Saturday, September 3, 2011

Ponzi Island 3: Cleaning up the mess

From a total of S$381.8 billion of bank loans in Singapore, S$234 billion goes in FIRE-industry (Finance, Insurance, Real-Estate), which is 61% of total. Out of that, S$183 billion goes into real-estate which is around half of our total bank loans.

The addiction real-estate bubble that leads to foreigners import
Clearly, our banks are prop up by the unsustainable property bubble that should have been burst, without the import of foreigner. If PAP stop importing foreigner today, within 10-20 years, the largest income source of our banks will go to zero.

Hard choices
Stop importing foreigners and put our women back home to have more babies. This will leads to negative economic growth as women are retired from economics activities. Real estate price will self-correct as family income dives and lack of foreign buyers. It also mean our financial industries will have to downsize to its appropriate place, probably resulting to cutting half its workforce, because housing loan is going to zero.

Or we can keep on importing foreigners and piling debts onto the new comers so that our banks will continue to grow and grow. This will stop when we run out of space, massive unemployment or when countries like India and China out-prosper us.

Solving the Singaporean infertility with more foreigners will not solve the underlying problems

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