Could the island survive a major economic crisis?

Would PAP be remembered as the rogue Govt in the future for bringing about the collapse of the country through its high property price, high cost of living and high dependency on immigrants? The formula for a crash in the economy and property price need no guess work. The writing is on the wall that the international finance and the monetary systems are waiting to hit ground zero. There are so many frauds and corruption in the world’s financial institutions and systems that it is now being sustained by the continuing printing of paper money by most of the developed countries. And Singapore is in the thick of this hazy and corrupt financial system that when it collapses, there is no where to hide and no where to run. Every Singaporean is part of this money matrix, tied up in huge loans through housing and a disappearing CPF that is good only on paper.

When the world’s financial system stops functioning, it is as good as dysfunctional now at the rate it is going, cheating all the investors of their hard earned money to benefit a few crooks, it is simply unsustainable. When it goes down, the economies of most countries will go as well. Our Raffles Place and Shenton Way and the new financial centre in Marina Bay will become ghost towns. All the high salaried finance FTs will have to pack their bags and return home. With half a million to a million foreigners that are here because of jobs, and will flee when the jobs are gone, the population will shrink overnight. Instantly the whole property market will be like a house of cards. No tenants, owners unable to service the loans, everyone scrambling to get out by selling whatever they have, bank foreclosures…. The more properties one owns, the more heavily one is mortgaged and in debt.

This spiral will hit every sector of the economy and everyone, including HDB owners. FTs and FWs will be evacuating like locusts migrating to greener pastures after a feast and leaving waste behind. Construction companies and developers will all go bust. The whole economy will be in ruins and so will be the lives of a people depending solely on unproductive pursuits of churning properties and stocks and derivatives. Everything will burn like all papers will burn.

The highest risk and heavily leveraged industry today is the finance industry. And we are deeply in it. And the people are all highly geared in properties, private or HDB, all in big debt and needing more money to service the debt. When jobs are gone, when easy money from high finance is not there, where will it lead to? Our economy is too highly reliant on the finance industry and properties, and on more foreigners being here. They are intertwined like triplets, when one goes, the others go as well. With 40% or 2m transient workers here, their departure can be traumatising and financially crippling.

When that day comes, don’t worry, economic systems are designed for boom and doom, like the great depression, it is a matter of when. And the good thing, it seems so near. The Govt will have no more tricks to pull out from the bag. In fact it is living on one last trick, growing population to boost up property prices and the economy. How long can this trick last?

I know, this is a very pessimistic doomsday forecast. Pray it doesn’t happen.

Would Japan and China be better off with more immigrants/people?

LKY chided Japan and China for their presumingly flawed population policies. China’s problem is its one child policy to hold back a population explosion.It must be crazy to keep growing the population with 1.3b now. In the case of Japan, it is its homogenous society that did not take too kindly with immigrants of other origins. So, would these two countries be better off by abandoning their population control policies? The hyped fear is that the countries will age too rapidly and eventually ran out of stock of people. And leave it to the mathematicians, it is then possible theoretically, assuming that the human race is unthinking and as predictable as robots and both countries will be nothing, no people left.

Putting this argument aside, are these two countries progressing or regressing? One has just emerged as the second biggest economy in the world and threatening to over the USA as the biggest in 30 years or less. Japan is still the third largest economy in the world, having been overtaken by China which is impossible to stop given its physical size and population. But Japan is still unbeatable as the number three, ahead of all the developed European economies, ahead of Britain, France and Germany.

Though the Japanese were experiencing very little economic growth over the last 30 years, is the quality of life getting worst? Definitely not. They are still enjoying possibly the highest quality of life without growth, and also with little inflation while housing prices remained practically stagnant to mitigate against slower or no growth. The Japanese are still very wealthy as a country with plenty of reserves and industries and high productivity. Japan does not need the ponzi population growth to maintain a high quality of life without the apparent growth that is deemed desirable.

In both these countries, would they be better off or worst off if their populations were to shrink another 10% or 20%? Economists can argue either way but more population does not only bring growth alone but could bring along many more social and political problems that would negate the little benefits from economic growth. Would it be better to maintain a high quality of life with little economic growth and little population growth?

How much time left before the rice is cooked?

While Gilbert Goh and his friends are busy planning the May Day Protest Rally, while many angry Singaporeans are rallying for support from their friends and other Singaporeans to make a presence at Hong Lim to make a statement to the Govt’s population policy, time is ticking away. How much time is left to prevent the population from growing from 5.3m to 6.9m in 2030? How much time is left to prevent the population from hitting 6m in 2020?

There was an unusual silence from the govt’s quarter as to what is happening since the White Paper was approved in Parliament in a sure pass voting when PAP held an absolute majority of parliamentary seats. The passing of the unpopular bill with very little support from the citizens has been quickly swept into the cupboard and not to see daylight again. No govt official is willing to talk about it, presumably the whole process and mechanism of bringing in more foreigners to hit the two targets of 6m in 2020 and 6.9m in 2030 are in full swing. Make hay while the sun shines.

If this is so, how many have been added to the 5.3m to date and how many foreigners will be coming in monthly or annually as to plan? According to the projection in the White Paper, the average increase in population is 100k annually or about 8,500 monthly. Two months have passed and the population number must have gone up accordingly. By May Day about 35,000 new migrants would have gone pass the gate. By 2016, 300,000 more heads will add to the current 5.3m to 5.6m.

Is there any change in the position of the Govt on this? As planned, I suppose. And the increase will add to demands for all other services and facilities and more trains, cars, roads and HDB flats and schools and what not…more Jolibees and restaurants and shopping centres and food courts.

At the moment the road to 2016 is a foregone conclusion and 5.6m will be the population by then. Would the GE change anything? A regime change is the only way to put a stop to the population growth and a rewind to a smaller number, maybe 5m or less. So it looks like nothing is going make any difference till 2016 and very likely after 2016, if PAP continues to be in power, the 2020 and 2030 targets of 6m and 6.9m are the likely certainties.

Is there time for change or just wishful thinking?

New definition of affordability of HDB flats

In the papers today, Liu Thai Ker spoke about his times, the premises they used to compute affordability before coming out with HDB prices. This was the old formula, Dr Liu said, ’in those days, flats typically cost about three years of an owners’ salary…we looked at the per capita GDP growth, the sector of people eligible for public housing, their income, and then matching that to our selling price and to our flat sizes. It was really a very detailed study’.

The new innovative formula of the super talents, ‘ the prices of new HDB flats are set based on the typical household of families, the market price of similar resale flats in the vicinity, and the flat size and location.

You can make out the thinking behind the two formulae and the kind of people formulating them and what they were trying to achieve.

Time to stop the housing ponzi

The pioneer of Singapore’s public housing, Dr Liu Thai Ker, has spoken on the need for HDB to return the basics. Dr Aline Wong also joined the call. HDB should go back to provide a roof for all Singaporeans. More and more senior elites from the establishment are saying that things are not going right and needed to take a step back. And the solutions offered by Liu Thai Ker to stop the housing ponzi are not calculus but simple common sense. Build public flats with no frills and build a little extra to the supply. The prices of public housing will adjust accordingly.

The same call was made by Boon Wan but with many catches. Back to basics to offer cheaper flats will necessitate adjusting the products for sale and one could end up buying half an apple, like shorter lease, conditions to sell back to HDB and all the jazz. Why like that?

In today’s media, it was reported that 2 rm and 3 rm flats can be sold at a net price of $57k and $159k respectively after setting off the grants. Hey these prices are quite decent and reasonable. If this can be done, why is there a need to tweak the terms of sales to bring down the prices? Many silly suggestions to make HDB prices cheaper were made by muddle head Singaporeans. The actual cost of building public flat is very much lower and the sale price can be brought down without all the silly suggestions. The fact that the cost of building the flats is being kept secret is telling a big story.

What so far transpired in the media is that the Govt is preoccupied with the need to keep property prices going up. If we don’t bring in more migrants, property prices will come down. What rubbish. Now you understand why 6.9m is necessary? It is to prop up property prices as part of the ponzi scheme. The SERS and en bloc sales will not be feasible without more and more buyers in the pipeline. Every old flat pulled down must be replaced by 5 new flats to justify the cost of rebuilding. Thus, it means you need 5 times the buyers to sustain the scheme. The population must continue to grow even after 6.9m if the property price is go be kept up.

This gravity defying act, by meddling with market forces and supply and demand will all come to naught without the increasing influx of migrants. The 99 year lease will dictate that all such flats must end up with zero value unless they can be pulled down before the lease expires. The ponzi scheme must come to an end sooner or later as the island just cannot keep taking in more and more people and the price of flats keep going up while the workers remain as CBF.

It is better to stop the ponzi housing scheme now with lesser people being hurt and less badly than to allow it to snowball to monstrosity and beyond control, like the American national debt. Too big to do anything or unsolvable without a total collapse of the system.