Looking at the past events this week, namely US signed debt deal which consist of a raised debt ceiling and spending cuts. US seem to have averted danger at the last minute but looking at stock market reactions i think investors have zero confidence in the US government's ability to avoid default for real or to actually bring down their debt significantly. Investors have no confidence in the stock market, no confidence in the real market, no confidence in US policy decisions.... i think we have a huge problem over here. The US problem is deeper than most of us thing and it seems to me there is not a single solution to it in sight.
ever since the fall of lehmann brothers, US has been pumping in money into its economy, but it has yet to be revived. interest rates are near zero, but there is no impact. a burgeoning debt is rearing is ugly head
Across the other side of the Atlantic Ocean (is it the correct ocean? my geography is crap. so pardon me if its wrong) , US has troubled allies too. Europe is still bleeding. After Greece it has bigger problems such as Spain and Italy. Greece had a 2nd bail out last month and experts dont think it will not stop the domino effect. Economies of Spain and Italy as so much bigger than that of Greece's. Government bonds of these countries have jumped well above 6% when EU average in the past was 3-4%. England has been stagnating for quite some time and after the GFC it was said that by 2015 it has the possibility of going bankrupt.
The only saving grace Europe has is Germany (and maybe France) with a relatively strong economy and a government with no debt but how willing is Germany to save its numerous neighbors is a question and how much can it save with so many economies collapsing around it.
With all these crises looming, what is its effect on singapore? one word. BAD. Singapore's economy is highly exposed to anything that is happening in the world cuz just like the physical size of our country, our economy compared to other's is puny. Our SGD may be rising against the other currencies which i think is most probably due to our hot property market but the moment US slips into recession it will come crashing down again. In my opinion, the GFC never ended back in '09. call me a pessimist but i think the recent growth was just an illusion of something even worse to come.
With such an outlook on the prosperity of Singapore leads me to my next point. The presidential elections on August 27th 2011. Just a few hours ago, CNA posted an article on what K Shanmugam, our Law and Foreign Affairs Minister said about the constitutional powers of the President; what the president can do and what he is unable to do.
here's the link. http://www.channelnewsasia.com/stories/singaporelocalnews/view/1145264/1/.html have a read and take a real good look at the candidates before voting. i think most of my close friends know my choice. it might be a good idea to read the constitution while you are at it.
food for thought: no economy can prosper all the time there will come a time where it reaches its limit and goes downhill from there. look at the G7: US, England, Germany, France, Italy, Japan and Canada. out of all the 7 countries 4 of them have hit a ceiling of sorts and are declining. Singapore although is a young country is a developed economy. with the quality of younger generation that we have (post '80ers) is our time as a developed economy up? i wonder and fear for our future.
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