Friday, April 11, 2008

1 US$ = 1.357 S$

Yesterday MAS decided to do something about inflation - allow the S$ to rise sharply against the US$. It was reported in the papers that they made the move as the price of oil rose above U$111. Yesterday the US reported that its trade deficit has rose to U$63B for February - Americans consume US$63B more than they export. Watch this video:

You see for many years Asian govts funded the US deficit by buying US$ assets (treasuries, stocks etc) - this allowed the Americans to consume much more than what they produced. It also kept the Asians busy with and more work to produce more for export to the US. The main beneficiaries of this whole setup were the Americans who get to eat more, the export companies in Asian and strangely the Asian govts who were able to create jobs by lending to the Americans to consume.

If you go to America and eat at the restaurants, you find the portions bigger, the shopping malls are bigger, the average car is bigger ...etc. Many of my friends got tired of being on the working side of this strange equation, they went to America and traded work for consumption. They worked less and got paid more, drove bigger cars, stayed in bigger houses etc.

I find it very strange why Singaporeans like emigrate when there are so many jobs for them in Singapore. We have the one of the most competitive school system in the world, the most competitive job market, we work longer and harder than any other population in the world - why would anyone want to leave such a great system?


Anonymous said...

Why indeed?! Maybe because they have the freedom of choice? One cannot appreciate how claustrophobic, contrived and controlled Singapore can be until one spends time away.

And it is boring to hear how well Singapore is doing and what a magnificent government we have when we cannot keep one little uncharged 'terrorist' under detention.

We reap and have accumulated billions in fines, taxes, etc but have elderly doing menial tasks for a pittance. On the other hand our well paid executives make investments decisions which set our neighbours off or lose billions.

It's a small core of "us", very exclusive and everyone else is "them" who pay and pay.

We don't need a new government, we just need one that is not arrogant and which works.

Anonymous said...

Who created the spendthrift consumerist society out of America? The US banks of course, through credit cards, subprime loans and other credit offerings because they can make high interest out of them!

These are the Ah Longs par excellence. Completely legal. What more they are in control, in fact own the Fed which dispenses loans to their government to help the trouble institution - but only at the right timing, months after the big fool or rather their running dog PAP has gone in to bail out their troubled banks.

It has all been planned from the top by the financial industry - all the way from a debt-ridden society to a crash and then a bail out with loans from the Fed when it is profitable to do so.

With the subprime issue, when American home owners buyers can no longer service their housing loans, the banks repossess the houses. But then the money also stop coming in from house owners. Hence a large part of the financial trouble, one that is more serious than their planners originally expected.

Tis called the law of no free lunch ultimately.

American consumerism is rooted on spending on credit, a way of life that have been sold to the American public for too long.

Now that things have gone sour, the financial experts are saying it is the problem as though it is a new discovery. Hey it been there for many decades.

What is needed is a new monetary system not only for America but for the whole world. Numerous proposals have been made by various parties.

However I feel that this issue of a new healthy monetary system for the world requires the top brains from all countries coming together to solve through a platform as the UN.

IMF is not suited for this role as it has always supported the conventional system, one that has been creating so much misery for the world. IMF is but an arm of the money masters of the US. IMF had been hand-offs towards the destabilizing activities of trillion-dollar hedge funds. Yet it now wants to control the activities of Sovereign Wealth Funds (SWFs).

[Incidentally the Temasek is first and foremost volunteering to help IMF draft out the new guidelines for SWFs. What a minion.]

The creation of a new monetary system that at the same time rid the US and the world of the deceptive and greedy policies of the US banks is direly needed.

Otherwise there will never be financial stability for the world. Never!

Anonymous said...

ahhh..the rich get richer.

Anonymous said...

Nice post :) The Americans seem to be quite smart. We export real products and collect pieces of paper (US dollars) back from them. But we didn't spend all the US dollars we collected. So we loaned it back to them so they can buy even more. But now that we have accumulated so many US dollar papers, their real value is dropping! It looks like we are kind of stupid. Collecting so many pieces of US dollar paper and not any real product. Now the Americans don't have to pay us back as much in terms of real goods that we once sent to them. Smart. But I'm not an economist. Maybe somone in our gahmen can explain how the Americans are acually the stupid ones and we are smart. Dat's what they usually tell us!

Anonymous said...

@ anonymous 12:49pm

Just to add to your comments...

IMF play the main role during the Asian Currency Crisis, by asking recipients of loan to take on sweeping reform (i.e. open up your market, adopt our system, take our investment make it easier for us cream profit)

Plenty of leverage in times of need, Ah Longs indeed.

Now fast forward 10 years, Credit Crunch, so much for the enviable stability and resilience build on financial innovation. Now even the former Fed 'maestro' is getting a bad press.

What's more revealing? IMF selling its gold to balance its sheets. Nothing but an economic hitman, saddling poorer nation.

There's is also no doubt developing country is the ONLY one shoring up the dollar when their foreign reserve shows little change during the past year despite the strengths of Euro.

Now for a new monetary system? Bring back the Gold Standard as some crazy wild eyed US senator keeps barking about?

First of all no amount of gold ever mined off the earth can supplant the debt the current system exponentially generate without epic contraction. Think nuclear winter.

Secondly, gold are just as vulnerable to supply and demands, hence inflation. Think Spanish conquistador.

Here's an interesting idea that the British and the Saudis came up, the house of Saud decide to pay for their military hardware with oil futures, a win-win :D

Onlooker said...

Cheaper American goods?
More go to Disney for tours?
More legal Stuff will come out of US esp the evil MOsantor Patented corn that they are infecting the local /indigenous corns with kind of like FT.
FYI Corn are pollinated by air(aka wind). please correct if wrong
Hence the plot of recreational land in lim chu kang for corn = Another disaster in the making :) esp for our truly asia neighbor corns.
That aside :)
Gold back currency is the way for US to go cos It favor the saver(aka producer) vs Current System(Greenspan) which favour the (spenders aka interest rates)
Hopefully they get to repay their debt and not left homeless. Happening now.

Anonymous said...

Read this important breaking news report 'G7 gives banks 100 days to start revealing losses'. This order was based on a report by the Financial Stability Forum (FSF).

The latter organisation had been set up on 20 February 1999 by the G7. Apparently because it is not US controlled it subsumes the American-led organisations like IMF.

The subject order by G7 is likely to result in the collapse of more American banks. The financial leadership of the US will be shaken and with that its banking cabal that had hitherto controlled, manipulated and made a mess of the world through its greed and lack of global ethics.

This is a very critical watershed in the history of mankind and all good men should follow closely the outcome. It gonna lead to the ousting of the old financial powers by reason of necessity because the latter cannot even help themselves now.

Although the G7 is comprised of the developed nations, I think these nations have learnt too many painful lessons under the US-led banking cabal and IMF to continue with the old protectionist and unethical ways. Things must change if every nation is to make it good.

Anonymous said...

The whole world economy runs on oil and because oil is traded in US$ all countries must accumulate US$ for oil. So you see China and Japan still have to keep plenty of US$.

Saddam Hussein wanted to do something that really got him on US radar, trying to start an oil trading exchange based on the euro, similar to what Venezeula and Iran are trying to do. The Americans have to do something to stop them. Saddam Hussein is history and Venezuela and Iran are now targeted by the US. When oil is traded in euro, the US$ will no longer be the dominant currency in demand and you can guess the resultant effect on the US.

Anonymous said...

The ultimate aim of all economic activities is consumption, not production.

ron said...

Since there was a mistake, it is necessary to let a better man to right the wrong.
Can we give changes to Mas ?
If not, why don't we let better person to view/ correct the mistake from different propestive?