7/09/2012

The world should learn from Sinkieland



Two gripping news today, rate cheating by Barclay’s on LIBOR and China’s curb on property speculation. In Barclay’s case, it was trying to offer better interbank rates against a fixed rate determined by a formula. The British authorities and European govts are against variable rates. They are going to frame criminal charges against the violators. They want all banks to work on a fixed and determine rate. Isn’t this against a free market?

Rates should be freed up so that every bank can compete freely to offer the best rates to their customers. This will bring down the cost of financing and must be good. And the Americans are the champions of such deregulations and free competition. Sinkieland is the next freest place in terms of free competition. A good case is commission rates. Several industries are encouraged or made to operate on a free rate basis, ie, everyone can offer any rate to their customers, even doing it for free, while they make from other businesses. Technically, some big financial institutions would be able to offer cut throat rates to win market share and make their profits from elsewhere. It will only encourage a lot of trading and business activities when commissions can be reduced to practically zero. Must be good for business. And cutting rates, offering better rate, is not a crime, it is free competition.

It is inconceiveable that the Europeans could not see the merits of free rates against fixed rates. They should allow the banks to compete freely with each other and those that are not competitive should be allowed to fold up. Free market mechanism should be allowed, with free play, to bring down the rates to the lowest possible.

In China’s case, they did not want property prices to go up, even after several years of curbing regulation, they would not want to see a rebound of property prices. China would encourage first time buyers but not speculation that would drive up prices and great profits for the rich. This is against free market practices and free market forces. By doing so, the prices of properties will be artificially depressed which is not good for the economy. The economy would not grow, just like North Korea, when a landed property cost $10k compares to a lousy 2 rm flats here that could fetch $100k. The North Korean economy will definitely be shrunk and small in size. Economy growth numbers will be small and slow to grow. No wonder China is so badly managed and at the brink of a collapse, according to free wheeling western economists and analysts.

If the North Koreans would to allow market forces to determine their property prices, all the landed property will be worth a few hundred thousand dollars instantly. China’s economy too will get a big boost with free market forces driving their property prices.

These countries should learn from Sinkieland and drive down the cost of doing business with low interest rate and let property prices shoot to the sky so that all property owners feel they are instant millionaires. Never mind if they are struggling to pay the mortgages and have nothing left for other things. When property prices are high, when speculation is a past time, the economy will boom and everyone will few really rich.

The Sinkie example is the best for high growth and high property prices, and for the making of instant millionaires without working for it. It must not be a crime to offer cheaper and more competitive rates, even no commission or doing things for free. It is not a crime to sell property at ever higher prices. It is good for the economy. People who cannot afford to buy just buy what they can afford, or rent. No one is forced to buy property at high prices. Free market at work.

4 comments:

Anonymous said...

Please continue to blow the bubble... may be a nice rainbow when it finally pop at the correct angle.

Divali said...

(Q&A: Barclays and bank rates}
...why is Libor so important? Here we take a closer look at the issues involved:
http://www.bbc.co.uk/news/business-18613988

Anonymous said...

Free economies must not allow rate fixing or fixing of any kind.

Matilah_Singapura said...

Singapore Economic Freedom Index #1 in the world, next to Hong Kong.

Let's keep it that way.