18
October
2008
So the local pages over the last 2 weeks have been filled with news that Singapore has slipped into a recession. And it seems like everywhere you turn there is news of impending doom. In fact the tone is getting a little worse everyday.
Last week, the government stressed that it was only a technical recession, meaning 2 consecutive quarters of contraction, as if it was a statistical abnormally, and not a real cause for concern. Over the next few days, news of slower growth then of possible pay cuts, then the snowball cummulated to last night’s admission by Mr Lee, that we are in a recession and that the next 12 months will be hard. At this pace we could start hearing them talk about bracing for job cuts in about 2 weeks.
Now, to the average Singaporean this is all pretty sudden. Two months back the government was telling us that everything was fine, and this years growth forcast would be in the 4% region, and suddenly today, we are being told we’re in a recession. So what happened?
If the news is to be believed, Singapore is an innocent bystander caught up in a global financial crisis, originating from America, and created by greedy investment bankers with their fancy derivatives product. And that is was a storm that came suddenly and without warning.
FALSE ON ALL COUNTS
Except maybe the greedy part.
The financial crisis had been raging for the last year, since August 07. Bank after bank in US and Europe had fallen. Did everyone forget that it was just last year that DBS and it’s local counterparts, wrote off billions in their sub prime holdings? Leading to the then DBS CEO’s urge to spend more time with his family?
Anyone who has not been stuck in the local propaganda would have seen this coming from a mile away. The fact is that the government, with their million dollar ministers, and high flying scholars would have seen this coming too. ( They better, since their justification for the higher pay is that they’re smarter and more competent.) Which means that they are deliberately keeping the news away from the people.
Over the course of the last year, I have often been amazed at the buying frenzy happening around me amid the global difficulties. I seem to recall a whole newspaper section dedicated to the topic of BoomTown at the end of last year, in light of the increased luxury spendings by local Singaporeans, the impending casinos and converting the southern islands into the playground of the super rich.
The government had admitted that they wanted to transform Singapore into a Monaco of the East, and there was a concerted effort to push the whole nation in that direction. Suddenly everything was glamourised and vibed up. Even the papers were bragging about Singapore climbing up the party city rankings.
Almost nothing happens in Singapore without government planning, and this was part of it’s new plan. In light of what it was trying to achieve in terms of branding itself, it had to keep the bad news at bay. If you told the people that a recession was heading their way, would they still be as inclined to go out and buy $1000 phones, $6000 TVs and live it up every friday night? Probably less so, and that would have put a damper on their grand plans. Of course it’ll also be difficult to justify that huge pay hike they gave themselves at the begining of the year.
Now to the cause of the recession.
Yes this is a financial crisis, but the cause of it is the asset bubble burst, more specifically a burst in the US housing bubble. (More on the technical details of the causes in a later post) Given that finance is one of the 4 pillars of the Singapore economy, how could a financial crisis not affect Singapore? It’s funny how in the same breath, the papers can trumpet that we’re one of the most open economies in the world, and then turn around and say that the global financial troubles will not affect us? We’re either open or we’re not, make up your mind. If we’re and open economy, then you have to take the good together with the bad.
So sudden recession? I don’t think so. The reaason why most people think so is the direct result of selective propaganda, that was designed to keep the bad news from people for as long as possible, and then put the blame on someone else.
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20
August
2008
Seems to me, there are more sports cars on the road every single day. You can’t really drive any where in town now without being behind or in front of one.
You can actually run into ( not literally) 3 GTRs in 1 night and it’s not at a night club.
Wonder where the impending recession is.
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2
August
2008
Less than 2 weeks from National Day, yet there is a conspicuous number of flags missing from a lot of windows this year.
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2
August
2008
I can usually brush off most of what is in the local news as silly, irrelevant or just another piece of government self advertisement. But occasionally I’ll come across something that is outright dumb.
http://business.asiaone.com/Business/Story/A1Story20080731-79925.html
The whole world is currently dealing with inflation, and everyone knows that it’s caused by oil and food price spikes. Yet our esteemed government is somehow implying that the pay rise of workers is somehow causing or will contribute to the problem. This is the same guy that said previously that it’s alright for rice price to spike by 30% or more, since we only spend a small portion of our income on rice….. hmmm… yes.. I can see the raionale.
Even if we believe that inflation is only 7.5%, that still means that all else being equal, everyone just got poorer by 7.5%. When SMRT and Comfort Delgro can go about hiking fares, citing higher oil price, to keep their profitability inline, and thereby compounding the inflationary issues, the average worker is supposed to such it in and take the wage cut for the sake of keeping headline inflation down?
Do we have this backwards?
Inflation is supposed to be a measure of price rise for the common person, so that he can measure his real income. Not just another government statistic. Like how GDP is supposed to be a measure of welfare of the people and growth in quality of life, not a measure for how much civil servants’ pay hike should be.
This country must be the only place on earth where the head of the workers “union” tells the workers to live with a lower real income and a lower quality to hold down a statistic. In which other country do we see the government’s answer to fighting against inflation to be hold down wages and “moderate” job growth. That’s like stabbing your right leg to take away the pain you’ll feeling in your left leg.
This particular inflation has 2 sources, oil and food. As mentioned in a previous post, Singapore had the third most expensive petrol in the world, before this recent spike. Again why so, and could something not be done about it. (Let’s not forget that Exxon just reported record profits yet again)
It seems to me that over here, the government seem to value profitability a lot higher than the welfare and quality of life of it’s people
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23
July
2008
Public criticism in the state papers of the public transport system?
http://motoring.asiaone.com/Motoring/News/Story/A1Story20080714-76503.html
Is this a revoke? The end of the “Everything is the best in Singapore” propaganda?
Or is it that the public transport has just gotten so bad over the last few years that it’s no longer taboo to talk about it?
A round of applause for the brave writer please.
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12
July
2008
My typical Saturday morning ritual, is to have a mid morning cup of coffee while scanning through the news, both local and international. And every Saturday I’m appalled at the discrepancy in news coverage locally.
Overnight in US, the stock markets have fallen by another 1%, global equities are officially in a bear market , 5 US banks have collapsed so far this year, and the latest buzz is if another government bailout of their largest lenders are needed immediately. Jobs losses and loan defaults are debated hotly.
And it’s not just the US, the housing bubble has officially burst in UK, Spain and Ireland. The EU is bracing itself for a recession. China’s stock market has been halved this year, for completely separate reasons. Hong Kong is not too far behind really.
Yet in the local news, there is not a whisper of the financial tsunami. Isn’t Singapore supposed to be one of the most open economies in the whole? Are we supposed to be a financial hub? There is no question at all that it will hit our shores. Yet other than the occasional article on inflation here, there is no mention of any economic news to give the population a heads up on what is coming their way.
Sure some prominent businessmen here have stepped out to say that the economic situation is bad and getting worse, but these articles are usually buried at the tail end of the papers, in small inconspicuous corners.
I know that the broad sheet is focus on local news and it is government censure, but the near complete blackout of bad economic news, seems like censorship that could rival the Great firewall of China.
When GDP growth contracted in Q4 of 07, it was brushed off by the ministers because according to them, the economy was growing too strongly the quarters before.
When it was repeated this week that GDP contracted again in Q2 of 08, it was also dismissed as a blip in drug export.
I’m sure the news will be quickly wiped off the table. Already 3 days later the papers seem to be more interested in what the MPs are listening to on their ipods.
Hmmm… so that’s why we’re paying them millions every year…
Is it me or is the Straits Times just trying to stuff it’s readers with feel good articles.
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12
July
2008
I’ve always mantained that the fuel surcharge by the airlines was a scam, it’s just like any other price hike, but somehow by calling it a fuel surcharge, the company is pushing the blame on something else, as if it’s not their intention to raise prices, and painting picture as if they are somehow victims too.
I guess profit maximisation by any means is fair game.
Now it seems the taxi companies have caught on as well, and are in on the act.
“ComfortDelGro said yesterday the surcharge is to help cabbies mitigate the unrelenting rise in fuel prices.” - AsiaOne 12 July 08
They almost try to pass it off as charititable donation to help the taxi drivers cope.
So the price hikes 6 months ago was not enough? Who wants to bet that ComfortDelGro will report another profit growth this year?
I have nothing against the taxi drivers personally ( other than how some of them drive!!!) But a monopoly operator, squeezing out yet even more profits, while providing what is supposedly a public good is truely disgusting.
Yet another reason to keep boycotting taxis.
Next up, hikes in bus and train fares.
Somehow I don’t see a pay hike coming up to help cope with the runaway inflation.
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28
June
2008
Article from 2 weeks back.
http://www.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20080618-71573.html
No it’s not the rise in ERP again. It used to be that they penalise people for driving into town, now it seems like they are penalising people for trying to leave town as well.
What strikes me is not the lack of notification on the aquisition of the property. But the fact that they actually will acquire private property and not even attempt to pay the rightful owners anything. Hoping for fair market value might be a little beyond the LTA. But you would think that there would be some token theoretical (read lower) value that would be compensated.
Talk about robbery.
I guess what we can imply from this is that, there is no such thing as property rights here.
Oh an I’m pretty sure we will not hear about the case again in the news.
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11
June
2008
Just occurred to me that globally we now have an Oil Shock, a Credit Crunch, a Housing Meltdown and a Commodity Price Inflation. Historically any one of the above would be enough to cause a recession. Now we have all 4 at the same time. Hmmm……..
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6
June
2008
In recent weeks, I’ve tried figuring out how I stand on the political spectrum. While I can firmly say that I’m socially a liberal, strongly support free trade, lean heavily in favour of green policies and favour a small government. I cannot quite figure out if that puts me more in the left or the right wing. I’m referring to the more orthodox sense of left and right, not the American reference of it ( but who can blame them, when they can’t even drive on the correct side of the road)
Coming from Asia, I cannnot pretend to understand fully the implications of living in a US style democracy. Nor have I experienced European style social support and welfare. In most parts of Asia, the political focus is predominantly on the economy, issues of social conservatism or liberalism or even nationalistic sentiments really rarely come into the picture.
The fact of the matter is, Asia is unlike Europe or the US socially and politically. It doesn’t mean that it’s better or worse, or that we should aspire to be like one or the other, just that we’re different, having come from a very different place historically.
In an attempt to not chicken out, and take Tony Blair’s “The Third Way”, I pressed on, but the harder I tried, the more hopeless the exercise.
The fact of the matter I think is that a linear scale, such as a classification like left vs right, is no longer applicable today when everywhere views and social norms are fragmenting. Even European politicians are tripping over themselves trying to get to ” the middle”
Socially what do we consider to be liberal or consavertive in Asia? I think no where else is the contrast more stark than in Japan, where I’m currently writing this post. Stop by Shinjuku or Harajuku train station, on the western side of Tokyo, and the extend of social freedom is clearly on display. Yet just a minute’s walk from Harajuku station, will bring you into the Meiji shrine that families visit weekly in their traditional costumes.
Why should someone who is pro freetrade have to be anti social welfare? Why can’t someone support both an active foreign policy and liberal social practises?
In a sense, I think the pundits are right, in that Asia will change the world. Not just it’s economic balance, but also it’s social and political landscape. The left vs right argument that most grew up listening to, and that is still being hotly debated in the current US election, is rapidly becoming irrelevant to the rest of the world. That does imply that most of the convenient mental markers that we we taught in school are also fast becoming obsolete, as Asia’s impact on the rest of the world grows. It’s no longer about capitalist vs socialist or conversative vs liberal.
A lot of Asian countries have shown that they can blend them effectively, and in ways that defies classifications. Take for example, China and Japan, one is a communist country with a vibrant capitalistic economy, the other a paper democracy with a monopolistic like economy.
Most of us grew up with western news reports and analysis, thanks to the success of the BBC, Financial Times, Wall Street Journal and the Economist (or you grew up on lousy TV serials, in which case you are not really concerned about the rest of the world). And they have conditioned us to think of the world in the traditional framework.
What this might mean is that we have to relearn the way we look at the world, and how we look at the governments and policies around us, and maybe make judgements based on very different rules.
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