Post by Concerns of a Heartland Sinkie - Part 3

As mentioned before, pls edict/ amend any error you may deem fit. Thank you.

"Generally, wages in the labour market are determined in the below simplified algebraic equation:

W = PeF(u,z)

On the other hand, prices that producers charged to consumers can be determined by the following equation:

P = (1+Tgst) (1+m)W

Substituting the first equation into the second, we get:

P = Pe(1+Tgst)(1+m)F(u,z)

Further simplifying the factor “u” and converting it to output (Y) yields the following relation:

P = Pe(1+Tgst)(1+m)F(1-Y/L, z)

Given LHS is P (price level) & RHS contains Y (national output), this relation can be plotted in a Price Level – National Output space.

At any given aggregate demand, when the term “Tgst” is increased, say eg from 7% to 9%, at each and every national output level, P would be higher translating to a decrease in the aggregate supply.

Thus, the effect as shown (Mathematically) above implies that at a given aggregate demand, an increase in Tgst would lead to the double-whammy pernicious effects of a higher price level and a reduced national output."



NB: Above formulations are “clobbered” together during lunch break hours (on 9 Mar 2018) amidst gobbling down of a take-way sandwich in a crowded “chairless” stand only tall tables eatery in town area. The “inspiration & motivation” (to “clobber” above-mentioned formulations) came from reading Uncle RB’s post while walking to buy a quick lunch. Thus, there may be oversight in the formulation. If there is any conceptual “discrepancy”, would humbly and highly appreciate any learned economist working near Uncle RB’s office in MBFC, RP or any Economics Professor teaching in the Unis to share their insights. Thank you so much in advance.

A childish parliament versus an adult parliament

How can there be a childish parliament? You are right, all parliaments are for adults, national leaders, men and women and some very young men and young women. There is no parliament for children. The only parliament that is for children is a moot parliament that sometimes the schools would organize to educate the children and let them do some role playing to experience what the lives of adults would be like.

In a childish parliament, you can expect them to speak childishly and behave childishly as it is only natural for children to do so. And the language used would be childish as well. Any bad words used would not be tolerated and they would squirm and report to the teacher in charge. In a childish parliament, you would not expect them to be rude or to talk nonsense, oops, maybe children will do, occasionally as they would not know the difference.

Of course a childish parliament would not stand up to the adult’s expectation of honesty, integrity and truthfulness, at best like a debate. Oh yes, a childish parliament would have all the rules like in a debate. Everyone would be allowed to speak with a limited time and in decorum, speak good English, no Ingrish or Singlish. And no telling grandfather and grandmother stories.

Why, because time is precious in a debate. Each one is only given a limited time and they cannot afford to waste time telling grandfather stories. In a real adult parliament, you can imagine how much time is wasted if a parliamentarian wasted one hour telling grandfather stories. Not only he/she would waste her/his one hour, but the one hour of the PM, the ministers and all the MPs. And if this is broadcast over TV, it would waste the time of millions of viewers. Time is precious even in a childish parliament.

Actually, I think, an adult parliament has a lot to learn from a childish parliament. There are good things, good rules to learn from a childish parliament. Those good debaters should conduct lessons on how to speak well, speak eloquently in an adult parliament, even conduct good Ingrish lessons.
Another important thing about childish parliament is that they would not allow anyone to talk cock. The girls would be blushing. And if a boy were to get angry and shout, fuck you, the girls would be running out to hike in the toilet, some would faint. That is what childish parliament would be like.

Teacher, teacher, he cannot say like dat, cannot use bad words.

Chan Chun Seng just gave me a reason to support GST hike

Read the extract of an article posted by Augustine Low in the TRE below.
 
‘Forgo the GST hike and Singaporeans could end up finding imported goods and holidays less affordable. This was the warning given by Chan Chun Sing at a Lunar New Year dinner.
 
The pain of having to contend with price hikes and tax hikes is bad enough. But politicians like Chan have the habit of making it worse by giving excuses and rationale which shows a disregard for Singaporeans’ common sense and intelligence.
 
Defending the GST hike, Chan Chun Sing somehow managed to turn it into something which simply had to be done, otherwise Singaporeans would lose their privilege to continue enjoying imported goods and cheaper holidays.
 
How he got from GST hike to imported goods and cheaper holidays is a classic case of taking the argument to the extreme in order to convince Singaporeans that a GST hike is the only way out because the alternative is far worse.
 
To sum up Chan’s argument: without the GST hike, the government would have to draw from reserves and the world would surmise that Singapore has a weak fiscal policy. Forces at large would therefore collude to weaken and destabilise the Sing dollar, and after the Sing dollar comes under attack, Singaporeans’ savings and spending would be negatively impacted. The result: less money for imported goods and holidays.
 
Wow! And just like that, Singaporeans are supposed to buy into his argument that a GST hike is preferable to none?’


I state categorically that the above is not written by me, but appeared in the TRE.
I am truly convinced by such clever argument. Our PM in the making, more good years coming with more GST hikes. Oh, there is another reason to support the GST hike, it will help the poor, for the good of the poor. Now, how not to support the GST hike, you tell me lah.

PS. Below are some not so complementary and hilarious comments on our future PM in Ausgustine Low’s article. Please don’t take them seriously and treat them as fake news or comments of the losers.


 
Samuel S:
March 5, 2018 at 9:38 pm (Quote)
For once if we have chance to choose our PM, we will 100% write CCS off the the list! Just dont understand why our current PM think he is suitable choice because PM Lee himself is not qualified to lead the country. The reason he is here is because of his father LKY.
 
oxygen:
March 5, 2018 at 10:18 pm (Quote)
4th GENERATION “GET SINGAPORE THINKING” aka GST have all run out of ideas of how to govern LEE-jiapore.
The art of governance is reduced to simplicity of CHICANERY including floating the trial balloon and accusing others of working up on suspicions AFTER they had tabled falsity statistic to advance their wicked plots of accusing WP of municipal accounting fraud that never existed.
We don’t want the PAPpys around anymore. They are all failed apprentices whereever they go.

NotMyProblem:  
March 5, 2018 at 11:05 pm (Quote)
I am not sure if Chan Chun Seng actually takes Singaporeans as some kind of an idiot.
Idiot politician is not the problem, the problem is we have idiot voters keep voting for them. That’s the reason, Chan Chun Seng treats Singaporeans as idiot.
Singaporeans, we have been called daft by the PAP, are we going to prove that they are right!!!
 
doggie:  
March 5, 2018 at 11:19 pm (Quote)
No worries, gong gong sinkies are very forgetful.
Once GE comes, dangle some goodies, add in some threat if miw gets voted out housing price will fall and our women have to work as maids
gong gong sinkies will vote against pee and poo.
add in the new citizens, it will be 80% next time
hahahaha
 
opposition dude:  
March 6, 2018 at 1:10 am (Quote)
Keechiu was never very bright so the things he says are absurd at worst and good for a laugh at best.
This goes to show that ministers do not think before they talk. I’m sure we all remember Josephine’s forever unforgettable you don’t need a big space to orh ee orh or Zorro wanting to upturn the downturn or even once in 50 years.
Just wait for the next time kee chiu speaks, it will be another lightbulb going off moment.
 
kenny:  
March 6, 2018 at 7:14 am (Quote)
CCS is an ABSOLUTE IDIOT of a politician ! ! !
Three words for him ” OHHH SHUT UP ! ! ! !”

Korean Reunification amidst new realities and Korean interests

After the Korean War, nearly 70 years have gone by and many leaders have come and gone. The North Koreans are seeing a third generation of leaders led by the grand son of Kim Il Sung while the South has seen many leaders served and departed. The leaders of both Koreas are of a very different generation from the Cold War days and are coming to terms with the new realities of a 21ts Century world and a new generation of Korean people on both sides of the 38 parallel.
 
War is increasing becoming irrelevant to settle differences between people of a country, of the same nationality, race and culture except for the evil Empire. The Germans have reunited. The Vietnamese have reunited. The Chinese are working to be reunited but with a long trajectory without wanting to force the issue unless the Taiwanese seek independence. The reunification of Taiwan is a matter of time, a matter of when. There is no hurry as the two people and economy get to fuse and intertwined more closely and become more interdependent.
 
North and South Korea would also be reunited in a matter of time. They are one people and would not be separated forever. The issue is how to go about this reunification. The new reality is to bring about a reunification peacefully. The two halves of Korea could start by agreeing on some fundamental principles like China and Taiwan, that there is one China and the reunification will be by peaceful negotiation. And they shall not be pressured by time, that the reunification must take place within a fixed time frame. Let the future generations, if necessary to settle the reunification issue if needed be as long as the One China principle is not threatened. There could even be a gray period of one country two systems to gradually integrate and merge the two into One China.
 
North Korea and South Korea could adapt the Chinese model, agree that there is one Korea and reunification will be by peaceful negotiation without a fixed time frame and they could even live with a one country two systems for a long gestation period till the two people and govts are ready to be reunited as one Korea.
 
When there is agreement that war is no longer an option and both agree on the eventual reunification of the two Koreas by peaceful means, both govt and people could start to work more closely, cooperate with each other, share and help each other as they progress along without being forced into a war by the evil Empire. The denounciation of war would remove the main reason for the Americans to justify continuous war games to provoke the North Koreans.
 
South Korea should also exert its independence and not be coerced to conduct provocative war games with the Americans to threaten North Korea. All acts of hostility should cease and replace by acts of cooperation and good will. These would pave the way to the eventual reunification of the two Koreas peacefully, in 30, 50 or 100 years. Let the Korean people be reunited as one people again without going to wars, without having to be in a hurry.
 
Keep the foreigners out of the equation and settle the differences among the Koreans themselves, with both sides pledging not to go to war. The Koreans must decide their own fate and not be dragged into a war by the evil Americans and Japanese. They must treasure their independence and unity as a proud people living in peace like the Vietnamese now, after driving out the foreign forces in their land and reunited as one people to charge their own destiny.
 
There is great hope that the wise leaders in Kim JongUn and Moon Jae In would be able to bring their people and country together. The Americans and Japanese are still working desperately to bring the two Koreas to a war instead of reunification. Only the Korean people can avoid this calamity to their people and country by seeking peace through negotiation.

A simple way to guesstimate the reserves

The non transparent secret of the country’s reserves, speculated to be worth $1 trillion has been subjected to many queries as to what is really there. As it is a closely guarded state secret, no one really knows, even the President that holds the second key to guard the reserves. In a way, the reserves could be like a mirage of a mountain of gold. The people could imagine or were told that it is large and is there, but cannot feel or touch it. The big question in many people’s mind is whether this is true. It is only fair for any reasonable man to have doubts about something that is like what the salesman told them, and they have to believe his words, to trust him.
 
When the people are kept in the dark, it is very difficult to know the truth. The more the govt tries to hide this info, the more suspicious will be the people who want to know the truth. And the more the govt is frantically trying to raise taxes, even very unpopular measures, the more worried would be the people as to the health of this gold mountain mirage. Simple, got so much money no need to panic to raise so many taxes. The reason that the reserves cannot be touched, to be kept for the rainy day, is hogwash. It was touched many times during Nathan’s days.
 
Let’s see what we can extrapolate from some of the official statistics provided by Heng Swee Kiat to figure out how much is there in the reserves. The estimated NIRC for FY2018 is $15.9. I am not sure this is profit earned for the whole year prior to FY2018 or the estimated returns for FY 2018, ie not earned yet. But putting this aside let’s just use this number as a basis to extrapolate the reserves gold mountain.
 
The $15.9b is net return, ie after paying 2.5%/4%/5% interest to CPF members, estimated at $400b borrowed. If we use a 3% interest paid to CPF, this would work out to be $12b. The gross profit from the funds invested, less expense other than CPF interest, would be $12b + $15.9b +15.9b = $43b. Assuming NIRC is 50% of net income and balance 50% went into the reserves.
 
The govt has been using a 3.5% figure as the returns from investing our reserves. Thus if $43b is the gross return or 3.5%, the reserves should be $1.23 trillion. If we use just the $31b as net return, the reserves should be $886b. Could have use $32b ie 15.9 +15.9
 
But 3.5% return is supposed to be an average. The estimated return of $31b could be 5%, 7.5% or 10% over the years. These would give the reserves as $620b, $413b and $310b respectively. I use the different percentages to show that the higher the rate of return, the lower would be the reserves.
 
Alternatively if we use $43b as the gross return and 5%, 7.5% and 10% return, the reserves could be $860b, $573b and $430b respectively.
 
The good news, the reserves could be as high as $1.23t or $886b. The bad news, it could be as low as $310b or $430b.
 
If the funds are not performing that well, ie making a 3.5% return, then the reserves could be in the region of $886b to $1.23t. Someone said the interest rate for long term interest, risk free is about 3%. What is the point of paying hundreds of millions to fund managers to bring in 3.5% with high risk of losing the capital. Sack the whole bunch if they cannot bring in more than 5% returns.
 
Extrapolating from the rate of returns based a given NIRC of $15.9b, the paradox is that higher the percentage of returns means lower reserves and vice versa. If the funds are doing well, ie making returns of 5%, 7.5% or 10%, then the reserves could be quite scary, like a glittering golden mountain but not all gold.
 
What is the real thing, when would this be made known, or forever be in the unknown?
 
PS. MOF stats stated that GIC has a 20 year annualized return of 3.7% while Temasek’s annualized return from 2002 to 2014 is 15%.