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2/19/2011

Budget – Why so little?

$6.6b with $3.2b angpows for the people were announced by Tharman in his budget speech yesterday. My immediate reaction is why so little? The Americans printed US$600b or nearly S$800b. This is roughly $2,600 per American. We are giving out about $1,000 per citizen. And we are so much richer than the Americans. They are in debt and we have a huge reserve and surpluses every year. We could do much more to help the people in a time when inflation is eating up the income of the people. In 2009, during the financial crisis, the Resilience Budget was $20b. This year we have a bumper harvest and only a $6.6b giveaway. Definitely not good enough. The few thousand dollars are spread too thinly and will disappear in no time. The most crucial issue is how to curb high inflation. Actually no lah, inflation only 3 to 4% according to the latest official reports, where got high. Why are the people complaining about such miniscule inflation? I am also scratching my head. The monthly inflation seemed to vary from 3 to 5% and the whole year inflation is only 3 to 4%. If one simply compound a 3% monthly inflation over 12 months, I am sure is it more than 4%. If really the annual inflation is 3 to 4%, and with income rising above 5%, there is real income growth for the individuals. In that case, the budget is actually a big bonus. There is no real need for an angpow budget and nothing to worry about. What is real? The cost of everything is still rising and unstoppable. This is the frightening part and no amount of angpows and handouts can do much if the outflow is faster and more than the income, angpows and handouts included.

22 comments:

Wally Buffet said...

Nothing much in the election budget for me but my children are laughing all the way to the bank!

Yes, there's actually something. This so called Growth Bonus. Enough to go to Sim Lim Square and get me a decent motherboard for my "aging" computer.

Come to think of it. A high inflationary period is the best time to launch a business. If someone sells a curry puff for $2 and you're able to do it for $1.50 with the same quality, your business is made.

People should wise up to the fact that most businessmen are profiteers in disguise. They will jack up the price of everything at the slightest pretext and the consumer suckers will just pay and pay.

If all consumers unite and do not buy, the $2 curry puff seller will be sent to the cleaners in no time.

If only we had a consumers' interest group which is more than in name only, things could be a whole lot different and better.

Hehe. :o)

Anonymous said...

"why so little?", unquote.

You want more? It can be given!

BUT,

if we take more back later on,

dont swear huh!

Anyway, spend whatever that given to help the economy and save yourselves from inflation. Saving is only for the fools nowadays.

modernsun said...

The fact is that there are many local Singaporeans who are underpaid, underemployed, jobless and demoralized long-term jobless.

I recalled my last torment when I was jobless for more than a year, from June 1st 2008 till June 8th 2009. I went through all government-linked Welfare and help groups (eg. South West CDC, WDA, MENDAKI) for job-matching assistance but all yielded no positive outcome. They also rejected my financial help requests. The dozens of interviews I attended via self-search job portals ended in vain.

It's now (Feb 18th 2011) almost 2 months I'm jobless despite having decent qualifications, skills and experiences in IT. God knows how much longer I'll be jobless. God knows how much blatant propaganda and tendentious lies Singapore media will continue to spin.

The issue is not about high-level foreigners/immigrants but those low-to-mid levels that undoubtedly rob jobs away from locals. If anyone is in my shoes, he/she will feel extremely enraged by this dire situation.

Chua Chin Leng aka redbean said...

Hi modernsun,

Welcome to the blog. I heard Tharman said we are in a situation of full employment. Unfortunately there still many qualified Singaporeans like your goodself still in between jobs.

If the govt cannot ensure Singaporeans with jobs commensurate with their experiences while FTs are happily and gainfully employed, something is not right.

There is a big hole waiting to be patched but no one is seeing it.

Anonymous said...

Right. You want more, they will take back more after the election. So, just take it, because paying back time applies to everyone, for or against them.

Anonymous said...

With the election coming, many will become 'erected again'. Everyone they interviewed on TV seems to praise it with saliva drooling from their mouths.

Enjoy the gain, but make sure you are ready for the pain, after election is over. Transport fare increase in October, GST expected to rise, salary increase for the rulers, you name it, they have it.

Wally Buffet said...

现甜后苦!

Matilah_Singapura said...

This budget gets my guarded support.

Govt is pulling back on spending -- excellent idea.

I'm not a fan of Tharman S, but I (cautiously) support this "sensible" budget.

There is only one way to curb inflation: reign in and eventually deflate the money supply. You can't change the economic laws of nature.

Anonymous said...

There is only one way to curb inflation: reign in and eventually deflate the money supply. You can't change the economic laws of nature.

You are right about how to curb inflation.

Unfortunately when the FED and other central bank in the world printing ton and ton of money.they create inflation that will take years to rein in.

Read www.maxkeiser.com or www.zerohedge.com for the latest development in the world market.

Matilah_Singapura said...

anon 1046:

> FED and other central bank in the world printing ton and ton of money.<

The Chinese Central Bank is actually a worse "offender" (money printer) than the Fed. But of course the Yuan is a domestic currency and not a world reserve currency, so what the Chinese are doing is not as bad...globally speaking.

A cheap Yuan all these decades has put China in a favourable trading position: it can out-compete any economy in terms of price competition.

However, now the piper is calling in his marker: China's inflation (decades of money printing to keep the Yuan LOW) has produced asset bubbles which are dangerously close to busting, and worst of all intolerable price rises in food, energy and the general cost of living.

I'm putting money on Middle East-style civil unrest in China within the next few years. Now that would be fun to watch. ;-)

Competitive debasement, aka currency wars aka who can out-print Helicopter Ben...is likely to continue. any deflation will crash economies leading to GUARANTEED civil unrest, and possible civil and cross-border warfare.

The majority of people in the world like MONEY PRINTING -- that is an inescapable fact.

wally already mentioned, quite correctly, that inflationary times is a good time to start a business (depending on which part of the inflationary cycle one is in).

In the beginning or the middle of an inflation cycle, you have euphoria -- people feel rich and are positive...credit is abundant, stock market and real estate up, consumer prices up...but tolerable, business is expanding, labour markets are tight with low levels of unemployment.

In Singapore, the cost of living is rising, there is some concern and the usual perfunctory noises from the govt. but it is still tolerable -- people just whine and whinge about it.

Singapore's "open economy" is a lot more resilient than say Egypt, and it is very much smaller than say China, with much higher levels of savings, productivity, robust capital structures, and essentially Laissez faire financial sectors. Plus the rule of law is solid and politically is very stable.

In other words inflation in Singapore-- no problem, can tahan for a lot longer than any other shit-basket cuntry.

Put it this way: Singapore is in a much better financial/ political-economy position than China.

That's my Hotel -- good girl!

Anonymous said...

"Singapore's "open economy" is a lot more resilient than say Egypt, and it is very much smaller than say China, with much higher levels of savings, productivity, robust capital structures, and essentially Laissez faire financial sectors. Plus the rule of law is solid and politically is very stable". unquote.

That's due to the efficiency of the leadership!

But, everyday 24/7, singaporeans still kpkb! Why???

Chua Chin Leng aka redbean said...

The demon of a cheap yuan is a myth. The Chinese are competitive because they consume less and their cost of living is tens of times cheaper than the developed countries in the West. In fact all the countries outside the developed countries have a competitive advantage in cost of production, land and labour.

The edge is organisation and a people willing to work. India, Indonesia, SE Asia, africa, Latin America and the ME all have the same advantage as China. The X factor is missing or lower in some of them and holding the people from progressing.

China's inflation problem is in the cities and in some sectors. Food is abundance and will not be an issue. Even housing, other than in the big cities like Singapore where the landlords and profiteers bid up the prices to sky high, housing in the rest of the countries are still available. No one needs to buy them at that kind of prices. The speculators will be hurt for sure if it comes down.

furrybrowndog said...

Not defending the pre-election handout, but I'm not sure how valid it is to compare the $6.6bn with what America spent. Sure they had a $787bn stimulus, but a lot of it was government spending which doesn't directly make its way to people's pockets. Similarly with the Resilience budget, where they had the Jobs Credit Scheme and much money ended up in the hands of the employers rather than employees. Not quite an appropriate comparison.

Could they have given out more? Absolutely, but the most disappointing thing about the budget, though it's also the least surprising was that there was no GST cut or even a gradated system for luxury or necessities just like the SDP proposed. Fortunately there was no proposed corporate tax cut either, the income tax changes may seem generous but will benefit only a few people since some 56% of working adults don't pay income taxes with chargeable income <$20,000.

Anonymous said...

"The Chinese are competitive because they consume less and their cost of living is tens of times cheaper than the developed countries in the West"

Exactly. Now, some in the US and the West are complaining about US Multinationals in China paying slave wages to Chinese workers and in the process closing down factories and laying off workers in their own countries.

Because Western counties are addicted to waste and over consumption, they think that such wages paid in China can only be equated to slave wages in their own country and people could not survive on it. The truth is, people in less developed countries can survive because their needs are simple. It is only when they try to satisfy their unsatisfiable wants that problems will arise.

Matilah_Singapura said...

anon 818:

> That's due to the efficiency of the leadership! <

Actually NO. An "open economy" means that it is essentially "free" -- you can do what you like, which means very little "leadership" or govt intervention.

The economy does well because of a strong PRIVATE sector -- which is where all the wealth is created.

> But, everyday 24/7, singaporeans still kpkb! Why???

In every society you get people who cannot tell the difference between their arsehole and a hole in the ground, and prefer to whinge instead of looking for and exploiting opportunity.

Anyway kpkb is good: at least it shows that these folks still have a pulse and are still breathing ;-)

redbean:

> The demon of a cheap yuan is a myth.

The Yuan is cheap, but I don't see that as a demon. (becasue I don't give a shit. The yuan is not a reserve currency)

The "demon" of a cheap yuan: depends where you are in China. As a businessman/ speculator/ developer, cheap yuan is good -- you are more export competitive, asset prices explode and real estate (residential and commercial) booms.

If you are a worker or a peasant: the cheap yuan makes owning a private home more difficult and to meet the cost of living an on going challenge. Your purchasing power steadily diminishes, your wage increases do not meet the rising inflation.

> The Chinese are competitive because they consume less and their cost of living is tens of times cheaper than the developed countries in the West.

Yes, and no. That was the case decades ago. Now the average Jo is struggling to live month to month. However businesses and business people are saving and accumulating.

The entrepreneurial-minded/ private enterprise folks tend do well in inflationary periods due to cheap money. Cheap money means you can borrow more and make the money work for you.

Thrift and hardwork is a cultural fixture of the Chinese. However that could change like it did in the west.

Central banking, fiat currency regimes and artificially low interest rates. changed all that in the west.

Human behaviour is "enhanced" by incentives. In the past - hard work and thrift were necessary because of poverty and uncertainty. If you didn't look after your group, the result was extinction.

In modern times we have central banks, fiat currency and zero or single digit interest rates set by the govt, not the market.

The incentive to save is not there. Instead the incentive to BORROW is enhanced. If the interest rate is 0-3% why should I save? I should borrow instead.

That damn near destroyed western culture. Now most of the western world are debtors.

It takes a long time fro culture to change. Thrift and hard work is still a Chinese cultural belief -- for how much longer, no one can't say.

> Food is abundance and will not be an issue.

Surely you jest. Just watch what happens to the price of rice this year and the next. Watch out for more floods in China this year too. (La Nina weather pattern)

The fact that all these "problems" Are in the cities is the point: the cities are the engines of productivity, commerce and wealth creation -- the crucibles of modern civilization. If they are fucked up -- the whole cuntry suffers.

Anonymous said...

Modern food production method is churning out plenty of extra stock, but all those food producers are the fuckers crying wolves about food shortages. Understandable as they gear for maximun and even unreasonable profit. Similarly, political leaders are selling themselves to the world that they are the best, the cleanest and purest on earth. As the world knows since time immemorial, the more power they get, the more corrupt they will be.

what's happening in the middle east should happen elsewhere too, there's a great need for a global cleansing, may they happen and have south east asia sweep clean as well.

Matilah_Singapura said...

anon 941

> Modern food production method is churning out plenty of extra stock, but all those food producers are the fuckers crying wolves about food shortages <

No doubt that there'll be some cartels and oligarchies which will seize the opportunity to profiteer, but the basis for food shortages is scientifically real

1. Food shortage looms as La Nina returns to stunt growth

2. La Niña as Black Swan – Energy, Food Prices, and Chinese Economy Among Likely Casualites

3. La Niña and Your Grocery Bill by Evelyn Gariss - one of the foremost pundits on climate and weather their effects on finance and the economy.

> what's happening in the middle east should happen elsewhere too, there's a great need for a global cleansing, may they happen and have south east asia sweep clean as well.

SE Asia has more or less "purged" itself of dictators. Pol Pot: gone. Marcos: gone, Suharto : gome, Thaksin : gone. Left: The military junta in Myanmar...but even they are changing.

SE Asia is actually pretty damn stable and all economies are doing well, trade surpluses are up, currencies reasonably stable, domestic savings are healthy, populations are increasing their standard of living...real wealth is being produced.

There is simply no rational comparison of the currently changing political-economies of the Middle East and SE Asia. Those cuntries in the ME who are protesting have high unemployment, real institutionalized poverty and brutal govt suppression.

SE Asian govts may not be "perfect" but in terms of human rights, democratic institutions and free enterprise, SE Asia and the many emerging markets in it are stable and great examples of peace and prosperity.

Chua Chin Leng aka redbean said...

Welcome to the blog, furrybrowndog.

How much and how often can the govt give? Anyway, giving is bad. The solution is to take less from the people by reducing the cost of living.

The morphine jab can last for a few months at the most. The paying for all the hikes in prices and fees is unrelenting and will continue and getting more painful.

Who wants to bet, transport fares will go up, ERPs, GST, medical fees, school fees, and what else?

Anonymous said...

The morphine jab will last for months?

Let's see.

Low Thia Khiang has a more rational take on the morphine jab. The morphine will be injected in early May, and he reckoned election should be before the effect of the morphine wearing out, which should be sometime not later than end of May. I tend to agree.

A good mandate would give them a stronger hand to increase the GST, ministers' salaries and transport fares etc by end of 2011.

Would the morphine do the job this time?

Anonymous said...

Singaporeans have a god-given golden opportunity to have a peaceful regime change without having to resort to protest and uprising.

It's such a wonderful co-incidence that the coming election will be broadly contested and the internet had most of the voters enlightened about the performance of the incumbent leaders.

The oppositions have also for the first time get broad supports from socio-political activists. As such the oppositions should do their best to listen to all the activists; their wishes, their knowledges of social and political aspirations of the people. Many of these a activists are professionals in various fields and many of them are widely travelled.

This once in a life-time golden opportunity for singaporeans once missed, will be gone forever. Will you not take it?

Anonymous said...

Most Singaporeans are too besotted with upgrading and giveaways to care about once in a lifetime opportunities.

It would take a category 10 earthquake to change that mindset. My apologies to opposition voters of Hougang and Potong Pasir, who are invariably more enlightened than most.

Matilah_Singapura said...

anon 107:

> It would take a category 10 earthquake to change that mindset <

And what kind of natural disaster would get you to change your mindset?

You have made an (unstated but obvious) assumption that voting out the PAP or changing the status quo would be "better"...and you assert this without any empirical evidence