Forbes Article - Why Singapore's Economy Is Heading For An Iceland-Style Meltdown

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#11
This is not very clear. A lot of people who buy HDB flats get concessionary rate which are fixed rates and not floating.

Does the 70% quoted in the article is looking at a sub section?



(14-01-2014, 02:58 PM)safetyfirst Wrote: I do agree with the fact that many singaporeans hold floating rate mortgages, this may spell some pain down the road if interest rates rise. To the extent that banks go bust, i think it is unlikely
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#12
The home bubble will burst in CHINA first
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#13
Singapore has a large foreign assets portfolio to compensate the internal deficit in time of crisis. Singapore will become poorer, but unlikely bankrupted. For a country to bankrupt, the country has to owe foreign creditors a lot of money. That's not something happening in Singapore. For any domestic crisis, the Singapore government can just print and print, to inflate the crisis away.
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#14
Well that is why you might want to consider diversifying assets in other countries. Because if you are based in Singapore, you're essentially all in on the future of Singapore. And as you know unexpected events could actually happen, therefore it might be wise to own some foreign currencies/assets.
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#15
(14-01-2014, 03:53 PM)braces Wrote: Well that is why you might want to consider diversifying assets in other countries. Because if you are based in Singapore, you're essentially all in on the future of Singapore. And as you know unexpected events could actually happen, therefore it might be wise to own some foreign currencies/assets.

Not Iskandar properties pls. 'Northland' is even worse shape than us.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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#16
(14-01-2014, 12:16 PM)opmi Wrote: Author don't know what he is saying.

Sg not Iceland
- got major banks set up big offices in Iceland?
- got shipping call on Iceland ports?
- got major pharma set up mfg plants in Iceland
- Iceland got wise and efficient govt like PAP? (Controversial statement..hahaha)

Iceland got oldest parliament and republic since 930AD.... they must have done something right Big Grin

I think author need to see the difference besides the similarity. There is a fine line between delusional and conviction, the latter stands on much firmer ground.

For sure Singapore will go through a property soft patch which this forum been discussing past 6 months. But that is as similar to meltdown as molehill to a mountain.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#17
Bank wise, I heard of some local banks are engaging more into complex derivatives financing. And given the fact that SGX is pushing more for it, will there be a surprise shock from this area?
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#18
Extreme case of modelling. Tail risk.. At the end of the day, author is just saying the world is gonna end on Singapore.
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#19
(14-01-2014, 02:28 PM)Behappyalways Wrote: The country population policy is a time bomb......which when it happens, it would result in a chain effect.....



an old article
Deeter believes that 30 percent of those who bought homes in Ireland during the boom times have since relocated and many were foreign nationals who moved to Ireland to begin with
“When you have all of these patterns emerging, it makes common sense that they have to connect somewhere. A great number of those who bought new properties over the last few years were foreign nationals, and we are now being told that there is an extremely high number of those foreign nationals emigrating."

http://www.irishcentral.com/news/10000-c...42113.html

Read through the Forbes article. The population time bomb stood out for me and has the most traction.
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#20
http://www.forbes.com/sites/jessecolombo...-meltdown/

Background: The 2008–2011 Icelandic financial crisis was a major economic and political event in Iceland that involved the collapse of all three of the country's major privately owned commercial banks, following their difficulties in refinancing their short-term debt and a run on deposits in the Netherlands and the United Kingdom. Relative to the size of its economy, Iceland’s systemic banking collapse is the largest experienced by any country in economic history.

In 2007, Iceland was celebrated for attaining the world’s highest standard of living according to the U.N.’s annual Human Development Index report. In less than a decade, the tiny North Atlantic island had transformed from a traditional fishing and tourism-based economic backwater into a finance and banking powerhouse, rocketing the country’s wealth and living standards to enviable new heights. Sadly, Iceland’s economic boom was an illusion based on a reckless credit and asset bubble that led to a terrifying financial crisis when it popped in 2008.

It has been just five years since the Global Financial Crisis, and the world – in brazen defiance of the lessons of 2008 – is already back to blowing massive bubbles and naively praising the countries that are benefiting from these “fool’s gold” economic booms. The Southeast Asian island nation of Singapore is currently inflating one of the most egregious examples of these post-2009 bubbles, and is displaying parallels to Iceland’s bubble that are causing me to believe that its boom will end in a similar (but not necessarily identical) manner.

Like Iceland in its heyday, Singapore’s economic stability and vitality – on the surface at least – has made it the envy of the world at a time when most Western economies are languishing under feeble growth, and high rates of unemployment and poverty. Singapore’s booming finance and real estate-focused economy has earned it the moniker “The Switzerland of Asia”, and finance professionals from all over the world are flocking to work there to take refuge from the hard-hit financial sectors in their home countries. Singapore’s unemployment rate is a mere 1.8 percent even as the country’s red hot construction sector has been attracting overseas workers, and a growing number of wealthy citizens are hiring domestic helpers from neighboring countries like the Philippines and Indonesia. The ranks of Singapore’s wealthy are growing rapidly thanks to the country’s asset bubbles, which is helping to fuel a luxury consumption boom in everything from high-end apartments to exotic supercars.

Even though Singapore is no longer an emerging market nation, I consider its bubble economy to be part of the overall emerging markets bubble that I have been warning about due to its strategic role and location in Southeast Asia, which is also known as ASEAN (Association of Southeast Asian Nations). My recent reports on Malaysia, Thailand, the Philippines, and Indonesia show that the entire region is caught up in a massive bubble, and Singapore is benefiting from this bubble by acting as ASEAN’s financial center.

The emerging markets bubble began to inflate in 2009 after China launched a $586 billion stimulus plan to boost its economy after the Global Financial Crisis threatened the country’s economic growth. China’s stimulus plan aimed to drive economic growth with an ambitious debt-funded infrastructure and residential real estate construction boom that led to the building of countless empty and unused cities and other wasteful projects. The stimulus plan caused Chinese growth to surge, and sparked a global raw materials boom and eventual bubble that provided an economic windfall to commodities exporters such as Australia and emerging market nations at a time when the rest of the global economy was suffering very heavily. International investors soon took notice and piled into emerging market investments to reduce their exposure to investments in deeply indebted and troubled Western economies.

Extremely low interest rates in the West and Japan, combined with the U.S. Federal Reserve’s multi-trillion dollar quantitative easing or QE programs resulted in a $4 trillion torrent of speculative “hot money” that flowed into emerging market investments from 2009 to 2013. An international carry trade arose in which investors borrowed significant sums of capital at rock-bottom interest rates from the U.S. and Japan, and directed the proceeds into high-yielding emerging markets assets with the intention of profiting from the difference in interest rates or the spread.

The sudden surge of demand for EM investments led to a classic “too much money chasing too few goods” scenario, which inflated bubbles in those countries’ assets, especially in bonds, which led to record low borrowing costs for emerging market governments and corporations. These ultra-low interest rates have helped to finance government-driven infrastructure spending booms while inflating an unprecedented wave of dangerous credit and real estate bubbles in emerging nations across the globe.

Hot money inflows, combined with central bank policies that allow currency appreciation to temper inflation, have contributed to an approximate 22 percent increase in the value of the Singapore dollar against the U.S. dollar since the financial crisis:

Singapore Dollar Chart

Source: XE.com

Foreign direct investment (net inflows, current dollars) into Singapore immediately surged to new highs after the financial crisis:

Singapore FDI

Source: IndexMundi.com
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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