This post serve to notify you, that you better be prepared to take care of yourself than rely on your government to care for you in your older years. Thus, please put in efforts to ensure you are sufficiently covered. Please take your money seriously, invest and make sure your funds are sufficient when you retire. Here's the can of worms fellow Singaporeans:
1. Report on 27 Apr 2008
(source : http://www.channelnewsasia.com/stories/singaporelocalnews/view/343983/1/.html).
SINGAPORE: MediShield premiums will go up between a few dollars and S$40 a month from December 1, depending on age.
The Health Ministry (MOH) is raising the premiums so that it can increase the MediShield payouts to reduce the financial burden on Singaporeans with large Class B2 and Class C hospital bills.
The deductible stays the same for those under 80 – S$1,500 for Class B2 and S$1,000 for Class C. But it will be raised to S$3,000 for Class B2 and S$2,000 for Class C for those aged 81 to 85.
MOH will also raise the annual Medisave withdrawal limit to S$1,150 for policyholders aged above 80. For the rest, it stays at S$800.
2. Life Expectancy of Singaporeans
Refer to another source https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html
Life expectancy at birth:
total population: 81.89 years
male: 79.29 years
female: 84.68 years (2008 est.)
Refer to the first Para, increase in MediShield claims/payouts are for those above 80 years old. This applies only to B2 and below class wards.
The life expectancy refers to those born in this current few years, not applying to those who are already born years ago and working. Our life expectancy is not those stated above, but shorter.
3. Current MediShield Premium
http://mycpf.cpf.gov.sg/CPF/Templates/SubPage_Template.aspx?NRMODE=Published&NRORIGINALURL=%2fMembers%2fGen-Info%2fFAQ%2fHealthCare%2fMSH%2ehtm&NRNODEGUID=%7b19A871A3-E1A4-4C7C-AD0E-42686AE7E9A5%7d&NRCACHEHINT=Guest#SEC4Q17
Table F:
Annual Premium Table Age Next Birthday Yearly Premium
30 and under - $30
31 - 40 - $40
41 - 50 - $80
51 - 60 - $160
61 - 65 - $225
66 - 70 - $265
71 - 73 - $335
74 - 75 - $375
# 76 - 78 - $420
# 79 - 80 - $510
# 81 - 83 - $600
# 84 - 85 - $705
4. The Cruel Fact, The Percentage of Increase
Let's look at figures. If premium is increased by $40/month, or $480/year for those above 80 years old, what is the percentage of increase?
a. Age 81 - 83 = $600/year. Increase by $480/year works out to 80% increase
b. Age 84 - 85 = $705/year. Increase by $480/year works out to 68% increase.
c. Age 86 onwards. Sorry, not covered.
As stated in CIA Fact Book, the median age is 38.4yrs old. Let's assume, the MediShield premium increase is $3/mth for this group. That works out to $36/year. The premium for this age group is $40/year. The increase is, 90%.
Reports are not being transparent by publishing the bigger picture, by percentage of increase. By saying, a few dollars a month, it sounds palatable.
5. What Next
With so much increase, first Goods & Services Tax, follow by Transportational Cost, now MediShield Premiums, what next?
We must make sure we do our own dues, to be sufficiently prepared for our older years.
Tuesday, April 29, 2008
Friday, April 25, 2008
Global Slowdown Not The Worst Yet
The current global growth slowdown, and potential recession, may be the worst in the last 30 years. The current situation started with the US Sub-prime, leading to financial crisis which spread globally.
This may not be the worst that is yet to come.
Last October (2007), I wrote about the "Anticipation of Next Recession" (http://globalcookie.blogspot.com/2007/10/anticipation-of-next-recession-or-great.html), which I was making a guess that it will happen some time around year 2014. In recent period, there were news coming from global financial leaders about the US Recession which is the worst since the last Great Depression (1929).
Many countries and funds have scrambled to bail out financial institutions trapped in the US Crisis that threatened to cause some to wind up. Billions of dollars have been pumped into US financial institutions over recent months. Singapore alone had contributed at least US$40 billion through the Government Investment Corp (GIC) and Temasek Holdings.
Is this the worst?
Going back to my posting in October 2007, the anticipation of the next Great Depression was based on my assumption that the Baby Boomers' retirement will create a vaccum, etc. That was just talking about retirement of Baby Boomers. I like to shine more light into that post.
China had seen double digit growth over the last 20 years, since opening up of their economy. China economy have evolved and the Chinese spending power have grown so much, they become the biggest consumers now.
However, a worrying trend have evolved together with their growth. Chinese (no statistics) are spending beyond their means. Their car population have outgrown anywhere else in the world. Are these car owners really affluent enough to afford cars as part of their lifestyle?
Should a melt down happen in China years from now, coupled with global greying population (not just US), it may create a major problem for economies around the world. Emerging countries currently do not have the financial and consumption ability to sustain the consumer power of the Developed Nations and China.
Will this lead to a real Great Depression years from now? The worst may yet to have been seen.
This may not be the worst that is yet to come.
Last October (2007), I wrote about the "Anticipation of Next Recession" (http://globalcookie.blogspot.com/2007/10/anticipation-of-next-recession-or-great.html), which I was making a guess that it will happen some time around year 2014. In recent period, there were news coming from global financial leaders about the US Recession which is the worst since the last Great Depression (1929).
Many countries and funds have scrambled to bail out financial institutions trapped in the US Crisis that threatened to cause some to wind up. Billions of dollars have been pumped into US financial institutions over recent months. Singapore alone had contributed at least US$40 billion through the Government Investment Corp (GIC) and Temasek Holdings.
Is this the worst?
Going back to my posting in October 2007, the anticipation of the next Great Depression was based on my assumption that the Baby Boomers' retirement will create a vaccum, etc. That was just talking about retirement of Baby Boomers. I like to shine more light into that post.
China had seen double digit growth over the last 20 years, since opening up of their economy. China economy have evolved and the Chinese spending power have grown so much, they become the biggest consumers now.
However, a worrying trend have evolved together with their growth. Chinese (no statistics) are spending beyond their means. Their car population have outgrown anywhere else in the world. Are these car owners really affluent enough to afford cars as part of their lifestyle?
Should a melt down happen in China years from now, coupled with global greying population (not just US), it may create a major problem for economies around the world. Emerging countries currently do not have the financial and consumption ability to sustain the consumer power of the Developed Nations and China.
Will this lead to a real Great Depression years from now? The worst may yet to have been seen.
Strengthening of Sing Dollar
Singapore's Year on Year inflation as at January 2008 was 6.6%, up from 4.4% in December 2007. (Source : http://www.mas.gov.sg/eco_research/eco_dev_ana/Inflation_Monthly.html)
While the world frets about a possible U.S. recession, global inflation has quietly climbed to historic levels, confronting policy makers with tough choices that could end up hurting the euro and lifting Asian currencies.
At a time when global growth is slowing and prices are rising, a strengthening currency can help protect consumers by increasing their buying power.
(Source : http://banderasnews.com/0802/nw-globalinflation.htm)
In recent reports, Monetary Authority of Singapore is set to strengthen Singapore Currency further and may meet exchange rate of $1.32 against US$ by year end (2008). Stronger Singapore Dollar can help lower inflation as it will cost lesser to import from other countries.
However, adjusting the currency is a double edge sword. With stronger Singapore Dollar, our exports becomes less attractive. Singapore's export are already facing competition from developing nations, where labour cost are much lower, which helped lower cost of exports.
As such, the Monetary Authority will be watchful on how far the currency appreciates in value so that we do not end up edging ourselves out of global competition.
While the world frets about a possible U.S. recession, global inflation has quietly climbed to historic levels, confronting policy makers with tough choices that could end up hurting the euro and lifting Asian currencies.
At a time when global growth is slowing and prices are rising, a strengthening currency can help protect consumers by increasing their buying power.
(Source : http://banderasnews.com/0802/nw-globalinflation.htm)
In recent reports, Monetary Authority of Singapore is set to strengthen Singapore Currency further and may meet exchange rate of $1.32 against US$ by year end (2008). Stronger Singapore Dollar can help lower inflation as it will cost lesser to import from other countries.
However, adjusting the currency is a double edge sword. With stronger Singapore Dollar, our exports becomes less attractive. Singapore's export are already facing competition from developing nations, where labour cost are much lower, which helped lower cost of exports.
As such, the Monetary Authority will be watchful on how far the currency appreciates in value so that we do not end up edging ourselves out of global competition.
Saturday, April 12, 2008
Global Financial Crisis (US & G7 seeks Financial Reforms)
Here's the joke. Had the US financial system be tighter in boom years, the global economy will not be weary today. Is it a lack of governance or the ruins of democratic financial system, in the US that created such a huge mess today?
The Denial
To think that the current financial turmoil started from their mishandling, they are still out holding their might to teach the global financial heads how to better manage global financial controls. Their leaders are not admiting to the problem and in denial claiming IMF is "Unduly pessimistic" about the US Economy. They are more focus on war in Iraq it appears, or the outgoing Administration are worry of a bad legacy.
Financial System & Controls
When banks starts getting overly aggressive and optimistic, we have to get cautious. The other joke about banks is, "they'll lend you and umbrella during sunny days, and take it back during rainy days".
In Singapore, banks tends to be conservative. Larger loans are usually subjected to strong collateral, such as properties. However, banks are stringent in lending beyond 80% Loan To Valuation as this expose them to greater risk that if the borrower defaults on payment, they may not be able to recover their loan.
With such controls, the financial institutions are limiting their risk.
Borrowers Personal Responsibility
Borrowers should learn to understand more about the economy and interest rate patterns to avoid over commiting into a loan they will have problem servicing later. This may be hard as some are overly naive and created false expectation of themselves and their potentials.
Let us not forget the lesson learnt since the Asian Financial Crisis to the most current Global Financial Crisis. We have to embrace these valuable lessons to avoid being trapped. The governments have too much to be concern about than to be responsible for our financial education.
US will work with partners to avert future crisis: Paulson
WASHINGTON (AFP) - - US Treasury Secretary Henry Paulson warned Friday that the struggling US economy may face rougher times ahead but insisted its fundamental prospects are in good shape.
The Treasury chief also said Washington would work with its global partners to take steps aimed at averting future financial crises.
"The financial market turmoil and its impact on global growth underscore the need for all countries to remain open to trade and investment," Paulson said after a meeting here of finance ministers and officials from the Group of Seven major industrialized countries.
"We have worked, and will continue to work, closely to address global challenges and take concrete actions," Paulson said.
G7 officials endorsed a plan earlier Friday aimed at preventing a repetition of the recent financial market turmoil which has caused tens of billions of dollars of losses for major banks and securities firms.
"There may be more bumps in the road" for the US economy, Paulson cautioned.
The current slowdown in the world's biggest economy has been called a recession by the International Monetary Fund, an assessment dismissed by President George W. Bush's administration as "unduly pessimistic."
But it is clear that a persistent US housing slump and a related credit crunch have slowed US economic growth dramatically in recent months.
"I am confident in the long-term economic prospects of the United States," Paulson said. "However, the housing correction, together with high energy prices and financial market turmoil are weighing on US economic growth."
Paulson, a former chief executive of Goldman Sachs, said the US economy would likely get out of a first-quarter rut by later this year and possibly as early as the second quarter.
"The first quarter was a tough quarter," he told journalists at a press briefing.
A growing number of economists believe America's economy has already slipped into a recession.
Bush administration officials say a flurry of Federal Reserve interest-rate cuts and a giant 168-billion-dollar economic stimulus package should revive growth in coming months.
Paulson said the economy could benefit from "positive results" as early as the second quarter as it continues to weather stressed housing and credit markets.
He said some media headlines on the economy appeared to be overly bleak and stressed that America's economy is broad-based and dynamic.
Addressing reporters' questions about the foreign exchange markets and the weakened dollar, Paulson said G7 officials always debate currencies.
"I reiterated in very strong terms our commitment to a strong dollar," he said of his participation in the G7 finance meeting, adding that ministers also discussed other global currencies and their values.
The US dollar has weakened markedly on foreign exchange markets in recent months, partly due to aggressive Fed rate cuts.
Paulson also reiterated calls for Beijing to increase the flexibility of its yuan currency.
"As someone who has just got back from China, I believe that China understands ... it's in their interests, as they're are dealing with some of the issues they have ... to have a currency that's more reflective of underlying economic fundamentals," he said.
Some US economic commentators accuse China of keeping its currency artificially undervalued to support China's ballooning trade surplus with the United States.
(Source : http://sg.news.yahoo.com/afp/20080412/tts-g7-imf-worldbank-economy-statement-u-972e412.html)
When problem brews, the weak blames others.
G7 finance chiefs back financial reforms amid crisis
WASHINGTON (AFP) - - The Group of Seven warned Friday the global economy is sputtering and vigorously backed measures to prevent a recurrence of what is being called the worst financial crisis in seven decades.
Finance ministers and central bank governors of the G7 major industrialized countries said banks should adopt steps to "fully and promptly" reveal their risk exposure due to the current financial market turmoil within 100 days.
The world economy "continues to face a difficult period ... (and) near-term economic prospects have weakened," the G7 officials said in a statement after their meeting here.
The finance chiefs from Britain, Canada, France, Germany, Italy, Japan and the United States stared into the abyss of a complex crisis that began in the US subprime home-loan market in August and has spread into a global credit squeeze draining world growth.
"The turmoil in global financial markets remains challenging and more protracted than we had anticipated," they said ahead of the weekend meetings here of the board of governors of the International Monetary Fund and World Bank.
"While economic conditions differ in our countries, downside risks to the outlook persist in view of the ongoing weakness in US residential housing markets, stressed global financial market conditions, the international impact of high oil and commodity prices, and consequent inflation pressures."
The G7 finance chiefs also noted that since their last meeting in February, there have been "sharp fluctuations" in major currencies and members "continue to monitor exchange markets closely and cooperate as appropriate."
Major central banks have coordinated multi-billion dollar cash injections into stressed financial markets in recent months and the dollar has plunged to record lows.
In response to the spreading crisis, they said they approved a Financial Stability Forum (FSF) report on ways to prevent a repetition and had identified several recommendations for implementation "within the next 100 days."
"Rapid implementation of the FSF report will not only enhance the resilience of the global financial system for the longer term but should help to support confidence and improve the functioning of the markets," they said.
Ranked first, "firms should fully and promptly disclose their risk exposures, write-downs, and fair value estimates for complex and illiquid instruments.
"We strongly encourage financial institutions to make robust risk disclosures in their upcoming mid-year reporting consistent with leading disclosure practices as set out in the FSF's report."
Among other measures for early implementation, the G7 said the International Accounting Standards Board (IASB) and standard-setters should "initiate urgent action to improve the accounting and disclosure standards for off-balance sheet entities."
It should also enhance its guidance on fair value accounting, particularly on valuing financial instruments in periods of stress.
Off-balance sheet entities have been blamed for concealing the true extent of the banks' exposure to the US high-risk subprime mortgage crisis and the risks involved in assets that could not be fairly valued in times of distress.
In its report, the FSF said watchdogs around the world should improve their "responsiveness to risks," and "robust arrangements" should be put in place to deal with stress in the global financial system.
"To restore confidence in the soundness of markets and instutitions, it is essential that steps are taken now to enhance the resilience of the global system," the FSF urged.
The G7 ministers reaffirmed "our strong commitment to continue working closely together to restore sustained growth, maintain price stability, and ensure the smooth and orderly functioning of our financial systems."
US Treasury Secretary Henry Paulson, his country at the epicenter of the crisis, said: "We have worked, and will continue to work, closely to address global challenges and take concrete actions".
(source : http://sg.news.yahoo.com/afp/20080412/tts-g7-imf-worldbank-economy-c1b2fc3.html)
The Denial
To think that the current financial turmoil started from their mishandling, they are still out holding their might to teach the global financial heads how to better manage global financial controls. Their leaders are not admiting to the problem and in denial claiming IMF is "Unduly pessimistic" about the US Economy. They are more focus on war in Iraq it appears, or the outgoing Administration are worry of a bad legacy.
Financial System & Controls
When banks starts getting overly aggressive and optimistic, we have to get cautious. The other joke about banks is, "they'll lend you and umbrella during sunny days, and take it back during rainy days".
In Singapore, banks tends to be conservative. Larger loans are usually subjected to strong collateral, such as properties. However, banks are stringent in lending beyond 80% Loan To Valuation as this expose them to greater risk that if the borrower defaults on payment, they may not be able to recover their loan.
With such controls, the financial institutions are limiting their risk.
Borrowers Personal Responsibility
Borrowers should learn to understand more about the economy and interest rate patterns to avoid over commiting into a loan they will have problem servicing later. This may be hard as some are overly naive and created false expectation of themselves and their potentials.
Let us not forget the lesson learnt since the Asian Financial Crisis to the most current Global Financial Crisis. We have to embrace these valuable lessons to avoid being trapped. The governments have too much to be concern about than to be responsible for our financial education.
US will work with partners to avert future crisis: Paulson
WASHINGTON (AFP) - - US Treasury Secretary Henry Paulson warned Friday that the struggling US economy may face rougher times ahead but insisted its fundamental prospects are in good shape.
The Treasury chief also said Washington would work with its global partners to take steps aimed at averting future financial crises.
"The financial market turmoil and its impact on global growth underscore the need for all countries to remain open to trade and investment," Paulson said after a meeting here of finance ministers and officials from the Group of Seven major industrialized countries.
"We have worked, and will continue to work, closely to address global challenges and take concrete actions," Paulson said.
G7 officials endorsed a plan earlier Friday aimed at preventing a repetition of the recent financial market turmoil which has caused tens of billions of dollars of losses for major banks and securities firms.
"There may be more bumps in the road" for the US economy, Paulson cautioned.
The current slowdown in the world's biggest economy has been called a recession by the International Monetary Fund, an assessment dismissed by President George W. Bush's administration as "unduly pessimistic."
But it is clear that a persistent US housing slump and a related credit crunch have slowed US economic growth dramatically in recent months.
"I am confident in the long-term economic prospects of the United States," Paulson said. "However, the housing correction, together with high energy prices and financial market turmoil are weighing on US economic growth."
Paulson, a former chief executive of Goldman Sachs, said the US economy would likely get out of a first-quarter rut by later this year and possibly as early as the second quarter.
"The first quarter was a tough quarter," he told journalists at a press briefing.
A growing number of economists believe America's economy has already slipped into a recession.
Bush administration officials say a flurry of Federal Reserve interest-rate cuts and a giant 168-billion-dollar economic stimulus package should revive growth in coming months.
Paulson said the economy could benefit from "positive results" as early as the second quarter as it continues to weather stressed housing and credit markets.
He said some media headlines on the economy appeared to be overly bleak and stressed that America's economy is broad-based and dynamic.
Addressing reporters' questions about the foreign exchange markets and the weakened dollar, Paulson said G7 officials always debate currencies.
"I reiterated in very strong terms our commitment to a strong dollar," he said of his participation in the G7 finance meeting, adding that ministers also discussed other global currencies and their values.
The US dollar has weakened markedly on foreign exchange markets in recent months, partly due to aggressive Fed rate cuts.
Paulson also reiterated calls for Beijing to increase the flexibility of its yuan currency.
"As someone who has just got back from China, I believe that China understands ... it's in their interests, as they're are dealing with some of the issues they have ... to have a currency that's more reflective of underlying economic fundamentals," he said.
Some US economic commentators accuse China of keeping its currency artificially undervalued to support China's ballooning trade surplus with the United States.
(Source : http://sg.news.yahoo.com/afp/20080412/tts-g7-imf-worldbank-economy-statement-u-972e412.html)
When problem brews, the weak blames others.
G7 finance chiefs back financial reforms amid crisis
WASHINGTON (AFP) - - The Group of Seven warned Friday the global economy is sputtering and vigorously backed measures to prevent a recurrence of what is being called the worst financial crisis in seven decades.
Finance ministers and central bank governors of the G7 major industrialized countries said banks should adopt steps to "fully and promptly" reveal their risk exposure due to the current financial market turmoil within 100 days.
The world economy "continues to face a difficult period ... (and) near-term economic prospects have weakened," the G7 officials said in a statement after their meeting here.
The finance chiefs from Britain, Canada, France, Germany, Italy, Japan and the United States stared into the abyss of a complex crisis that began in the US subprime home-loan market in August and has spread into a global credit squeeze draining world growth.
"The turmoil in global financial markets remains challenging and more protracted than we had anticipated," they said ahead of the weekend meetings here of the board of governors of the International Monetary Fund and World Bank.
"While economic conditions differ in our countries, downside risks to the outlook persist in view of the ongoing weakness in US residential housing markets, stressed global financial market conditions, the international impact of high oil and commodity prices, and consequent inflation pressures."
The G7 finance chiefs also noted that since their last meeting in February, there have been "sharp fluctuations" in major currencies and members "continue to monitor exchange markets closely and cooperate as appropriate."
Major central banks have coordinated multi-billion dollar cash injections into stressed financial markets in recent months and the dollar has plunged to record lows.
In response to the spreading crisis, they said they approved a Financial Stability Forum (FSF) report on ways to prevent a repetition and had identified several recommendations for implementation "within the next 100 days."
"Rapid implementation of the FSF report will not only enhance the resilience of the global financial system for the longer term but should help to support confidence and improve the functioning of the markets," they said.
Ranked first, "firms should fully and promptly disclose their risk exposures, write-downs, and fair value estimates for complex and illiquid instruments.
"We strongly encourage financial institutions to make robust risk disclosures in their upcoming mid-year reporting consistent with leading disclosure practices as set out in the FSF's report."
Among other measures for early implementation, the G7 said the International Accounting Standards Board (IASB) and standard-setters should "initiate urgent action to improve the accounting and disclosure standards for off-balance sheet entities."
It should also enhance its guidance on fair value accounting, particularly on valuing financial instruments in periods of stress.
Off-balance sheet entities have been blamed for concealing the true extent of the banks' exposure to the US high-risk subprime mortgage crisis and the risks involved in assets that could not be fairly valued in times of distress.
In its report, the FSF said watchdogs around the world should improve their "responsiveness to risks," and "robust arrangements" should be put in place to deal with stress in the global financial system.
"To restore confidence in the soundness of markets and instutitions, it is essential that steps are taken now to enhance the resilience of the global system," the FSF urged.
The G7 ministers reaffirmed "our strong commitment to continue working closely together to restore sustained growth, maintain price stability, and ensure the smooth and orderly functioning of our financial systems."
US Treasury Secretary Henry Paulson, his country at the epicenter of the crisis, said: "We have worked, and will continue to work, closely to address global challenges and take concrete actions".
(source : http://sg.news.yahoo.com/afp/20080412/tts-g7-imf-worldbank-economy-c1b2fc3.html)
Thursday, April 10, 2008
Global Recession Forecasted
In International Monetary Fund (IMF) semi-annual World Economic Report released on 9 Apr 08, they warn that there is now a 0ne-in-four chance of a global recession. IMF also declare that the United States faces a recession this year.
The report said : "The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression, inflicting heavy damage on markets and institutions at the core of the financial system."
It also predict that global growth would slow to just 3.7 per cent this year while US economy will expand by just 0.5%. "The US is projected to tip into a mild recession in 2008 despite aggressive rate cuts by the Federal Reserve and timely implementation of a fiscal stimulus package." This would be the worst performance for the US economy for well over a decade.
Unless the global financial crisis worsens, Asia is set for slower yet still robust economic growth of about 4.0%, especially in newly industrialised economies of South Korea, Taiwan, Hong Kong and Singapore.
The IMF estimated that the worldwide losses stemming from the US sub-prime mortgage crisis could hit US$945 billion.
In a seperate report, ex-Federal Reserve chairman, Alan Greenspan, says US is already in recession.
The big cut in its most important interest rate capped the most aggressive Fed intervention in 25 years could help avoid a deep recession. The Fed has been urgently moving to prevent the trio of economic woes - housing, credit and financial - from plunging the country into a deep recession.
However, with the scoring energy prices and high food cost,, worry is that inflation could potentially become unhinged. If people, investors and businesses expect prices to rise sharply, they will act in ways that will make inflation worse.
The report said : "The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression, inflicting heavy damage on markets and institutions at the core of the financial system."
It also predict that global growth would slow to just 3.7 per cent this year while US economy will expand by just 0.5%. "The US is projected to tip into a mild recession in 2008 despite aggressive rate cuts by the Federal Reserve and timely implementation of a fiscal stimulus package." This would be the worst performance for the US economy for well over a decade.
Unless the global financial crisis worsens, Asia is set for slower yet still robust economic growth of about 4.0%, especially in newly industrialised economies of South Korea, Taiwan, Hong Kong and Singapore.
The IMF estimated that the worldwide losses stemming from the US sub-prime mortgage crisis could hit US$945 billion.
In a seperate report, ex-Federal Reserve chairman, Alan Greenspan, says US is already in recession.
The big cut in its most important interest rate capped the most aggressive Fed intervention in 25 years could help avoid a deep recession. The Fed has been urgently moving to prevent the trio of economic woes - housing, credit and financial - from plunging the country into a deep recession.
However, with the scoring energy prices and high food cost,, worry is that inflation could potentially become unhinged. If people, investors and businesses expect prices to rise sharply, they will act in ways that will make inflation worse.
Tuesday, April 8, 2008
Double Whammy For Low-Income
I read on newspaper, Today (8 Apr 08 issue), on the above subject and wonders if the writer has shone appropriate light onto the matter.
He wrote,
1. Increasing rate of inflation must be discussed together with declining interest rates
2. Real interest rates (nominal rates less inflation) have steadily declined in the recent past because of increase in inflation
3. Double whammy for low-income households - Purchasing power has fallen because of higher inflation while their ability to grow their savings has declined
4. Higher income households benefit from the higher inflation rate by being able to invest in alternative options that offer better returns than savings accounts, such as gold, exchange-traded funds and commodities that have boomed in recent past.
5. Lower-income households are unable to take advantage of such financial instruments because of lack of awareness and capital required for participation
6. Current situation seems hopeless for them.
He failed to share, with High Inflation and Low Interest, it errodes the value of money. This means, the funds we hold are erroded fast.
By sharing point 4 above, he may send the wrong signal to non-savvy investor-wannabe to invest in commodities like gold and equity based funds that had grown tremendiously over the recent period.
It is indeed true that lower-income families have lesser savings and may not even have any disposable funds. With that, they are unlikely to be able to open themselves to opportunities that others would have. The lower-income families are more concern of making ends meet with rising living cost.
As I read last year, people were spending more on luxury goods. As shared with several friends, if we could, conserve funds during good times and vest it into good returns investments while others spend away their hard earned monies.
During economic slowdown or downturn, our funds are magnified to allow us to take on more than what we would be able to afford during good economy.
He wrote,
1. Increasing rate of inflation must be discussed together with declining interest rates
2. Real interest rates (nominal rates less inflation) have steadily declined in the recent past because of increase in inflation
3. Double whammy for low-income households - Purchasing power has fallen because of higher inflation while their ability to grow their savings has declined
4. Higher income households benefit from the higher inflation rate by being able to invest in alternative options that offer better returns than savings accounts, such as gold, exchange-traded funds and commodities that have boomed in recent past.
5. Lower-income households are unable to take advantage of such financial instruments because of lack of awareness and capital required for participation
6. Current situation seems hopeless for them.
He failed to share, with High Inflation and Low Interest, it errodes the value of money. This means, the funds we hold are erroded fast.
By sharing point 4 above, he may send the wrong signal to non-savvy investor-wannabe to invest in commodities like gold and equity based funds that had grown tremendiously over the recent period.
It is indeed true that lower-income families have lesser savings and may not even have any disposable funds. With that, they are unlikely to be able to open themselves to opportunities that others would have. The lower-income families are more concern of making ends meet with rising living cost.
As I read last year, people were spending more on luxury goods. As shared with several friends, if we could, conserve funds during good times and vest it into good returns investments while others spend away their hard earned monies.
During economic slowdown or downturn, our funds are magnified to allow us to take on more than what we would be able to afford during good economy.
Asian Firms Freezing Pay and Headcount
A survey by global management consultancy Hay Group released last Friday (4 Apr 08), shows Asian employers are starting to brace themselves for the economic downturn. it found that 81% of Asian companies polled are planning to freeze or decrease headcount in 2008.
About 33% of the 140 Asian companies polled are also currently freezing or looking to freeze their employees' base salaries. In comparison, only 15% of the 863 non-Asian companies polled are preparing to do the same.
A total of 1,003 companies comprising mostly of multi-natoinal corporations across sectors such as energy, retail, healthcare, and finance and banking, were from 80 countries worldwide. Of these, 770 are from non-Asian countries. There are no figures of Singapore companies polled.
Although Singapore doesn't look as gloom as compared to the region, we would need to brace ourselves for cyclical downturns. Besides, the inflation has escalated in the last 1 year. Cost of basic necessities have climbed vigorously during this period, causing some extend of panic buying of basic necessities (eg, Rice) by consumers.
I had a recent look at my financial aspiration. If I could vest some funds separately, into various investment that matures every 3 to 5 years, it could result in having mature investment every 2 to 3 years interval. With that, I will not be at the mercy of economical upheaval wouldn't I?
About 33% of the 140 Asian companies polled are also currently freezing or looking to freeze their employees' base salaries. In comparison, only 15% of the 863 non-Asian companies polled are preparing to do the same.
A total of 1,003 companies comprising mostly of multi-natoinal corporations across sectors such as energy, retail, healthcare, and finance and banking, were from 80 countries worldwide. Of these, 770 are from non-Asian countries. There are no figures of Singapore companies polled.
Although Singapore doesn't look as gloom as compared to the region, we would need to brace ourselves for cyclical downturns. Besides, the inflation has escalated in the last 1 year. Cost of basic necessities have climbed vigorously during this period, causing some extend of panic buying of basic necessities (eg, Rice) by consumers.
I had a recent look at my financial aspiration. If I could vest some funds separately, into various investment that matures every 3 to 5 years, it could result in having mature investment every 2 to 3 years interval. With that, I will not be at the mercy of economical upheaval wouldn't I?
Friday, April 4, 2008
6 More Months of Uncertainty
As published on local newspaper (My Paper Friday 4 Apr 08), property tycoon Mr Kwek Leng Beng (Singapore's 5th richest - 23 Aug 07 [http://www.forbes.com/2007/08/23/biz-cz_07singapore_Singapores-40-Richest_land.html]) shared, "the uncertainty surrounding the local property market will last at least another six months and stake holders must stay nimble to deal with the changing tides".
He mentioned that the standstill in the local property market would end only after the United States sub-prime crisis clears. Any restoration of confidence in the property market will also hinge on private and public stakeholders remaining nimble and reviewingtheir strategies to meet changing market conditions swiftly.
In another report, Property Fever Here Starting to Cool, it was reported that bids for land has dropped in numbers of bidders and price offered. In recent land tender, the residential site bordering Choa Chu Kang Road and Woodlands Road attracted just two bids. The highest offer being $61 million, which works out to just $162 psf per plot ratio.
The low point came last month when just $78 psf was offered for land in Westwood Avenue, which was rejected by the Urban Redevelopment Authority.
The property market boom between August to November 2007 lead to a massive inflation of property prices. Property prices raised by percentages not seen before within such short span of time. The property market started to cooled off in December 2007 and January 2008 onwards saw a complete slow down in property deals.
My take would be, hold onto buying till after mid 2008. At that point, the dust would have settled a little more, but not clear yet.
He mentioned that the standstill in the local property market would end only after the United States sub-prime crisis clears. Any restoration of confidence in the property market will also hinge on private and public stakeholders remaining nimble and reviewingtheir strategies to meet changing market conditions swiftly.
In another report, Property Fever Here Starting to Cool, it was reported that bids for land has dropped in numbers of bidders and price offered. In recent land tender, the residential site bordering Choa Chu Kang Road and Woodlands Road attracted just two bids. The highest offer being $61 million, which works out to just $162 psf per plot ratio.
The low point came last month when just $78 psf was offered for land in Westwood Avenue, which was rejected by the Urban Redevelopment Authority.
The property market boom between August to November 2007 lead to a massive inflation of property prices. Property prices raised by percentages not seen before within such short span of time. The property market started to cooled off in December 2007 and January 2008 onwards saw a complete slow down in property deals.
My take would be, hold onto buying till after mid 2008. At that point, the dust would have settled a little more, but not clear yet.
Subscribe to:
Posts (Atom)
