How wise of him to compare USA economy with SG. SG has nothing and is a price taker of everything.
i read the rebuttal of rebuttal. interesting read. Time to get the war chest ready for bear market
The impossible trinity requires MAS to lose control over Singapore's i/r. This is necessary for free capital flow and a managed float exchange rate system.
SIBOR has to follow the fed funds rate.
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He said US interest rate is forced down to zero to save america. Singapore doesn't need to do so because it has a growing and strong economy..
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Then MAS should just let go the interbank rate control? Its a inflating cycle using unconventional economic policy - ultra-low deposit rate when inflation is 4-5%? How long more depositor will suffer at the expense of those who borrowed excessively to help create the inflation feel good effect, manifest most acutely in property cycle - record cycle since 2000 till now even in the face of global crisis.
Very soon the unraveling is going to create panic? I m sure the contractor will be the first to bale out. The chinese contractor bid so low and yet willing to loss money. How many more contractor will suffer?
Value investors should be looking forward with great anticipation to the next crash/downturn. At the moment all property sectors are expensive, a good downturn creates much better value, and is better for society as the young can buy without over-borrowing. The Singapore stock market is, in my humble opinion, not in bubble territory; but it takes a lot of hard work to find good value investments at the moment. In a downturn/crash there is value all over the place, just waiting to be picked up. Remember March 2009, stocks like Fortune REIT yielding 20% annual dividend, and selling at a fraction of their asset value per share. Before that, happy hunting in 1998, 2001, 2003. No similar excitement/opportunities over the last four years. After experiencing fairly frequent big downturns over the last 35 years in Singapore, Hong Kong and Taiwan, there are lots of other advantages for the cautious value investor in a downturn: cheaper restaurants (and more variety as new eateries take advantage of cheaper rents), real bargains if you look around in the sales, greater availability of taxis. As long as you keep some firepower in reserve, avoid leverage, and stick to value investing. downturns/crashes are the best thing that can happen. A value investor should be miserable when markets are in a bubble, and over-joyed when they crash.
(18-01-2014, 10:58 AM)ValueBeliever Wrote: [ -> ]Then MAS should just let go the interbank rate control? Its a inflating cycle using unconventional economic policy - ultra-low deposit rate when inflation is 4-5%? How long more depositor will suffer at the expense of those who borrowed excessively to help create the inflation feel good effect, manifest most acutely in property cycle - record cycle since 2000 till now even in the face of global crisis.
Very soon the unraveling is going to create panic? I m sure the contractor will be the first to bale out. The chinese contractor bid so low and yet willing to loss money. How many more contractor will suffer?
There is no reason for saving rate to reflect inflation. Just old saying says, no risk, no return. To counter inflation risk, the investment has to take certain risk. No way that riskless saving can fight inflation. And like everything else, saving has its price, that's saving interest rate. If the interest rate is any higher, at least the demand for saving from the financial institutions has to be higher. That's not the case in Singapore for very long. The loan interest rate or the return from the saving collected by the banks is not high enough to stimulate more demand for saving. On the other hand, saving supply is high. There is a lot of foreign money coming into Singapore.
(18-01-2014, 03:43 PM)Dosser Wrote: [ -> ]Value investors should be looking forward with great anticipation to the next crash/downturn. At the moment all property sectors are expensive, a good downturn creates much better value, and is better for society as the young can buy without over-borrowing. The Singapore stock market is, in my humble opinion, not in bubble territory; but it takes a lot of hard work to find good value investments at the moment. In a downturn/crash there is value all over the place, just waiting to be picked up. Remember March 2009, stocks like Fortune REIT yielding 20% annual dividend, and selling at a fraction of their asset value per share. Before that, happy hunting in 1998, 2001, 2003. No similar excitement/opportunities over the last four years. After experiencing fairly frequent big downturns over the last 35 years in Singapore, Hong Kong and Taiwan, there are lots of other advantages for the cautious value investor in a downturn: cheaper restaurants (and more variety as new eateries take advantage of cheaper rents), real bargains if you look around in the sales, greater availability of taxis. As long as you keep some firepower in reserve, avoid leverage, and stick to value investing. downturns/crashes are the best thing that can happen. A value investor should be miserable when markets are in a bubble, and over-joyed when they crash.
A better society is the young can earn more to pay higher price for a property. Of course, that's not the case in Singapore. So it is not better.
mild inflation is good, but deflation is bad.
(18-01-2014, 10:58 AM)ValueBeliever Wrote: [ -> ]Then MAS should just let go the interbank rate control?
MAS does not have control in the first place.
In the impossible trinity (exchange rate stability, free capital flow and monetary policy independence), MAS has chosen exchange rate stability and free capital flow. By doing so, it has lost control over SIBOR.
If MAS increases SIBOR to curb inflation, singapore dollar will strengthen and exporters will most likely be affected.
Currently, Singapore uses macro prudent policies to curb the raise of inflation. These policies are very much apparent in the housing sector (ABSD, TDSR etc).