Fears of a Black Swan in Singapore General Election 2011

[hyom]

Singapore general election will be held on 7 May 2011. Investors' expectations are over-optimistic.

Source:

"So I think a lot of investors have plugged in very lofty expectations because over the last three GEs the PAP has only lost two seats so far, and given these are lofty expectations, should the opposition win more than that I think the markets will get slightly hit, but that will only be for a short while."

Given such high expectations, the market may suffer a backlash if the PAP loses 1 or 2 GRCs. I am not so worried about PAP losing one or two GRCs and losing plenty of money when the market opens. I think this may even be a good thing as it may make PAP listen harder to the people. My primary worry is the PAP losing power. That is the black swan event (unexpected with extremely damaging consequences) which will immediately devastate investors' portfolio and risk the long-term prospects of Singapore.

I strive to be pro-Singapore, neither pro-PAP nor pro-Opposition. The reason why I think it will be a disaster for Singapore if PAP loses power is that the opposition is still not ready to form a viable government at this point in time. Using a business analogy, if a customer (Singaporean citizens) is trying to switch supplier because there is great dissatisfaction with the incumbent supplier(PAP), it does not switch immediately to the alternate supplier (Opposition). It has to give time to cultivate the alternative supplier to achieve a reasonable quality before making the switch. In the mean time, if the incumbent supplier regains its edge because of competition from the alternate supplier, the business prospers. The customer may even stick with the incumbent supplier if he makes good improvements.

No business(citizens) with proper supply chain management will depend on only on one supply source (PAP). It is too risky. What if the sole supplier fails? Besides, without competition, the sole supplier will grow complacent and decline. The worst part of it is that the cost of the decline will be solely borne by the customer. The sole supplier(PAP) will simply squeeze the customer(Singaporean citizens) by raising prices (raise GST, ERP, government fees etc). The customer can cry foul and bang his fists on the table but can you really sympathize with the customer? We should blame the customer (citizens) for not cultivating an alternative supplier (opposition) to compete against the sole supplier (PAP). Meanwhile, we cannot blame the sole supplier (PAP) to make an all-out effort to destroy his competition (opposition). Do you want to be a shareholder of a company that does nothing about competition or destroy the competition?

In the coming election, the opposition has been able to attract high-calibre candidates like Chen Show Mao. A credible "alternative supplier" has emerged. Do cultivate them as a check on the incumbent one. However, this is not a time to switch supplier completely because the the "alternative supplier" is simply not ready to take over. In my humble opinion, give the "alternative supplier" (opposition) some time to prove itself and another chance for the "incumbent supplier" to recover its footing, for the sake of the country.

An investment operation functions best when the investor thinks like a business owner. Similarly, a democracy functions best when each voter thinks like a stakeholder. Rational voters who think like stakeholders do not treat political elections like a beauty contest (PAP Tin Pei Ling against NSP Nicole Seah).

On one extreme, I have read vitriol comments on the internet like "I will vote out PAP even if a cockroach contests as an opposition candidate". On another extreme, there is a climate of fear "I will vote PAP because there will be consequences if PAP finds out." Both are irrational. A more desirable approach is to simply think like a stakeholder. Assume that you and your children are going to live in this country for a long time to come to face the consequences of the polling results.

If you think the PAP candidate will bring a better future to you and your children, give him your vote.
Likewise, if you think the opposition candidate can do a better job, vote for him.

Different people will reach different conclusions despite having the same objectives. This is fine as long as the decision process is taken rationally like a stakeholder.

It is in fact more important for the middle to lower income groups to think like stakeholders than the upper-income. The rich will be able to migrate to greener pastures when the country crumbles while the middle-income and below will be stuck here to face the consequences. In a globalized economy, it is ironic that the asset-rich actually has less stake in the country than the asset-poor.

I am a middle-class person(only 1 HDB, middle-class salary and always worried about job security) who will be stuck here to face the consequences. I will certainly think very carefully on this issue from today onwards till 7 May 2011.

[piggo]

Think it's presumptuous to think the economy will go down, the nation will fail, the national reserves will be depleted simply because the opposition gains more seats in the parliament. When fear tactics starts coming out, it makes you wonder what are they really trying to hide.

Anyway better vote right, just 10 - 20 seats to opposition and our visionaries will be wasting time on "fixing" the opposition instead of planning our future.... considering their salaries, it'll be a real waste of taxpayers' money.

[hyom]

Think it's presumptuous to think the economy will go down, the nation will fail, the national reserves will be depleted simply because the opposition gains more seats in the parliament. When fear tactics starts coming out, it makes you wonder what are they really trying to hide.

The opposition gaining more seats is not a black swan event. It is in fact a positive development for the country because Singapore is developing an alternative party to provide competition to the ruling party. Depending on a single party without any backup is poor risk management because it represents a single point of failure.

The black swan is when the PAP gets voted out of power in the coming election.

When I expressed my fears to my colleagues over lunch, they look at me as if I were an idiot. Maybe some even think I am a PAP mole spreading fear to incite the people into voting for the ruling party.

[corydorus]

I think is unnecessary fear. The civil servants still there. Taiwan is a good example. The Opposition who never rule, held power for 2 terms, endured corruptions, parliament fights, a failed assassination, tension with china, financial crisis, SARS, mafia etc

The country still economically strong as ever. The KMT finally return tamed to people wishes. There is now strong checks in government, good medical for all, few foreigners, strong independent press and works perfectly well with china.

Please vote for your children.


Cory

[iisterry]

...

The irony and hypocrisy of your posting astounds me. Firstly you claim to be non-partisan and then you delve into fear-mongering tactics in an attempt to skew other's voting mentality.

Are you over-extended in properties?

To address your "black swan event", the various ministries are still staffed by the exact same people regardless of whoever is at the helm. You also have the permanent secretaries around. The various heads of our stat boards and other important civil figures are not going to be affected, they can be vetoed into position simply by the powers of our President.

In a fully functioning democracy, the Legislative, Executive & Judiciary are there to check and counter-check each others actions. You further have the various stat boards & other public divisions to ensure that the nation operates as per normal regardless of whichever party formed the Government.

There is no need to build straw-man arguments to strengthen your position. By citing that "people will vote for cockroaches over PAP", you undermine the fact that there are logical, sane, credible, intelligent & willing people ready to stand for political office at the expense of self-sacrifice and that there are many sane & logical electorate which supports them by virtue of the message they bring across.

To even allude that they are treating it as a beauty contest is a hit below the belt. Why not go further to claim that CST is trying to create a legacy for himself by contesting a GRC?

You may also console yourself in the fact that the Prime Minister is appointed by the President. This can be done even if the PAP fails to be the majority party. NMPs can also be appointed as ministers by the PM if he deems fit. How they are going to justify the actions to the people is another issue.

It is extremely tragic for you to view governance as an investment for your own financial wealth. The Legislative is elected into Parliament to represent the voices and needs of their voters. I fear for the day of the eventual bubble exploding if someone does not shake some sense into the incumbent.

To address your point. A true stakeholder does not care for momentary financial numbers that serves to allow the CEO and other majority stake-holders to encash their stock options. On the contrary, they seek to ensure that the company progress on a stable, well-thought-out route and is performing in everyone's best interest.

Your colleagues are right. You are an idiot.

Next issue you might be spewing would be that we should all vote for the incumbent as they can track down votes and make hell out of your life.

[hyom]

I think is unnecessary fear. The civil servants still there. Taiwan is a good example. The Opposition who never rule, held power for 2 terms, endured corruptions, parliament fights, a failed assassination, tension with china, financial crisis, SARS, mafia etc

You may be right. Having unnecessary fears is a habit borne from losing money in the market because I did not worry enough. I think the habit of thinking about risks first before gains is ingrained in investors who have been burnt before.

Are you over-extended in properties?

Thankfully, no. I live in a HDB flat with neither ambition of upgrading to a condo nor intention of buying a property for investment. I hate leverage, hence property is out until I can buy one with little debt.

The irony and hypocrisy of your posting astounds me. Firstly you claim to be non-partisan and then you delve into fear-mongering tactics in an attempt to skew other's voting mentality.

If you are suggesting that I am afraid of losing money in my investments if PAP loses power, I admit it right now. I am biased in matters in which my investments are put at risk. Since this is an investment forum, why should this be a problem?

I said I was pro-Singapore, neither pro-PAP nor pro-Opposition (non-partisan, as you said). I am pro-Singapore because what is good for Singapore will be good for my investments. I am neither pro-PAP nor pro-Opposition because none of them
is responsible for my payroll.

A true stakeholder does not care for momentary financial numbers that serves to allow the CEO and other majority stake-holders to encash their stock options. On the contrary, they seek to ensure that the company progress on a stable, well-thought-out route and is performing in everyone's best interest.

If the ruling party is declining, then a gradual change, not a sudden change, to the opposition will be to everyone's best interest. This ought to be a more stable, well-thought-out route. My posting is against a sudden change which is the black-swan event talked about.

Your colleagues are right. You are an idiot.

You are free to form your opinion. I have read some of your postings on this forum. Some were quite good and informative. Thank you.

I am sorry if my posting offended you.

[Musicwhiz]

iisterry,

Please do tone down your language and do not resort to personal attacks. Let's just discuss the issues involved. I understand that political views can make people very emotional but since this is a public forum we should endeavour to seek to respect differing opinions and "agree to disagree" (i.e compromise).

Thanks for your co-operation.

[FA+TA]

Don't worry, opposition can only get less than 30%.

Millionaires will vote for PAP. The rich will vote for PAP.
Government is a major employer, their employees will vote PAP.

I support past leaders of PAP. I simply vote for PAP whenever there are elections. I know the creation of GRC only recently from other forum.

Please ponder why high qualified people join oppositon despite the sacrifices and uncertainty.

Do you want your children to be in debt for whole of their life because of public housing?
Do you want Singapore to has low fertility?
Do you want Singapore to fill with old people like Japan?
Do you want Singaporeans to be so stressed and stay in IMH?
Do you think Singapore will be around for another 30 years?
Do you want leaders who knows the average citizens or simply ignore them?
Do you want our transport system to be sardine packed like JE mrt during peak hours?
Do you want your salary to be stagnant vs ever increasing living expenses?

长痛不如短痛

Wake them up before it is too late. Don't let future PAP leaders rectify the damages they have done. Rectify it before it is too late. We will be cooked like frog in slow heat if we allow the policies to carry on.

Vote for your children and sustainability.

[wj888]

Watch The New Romance of the Three Kingdoms (China series).

It is a good education on human behaviour and politics.

There's the army and generals, the lord and his ministers and the admin services.

Whenever the state of one lord is overtaken by another lord, almost all of them transition smoothly with the admin services and some ministers and most of the army/generals accepting the new lord.

You might say it's a drama serial.. but it encapsulates human behaviour. A lot of people in the admin services, army and parliament are just performing a specific task and they do not care who is the lord as long as they are still gainfully retained in their position.

But I do think SHOCK to the market is a possibility if opposition do happen to win majority. But if the Shock drop does happen, BUY! Black swan? Unlikely.

[karlmarx]

i think the arguments in this thread sums up the attitudes different stakeholders have towards politics. it is clearly a contest between classes; the haves and the have-nots. the top 20 percentile of the richest singaporeans will always vote for pap, primarily for their asset-enhancement and pro-business policies. the bottom 20 percentile will do otherwise. the sandwich class on the other hand, are given a quasi-asset (hdb), with the hope that they may vote for the pap like the rich for same purposes of asset enhancement.

owners of hdb and private properties would do well to examine their assumption of an ever-appreciating asset. the many people i've spoken to who holds properties, believes that it will only go up in value. fundamentally, this isn't possible. income has been stagnant, and there is a physical limit to the number of foreigners we can have. yes, land is scarce in singapore. but it is only scarce when you have an increasing population. it is just a matter of time before boom goes to bust; when the economy is hit or when policy reversal takes place. if i were to be holding an investment property, i will offload it soon, regardless of the outcome of the election. also, results of an election changes long-term fundamentals and therefore shouldn't be treated like your monthly unemployment data.

i honestly cannot imagine how livelihood for the average joe will be worse off with an opposition majority in parliament. our economy is without (new) growth engines, we have swiss' cost of living, and our people are so stressed that they're not making babies. if you measure the ability of the incumbent on economic growth, let's see what we have. IR? most of the employees in hotels, f&b are staffed by foreigners. manufacturing? our largest growth engine in the past, is now a sunset industry. it is a cost-competitive industry, which means it is a matter of time before it is wiped out, or more foreigners are brought in to suppress wages. r&d? one of the all time biggest flops, just ask those who studied life science. banking? wealth management survives on rich indonesians, malaysians, and PRCs. investment banking is stagnant, look at sgx and their listings. o&g? one of the bright spots, but unfortunately, also employs plenty of cheap labour. construction & property development? not a growth engine unless there's growing demand. property developers boomed in the past years because of increased population, which results in higher demand. air and sea ports? also one of the bright spots. civil service? again, not a growth engine, but pays its employees the best.

the incumbent is still stuck with the 'provide MNCs with low cost business environment by suppressing wages' mentality. the attempt to create a skilled industry -- life science r&d -- has failed terribly. we lost to taiwan in the IT and semiconductor industry. they have asus, acer, htc, etc. we have a bleeding soundcard manufacturer. in finance, we lost to hk. they do the big deals while we do the back operations, and peddling of insurance and unit trust. and because most of the businesses here are from overseas (MNCs), the bulk of the earnings also get remitted.

but why are we in this predicament? the education produces many book smart people, but what our economy really needs are street-smart people. if you are only trained to work like a mule -- hardworking and obedient -- you will only get jobs that require such traits. while the jobs that require smarts are given to those who are trained to think and lead. 50 years since independence, the education system hasn't changed at all, still producing mules. look at the founder ceos of locally listed companies, how many of them are scholars of some sort? none.

running an economy is no easy business. but are those who claim to be the best crew to steer the ship, really the best? the four asian tigers began their race during the 60s, but look how far we have been left behind. taiwan, hk and korea all have their niche industries competing globally. singapore's only niche is third world wages in first world economy.