200
:
GRS 275 DEDIP
SECRET
SECRET
FM HONG KONG 040830Z FEBRUARY 81
TO PRIORITY F C O
TELEGRAM NUMBER 116 OF 04 FEBRUARY
INFO PRIORITY PEKING
2016
MIPT
TOP COPY
TIME AT WHICH CONFIDENCE MAY COLLAPSE
He / HK GD
AKK CHoli RECEIVED IN REGISTRY NO. 51
18 FEE
DESK OFFICER
INDEX
PA
REGISTRY Action Taken
4142 Awz0/2
MY MORTGAGE $192.
1. WE HAVE BEEN INCLINED TO ASSUME THAT SINCE À MORTGAGES AGREEMENT THAT RAN BEYOND 1997 WOULD BE UNENFORCEABLE, 1982 WOULD HAVE A SPECIAL SIGNIFICANCE BECAUSE 15 YEAR MORTGAGES ARE THE LONGEST NORMALLY AVAILABLE. BUT HIGH INTEREST RATES AND CONSEQUENT NEED FOR LONGER MORTGAGES ARE ALREADY FOCUSSING BUSINESS ATTENTION ON THIS PROBLEM AND THE COMBINATION OF STRONG DEMAND AND THE INGENUITY OF THE MARKET MAY WELL CONTRIVE AT LEAST TO POSTPONE THIS PROBLEM IF NOT
ACTUALLY OVERCOME IT.
2. THIS SAME FACTOR, THE INGENUITY OF THE MARKET, MAY ALSO GET ROUND OTHER PROBLEMS AS, FOR INSTANCE, IT HAS IN THE CASE OF THE ISLAND LINE OF THE MTR (QUOTED IN ALL SINCERITY TO GU MU LAST YEAR AS ONE OF A SERIES OF LARGE PUBLIC WORKS WHICH MIGHT PROVE DIFFICULT TO FINANCE IF THE MARKET LACKED CONFIDENCE IN THE FUTURE). THE SAME MIGHT EVEN PROVE TO BE TRUE OF THE AIRPORT ALTHOUGH, AT PRESENT, THAT SEEMS A MUCH GREATER PROBLEM.
3. MOREOVER THE MARKET COULD PROBABLY BE HELD UP FOR A YEAR OR TWO BY CPG ENCOURAGEMENT OF ONE SORT OR ANOTHER.
4. BUT LOSS OF CONFIDENCE COULD EQUALLY BE BROUGHT FORWARD
E G BY THE SUDDEN DECISION OF A MAJOR FIRM (SAY EXXON), EITHER NOT TO INVEST OR TO WITHDRAW INVESTMENT, OR BY PUBLICLY EXPRESSED APPREHENSION ON THE PART OF THE CIVIL SERVICE AS TO ITS FUTURE POSITION,
5. FOR ALL THESE REASONS WE SHOULD NOT BE TOO DOGMATIC, EITHER WITH OURSELVES OR WITH THE CHINESE, IN USING EITHER DATES OR PROJECTS IN OUR ARGUMENTATION. ALL WE CAN BE ABSOLUTELY SURE OF IS THAT IN DEFAULT OF NEW ARRANGEMENTS SOONER OR LATER THE SITUATION WILL SLIDE AND WILL DO SO WELL BEFORE THE MID '80S.
MACLEHOSE
LIMITED
HD/HK&GD
HD/FED
SIR E YOUDE
MR DONALD
PS/MR BLAKER
PS
PS/LPS
See(35
PS/PUS
SECRET
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