This is a long article, but it is worth reading a few times. Article.
Wednesday, June 13, 2012
Singapore is an expensive city for travellers
Here is another worrisome news. Singapore is becoming more expensive, even for travelers. Article. With all these big challenges, are our Government ministers really competent to deal with them?
Bursting of the property bubble
Many people think that the Government will be able to control the property market to keep it from a collapse. I have seen the property market burst a few times - so I shall share with you what is a possible scenario, and why the Government will not be able to stop a collapse.
Suppose there is panic with the Euro or the US dollar, due to the economic crisis in Europe or America. We have read about the big and unsustainable deficits and the printing of money to support the economy. Many analysts are predicting various types of possible dire consequences.
You may say - well, that is Europe and America. It should not affect the Singapore property market. In 1998, during the Asian Financial crisis, interest rate shot up to 20 percent in Singapore. People, who borrowed money from the banks were suddenly asked to pay back the loans. They have to sell their properties at distressed prices.
If there is a financial crisis in 2012, which is possible, the people who have to dump their properties at distressed prices could be the foreigners and local speculators who were over-stretched and had bought expensive properties at astronomical prices. When they dump their properties at distressed prices, can the rest of the property market hold up?
During the 2004 crisis, the Singapore property market was saved by a smart move by the Government to allow borrowers to re-pledged their properties to the banks at higher priority over the CPF savings. This allows the bank to report the mortgages as safe, so there was no need for the properties to be foreclosed.
The next crisis could be different, as the properties prices are much higher now, and many borrowers could be foreigners or local speculators who do not have this CPF cushion. This is just a random thought - and I might be wrong!
Suppose there is panic with the Euro or the US dollar, due to the economic crisis in Europe or America. We have read about the big and unsustainable deficits and the printing of money to support the economy. Many analysts are predicting various types of possible dire consequences.
You may say - well, that is Europe and America. It should not affect the Singapore property market. In 1998, during the Asian Financial crisis, interest rate shot up to 20 percent in Singapore. People, who borrowed money from the banks were suddenly asked to pay back the loans. They have to sell their properties at distressed prices.
If there is a financial crisis in 2012, which is possible, the people who have to dump their properties at distressed prices could be the foreigners and local speculators who were over-stretched and had bought expensive properties at astronomical prices. When they dump their properties at distressed prices, can the rest of the property market hold up?
During the 2004 crisis, the Singapore property market was saved by a smart move by the Government to allow borrowers to re-pledged their properties to the banks at higher priority over the CPF savings. This allows the bank to report the mortgages as safe, so there was no need for the properties to be foreclosed.
The next crisis could be different, as the properties prices are much higher now, and many borrowers could be foreigners or local speculators who do not have this CPF cushion. This is just a random thought - and I might be wrong!
Government should be accountable and transparent
This writer has raised some concerns that Singaporeans should be aware of. Article. While I believe that our Government is basically honest, it is better for them to be more accountable and transparent, rather than to allow doubts to be raised.
Tuesday, June 12, 2012
Property bubble
It is easy to create a property bubble. The owners of land can collectively create a shortage of supply. The higher demand, relative to the short supply, will push up the price of the properties. This will create a panic among the end users that the property prices will soon become unaffordable, so they rush to buy the properties now. Speculators come in to drive up the prices faster and make a trading profit. The buying is fueled by low interest rate and easy credit terms offered by the banks. There - you have got a property bubble.
In Singapore, the supply of land is under the hands of a few land owners. The state is the largest owner. Most of the land available for development came from the sale of state land. The property developers who bought the state land at a high price on tender have a vested interest to control the supply and maximize their profits.
The structure of the land ownership and the Government policy adopted in Singapore have resulted in an escalation of the property prices to unaffordable levels. The average price of a 4 room HDB flat in a remote area in Singapore is now higher than the an average house, sitting on a large piece of land, in most towns in America.
As the property bubble continues to grow, the Government can proudly say that they are enhancing the value of the assets of Singaporeans. But, this economic strategy is unwise.
How long can the property bubble continue to grow? Not much longer, in my view. It has reached a crazy level and is being sustained by fear, greed and speculation. There are foreign buyers, including speculators hoping to make a profit. When the bubble burst, it will be the local Singaporeans who will be holding the can.
If we study the experience of property bursts in Japan, Ireland, Spain and America, the conclusion is that it will take a long time for the property to recover. This will be a big drag on the banking system and on the people who face negative equity on their property.
In Singapore, the supply of land is under the hands of a few land owners. The state is the largest owner. Most of the land available for development came from the sale of state land. The property developers who bought the state land at a high price on tender have a vested interest to control the supply and maximize their profits.
The structure of the land ownership and the Government policy adopted in Singapore have resulted in an escalation of the property prices to unaffordable levels. The average price of a 4 room HDB flat in a remote area in Singapore is now higher than the an average house, sitting on a large piece of land, in most towns in America.
As the property bubble continues to grow, the Government can proudly say that they are enhancing the value of the assets of Singaporeans. But, this economic strategy is unwise.
How long can the property bubble continue to grow? Not much longer, in my view. It has reached a crazy level and is being sustained by fear, greed and speculation. There are foreign buyers, including speculators hoping to make a profit. When the bubble burst, it will be the local Singaporeans who will be holding the can.
If we study the experience of property bursts in Japan, Ireland, Spain and America, the conclusion is that it will take a long time for the property to recover. This will be a big drag on the banking system and on the people who face negative equity on their property.
Monday, June 11, 2012
In a recent keynote speech to the Economic Society of Singapore, PM Lee Hsien Loong talked about the strategy on economic growth. Full speech.
There are two points in his speech that I dislike:
a) He referred to "targeted assistance". This means writing rules on which gets and who does not get. These rules are usually arbitrary, complicated and unfair to those who are excluded at the margin. Those who benefit are happy; but those who are excluded are not. This divides our people and create a selfish culture.
b) He said that the government may not be able to boost the income, but they are able to boost the value of the assets. It is easy to inflate asset values, e.g. build a property bubble, but it has cannot be sustained and has to burst one day, with serious consequences. Even if it is supported at a high level, the younger generation will pay for it through high prices and 30 year loans. This strategy is bad for the people.
There are two points in his speech that I dislike:
a) He referred to "targeted assistance". This means writing rules on which gets and who does not get. These rules are usually arbitrary, complicated and unfair to those who are excluded at the margin. Those who benefit are happy; but those who are excluded are not. This divides our people and create a selfish culture.
b) He said that the government may not be able to boost the income, but they are able to boost the value of the assets. It is easy to inflate asset values, e.g. build a property bubble, but it has cannot be sustained and has to burst one day, with serious consequences. Even if it is supported at a high level, the younger generation will pay for it through high prices and 30 year loans. This strategy is bad for the people.
Competition in education
I do not like the competition in the schools to get top grades and to win scholarships. This is unfair to children from poorer families and breed the culture of "self first". It also destroys the childhood of our young. Here is a view from a parent.
Sunday, June 10, 2012
FISCA Educational Talks
Here are the educational talks organised by FISCA over the next few months. Please register early. Spend time to educate yourself and avoid losing a lot of money on bad investments, including life insurance policies. http://easyapps.sg/assn/Org/Event.aspx?id=5
An App to improve your vocabulary
Here is an app to improve your vocabulary. It can run on an iPhone or iPad.
http://itunes.apple.com/us/app/bright-words/id509197299?ls=1&mt=8
The app is called Bright Words. It allows several people to compete and
find out who can get most of the words correct. It can also be played in a
single player mode, to improve your vocabulary.
The Free version test words up to 4 letters. The paid version test words up to
8 letters.
The webpage also shows other apps developed by Tan Kin Lian & Associate.
Besides being fun, it allows you to develop a flexible mind and develop your
skill of problem solving.
You can try with the free version, and upgrade to the paid version.
Please help me to forward this letter to your friends.
Scams
Dear Kin Lian:
This youtube video features syndicates that prey on the old and unemployed. They use tactics from other industries such as real estate investment, forex trading, app building,etc....
I hope you can share it with readers of your blog. We need to tell retirees and unemployed that can ill afford to lose their money.
Jim
Regulate the Internet
Many people will be appalled by the proposals to regulate the Internet that are being considered by China. Article and will condemn China for this additional "repressive" measure.
In my view, these measures are necessary and sensible. The new law will require the websites, blogs and micro-blog owners to ensure that the people who contribute their opinions are registered with a true identity. It is important that people act in a responsible manner towards other people, in the Internet and in the real world. Many of the behaviors in the Internet by anonymous people are not acceptable.
At present, China banned many social media blogs and websites. This is too harsh a measure, but they found it to adopt this measure to control the irresponsible behavior - which could incite hatred and violence.
After the new law is implemented, I expect China to take the bold step or allowing the social media to develop. This would be a clear statement that China is not repressive, and can show a good example to the rest of the world on getting the right balance between free speech and responsibility.
But, I could be wrong in my optimism. Let us wait and see.
In my view, these measures are necessary and sensible. The new law will require the websites, blogs and micro-blog owners to ensure that the people who contribute their opinions are registered with a true identity. It is important that people act in a responsible manner towards other people, in the Internet and in the real world. Many of the behaviors in the Internet by anonymous people are not acceptable.
At present, China banned many social media blogs and websites. This is too harsh a measure, but they found it to adopt this measure to control the irresponsible behavior - which could incite hatred and violence.
After the new law is implemented, I expect China to take the bold step or allowing the social media to develop. This would be a clear statement that China is not repressive, and can show a good example to the rest of the world on getting the right balance between free speech and responsibility.
But, I could be wrong in my optimism. Let us wait and see.
Scope for minimum wage in Singapore
This article reported that a few government leaders and pro-establishment bodies are now in favor of setting a minimum wage for certain occupations. It takes a long, long time for these people to realize the harm that is being caused to our society by the lack of such a basic measure to protect the citizens.
The article failed to mention the Public Forum that was held yesterday (9 June 2012) by a non-government organization. Article. This forum featured passionate speakers who have spoken on this issue on many occasions in the past. It is quite sad to see the media ignore people who have not been in the forefront of this issue, and give prominence to other people who were not really passionate about this matter but happened to be pro-establishment!
We need a more independent and unbiased media to improve the engagement of the citizens in Singapore.
The article failed to mention the Public Forum that was held yesterday (9 June 2012) by a non-government organization. Article. This forum featured passionate speakers who have spoken on this issue on many occasions in the past. It is quite sad to see the media ignore people who have not been in the forefront of this issue, and give prominence to other people who were not really passionate about this matter but happened to be pro-establishment!
We need a more independent and unbiased media to improve the engagement of the citizens in Singapore.
Protect the citizens
Dear Mr. Tan,
It seems that HK not only beats Singapore in term of more competitive in economic ranking yet manage to protect its citizens from investment fraud. Unlike our MM & SM of that time saying that investors go in with their eyes open or PM was reportedly saying "let the buyer beware" instead of admitting that MAS failure to regulate, banking malpractice and government inaction were to blame. The current Education Minister is the CEO of MAS at that time.
Regards
Steve
http://www.martinlee.sg/hk-minibond-investors-to-receive-further-payout/
Bailout for Spanish banks
Spain needs US $125 billion to bail out its banks, due to the collapse in the property market. Report. Other countries, e.g. Ireland, America and Japan, have also suffered similar difficulties due to the bursting of the property bubble.
Many people may not realize that the financial crisis is caused by the ridiculous accounting policy called "mark to market". When the property prices appreciate, and this is called a bubble, all owners and the banks report billions of dollars of "wealth" being created. When the property prices fall, we have a financial crisis!
We are destined to have financial crisis, so long as the ridiculous accounting treatment called "marked to market" is still being followed. Many decades ago, it was the practice to keep assets at book value and to provide for depreciation in the value of the assets. It was not prudent to mark the assets to their "market value", until the assets are sold. This is a more sensible approach.
This will force the asset owners to sell their assets to realize their market value. They will find that the so-called market value is not the real value, as there are limited buyers for the large holdings of assets among the owners who are keen to realize their profits. This is the real world, and it will not show the asset values appreciated madly, and will not encourage over-investment that will lead to the banking crisis now faced by Spain, but was quite common in the other countries.
To have a more stable financial system, we need to remove the ridiculous practice of "mark to market".
Many people may not realize that the financial crisis is caused by the ridiculous accounting policy called "mark to market". When the property prices appreciate, and this is called a bubble, all owners and the banks report billions of dollars of "wealth" being created. When the property prices fall, we have a financial crisis!
We are destined to have financial crisis, so long as the ridiculous accounting treatment called "marked to market" is still being followed. Many decades ago, it was the practice to keep assets at book value and to provide for depreciation in the value of the assets. It was not prudent to mark the assets to their "market value", until the assets are sold. This is a more sensible approach.
This will force the asset owners to sell their assets to realize their market value. They will find that the so-called market value is not the real value, as there are limited buyers for the large holdings of assets among the owners who are keen to realize their profits. This is the real world, and it will not show the asset values appreciated madly, and will not encourage over-investment that will lead to the banking crisis now faced by Spain, but was quite common in the other countries.
To have a more stable financial system, we need to remove the ridiculous practice of "mark to market".
Saturday, June 09, 2012
Improve your vocabulary
Here is an iPhone App that improves your vocabulary and is fun to compete with your friends. It can also run on iPad. http://itunes.apple.com/us/app/bright-words/id509197299?ls=1&mt=8
Improvement to traffic light at Bugis
LTA has taken urgent steps to improve the traffic light at Bugis, where two serious accidents occurred recently. Article.
A taxi driver told me that the problem was noticed by many taxi drivers earlier, but they did not know who to report to. We need to improve our system of getting feedback from the public and acting on the feedback promptly - rather than wait for a serious accident to occur before taking action.
In recent years, there is a tendency of many government agencies to avoid taking responsibility and to point fingers to other agencies. We have to find a solution to change this bad habit.
A taxi driver told me that the problem was noticed by many taxi drivers earlier, but they did not know who to report to. We need to improve our system of getting feedback from the public and acting on the feedback promptly - rather than wait for a serious accident to occur before taking action.
In recent years, there is a tendency of many government agencies to avoid taking responsibility and to point fingers to other agencies. We have to find a solution to change this bad habit.
Singapore needs to strive for growth
Prime Minister Lee Hsien Loong explains why the government needs to pursue its growth strategy. His speech is reported by CNA. Article. And another report from Today. Article.
I will be writing to give my views on several points contained in his speech including the following:
a) Most countries pursue growth policy
b) But they balance this policy with other priorities, to give a better life for the people
c) Singapore's policies are not well balanced - leading to a feeling of insecurity, stress and lower quality of life
d) This is reflected in our low birth rate - among the lowest in the world
e) The policy of increasing asset value is flawed, as it is fueled by an asset bubble that will have to be paid by our future generation!
I will be writing to give my views on several points contained in his speech including the following:
a) Most countries pursue growth policy
b) But they balance this policy with other priorities, to give a better life for the people
c) Singapore's policies are not well balanced - leading to a feeling of insecurity, stress and lower quality of life
d) This is reflected in our low birth rate - among the lowest in the world
e) The policy of increasing asset value is flawed, as it is fueled by an asset bubble that will have to be paid by our future generation!
Firms have to explain anti-corruption measures
WHILE the recent reports on the corruption case
involving the former Singapore Civil Defence Force chief
have named the companies whose employees were alleged to have given sexual favours
in exchange for getting business,
the attention has been on the wrongdoing by the individuals
('Former SCDF chief faces 10 charges'; Thursday).
The companies concerned need to explain...
including monitoring and enforcement.
.. also review
whether their promotion and reward systems are overly aggressive
in encouraging financial results at all costs.
Associate Professor Mak Yuen Teen
National University of Singapore Business School
http://www.straitstimes.com/STForum/Story/STIStory_808834.html
Millionaires who don't feel rich
Singapore,
the third richest country in the world on a per capita basis,
may be good at accumulating wealth
but it fares less well when it comes to distributing it.
http://thestar.com.my/news/story.asp?file=/2012/6/9/focus/11439831&sec=focus
Thursday, June 07, 2012
An affordable home
A family should spend not more than 4 years of the family income (based on two working persons), or 5 years of the income (based on a sole income earner). This article explains the calculation. http://tankinlian.com/FramePDF.aspx?ID=657
Subscribe to:
Posts (Atom)