atans1

Elections before 9/8/15?

In Economy, India, Indonesia, Political economy on 21/10/2014 at 6:13 am

Conventional wisdom is that the next GE will be held after the 50th anniversary celebrations of S’pore’s independence which will be a celebration of all things PAP. So the Oppo parties are not gearing up for an early GE (end of this yr or before Aug 9 next yr.)

And this piece of news doesn’t disturb the narrative:With the January 2017 deadline for the next General Election looming closer, the Elections Department (ELD) has been calling up public servants for training to be election officials, as part of the electoral process … , the ELD said in an emailed statement: “ELD prepares and organises the Public Service to conduct elections in Singapore. Amongst other work, ELD selects and trains public officers on an ongoing basis to perform election duties during an election.” (CNA 17 October)

There have been early training sessions before with no elections following. The conducting of training sessions is a lousy leading indicator.

But think about the economic prospects of S’pore  and the training could be a sign of early elections.

No govt wants to hold a general election in a recession or when a a recession is likely. Already the growth rates for this yr and next yr have had to be trimmed because the global economy isn’t doing too well.

And things could get worse: The global economy is in a woeful state [Skip the next few paras if pressed for time or an illiterate in finance and economics]. The euro zone, fully 17% of global GDP, is predicted to expand just 0.8% in 2014 according to the IMF. China and Japan, together 25% of global GDP, are slowing. Emerging markets are floundering: a report on the synchronised slowdown from the Fund puts much of it down to weak trading partners (a sort of trade contagion). As the world slows, America seems a prudent place to park cash. Chinese and Japanese holdings of US Treasury bonds—now $2.5 trillion—have doubled in five years, according to the TIC data.

… the euro area. Inflation is just 0.3% and the area is already awash with unemployed workers … end up with both fiscal and monetary policy being relatively tight.

What would happen next? American exporters would get hit twice—first by weak demand from abroad, then as their goods get pricier for foreigners to buy as the dollar continues to rise. But since America is a relatively closed economy, the impact abroad could be bigger. The big risk is that a runaway dollar topples emerging-market economies just as it did in the 1980s and 1990s. A pessimist would argue that many of the conditions now are exactly as they were then. Many emerging markets borrow by issuing bonds in dollars, rather than their own currency. Appetite for these higher-yielding dollar bonds has been strong in recent years: in January 2014 Indonesia issued its largest dollar bond since 1998; according to its Finance Ministry data, India has dollar debts of around $273 billion (15% of GDP). As the dollar rises, the local-currency cost of these debts goes up.

Floating exchange rates make things a little different when compared to the Asian crisis, but would not help that much. Take a country like Brazil, which has inflation of 6.75% (see the WSJ on this) and yet an economy in recession. If its currency continues to depreciate against the dollar then inflation builds up further. The central bank ends up in a bind: raise rates to cut inflation and stem the depreciation, or keep rates low to get the economy back on track. Both paths would be risky, and could cause a wider stress if the contagion of previous emerging-market crises is any guide.

With any luck none of this will happen. But it all could happen. And if you are in the business of forecasting and stress testing, you should prepare for the worst.

http://www.economist.com/blogs/freeexchange/2014/10/pessimistic-forecast

So what about the fact that oil prices are close to US$80 from US$105 a few weeks ago

[M]ajor Asian economies, though, will look at falling oil prices less as a stimulant and more as a signal that global growth is faltering. For export-dependent Asia, lacklustre worldwide demand could end up being highly disinflationary.

That’s a big worry for the likes of China, Hong Kong and Singapore. These economies have all seen private credit rise rapidly since the 2008 crisis and need tolerably healthy inflation to help bring down the real value of debt. But China’s 1.6 percent inflation rate is now the lowest since February 2010, while the annual rate of increase in Singapore’s consumer prices has slipped below 1 percent. South Korea, which has historically had a problem of high household debt, can’t afford to allow its meagre 1.1 percent inflation rate to slide further.

http://blogs.reuters.com/breakingviews/2014/10/17/cheap-oil-is-no-tonic-for-sluggish-asian-economies/*

So I wouldn’t be surprised if 50th anniversary celebration events come fast and furious early next yr: to remind S’poreans of the role of the PAP in S’pore’s development from the second largest port in Asia to a global city state, with property prices to match those of global cities like NY and London.

But I’d be surprised if the PAP reminded us one LKY said in 1959,”we must go about our task (of building up a nation) with urgency … of integrating our people now and quickly”, because he said this when revealing that only 270,00 out of the 600,000 voters were born here. 

—–

*Btw two countries where I have investments will benefit: The big exceptions are India and Indonesia. Both governments supply gasoline and diesel to their consumers at fixed, affordable rates. For them, the 25 percent slide in the price of a barrel of Brent crude over the past four months translates into significant budgetary savings, which could be channelled into much-needed infrastructure investment.

 

 

A delusion? PAP confident it regained lost ground

In Financial competency, Political governance on 20/10/2014 at 5:41 am

Surely not when S’poreans in their 20s and 30s and their parents have difficulties in the PAP’s version of paradise? If these two groups have problems how can the PAP expect to hold the line at 60% of the popular vote? Let alone improve it to 65-66%*.

Speaking at a seminar organised by the Singapore Exchange and SIM University sometime back, one Mr Kevin Scully (who has been around in financial services so long that I wonder if he is related to Dracula) puts it: “You cannot rely on your children for financial support because they probably have more debt and cashflow problems than you. My daughter is getting married, and she needs $700,000 to pay for her flat.”*

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={489390965-20577-4829937219}

As the SunT writer put it very succinctly, “My generation has enjoyed the Singapore miracle, so to speak, when big-ticket items such as HDB flats cost a fraction of what they are worth now. If we have difficulties financing our retirement, the next generation will have an even rougher ride.”

And their parents while benefiting from asset appreciation (or inflation, if one is a die, die anti PAP cyber warrior) have a problem, illustrated also by Kevin Sculley:

the costs of food and health care have vastly outpaced the six- and 12-month fixed deposit rates over the past 10 years.

“We need to get returns of at least 3 to 5 per cent on our investments just to stand still. Clearly, this will not come from bank deposits.”

As the SunT writer puts it

He flagged another problem for those of my generation – people in their 40s and 50s – namely, the likelihood that many of us may run out of money during retirement because of inflation.

It was a sobering thought for those of us at the seminar organised by the Singapore Exchange and SIM University.

So how can this be true? [T]he People’s Action Party (PAP) was confident it had regained lost ground since the 2011 general election. Its confidence stemmed, it was said, from a huge survey that it had been conducting over the past few months …  http://atans1.wordpress.com/2014/10/17/fts-then-1970s-now/

But then S’poreans could be like the victim in a long-term relationship with an abusive partner. A bit less abuse, a bit of tender loving care and the victim is ready to accept more abuse in future.

*I’m assuming that the PAP believes that it needs a clear, biggish majority to ensure that it retains the “moral” right to continue paying PAP ministers their relatively huge salaries while not doing too much to deserve the money (think RI boys Hng Kiang and Yaacob). If it doesn’t, it could resort to very serious gerrymandering so that the 35% core vote (die, die must have PAP) keeps the PAP in power, with the help of egoists Tan Kin Lian (and Goh Meng Seng, his PE 2011 adviser), s/o JBJ and Tan Jee Say, who are more than happy to split the Oppo vote.

We [Barisan Socialists] won thirteen seats at the elections, averaging 15.000 votes to each seat. The PAP won thirty- seven seats, averaging 7,000 votes to each seat. The United People’s Party, whose function was to split the left-wing votes, campaigned on a programme that was somewhat similar to ours but more extremely put. Only their leader, Mr. Ong Eng Guan, was elected. We received 201,000 votes (35 per cent) and the PAP 272,000 votes (47 per cent). The difference is only 70,000 votes out of a total electorate of nearly 500,000. The UPP took away 49,000 votes (8 per cent), causing us the loss of seven constituencies (apart from Mr. Ong’s), and saved four PAP Ministers from defeat.

http://archive.spectator.co.uk/article/29th-november-1963/23/the-situation-in-singapore

http://atans1.wordpress.com/2014/07/21/want-a-pekatan-here-its-disunited/

 

 

 

 

 

Higher minimum wage, lower unemployment

In Economy, Uncategorized on 19/10/2014 at 4:39 am

Our constructive, nation-building media would never republish or tell this tale of where minimum wages didn’t do what the PAP govt claim it would do: raise unemployment. .

A higher minimum wage in practice – Christopher Flavelle of Bloomberg View argues a $10.10 [£6.27] minimum hourly wage would neither change America for the better nor destroy a million jobs, based on the case study that is Canada.

In 2014 every province in Canada had set its minimum wage at $10 Canadian an hour or higher. British Columbia, which had the biggest increase of any province, saw its unemployment rate fall by almost a full point over the same period, to 6.7 %.

On the other hand, the share of people with low incomes fell just 0.4% in four years, even as the minimum wage increased 16% in real terms during the same period.

“The link with poverty and the minimum wage is almost zero,” Stephen Gordon, an economics professor at the University of Laval in Quebec City, tells Flavelle. “Lots of people who earn the minimum wage are not in poverty, and a lot in poverty don’t earn the minimum wage – the problem is they’re not working, or the number of hours they get.

BBC Online extract

Follow

Get every new post delivered to your Inbox.

Join 218 other followers