2010-09-10businessinsider.com

Pegging to the US dollar creates knock-on contagion effects around the world. Hong Kong used to be a very free, healthy economy (as it was carved out of China as a "free trade zone" by the British). Unfortunately in the 80s they started pegging the HKD to the US dollar, allowing economic rot to trickle in (before then, Hong Kong had no measurable unemployment, and no inflation!)

What's going on? Hong Kong housing prices are up 45% since the start of 2009, thanks to low mortgage rates fueled by the Hong Kong dollar's peg to the U.S. dollar and ultra-low interest rates in the U.S.. Price rises are now spreading beyond the most esteemed locations, making affordability for the average Hong Konger a major concern.


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