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

[pianist]

I think for sg to burst, Ireland has to burst and explode a few times first..
our is the safe haven, the swiss standard of living..

[ValueBeliever]

this 1 is a reminded of what will happen when the rental yield peak, housing available for sale stay longer than usual in the market and next thing you know interest rate spike due to Asia stability. I look at our neighbor time and again, its a nagging concern of when the politics and policy turn from bad to nasty, we are going to be in a very bad state..

http://blogs.wsj.com/moneybeat/2014/01/1...arketsMain

164% household debt to GDP. So Singapore 74% is a way too far from being bubble. USA is 100% to GDP. We still look far better!

So dont worry too much - if rental yield fall, gov will increase salary of civil service and announce increasing inflation nos. to support ever higher salary for all.

[mulyc]

the article is just over-dramatizing whatever data the author could find, including the article title, just to get more eyeballs.

he has been writing similar styled articles of most developing asian countries, all trying to predict a global meltdown that begins with a slow down in china's economy. unfortunately in the case of singapore meltdown, his article shows very little on the ground knowledge and alot of general lifting of specific data (only data supporting his arguments) from various substantiated sources.

there are various points raised which make sense (like property and foreign labour), but once again they are all over-generalised and one-sided, failing to elaborate on efforts by the singapore government to curb these excesses

no doubt there are risks with the way singapore manages its finances but it is one which is prudent compared with alot of other developed economies. will we suffer a meltdown? we can't say never because you never know. but the chances are far less likely compared to other countries.

[DP28]

Agree. Just another ang moh trying to stirr up Asian markets.. All trying to be the next roubini.

[flinger]

TITLE: S'pore is not facing a credit bubble: MAS
By Wong Siew Ying
POSTED: 14 Jan 2014 22:50
URL: http://www.channelnewsasia.com/news/busi...54240.html

The Monetary Authority of Singapore says Singapore is not facing a credit bubble that puts the country or its banking system at any risk of crisis, in response to a Forbes article that claims Singapore is facing a dangerous credit bubble, fuelled by ultra-low interest rates.

SINGAPORE: The Monetary Authority of Singapore (MAS) on Tuesday said Singapore is not facing a credit bubble that puts the country or its banking system at any risk of crisis.

This was in response to media queries after a Forbes article claimed that Singapore is facing a dangerous credit bubble, fuelled by ultra-low interest rates.

The article cited several risks including Singapore's ratio of household debt to GDP, rising property prices and potential crisis in the banking system should non-performing loans increase when interest rates start to normalise.

The lengthy article dated January 13 was titled "Why Singapore's Economy Is Heading For An Iceland-Style Meltdown." It was written by a contributor who claims to be an economic analyst.

The MAS emphasised that serious observers and investors are not in doubt about Singapore's financial health.

On the unusually low global interest rates, the MAS said it is clear that they have stimulated credit growth and an increase in property prices in recent years.

However, decisive steps have been taken to cool property demand and prevent excessive leverage.

The central bank also highlighted three facts which it said 'stand out clearly'.

First, the property market is now stabilising and new housing loans have also been declining.

Private home prices in Singapore rose by one per cent in 2013, with a 0.8 per cent decline in the fourth quarter. This is after a three per cent price increase in 2012 and annual increases averaging 12 per cent per year during 2010-2011.

The MAS added that new housing loans fell by 35 per cent on year in Q3 2013.

Second, household balance sheets are on the whole strong and property asset values are significantly higher than the debts incurred.

The MAS explained that "the average loan-to-value ratio of outstanding housing loans stands at a healthy 47 per cent as of Q3 2013, implying a large buffer in asset values”.

Lastly, the MAS said Singapore's financial system is robust.

It cited a recent assessment program by the International Monetary Fund that showed Singapore's financial system would remain sound even under severe stress scenarios which include a sharp increase in interest rates - together - with a steep decline in property prices.

The MAS said Singapore's banks are resilient, with strong financial and capital positions.

The MAS said Singapore's triple-A rating from all the major rating agencies is not an aberration and that it attests to the country's economic and financial strength, including its sizeable foreign reserves.
- CNA/fa

[Behappyalways]

Look at the growth of pawn shops.....look at the growth of credit companies( 'Front' for ah long ) in suburban areas.... my dentist was telling me that she tends to have more customers during the early part of the month when people received their salary....she is not into finance but she is saying that people seems to be quite hard up......

things will be ok as long as the economy continues to grow......but when .......china or the euro crisis escalates then you might see 'once in fifty years' event......

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

[pianist]

ask yr dentist to lower her pricing charges..then she can see more customers flowing in.

[Behappyalways]

she is already one of the lowest around.....hee hee

she is not in it for money......anyway she retires recently.....

[CityFarmer]

We heard Forbes, MAS's views. Now is the third parties' view, the economists, not those in US, but local insiders...

Local economy, banking system resilient: Economists

SINGAPORE — Economists have chastised a widely circulated Forbes article which warned that Singapore is at risk of an Iceland-style meltdown, saying that the report displayed a lack of understanding of the situation here and is outdated.

The comments follow a statement by the Monetary of Authority of Singapore (MAS) on Tuesday, which rejected suggestions in the Forbes article that a credit bubble, fuelled by extremely low interest rates, was brewing in the Republic.

Singapore’s economy and banking system are resilient against potential risks from rising household debt and property prices, said economists.

While an increase in interest rates might cause problems, the tight regulatory control would minimise the risk of Singapore facing a dangerous credit bubble, they added.
...
http://www.todayonline.com/singapore/loc...economists

[viruskbs]

We heard Forbes, MAS's views. Now is the third parties' view, the economists, not those in US, but local insiders...

Local economy, banking system resilient: Economists

SINGAPORE — Economists have chastised a widely circulated Forbes article which warned that Singapore is at risk of an Iceland-style meltdown, saying that the report displayed a lack of understanding of the situation here and is outdated.

The comments follow a statement by the Monetary of Authority of Singapore (MAS) on Tuesday, which rejected suggestions in the Forbes article that a credit bubble, fuelled by extremely low interest rates, was brewing in the Republic.

Singapore’s economy and banking system are resilient against potential risks from rising household debt and property prices, said economists.

While an increase in interest rates might cause problems, the tight regulatory control would minimise the risk of Singapore facing a dangerous credit bubble, they added.
...
http://www.todayonline.com/singapore/loc...economists

this is the one thing to worry about from the article above

“The normalisation of interest rates will be a clear risk to the Singapore economy and borrowers … But, unless Singapore slips into an unexpected recession with (many jobs lost), the impact is expected to be well absorbed.”

Recession is a possibility in these days & times ..i dont know why they call it unexpected recession.