Chief warns people not to be too negative The scale of the current financial crisis is larger than that of the Wall Street crash of 1929, the chief executive said yesterday. But Donald Tsang Yam-kuen, speaking at the Managing World Cities Conference, said people should not be overpessimistic about the crisis. He said the government would continue to invest in education in order to prepare Hong Kong for sustainable growth in the longer term. 'On a scale much smaller than the one we face today, [the Wall Street crash] had a lasting effect going beyond five or six years. So let's be humble and careful,' he said. Amid such a gloomy outlook, critics questioned the reasoning of Mr Tsang when he talked about economic prospects with chief executive election opponent Alan Leong Kah-kit in public debates last year. Since taking office, he has made subsequent assurances that Hong Kong would enjoy economic prosperity in the medium term. Experts said the main cause of the current problem - the subprime crisis that began two years ago - started to emerge last year. The trend had been taken too lightly, they said. In his policy address last year, Mr Tsang said he had 'full confidence' in Hong Kong's economy, which was 'back on track'. Political analyst James Sung Lap-kung said the government should not have ignored the American subprime crisis last year. Mr Sung warned that faced with further economic fluctuations, Mr Tsang should not take things for granted. In the closing remarks of his address, Mr Tsang said unity was the key to prosperity, adding that Hong Kong could enjoy 'a golden decade'. Chinese University economics professor Liu Pak-wai said Hong Kong had only experienced the initial impact of the financial crisis. 'The root cause of the present meltdown is due to the property market plunge in the US, which started as early as two years ago,' he said. Professor Liu, who is also the university's pro-vice-chancellor, said the problem had emerged on a large scale because of low savings rates in the US. The average savings rate of Americans was just 1 per cent, compared to more than 30 per cent in Hong Kong and 40 per cent on the mainland, he said. 'It means that many people live on borrowed money. Many of them in fact cannot afford what they have been spending. 'Now that the bubble has burst, the impact is really hard to estimate,' he said. Economist Billy Mak Sui-choi of Baptist University agreed that the current crisis was on a larger scale thanks to globalisation. However, he said, bold steps taken by world leaders to loosen credit had been more aggressive than measures taken during previous crises.