Fixing the affordability myth

HDB flats are affordable! You must believe that this is true. I swear that this is true. Yes, it is true under certain conditions. There is enough money in the CPF. If not enough, it can be made enough by increasing the amount available from the CPF. But this option is at its limit and can hardly get higher unless money from the Special Account and Medisave Account can also be used. Another way is to prolong the payment, from 20 years to 30 years to 50 years. And all these assume that the flat buyer is forever employed in all his 30 or 50 years of living. What Singaporeans should ask for is for a reduction in the amount of CPF that can be used for purchase of HDB flats. And the duration for repayment should also be shortened. This will allowed more money to be saved for retirement and no need for any CPF Life or fearing that there is not enough money left in the CPF after paying for an affordable HDB flat. Ok, some of you must have stood up and wanting to pounce on me for suggesting reduction of CPF and the duration for repayment. Let me explain. If the people has only $X in the CPF, or the repayment is shortened to say 10 or 15 years, his affordability must come down if not all of $X can be used. He can only afford to buy a flat that cost less than $X. Now you get what I mean? The policy of pricing HDB flat is based on affordability and not on the cost of building the flat. So if the buyer can afford to pay less, the price of HDB flats must come down accordingly. The problem today is that a buyer can use nearly all his CPF and can stretch to 30 or maybe 50 years. This will increase his affordability to buy more expensive flats. So HDB can price its flats accordingly and proclaim that HDB flats are affordable. Today's affordable is all your money in the CPF for 30 or 50 years. This is translated to mean you will not have much of a saving until you have paid off the affordable flat. Got it?

Living in the past

This post could also answer some of the questions by Grunt above. I have read Lee Wei Ling's article 'Medicine is not just a career, but a calling' in the Sunday Times. What came out clearly is that Wei Ling is one of those near extinct specimen that is still living today, out of phase and out of time. The world has changed so much that chivalry is dead, compassion and helping the needy are only for publicity, not intended to be a genuine calling from the heart. This is best manifested in the high profile and high budget shows to attract people to part with their money by the sheer power of the media and show biz personalities. it is all a show. Medicine and medical science have advanced in leaps and bounds. So has human values and greed. Today, if a medical professional, or for that matter any professional, who is not earning enough to live a flashy lifestyle, he is a failure. He may be sidelined by his peers or scorned at for living in the idealistic past. Everything must be priced as high as the client can afford to pay. It is called 'affordable'. There is no time to bother about the actual cost or how deep a hole the client has dug to bury himself. This kind of thinking can be seen in another article in the same paper on the price of new HDB flats by Joyce Teo. She quoted a Albert Lu, the MD of C&H Realty who said, 'for those seeking a new flat to live in, it would not really matter whey they buy. If they were to buy high and sell low, they would also be able to buy a replacement home at a low price.' If this kind of rationalisation is acceptable, then HDB should go ahead and price at any price it wants, after all the owner is going to stay there for good. So buying a 4rm at $500K or $300k does not make any difference if it is owner occupied. Really? What a clever professional view! Back to Medicine is a calling. Yes it is a calling. Money is calling. The frightening thing is that many of our national leaders answered the calling to serve the people and they came from professions where the calling of Money is stronger. Now we can understand why money is the key in policy making. And why affordable has taken on a new meaning.

Long term investment and potential long term losses

The losses incurred by our investments in foreign banks is now under public scrutiny and attacks. Many people are just very unhappy and are very concerned about the huge losses from public money. They have not related to how these losses could ultimately affect their savings in their CPF or to the overall financial well being of the country. If the losses are realised, and huge, it must come from somewhere. There must be a big hole somewhere waiting to be patched. The only comforting news is that it is long term investment, maybe 10 years, 20 years or 200 years. In the long term, everything will be alright. The stock prices will come back up, the property prices will come back up, and so will be our investments. These are the general expectations of how things will be from past experiences. What if the fundamentals have changed? What if the rot is of a different kind, HIV or a new mutant that is incurable? The problems with the banks we have invested, and in many of these foreign banks are of a different nature. They are not structural or cyclical. They are due to frauds and mismanagement. Many of these institutions are empty shells, being robbed over the years by their management but dressed up as respectable and sound financial institutions. The money they are asking for their rescue is mindblogging. If the trouble of these banks are cyclical or structural, it is only a matter of time before they return to their former health. The question now is that it may not happen at all, or it may take a few generations to rebuild them from scratch. The same analogy can be applied to our stock market. Under normal circumstances the stock prices will rebound and go back to where they were before. But would it be that way? To understand this we must know why the stock prices were high and why they became so low. If they are just structural or due to cyclical economic swings, then there are hopes that they will come back. What if the high and lows were due to different factors, systemic flaws, structural flaws? As examples, what if the listed companies were run by crooks that we have no control over them, or the business models and the accounting numbers were all fictitious? What if the high prices were due to in flow of foreign funds which have dried up? What if the foreign funds that were here were just for short term, to exploit the weaknesses of our system and run when they have made enough or being exposed, or the systemic flaws were patched up? Maybe instead of investing in bankrupt or empty shelled foreign institutions, it is better to plough the money into our own healthy and well regulated companies and stop throwing good money away at organisations that we have no control whatsoever. We need to build a healthy base at home and attract good quality money here, not the other way. In the long term, a rotten apple can never be returned to what it was before. Bad investments in rotten apples are simply bad investments, down the drain. Habis.

The new cyberspace contest

The coming General Election will pit the TOM with Cyberspace head on and the impact is going to be startling. GEs of the past were mostly a one sided affair with the ruling party monopolising all the means of communication with the electorate. It was only in the last GE that cyberspace appeared and shifted the ground slightly. This time round it is not only going to shift the ground, it is going to be a major player to compete for the attention of the voters. And knowing how hungry voters are for alternative news and views, many will be searching in cyberspace to hear what they want to hear. What will still be available to the ruling party? The old media, newspapers, radio and TV, and a few blogs which are the off shoots of TOM. These will be the providers of the official views. You can count them in two hands. On the other side of the fence there will be at least 50 to 100 blogs and forums contesting against the official views. Some will be neutral but many will just take the views that are least reported in TOM. And many of these blogs and their visitors will find such views more interesting and refreshing. Then there are the opposition party blogs and websites that will air whatever they want, policies, agenda, plans and rebuttals. The latter is going to be very important as this is generally denied from them. Without the ability to rebut, often, or as in the past, they will look inept or incoherent. Now they are able to explain away the stuff their attackers threw at them. TOM, radio and TVs will still have the bulk of the readership and will still have the upper hand. But the sprouting up of many alternative blogs and forums will put a big dent into their armoury. And if these alternative blogs could put up well argued positions, rational and logical views, credible views, to win over the voters, the results of the next GE is not going to be so predictable. It is going to be a contest of ideas in cyberspace and the opposition parties are going to have the upper hand in numbers with each blog/forum reaching out to smaller groups of visitors. The aggregate can be quite substantial. And so far there is no answer from the other side. It is like a huge conventional army staying its ground to fight a big battle while the enemies were all over engaging in small skirmishes and guerilla warfare. It is an asymmetric electoral warfare.

Living dangerously

PowerSeraya, the third and last power station is sold to YTL, a Malaysian conglomerate. Irrespective of whichever country buying it, should a strategic asset like the power stations be sold and be managed by any country other than the state? Should we sell our water treatment plants as well? Next, shall we sell out ports, Changi and PSA? Or shall we sell SIA and NOL? Where will the selling of strategic assets ends and when will the people stand up and ask, is this the right thing to do? Or are the people so complacent that nothing will worry them? I just don’t feel comfortable going down this road. Do we need the money so badly? Are these money put to better use than to hold on to these assets? Or are we trading our strategic assets for non strategic assets? Why are Singaporeans so indifferent to what is happening to the country and their future wellbeing? I have seen privatized security services hiring foreigners, including carrying of arms, to guard key installations and controlling movement of people. Does anyone think it is a good idea that foreigners should be allowed to carry arms in our own backyard? Having a contingent of Gurkhas is already an aberration. How far down shall we go down this road? We still have the police force and the armed forces in our control. When will they be filled by foreigners? Oh, I heard that the obviously foreign looking personnel in uniforms are PRs or new citizens. So, issuing them PRs and pink ICs immediately qualified these foreigners as one of us? We are living in a very dangerous world. Having people with unknown background guarding our buildings and installations is not a joking matter. Or maybe I am wrong.