Sunday, October 19, 2014

Hong Kong Protest: the Rest of the Story

Police have been working very long hours.
Trying to rest during breaks
They were abused endlessly by the protesters, see
The press has been extremely biased in its reporting, interviewing predominantly the protesters and their leaders, praising them as peaceful, yearning for democracy, criticizing those who oppose the street blockage, and denigrating the Hong Kong police. The protest is not a spontaneous student movement.  Rather, it is a well funded and well organized anti-government undertaking.  Wittingly or unwittingly, the press has become a handmaiden of the dark forces behind this protest to topple one of the freest cities that had been the pride of East Asia.

Well-equipped protesters charging at the police
On August 31st, the Chinese National People’s Congress adopted a framework to give the millions of Hong Kong registered voters universal suffrage in the 2017 Chief Executive election. Two to three candidates will be chosen by a 1200-member Nominating Committee. Each candidate must have the endorsement of more than half of the Committee members. The exact composition of the Committee has not yet been decided.  According to Wikipedia, based on the last election in 2012, a similar committee included:
• 1,044 members elected from 38 sub-sectors,
• 60 members nominated by the religious sub-sector, and
• 96 ex officio members
Protesters breaking windows at Legislative Council Building

Each sub-sector, known as a Functional Constituency, elected its own representatives, from accountancy and banking to social welfare and wholesale. All in all, these sub-sectors included about 240,000 constituents from all walks of life.
Protesters breaking into the Legislative Council Building

This NPC framework of using a Nominating Committee adheres to the provision of Article 45 of the Basic Law–Hong Kong’s mini-constitution and the Sino-British Joint Declaration (PDF).
Another protester smashes the window of LegCo
The framework further requires two-thirds of the Hong Kong Legislative Council votes to pass. But the pro-democracy movement leaders don’t like the
Protesters use fire extinguishers to attack the police
Nominating Committee. They want open nomination because they say the Committee is stacked with pro-Beijing elites and not broad-based enough. They also insist that the Chief Executive, C.Y. Leung, resign. 

Beijing has announced that the 2017 election must be in accordance with the Basic Law, meaning no open nomination, and Leung has indicated he would not resign.

If the Legislative Council does not pass the Beijing adopted framework, then the 2017 election will revert back to the 2012 election process, without universal suffrage.  The next Chief Executive would then be elected by a 1200 member Election Committee, composed of basically the same members as the Nominating Committee but with a different name.

Protesters use their umbrellas to attack the police

Some 200 protesters trapped 3 policeman, punching
them and insulting them with the F bomb

Umbrellas provided by the organizers to the protesters.
Wonder if they had planned the
Umbrella Revolution name ahead of time
In a press release on September 5th, the British Foreign and Commonwealth Office in response to the China’s election framework said, “We welcome the confirmation that China’s objective is for the election of Hong Kong’s Chief Executive through universal suffrage.”  It continues to say “there is no perfect model”.
26 supply centers just at Admiralty

Margaret Thatcher's private secretary, Lord Charles Powell, recently said. “Hong Kong has very extensive autonomy - far greater than we believed actually could be achieved when the Hong Kong joint declaration with China was negotiated. They have had far better conditions – including political conditions - than any other city in China. But the bottom line is they are a city in China.”

Our Electoral College system for the presidential election is an indirect election. reports that four of our presidents did not win the popular vote.   The United Kingdom’s Parliamentary system in its prime minister election is not direct either.

Free supply of tents and pallets
Protesters scale a 10 foot fence of the government building
Because of their distaste for the NPC decision, university students began a one week student strike on September 22nd. The pro-democracy proponents had scheduled an “Occupy Central” movement to begin on October 1st, to coincide with the Chinese national day, with the purpose of paralyzing the city’s financial district. However, at the scheduled conclusion of the student strike, on September 26th, a student leader, Joshua Wong, urged the protesting crowd to scale a 10-foot high fence of the government administration building at Admiralty.
Free supply of water
That caused pandemonium and the peaceful protest became disruptive. Wong was arrested for entering government property without authorization, disorderly conduct and unlawful assembly. He was released 46 hours later under the habeas corpus provision of the Basic Law. His arrest brought out many more demonstrators.

Not just tents, but hard hats also
Riding on the chaos and emotion of the students, the Occupy Central leaders, comprised of two university professors and a minister, moved up the occupation in the early hours of September 28th. The Occupy organizers had told protesters to bring goggles and sleeping bags. 

At the Admiralty site, organizers were giving away everything the protesters might need, from water and gas masks to
Police warned crowd before using force
umbrellas and snacks. It would seem they were prepared for pepper spray, if not tear gas. That evening, there were tens of thousands of protesters. While mostly peaceful, many of the protesters were pushing the police from both ends, using their umbrellas to poke at the police.
There are 26 supply centers at the Admiralty protest site
Banner on top reads, "Umbrella Revolution".

Outnumbered and surrounded, the police launched 87 rounds of hand-thrown tear gas after pepper spray did not stop the charge. Police stood their ground and did not advance or charge the crowd. As a result, when the tear gas dissipated, the protesters returned.  No one was seriously injured. 

Din, Din
The police use of tear gas was roundly criticized by the media.  It also shocked many people in Hong Kong as this was only the second time since Hong Kong’s return to China in 1997 that tear gas was deployed.  Not happy, many more protesters came out to voice their displeasure, Joshua Wong urged people to go out on the streets in Mongkok, a densely populated working class neighborhood.  Causeway Bay then followed.
More din, din

Now that the protest is in its second month, the effect of the protest has been felt by just about everyone in the City.  The Hong Kong stock market dropped by more than a thousand points from 24,306.16 on September 19th to 22,932.98 on September 30th.   L’Oreal was the first international business to ban all travel to Hong Kong. 
The number of tourists visiting Hong Kong is expected to drop significantly.  Hundreds of bus routes have been suspended or diverted because of the street blockage.  The already congested Hong Kong traffic has become much worse.  Many people and students have to add another hour or more to their daily commute. 
Reading area in the middle of the street
Many stores and banks at the affected areas were temporarily closed.  Those stores that do open have to hand carry inventory to their businesses as no trucks can get near them.  In that sense, the Occupy Central leaders’ goal of paralyzing the City has been achieved.  However, the businesses affected are not the intended big financial businesses in Central.  The stores in Mongkok and Causeway Bay include many small retailers and restaurants.

Supply Center

A number of restaurants have already closed down.  Taxi, mini-van, tram, and truck drivers are losing hundreds of dollars a day in wages and revenue, not to mention commissions sale people.  LVMH, owner of Louis Vuitton, Givenchy, and Dior, announced its Asian sales plummeted by 50% in the past few weeks.  Tag Heuer Watches are laying off 46 people in Switzerland and Cartier will put people on a shorter work week.
Pakistanis came out to support the government
Resentment against the protest is rising everyday.  Anti-protesters have come out in droves.  The Small Claims Court has been clogged with plaintiffs suing the protest organizers for loss of income.  Some people have tried to remove the barricades and tents in the occupied areas causing scuffles between the two groups, in Mongkok in particular.  Most of them are simply citizens affected by the protest, not gang members.  Some 980,000 people signed a petition in the first 4 days of a signature drive urging the protesters to stop occupying the streets.  By the end of the 9 day signature drive, over 1.83 million people have signed the petition.  But this was mostly ignored by the press.  The press kept stressing the Occupy Central drive got some 800,000 signatures.

Shooting hoops
An unintentional consequence of the protest is the breakdown of the family units.  News media have reported that the overwhelming majority of the protesters are young and their parents mostly do not condone the protest.  This has created a deep wedge between the two generations.  Many couples have also split up and many people are being “unfriended” on Facebook as a result.  This heavy burden will take a long time to heal.
Dancing on the street

While the protesters say their goal is to achieve genuine universal suffrage, many observers believe that this is just a catchphrase.  The real causes of the unrest are social, including limited space resulting in high housing costs and shortages of columbarium, the wealth gap, and the Hongkongers contempt for China and the visitors from the Mainland.  

Playing Ping Pong
Hong Kong is very free and democratic already and its residents have enjoyed a high degree of autonomy and rights. The fact that these protesters have blocked thoroughfares for more than a month without worry is a clear example of that. What other government would tolerate that kind of prolonged disruption and demonstration?
Playing Mahjong

Bill Clinton’s “It’s the economy, stupid” may very well be part of the reason.  Even though the Hong Kong per capita income is higher than ours, there is a huge wealth gap and most young people simply cannot afford to set up their own homes.  The government has built a lot of public housing, but home prices are still very high in spite of the efforts.  The first Chief Executive, Chee-hwa Tung, had a grand plan for housing but he was side-tracked by the SARS outbreak and the housing plan fell victim.  Today, an apartment in the city center costs $1,750 per sq.ft.  Outside of the city center, the cost is still $1,075 a sq. ft..  Rents are equally high.  This has caused a lot of anger and frustration.
Dressed like Captain America, he knocked an elderly
gentleman to the ground and was arrested.
Notice what his T-shirt says

The people in Hong Kong blame it on the government and believe that the current government is not as competent as the British colonial government. Hong Kong actor Anthony Perry once joked that the people would even blame an earthquake on the Chief Executive.  He may be spot on about that.

Then there are the tourists from Mainland China.  It’s a double-edged sword.  With over 40 million visitors from the Mainland every year, they provide a lot of jobs and businesses to the City.  On the other hand, they have also caused a lot of tensions among the local residents.

Generator at the protest site
Stealing electricity

Stealing water from fire hose
Using umbrellas as weapon

Mainlanders can be easily identified on the streets, they speak Mandarin instead of Cantonese, the dialect dominantly used in Hong Kong, with suitcases in tow for the goods they buy.  Streets become even more crowded.  Shopkeepers cater to these visitors first because they are big customers.  They empty the store shelves leaving little for the locals, from basic needs like baby formula to luxury items such as jewelry and name brand merchandise.  Additionally, until the government put a stop to it, many expecting mothers came to Hong Kong to give birth.  That took up hospital beds.  Many Hongkongers also don’t approve of the government granting
A Mainland tourist with luggage in tow
150 Mainlanders residency in the City on a daily basis.  And last but not least, Hongkongers often do not consider the Mainlanders to be civilized.  All of this has resulted in their hatred for the Mainlanders.   Many
Protester gone wild, shouting at Mainland visitor
Hongkongers call them “locusts”.  That hatred is extended to China.  Being a former British colony, the Hong Kong people are very Westernized.  Many youths in Hong Kong today do not identify themselves as Chinese.  They are unwilling to accept Hong Kong as part of China.  It is not unusual to see the former Hong Kong colonial flag with the Union Jack in every demonstration.

The text on the flag reads,
"I'm a Hongkonger, not a Chinese."

The protesters insist that Beijing promised "genuine" universal suffrage for the 2017 Chief Executive election back in 2007.  Here is what the NPC said in 2007, "The election of the fifth Chief Executive of the Hong Kong Special Administrative Region in the year 2017 may be implemented by the method of universal suffrage, that after the Chief Executive is selected by universal suffrage, the election of the Legislative Council of Hong Kong Special Administrative Region may be implemented by the method of electing all members by universal suffrage."
Union Jack & Stars and Stripes at protest site

Universal suffrage is exactly what the NPC is offering the people in Hong Kong.  It should be understood that the Basic Law would still govern.  Article 45 of the Basic Law says, "The Chief Executive of the Hong Kong SAR shall be selected by election or through consultations held locally and be appointed by the Central People's Government. The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures." 

The Sino-British Joint Declaration simply says, "The Government of the Hong Kong Special Administrative Region will be composed of local inhabitants.  The chief executive will be appointed by the Central People's Government on the basis of the results of elections or consultations to be held locally."

China and some Hong Kong politicians have alleged the U.S. is partly to blame for the unrest, not just meeting with protest organizers but also funding the movement.  Direct evidence is hard to find.  Here is some of what is known.
Fox interviewed Dr. Michael Pillsbury, Defense Policy Advisor and Senior Fellow at the Hudson Institute in this video.

Transcript of Dr. Pillsbury's answer to the first question of whether Occupy HK is America's fault:
"It’s not all our fault but we’re partially involved. We have a large consulate there that’s in charge with taking care of the Hong Kong policy act passed by congress to ensure democracy in Hong Kong. We also have funded millions of dollars in programs through the National Endowment for Democracy to help democracy in Hong Kong, so in that sense the Chinese accusation [that it’s America’s fault] is not totally false."

Two pro-democracy movement leaders, Martin Lee and Anson Chan, have given a talk sponsored by the National Endowment for Democracy (NED) in Washington.  Both have met with Vice President Joe Biden and various Congressional members including Nancy Pelosi.  A New York Times article said NED's annual reports disclosed that it had given $755,000 and $695,000 in grants to Hong Kong in 2012 and 2013, respectively.  Part of the money was earmarked “ to develop the capacity of citizens — particularly university students”.

A one hour talk by Martin Lee and Anson Chan
at the National Endowment for Democracy

Bus trapped at the protest site
According to a Sept 22, 1991 interview in the Washington Post with one of the creators of the NED, Mr. Allen Weinstein, "a lot of what we (NED) do today was done covertly 25 years ago by the CIA."

An injured policeman
The U.S. Congress introduced a bill called the Hong Kong Human Rights Democracy Act in mid-September, on the 12th day of the occupy protest.

A prominent figure in the Occupy Central movement is Apple Daily News owner Jimmy Lai.  Paul Wolfowitz stopped by Hong Kong to see Lai on his way to his new assignment.   Former U.S. Ambassador Raymond F. Burghardt was seen visiting Lai at Admiralty.  Lai’s personal assistant, Mark Simon, is a former U.S. intelligence officer.  After Simon’s computer was hacked, many of his emails have become public.  The emails show that in addition to Lai handing out some $5 million dollars to many of the anti-government leaders, Simon also said he would pay for the Occupy Central advertisements in various newspapers.  Furthermore, Lai was reportedly to have donated large sums of money to a Myanmar NGO and was seen in news photos with President Thein Sein.

Giving police the middle finger
One of the recipients of Jimmy Lai’s $5 million handout is a Labor Party legislators, Cheuk-yan Lee.  In another hacked email that became public earlier this month, it was reported that the Labor Party had received more than $2.5 million from the American Center for International Labor Solidarity.  According to Wikipedia, the Solidarity Center “serves as a conduit for US foreign aid” and "over 96% of its funding comes from the United States federal government, mostly through the National Endowment for Democracy."

The U.S. Consulate in Hong Kong has acknowledged meeting with the protest leaders but it has denied playing any guiding role and said it does not support any particular political party or person.  A NED spokesperson said NED had not financed any civil disobedience training for Hong Kong residents.

Policeman catching a nap
U.S. Ambassador Raymond Burghardt with Jimmy Lai
A BBC article says the Hong Kong protest was planned two years ago at the Oslo Freedom Forum and that "BBC Newsnight has been told many of those involved in the demonstrations, perhaps more than 1,000 of them, have been given specific training to help make the campaign as effective as possible."  The Oslo Freedom Forum receives funding from the John Templeton Foundation.
An 88 year old gentleman knelt in front of the student leaders
asking them to open up the streets, to no avail

The protest has made a mockery of the rule of law, a cornerstone of democracy.  Not only is blocking the streets an offense, Joshua Wong said while he respected the High Court’s recent temporary injunction order to vacate and to remove all barricades, he would not retreat nor would he suggest anyone to retreat.  But he fought tooth and nail to gain release from custody after his arrest under the habeas corpus law.

Is there any end in sight?  That’s hard to say.  Keen observers would agree the protest has morphed from a student movement with love and peace into a leaderless anti-government, anti-tear gas movement.  The government is worried that if it uses force to remove the protesters and the barricades, it would cause an adverse reaction like it did with the tear gas.  But the government is also concerned about the simmering anger of the majority of the citizens.  The situation is extremely fluid.  Any wrong move could spark an outright riot.  

The only hope seems to be the protesters themselves getting tired of their actions and deciding it’s time to pack it up.  Whether that will happen anytime soon is anyone’s guess.
Tents at Admiralty, in the middle of the street.
Hong Kong University Student Magazine
Caption reads "Hong Kong Democracy Independence"

Further reading:

 Protesters scaling a 10 foot high fence outside of the government admin building

Tuesday, September 16, 2014

Help Free Matt and Grace

Some of you may remember Matt and Grace. They are the Christian couple who adopted 3 children from Africa and one of them unfortunately passed away while they were working at Qatar. The Qatar government thought no Chinese couple would adopt Black children and thought it was a case of child trafficking gone wrong. They were found guilty of child endangerment and the conviction carries a three-year prison term.

The Innocence Project has been helping them. But according to Grace's sister, Joanne Chin, Matt and Grace desperately need your help. They have sold their home, emptied the bank accounts, and their families have liquidated assets and retirement savings. If you can help, please click on this link below to make a donation:

Deductions are apparently tax deductible as the donation goes to Allegro Organizational Solutions of Houston TX first and Allegro is a 501(c)(3) organization, according to the IRS website:
26-1197590 Allegro Organizational Solutions Inc. Houston TX United States PC
(PC stands for Public Charity)

For more info, please see:

Monday, July 14, 2014

Investment strategy

I always think it is dumb to hand money over to someone and let him/her do whatever that s/he wants to do to invest with that money. As far as I'm concerned, this is especially true if these people don't even know the track record of the "advisers" handling their money. Fact is no one has more interest in that money than the owner.

I'm a big proponent of passive investments such as the Total Market Index Fund and the S&P 500 Index Fund at one of the discount brokerage firms that does not charge a commission to buy in and has very low expense ratios. Another important fact is there is little to no buying and selling of the stocks these index funds hold. So the investor pays less tax. Actively managed mutual funds have lots of buying and selling, therefore, they generate lots of short-term capital gains that are taxed at ordinary income tax rates.

Sunday, July 13, 2014

Update your Estate Planning documents

Let this serve as a wake up call for all the procrastinators out there. Every time there is a life changing event, such as marriage, divorce, birth or death, always review your estate planning documents to see if they are up to date. Update the beneficiaries for any insurance policies and retirement plans.

Thursday, June 12, 2014

Inherited IRAs not safe in bankruptcy

The U.S. Supreme Court held today that inherited IRAs are not “retirement funds” under U.S.C. §522(b)(3)(C), and are not protected from creditors in bankruptcy proceedings. (Clark v. Rameker (June 12, 2014) U.S. Supreme Court, Case No. 13-299)

Bankruptcy laws protect retirement accounts from the reach of creditors, and the lower courts have been inconsistent in determining whether this protection extended to inherited IRAs. Today’s decision makes it clear that is does not. However, this decision only applies to inherited IRAs.

To view the full Supreme Court opinion, go to:

Monday, June 9, 2014

The True Cost of China’s Fakes

​I don't know if the NYT editor read this OpEd before publishing it. First, IMO, it's a stretch to say using AliPay demonstrates distrust? How is that that much different from us using credit cards to make online purchases when we are protected from ​​unscrupulous vendors. And how many taxpayers around the world, not just those in China, would like to see a refund of their income taxes if their government doesn't ​keep its commitments? This article is total rubbish.


Sunday, April 6, 2014

You can only rollover an IRA once every 12 months

In both Proposed Regulation § 1.408-4(b)(4)(ii) and IRS Publication 590,Individual Retirement Arrangements (IRAs) rollover, the IRS says the limitation is applied on an IRA-by-IRA basis. However, a recent Tax Court opinion, Bobrow v. Commissioner , T.C. Memo. 2014-21, held that the limitation applies on an aggregate basis, meaning that an individual could not make an IRA-to-IRA rollover if he or she had made such a rollover involving any of the individual’s IRAs in the preceding 1-year period. The IRS anticipates that it will follow the interpretation of § 408(d)(3)(B) in Bobrow and, accordingly, intends to withdraw the proposed regulation and revise Publication 590 to the extent needed to follow that interpretation. These actions by the IRS will not affect the ability of an IRA owner to transfer funds from one IRA trustee directly to another, because such a transfer is not a rollover and, therefore, is not subject to the one- rollover-per-year limitation of § 408(d)(3)(B). See Rev. Rul. 78-406, 1978-2 C.B. 157.

An IRA rollover is to withdraw funds from an IRA and redepositing the funds within 60 days.

Announcement 2014-15 won't be effective for the rest of us until 2015:

From now on, clients had better be making trustee-to-trustee transfers.

The case in question is at:

Wednesday, February 19, 2014

NO to SCA 5!

I've just signed this petition against SCA 5 which will bring back special preference to admissions to the University of California, overturning Proposition 209.  If passed, this will have a negative impact against Chinese, Indian and Korean applicants, among others.

To read what SCA 5 will do, click on this site:

Here is a synopsis of SCA 5: The California Constitution prohibits the state from discriminating against, or granting preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.

(f) For the purposes of this section, “State” shall include, but not necessarily be limited to, the State itself, any city, county, city and county, school district, special district, or any other political subdivision or governmental instrumentality of or within the State. “State” does not include the University of California or the Public School System.


The last sentence exempts UC from non-discrimination. The way I read it, SCA 5 will not only impact student applications, but faculty and staff too.

Unfortunately, all three senators of Chinese descent have voted in favor of it, Carol Liu, Ted Lieu and Leland Yee.  So it will most likely pass.   But I hope you will still sign it, if nothing else, to show the politicians we the people of California are against bringing back racial discrimination and preferences.