Friday, June 10, 2011

Defaulting CPF 3: Singapore government public debt

Above: Government Debt as % of GDP
Original Source : CIA factbook

Few people knew that Singapore government is more broke than many of the PIIGS. Fortunately (to PAP), the counter party of our public debt is our own citizen -- aka CPF obligation. This is not unlike Japan. Hence, PAP can play this game forever, because default is not a problem.

The PIIGS are unfortunately that their counterparty is Goldman Sachs. Hence, they must pay.  Below is what CIA factbook describe about Singapore public debt counterparty.


TokyoSingaporean said...

what is singapore government securities? and how is it tied up with CPF? Who are the PIIGS?

I can't understand this game you're trying to explain to us.

Veritas said...

When you deposited into CPF account, implicitly government is going to own your some money.

You become the creditor and PAP become the debtor. Not many people are aware of that.

And to prevent folks from saying GIC or temasek raiding CPF, PAP create financial engineering as below.

In layman term

1) Garment borrows from CPF through some financial engineering instrument. (Probably garment sell some bonds to CPF)

2) Garment give the money to GIC and Temasek, either directly or repackage it using accounting gimmicks.

PIIGS are those countries like greece iceland...etc that got bankrupt recently