Sunday Times, Coffee and Slight Nausea

Warning : Read this forgivingly, for this ignoramus is unworthy to be making any judgements on the opinions of experts.

I make it a point never to read the Straits Times but for once every few months. It was not by choice that I picked it up, out of nothing else available on the shelves, as I ordered coffee and waited for my son to play another round of tennis this morning.

Golly. Unluckily, I gravitated to the big splash of economists’ predictions for Singapore and if I have to read another piece of mind numbing happy utopia calls, I will protest at the Toto salaries they are all bringing home. Yes. We know what an economist fetches these days, its better than winning the Toto but surely, we cannot be breeding this batch of propaganda spewing experts in the name of independent research.

Ok. I know a few of them personally and I am in hot soup for writing this. Let’s be responsible here.

Every single recommendation was for USD/SGD at 1.20 to 1.22 by June and 1.19-1.20 by Dec. Every single recommendation for STI to fly. This is intended for public consumption and people like my father.

There is an undercurrent brewing and it is starting at home and everywhere else in the world. Currency wars, rich poor divides, politics of populism as voter anger grows which is all glossed over.

Perhaps we cannot blame the economists because they are not the political or social analysts. Perhaps we should all read The Economist because I happened to chance upon the most enlightening article of them all yesterday.

That we are all heading down the path of the Nordic countries 20 years ago and how they are making good as the rest of the world languishes down the well worn path of social destruction and rebirth.

The Nordic governments are updating their version of capitalism to deal with a more difficult world

Perhaps I am too early in making this call just like I was too early in calling for currency wars early last year but it is certainly something for us all to bear in mind and act on.

I stand by my call that USDSGD will be closer to 1.26 in the near term. And perhaps some economists who have not been interviewed may even agree with me. Granted that our inflation trend will still on the heavy side given the labour constraints our economy is facing, we must bear in mind the SGD Neer and the effects of the mini Asian bubble brewing. The ferocity of the JPY devaluation will hit hard and fast and the export orientated Asian giants are likely to retaliate. Samsung has already warned of lower profits ahead as the KRW continues appreciating.

Singapore’s MAS has their semi annual monetary policy review in April. The economists are all predicting their hands will be tied in the face of inflationary pressures. They also need to keep the money coming in for the people to fund their property purchases at double discounted rates. Thus their 1.20 call.

My take is that Singapore has had it too good for too long. The government engineered slowdown is coming to cool the investment fervour. When the velocity of money slows, the pullback will come and money will migrate to other emerging opportunities. By that, I mean countries like the US which appears to be on the cusp of recovery.

We have to be circumspect and start thinking for ourselves if fairy tales last forever.