The First Question - Global Competition, Economic Growth and that Little Fellow on the MRT Train (You)

"High growth: Amid global competition, can you maintain Singapore's high economic growth and keep on improving our standard of living?"

The answer is - nope. Basically the world is too large and the economy is beyond any government's control. Over the past 15 years, the PAP itself has repeatedly told you so. Every time the economy runs into trouble, the PAP will unfailingly blame it on "external factors". The ailing US economy; the rising costs of oil; the ever-increasing competition from China and India, and so on. So it is quite clear that the economy is beyond its control.

(Of course, every time the economy is doing well, the PAP will claim credit and point to its own ingenious schemes and policies. But we all understand that. It's called politics - and PR and marketing are just part of the game).

To put it another way, a nation's economic growth and standard of living depend on a wide range of complex factors, and are way beyond the direct control of any single government, political party or human being (even if they occasionally like to pretend otherwise).

However, for the individual citizen, the first question can be rephrased into a more practical form - "Can you achieve and maintain a satisfactory income and standard of living, for yourself and your family?".

This rephrasing is important. It offers a more appropriate perspective. It allows us to move from feeling powerless, to feeling empowered. After all, it is not the individual's duty to compete with the world. It is not the individual's mission to defeat the planet.

The individual's main job is merely to learn how to look after himself and his loved ones. That is a much smaller and much more manageable task. It is also more sensible and more meaningful.

Remember that in the best of economic times, there are still poor people and there are still unhappy people. In the worst of times, there are still rich people and there are still happy people. In the most prosperous countries, there are still homeless folks. In the poorest countries, there are still millionaires (and billionaires).

Thus in the story of your own personal life, we may say that the state of the general economy is a sub-plot, but is most certainly not the main story. YOU are the lead actor in the story of your own life.

More later.

The Ever-Inquisitive Mr Goh Chok Tong

This man has so many questions. Considering how much he's paid, one would have thought that he should be supplying answers instead, LOL.

ST Aug 3, 2009
10 challenges for the next generation: SM

Success creates its own problems, said Senior Minister Goh Chok Tong yesterday when he spelt out the 10 challenges facing the next generation. He highlighted them by posing questions to Cabinet ministers, families and the young.

1 High growth: Amid global competition, can you maintain Singapore's high economic growth and keep on improving our standard of living?

In 1959, thousands of Singaporeans lived in slums and squalor. Today, more than 90 per cent own their homes.

2 Life will get better: How do you, as leaders, convince Singaporeans of that when they are already living in good-quality public and private housing?

3 Transport: How does the Transport Minister satisfy the demands for comfort, convenience, congestion-free travel and punctuality of services and expectation of affordable fares, ERP and parking charges?

4 Health care: Can the Health Minister stamp out diseases linked to an affluent lifestyle, such as diabetes and cancer? And keep health-care costs down and affordable?

If we live till 90, we would probably have to work till 75 to have enough savings for a cosy retirement of 15 years.

5 Worker training: Can the Manpower Minister and the labour chief design a new training programme, Workfare (a wage supplement for working low-income Singaporeans) and a Jobs Credit wage subsidy scheme for grandparents and maybe even great-grandparents?

6 More babies: What will get our young to marry and have children? Any creative ideas on procreation, Mr Goh asks parents and the young.

7 Ageing: Today, 9 per cent of our population are over 65 years of age. By 2030, it will more than double to 20 per cent.

How do we support so many senior citizens, he asks the chairman of the Ministerial Committee on Ageing.

How will we look after our parents and grandparents? Will you build more community hospitals, nursing and old folk's homes, and keep them affordable?

8 Scarce land: In the last 50 years, land area has been expanded by more than 20 per cent, through reclamation.

How much more land can Singapore reclaim over the next 50 years, he asks the Minister for National Development.

As the population and the economy grow, how will Singapore deal with the potential over-crowding problem?

9 Education: Bright students will be sought after internationally, chipping away at Singapore's talent pyramid at the top. Mr Goh considers this one of the most serious threats to Singapore's long-term survival and says it has to be solved now.

His questions for the Prime Minister, Education Minister, schools and families: How do we bond students going abroad to Singapore, physically if possible, and if not, at least emotionally? How do we ensure most will return home and contribute to Singapore? How do we ensure there will always be a core of honest, able and dedicated Singaporeans to look after the country and their fellow men?

10 Religious harmony: For four decades, Singapore has enjoyed racial and religious harmony. How do the people of Singapore ensure that Singaporeans of different faiths will continue to mix with one another and respect one another's faith?

In subsequent posts, I will share some thoughts on some of the 10 questions above.

How To Understand Information in the Age of Lots of Information

Early this year, I wrote a post entitled The Modern Risks of Information and Advice. In that post I explained why we must be careful how we interpret information and advice, even when it comes from expert sources.

The key point is that no matter how knowledgeable an expert may be, his interests are not necessarily aligned with yours. Therefore he may or may not tell you what you really need or ought to know. Also, he is likely to say the things which are in his own best interests to say.

It doesn't mean that all experts are always out to deceive or mislead you. It does mean that whenever you come across any expert providing his views or opinions, you should take a moment to consider his possible motivations in providing such views or opinions.

A case study below. Suppose you are a property developer, with many units left to sell. Further suppose that it is suspected that a property bubble might be forming. Is it in your own personal interests to say that there is a bubble forming ... or that there isn't?

July 31, 2009
No property bubble forming
They say buying frenzy hasn't reached point where Govt needs to intervene
By Joyce Teo

PROPERTY developers are enjoying the surge in interest from buyers but they do not believe that speculation has reached a stage where the Government needs to step in.

They also maintain that the prevailing economic conditions will begin to cool the buying frenzy and stop a bubble forming in its tracks.

'It's not a bubble, it's just a blister after the pain we experienced in the global financial crisis and it comes before a recovery,' said Cushman and Wakefield managing director Donald Han.

Meanwhile the TODAY newspaper reports that yesterday, at a showflat in Tanah Merah, hundreds of people showed up yesterday and started queueing to get in - even though the showflat was supposed to open only today.

So the developer TID opened the showflat last night at 8 pm. It started sales by open ballot sometime after 11 pm. The balloting carried on "well into the wee hours of the morning" - we assume this must be 1 am or 2 am.
Bubble or not? Hmmmm ....

A late night property ballot ... is this a sign of the times?
Jul 31, 2009

The showflat was only due to open today.

But on Monday, some, mostly property agents, were already lining up for units at the Optima condominium at Tanah Merah. They went home after developer TID made it clear the queue would not be recognised.

However, this did not stop hundreds from turning up early yesterday - leading to a massive queue and the occasional ugly spat over queue-jumping. The result? TID decided, at about 8pm, to open the showflat doors and, unusually, kick off open balloting.

The process began after 11pm last night and carried on well into the wee hours of the morning. Successful applicants paid the 5-per-cent deposit on the spot.

Population Demographics and the Property Market

Population demographics are often viewed as one of the most important fundamentals of the property market. The rationale is simple to understand. A growing population increases the demand for housing, and the younger the population, the better for property investors. This is because in the coming years, a relatively higher proportion of people can be expected to grow up, move out, start families and need their own homes.

However, all rules of thumb are only approximately correct. Various factors might eat away at their correctness. What factors might nibble down the "population demographics" property rule? Here are a few suggestions.

(1) An increasing average lifespan. The longer the average citizen lives, the longer the period of time he will require a home (thereby propping up the property market). Suppose for example that in the past the average citizen lived to age 65, but that in the future, the average citizen lives to 85. Then on average, he will contribute to housing demand for an additional 20 years.

(2) Decline of the extended family. In the past, it was very common to find extended families. For example, three or even four generations might share one roof. However, nowadays it is more common for young adults to move out upon getting married, and for their parents to live on their own. This leads directly to additional demand for housing.

(3) More singles living on their own. Nowadays, young people in Singapore may not even wait until they get married, before they move out. For the sake of privacy and independence, they may move out earlier, renting a place of their own if they cannot afford to buy one. This change in lifestyle norms would contribute to greater demand for housing.

(4) Low interest rates. If bank interest rates are perennially low, then more cash-rich individuals will be driven to park their cash in other assets, such as shares, bonds or property. Thus if you have an extra $500,000 to spare, then instead of putting it in a bank, you might well choose to use it to buy an additional apartment and rent it out (consider that DBS pays only 0.45% for a 12-month fixed deposit of $500,000).

(5) Increasing foreign ownership. If the laws of a country are favourable to foreign ownership of property, then foreign ownership of property will increase. The clearer and more transparent those laws are, the stronger that trend will be. Many of those foreigners don't even need to be living in that particular country. They are just high net-worth individuals who hunt around the world looking for places to park their cash.

(6) Divorce rates. According to Wikipedia, divorce rates in Singapore have doubled over the past decade. If this social trend persists and grows, in time we may expect to see, at any given time, a higher proportion of individual adults needing to rent or buy a new place, because they have just separated from their ex-spouse.

The Property Boom is Back

Hard to believe, but it's true. The facts speak for themselves. Latest news on the HDB market:

ST July 24, 2009
HDB prices hit record high
By Jessica Cheam

PRICES of Housing Board flats have reached a historical record, rising 1.4 per cent in the second quarter this year, reversing a first-quarter dip of 0.8 per cent.

Fresh data released from the HDB on Friday shows the resale price index rising to 140.2 - beating the previous record set in the fourth quarter of last year when it hit just over 139.

The figures have come in slightly higher than flash estimates released earlier this month which showed that prices rose 1.2 per cent.

Sales of HDB resale flats also surged 58 per cent, reflecting improved market sentiment, to reach 10,184 transactions in the second quarter, compared to 6,446 in the first quarter.

And here's a snapshot of the private property market:

July 24, 2009
Buyers snap up home deals
Lower prices, pent-up demand driving surge in sales of private homes
By Melissa Tan & Smita Krishnaswamy

THE current recession-defying surge in home sales is being driven by pent-up demand from local buyers with enough savings to swoop on lower-priced units and a determination to invest or upgrade.

These buyers are not acting on impulse but have been saving up for years.

Another key factor is the fear of missing the boat ahead of another property boom, The Straits Times has found after speaking to buyers and market analysts.

Last month, an all-time record of 1,825 private homes were sold, continuing a major upswing that started in February. The June figure exceeded that of August 2007 - the height of the last property boom.

On recent weekends, showflats have been crammed with families, couples and singles. Some want to buy a condo as an investment with prices still quite low; others wish to upgrade from HDB flats.

And just six months ago, practically all the real estate analysts were saying that 2009 would be a disaster for the property market. In fact, June was cited as the time when things would go really, really sour, just because of the number of projects that would TOP around then.

One of those situations where truth turns out to be stranger than fiction.