The Alchemy of Debt: Making a Surplus Out of Thin Air
In the natural world, if a squirrel spends more acorns than it buries, it starves. In the realm of high-level bureaucracy, however, we have invented a magical ritual called "financing." The Hong Kong government recently announced a consolidated surplus of HK$11.2 billion for the 2025-26 fiscal year. On the surface, it looks like a triumph of fiscal prudence. But look closer at the ingredients of this celebratory cake: they spent HK$790.3 billion and earned only HK$697.5 billion.
How does one find an $11 billion profit in a $90 billion hole? Simple alchemy. You borrow HK$156 billion through bond issuance, pay back a chunk of old debt, and presto—the spreadsheet turns green. It is the ultimate display of the "prestige" instinct in human behavior. As social primates, leaders must signal competence and stability to the tribe to prevent panic and maintain their position in the hierarchy. If the caves are empty, you don't admit failure; you borrow acorns from the neighboring forest and tell everyone the harvest was a record-breaker.
The government credits slightly better-than-expected revenue from stamp duties and land sales. But let’s be honest: the "surplus" is a creative construct of accounting. By treating borrowed money as a net gain, they have managed to perform a financial vanishing act that would make a street magician weep. Historically, states that rely on debt to signal health are merely kicking the can down a very long, very expensive road.
We are told to be optimistic for 2026 and beyond. The property market is "stabilizing," and the books are "balanced." But in the darker corners of human history, we know that 1+1 only equals 3 when you are using someone else’s calculator. As long as the market believes the illusion, the hierarchy remains stable. Just don't ask what happens when the bonds come due and the next generation realizes they are the ones paying for today's "victory" party.
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