Thursday, February 24, 2011

HK Government issues inflation linked bonds

Hi Mr. Tan,
Just to share this news with you, in case you missed this,
This would be good if government has excessive income, and redistribute back to citizen.
CKS

My comments
A government that takes care of its citizens will be thinking along the same lines and find this type of solution. The government should not expect the citizens, especially the lower educated or elderly, to be able to be financial wizards in finding their own solutions. These poor citizens will be at the mercy of the vultures!
at

2 comments:

  1. sgcynicFebruary 24, 2011 5:57 PM

    Contrast Singapore actions with Hong Kong's:
    Here the CPF Life Annuity is not peg to inflation. The value is eroded with time. Furthermore, the PAP dominated Parliament added an insolvency clause to close the CPF Life Annuity Fund should it become insolvent, while assuring its members and the public that the clause would not be exercised. Duh! Then why introduce such a clause? High falutin crap from our esteemed politicians.

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  2. JamesneoFebruary 24, 2011 6:43 PM

    I am not so enthusiastic about such bonds because i question if their motive is to "manage or symbolically show they are fighting the inflation". In reality, such bonds are often exploited through loop holes like changing the CPI composition to make it seems like the inflation is low or only focus on core inflation like housing and luxury purchases. In this way they can get liquidity at low interest rate maybe only slightly larger than the government bonds but can use such funds to prop up their property sector and also finance their daily expenses and also gain political points.

    If they really are interested in fighting inflation, some capital control is needed but unfortunately they could not do it as their economy like singapore is addicted to debt induced ponzi growth in the property and financial sectors. They should also not be like singapore and presume that the inflation will taper off in the second half of the year. My view is that we will experience high inflation throughout the next decade and we can combat it through a strategy that few Singaporeans understand: physical gold purchases and also through stocking up on essentials that can last for a long time.

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