2/23/2008

When the music stops?

We are in the golden years. Full employment, high salaries. People have a lot of money to spend. Property owners can afford to sell at high prices or charge high rentals. Everyone take the opportunity to jack up their prices of goods and services. But after a few grumblings, life goes on. Taxi fares go up, ERP rates go up, GST goes up. No sweat. KPKB for a while. People will get use to the high cost. Conservancy rates go up, PUB rates go up. Never mind, got rebates. And for those who are struggling, there are the annual handouts from the govt. The budget goodies. Now, what will happen when we price ourselves out of the market system? Or if the world economy goes on a tailspin? No jobs, no fat salaries, no budget surpluses to handout, and all the rebates and subsidies expire? Can we see prices coming down? Can property prices come down, rental comes down, food and essential services come down, transport fares come down? Some can but many can't. Can the goodies, handouts, rebates, subsidies go on and on and the people keep stretching their hands out and expecting to get them? The high cost of living is likely to stay even when times are bad. Anyone heard of transport fares coming down? Conservancy fees or PUB bills coming down? Or foodcourt prices coming down? Many are committed to a higher lifestyle, higher property prices and rentals. When jobs are gone, or salaries cut, just like in the late 90s, the noose will tighten. This time even faster and tighter. It was a lesson that we never learn. There was euphoria before the bust.

3 comments:

Matilah_Singapura said...

There are signs that the economy is entering a stage of stagflation. However, all is not lost. If left alone, there will be a "correction" and most of the excessive nonsense will be wiped out--including unfortunately, but unavoidably some people's livelihoods.

...and then the growth will begin again---completely renewed--BUT ONLY if the govt leaves things alone to go their natural course.

redbean said...

speculation in stocks and properties is done freely, own choice. go in with eyes wide open and play. take your own risk.

allowing the madness of high property prices and rentals to go on unabated is irresponsible. it affects everyone, including the innocence.

Matilah_Singapura said...

All economic goods have their prices bid up and down in the market.

It has got nothing to do with "responsibiity" or "guilt" or "innocence". People act (respond to) incentives.

A few years ago people were screaming at the govt to keep the property prices from falling to the bottom.

Markets are a spontaneous order - no one can "control" them without adding distortions which always backfire and hurt the ones they are supposed to protect.

The most irresponsible thing to do wpould be to interfere. The most MORAL thing to do is to leave the prices alone.