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What We Can Learn From The Founders Of Hong Kong

Tyler Durden's picture


Submitted by Simon Black of Sovereign Man blog,

As you may know, I’m an avid reader. I devour especially historical accounts of any kind, because I consider lessons of history to be invaluable. As the Latin proverb says: Historia magistra vitae est—history is life’s teacher.

One of my all-time favorite books is a novel by James Clavell, Tai-pan. It’s the second book in his series of six novels known as The Asian Saga—a fictional account of historical facts.

Tai-Pan tells the story of Western, and especially British, traders at the time of the Opium Wars with China. The story starts right after the British have defeated the Chinese Empire in the First Opium War and claimed a barren island in the Pearl River delta as a British possession—Hong Kong.

Tai-Pan is actually a Cantonese term that literally means “big shot”, and was reserved strictly for top foreign businessmen and traders operating in the Chinese realm.

In the story, right after the ceremonial claim of Hong Kong, the eponymous Tai-Pan, a Scottish merchant Dirk Struan, who dominates the trade in tea, silk, and opium, receives letters and dispatches from his son Culum who has just arrived to the Orient from Scotland:

“Finally he broke the seal on his banker’s letter. He read it and exploded with rage.


“What is it?” Culum asked, frightened.


“Just an old pain. Nothing. It’s nothing.” Struan pretended to read the next dispatch while raging inwardly over the contents of the letter. Good sweet Christ!


“We regret to inform you that, inadvertently and momentarily, credit was overextended and there was a run on the bank, started by malicious rivals. Therefore we can no longer keep our doors open. The board of directors has advised we can pay sixpence on the pound. I have the honor to be, sir, your most obedient servant…”


And we hold close to a million sterling of their paper. Twenty-five thousand sterling for a million, and our debts close to a million pounds. We’re bankrupt.


Great God, I warned Robb not to put all the money in one bank. Na with all the speculating that was going on in England, na when a bank could issue paper in any amount that it liked.”

Chillingly familiar, right?

A million pounds was an ENORMOUS amount of money in the 1840s. And here the biggest merchant in the Orient fell into the same trap as many people do today. He failed to recognize the risks and diversify accordingly.

He was obviously aware of the threats, but didn’t act when he had the time and opportunity to do so.

The world is not that different today.

Just last week we talked about how HSBC in the UK is restricting its customers’ access to their own money. As revolting as it seems, this is what banks with capital shortfalls and liquidity crunches do.

Another thing from Europe which has gone completely unnoticed was a hearing in the European Parliament on banking, during which the new German board member of the European Central Bank, Sabine Lautenschlaeger said that it should be possible to wind down failing eurozone banks over a weekend “before markets open in Japan on Monday.”

The threats and warning signs are there for everyone to see even today.

The question is, will you have the foresight to act and mitigate your risks beforehand, or will you end up regretting your inaction, just like the Tai-Pan?


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Wed, 02/05/2014 - 19:20 | 4405968 IridiumRebel
IridiumRebel's picture

Ahh...the sweet Brits and East India company; drug dealers who addicted a country and stole their wealth for generations to come. Drugs are so good at rendering unsuspecting folks inept to brazen theft. Now America has taken the place as world power. Stay groggy, folks....

Wed, 02/05/2014 - 19:40 | 4406022 wintermute
wintermute's picture

Ahh.. The irony, the US today is descended from what was effectively the "West India" company. Just compare the Stars and Stripes with the East India company flag.

Wed, 02/05/2014 - 19:55 | 4406086 Landotfree
Landotfree's picture

Tai-Pan thinks he is going to be okay because he spreads his so called wealth to multiple banks?


Tai-Pan is going to be liquidated pretty fast once that process starts if that is what he really thinks.   

Tanks and bombs don't care how your so called wealth is spread out once the liquidation starts.   

About as stupid as Peter Schiff, "Crash Proof", yet everything he suggested crashed along with everything else.   The idiots don't see the Forest for the Trees.

Wed, 02/05/2014 - 20:01 | 4406107 philipat
philipat's picture

"Debt money" and its pushers, aka Bankers, is just as insidious as opium and should also be made illegal.

Thu, 02/06/2014 - 02:00 | 4407000 old naughty
old naughty's picture

Big Dick (um, sorry, Dirk) as depicted in "Tai Pan" is not part of the elite.

"Tai Pan Dick" = Big Dick, a Hongkonger slang.

And when it comes to il-legal, check out the BNA (British North America Act), they're still very much "behind the curtain".

In the Dominion of Canada, not even fuddle-duddle Pierre could make significant in-road after "Bill of Rights" repatriation.

Union Jack is still flying high...Who coined the word commonwealth, duh !!!

Wed, 02/05/2014 - 20:00 | 4406109 negative rates
negative rates's picture

Long spices bitches!

Wed, 02/05/2014 - 23:53 | 4406802 IridiumRebel
IridiumRebel's picture

Absolutely correct. The Colonials would write back to Merry ol England about infrastructure, schooling and religious desires and the response was, "STFU AND GROW CROPS". Y'all came for gold, but tobacco and cotton will do. The Chinese got Maize, peanuts and sweet potatoes...not that they cared in between drooling and more opium hits.

Wed, 02/05/2014 - 19:37 | 4406027 Skateboarder
Skateboarder's picture

East India company... until bam! Nationalized. You're a colony now, bitch. Afghanistan looks worse because we skipped the formalities this time.

Wed, 02/05/2014 - 19:57 | 4406093 Boris Alatovkrap
Boris Alatovkrap's picture

Drug for 21 Century is iDevice, is iDistraction for iCitizenry. Is access gateway for important information such as is like "Is Speers and Federline reunite or is hair razor redux?", "what hooker shoe is Kim Kardashian wear with slut dress?", "Who is next Amerika Idol?" and "Ducks Die Nasty". If global economy is collapse, maybe Amerika citizenry is sleep through, no?

Wed, 02/05/2014 - 20:06 | 4406117 Skateboarder
Skateboarder's picture

If global economy is collapse, supplies chain is stop, and iDevice is no longer produce for to be consume by loyal iCitizen. :(

"What do you mean run out of vodka?"

Wed, 02/05/2014 - 19:26 | 4405983 Rainman
Rainman's picture

Greed, envy , sloth ....humans never change

Wed, 02/05/2014 - 19:26 | 4405984 0b1knob
0b1knob's picture

Obama meets with his master.   I guess we will know what orders he received soon.

Wed, 02/05/2014 - 21:23 | 4406411 steve2241
steve2241's picture

altikriti?  Where have I heard that name before?  Oh!  Sadaam Hussein al-Tikriti.  (Signifies someone from the town of Tikrit, Iraq.)

Wed, 02/05/2014 - 19:36 | 4405990 akak
akak's picture

I wonder how they teach the glorious history of the Opium Wars in British state schools?

(Probably about the same way that they teach the glorious history of World War II and the "Greater East Asian Co-Prosperity Sphere" in Japanese state schools.  Or, for that matter, probably in about the same way that they teach the invasion and annexation of Tibet in Chinese state schools.)

Wed, 02/05/2014 - 19:41 | 4406042 Winston Churchill
Winston Churchill's picture

Or like the opening of the West in America, maybe.

Funny how those rose tinted spectacles only work on other

countries history.

Let he is without sin cast the first ... seems aposite.

Wed, 02/05/2014 - 19:56 | 4406089 tip e. canoe
tip e. canoe's picture

Be innocent of the knowledge, dearest chuck,
Till thou applaud the deed.

Wed, 02/05/2014 - 20:14 | 4406158 Panem et Circus
Panem et Circus's picture

Thank Ol Hickory for that whole Manifest Destiny crap... That will probably offend a few ZH folks, but it's true.

Wed, 02/05/2014 - 19:59 | 4406101 logicalman
logicalman's picture

About as well as the US education system teaches about indiginous people and slavery.

The British school system was (can't comment about the present) about as interesting as watching the tar drip experiment.

History was no exception and was pretty much indistinguishable from propaganda.

I went throught the Grammar School system (just listen to The Wall) and loathed history.

I am now a big reader of things historical because I can follow a thread, fill in gaps for myself and see the patterns.

If you don't eat yer meat, you can't have any pudding.


Wed, 02/05/2014 - 20:07 | 4406122 Winston Churchill
Winston Churchill's picture

I went to an  English Public school.

They didn't gloss over the details at all.

Scratch an Englishman ,and find a pirate seemed to be the meme.

Mind you a lot of my contemparies then became pirates in business.

Wed, 02/05/2014 - 20:23 | 4406183 Clowns on Acid
Clowns on Acid's picture

Yeh I heard about that... "Dress British... Act Yiddish".

Wed, 02/05/2014 - 20:19 | 4406168 Panem et Circus
Panem et Circus's picture

You clearly don't have young children. The US schools ONLY teach about instances where minorities were oppressed. They don't ever, ever, talk about the good things we have done.

Wed, 02/05/2014 - 21:23 | 4406403 Balanced Integer
Balanced Integer's picture

At least two people seem to think that the US has been run by Emperor Palpatine since 1789.

Wed, 02/05/2014 - 21:50 | 4406472 logicalman
logicalman's picture

What the fuck did the Arabs do for the world?

Not much really, only a decent mathematical system, medicine and the beginnings of observational astronomy.

Wed, 02/05/2014 - 23:12 | 4406726 DLux
DLux's picture

They shared the Hindu developments in mathematics with the west, but they did not develop the original system. Same with astronomy.

They did travel the world and pickup on the developments of other ancient people (much like the Brits). 

Wed, 02/05/2014 - 19:28 | 4405997 NoDebt
NoDebt's picture

I'm going to let you in on a little secret, Simon: THERE IS ONLY ONE BANK TODAY.  If I learned anything from 08-09 it's that when one of the big ones, no, not even a big one, just a medium one goes down, it takes the rest of them with it.  Derivatives have seen to that.

They're a bunch of out-of-shape 300 lb. mountain climbers all tethered together going up the side of Mt. Everest.  One slips, he's dragging the rest down with him.

Wed, 02/05/2014 - 19:29 | 4406000 Dr Benway
Dr Benway's picture

LOL. Simon goes to James Clavell for fine literature and historic insight.

Wed, 02/05/2014 - 19:43 | 4406049 Urban Redneck
Urban Redneck's picture

If one wants to learn, shouldn't the goal be to find history that ISN'T a fiction?

Wed, 02/05/2014 - 19:51 | 4406080 Winston Churchill
Winston Churchill's picture

A lot of Tai Pan wasn't fictional.

Can't remember the true name of the  trading house anymore.I think

it was Jardine Matherson , but the names were changed to protect

the author from lawsuits and/or triad killing.

Wed, 02/05/2014 - 21:47 | 4406460 InanimateCarbonRod
InanimateCarbonRod's picture

Yep. It was Jardine Matheson.  Sir William Keswick.

Wed, 02/05/2014 - 22:05 | 4406523 Saul Sage
Saul Sage's picture

Just finished 3/6 books last year:
noble house = tiapan/dirk straun
brock & sons = morgan brock, the other big english trade house
cooper tillman = the americans

Clavell wrote a fine set of books without the same old story feeling you get from authors like clive cussler or a tom clancy.., Jack Ryan as lead character in every book? come on, at least change the dude's name!

Wed, 02/05/2014 - 19:54 | 4406085 Terminus C
Terminus C's picture

there is no such thing as fictionless history.  the goal is to reduce fiction, but because it history is a story told by people, there is always a ficticious element (the less the better, but always prevelant.

Wed, 02/05/2014 - 20:03 | 4406111 Urban Redneck
Urban Redneck's picture

Herodotus & Plutarch.
We used to care.
On a long enough timeline...
apparently it stops being a mattering thing.

Wed, 02/05/2014 - 21:02 | 4406313 Seychelles
Seychelles's picture

One is always kept guessing.  History is similar to gossip; as it spreads from person to person or book to book and is modified to varying degrees at each step, there comes a time when the information content by chance can in part be mostly true.

Wed, 02/05/2014 - 19:30 | 4406003 OC Sure
OC Sure's picture

Dirk Straun navigated 40 lacs of silver down the river.

Ian Dunross orchestrated the modern exchanges flawlessly.

'twas a Noble House indeed.

(...the house these daze are tainted with ignoblilty.)

Wed, 02/05/2014 - 19:33 | 4406011 PGR88
PGR88's picture

Want to really learn about what made Hong Kong successful??

Read about Sir John Cowperthwaite.  He was a British Civil Servant and a post-war HK Financial Secretary.


Wed, 02/05/2014 - 19:37 | 4406025 akak
akak's picture

Admit it, you just made that name up.

Wed, 02/05/2014 - 20:07 | 4406124 logicalman
logicalman's picture

There's plenty of Postlethwaites around, why not a few 'Cowperthwaite's?

Wed, 02/05/2014 - 20:52 | 4406290 kaiserhoff
kaiserhoff's picture

Brit names are often stranger than fiction.  Kraut names too.

There are neighboring towns in England called Nasty and Ugly.  Supposedly, the editor of the local paper waited for years before announcing "Ugly woman to marry Nasty man."

Wed, 02/05/2014 - 21:36 | 4406440 akak
akak's picture

Well, I have been to Bliss, to Paradise, to Nirvana, to Climax, AND to Hell --- all in one US state!

Wed, 02/05/2014 - 21:50 | 4406479 logicalman
logicalman's picture

There were two pubs near Sheffield - The North Pole and The Moon.

It wasn't uncommon to go to the North Pole and the Moon in a single night!



Wed, 02/05/2014 - 20:06 | 4406128 Apostate2
Apostate2's picture

Correct and glad you pointed this out to the historically challenged.

Wed, 02/05/2014 - 20:30 | 4406198 Harbanger
Harbanger's picture

He introduced Hong Kong to free market economics which made them incredibly succesful.  Hong Kong has a very capitilistic system with low taxes and high economic freedom.  The exact opposite of where the socialized west is going.  That's why you'll never hear his name mentioned.

Wed, 02/05/2014 - 20:42 | 4406253 MoneyPowerWomen
MoneyPowerWomen's picture

thanks PGR, great tip, interesting history

Wed, 02/05/2014 - 19:39 | 4406030 TideFighter
TideFighter's picture

If you want collegiant-level history classes, you must now attend a military academy. None of the top 29 liberal arts colleges require ANY history-sad fact. 

Wed, 02/05/2014 - 19:57 | 4406083 HardAssets
HardAssets's picture

Yeah right, . . . . they teach all the 'dirt' to young cadets and midshipmen.

Funny they never mentioned USMC Maj General Smedley Butler to me when I was a midshipman even though he won two congressional medals of honor.

Maybe his book "War Is a Racket' had something to do with it and his statements that he never had an original thought till after he left the military. Or maybe it was his opinion that he had been nothing but hired muscle for the 'banker boys' all over the globe.

Wed, 02/05/2014 - 20:19 | 4406167 pupdog1
pupdog1's picture

War is a racket can be found online and downloaded for free.

It's only about 25 pages.

It is an absolutely must-read.

Wed, 02/05/2014 - 21:55 | 4406491 logicalman
logicalman's picture

If you are looking for a 'must watch' movie with a similar message, All Quiet on the Western Front (1930 version) is worth your time.


Wed, 02/05/2014 - 19:38 | 4406032 teslaberry
teslaberry's picture

funny i thought the main lesson of hong kong was that all political power comes from gunboat diplomacy, or, saving that, world war 2 demonstrates it comes from  massive conquest. 


bank runs? this is the lesson of hong kong. no...........

Wed, 02/05/2014 - 20:16 | 4406162 Apostate2
Apostate2's picture

No. the 'lesson of Hong Kong' is don't give up all your silver to buy dope. You may lose real estate.

Wed, 02/05/2014 - 19:45 | 4406054 Bitchin Bear
Bitchin Bear's picture

What great books!  Tai Pan is by far my favorite.  I usually re-read it every couple of years.  Hubby can't understand why one would read a book again.   What can I say?  It's just rich... as are Noble House and Shogun.  King Rat is a great change of pace.  Makes me want to drag out the storage boxes and dust them off!

Wed, 02/05/2014 - 21:44 | 4406068 RaceToTheBottom
RaceToTheBottom's picture

Don't worry about them losing money from corrupt banks, the Scots can squeeze more out of a coin than anyone.  With them, it is genetic...

Wed, 02/05/2014 - 19:49 | 4406072 Doctor Faustus
Doctor Faustus's picture

King Rat was Clavell's first novel and more aptly describes our future (and perhaps current) economic and societal future.

Wed, 02/05/2014 - 19:51 | 4406081 buzzsaw99
buzzsaw99's picture

What the hong kong founder-maggots learned was that they could exploit chinese peons however they wanted and still do that to this very day.

Wed, 02/05/2014 - 20:00 | 4406108 gwar5
gwar5's picture

One can only hope history repeats, and that Jamie Dimon and Lloyd Blankfein will be screaming like Nancy Kerrigan when they get wacked.


Wed, 02/05/2014 - 20:07 | 4406125 FredFlintstone
FredFlintstone's picture

Saw a picture of Nancy Kerrigan recently in an oxford shirt and blue blazer. She used to be good looking, I swear she looked more like man in that photo than Bruce Jenner does today.

Wed, 02/05/2014 - 20:19 | 4406173 Clowns on Acid
Clowns on Acid's picture

Hmmm...did she get clubbed again ?

Wed, 02/05/2014 - 20:10 | 4406136 disabledvet
disabledvet's picture

why would a bank print money when the Government does that for them?

this was the age of the gold standard. banks printed their own money (Warren Buffet actually bought a bank that still had its own "money" in the vaults) because there was so little cash floating around.

obviously that's not true anymore.

and of course we have Macau now in case anyone thinks "it's all clean now."
Even Singapore has a casino.

Wed, 02/05/2014 - 21:50 | 4406474 RaceToTheBottom
RaceToTheBottom's picture

Banks are all learning up on Bitcoin to issue their own virtual currencies.  Chase has even pieced together enough corruption to get a patent on virtual currencies.

Things are circular and we may have bankster currencies again.  But really with the FED printing fake money, the equivalent of a Bankster currency is the deal each bank makes with the FED.

Wed, 02/05/2014 - 22:00 | 4406509 Offthebeach
Offthebeach's picture

I was thinking of starting wampum again. You know, quohogs shell bits on a string.
But I suppose Chinese ersatz wampum would flood in.
Not to mention having a after Taszer .40 automatic slammed into the small of my back by Treasury goons yelling drop the moccasins and get down on the ground.

Thu, 02/06/2014 - 10:09 | 4407535 StandardDeviant
StandardDeviant's picture

"Even Singapore has a casino."

Two, actually.  But please, they're "integrated resorts".

Wed, 02/05/2014 - 20:09 | 4406137 RafterManFMJ
RafterManFMJ's picture

I reduced my account at PNC by 50 percent last week; wire transfer for some PMs and wrote a check on my account to a local credit union.

Today I was in and pulled aside after cashing a check.

I was asked if everything was ok? Was I happy with PNC? Would I like a credit card? How about a loan? Finally I was offered some free coffee.

I found the display disconcerting, to say the least.

Wed, 02/05/2014 - 20:26 | 4406195 Panem et Circus
Panem et Circus's picture

Funny, I pulled $50k out of PNC last year to put into a future boating accident. They made me fill out paperwork to say what the money was to be used for and where it was going. Literally would not hand it over until I told them. Amazing.
I asked the manager "who's money is this, yours or mine?" I got the "sorry, it's the Fed Reserve requirement. Ever since the Patriot act we have to ask". She actually told me they have to do some level of paperwork for any cash withdrawal over $4k!

Wed, 02/05/2014 - 21:55 | 4406498 RaceToTheBottom
RaceToTheBottom's picture

Interesting.  I had thought that the 10K level during wiring was not the only level...

Pretty soon we will all be acting like the San Francisco waiter who comes into a real-estate closing with two suitcases full of dollars to buy a Victorian.  Except in the future it will be gold bullion and coins

Wed, 02/05/2014 - 20:35 | 4406225 jonjon831983
jonjon831983's picture

You'd think they'd start with a coffee first before trying to milk you.  Fine display of terrible customer service.

Wed, 02/05/2014 - 20:25 | 4406194 Clowns on Acid
Clowns on Acid's picture

The Fed since Greenspan has been the Pusherman in the US. The CRA Act then negative real interest rates got the populace hooked on debt. Of course the US Gov't is the biggest heroin junkie in the world. 

Wed, 02/05/2014 - 21:25 | 4406410 dragoneyes74
dragoneyes74's picture

With the ECB in the morning, and NFP on Friday, the next two days in the metals are going to be really exciting, or really disheartening.  It's time to make a move.  Silver poked thru its downtrend line today and is finally starting to lead.  They've based out for two and a half months now.  A breakout above $1280 in gold completes the inverse head and shoulders pattern and with all the shorts that have built up it will be very explosive.  It may depend on the dollar.  Whatever happens the next two days in gold, silver, and the Euro will likely have long legs.  I expect to be entering a Euro short or gold and silver long position.  Maybe, paradoxically, both.   

As for the ES, I've been afraid to be aggressive in either direction.  Reversing today at horizontal support makes it hard to want to get short, especially if Boehner is already talking about conceding.  But I'm not getting long either.  If you're a bull I think the last thing you want to see if a move back to 1800 where a possible head and shoulders could form.  The best case would be to finish the correction down to the 200-day, poke thru and trap some bears, THEN reverse.  That I can buy.  Not here.  If we spike into the 1760 downtrend line, I hope to have the guts to short it really small, but I am all about the metals right now.  You can wait all year and not see a setup as good as this.  All it needs is the right news for fuel and we're off.  If it doesn't breakout over the next two days, I may need to see a councelor.  


Wed, 02/05/2014 - 23:10 | 4406714 Overleveraged_a...
Overleveraged_and_Impatient's picture

I'm going to do the exact opposite of what you're doing.

Thu, 02/06/2014 - 00:31 | 4406861 The Wisp
The Wisp's picture

Just got a Letter in the mail from Discover Bank. says they will be down for maintenance during the long presidential day weekend. been reading too much Zero hedge. my first thought was How many other banks were going to do the same Bank Holiday  Chinese new year trick..

Thu, 02/06/2014 - 00:36 | 4406883 mijev
mijev's picture

Just made it all the way through the comments. I rarely do that these days. This is an interesting thread and thanks to those who shared their thoughts.

Thu, 02/06/2014 - 02:23 | 4407018 discopimp
discopimp's picture

Robb didn't build that

Thu, 02/06/2014 - 03:19 | 4407071 satoshi911
satoshi911's picture

Simon 'Kardashian' Black

Wow, just like Maulden, ... and Schiff, and other resident experts.

Take a snippet from history and start rambling, and write it up as an article.

Who could have guessed? Simon Black, a sovereign man ( dual passport of course ) from the gubmint here to help you.

So fucking what? How many here have a nickel in HSBC-UK?

I think nada


Put KARDASHIAN ass & tits on Simon-Black, and make him useful.

Do NOT follow this link or you will be banned from the site!