A-So, A Sequester ? Learn From Singapore Budget
The trouble about the sequester is that they knew about it 2 years ago when Obama signed on the spending cuts. Backing down now ?
Well, he did not really expect to get re-elected, did he ?
The pitfalls of democracy is a beautiful thing. That you can leave events like the fiscal cliff and sequestration of spending till the 11th hour (starting this Friday, some things will just shut down) and still look like a half decent leader.
Not in Singapore.
I was thinking perhaps the Singapore government can patent their method and sell it to wannabe Presidents of the United States ? A presidential term lasts 4 years, Singapore’s government is forever !
That is the difference between a country headed off a fiscal cliff and into a spending sequester and a country that is run like a profitable corporation.
Singapore Inc, paying out SGD 1-2 bio to the country but making SGD 4 bio in profits ! That’s the way to go !!!
Does not sound too bad.
What is the Sequester ?
I feel obliged to explain what is the sequester just for a few of my friends who may not be in tune.
The sequester is a series of across the board cuts in federal spending that will hit America on 1 Mar until they manage to save US1.2 trillion over 10 years.
The disagreement over the US Budget needs to be resolved before then for the government to continue to function.
What is the Difference Between the Sequester and the Fiscal Cliff ?
The fiscal cliff was just the process of agreeing to up the debt ceiling of the government which allowed it to continue borrowing to fund themselves.
What is in it for us ?
2 schools of thought. 1 is it’s no problem. The government must go on and they will find a way with temporary budgets till the US Congress and Senate find a middle ground.
2nd school is the Armageddon school, screaming for failure and a large scale shut down that would effectively stall the economy that is on the infant stage of a recovery.
The markets seem to be taking option 1 at the moment. Who would blame them ? We just survived 2012 and before that the Millenium Bug. Sequest-what ?
The public is largely ambivalent.
Equities – Stay sidelined.
Safe haven plays like gold is a good idea.
Bonds – I am not sure if the US will face a ratings cut or if it will strengthen the US dollar as a result (because of the counter intuitive nature of this event and if it is risk off, even for the US, the consequence would still be a flight to quality and that is not to China)
Lessons to be Learnt
Pity again that Singapore Inc cannot be hired to run the US government. I think sub contracting the job out would save them alot of headache. Just a joke of course.
The main theme, in my opinion, is that we have to brace for the new age and times awaiting us. The age of austerity.
Everywhere we are seeing signs and messages on belt tightening. Do not ignore them.
The new Chinese government has pledged to cut the fanfare. Singapore too, is saving for the rainy day. US is reducing in a big way and Europe has been trying since last year. Only Japan is spending away and Australia has threatened to join the currency war with a deficit.
I am not cheering but I will not criticise. A government’s got to do what they have to do or undo what they have done.
I will not be a big beneficiary of this budget and I am slightly disappointed that I will not be reaping more for my years of hard work.
Just thinking of the days ahead and reminded of Charles Dickens’s Hard Times, a thought provoking read when I was a teen and wondering what all that progress was for.