Many Emerging Market Economies (EMEs) have had a wealth of experience in the mismanagement in their macroeconomic, fiscal and monetary policies, and all of them had paid a heavy price for their past mistakes. The fact that the latest series of crises erupted in the developed world does not mean EMEs are immune from the spillover effects. More fundamentally, the Emerging Market Economies, including Hong Kong where household debt to GDP ratio saw a record high, must learn from the latest mistakes of the developed world and take extra care in not getting into the mind-set or habit of spending beyond our means, whether at the household, corporate or government level. Hong Kong should in particular guard against the temptation of “collective irresponsibility” by pushing for or condoning public policies that entail spending that cannot be sustained in the medium to longer run, or else we would be mortgaging the future of our children and grandchildren. This again is easier said than done, and requires considerable wisdom of Hong Kong people and the courage and skills of our leaders to resist increasing pressure and temptations for unrestrained public spending. Hong Kong’s population is aging, and aging fast. At present, the elderly  BIS central bankers’ speeches  5  dependency ratio of Hong Kong is 5:1. This means that Hong Kong now has 5 persons within the age group of 15–64 supporting each person over the age of 65.
After the Global Financial Crisis, there is some reduction in the private sector debt in some countries, notably in the US. However, the levels of government debts have continued to rise. Before the Global Financial Crisis, the US federal debt was $ trillion. In 7 years’ time, the federal debt increased by almost 100% to $ trillion. This is equivalent to an increase from 63% of GDP to 103% of GDP. In the euro-area, the level of public debt was 100% of GDP prior to the eruption of the European Sovereign Debt crisis in 2011, and it went up by another 2.7 trillion Euros and reached 120% of GDP in Q3 2014. In Japan, the situation is even worse. Public debt to GDP ratio went up steadily in the last twenty years and now reaches a stunning level of about 260%. Together with private-sector debt, the total debt of Japan adds up to about 480% of GDP, the highest in the developed world. So we don’t have a pretty picture in the developed world as a whole. 9. Such rapid growth of public debt in major advanced economies reflects the lack of fiscal discipline and unrestrained spending behaviour of their governments. Except for Germany, most European governments have never been able to record fiscal surplus in any year since the early 1980s, with average annual fiscal deficits amounting to about 3–8% of GDP.