As I prepared for this policy address, images kept flashing through my mind of our countrymen fighting the terrible floods ... As we in Hong Kong face one of the most severe challenges in our recent history ... if we can show the same spirit of strength, courage, solidarity and concern for our fellow citizens, we will be able to overcome our present difficulties and build a brighter future.' So said the then chief executive, Tung Chee-hwa, in his 1998 address, titled 'From adversity to opportunity'. In the National Day reception last week, Chief Executive Donald Tsang Yam-kuen said: 'From the earthquake in Wenchuan , to the staging of the Olympic Games in Beijing and the successful launch and return of Shenzhou VII, the Chinese nation has once again showed the world our tenacity and perseverance ... As we face the financial crisis, such tenacity and perseverance are particularly meaningful to us.' The meeting of minds in Mr Tung and Mr Tsang's appeals to the nationalistic feelings of Hong Kong people to help ride out the economic storms could not be more ironic. Shocked and rocked by the 1997-98 Asian financial crisis, the city was swiftly gripped by uncertainty and turbulence, and the protracted economic downturn took its toll on Mr Tung's popularity. Although it is too early to know all the effects of the latest financial shock, there are good reasons for Mr Tsang to instil a sense of crisis and invoke the fighting spirit among citizens as times get tough. Even before the collapse of leading American investment banks, top government officials predicted that the US economy would not return to stability before the second half of next year. With no sign of light at the end of the tunnel, a crisis of confidence about the economy on the domestic, regional and global fronts looks set to deepen in the near-term. The immediate problem facing the government is how to detonate the political time bomb involving the investments of thousands of people in minibonds issued by the now-defunct Lehman Brothers. Failure to resolve the brewing row between investors and the banks will sow the seeds of social instability and undermine confidence not only in banks but also in the government and monitoring institutions. In the medium and long term, volatility in the financial world will cast a shadow over the government's economic policy that critics say has been heavily tilted towards the financial services industry. There are looming fears of a string of economic woes. Economic growth is expected to slow, the financial deficit to return, inflation to stay high, jobless figures to rise again and the property and stock markets to head into uncharted waters. In a worrying sign of things to come, major companies have begun to cut jobs en masse. Taken together, the feelings of pessimism about the economy will precipitate a problem of confidence. This problem will turn into a crisis if people find that the government has a deficit of ideas about the right direction, a sound strategy, policies and a concrete action plan for the city. Much has been said about plans to raise allowances for the elderly and to give the go-ahead to the enactment of a minimum wage law in the next policy speech. The political and economic problems unfolding in recent months have proved to be far more acute and complex than Mr Tsang could have envisaged when he mapped out his second-term policy blueprint last year. In his call for Hong Kong people to draw inspiration from events on the mainland, Mr Tsang showed he is critically aware of the urgent need to act to avoid a downward spiral of confidence in the economy and his leadership. Chris Yeung is the Post's editor-at-large.