The problem with being a safe haven

In Economy on 10/09/2011 at 9:34 am

Proud and happy that S’pore is a safe haven in this crisis?

Think again. The Swiss experience.

For S’pore the choice is deflation as strong currency stifles economic activity especially exports in gds and services.

Or if the currency is kept artifically low, asset inflation.

Whatever the case, MAS can continue losing serious money (S$10bn last yr).

Only SDP will be happy, saying, “We told you so”.

  1. Even after losing S$10bn last year, the result is a >5% yr/yr inflation. The US managed to have a lower inflation than Sg with a weak(!) USD. Perhaps MAS got it wrong that a strong SGD will tame inflation.

  2. Who is talking, no one in this world can afford keep losing, be it the Government, any enterprises or companies big or small even with our Singapore Citizens that is to say if income cannot sustain the inflation, then all will be in serious trouble. Only those cash rich and who can sustain will be safe and stay afloat and those who cannot will be in debt or go to the poor house.
    Just wait and see, how could car COE’s be at such sky high price at this point of time, how could houses be sold at such high rate accept for own occupation most are for speculations.
    If not curbed many will be laughing all the way to the bank and others will be in debt and crying on the way to the poor houses.
    Especially those utilising on borrowed money.

  3. PAP will be happy too. They will blame “populist” measures that curbed the immigration flood for the recession, and re-open the floodgates, just as they use low birth rates *today* as an excuse to flood Singapore with full grown foreigners. We should be importing babies only if the problem is with a lack of babies, right? Never mind the full grown adults we lack today should have been born in an era when PAP was waging war against babies. It’s always the people’s fault, never PAP’s fault.

  4. No worries,Singapore will self-correct. STI will drop 70% within 2 years and property market will go down 60% over next 3 years. Foreign talents will all run road and the banks can have fun auctioning the properties to zero buyers. No big deal, at most UOB and OCBC merge while govt pump in $200B into DBS. Another $300B pump in to the GLCs and TLCs. RSAF and RSN will be mobilised yet again to shoot potential foreign talents trying to swim into S’pore from Indonesia. After 4 years, wipe the slate clean. After that start importing 250,000 foreign talents every year to jumpstart the GDP again. Golden Age will be ahead of us.

  5. “For S’pore the choice is deflation as strong currency stifles economic activity especially exports in gds and services.”

    That is generally true for most cases. Factor costs for corporations in Singapore are largely denominated in foreign currencies linked to the USD and benefit from a strong SGD. Other than rentals and wages. We now know wages are depressed here because SG workers’ international wage cost has now become less competitive compared to the ever eager migrants flooding our shores.

    Aren’t you glad to have retired with a suitcase full of cash, atans1?

    • Problem is cash mgt means I left surplus cash in CPF to take adv of 4% and 2% rates. If there is severe deflation, SDP might be right and $ gets locked in.

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