Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

[Baby1M]

Looks like SG is heading for disaster if current Government do not stop using "up money/cost/price in their policies".

Sources:
Singapore Wages May Worsen Fastest Rich-World Inflation: Economy - Bloomberg

 

[Red_Bean_Bun]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

The only way is to raise interest rates - the traditional tool to combat inflation.

Then all those with properties loans will start jumping down from their condos .....

So how ? Bite the bullet on short term pain (raise interest rates) or go for GDP growth (screw certain FTs on their pay) ......

Remember one time when LKY still in charge - interest rate for housing was at least 8%. He believed in biting the bullet.......

 

[wobbles]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

I say bring on the pain. Raise interest rates please!!!!!

 

[wt_know]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

i quote "All price go up, only salary no up"

 

[Baby1M]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

Short term pain for gains is better than digging a deeper hole.

 

[Red_Bean_Bun]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

If their economists take heed then time to lock in fixed interest rates.....

I say bring on the pain. Raise interest rates please!!!!!

 

[wobbles]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

If their economists take heed then time to lock in fixed interest rates.....

Yes, but I'm a lost cause. 30 year mortgage - lock in also dun have 30 year period.

Still. I cannot be selfish - I reckon raising rates would be a far more effective tool to rein in inflation - I mean, we've near tried everything else already and the inflation rate is still a runaway choo-choo train with a firecracker shoved up its ass.

 

[ktnpl]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

Guys, MAS' policy is to manage the exchange rate but not interest rate.

The hard truth: Push too hard for GDP growth and it leads to inflationary pressure.

Sometimes stagflation comes along ie. no growth but inflation which hearsay may happen in 2013 but this should be a passing cloud.

The worst nigtmare is actually deflation.

 

[wt_know]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

the solution is to import cheap labour cheaper ... lolz

on serious note, govt should admit inflation pressure is high and not exclude car and property from the basket and say inflation 2%+ nia

 

[Baby1M]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

Guys, MAS' policy is to manage the exchange rate but not interest rate.

The hard truth: Push too hard for GDP growth and it leads to inflationary pressure.

Sometimes stagflation comes along ie. no growth but inflation which hearsay may happen in 2013 but this should be a passing cloud.

The worst nigtmare is actually deflation.

I m no economist and the word "deflation" is relatively new to me. So I go read and got a simple input as follows;

In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). This should not be confused with disinflation, a slow-down in the inflation rate.

Economists generally believe that deflation is a problem in a modern economy because they believe it may lead to a deflationary spiral. A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price. Since reductions in general price level are called deflation, a deflationary spiral is when reductions in price lead to a vicious circle, where a problem exacerbates its own cause. The Great Depression was regarded by some as a deflationary spiral. A deflationary spiral is the modern macroeconomic version of the general glut controversy of the 19th century. Another related idea is Irving Fisher's theory that excess debt can cause a continuing deflation. Whether deflationary spirals can actually occur is controversial, with its possibility being disputed by freshwater economists (including the Chicago school of economics) and Austrian School economists.

..... quite a load

 

[ktnpl]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

the solution is to import cheap labour cheaper ... lolz

on serious note, govt should admit inflation pressure is high and not exclude car and property from the basket and say inflation 2%+ nia

Even ignoring infrastructure issues, importing cheap labour will never sustain long term economic growth. We have to move away from the pyramid concept where we climb higher by stepping on many others. One day it will collapse because the top will grow too fat and heavy lol.

 

[wt_know]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

pretty much sum up in 1min 40secs
last time cost and current cost ... up 10-20x?
last time salary and current salary ... up 0.5x-1x?
now $300k-$400k ... you can only buy the basic of basic of basic hdb flat

[video=youtube;z-qNMOkl4NQ]http://www.youtube.com/watch?v=z-qNMOkl4NQ[/video]

 

[Red_Bean_Bun]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

Not true for Exchange rate as stated by the MAS - not in their control. But I was referring to the Interest rate which MAS is determined to stay out from as it affects the asset pricing etc and we have a free capital flow.

They have to realize that policies need to change to address issues because issues don't try to fit into the policies.

Guys, MAS' policy is to manage the exchange rate but not interest rate.

The hard truth: Push too hard for GDP growth and it leads to inflationary pressure.

Sometimes stagflation comes along ie. no growth but inflation which hearsay may happen in 2013 but this should be a passing cloud.

The worst nigtmare is actually deflation.

 

[Red_Bean_Bun]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

Looking at the latest dialog between Peter Lim, Najib and our guys on Iskandar - our domestic infrastructure is recognized as being too small. Banking, finance, education which does not need a huge physical undertaking is preferred. Look at Geneva as an example. The only manufacturing there are for watches. Almost all banking there with some tourism.

The rest work with our neighbors - complimentary as reported. Labour there is cheap and we do not need to house them because they would live there. So SMEs here can operate more cost effectively.

Just look at how cars here are going to JB to fix their oil leaks .... Faster and cheaper. What if those WS are owned by Singaporeans ?

Even ignoring infrastructure issues, importing cheap labour will never sustain long term economic growth. We have to move away from the pyramid concept where we climb higher by stepping on many others. One day it will collapse because the top will grow too fat and heavy lol.

 

[MW]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

But we have BMW! and many threads asking about mods, power and aesthetics!

 

[Pinky]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

Raise pay, take it from the CEOs and Chairmans, redistribute to the ordinary employee.
Those that are not happy can go back to their failing economies.
Businesses pull out, companies close down, mortgages don't get paid, property prices crash. Whole system resets:laughing:
Then everyone can choose to lead the simple life and be happy.

 

[Oilman]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

But we have BMW! and many threads asking about mods, power and aesthetics!

But when people buy a 320 and tell everyone they can make it go faster than a 328, you know life in Singapore is getting a bit too stressful.

*run away*

 

[ktnpl]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

Not true for Exchange rate as stated by the MAS - not in their control. But I was referring to the Interest rate which MAS is determined to stay out from as it affects the asset pricing etc and we have a free capital flow.

They have to realize that policies need to change to address issues because issues don't try to fit into the policies.

It is the other way round from what you mentioned in your first statement. See extract from MAS website in blue:

Monetary Policy

Singapore’s monetary policy has been centred on the management of the exchange rate since the early 1980s, with the primary objective of promoting medium term price stability as a sound basis for sustainable economic growth. The choice of our monetary policy regime is predicated on the small and open nature of the Singapore economy.

There are three main features of the exchange rate system in Singapore.
1. The Singapore dollar is managed against a basket of currencies of our major trading partners.

2. MAS operates a managed float regime for the Singapore dollar with the trade-weighted exchange rate allowed to fluctuate within a policy band.

3. The exchange rate policy band is periodically reviewed to ensure that it remains consistent with the underlying fundamentals of the economy.

There has been no change in their policy stance since the time we were taught Economics two decades ago and beyond. We have to accept that a small open economy like Singapore has to be a price taker (price refers to interest rate in this context) and it is difficult for the regulator to control both interest rate and exchange rate at the same time. If interest rate is set higher, inflow of funds for Singapore dollar will cause Singapore dollar to appreciate and we lose our export competiveness. If interest rate is set too low, the outflow causes Singapore dollar to depreciate and we get imported inflation. Hence, interest rate is left to find its equilibrium while MAS pursue its policy objective of stabilising the Singapore dollar to maintain a balance between export competiveness without too much domestic inflation. On most occasions, MAS' policy stance is to achieve a slow appreciation of the Singapore dollar.

 

[MW]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

But when people buy a 320 and tell everyone they can make it go faster than a 328, you know life in Singapore is getting a bit too stressful.

*run away*

Exact phrases used were "unleash the 320" n "it has same engine same turbo as the 328 shouldnt be difficult to see a little crouching tiger hidden dragon from this 320"

:woowooo:

 

[Red_Bean_Bun]

Re: Singapore Wages May Worsen Fastest Rich-World Inflation: Economy

True but this does not help with the inflation issues.

Since MAS cannot directly control liquidity being we are an open economy - there should be more effective tools to control credit other than loan to value ratios or stamp duties. Incidentally these are property specific. And the SG CPI excludes properties for various reason but this was brought up in inflation dialogues. Contradictory ......

And bear in mind stamp duties etc are taxes which help regulate spend vs income gaps but it does not help in inflation. This is where the fiscal cliff issues are causing some concerns ...... so GST adjustment might be on the cards.

But that has got no direct impact on inflation ......

It is the other way round from what you mentioned in your first statement. See extract from MAS website in blue:

Monetary Policy

Singapore’s monetary policy has been centred on the management of the exchange rate since the early 1980s, with the primary objective of promoting medium term price stability as a sound basis for sustainable economic growth. The choice of our monetary policy regime is predicated on the small and open nature of the Singapore economy.

There are three main features of the exchange rate system in Singapore.
1. The Singapore dollar is managed against a basket of currencies of our major trading partners.

2. MAS operates a managed float regime for the Singapore dollar with the trade-weighted exchange rate allowed to fluctuate within a policy band.

3. The exchange rate policy band is periodically reviewed to ensure that it remains consistent with the underlying fundamentals of the economy.

There has been no change in their policy stance since the time we were taught Economics two decades ago and beyond. We have to accept that a small open economy like Singapore has to be a price taker (price refers to interest rate in this context) and it is difficult for the regulator to control both interest rate and exchange rate at the same time. If interest rate is set higher, inflow of funds for Singapore dollar will cause Singapore dollar to appreciate and we lose our export competiveness. If interest rate is set too low, the outflow causes Singapore dollar to depreciate and we get imported inflation. Hence, interest rate is left to find its equilibrium while MAS pursue its policy objective of stabilising the Singapore dollar to maintain a balance between export competiveness without too much domestic inflation. On most occasions, MAS' policy stance is to achieve a slow appreciation of the Singapore dollar.