Friday, January 24, 2014

Why Singapore is not Iceland . . .

Link Here

[The bottom line...
Singapore's financial sector and economy are not at risk of an "Iceland- style meltdown", as Jesse Colombo claims. Still, the market mechanisms on which his analysis is based are standard features of global capital markets, and fragilities and excesses do exist in our financial system. Consumers and investors can keep our money and its purchasing power safe by understanding and acting on a few simple principles: low interest rates (and high and rising property prices) do not last forever; excessive leverage (indebtedness for speculative purposes), like gambling, puts one at risk of losing everything; the government cannot protect and rescue us from all our behavioural excesses (that is, market risks exist in Singapore investments just as they do in other places - to expect otherwise is to court "moral hazard"); and the most secure way to make more money is to increase productivity from which sustainable higher incomes and real wealth flow. As a mature, developed economy that is now one of the world's richest as well as most open, we can no longer rely on future rapid GDP growth for recovery from a potential financial crisis.]


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