The Illusion Of Wealth Driven By Debt In Singapore

The concept of wealth in Singapore is upside down. Instead of championing entrepreneurship & innovation within people, Singapore is about ‘owning’ private property & ‘buying’ new private cars to be seen as being ‘wealthy’ re: CULTIVATING MATERIALISM. Singapore under the PAP is guilty of cultivating such thinking because they continually tear old historical monuments & buildings and replacing them with spanking new ones in the process. We’ve ended up looking like a First World city on the outside but inside we have a 3rd world core of impoverished citizenry & indebted households.

It’s damn silly when people assumed humongous debt acquiring cars & condos (materialism & conspicuous consumption) using their uncertain income (in a disruptive economy) to service debt repayments in order to look wealthy. But if their income flow ends or are impaired, they’ll lose everything. In Singapore, the equation is perceived wealth = disguised massive liabilities; in other economies, wealth is measured by net worth ie. net asset value after deducting liabilities (& excluding 1st home). Look at all the cars on the road & all the spanking new condos, they’re invariably purchased using massive amounts of debt. The threshold for the Singapore Economy is extremely stretched to the limit. There are a lot of imbalances within the Singapore economy. Truth is that our economy is running on fumes, heavily reliant on ever-escalating debt to maintain forward momentum. If the debt tap is turned off or interest rates hiked up, there will be lots of boiled frogs in the process.

How long can the PAP continue with the charade that the SG$ is exceptionally strong when they are losing tonnes of monies here & there. Ultimately, outsiders would soon get wind of S’pore’s poor financial situation & give the SG$ a vote of no-confidence. There will come a day of reckoning soon & there will be blood on the streets.

 

Analyst

 

 

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17 Responses to “The Illusion Of Wealth Driven By Debt In Singapore”

  • Ong PC:

    This is alarmist article with no basis. Most Singaporean private property owners buy private property only if they can afford it – Either they sold their HDB at good profits and can afford to plough the money back into private property; or they have made their money from their own business or employment; or they have profited handsomely in stock market; or they have won the lottery. They take on very little debt to buy private property. Singaporeans have among the highest cash savings in the world and we are very conservative with money. And together with our CPF savings, liquidity is not a problem for us.

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  • rukidding:

    100% agree with author !

    Somehow,…the 70% likes “acting” !

    Spanking New Big cars found at HDB carpark which probably cost more than the HDB unit.

    Who knows what these owners are eating for breakfast every morning ?

    Who knows how many are GRAB partimers ???

    And probably all their kids GRAND Pa and GRAND ma have been turned into their household maids and servants with “NO PAY”…Free ?

    Don’t tell me the G not aware of such things happening ???

    Maybe,…all their Walkabout were “staged” ???

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  • Python 5:

    debt fuelled false prosperity.

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  • Python 5:

    a very simple calculation.

    if save $100 a month,
    if working for 1 year, mean $1200 a year.
    if working for 10 years, means 10x$1200 = $12,000
    if working for 20 years, means 20x$1200 = $24,000

    1) ask anyone on the street, how much LIQUID SAVINGS you have?
    2) and then ask him much many years he’s been working.

    Go try these 2 questions on anyone. then see their reply and body language.

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  • Python 5:

    go read Hyman Minsky’s 5 Stages of a Bubble

    Displacment
    Boom
    Euphoria
    Profit taking
    Bust

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  • oxygen:

    @ PC Ong

    MATE, YOU WANKING NONSENSE BELOW yet again. Ravi Menon must find your comedy comical – he has been warning of excessive exuberance last November and euphoric irrational sentiment before piling on additional cooling measures last week. He and Lawrence Wong are worried about excessive household leverage in property speculation

    Ong PC: This is alarmist article with no basis. Most Singaporean private property owners buy private property only if they can afford it – Either they sold their HDB at good profits and can afford to plough the money back into private property; or they have made their money from their own business or employment; or they have profited handsomely in stock market; or they have won the lottery. They take on very little debt to buy private property. Singaporeans have among the highest cash savings in the world and we are very conservative with money. And together with our CPF savings, liquidity is not a problem for us.

    What do you seek to achieve here by farting gases again here, you idiot!

    Why do you think the reasons behind big falls in property and bank shares last Friday after the Govt announced property cooling measures?

    YOU FARKING IDIOT.

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  • Hard truth:

    No matter the policy and which government, the 30% people are still the losers.

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  • oxygen:

    @ ANALYST

    GREAT BRILLIANT WRITING – the idea that capacity to borrow and spend conspicuously is wealth is insanely stupid. It is CONSUMPTION, not WEALTH FABRICATION as you pointed out. Everything in economics return to the mean and reality when leverage is discarded or call to account. The banks knows it – they are not going to lend recklessly within ttheir own awareness of borrower’s credit capacity and credibility. MAS has aggregate data – they know the extent of household leverage and risk to economy. Ravi Menon/Lawrence Wong took out the cane and did a good whack to wake up idiots. REDAS won’t have the macro-economic statistics screamed foul play but they are wrong.

    https://sg.finance.yahoo.com/news/property-curbs-challenged-leading-developers-115835067.html

    And Moody is right of bank prudential protection needs.

    http://finance.theindependent.sg/singapore-banks-will-benefit-from-tighter-regulations-to-cool-property-market-moodys/

    IF YOU LOOK AT THE NUMBERS, CREDIT EXPANSION SINCE GFC IN SGP is running much more faster than GDP growth – it is bubble economic living on the fuel and fumes of debt leverage at a national level.

    MAS MUST BE WORRIED. WHEN ECONOMY SLOWS OR CRASHES, HOW ARE HOUSEHOLD GOING TO FINANCE THEIR DEBT-FUELED LIFESTYLE?

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  • I dun trust this gov anymo:

    Ultimately, outsiders would soon get wind of S’pore’s poor financial situation & give the SG$ a vote of no-confidence.
    ……….

    Most importantly is when would sgs wake up and give this gov a united vote of no confidence.
    The 30% are waiting impatiently.

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  • Spiritual wealth:

    Lord God will deprive usury of all blessings, but will hearken to fair deeds & acts of charity.

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  • Python 5:

    oxygen, this idiot is a property agent is it???

    oxygen:
    @ PC Ong

    MATE, YOU WANKING NONSENSE BELOW yet again. Ravi Menon must find your comedy comical – he has been warning of excessive exuberance last November and euphoric irrational sentiment before piling on additional cooling measures last week. He and Lawrence Wong are worried about excessive household leverage in property speculation

    What do you seek to achieve here by farting gases again here, you idiot!

    Why do you think the reasons behind big falls in property and bank shares last Friday after the Govt announced property cooling measures?

    YOU FARKING IDIOT.

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  • ronnie:

    recent ntuc food ct also need to close located near new stadium
    (not sure where izit.)ntuc also cannot tahan ready.

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  • Haigen-diaz:

    @Analyst “CULTIVATING MATERIALISM”
    Are we not members of a culture that worships consumerism? Are the accumulated products of greed more or less the objects of our idolatry? The current ‘crisis’ is nothing next to the reckoning that awaits this nation, or any individual who refuses to live within their means. The very least any spending protagonist could do is acknowledge that, and start talking about how we return to a nation of producers who can live within our means and sustain the environment. We can build all the infrastructure you want, Condos, BTOs, Changi Jewel, Terminal 5, Tuas mega-port, Cross Island Line, etc, but unless those jobs go to our tax-paying, law-abiding citizens, the effort won’t work. Having contractors pocket massive profits derived from hiring foreign workers and then having them wire home 50% of their wages will not spur the economy. That means our system has to “eat” the loss of net worth (equity) implied by the loss of those “build-up” assets. And, that means that the banks (and others that participated in the derivatives) are operating with a negative net worth. The government does not have enough money to save them because they are “too big to save” in that the money necessary, is too great, when our gross external debts of S$2.518 trillion of debt liabilities are traced to our local banking sector. A major reason for the current melt down is just such a case. The market structure is like a living organism that needs to evolve to remain viable. Does our government have a good history of creating “programs” to stimulate the economy? Failure to make minor adjustments along the way leads to melt downs and potentially extinction. The potential economic downturn looks like it could have legs so we may have a relatively stagnant economy and financial system for the next few years. Second, it’s important to remember the inter-generational implications of a large and semi-permanent debt. This debt will likely be repaid by future generations that were not responsible for incurring it.

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  • Tom Lee:

    ONG PC you should be in the circus. If what you say is right why did the govt have the TDSR and property cooling measures. For the latest round, they even admitted that they are trying to prevent the bubble from bursting. You realised they admitted that there is a property bubble? So what rubbish are you talking about? Like I said ONG PC you should be in the circus.

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  • True facts:

    True most of those that are status linked to condo are currently living from hand to mouth without any monthly savings.

    I have a few friends who shared with me their problems staying in condos.

    But they fing it hard to offload as their friends will laugh at them.

    Some got no choice but to drive a better looking cars like BMW or mercedes as they are in business to show to clients and friends.

    Really no choice and better way out.

    Some even rent a condo or landed property to stay to show to friends and clients.

    This is Singapore now.

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  • NotMyProblem:

    Tom Lee:
    ONG PC you should be in the circus. If what you say is right why did the govt have the TDSR and property cooling measures. For the latest round, they even admitted that they are trying to prevent the bubble from bursting. You realised they admitted that there is a property bubble? So what rubbish are you talking about? Like I said ONG PC you should be in the circus.

    Ong PC already in the circus!! The PAP circus. Ong PC’s only perform one act, stick his nose into his boss arse.

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  • reality check:

    High debt is not wealth…
    Too much debt is receipt for disaster down the road…

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