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Singapore economy 2014-2015: Third of Triple Whammy (Prelude)  

2014-11-01 19:59:06|  分类: Economics (Unto |  标签: |举报 |字号 订阅

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In the article, Singapore economy 2014-2015: First of Triple Whammy, the first whammy has already happened --  the Singapore property market had collapsed, beginning from 4th quarter 2013.

In the next article, Singapore economy 2014-2015: Second of Triple Whammy, the second whammy is imminently near our door-step. Run! Divest all your stock holding now!

What is the Third Whammy?

I have been telling all my good friends, it is going to be the collapse of the banking system, specifically, the Singapore Banking System. Every one of them said I am crazy. They say, “Nowadays, bank run is not possible. Hence, the collapse of the Singapore Banking System is impossible.”

Let’s go back to some intrinsic factors about how Singapore shot up to be a first world country, economically.

GDP growth

There are three intrinsic factors that contribute to GDP growth. They are: growth in (labor) productivity, rate of growth in migrant workers and inflation.

First, we can almost forgo the intrinsic factor, labor productivity. It has more to do with industrialization. Even in the most advance countries like the USA, Germany or Europe, Japan or South Korea, the pace of industrialization is extremely low, its annual growth in productivity hardly hit above 0.1% per annum. The Singapore government stopped reporting productivity growth for the past two decades because it was near zero and worse, it has been in the negative territory for most of the last two decades.

Second, every migrant worker whether they are from Bangladesh, India, China, The Philippines, Myanmar or Malaysia, contributes directly to the economy in the form of a special tax, called Work Permit at S$450 to S$550 per worker per month. The cleaners and construction workers who came mainly from Bangladesh and India earn a basic wage of about S$450 per month. The service workers who came from China, Myanmar, The Philippines and Malaysia earn about S$900 to S1100 per month.

In short, every foreign talent, a beautiful word that actually means migrant workers. A migrant worker from Bangladesh or India contributes a total of minimally S$900 (S$450 in worker levy plus S$450 in wage) per month.

How much had the migrant workers had contributed to the growth in the GDP for Singapore? A quick look at the statistics of the rate of growth in migrant workers over the past two decades shall give you a good estimate.

Therefore, please do not complain that Singapore is swarmed with foreign talents. The smart alecs in the Finance department and the brainiest of them all is Tharman Shanmugaratnam, all are addicted to foreign talents. Should the growth in foreign talents slow down, the GDP growth for Singapore shall go down hands in glove. For year 2014, the GDP growth is a mere 2.4%. Important note 1: At this juncture, let’s not make a guess how much of this 2.4% is contributed by the growth in foreign talents (migrant workers). 

Singapore economy 2014-2015: Third of Triple Whammy - 行天之道 - 论老子

Third, the high rate of inflation has been the key driver of the GDP growth of the Singapore economy for the past 3 decades. One, Since the launch of the Great HDB upgrading Program in year 1990 and the CPF Housing Grants, the price of HDB flats have more than quadruple, if not by a factors of five to six times in less than 25 years. Two, the introduction of the COE bidding system in year March 1990 had added S$50,000 to S100,000 per car sold in Singapore. Three, the spiraling rise in the cost of Medical care had increased by a factor of at least five times since two decades ago. Four, the huge surplus of the Town Council in the range of several tens of millions is a direct result of over-charging in the monthly Service and Conservancy Charges. Five, as a result of the open bidding of Kopitiams and air-conditioning of food courts a cup of Kopi C sells for S$1.10 (Kopitiam) or S1.40 (Food court) compared to 50 cents 25 years ago. The lists can go on and on.

Summing up, the proud 8% to 9% average GDP growth achieved from the period 1990 to mid-2000 was achieved from pure rate of inflation engineered (more exacting, hideously manipulated) by the smart alecs who work in the Finance Department. Yet, the average Singaporeans proudly tell the rest of the world they are very proud of Singapore GDP growth, the highest in the world, after The People’s Republic of China.

By the way, do you know what inflation means to you?

Let me tell you in two easy to understand manner.

One, inflation means you have to use more money to pay the same amount of goods. For example, you pay S$1.50 for a cup of iced Kopi C instead of S1 in the past means you have to fork out another $0.50 cents to buy the same amount of iced Kopi C. The bus fare has been twitted quietly for decades. The rise in the bus fare and MRT fare means you had to spend more money for your day-to-day transport needs. Are you happy with a rate of inflation that is higher than 0%, year on year? If you agree to a positive rate of growth in the inflation, you are agreeing to being robbed for nothing.

Two, inflation is the most powerful and magical tool that robs the poor and gives it to the rich. The consumers are the poor fellows who could not do anything other than, just pay for the increase in bus fare or a cup of Kopi C and what-so-ever. Who collects the additional profits arising from the spiraling rate of inflation? The additional profit goes to the businessmen and the government who had masterly devised many forms of taxes, levies or duties.

If you still do not get this, let me explain to you, two economic concepts.

1) The Gini coefficient

Singapore’s Gini coefficient before accounting for Government transfers and taxes was 0.478 (year 2012). Using the ‘modified OECD scale’ Singapore’s Gini coefficient stood at 0.435 (year 2013) and after Government transfers and taxes, it stood at 0.414 (year 2013). At 0.414, Singapore’s income inequality is significantly higher than all the other economically-developed countries in OCED.

Some years ago, Lee Kuan Yew told the reporters off by saying, “Let’s ignore the Gini coefficient. Let talks GDP growth. Singapore economy has been growing at the high teens for more than three decades.”

This crook does not want (the journalists) to tell you this cool hard fact: A spiraling rate of inflation which was craftily engineered (actually manipulated) by the PAP-led government for at least the past three decades is the root cause to a high Gini coefficient that is closing in to 0.5.

        Please read blog article: “How to recognize a bad government” at url  http://ericwoonct.blog.163.com/blog/static/18191136220147200225805/

2) Profit-maximization

Profit-maximization is a very easy game, indeed. Every one already knows there are two easy ways. One, increase the selling price and thereby, collect more revenue (money) by selling the same amount of goods. Two, reduce the cost of productions, thereby, paying less for the same amount of goods produced or sold.

The spiraling rate of inflation had explained why the price of all goods had been on the rise since 1990. It serves only one purpose: Make the rich richer by way of profit-maximization.

Few people realize the reason for the huge influx of foreign talents was aimed squarely to reduce the cost of employing workers. This is a simple argument. If a Singaporean is hired as a road sweeper, he should receive a monthly salary is $1,000 because the employer had to pay worker levy of S$450-S$550 and a wage of S$450 as wage per month. Ignore all other factors the presence of large number of foreign talents forced the salary of local Singaporeans who are willing to work as road sweeper at a fixed rate of S$1,000 per month.

A typical Singaporeans sales executive earns around S$1,500 per month (let’s ignore the employer contribution to the employee’s CPF and several other cost factors like medical and insurance), the salary of Singaporeans who are most willing to work as road sweepers is artificially depressed at S$1,000 because of the competition of the large pool of foreign talents (migrant workers). Keeping the cost of employing worker low is achieved by replacing local Singaporeans with foreign talents, period.

Of course, LHL put the blame on the local Singaporeans who does not want to be road sweeper. Hei! If LHL were to pay a road sweeper the same as the average salary of S$1500, the queue will be in tens of thousands.  

Wait a minute! Was I been … carried away?

This is the main point in writing this prelude. The PAP-led government is ONLY interested in robbing the people in two hideous ways: spiraling rise in the rate of inflation and profit-maximization. By the way, the PAP-led government is the only government that is all out for profit-maximization.

Before you beg to differ in opinion, please read this blog article, “Feedback to ensure greater equity among car buyers” which was published on May 17, 2013 at url

 http://ericwoonct.blog.163.com/blog/static/18191136220134172279248/  

 It suggested the use of a sliding loan quantum, beginning from (the theoretical value of) 0% and slowly loosen up on the credit on car loan in increments of ten or five percentage point as an effective mean to control the car population instead of the CEO successful bid price. LHL and his Cabinet Ministers had read this blog article. However, 17 months has passed, yet, there was no change in shifting the strategy from a CEO bid price approach to the credit control approach. Why?

The PAP-led government cannot rob the car buyers with high COE anymore. This government simply cannot forgo the idea of robbing its citizens. It also will not forgo any opportunity to rob every single business entity, including the banks.

You may laugh at me thinking LHL will not rob the banks. I shall share with you how he will rob the banks in Singapore economy 2014-2015: Third of Triple Whammy - Part 1.


In summary, economics is a complicated subject. Henceforth, the author chose to break it down into five separate articles, each focusing on a single topic. Please read these articles in the following sequence.

Singapore economy 2014-2015: First of Triple Whammy

Singapore economy 2014-2015: Second of Triple Whammy

Singapore economy 2014-2015: Third of Triple Whammy (Prelude)

Singapore economy 2014-2015: Third of Triple Whammy - Part 1

Singapore economy 2014-2015: Third of Triple Whammy - Part 2

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