A case of if you cannot beat them, join them?

[teddybear]

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.

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]

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????

[amk]

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

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]

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

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]

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.

[hopeful]

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?

[amk]

.. 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

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]

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.

[teddybear]

You statement is totally wrong!
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!).

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]

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

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]

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]

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]

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]

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.

[phantom_opera]

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.

[hopeful]

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?

[amk]

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.

[teddybear]

MAS should invite you to be their Managing Director since you are better than them? You must be joking!

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?

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?

4) S$ debase, capital flows out of Singapore too quickly, Singapore GDP go downs the drain mostly!

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.

[teddybear]

It is also true that a lot of wealth are not created by Singaporeans! (without these foreigners GDP & wealth will not grow so much!)

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]

MAS should invite you to be their Managing Director since you are better than them? You must be joking!

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?

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?

4) S$ debase, capital flows out of Singapore too quickly, Singapore GDP go downs the drain mostly!

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.

[teddybear]

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. 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 .
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) , 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!).

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]

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]

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

[phantom_opera]

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

[hopeful]

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?

[hopeful]

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.

[hopeful]

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]

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]

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]

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%!!!

U r hoping ppty price to crash rite ?!?!?! own agenda?