Friday, September 2, 2011

Ponzi island 2: A historical perspective

Comparing 1997 Asian Economic Crisis effects on Singapore, and USA subprime meltdown 
During the subprime crisis, Case-Shiller drop by 33%, causing the failure of all USA big banks, which were then subsequently bailed out by TARF and QE.

Flashback during 1997 crisis, Singapore real-estate plunge even more, for a total of 45%. Arguably, Singapore banks then were probably not too much better than those TBTF banks of USA today. Tat-Lee bank was then nearly bankrupt and bail out was arranged, for a merger with Keppel Bank. Even DBS merged with POSB to improve its book.
Property Index of Singapore from URA

USA Case Shiller index
Economic correction mistaken as downturn
With the low fertility rate and aging Singaporean population, our property price could only go lower. The real estate plunge of 1997 was in fact a correction of the bubble to its appropriate and sustainable level. If the 1997 price level persists today, we will not have a fertility disaster of today's severity.

Foreign immigrants bailing out local banks and landlords
Out of the despair of bankers and people like Ng Teng Fong who have been robbing Singaporean for decades, the acceleration of foreigners import commenced. 

While real estate tycoon and banksters cheer, Singapore is getting more and more precarious economically. Fundamental economic issues are swept under carpet and bubbles get ever bigger. 

1 comment:

Anonymous said...

Last week NYT and WSJ both ran articles claiming Obama would soon bail out the housing market using Frandie Mac. Here our great leaders have done better - get the foreign talent to do the bailout: Ft basically 1) suppress low income wages so GLCs can survive, 2) inflate high-income senior civil servants pay (thru the top 6 taxpayers IRAS bracket), 3) chase up languishing housing and boost banks/construction companies profits, 4) boost GDP so they receive GDP-bonus. Like that senile man said: suck it up, it's good for singapore!