1/15/2011

What high COEs will mean

If a taxi cost another $50k, you can bet the taxi will go up accordingly to cover the extra cost. If school bus is also in the scheme, you can bet that bus fees will go up. At $50k more and a 7 year life span for a taxi, it simply means $7k more to write off a year or $600 pm more to charge to the commuters. The school bus will have to apportion the increase to the 20 to 40 kids in a bus. The goods and delivery vehicles will have to be cost in which means ultimately everything will be cost in. Don’t think it will only affect the car owners or ex car owners. The multiplier effect will quite widespread. And anyone buying a $100k car will not park it in the car park for show. It is too costly to waste away. And insurance companies will be laughing to the banks with car values going up. More people changing to public transport means the public transport system will have to take on heavier load. More buses and trains, more sardines, and more cost. Somehow, whichever way, the cost is still up. Why like that? COEs, ERPs, public transports, no matter which button is pressed, commuters got to pay more and bear with bigger inconvenience.

4 comments:

Wally Buffet said...

It never fails to amaze me at how stupid this car ownership scheme is.

When I chance and saw my pizza delivery boy polishing his brand new car, although red plated, I knew this whole shebang is really rotten.

When questioned how he could afford a car, he sheepishly said that his parents helped some, the car company gave him a ten years loan and since interest rates were so low, he more or less paid on the never never, interest free!

COEs and ERPs do not of themselves control the car population. It merely adds to the ownership and running costs of the car and when people performing a public utility gets hit, the non car owning population will be hammered in the pocket as you quite rightly pointed out. Downstream inflation results and EVERYONE suffers the consequence of a hare brained scheme.

Almost all cars are purchased through financing. Jack up interest rates and reduce the loan term to three years and there will be an immediate slump in car demand. Then and only then will those who can really afford cars have one, not some pizza delivery boys earning 5 bucks an hour.

Talking about interest rates. Inflation is up yet interest rates on the Sing dollar is less than 1%. The economy is supposedly booming unlike the US. We are told that inflation is mostly imported and monetary policy is through currency adjustments.

Well, it ain't working mate!!

Just follow the wise Australians, jack up interest rates and the results could be less academic.

Maybe we can entice Glenn Robert Stevens, the current governor of the Reserve Bank of Australia to be a foreign talent and lead us on to the path of sanity.

Hehe. :o)

Matilah_Singapura said...

Australia tightened the money supply, but it is not out of the woods yet. The massive flood damage in Queensland and possibly NSW is going to bite into the productivity, and as a result the Reserve BAnk may have to inflate again.

Singapore's MAS tightened but apparently not enough. Don't forget the massive stimulus they pumped in in 2008-9. Plus if you look at SingStat and MAS own data, the MAS has been inflating (or caused inflation) for years. In 2006 the rte of money supply increase was 26%! There is bound to be some "effect" years down the line -- which is about now.

BTW inflation is an increase in the money supply, NOT how most media pundits and lay people mistakingly define it as n "increase in prices".

SGD is "appreciating" relative to inflationary currencies like the USD. Interest rate is 1% because the SGD is still inflated itself

Anonymous said...

Can't blame the pizza delivery boy. He is also infected by the 'Car Madness Syndrome', unique to Singaporeans.

Apart from the low interest rates and long loan term, I understand the downpayment for a new car is also extremely 'affordable'.

As I always said, people nowadays look no further than what they can afford today, and worry not about tomorrow.

It takes another quick turnaround recession to see them running to the Government crying for help.

But lessons will never ever be learnt!

Matilah_Singapura said...

anon 303

> 'Car Madness Syndrome', unique to Singaporeans. <

Actually, it is not ;-)

Mass production and 100 or so years of cheap abundant oil enabled the idea of 'personal transportation' to become a reality.

Having a car to drive, when and where there is a road, represented an objective increase in personal freedom.

P.J. O'Rouke: Driving Like Crazy 55min, video

You can't blame any kid who wants to have his own car as soon as he is old enough to drive.

Thankfully, the Singapore govt with its hopeless policy of COE has fucked up the freedom for the young (a time where it is glorious to be young and free), once again.

Lucky for me, I left S'pore when I was young and had my first set of wheels before my 22nd birthday. My sis got her first car at 18.