"Road to Recession.....", Newsweek Cover Feb 2008
Frankly speaking guys things don't look too good. The only good thing is the good years weren't too good anyway with those price hikes so how bad can it get when things turn nasty. At least we're not Americans. Here's what the average American household is facing:
Debt at 138% of household income. What is happening in America is something like the Asian crisis - falling currency, troubled banks, collapsed property market and high debt levels. I was in a Mediterranean city on a job assignment last week- the local handmade candy store which I have visited many times before and happily accepted my US$ as a substitute for the local currency....this time the shop keeper gave me that disappointed look when I presented my US$ and said, "Ah...US$ why is it always falling, you know why?". I don't think he will be keeping those US$ for more than a few days.
"What we are not sure about is whether this will worsen into a depression...",
Newsweek Pg 3, Feb 2008
""Is the Fed trying to devalued the US$ to solve the problems, what will happen to the pensioners" - Senator Ron Paul.
People don't ask too many questions on whether an economic system is equitable until they wake up one day and find themselves destitute and without a job or when their retirement savings isn't enough for basic living. As the profits for corporations rose sharply to record levels, wages remained depressed and the American consumer simply borrowed more and more to keep spending....now some of them have decided to make the banks pay by defaulting on their credit cards. It is no fun being an average American these days. Many are asking why they are punished for the 'sins' of subprime lenders - the biggest of whom Countrywide Financial CEO, walked away with millions in compensation. Pensioners are asking why the inflation is escalating and eroding their savings as interest rates are cut to bail out Wall Street and its banks..
Your well being as a Singaporean is not just a matter of how hard you work and save but how much bad paper some faraway American bank issues, how one 35 year old "low level" trader can build up $74B worth of stock index futures causing your unit trust to plunge 10% in 2 days when it was dumped and whether Joe in California decides to pay for his credit card bills or defaults on its payment. Unfortunately the global economy means subprime in US results in a subprime economy in Singapore. Last year was indeed a Golden Period, while your bread price climbed 20% and taxi fare escalated to inaffordability, most of us got some kind of pay hike (albeit not enough) and bonus (also not enough). this may be the year we will be glad to have jobs to go and a pay package to live on every month.