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http://www.todayonline.com/Business/Property/EDC110304-0000221/A-case-of-if-you-cannot-beat-them,-join-them?
A case of if you cannot beat them, join them?
by Colin Tan
Updated 01:40 PM Mar 04, 2011
Many had expected strong interest and a good fight for a prime private housing site in Bishan when the tender closed last week. Nevertheless, the result still surprised many or should I say "shocked" them - and in more ways than one - when it was announced late on Thursday.
The first surprise was the highest bid submitted: S$550 million or S$869 per sq ft per plot ratio (psf ppr) for the 129,136 sq ft 99-year state plot. The second was that it was about 27 per cent higher than the second-placed bid and a whopping 2.9 times the minimum bid of S$189,831,390 - or what the Chief Valuer must have deemed as fair market value or at least not too far from it.
The last surprise was that the top bid came from CapitaLand, who had on a number of occasions highlighted the speculative chasing for land in earlier tenders. Instead of incurring the risk of overpaying for sites through "blind tenders" for government land sales, the developer had indicated that it preferred private treaty negotiations for collective sales.
Is this a case of "if you can't beat them, join them?" Or did it reflect the special interest of the developer in the surrounding area as it could create synergy with the Junction 8 mall, which is owned and operated by its unit CapitaMall Trust as suggested by one?
In any case, the Bishan bid was consistent with the record price of S$1.2 billion or S$753 psf ppr submitted for a 30ha mixed-use site in Punggol a week earlier.
The total value of all 19 bids for the Bishan site came up to slightly over S$6.5 billion, reaffirming once more the fact that the market is heavily laden with liquidity. My opinion has always been that with the huge amount of liquidity in the market, hugely profitable developers, of which they are now many, have no choice but to bid higher and higher, just to secure sites.
And if a developer has no choice but to "overpay" for a site, it is immensely preferable to overpay for a choice plot than for one in a run-of-the-mill location.
One alternative would be for developers to venture abroad to do overseas projects that have their own and not necessarily lower risks - which some have already done. Another would be to return the monies back to shareholders and wait for saner prices. However, this would defeat their own raison d'être.
I am not sure which developer triggered the site but the timing was notable as it came soon after the fourth round of cooling measures (CM4). After conducting its own impact assessment, it must have felt that it could get the choice site for a steal given that market sentiment had been severely battered by CM4.
If CapitaLand felt a tinge of disappointment that it could have gotten the site by a much lower margin than the 27 per cent it achieved, it probably felt vindicated when the National University of Singapore released its Singapore Residential Price Index (SRPI) this week that showed prices for high-rise private properties rising by a searing 2.6 per cent in January. This growth rate is equivalent to over 30 per cent per annum in case you are still not sure whether prices are rising quickly or not.
Of course, like many, you may say that the January results were mainly based on purchases concluded before the effective date of Jan 14 for the latest set of cooling measures.
However, as the weeks roll by, one cannot help but feel that CM4 has been more limited in its impact than CM3. It was the first time that showflats stayed open, allowing us to immediately gauge market sentiment.
Short of a buying ban, the sharp hike in sellers' stamp duties was interference on a scale never seen in other parts of the world before - in the decisions of investors to buy and sell. However effective it was in eliminating those in the market for a quick gain, it appears, for now at least, to have limited overall impact.
By now, the market must be shorn of almost all speculators and short-term investors. What is left is what many are describing as genuine long-term investors. If the buying continues and prices continue to rise, many would probably ask: Is this long-term buying considered a problem?
Colin Tan is head, Research & Consultancy at Chesterton Suntec International.
Wild Falcon
07-03-11, 21:20
What is he trying to say? These guys should just learn to speak simply and coherently. Or maybe he just doesn't want to predict anymore because he is always so wrong?
The problem is that he is trying to rojak on all points of view... nice try but still a confusing article & an open-ended "defensive" opinion :doh:
devilplate
08-03-11, 11:01
one of the most crappiest writer?
pian jiat?
Analyst being analyst, base their assessment on previous data. However, what is happening now is unprecedented.
Safest thing to do is to list out the present findings, and let the reader draw their own conclusion. A bit weak but what to do... if give wrong analysis will lao kui if turned out wrong...
best is don listen to analyst. they talk only. whether price up or down, no impact for them. buyer is the one suffer if they listen to analyst and thing turn out bad. fortune teller can do a better job!!!
actually, if u had *really*followed all these market talks, you will realize Colin Tan is one of the very few "analysts" that are bearish. He had been talking down all this while.
now even he is changing his tone :cool:
actually, if u had *really*followed all these market talks, you will realize Colin Tan is one of the very few "analysts" that are bearish. He had been talking down all this while.
now even he is changing his tone :cool:
so that's what he means by
A case of if you cannot beat them, join them? :D:D:D
http://forums.delphiforums.com/3in1kopitiam/messages?msg=45319.1
Mar 3, 2011
Practise restraint when bidding for land
DEVELOPERS should be more responsible when bidding for land, especially if they are government-linked companies like CapitaLand ('19 bids for Bishan site, top offer $550m'; Feb 25).
High land bids, such as the $550 million winning bid for the Bishan plot, can only lead to inflation in the property market. At about $118 million more than the second highest bid, it translates into nearly an additional $197,000 that each buyer of the 600-unit project may have to bear.
CapitaLand's bid goes against the Government's aim for reasonable property prices.
I hope such outsized bidding does not result in more cooling measures that affect genuine home buyers.
Adam Reutens-Tan
http://forums.delphiforums.com/3in1kopitiam/messages?msg=45319.1
Mar 3, 2011
Practise restraint when bidding for land
DEVELOPERS should be more responsible when bidding for land, especially if they are government-linked companies like CapitaLand ('19 bids for Bishan site, top offer $550m'; Feb 25).
High land bids, such as the $550 million winning bid for the Bishan plot, can only lead to inflation in the property market. At about $118 million more than the second highest bid, it translates into nearly an additional $197,000 that each buyer of the 600-unit project may have to bear.
CapitaLand's bid goes against the Government's aim for reasonable property prices.
I hope such outsized bidding does not result in more cooling measures that affect genuine home buyers.
Adam Reutens-Tan
is somebody putting a gun at the buyers' heads?
Willing seller willing buyer.
is somebody putting a gun at the buyers' heads?
Willing seller willing buyer.
Ask the guy Adam who wrote to ST.
He thinks it is a government conspiracy to artificially raise bid price for revenue and hence selling price.
:scared-1: :scared-1: :scared-1:
http://forums.delphiforums.com/3in1kopitiam/messages?msg=45319.1
Mar 3, 2011
Practise restraint when bidding for land
DEVELOPERS should be more responsible when bidding for land, especially if they are government-linked companies like CapitaLand ('19 bids for Bishan site, top offer $550m'; Feb 25).
High land bids, such as the $550 million winning bid for the Bishan plot, can only lead to inflation in the property market. At about $118 million more than the second highest bid, it translates into nearly an additional $197,000 that each buyer of the 600-unit project may have to bear.
CapitaLand's bid goes against the Government's aim for reasonable property prices.
I hope such outsized bidding does not result in more cooling measures that affect genuine home buyers.
Adam Reutens-Tan
i m sure developer will know more in developing and selling property than Adam Tan ba...... If not Adam should be a developer and not a journist. As my friends always say, dont teach your dad how to ***k.
furthermore, this is open market competition. If govt dont want pple to bid high, just put a price celling lor.....
Cooling measures doesnt affect genuine home buyers as it doesnt cause price to go up nor does it restrict home ownership. Only things that results in more cooling measure is high high volume and high high prices.
No Offences, Find Adam's sharing very low quality......
i m sure developer will know more in developing and selling property than Adam Tan ba...... If not Adam should be a developer and not a journist. As my friends always say, dont teach your dad how to ***k.
furthermore, this is open market competition. If govt dont want pple to bid high, just put a price celling lor.....
Cooling measures doesnt affect genuine home buyers as it doesnt cause price to go up nor does it restrict home ownership. Only things that results in more cooling measure is high high volume and high high prices.
No Offences, Find Adam's sharing very low quality......
Don't think Adam is a journalist, he seems more like another Singaporean who usually writes to ST Forum.
Don't think Adam is a journalist, he seems more like another Singaporean who usually writes to ST Forum.
just feels like he may be a vested speculator scare of more measures to come. Real Owner home buyers welcome cooling measures, not fear them.
just feels like he may be a vested speculator scare of more measures to come. Real Owner home buyers welcome cooling measures, not fear them.
Maybe he wanted to buy more properties but got affected by 4th cooling measure as he has to fork out more cash and loan less to buy 2nd and 3rd properties.
ST Forum got plenty of letters about property lately.
Maybe both the spike and cooling measures was really sharp and unprecedented.
:D :D :D
just feels like he may be a vested speculator scare of more measures to come. Real Owner home buyers welcome cooling measures, not fear them.
not all real buyer welcome measure. some buyer just save enough for the 20%......LTV measure kicks in. this measure really push this group of people far far far from getting their dream home. furthermore, the measure did not bring down price. so those who just about to get their dream home see their dream burst by the measure....
Maybe he wanted to buy more properties but got affected by 4th cooling measure as he has to fork out more cash and loan less to buy 2nd and 3rd properties.
ST Forum got plenty of letters about property lately.
Maybe both the spike and cooling measures was really sharp and unprecedented.
:D :D :D
he should celebrate then, cos it shows developers confidence that market will chong!!!
not all real buyer welcome measure. some buyer just save enough for the 20%......LTV measure kicks in. this measure really push this group of people far far far from getting their dream home. furthermore, the measure did not bring down price. so those who just about to get their dream home see their dream burst by the measure....
for pple whom own 1 property loan is still 20% LTV ma..... 2nd property owner cannot call OWNER HOME i guess, cos there is element of investment le.
My views are that the measure bought time for those group of pple to decided b4 the price gain momentum and keep on running away.
I got absolute no doubt that if the measure didnt come fast n swift, we will see more sharp ran up in prices.
not all real buyer welcome measure. some buyer just save enough for the 20%......LTV measure kicks in. this measure really push this group of people far far far from getting their dream home. furthermore, the measure did not bring down price. so those who just about to get their dream home see their dream burst by the measure....
This is quite true. Effectively MBT push this group to save some more, and upgrade later. And he hopes price can stay still because of the harsh SSD penalty. With such huge SSD, any speculative, or mildly short term investment elements are wiped out. Without speculative element, he hopes price will stop rising.
... Well that's the plan :cool: too bad the Fed doesn't care abt anyone else's asset inflation problem. And MAS is too scared to change the SGD policy. The massive liquidity at 0% rate is making this problem very hard for everyone.
stalingrad
08-03-11, 20:20
This is quite true. Effectively MBT push this group to save some more, and upgrade later. And he hopes price can stay still because of the harsh SSD penalty. With such huge SSD, any speculative, or mildly short term investment elements are wiped out. Without speculative element, he hopes price will stop rising.
... Well that's the plan :cool: too bad the Fed doesn't care abt anyone else's asset inflation problem. And MAS is too scared to change the SGD policy. The massive liquidity at 0% rate is making this problem very hard for everyone.
agree MAS is a problem too. when inflation is at the 5 to 6% level, keeping interest rates at less than 1% for housing loans is just crazy. it is courting troubles, if not playing with fire.
phantom_opera
08-03-11, 20:31
MAS does not have control over bank interest lah ...
M3 up 20% since 2009:
2009 (million)
Jan 346,731.0
2011 (million)
Jan P 413,235.9
:scared-4:
People who said such things & blaming MAS are suffering from puting cash in banks at low interest & seeing their vaues evaporate & seeing others making money, eye red red? :p
MAS is not god, can't solve all problems simultaneous. :beats-me-man:
agree MAS is a problem too. when inflation is at the 5 to 6% level, keeping interest rates at less than 1% for housing loans is just crazy. it is courting troubles, if not playing with fire.
blackjack21trader
09-03-11, 04:46
I will tell you the real reason why people are buying. Inflation, new IRs , immigration,population growth, low interest rates, and enbloc millionaires are only a small composite part of it. There is another more pertinent REAL mother of all reasons that I shall only reveal after the election.......you will be lost for words, I assure you....
your little humble brother,
Geylang OKT
09-03-11, 05:45
Property huat ahhhhh :D
That is really sensational! I can see those reasons you cited but another pertinent REAL mother of all reasons? Looking forward to your revelation! :cheers1:
I will tell you the real reason why people are buying. Inflation, new IRs , immigration,population growth, low interest rates, and enbloc millionaires are only a small composite part of it. There is another more pertinent REAL mother of all reasons that I shall only reveal after the election.......you will be lost for words, I assure you....
your little humble brother,
That is really sensational! I can see those reasons you cited but another pertinent REAL mother of all reasons? Looking forward to your revelation! :cheers1:
Greed and fear lor :D.
agree MAS is a problem too. when inflation is at the 5 to 6% level, keeping interest rates at less than 1% for housing loans is just crazy. it is courting troubles, if not playing with fire.
MAS has a bigger picture to look at. Property market is just part of it. Is it better to have a competitive export economy and live with asset inflation ? Or is better to have a cool pty market along with a negative growth / uncompetitive economy ? I guess the decision had already been made. For property, just use administrative measures to cool it as much as it can. 60% or 50% LTV ensures banks won't fail in the event of major crash/recession (Irish style). So SG as a whole is safe. Never mind a little inflation here and there.
We as small investors should then judge the situation and make the best out of it.
Wild Falcon
09-03-11, 09:55
Good observation. So now that he has become bullish, maybe we should all become bearish? :)
actually, if u had *really*followed all these market talks, you will realize Colin Tan is one of the very few "analysts" that are bearish. He had been talking down all this while.
now even he is changing his tone :cool:
devilplate
09-03-11, 10:19
Good observation. So now that he has become bullish, maybe we should all become bearish? :)
i oredi become neutral....:ashamed1:
devilplate
09-03-11, 10:20
I will tell you the real reason why people are buying. Inflation, new IRs , immigration,population growth, low interest rates, and enbloc millionaires are only a small composite part of it. There is another more pertinent REAL mother of all reasons that I shall only reveal after the election.......you will be lost for words, I assure you....
your little humble brother,
u r making me very 'gian'....
wah liu.....make sure u dun disappear after erection!!!
stalingrad
09-03-11, 11:41
MAS does not have control over bank interest lah ...
M3 up 20% since 2009:
2009 (million)
Jan 346,731.0
2011 (million)
Jan P 413,235.9
:scared-4:
but MAS control exchange rates. by allowing the SGD to appreciate rapidly against US dollar, domestic interest rates will rise rapidly to kill all speculators, and quickly deflate the property bubble.
if SGD appreciates by 5% overnight against USD, domestic inflation will drop to zero, and interest rates will shoot up, and kill off all speculators. One rock, and two birds killed.
phantom_opera
09-03-11, 13:37
but MAS control exchange rates. by allowing the SGD to appreciate rapidly against US dollar, domestic interest rates will rise rapidly to kill all speculators, and quickly deflate the property bubble.
if SGD appreciates by 5% overnight against USD, domestic inflation will drop to zero, and interest rates will shoot up, and kill off all speculators. One rock, and two birds killed.
What are you talking about?? If SGD appreciates 5% overnight, it does not necessary mean petrol price will drop 5% and inflation will drop to 0% ... :doh:
devilplate
09-03-11, 14:45
SGD appreciates and domestic int rates will rise too? why?:confused:
Ai yoh, why you so stupid say these things that can already prove you wrong?
SGD has been appreciating for the past 2 years! However, instead of interest rate increasing, it has been dropping until current super low rate! :rolleyes:
but MAS control exchange rates. by allowing the SGD to appreciate rapidly against US dollar, domestic interest rates will rise rapidly to kill all speculators, and quickly deflate the property bubble.
if SGD appreciates by 5% overnight against USD, domestic inflation will drop to zero, and interest rates will shoot up, and kill off all speculators. One rock, and two birds killed.
stalingrad
09-03-11, 16:59
SGD appreciates and domestic int rates will rise too? why?:confused:
when the MAS buys up extra liquidity from the US, there are more sing dollars circulating around in the banking system. the extra sing dollars available reduce the interest rates. that has inflated the bubbles.
to reverse the damage, the only way is to mop up all the sing dollar liquidity by selling US dollars and buy Sing dollars, which will reduce the Sing dollar liquidity and raise the interest rates. the other effect is that the sing dollar exchange rate will go higher, thus reducing the inflation rate.
so, one rock and two dead birds.
devilplate
09-03-11, 17:09
when the MAS buys up extra liquidity from the US, there are more sing dollars circulating around in the banking system. the extra sing dollars available reduce the interest rates. that has inflated the bubbles.
to reverse the damage, the only way is to mop up all the sing dollar liquidity by selling US dollars and buy Sing dollars, which will reduce the Sing dollar liquidity and raise the interest rates. the other effect is that the sing dollar exchange rate will go higher, thus reducing the inflation rate.
so, one rock and two dead birds.
but wat teddy says true also wor....
or u mean SGD appreciates too slow for the past 2yrs? i seriously dun tink MAS can anyhow push up SGD overnite? got any other side effects?
when the MAS buys up extra liquidity from the US, there are more sing dollars circulating around in the banking system. the extra sing dollars available reduce the interest rates. that has inflated the bubbles.
to reverse the damage, the only way is to mop up all the sing dollar liquidity by selling US dollars and buy Sing dollars, which will reduce the Sing dollar liquidity and raise the interest rates. the other effect is that the sing dollar exchange rate will go higher, thus reducing the inflation rate.
so, one rock and two dead birds.
If that happened....Manufacturer's exports karpoooos...
With lesser demand for SG products from overseas, i think it killed not just two birds but every birds in SG...:2cents:
devilplate
09-03-11, 17:36
If that happened....Manufacturer's exports karpoooos...
With lesser demand for SG products from overseas, i think it killed not just two birds but every birds in SG...:2cents:
tats a gd one :D
stalingrad
09-03-11, 18:32
If that happened....Manufacturer's exports karpoooos...
With lesser demand for SG products from overseas, i think it killed not just two birds but every birds in SG...:2cents:
but inflation expectations getting higher and higher, the damage to the economy is getting more and more serious. Workers will be unhappy seeing their pay checks shrinking by the day. so, MAS must take a balanced approach, with priority given to fighting inflation. that means allowing sing dollar to appreciate more rapidly. at this moment, sing dollars are not appreciating faster than the currencies of the neighboring countries. MAS should take a bolder approach to tamp down inflation expectations.
As Teddy mentioned, MAS is *already* doing SGD appreciation. Right now it's almost 5% a year priced in, as observed in forward mkt. If not Sibor wouldn't have been 0.45, it would have been 0.1. In April the slope will probably be adjusted steeper, but no way it can bring up the inteest rate to 2.
U severely underestimated the role of SG export economy. It's far more important than pty bubble. Pty bubble can simply be prevented by admin measures. Inflation of SG is imported. There is no way you can shield SG from a worldwide problem. For workers, the most important thing is they must have jobs. Therefore the economy must be competitive. You have no choice.
stalingrad
09-03-11, 19:12
As Teddy mentioned, MAS is *already* doing SGD appreciation. Right now it's almost 5% a year priced in, as observed in forward mkt. If not Sibor wouldn't have been 0.45, it would have been 0.1. In April the slope will probably be adjusted steeper, but no way it can bring up the inteest rate to 2.
U severely underestimated the role of SG export economy. It's far more important than pty bubble. Pty bubble can simply be prevented by admin measures. Inflation of SG is imported. There is no way you can shield SG from a worldwide problem. For workers, the most important thing is they must have jobs. Therefore the economy must be competitive. You have no choice.
but are these "administrative measures" working? if they are, we wouldn't be here talking about the "problem", would we?
but are these "administrative measures" working? if they are, we wouldn't be here talking about the "problem", would we?
So do it again !
Redas is even preempting this by "recommending specific measures to target specific segments".
For example, MM should be banned.
And set a *floor* for loan rates. HK is already doing that.
phantom_opera
09-03-11, 19:34
Setting a floor for loan rate?! Then banks how to compete with each other, surely they will give other goodies right e.g. setting a lower margin? Then back to square one.
e.g. if bank A offers SIBOR or SOR + 0.5%, if change to floor rate where floor rate is higher than SIBOR or SOR, then banks will simply change to floor_rate + 0.3% or floor_rate + 0%. If floor rate is high e.g. 2%, then bank A can offer floor rate fixed for 5y and bank B can offer floor_rate fixed for 10y provided that SIBOR is below floor_rate etc ... so won't work one.
but inflation expectations getting higher and higher, the damage to the economy is getting more and more serious. Workers will be unhappy seeing their pay checks shrinking by the day. so, MAS must take a balanced approach, with priority given to fighting inflation. that means allowing sing dollar to appreciate more rapidly. at this moment, sing dollars are not appreciating faster than the currencies of the neighboring countries. MAS should take a bolder approach to tamp down inflation expectations.
They already did, Mac fillet o fish meal is $4.50, revert to 10 yrs ago price.
Don't talk nonsense lah. Inflation getter higher and higher damage the economy? Then why Singapore GDP grow at >15% in 2010 when there is a super high (vs historical) inflation of 5%? :doh: Why we don't see Singapore got high GDP grow with inflation at 1+% in 2009? :beats-me-man:
You talk as though you are an expert! MAS need to invite you to be their Managing Director instead since what they are doing are not right? :rolleyes:
but inflation expectations getting higher and higher, the damage to the economy is getting more and more serious. Workers will be unhappy seeing their pay checks shrinking by the day. so, MAS must take a balanced approach, with priority given to fighting inflation. that means allowing sing dollar to appreciate more rapidly. at this moment, sing dollars are not appreciating faster than the currencies of the neighboring countries. MAS should take a bolder approach to tamp down inflation expectations.
phantom_opera
09-03-11, 20:01
Don't talk nonsense lah. Inflation getter higher and higher damage the economy? Then why Singapore GDP grow at >15% in 2010 when there is a super high (vs historical) inflation of 5%? :doh: Why we don't see Singapore got high GDP grow with inflation at 1+% in 2009? :beats-me-man:
You talk as though you are an expert! MAS need to invite you to be their Managing Director instead since what they are doing are not right? :rolleyes:
I think he may have sold his condo and seller remorse :banghead:
but are these "administrative measures" working? if they are, we wouldn't be here talking about the "problem", would we?
Sometimes it's about the lesser of 2 evil. Wanna solve the problem? Easy, call obama n tell him stop printing $$$$ n create all these problems, or call china n India to stop using so much oil n resources all everything will be well?
Can we do that? Can measures prevent those things? What can we do? Create jobs, boom town the economy, use $$$$ to suppress problem for the poor. Help the next generation escape proverity thru education.
Seriously pple here are talking inflation hitting you? U mean u having problem eating 3 meals? Or u unhappy now u got to pay more $$$ to drive big car n that big house u one is too expensive?
The truth is inflation hits the low income group, jeopardize the living conditions. These are the pple govt must help, n help their next generation escape the poverty trap. Subsidize the poor, help them get a roof over their head. Need be heavily subsize their flat n put a huge MOP on it.
They already did, Mac fillet o fish meal is $4.50, revert to 10 yrs ago price.
Ha ha ha good one
but inflation expectations getting higher and higher, the damage to the economy is getting more and more serious. Workers will be unhappy seeing their pay checks shrinking by the day. so, MAS must take a balanced approach, with priority given to fighting inflation. that means allowing sing dollar to appreciate more rapidly. at this moment, sing dollars are not appreciating faster than the currencies of the neighboring countries. MAS should take a bolder approach to tamp down inflation expectations.
I second Teddy opinion.
What would happen if you attempt to cook/throw a live frog straight into a pot boiling soup? The frog will jump out straight away.
However, if you let the frog swim in the pot at room temperature and then gradually increase the heating temperature, the frog will adapted with each gradual increase in temperature thus no jumping out from the pot.
Of course, you can argue the frog will die at the end of the day because of high boiling temperature. Question is, who else in the other part of the world will not get affected? Gradual increase might not be the best approach but may be the best alternative approach for now. Anyway, Singaporeans are good at adapting to harsh environment, right?
For this, guessed we need not our multi millions garment to suggest "it's tough, let bite the bullets". Am happy if it is not a mortar round.....
:2cents:
Back
Wild Falcon
10-03-11, 09:28
I think we should look at real growth and not nominal. GDP growth may be 15% but real household income only increase by 0.3%. Clearly the distribution of wealth is not ideal, and the majority of the growth is driven by foreigners and going to foreign pockets. Obviously many of us here have benefited from our property investments and even car purchases due to inflation but that shouldn't stop us from thinking about the wider effects of runaway inflation. If income cannot keep up with inflation (as in the case last year), can we go around saying that the 15% economic growth and 5% inflation is a good thing? Has the economic growth resulted in increase in household income for Singaporeans? An economist has to think about the effect on the wider population, and not his own personal gains. So I think the bros here are supporting "high inflation" because many are leveraged with multiple property investments, but high inflation cant' be a good thing, esp when income levels are lagging way behind.
I What would happen if you attempt to cook/throw a live frog straight into a pot boiling soup? The frog will jump out straight away.
However, if you let the frog swim in the pot at room temperature and then gradually increase the heating temperature, the frog will adapted with each gradual increase in temperature thus no jumping out from the pot.
:2cents:
Back
Haha, ur version is frog, and Andy Xie's version is hairy crab...
devilplate
10-03-11, 09:37
Haha, ur version is frog, and Andy Xie's version is hairy crab...
but frog version better....crab cant jump:p
devilplate
10-03-11, 09:38
I think we should look at real growth and not nominal. GDP growth may be 15% but real household income only increase by 0.3%. Clearly the distribution of wealth is not ideal, and the majority of the growth is driven by foreigners and going to foreign pockets. Obviously many of us here have benefited from our property investments and even car purchases due to inflation but that shouldn't stop us from thinking about the wider effects of runaway inflation. If income cannot keep up with inflation (as in the case last year), can we go around saying that the 15% economic growth and 5% inflation is a good thing? Has the economic growth resulted in increase in household income for Singaporeans? An economist has to think about the effect on the wider population, and not his own personal gains. So I think the bros here are supporting "high inflation" because many are leveraged with multiple property investments, but high inflation cant' be a good thing, esp when income levels are lagging way behind.
vy tough to strike a balance....u see china/india....china not as bad compared to india though...lol
to add....its actually vy good to hf 3-5% inflation for SG....however, this yr might be exceptionally high due to US.........
US will continue to print $$$$ and force china to let their yuan appreciates faster....everyone knows it...hehe
proud owner
10-03-11, 09:43
when i cautioned all about measures last yr .. many didnt believe
i cited china/hk/taiwan/korea as example and that spore would have to follow as well .. still some didnt believe and said spore was unique and didnt need to follow them ..
i was right ... we had CM3 then 4 ..
now i want to warn all of a potential rise in interest rates...
many have posted their reasonings ... so i need not repeat
but be warned
I think we should look at real growth and not nominal. GDP growth may be 15% but real household income only increase by 0.3%. Clearly the distribution of wealth is not ideal, and the majority of the growth is driven by foreigners and going to foreign pockets. Obviously many of us here have benefited from our property investments and even car purchases due to inflation but that shouldn't stop us from thinking about the wider effects of runaway inflation. If income cannot keep up with inflation (as in the case last year), can we go around saying that the 15% economic growth and 5% inflation is a good thing? Has the economic growth resulted in increase in household income for Singaporeans? An economist has to think about the effect on the wider population, and not his own personal gains. So I think the bros here are supporting "high inflation" because many are leveraged with multiple property investments, but high inflation cant' be a good thing, esp when income levels are lagging way behind.
1) Are we in runaway inflation situation? what are the wider effects of runaway inflation?
2) Why can't high inflation cant' be a good thing, esp when income levels are lagging way behind? In the context of multiple-property owners?
devilplate
10-03-11, 09:47
when i cautioned all about measures last yr .. many didnt believe
i cited china/hk/taiwan/korea as example and that spore would have to follow as well .. still some didnt believe and said spore was unique and didnt need to follow them ..
i was right ... we had CM3 then 4 ..
now i want to warn all of a potential rise in interest rates...
many have posted their reasonings ... so i need not repeat
but be warned
aiya...u sounds irritating leh....
be warned!??!!?!:tongue3:
instead of saying be warned as interest rate will rise eventually which ANYBODY knows tat...u shd give a timeline......:tongue3:
i can aso say BE WARNED: PPTY 20yrs later will cost higher den current prices....buy now or regret 20yrs later:p
when i cautioned all about measures last yr .. many didnt believe
i cited china/hk/taiwan/korea as example and that spore would have to follow as well .. still some didnt believe and said spore was unique and didnt need to follow them ..
i was right ... we had CM3 then 4 ..
now i want to warn all of a potential rise in interest rates...
many have posted their reasonings ... so i need not repeat
but be warned
Assuming you are right, should we start switching to fixed 3 years loan?
Or take up SOR + 0.65% loan?
proud owner
10-03-11, 09:53
Assuming you are right, should we start switching to fixed 3 years loan?
Or take up SOR + 0.65% loan?
sorry not writing anymore
cos i am irritating ...
and petty too
:sleep: :sleep: :sleep:
stalingrad
10-03-11, 11:40
I think we should look at real growth and not nominal. GDP growth may be 15% but real household income only increase by 0.3%. Clearly the distribution of wealth is not ideal, and the majority of the growth is driven by foreigners and going to foreign pockets. Obviously many of us here have benefited from our property investments and even car purchases due to inflation but that shouldn't stop us from thinking about the wider effects of runaway inflation. If income cannot keep up with inflation (as in the case last year), can we go around saying that the 15% economic growth and 5% inflation is a good thing? Has the economic growth resulted in increase in household income for Singaporeans? An economist has to think about the effect on the wider population, and not his own personal gains. So I think the bros here are supporting "high inflation" because many are leveraged with multiple property investments, but high inflation cant' be a good thing, esp when income levels are lagging way behind.
Inflation may be dangerous to social stability. Just look at egypt, tunisia and now libya.
I am sure the government is worried about inflation and is effect on social stability as well, what with inflation's effect on the gap between the have and have not. but I hope it will do something to tamp down inflation and its expectations.
But I doubt Redas will say their new launch at price >20% compared to surrounding resale comparable units considered be over-priced? (though we know they are, regardless of whatever excuses they want to give). :doh:
So do it again !
Redas is even preempting this by "recommending specific measures to target specific segments".
For example, MM should be banned.
And set a *floor* for loan rates. HK is already doing that.
Isn't getting 5% inflation but 15% GDP growth better than 0% inflation but -10% GDP growth? GDP grows means overall income will grow (just whose pockets they go into).
MAS knows what are more important to Singapore, hence their targeted policies. They can't cure all problems at the same time. SGD rises in a way is to reduce effect of inflation, but not totally. Since GDP can grow, just let it grow! Distribution of wealth not ideal? The Govt is now handling targeted helps to the low incomes, resolving the problem where inflation usually hits the lower income more, so problem solved. Anyway, you earn what effort you put in isn't it? You expect to get more for doing nothing? The middle and higher income gains from GDP growth and asset/property price growth, so higher inflation not a issue. (What will irks people is if property price crash, GDP negative, many jobless and yet with high inflation then that will be big problem, resulting in those Libya, Tunisia you mentioned? (since middle-income forms a very big group in Singapore)).
In comparison, MND not doing so good job because don't know how to implement "targeted" cooling measures to cure the real problem (which is new launch super high prices) which they say they want to cure. :p
I think we should look at real growth and not nominal. GDP growth may be 15% but real household income only increase by 0.3%. Clearly the distribution of wealth is not ideal, and the majority of the growth is driven by foreigners and going to foreign pockets. Obviously many of us here have benefited from our property investments and even car purchases due to inflation but that shouldn't stop us from thinking about the wider effects of runaway inflation. If income cannot keep up with inflation (as in the case last year), can we go around saying that the 15% economic growth and 5% inflation is a good thing? Has the economic growth resulted in increase in household income for Singaporeans? An economist has to think about the effect on the wider population, and not his own personal gains. So I think the bros here are supporting "high inflation" because many are leveraged with multiple property investments, but high inflation cant' be a good thing, esp when income levels are lagging way behind.
devilplate
10-03-11, 12:15
very funny aso la...so many media toking bad about MMs how unlivable and distorting the PSF and destroying the whole ppty landscape......but den URA only set min guideline at 300sqft????:doh:
It's all so grand and noble to say "oh let's not just look at personal gains and should look at those with lower income". As if supporting the current government/MAS policy equates to selfish profiteering :cool:
just remember this, 100yrs ago, communism is a very grand and noble idea. that's the fairest economy ever.
we have a global inflation problem. US is not going to care what you think, or concern. we import inflation.
how to deal with this ? gov decided to accept mild level of inflation, while trying its best to maintain competitiveness. the focus had been entirely on keeping jobs.
SGD appreciation will be steeper. Rates will rise gradually. Inflation however will not be stopped.
stalingrad
10-03-11, 12:53
It's all so grand and noble to say "oh let's not just look at personal gains and should look at those with lower income". As if supporting the current government/MAS policy equates to selfish profiteering :cool:
just remember this, 100yrs ago, communism is a very grand and noble idea. that's the fairest economy ever.
we have a global inflation problem. US is not going to care what you think, or concern. we import inflation.
how to deal with this ? gov decided to accept mild level of inflation, while trying its best to maintain competitiveness. the focus had been entirely on keeping jobs.
SGD appreciation will be steeper. Rates will rise gradually. Inflation however will not be stopped.
from the foreigners' point of view, the SGD is surest bet. Since MAS has already announced and stuck to this "gradual appreciation" policy. So come what may, the value of SGD in terms of USD will be higher in 2012 than in 2011, and higher in 2013 than in 2012. So, SGD is basically a risk free investment. Its movement is no longer a random walk, but a straight line up. That is precisely why foreign money has poured into Singapore. if the SGD is allowed to free float, its movement is likely to zigzag, and thus deter speculation.
so, this gradual appreciation policy's side effect is to hand americans a risk free investment. What are the effects on national well-being. I let you decide.
stalingrad
10-03-11, 13:17
I am afraid this market doesn't make a lot of sense. US is deflating, and the rest of the world is inflating. When gentle Ben has finally succeeded in reflating the US economy and stop short of his QE1000, the rest of the world will face a terribly distorted economy and new political landscape: terrible inflation, social instability, topped regimes in middle east, oil rich countries, and more importantly, property bubbles everywhere. When all these property bubbles burst at the same time, there may be another great recession if not depression.
I would not buy more properties if I were you if your time horizon is less than 30 years.
from the foreigners' point of view, the SGD is surest bet. Since MAS has already announced and stuck to this "gradual appreciation" policy. So come what may, the value of SGD in terms of USD will be higher in 2012 than in 2011, and higher in 2013 than in 2012. So, SGD is basically a risk free investment. Its movement is no longer a random walk, but a straight line up. That is precisely why foreign money has poured into Singapore. if the SGD is allowed to free float, its movement is likely to zigzag, and thus deter speculation.
so, this gradual appreciation policy's side effect is to hand americans a risk free investment. What are the effects on national well-being. I let you decide.
how many lots do you short USDSGD forex?
.. When gentle Ben has finally succeeded in reflating the US economy and stop short of his QE1000, the rest of the world will face a terribly distorted economy ....
that's not his problem.
when that happens, every one else dies, US is strong again, and remain as super power.
it has always been "I win, you lose" for America :cool:
we small flies here have to find a way to survive.
btw SGD is not necessarily a risk free investment. u r assuming SG will always do well, and will always maintain a strong economy. if something went terribly wrong, either a mismanagement here, or an unrest in the region (e.g. NKorea firing a nuclear missile to Japan and whole of south china sea locked up ?), SG economy will be severely hit. when that happens, SGD will be worthless. We are not australia.
stalingrad
10-03-11, 14:41
true, SGD is not a sure bet. But barring calamity, SGD will have an inexorable march against the US dollar in the short term. thus, SGD has become the target of carry trades - short USD and long SGD. thus, we are handing a guaranteed profit to currency traders by this gradual appreciation policy, while our MAS is devouring the worthless US dollars, and will continue to do so for many months ahead. thus, the gradual appreciation policy itself is inflationary, because it causes the money supply to swell up, and depresses interest rates.
You statement is totally wrong! :doh:
Instead, the truth is that MAS is very clever - they just shout that they want S$ to gradually appreciate & instantly S$ will gradually appreciate without them having to come out with the money to make S$ appreciate (your so called currency traders not under their payroll will help them to achieve their aim!). :D
true, SGD is not a sure bet. But barring calamity, SGD will have an inexorable march against the US dollar in the short term. thus, SGD has become the target of carry trades - short USD and long SGD. thus, we are handing a guaranteed profit to currency traders by this gradual appreciation policy, while our MAS is devouring the worthless US dollars, and will continue to do so for many months ahead. thus, the gradual appreciation policy itself is inflationary, because it causes the money supply to swell up, and depresses interest rates.
phantom_opera
10-03-11, 19:49
Want to cool down property investmenet? Peg CPF OA to inflation rate up to 300k, problem solved. But they did the opposite in 1992 so that maintaining value of your CPF OA becomes your problem :tsk-tsk:
Alternatively, government guaranteed TIPS:
What Does Treasury Inflation Protected Securities - TIPS Mean?
A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. TIPS are considered an extremely low-risk investment since they are backed by the U.S. government and since their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed. Interest on TIPS is paid semiannually. TIPS can be purchased directly from the government through the TreasuryDirect system in $100 increments with a minimum investment of $100 and are available with 5-, 10-, and 20-year maturities.
stalingrad
10-03-11, 20:34
I think there is a misunderstanding about exchange rates. While the exchange rate may help a country like singapore maintain its export competitiveness, another issue is domestic inflation. if the latter is out of control, exports of singapore will be uncompetitive even if the nominal exchange rate is maintained. this is exactly the situation we are in.
if MAS lets sing dollar appreciate more rapidly, domestic inflation will calm down and it actually can help exporting firms compete better by helping them reduce their input cost, and allowing them to reduce export prices to compete more effectively in developed countries.
thus, one rock, three dead birds, inflation, property bubbles, and export uncompetitiveness.
phantom_opera
10-03-11, 20:36
I think there is a misunderstanding about exchange rates. While the exchange rate may help a country like singapore maintain its export competitiveness, another issue is domestic inflation. if the latter is out of control, exports of singapore will be uncompetitive even if the nominal exchange rate is maintained. this is exactly the situation we are in.
if MAS lets sing dollar appreciate more rapidly, domestic inflation will calm down and it actually can help exporting firms compete better by helping them reduce their input cost, and allowing them to reduce export prices to compete more effectively in developed countries.
thus, one rock, three dead birds, inflation, property bubbles, and export uncompetitiveness.
Just join teddy n buy D Leedon lah ;)
stalingrad
10-03-11, 20:50
I hope some people at MAS will read my post. many of them seem to be acting in a knee jerk reaction to the weakening US dollar. that is, while US dollar is not worth the paper it is printed on, we should debase our currency to maintain our export competitiveness. in this usual time, one needs to think outside the box, including MAS.
Wild Falcon
10-03-11, 21:12
You still don't get it. Resident real household income only increase 0.3% in 2010 - a far cry from the blistering GDP growth of 14%. So GDP is not a good indication of how much better the median Singapore family is doing. A lot of the wealth created did not land with Singaporeans.
I know some of you only read mainstream media and whatever our government says. But sometime we just need to read some of this statistics together with other statistics. GDP is not everything.
Isn't getting 5% inflation but 15% GDP growth better than 0% inflation but -10% GDP growth? GDP grows means overall income will grow (just whose pockets they go into).
MAS knows what are more important to Singapore, hence their targeted policies. They can't cure all problems at the same time. SGD rises in a way is to reduce effect of inflation, but not totally. Since GDP can grow, just let it grow! Distribution of wealth not ideal? The Govt is now handling targeted helps to the low incomes, resolving the problem where inflation usually hits the lower income more, so problem solved. Anyway, you earn what effort you put in isn't it? You expect to get more for doing nothing? The middle and higher income gains from GDP growth and asset/property price growth, so higher inflation not a issue. (What will irks people is if property price crash, GDP negative, many jobless and yet with high inflation then that will be big problem, resulting in those Libya, Tunisia you mentioned? (since middle-income forms a very big group in Singapore)).
In comparison, MND not doing so good job because don't know how to implement "targeted" cooling measures to cure the real problem (which is new launch super high prices) which they say they want to cure. :p
phantom_opera
10-03-11, 21:33
You still don't get it. Resident real household income only increase 0.3% in 2010 - a far cry from the blistering GDP growth of 14%. So GDP is not a good indication of how much better the median Singapore family is doing. A lot of the wealth created did not land with Singaporeans.
I know some of you only read mainstream media and whatever our government says. But sometime we just need to read some of this statistics together with other statistics. GDP is not everything.
That tiny 0.3% growth is average or median household income?? Condo is meant for top 25% of household isn't it? So isn't it fair to look at how many households have income above 10k per month?
Your household income of $10,000
is higher than 74.5% of all households.
You still don't get it. Resident real household income only increase 0.3% in 2010 - a far cry from the blistering GDP growth of 14%. So GDP is not a good indication of how much better the median Singapore family is doing. A lot of the wealth created did not land with Singaporeans.
I know some of you only read mainstream media and whatever our government says. But sometime we just need to read some of this statistics together with other statistics. GDP is not everything.
can I ask something stupid?
Why do you care about the rest of the Singaporeans?
Are they all your relatives? If you passed away, do they all attend your funeral? If you need money for surgery, do they all chip in to help pay your expensive surgery?
if MAS lets sing dollar appreciate more rapidly
What make u think it's not already doing it ? How rapid is rapid enough ? U want a one time 10% up ? The issue is not so simple. I maintain my view: exchange rate alone will not solve inflation problem. Overdo it will harm the economy. Gradual but with a steeper rate is the best way to go. Pty bubble, trust me on this, gov more worried abt the bank rather than ppl. Ppl can bankcrupt, banks cannot. Therefore limiting bank lending is the right measure. Maintaining a working economy and enabling every one having a job is the overriding consideration, never mind the lower income will be hit hard by the inflation. Gov will hand out all sorts of subsidies to these group. This is our model right now.
MAS should invite you to be their Managing Director since you are better than them? You must be joking! :tongue3:
Why suddenly you are talking about debasing S$? Before that you are telling MAS to let S$ appreciate much more quickly other is a problem? :doh:
What will happen when Singapore debase S$ now? -:
1) US will label Singapore as "currency manipulator"! (just like US did for China etc). US impose trade sanctions on Singapore. Singapore die!
2) S$ cheap means import too expensive (Singapore imports almost all food stuffs). Low income people die of hunger or riot!
3) If (2) happens, business go down the drain, what export competitiveness you are talking about? :banghead:
4) S$ debase, capital flows out of Singapore too quickly, Singapore GDP go downs the drain mostly! :doh:
I hope some people at MAS will read my post. many of them seem to be acting in a knee jerk reaction to the weakening US dollar. that is, while US dollar is not worth the paper it is printed on, we should debase our currency to maintain our export competitiveness. in this usual time, one needs to think outside the box, including MAS.
It is also true that a lot of wealth are not created by Singaporeans! (without these foreigners GDP & wealth will not grow so much!) :tongue3:
You still don't get it. Resident real household income only increase 0.3% in 2010 - a far cry from the blistering GDP growth of 14%. So GDP is not a good indication of how much better the median Singapore family is doing. A lot of the wealth created did not land with Singaporeans.
I know some of you only read mainstream media and whatever our government says. But sometime we just need to read some of this statistics together with other statistics. GDP is not everything.
stalingrad
11-03-11, 07:04
MAS should invite you to be their Managing Director since you are better than them? You must be joking! :tongue3:
Why suddenly you are talking about debasing S$? Before that you are telling MAS to let S$ appreciate much more quickly other is a problem? :doh:
What will happen when Singapore debase S$ now? -:
1) US will label Singapore as "currency manipulator"! (just like US did for China etc). US impose trade sanctions on Singapore. Singapore die!
2) S$ cheap means import too expensive (Singapore imports almost all food stuffs). Low income people die of hunger or riot!
3) If (2) happens, business go down the drain, what export competitiveness you are talking about? :banghead:
4) S$ debase, capital flows out of Singapore too quickly, Singapore GDP go downs the drain mostly! :doh:
you misunderstood my posting. debasing the sing dollar is what MAS is doing by their gradual appreciation policy. given how weak the US economy is and given how robust our growth is, the sing dollar should be at parity with the US dollar right now. but instead, the sing dollar is still at the range of 1.20 to 1.30. that is debasing our currency.
let me tell you how silly the situation is. we are probably the only country in the world, in this history of modern economy, where the annual growth rate is 14% with 5-6% inflation, but the interest rate is less than 05%. the property bubble is inevitable in this situation. we have ourself to blame by growing the economy at all costs. at this stage of inflation and growth, we should have interest rate at the range 4-5% if not higher. that is what I meant by debasing our currency.
Ok, let me tell you this:
(1) annual growth rate is 14% with 5-6% inflation - This shows that Singapore Govt has done a good job indeed! Else where in other countries, you get low inflation (e.g. 3%) but also low GDP growth (3%). Which is better is obvious!
(1) MAS cannot do anything about the interest rate since the low interest rate is due to US exporting them to Singapore. :beats-me-man: MAS only control exchange rates and they have done their job well so far.
(2) Given the situation in Singapore, many people have seized the great opportunities to make big money (be it in properties, equities etc) due to this probably ONCE IN A LIFETIME special situation & opportunities and laughing all the way to the banks :D.
People who are shouting for high interest rates (and blaming the Govt for the low interest rates) must be SOUR GRAPES and see their CASH in banks evaporating in VALUES (and continues to do so) :doh:, thus now blaming the Govt for their own personal losses in the name of "for overall good for the country" (when in fact it isn't!). :p
you misunderstood my posting. debasing the sing dollar is what MAS is doing by their gradual appreciation policy. given how weak the US economy is and given how robust our growth is, the sing dollar should be at parity with the US dollar right now. but instead, the sing dollar is still at the range of 1.20 to 1.30. that is debasing our currency.
let me tell you how silly the situation is. we are probably the only country in the world, in this history of modern economy, where the annual growth rate is 14% with 5-6% inflation, but the interest rate is less than 05%. the property bubble is inevitable in this situation. we have ourself to blame by growing the economy at all costs. at this stage of inflation and growth, we should have interest rate at the range 4-5% if not higher. that is what I meant by debasing our currency.
phantom_opera
11-03-11, 07:45
Middle class Singaporeans hardest hit, the poor get handsome handouts from government so still ok. Middle class here even lose out to Malaysians as most of them own oil palm plantation lands which has seen the value 10X since 1997.
Moral of the story, you CPF OA and cash will become toilet paper in 10y due to high persistent inflation.
Dow below 12k last night, not a good sign technically so expect SIBOR to be below 0.55% end of this year.
And even a restaurant manager is demanding higher wages due to embedded inflation expectation:
SINGAPORE—Fears are growing that Asia's recent troubles with inflation could go deeper than initially expected as countries bump up against labor shortages and other problems commonly seen in times of too-fast growth.
...
Consider Singapore, which has one of Asia's higher inflation rates at 5.5% on year in January and which is at the head of a problem trend also cropping up to some degree in its less wealthy neighbors. Residents are increasingly unhappy over side effects of too-rapid growth, including worsening traffic, an overcrowded subway, and rapid increases in property prices.
One of the biggest problems, though, is a shortage of low-cost labor. The labor market is so tight that some employees are now able to command 30% pay raises if they switch jobs, says Chris Lee, a manager at SG Recruiters Group, a recruiting firm in Singapore. Restaurant managers are getting up to 2,500 Singapore dollars (US$1,970) a month, compared with S$1,800 a month a year or so ago, he says, and many restaurants are raising prices as a result.
"It's a job-seeker's market," he says. "The job market will definitely be getting tighter over time and there will be shortages of workers in most industries in the years ahead," he predicts.
phantom_opera
11-03-11, 08:07
Another gauge of inflation:
M3 money supply
2005
Jan 210,687.5
2011
Jan P 413,235.9
In 6y, M3 grows almost 100%?? Of course part of it is GDP growth so let's see:
2005 GDP 208,763.7
2010 GDP 284,560.7
You can see GDP only expanded less than 40% but M3 grows by 100% in the same period :scared-1:
phantom_opera
11-03-11, 08:13
And compare to the 1992-1997 property bubble:
GDP:
1992 94,208.8
1997 145,706.5
GDP expanded 54% in that period,
whereas M3 expanded about 73% only
1992 Jan 93,189.5
1997 Dec 160,766.0
I rest my case
Phantom Opera, if wages up, property will become more affordable again. and people will buy more, so property price shoot up again right?
So should people buy now before property price gets out of reach again?
And compare to the 1992-1997 property bubble:
GDP:
1992 94,208.8
1997 145,706.5
GDP expanded 54% in that period,
whereas M3 expanded about 73% only
1992 Jan 93,189.5
1997 Dec 160,766.0
I rest my case
errr...what case are you making?
Sorry I lost you.
So in property context, buy hold or sell?
1) in 2011
2) in 2012
3) in 2013
4) in 2014.
5) in 2015
Usually when reading research reports, I skip to conclusion first and then start reading the numbers.
you misunderstood my posting. debasing the sing dollar is what MAS is doing by their gradual appreciation policy. given how weak the US economy is and given how robust our growth is, the sing dollar should be at parity with the US dollar right now. but instead, the sing dollar is still at the range of 1.20 to 1.30. that is debasing our currency.
let me tell you how silly the situation is. we are probably the only country in the world, in this history of modern economy, where the annual growth rate is 14% with 5-6% inflation, but the interest rate is less than 05%. the property bubble is inevitable in this situation. we have ourself to blame by growing the economy at all costs. at this stage of inflation and growth, we should have interest rate at the range 4-5% if not higher. that is what I meant by debasing our currency.
errr...so what is your forex position now? short USDSGD or long USDSGD?
by the way, have you converted to Singaporean citizenship? You use the term "we".
stalingrad
11-03-11, 08:55
errr...so what is your forex position now? short USDSGD or long USDSGD?
by the way, have you converted to Singaporean citizenship? You use the term "we".
no one will short SGD now. Haven't you read my earliest posting? because of this gradual appreciation policy, SGD is almost guaranteed to go up against USD over time. it is no longer a random walk, it is just a linear function of time. This is currency speculator's paradise.
I do think that the policy adopted by the government of gradual appreciation instead of more rapid appreciation needs to be closely looked at before inflation and its expectations become intolerable. It may prove very dangerous to the long term health of the economy. We are now in the same boat as china. because of this instinctual aversion to strong currency, we are now fighting all the inbalances in the economy:
(1) Worker disgruntlement about shrinking paychecks
(2) property bubbles
(3) escalating wage demands,
(4) high inflation hurting the middle class
(5) people resigning to speculate full time
(6) exports losing competitive edges due to high input costs
All these can be alleviated by one time appreciation of say 10-20%.
just my humble opinion.
devilplate
11-03-11, 09:02
no one will short SGD now. Haven't you read my earliest posting? because of this gradual appreciation policy, SGD is almost guaranteed to go up against USD over time. it is no longer a random walk, it is just a linear function of time. This is currency speculator's paradise.
i believe forex trader prefer random surges rather den gradual linear....
devilplate
11-03-11, 09:04
I do think that the policy adopted by the government of gradual appreciation instead of more rapid appreciation needs to be closely looked at before inflation and its expectations become intolerable. It may prove very dangerous to the long term health of the economy. We are now in the same boat as china. because of this instinctual aversion to strong currency, we are now fighting all the inbalances in the economy:
(1) Worker disgruntlement about shrinking paychecks
(2) property bubbles
(3) escalating wage demands,
(4) high inflation hurting the middle class
(5) people resigning to speculate full time
(6) exports losing competitive edges due to high input costs
All these can be alleviated by one time appreciation of say 10-20%.
just my humble opinion.
one time 10-20%!!!:scared-1:
U r hoping ppty price to crash rite ?!?!?! own agenda?:tsk-tsk:
stalingrad
11-03-11, 09:08
one time 10-20%!!!:scared-1:
U r hoping ppty price to crash rite ?!?!?! own agenda?:tsk-tsk:
no it will not crash. the one time appreciation would suggest to the world that singapore has now finally matured and become more confidence in long term prosperity. It tells we are not some third world country like china that depends on debasing the currency to survive.
if anything, property values may go even higher, since all the PRC people that have invested here will benefit handsomely from the one time appreciation. they will tell more PRC people to come and invest here.
devilplate
11-03-11, 09:09
no it will not crash. the one time appreciation would suggest to the world that singapore has now finally matured and become more confidence in long term prosperity. It tells we are not some third world country like china that depends on debasing the currency to survive.
if anything, property values may go even higher, since all the PRC people that have invested here will benefit handsomely from the one time appreciation. they will tell more PRC people to come and invest here.
u sure anot.....:scared-5: :scared-2:
stalingrad
11-03-11, 09:14
u sure anot.....:scared-5: :scared-2:
it doesn't matter I am sure or not. what matters is whether MAS has courage to think outside the box. the problem with MAS is that it still thinks that Singapore is a developing country and debasing the currency is the only solution it can think of. Singapore is no longer a developing country and we should compete based on know how and value added. How do you achieve that? raise the currency exchange rate and force firms to add value instead of competing based on exchange rates.
no one will short SGD now. Haven't you read my earliest posting? because of this gradual appreciation policy, SGD is almost guaranteed to go up against USD over time. it is no longer a random walk, it is just a linear function of time. This is currency speculator's paradise
I find it difficult to get a straight answer out of you.
Based of your beliefs, are you now short or long USDSGD?
Or you have no open positions?
Think the question cannot get more clear than that.
You dare to short DOW when everybody says to long. So maybe you are a contrarian investor?
no one will short SGD now. Haven't you read my earliest posting? because of this gradual appreciation policy, SGD is almost guaranteed to go up against USD over time. it is no longer a random walk, it is just a linear function of time. This is currency speculator's paradise.
......
what do you mean nobody short SGD.
For every buyer there is a seller.
So obviously if I short USDSGD, somebody else is long USDSGD.
Wild Falcon
11-03-11, 09:38
I'm not just looking at my income lah. I'm talking about median. Anyway, HDB prices have increased in line as well. Clearly the growth in GDP does not translate to median household income.
Here's the link. Median household income increase 2.8% in nominal terms and 0.3% in real terms. Clearly, the blistering GDP growth of 14% is not exactly benefiting the people that much...
http://www.asiaone.com/News/AsiaOne+News/Singapore/Story/A1Story20110214-263423.html
That tiny 0.3% growth is average or median household income?? Condo is meant for top 25% of household isn't it? So isn't it fair to look at how many households have income above 10k per month?
Your household income of $10,000
is higher than 74.5% of all households.
phantom_opera
11-03-11, 09:38
Conclusion from comparing 1992-1997 vs 2005-2011 of M3 vs GDP growth is that:
1. Since M3 growing much faster than GDP growth in 2005-2011, inflation is definitely much higher in 2005-2011 compared to 1992-1997.
2. Property price with decent yield must at least match M3 growth in terms of capital appreciation. During 1992-1997, M3 expanded by 73%, so 1000psf unit should go to 1730psf from 1992 to 1997. Using the same logic, 1000psf unit should go to 2000psf from 2005-2011. Due to government cooling measures, this target has not been met so property, as of now, still has room to appreciate if M3 continues to grow much faster than GDP growth.
3. How about stocks? STI expanded from 1.2k in 1992 to 2.4k in 1997, outperforming M3 growth. STI expanded from 2.4k at 2005 and now still at 3k, the return really sucks big time consider M3 has expanded 100% in the same period. I guess all the Temasek companies are not doing that well relative to 1992 to 1997 period.
phantom_opera
11-03-11, 09:46
I'm not just looking at my income lah. I'm talking about median. Anyway, HDB prices have increased in line as well. Clearly the growth in GDP does not translate to median household income.
Here's the link. Median household income increase 2.8% in nominal terms and 0.3% in real terms. Clearly, the blistering GDP growth of 14% is not exactly benefiting the people that much...
http://www.asiaone.com/News/AsiaOne+News/Singapore/Story/A1Story20110214-263423.html
http://www.singstat.gov.sg/pubn/popn/c2010sr2/findings.pdf
Scroll down to page 10 ... must look at long term mah
stalingrad
11-03-11, 09:46
Conclusion from comparing 1992-1997 vs 2005-2011 of M3 vs GDP growth is that:
1. Since M3 growing much faster than GDP growth in 2005-2011, inflation is definitely much higher in 2005-2011 compared to 1992-1997.
2. Property price with decent yield must at least match M3 growth in terms of capital appreciation. During 1992-1997, M3 expanded by 73%, so 1000psf unit should go to 1730psf from 1992 to 1997. Using the same logic, 1000psf unit should go to 2000psf from 2005-2011. Due to government cooling measures, this target has not been met so property, as of now, still has room to appreciate if M3 continues to grow much faster than GDP growth.
3. How about stocks? STI expanded from 1.2k in 1992 to 2.4k in 1997, outperforming M3 growth. STI expanded from 2.4k at 2005 and now still at 3k, the return really sucks big time consider M3 has expanded 100% in the same period. I guess all the Temasek companies are not doing that well relative to 1992 to 1997 period.
you cannot just look at money supply alone. You also need to take into consideration the velocity of money. money in the bank will not be inflationary if not used.
devilplate
11-03-11, 09:53
Conclusion from comparing 1992-1997 vs 2005-2011 of M3 vs GDP growth is that:
1. Since M3 growing much faster than GDP growth in 2005-2011, inflation is definitely much higher in 2005-2011 compared to 1992-1997.
2. Property price with decent yield must at least match M3 growth in terms of capital appreciation. During 1992-1997, M3 expanded by 73%, so 1000psf unit should go to 1730psf from 1992 to 1997. Using the same logic, 1000psf unit should go to 2000psf from 2005-2011. Due to government cooling measures, this target has not been met so property, as of now, still has room to appreciate if M3 continues to grow much faster than GDP growth.
3. How about stocks? STI expanded from 1.2k in 1992 to 2.4k in 1997, outperforming M3 growth. STI expanded from 2.4k at 2005 and now still at 3k, the return really sucks big time consider M3 has expanded 100% in the same period. I guess all the Temasek companies are not doing that well relative to 1992 to 1997 period.
interesting views on money supply equation:cool:
2) 1kpsf shd be 2kpsf from 05-11....well, certain segment/ppty oredi achieved tat...unless u using PPI as a general guide? 2005 PPI was about 12x....den 2011 shd be 240!!:D so, NO sell until 240? now about 200....20% more to come!:D :cheers6:
Conclusion from comparing 1992-1997 vs 2005-2011 of M3 vs GDP growth is that....
it just means right now the gov is deliberately taking an inflationary approach to maintain the economy. BoE just did the same yesterday for UK.
Unusual time calls for unusual measures. THIS is already an unusual measure.
one time 10% appreciation of SGD will kill many exporters (what do you think Keppel rigs'/shipyards' advantage compared with the Koreans ? Its price is already 10% higher), and set huge precedence of uncertainty on SG as a whole.
If you think SG's controlled float is bad, what abt HK ? Shouldn't it be dead already ? and just as hopeful said, do we really have *runaway* inflation already ?
btw devil is right. all the SGD fx forward has appreciation priced in. The vol is so low there is nothing to play. anyway SGD is too small to be of any real interest for the market players.
phantom_opera
11-03-11, 10:36
Velocity of money must ask MAS. However, velocity of money is normally quite stable in a mature, open economy like Singapore. This is especially so since most economic activities are generated by the blue chips (including DBS, OCBC) in STI that are partly and wholly owned by Temasek Holdings so they will not purposely slow down the velocity of money to curb inflation but result in loss in profit/revenue for the blue chips.
For money in the banks, We are not like China, every day up and down bank reserve requirement. In fact, velocity of money should increase from one period to another period with more intense economic activities e.g. construction of circle line, DTLs, the two IRs during 2005-2011.
stalingrad
11-03-11, 10:40
it just means right now the gov is deliberately taking an inflationary approach to maintain the economy. BoE just did the same yesterday for UK.
Unusual time calls for unusual measures. THIS is already an unusual measure.
one time 10% appreciation of SGD will kill many exporters (what do you think Keppel rigs'/shipyards' advantage compared with the Koreans ? Its price is already 10% higher), and set huge precedence of uncertainty on SG as a whole.
If you think SG's controlled float is bad, what abt HK ? Shouldn't it be dead already ? and just as hopeful said, do we really have *runaway* inflation already ?
btw devil is right. all the SGD fx forward has appreciation priced in. The vol is so low there is nothing to play. anyway SGD is too small to be of any real interest for the market players.
No wonder HK has the most expensive properties in the world. And we want to be in the same boat as HK. why? Why can't we do better than HK? Aren't we paying the ministers to think better than their peers in the region?
besides if we consciously accept higher inflation in exchange for higher growth, then we should make that clear rather than saying "inflation is imported and we can't do anything about it."
devilplate
11-03-11, 10:45
No wonder HK has the most expensive properties in the world. And we want to be in the same boat as HK. why? Why can't we do better than HK? Aren't we paying the ministers to think better than their peers in the region?
besides if we consciously accept higher inflation in exchange for higher growth, then we should make that clear rather than saying "inflation is imported and we can't do anything about it."
den u go buy JB ppty lor since its cheap :tongue3: :D
btw, inflation rising....ppty/cars aside....rising food/oil cost is our main concern....cannot help it one la....SG dun grow food...dun hf oil fields.....ur 10% one time jump will make many ppl JUMP:tongue3:
stalingrad
11-03-11, 10:49
den u go buy JB ppty lor since its cheap :tongue3: :D
btw, inflation rising....ppty/cars aside....rising food/oil cost is our main concern....cannot help it one la....SG dun grow food...dun hf oil fields.....ur 10% one time jump will make many ppl JUMP:tongue3:
20% appreciation will make petrol 20% cheaper, vegetables from malaysia 20% cheaper, fish from vietnam and india 20% cheaper. that is undesirable?
I am not literally calling for a 20% one time appreciation for the sing dollar. I am calling for a more balanced approach toward growth and inflation. Just a little less focus on growth and more focus on inflation would be very desirable. But I am sure that MAS will not do that. why? because I understand it very well. it will never rock any boat. It will continue to think inside the box and blame inflation on "world markets." people are not smart enough to understand the problem to blame it. so why should it do anything?
the problem is that inflation doesn't have to be imported. the exchange rate is perfect barrier to inflation if we have the will to use it.
devilplate
11-03-11, 10:53
20% appreciation will make petrol 20% cheaper, vegetables from malaysia 20% cheaper, fish from vietnam and india 20% cheaper. that is undesirable?
I am not literally calling for a 20% one time appreciation for the sing dollar. I am calling for a more balanced approach toward growth and inflation. Just a little less focus on growth and more focus on inflation would be very desirable. But I am sure that MAS will not do that. why? because I understand it very well. it will never rock any boat. It will continue to think inside the box and blame inflation on "world markets." people are not smart enough to understand the problem to blame it. so why should it do anything?
cannot just artificially push up the dollar value just like dat rite....tats y goto do it gradually...no?
US hoping their currency to drop instantly against china yuan leh....aso cannot wat...tats y goto print tons and tons of $$ inorder to slowly achieve tat?:2cents:
stalingrad
11-03-11, 10:56
cannot just artificially push up the dollar value just like dat rite....tats y goto do it gradually...no?
US hoping their currency to drop instantly against china yuan leh....aso cannot wat...tats y goto print tons and tons of $$ inorder to slowly achieve tat?:2cents:
yes, china, hk and singapore are all doing the same thing. but the difference between singapore and china is that most of the costs of PRC exporters are in Yuans, but for Singapore, most of the costs are in USD. So, a stronger SGD can actually help our exporters lower their costs but a stronger Yuan will hurt Chinese exporters badly. Thus, we should not use currency as a competitive edge as much as China.
stalingrad
11-03-11, 10:59
cannot just artificially push up the dollar value just like dat rite....tats y goto do it gradually...no?
US hoping their currency to drop instantly against china yuan leh....aso cannot wat...tats y goto print tons and tons of $$ inorder to slowly achieve tat?:2cents:
cannot "artificially"? why? you don't understand that SGD is entirely artificially managed. its exchange rates are entirely an artifice, entirely man-made.
can talk until the cows come home.
what is your trading positions? short or long USDSGD?
Put money where the mouth is. Simple right?
devilplate
11-03-11, 11:09
yes, china, hk and singapore are all doing the same thing. but the difference between singapore and china is that most of the costs of PRC exporters are in Yuans, but for Singapore, most of the costs are in USD. So, a stronger SGD can actually help our exporters lower their costs but a stronger Yuan will hurt Chinese exporters badly. Thus, we should not use currency as a competitive edge as much as China.
i am trying to digest tat.....stronger SGD benefit the exporter meh????
i am not guru but i tot exporters profit will suffer as their pricing is based on USD??? convert back to SGD....they SUFFER!....no meh?:confused: :scared-4:
stalingrad
11-03-11, 11:14
i am trying to digest tat.....stronger SGD benefit the exporter meh????
i am not guru but i tot exporters profit will suffer as their pricing is based on USD??? convert back to SGD....they SUFFER!....no meh?:confused: :scared-4:
you are right. but you also need to look at the flip side, the costs. take the rig builders for example, like Keppel. their costs are all in US dollars; labor and steel are all in US dollars." so, when Sing dollar appreciates against USD, the costs in sing dollars will go down for these rig builders. That would make them more competitive. so the net effect of a one time 20% sing dollar appreciation will not have much impact on exporter's competitive position.
Does MAS know this? I am sure they know, but they are just a bunch of civil servants not willing to rock the boat and deviate from conventional thinking. I expect them to do nothing even if there is overwhelming evidence that appreciation is good for the economy.
i am trying to digest tat.....stronger SGD benefit the exporter meh????
i am not guru but i tot exporters profit will suffer as their pricing is based on USD??? convert back to SGD....they SUFFER!....no meh?:confused: :scared-4:
you cannot find a one-handed economist.
always economists have 2 hands.
"on one hand, blah blah...."
"on the other hand, blah blah...."
I layman hor.. But simple understanding is stronger dollar... means exporter will suffer..
stronger sing dollar may not mean lower prices.. as evident on our gasoline prices.. they just refused to come down despite crude 50% much lower and sing dollar vs US is 1.27 vs 1.5 then.
I not much education so I stand corrected ! (if kind souls can help me)
GST tax more on the rich and less on the poor also too cheem for me to comprehend !
stalingrad
11-03-11, 11:20
I layman hor.. But simple understanding is stronger dollar... means exporter will suffer..
stronger sing dollar may not mean lower prices.. as evident on our gasoline prices.. they just refused to come down despite crude 50% much lower and sing dollar vs US is 1.27 vs 1.5 then.
I not much education so I stand corrected ! (if kind souls can help me)
GST tax more on the rich and less on the poor also too cheem for me to comprehend !
stronger dollar will reduce the costs incurred by the exporters. We are an open economy. We don't make anything. the costs incurred by the exporters are all in US dollars.
besides, if inflation and its expectations become entrenched, workers are going to be unhappy and ask for pay raises, thus creating a vicious cycle.
you are right. but you also need to look at the flip side, the costs. take the rig builders for example, like Keppel. their costs are all in US dollars; labor and steel are all in US dollars." so, when Sing dollar appreciates against USD, the costs in sing dollars will go down for these rig builders. That would make them more competitive. so the net effect of a one time 20% sing dollar appreciation will not have much impact on exporter's competitive position.
Does MAS know this? I am sure they know, but they are just a bunch of civil servants not willing to rock the boat and deviate from conventional thinking. I expect them to do nothing even if there is overwhelming evidence that appreciation is good for the economy.
You are so full of hot air.
NATO. :sleep::sleep::sleep:
Txs Grad ! I agree with you ...
But... if sgd dollar goes up... cost in US dollar may increased... all those MNCs and manpower they paid us in sing dollar.. ie means higher cost ..
Does it mean that our govt will implement more measures to make us better, faster & cheaper ??
stalingrad
11-03-11, 11:26
Txs Grad ! I agree with you ...
But... if sgd dollar goes up... cost in US dollar may increased... all those MNCs and manpower they paid us in sing dollar.. ie means higher cost ..
Does it mean that our govt will implement more measures to make us better, faster & cheaper ??
no when SGD goes up, its take less SGD to buy the same amount of steel and foreign labor, so the costs for the exporters in SGD will actually go down.
devilplate
11-03-11, 11:30
stronger dollar will reduce the costs incurred by the exporters. We are an open economy. We don't make anything. the costs incurred by the exporters are all in US dollars.
besides, if inflation and its expectations become entrenched, workers are going to be unhappy and ask for pay raises, thus creating a vicious cycle.
i tot exporters usually will seal a 1-2yr contract at a price based on current USD exchange rates.....if SGD jumped overnite, exporters surely close shop....tats y MAS can only gradually let the SGD appreciates.....hmm...sounds logical...haha:2cents:
stalingrad
11-03-11, 11:40
i tot exporters usually will seal a 1-2yr contract at a price based on current USD exchange rates.....if SGD jumped overnite, exporters surely close shop....tats y MAS can only gradually let the SGD appreciates.....hmm...sounds logical...haha:2cents:
if SGD appreciates against USD, the USD payments received by the exporters will be exchanged into fewer SGD. That is true. but the costs incurred by the exporters in SGD will also be lower when the SGD appreciates. So the net effect is not that much, or at least less than the net effect of a Yuan appreciation for PRC exporters.
we as an open economy shouldn't use a weak currency as a competitive edge.
after all these intense and intellectual discussion, so what is the bottom line? will property prices go up or down in the next 2-3 years?
Allthepies
11-03-11, 12:10
if SGD appreciates against USD, the USD payments received by the exporters will be exchanged into fewer SGD. That is true. but the costs incurred by the exporters in SGD will also be lower when the SGD appreciates. So the net effect is not that much, or at least less than the net effect of a Yuan appreciation for PRC exporters.
we as an open economy shouldn't use a weak currency as a competitive edge.
i guess u have a strong feel about your reasoning/idea. Why don't you write up a formal paper and submit it to the relevant authorities. I'm sure if your reasoning is sound, they will adopt it.... :D
devilplate
11-03-11, 12:10
after all these intense and intellectual discussion, so what is the bottom line? will property prices go up or down in the next 2-3 years?
who dare to answer? if i say ppty will go up, ppl say i holds multiple ppty, got lots of vested interest and worse still, label u as AGENT
if i say ppty will go down, others will say i sore loser, sold oredi and waiting for price to crash...holds too much toilet paper in the bank....
Allthepies
11-03-11, 12:16
i put my bet on property price going up in the next 2/3 years based on the following observations
1) New plots are still aggressively bidded by developers
2) Extremely low interest rate and free flow of money
provided
1) No new government intervention/measures
2) No global recession
stalingrad
11-03-11, 12:27
who dare to answer? if i say ppty will go up, ppl say i holds multiple ppty, got lots of vested interest and worse still, label u as AGENT
if i say ppty will go down, others will say i sore loser, sold oredi and waiting for price to crash...holds too much toilet paper in the bank....
I say go down. when inflation gets worse and worse, MAS has to accelerate the "gradual appreciation" of SGD, leading to higher interest rates, causing the property market to drop. if MAS waits too long, the bubble may actually burst when interest rates skyrocket. so, I cannot say about the short term. In the long run, properties may be a bad investment.
devilplate
11-03-11, 12:34
I say go down. when inflation gets worse and worse, MAS has to accelerate the "gradual appreciation" of SGD, leading to higher interest rates, causing the property market to drop. if MAS waits too long, the bubble may actually burst when interest rates skyrocket. so, I cannot say about the short term. In the long run, properties may be a bad investment.
how short is short...and how long is long run? can give a more clearer timeline?:D
phantom_opera
11-03-11, 12:37
stalin either sold his property already or looking to buy CCR lah ... there is no relationship between SGD rate against interest rate ... SGD strong does not mean SIBOR will go up. SIBOR is almost pegged to US short term rate.
Recent survey of economists by MAS expect SIBOR to be at 0.55% end of 2011 ... your cash becoming toilet paper soon
stalingrad
11-03-11, 12:45
stalin either sold his property already or looking to buy CCR lah ... there is no relationship between SGD rate against interest rate ... SGD strong does not mean SIBOR will go up. SIBOR is almost pegged to US short term rate.
Recent survey of economists by MAS expect SIBOR to be at 0.55% end of 2011 ... your cash becoming toilet paper soon
No, I have not sold my property. and if higher SGD is achieved by MAs selling USD and buying SGD, interest rates will definitely go higher.
short term is two years, before the next US election.
devilplate
11-03-11, 12:49
No, I have not sold my property. and if higher SGD is achieved by MAs selling USD and buying SGD, interest rates will definitely go higher.
short term is two years, before the next US election.
ic...u mentioned u r not sure about the short term....hmm....actually i believe within next 2yrs(short term), ppty shd be increasing gradually and may even experience a spike somewhr due to pent up demand....thanks to cooling measures....:2cents:
after tat....too far away to do any analysis liao as things/policies/situation/cicrumstances changes by den
actually I think even staling agrees in the next 2yrs pty price will go up ...regardless whether he likes it or not....
and I agree, after that, it's too faraway to tell...
Bottomline is: somebody will to rock the boats and crash the property prices so that he can buy cheap cheap and start even talks of MAS so lousy cannot manage properly blah blah blah! :rolleyes:
after all these intense and intellectual discussion, so what is the bottom line? will property prices go up or down in the next 2-3 years?
phantom_opera
11-03-11, 13:17
For a more factual discussion, not just speculation, read this:
http://www.mas.gov.sg/publications/staff_papers/MAS_Occasional_Paper_No__16__Sep_1999.html
Quoted from link above:
The paper sets out to investigate the determinants of the
domestic interbank interest rate and the dynamic linkages between changes
in the interbank rate and the fixed deposit and prime lending rates. Our
empirical analysis shows that the interbank interest rate in Singapore is
primarily determined by movements in the US interest rate adjusted for the
expected change in the Singapore-US Dollar exchange rate. As the model
that we have estimated shows, this is a result of an endogenous portfolio
balance decision in a highly open economy with a managed exchange rate
regime. Before the advent of the Asian currency crisis, the differential
between the US and the Singapore interest rate was largely due to
expectations of changes in the Singapore-US Dollar nominal exchange rate.
During the crisis, rising exchange rate risk premia and errors in forecasting
future changes in the spot rate resulted in significant deviations from
uncovered interest parity.
=> What it is saying is that if USD-SGD is constant, 3m SIBOR S$ will exactly match 3m SIBOR US$.... but in reality there is a small differential e.g. 0.1 to 0.2% due to expectation of future movement of USD-SGD. And in the history, the differential becomes significantly big only during the Asian financial crisis when market is uncertain over stability of USD SGD exchange rate.
So stalin, what are you suggesting? Overnight appreciation of 20% of SGD or depreciation of 20%?
stalingrad
11-03-11, 13:26
For a more factual discussion, not just speculation, read this:
http://www.mas.gov.sg/publications/staff_papers/MAS_Occasional_Paper_No__16__Sep_1999.html
Quoted from link above:
The paper sets out to investigate the determinants of the
domestic interbank interest rate and the dynamic linkages between changes
in the interbank rate and the fixed deposit and prime lending rates. Our
empirical analysis shows that the interbank interest rate in Singapore is
primarily determined by movements in the US interest rate adjusted for the
expected change in the Singapore-US Dollar exchange rate. As the model
that we have estimated shows, this is a result of an endogenous portfolio
balance decision in a highly open economy with a managed exchange rate
regime. Before the advent of the Asian currency crisis, the differential
between the US and the Singapore interest rate was largely due to
expectations of changes in the Singapore-US Dollar nominal exchange rate.
During the crisis, rising exchange rate risk premia and errors in forecasting
future changes in the spot rate resulted in significant deviations from
uncovered interest parity.
=> What it is saying is that if USD-SGD is constant, 3m SIBOR S$ will exactly match 3m SIBOR US$.... but in reality there is a small differential e.g. 0.1 to 0.2% due to expectation of future movement of USD-SGD. And in the history, the differential becomes significantly big only during the Asian financial crisis when market is uncertain over stability of USD SGD exchange rate.
So stalin, what are you suggesting? Overnight appreciation of 20% of SGD or depreciation of 20%?
yes, that makes sense. when SGD is likely to appreciate over time against USD, more people will park their money in SGD, and thus leading to lower SIBOR. That explains the recent drop in interest rates. thus, as I said before, the gradual appreciation policy itself is inflationary.
But if MAS drops this gradual appreciation policy, and allow a one time 20% appreciation, then afterward, the movement will SGD will become random walk and holding SGD become risky. in that case, less people will hold SGD, and interest rates will start to rise.
just my two cents.
yes, that makes sense. when SGD is likely to appreciate over time against USD, more people will park their money in SGD, and thus leading to lower SIBOR. That explains the recent drop in interest rates. thus, as I said before, the gradual appreciation policy itself is inflationary.
But if MAS drops this gradual appreciation policy, and allow a one time 20% appreciation, then afterward, the movement will SGD will become random walk and holding SGD become risky. in that case, less people will hold SGD, and interest rates will start to rise.
just my two cents.
wow, 20% interest. the manufacturing sector will go kaputzzz
wow, 20% interest. the manufacturing sector will go kaputzzz
apologies, i mean 20% appreciation
stalingrad
11-03-11, 13:33
wow, 20% interest. the manufacturing sector will go kaputzzz
no, it won't. the sector's costs largely are in USD.
no, it won't. the sector's costs largely are in USD.
when sgd appreciates, it's against a basket of currencies and i believe usd is in it.
stalingrad
11-03-11, 13:41
when sgd appreciates, it's against a basket of currencies and i believe usd is in it.
that is precisely the problem. because MAS sets the value of SGD against a basket of different currencies, when countries like HK pegs their currencies on USD, our currency is pegged to the US more or less too.
The problem with this is that commodities prices are in USD. to quell inflation, we need faster appreciation against USD.
phantom_opera
11-03-11, 13:41
yes, that makes sense. when SGD is likely to appreciate over time against USD, more people will park their money in SGD, and thus leading to lower SIBOR. That explains the recent drop in interest rates. thus, as I said before, the gradual appreciation policy itself is inflationary.
But if MAS drops this gradual appreciation policy, and allow a one time 20% appreciation, then afterward, the movement will SGD will become random walk and holding SGD become risky. in that case, less people will hold SGD, and interest rates will start to rise.
just my two cents.
So you are suggesting MAS to give up managed currency regime with a big bang of 20% appreciation, briliant :banghead:
I think u all discussion on wrg factor. Trying to impress with all funny theories on how fiscal n monetary policies will affect prices. Some even wanna suggest to MAS how to price the singapore dollar.....
JC student will tell u, supply n demand alone determines prices. All factors to me are just secondary. Interest rates does not affect the basic demand of housing, it only affects your financing options n affordability.
Even if interest rates increases , if there are enough expats to pay the high rental, the interest rate cost will be pass on to the consumer. High GDP growth will ensure high demand as the economy needs more pple to drive it's engine. I would bet on demand to be the most important factor now. Post election policies will ensure a roaring property mkt if we do have a open door policies to up population for another 1.5m people.
At the aggressive rate properties are being enbloc n bidded by developers, I would say the price will move up moderately , mostly due to fear of insanely harsh housing policies.
stalingrad
11-03-11, 13:47
So you are suggesting MAS to give up managed currency regime with a big bang of 20% appreciation, briliant :banghead:
precisely. see, you are against it. I don't blame you. the benefits are many fold:
(1) no more property bubble;
(2) low inflation
(3) low income family can survive without government handouts
(4) reduced inflation expectations, good for the capital budgeting decision, and good for investments.
there is no downside. the manufacturing section has its costs mostly in USD, and so the downside is limited.
phantom_opera
11-03-11, 13:49
Of course supply n demand determine prices. But there are many factors that affect demand, the more significant factors are extreme low interest rate & high inflation rate. I think we all expect moderate GDP growth for next few years right?
=> and asking Singapore to give up a successful system?! Singapore needs certain degree of control over exchange rate stability and export competitiveness, losing that will be unimaginable :tsk-tsk:
John Williamson, a Washington-based UK economist credited with developing the BBC model in the 1970s, has called Singapore "the world's most successful practitioner of a BBC regime".
The Singapore currency system can "serve as a basic template for other east Asian countries", said Kim-Song Tan at the Singapore Management University in a recent paper on regional exchange rate systems.
The Monetary Authority of Singapore has said the BBC policy has given it flexibility in responding to changes in both local and global conditions to maintain export competitiveness and control inflation.
stalingrad
11-03-11, 13:56
as I said before, I expect MAS to do nothing, and continue to stick to its managed float regime. why should it do anything bold? if the current regime leads to disasters, MAS can say "we are just doing the same thing that China and HK are doing." but if they do something bold and it fails, it would get blamed to death.
so, MAS, just a warren of public servants, probably will continue to blame "imported inflation" and do nothing.
boy, earthquake in japan. that is inflationary too. I better buy more oil and gold.
bye.
precisely. see, you are against it. I don't blame you. the benefits are many fold:
(1) no more property bubble;
(2) low inflation
(3) low income family can survive without government handouts
(4) reduced inflation expectations, good for the capital budgeting decision, and good for investments.
there is no downside. the manufacturing section has its costs mostly in USD, and so the downside is limited.
U wondered y china refused to up it's currency exchange program? If ur theory is correct, all they have to do is up 50% , continue to import in usd they will huat big time? Your theory of increase currency exchange vs US to be competitively is fundamentLy wrg. Korea will just sell whatever u wanna sell by e tons.
Don't mind if I ask, how did u fair in economics lessons?
stalingrad
11-03-11, 14:00
U wondered y china refused to up it's currency exchange program? If ur theory is correct, all they have to do is up 50% , continue to import in usd they will huat big time? Your theory of increase currency exchange vs US to be competitively is fundamentLy wrg. Korea will just sell whatever u wanna sell by e tons.
Don't mind if I ask, how did u fair in economics lessons?
but neither china, nor korea have a open economy where most of its manufacturing costs are in USD. We do.
precisely. see, you are against it. I don't blame you. the benefits are many fold:
(1) no more property bubble;
(2) low inflation
(3) low income family can survive without government handouts
(4) reduced inflation expectations, good for the capital budgeting decision, and good for investments.
there is no downside. the manufacturing section has its costs mostly in USD, and so the downside is limited.
if adversely affected companies move businesses outta singapore, loss of jobs, tax revenue, etc etc. must look at this wholistically.
not to say the appreciation is a bad idea, just stating that there are other issues to consider as well
stalingrad
11-03-11, 14:03
Of course supply n demand determine prices. But there are many factors that affect demand, the more significant factors are extreme low interest rate & high inflation rate. I think we all expect moderate GDP growth for next few years right?
=> and asking Singapore to give up a successful system?! Singapore needs certain degree of control over exchange rate stability and export competitiveness, losing that will be unimaginable :tsk-tsk:
John Williamson, a Washington-based UK economist credited with developing the BBC model in the 1970s, has called Singapore "the world's most successful practitioner of a BBC regime".
The Singapore currency system can "serve as a basic template for other east Asian countries", said Kim-Song Tan at the Singapore Management University in a recent paper on regional exchange rate systems.
The Monetary Authority of Singapore has said the BBC policy has given it flexibility in responding to changes in both local and global conditions to maintain export competitiveness and control inflation.
but you have eyes to see for yourself whether it is doing its job or not, right?
RIGHT NOW, WE HAVE
(1) 5.5% inflation, highest in the region, if not Asia.
(2) fast inflating property bubble
(3) disgruntled workers complaining about shrinking pay checks.
(4) factory managers complaining about rising wages
(5) government having to give handouts to low income families to stop them from complaining.
so, the managed float system works or not? in your view?
stalingrad
11-03-11, 14:05
if adversely affected companies move businesses outta singapore, loss of jobs, tax revenue, etc etc. must look at this wholistically.
not to say the appreciation is a bad idea, just stating that there are other issues to consider as well
that is not a concern now. now the concern is the economy overheating.
Of course supply n demand determine prices. But there are many factors that affect demand, the more significant factors are extreme low interest rate & high inflation rate. I think we all expect moderate GDP growth for next few years right?
=> and asking Singapore to give up a successful system?! Singapore needs certain degree of control over exchange rate stability and export competitiveness, losing that will be unimaginable :tsk-tsk:
John Williamson, a Washington-based UK economist credited with developing the BBC model in the 1970s, has called Singapore "the world's most successful practitioner of a BBC regime".
The Singapore currency system can "serve as a basic template for other east Asian countries", said Kim-Song Tan at the Singapore Management University in a recent paper on regional exchange rate systems.
The Monetary Authority of Singapore has said the BBC policy has given it flexibility in responding to changes in both local and global conditions to maintain export competitiveness and control inflation.
The demand I mean is real housing demand, the kind where pple need a place to stay, not the Beijing kind where buy Liao keep it empty. Real demand is not because interest rate is 0% suddenly our ass stays in 2 house. Real demand ensure sustainability
phantom_opera
11-03-11, 14:14
but you have eyes to see for yourself whether it is doing its job or not, right?
RIGHT NOW, WE HAVE
(1) 5.5% inflation, highest in the region, if not Asia.
(2) fast inflating property bubble
(3) disgruntled workers complaining about shrinking pay checks.
(4) factory managers complaining about rising wages
(5) government having to give handouts to low income families to stop them from complaining.
so, the managed float system works or not? in your view?
The system works well over many years already. Cannot just scrap because you think it is best for current situation as it is proven to work very well in many other situations. As for wage increment, it is only possible with positive GDP growth. In short, Singapore has gone through high inflation period in the past as well low inflation period, it just happens we are back in high inflation period. Gradual appreciation is still the best strategy. Property bubble will stop once they sell TIPS or raise CPF OA rate to peg with inflation.
but you have eyes to see for yourself whether it is doing its job or not, right?
RIGHT NOW, WE HAVE
(1) 5.5% inflation, highest in the region, if not Asia.
(2) fast inflating property bubble
(3) disgruntled workers complaining about shrinking pay checks.
(4) factory managers complaining about rising wages
(5) government having to give handouts to low income families to stop them from complaining.
so, the managed float system works or not? in your view?
are the 5 points a disaster?
3 and 4 and 5 are practised everywhere.
which workers ever say they earn enough?
which boss ever say they need to give workers more?
inflation in Indonesia is even higher :) We are so used to relatively high inflation. What is 5.5% :doh:
making a mountain of a molehill :doh:
devilplate
11-03-11, 14:28
i tink India very jialat rite...super high inflation...
http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=INR
i m not using them to say Sg is better....just creating an awareness:D :cheers6:
very gd website indeed...hehe...7.5% inflation highest in 2008 for SG
looks like HK control their inflation rate better den SG...:cool:
but you have eyes to see for yourself whether it is doing its job or not, right?
RIGHT NOW, WE HAVE
(1) 5.5% inflation, highest in the region, if not Asia.
(2) fast inflating property bubble
(3) disgruntled workers complaining about shrinking pay checks.
(4) factory managers complaining about rising wages
(5) government having to give handouts to low income families to stop them from complaining.
so, the managed float system works or not? in your view?
Are we having 25% unemployment in Spain or 10% in USA? Are we having massive protest like poor middle east countries? Btw my children did have to leave home to be a maid or worst. Btw if u are a PR think abt y u come here n work , issit because u like to pay fast inflating property bubble, squeeze at crowded MRT , or u like to pay lengdary COE prices. Couldn't be because Singapore got world nicest swimming pool right?
While u care about how lousy our PAP is not living up to your worldly standards, I care for my family having a SAFE , stable environment and having a chance to get a good education so that even she get a master degree , she no need to go to some other country n be a maid or worst.
To some PRs they like to shoot loads of crab, cos they care a shit what happens to the country, they just pack up n go, what do they care abt?
Apologize if I Out of topic. I would go for moderate growth in prices supported by relocation demand.
but neither china, nor korea have a open economy where most of its manufacturing costs are in USD. We do.
Preciously ! Are u say if we increase 200% we will become cheaper than Korea n china in cost? Don't know what u talking.
devilplate
11-03-11, 15:04
i tink SG export more den import rite?
http://www.tradingeconomics.com/singapore/indicators/
many interesting figures....draw ur own conclusion:D
phantom_opera
11-03-11, 15:22
Japan Giant Earthquake and Tsunami, today's financial market will be fried if end up Tokyo suffers super damage:
http://edition.cnn.com/2011/WORLD/asiapcf/03/11/japan.quake/index.html?hpt=T1
devilplate
11-03-11, 15:24
Japan Giant Earthquake and Tsunami, today's financial market will be fried if end up Tokyo suffers super damage:
http://edition.cnn.com/2011/WORLD/asiapcf/03/11/japan.quake/index.html?hpt=T1
stock market oredi FRIED....:mad:
Allthepies
11-03-11, 20:04
Japan Giant Earthquake and Tsunami, today's financial market will be fried if end up Tokyo suffers super damage:
http://edition.cnn.com/2011/WORLD/asiapcf/03/11/japan.quake/index.html?hpt=T1
seems like mother earth is very angry.... first christchurch then tokyo maybe tom Singapore will just disappear... :( everyone here please don't argue so much and spend more times with your loved ones.... :D
Still no o e dares to commit.... Sigh... Let me start then...
1. Singapore aiming to become global city right? So London one Hyde park is selling for £6000 per sq foot on average. We have more room to move up.
2. If SGD gradual appreciation, means more foreign money money flowing in, equities and property will go up.
3. Interest rates will follow US, we have never used interest rates to handle inflation hence interest rates will follow US.... Plus if there are more money coming to SGD, that means the banks will ber flush with cash here andnwill need to lend out more so interest rates will remain low
4. Just as long the economy keeps growing, there will be more expats... Notice that now the gahmen is assessing even the criteria and quality of expats coming in, so there will be higher level jobs and hence bigger rental budget..
5. capitaland launching brand new condo called Paragon in shanghai maiming road at rumoured abt price of sgd2500 psf for a 70 years leasehold project in the next few weeks... Dont you thin that will make Singapore property prices look attractive?
6. Look out for this year F1, it should be the biggest and best yet as the two IR will be fully opened with all the bells and whistle and the Singapore remaking story will truly go global... More publicity and prices up again...
The only way property prices will go down will only be due to
1. China economy and propery crashes, all chines cash put of sin market to cover losses in chi a.
2. Oil crisis gets out offhand and oil goes to usd150 and above
3. Extremely harsh CM5, like only can loan 30% or totally no loan for third property... Or outright ban for buying of third property.... Ruhr now REDAS is trying to preempt that by showing data for different segment.... I think whatnthe are trying to Sonia hope the gahmen will cool the OCR pries but leave CCR condos alone...
So all in all, I predict prices rises of 5-10% for 2011
that is not a concern now. now the concern is the economy overheating.
when there's such an appreciation, the consequences will be immediate. incorrect to say there is not a concern now.
see what happened last year when countries tried to devalue their currencies to maintain export competitiveness. global political spats and currency wars......drastic measures produce consequences that are far flung and it would be foolhardy to ignore the flip side of a coin while taking the plunge
but inflation expectations getting higher and higher, the damage to the economy is getting more and more serious. Workers will be unhappy seeing their pay checks shrinking by the day. so, MAS must take a balanced approach, with priority given to fighting inflation. that means allowing sing dollar to appreciate more rapidly. at this moment, sing dollars are not appreciating faster than the currencies of the neighboring countries. MAS should take a bolder approach to tamp down inflation expectations.
You are so full of contradiction. First you ask for MAS to take a `balanced' approach and yet in the same breath, you asked for priority be given to fighting inflation. C'mon, how can there be a balanced approach when you have already defined priorities :doh:
This is so typical of airhead who sprout rubbish in brain-storming session who hide behind the `thinking outside the box' curtain when they actually know nuts about the topic and use the session to clarify their lack of knowledge. And to conceal their inadequacies, they claim they are thinking out of the box and urge others to likewise think `out of the box' so that that they do not seem stupid when bringing up stupid ideas :D
And very often, this kind of `out of the box' suggestions come from those who also NATO a lot.
Please do not act so noble and suggest that you want SGD to strengthen so that imported inflation is tamed. Most in this forum here knows your MAIN agenda has always been to buy another property AND in RCR/ CCR area like Duchess, Bukit Timah area. After you have failed to argue for higher interest rates in Sg, now you argued for 1-time 20% appreciation of SGD! We may be run by a man with the surname "Lee" but please do not mistake him for a Korean....most certainly not a North Korean comrades of yours.
What you are hoping to achieve with the 1 time appreciation is to destablise the economy and its also contrary to what Singapore stands for to foreign investors: A stable and well managed economy without fickle economic flip-flops. And only foreigners (or maybe PR, new citizen??) like yourself who is holding dual citizenship or PR elsewhere would suggest such radical AND nonsense policy because if it really happens (the appreciation of SGD), you can just pack up and convert your SGD denominated assets and return back to canada, US or wherever you so fancy and immediately you are 20% richer! Wow, either you are naive to think we can't see thru your intentions or you are just plain stupid. Like I said many times, your intentions are always so plain for others to see, even behind the computer, haha. Do yourself a favour, go register a new nick and come back again.
Still try to use reverse psychology and challenge MAS to `think' out of the box by saying they won't dare to take up your suggestion. Do you think this is children's playground? There is a reason why you are sitting behind the computer typing such nonsense in a ppty forum, dreaming that some SPH reporter will pick up your suggestion and write in ST. Trust me, if you are really that good, they would have taken notice of you in your professional capacity and invited you to submit your opinions via their terms, not yours :D
In conclusion, your only agenda is to milk singapore dry with all your selfish and stupid suggestions and claims that its your `out of box' thinking. More like `out of your AS+S' thinking :spliff2:
stalingrad
12-03-11, 11:15
devilplante,
you are right. whatever you say, there will be people attacking you. so, the best policy is just to shut up, and do what you do the best; that is say "good, agree, and you are the king."
Guys, don't forget my post here: http://forums.condosingapore.com/showthread.php?t=10697
Explaining why letting the SGD appreciate gradually or even letting the market speculate on it's appreciation is inflationary (any appreciation, one-time or gradual will send a bullish message to the market thus encouraging speculation on the SGD). The only way to fight inflation is to attack it's root (funds flowing into SG). Letting the SGD depreciate gradually is the way.
stalingrad
12-03-11, 20:35
Guys, don't forget my post here: http://forums.condosingapore.com/showthread.php?t=10697
Explaining why letting the SGD appreciate gradually or even letting the market speculate on it's appreciation is inflationary (any appreciation, one-time or gradual will send a bullish message to the market thus encouraging speculation on the SGD). The only way to fight inflation is to attack it's root (funds flowing into SG). Letting the SGD depreciate gradually is the way.
Don't bother with these ignorant people. they are speculators, not economics professors.
by the way, the effect will be the same by a one time 20% appreciation. That way, hot money will stop flowing into the country as investors figure that they have missed the boat.
but basically I agree with you this gradual appreciation pollicy is insane.
Very funny!
pmet is against S$ appreciation at all and how can his view point and end result to be same as you shouting for 20% appreciation in S$? :doh:
Seems like nobody here agree with you view at all! :p
Originally Posted by pmet
Guys, don't forget my post here: http://forums.condosingapore.com/showthread.php?t=10697
Explaining why letting the SGD appreciate gradually or even letting the market speculate on it's appreciation is inflationary (any appreciation, one-time or gradual will send a bullish message to the market thus encouraging speculation on the SGD). The only way to fight inflation is to attack it's root (funds flowing into SG). Letting the SGD depreciate gradually is the way.
Don't bother with these ignorant people. they are speculators, not economics professors.
by the way, the effect will be the same by a one time 20% appreciation. That way, hot money will stop flowing into the country as investors figure that they have missed the boat.
but basically I agree with you this gradual appreciation pollicy is insane.
devilplate
12-03-11, 23:25
Don't bother with these ignorant people. they are speculators, not economics professors.
by the way, the effect will be the same by a one time 20% appreciation. That way, hot money will stop flowing into the country as investors figure that they have missed the boat.
but basically I agree with you this gradual appreciation pollicy is insane.
the pot calling the kettle black:p
Don't bother with these ignorant people. they are speculators, not economics professors.
by the way, the effect will be the same by a one time 20% appreciation. That way, hot money will stop flowing into the country as investors figure that they have missed the boat.
but basically I agree with you this gradual appreciation pollicy is insane.
Rubbish lah. I got absolute no doubt that u got all kind of funny thing going on in your head. Being a small dot, u position your price relative to the big bros, u dont determine your price.
Btw, we already see a sudden 27% increase in pay only then got tons of unhappiness floating ard leh. Ur flawed suggest of 1 shot increase is the same as shooting oneself in the leg, suddenly your goods become 20% more expensive.
Hahaha but then what do we know!??
Just for a discussion: pmet, u conclude the root cause of inflation is hot money ? I have to disagree with you. Price of sugar, rice, cooking oil had increased more than 30% this yr alone. This has nothing to do with hot money. Why ? Because SG imports everything, it imports inflation from everywhere else. We have no choice. The correct way to fight it in fact is appreciation.
U and another member (can't remember who, p something) have a very strong opinion on foreign hot money. And you are concerned once they flow out everything will crash. My view is, the economy is not just pty and stock market. For pty, administrative measures can prevent bubble. For stock market, well hot money come and go, business goes on. SG Inc is mostly ran by exporters and mega GLCs. These businesses do not depend on hot money. However they do depend on fx on competitiveness. This is the reason MAS had artificially kept SGD down for a long time.
Rubbish lah. I got absolute no doubt that u got all kind of funny thing going on in your head. Being a small dot, u position your price relative to the big bros, u dont determine your price.
Btw, we already see a sudden 27% increase in pay only then got tons of unhappiness floating ard leh. Ur flawed suggest of 1 shot increase is the same as shooting oneself in the leg, suddenly your goods become 20% more expensive.
Hahaha but then what do we know!??
He is just a mad dog barking and biting people in this forum. :D
stalingrad
13-03-11, 11:14
Rubbish lah. I got absolute no doubt that u got all kind of funny thing going on in your head. Being a small dot, u position your price relative to the big bros, u dont determine your price.
Btw, we already see a sudden 27% increase in pay only then got tons of unhappiness floating ard leh. Ur flawed suggest of 1 shot increase is the same as shooting oneself in the leg, suddenly your goods become 20% more expensive.
Hahaha but then what do we know!??
no, I told you many many times, appreciation will not make your goods 20% more expensive. Can't you read?
I repeat: Given that the costs for the exporters are also in USD, appreciation is mostly a washout. get it? if not, I give up.
for once, please show that your IQ is not that of a lamppost.
devilplate
13-03-11, 11:50
no, I told you many many times, appreciation will not make your goods 20% more expensive. Can't you read?
I repeat: Given that the costs for the exporters are also in USD, appreciation is mostly a washout. get it? if not, I give up.
for once, please show that your IQ is not that of a lamppost.
???? goods definitely become 20% more expensive to the countries we export to wat.....aiya....u better go and tok to some of the guru in the export/import trade b4 u make any further comments:doh:
Letting S$ depreciate now will cause following problems:
1) super high food inflation (since sg imports almost everything), massive discontent
2) super high oil prices-> increase in business costs -> pass down to consumers -> even bigger discontent for general population
3) capital outflow, many unemployment to follow, -> interest rate need to increase to hold back capital outflow
4) (3) ->interest rate increase too high + unemployment causes loan default & property & stock market to crash since cashing out to keep cash in banks is safer -> who want to set up business & take risks when money in banks get high returns & is risk-free?
5) all above are just terrible!
Guys, don't forget my post here: http://forums.condosingapore.com/showthread.php?t=10697
Explaining why letting the SGD appreciate gradually or even letting the market speculate on it's appreciation is inflationary (any appreciation, one-time or gradual will send a bullish message to the market thus encouraging speculation on the SGD). The only way to fight inflation is to attack it's root (funds flowing into SG). Letting the SGD depreciate gradually is the way.
stalingrad
13-03-11, 14:14
???? goods definitely become 20% more expensive to the countries we export to wat.....aiya....u better go and tok to some of the guru in the export/import trade b4 u make any further comments:doh:
If your cost is reduced by 20% because of the SGD appreciation, you can lower your price by 20% in SGD so that the price of your goods in USD would be the same as before while maintaining your probability.
I feel I am speaking to a wall.
If your cost is reduced by 20% because of the SGD appreciation, you can lower your price by 20% in SGD so that the price of your goods in USD would be the same as before while maintaining your probability.
I feel I am speaking to a wall.
I bet u have never been in a manufacturing environment :cool:
U r assuming the cost of raw materials constitutes the major part of the selling price. U forget we need to pay local staff salaries, rents, taxes, services, etc all in SGD.
Say we buy steel at S$10, and sell rigs at S$100 equivalent. By raising S$ drastically, u managed to buy steel at S$8, r u saying u can sell the rig at S$80 now ( so in USD px remains the same ) ?!
I bet u have never been in a manufacturing environment :cool:
U r assuming the cost of raw materials constitutes the major part of the selling price. U forget we need to pay local staff salaries, rents, taxes, services, etc all in SGD.
Say we buy steel at S$10, and sell rigs at S$100 equivalent. By raising S$ drastically, u managed to buy steel at S$8, r u saying u can sell the rig at S$80 now ( so in USD px remains the same ) ?!
Agreed. Cost of labour & services in terms of SGD must not go out of balance with the supply and demand compared to China and India. Otherwise Singapore's competitiveness will be affected.
If your cost is reduced by 20% because of the SGD appreciation, you can lower your price by 20% in SGD so that the price of your goods in USD would be the same as before while maintaining your probability.
I feel I am speaking to a wall.
Seriously that is how most all of us feel when we try to explain to u.
Hmm... not trying to argue your points but Teddybear and Amk, have you wondered why inflation still continues through the roof although SGD has appreciated almost 15% in one year? And currently, SGD is still in the appreciation trend?
It's not too difficult to understand that hot money causes inflation. And to restrict too much from coming in, we need DEPRECIATION.
Guess the govt doesn't want to step in until the situation gets worse :)
...and yes, I too worry about the stock/property market crashing if the govt steps in too early.
Even if ZERO hot money come in, Singapore will still experience unprecedented inflation because all food and commodities have almost doubled in prices or even more and we just need them to live and survive! As such, it is just too easy to blame inflation on hot money! The root problem is not hot money, the root problem is that Singapore has no control over food and commodities supply to counter the price increase that others want us to pay. :o
The only sensible solution so far has been S$ appreciation, but must be gradual to avoid disrupting the economy. People will say MAS stupid, let traders earn all the money. But frankly, MAS just say will let S$ gradual increase and sit there do nothing and the traders will push up for them isn't it? So who is stupid and who is clever? :D
Hmm... not trying to argue your points but Teddybear and Amk, have you wondered why inflation still continues through the roof although SGD has appreciated almost 15% in one year? And currently, SGD is still in the appreciation trend?
It's not too difficult to understand that hot money causes inflation. And to restrict too much from coming in, we need DEPRECIATION.
Guess the govt doesn't want to step in until the situation gets worse :)
...and yes, I too worry about the stock/property market crashing if the govt steps in too early.
Even if ZERO hot money come in, Singapore will still experience unprecedented inflation because all food and commodities have almost doubled in prices or even more and we just need them to live and survive! As such, it is just too easy to blame inflation on hot money! The root problem is not hot money, the root problem is that Singapore has no control over food and commodities supply to counter the price increase that others want us to pay. :o
The only sensible solution so far has been S$ appreciation, but must be gradual to avoid disrupting the economy. People will say MAS stupid, let traders earn all the money. But frankly, MAS just say will let S$ gradual increase and sit there do nothing and the traders will push up for them isn't it? So who is stupid and who is clever? :D
actually don't understand how USDSGD can be a straight line.
There is buyer and seller of USDSGD forex.
If trader A short USDSGD because he believe SGD will strengthen,
then his counterparty trader B long USDSGD because he believe USD will strengthen.
and if USDSGD continuously drop, then trader B lose money all the time?
Until one fine day trader B wake up and realise that he will no long USDSGD at 1.26 but will long at 1.20. Take it or leave it.
So Trader A want to short at 1.26 and Trader B want to long at 1.20. Impasse until one party gives in.
phantom_opera
15-03-11, 09:37
actually don't understand how USDSGD can be a straight line.
There is buyer and seller of USDSGD forex.
If trader A short USDSGD because he believe SGD will strengthen,
then his counterparty trader B long USDSGD because he believe USD will strengthen.
and if USDSGD continuously drop, then trader B lose money all the time?
Until one fine day trader B wake up and realise that he will no long USDSGD at 1.26 but will long at 1.20. Take it or leave it.
So Trader A want to short at 1.26 and Trader B want to long at 1.20. Impasse until one party gives in.
You forget the legitimate use of futures, to hedge.
actually don't understand how USDSGD can be a straight line.
fx is a very very sensitive instrument. for example due to this Japan crisis, SGD had been depreciating these few days. no one dares to take long dated position of fx, unless it's a long dated hedge, not a position itself.
pmet: there is a theory that says, slightly inflationary measures are needed to boost an economy from recession. not that every one agrees (it's a theory not a fact), but the point is , inflation by itself, is NOT a 100% evil thing. The art is how to run it in a balance.
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