All about what is happening in the global economy...

[3Boys]

MadScientist:

As for Europe, Paul Krugman is one of the best NYTimes writers...
in his recent article:
http://www.nytimes.com/2011/09/26/opinion/euro-zone-death-trip.html?hp

Cheers!

Well, I read quite a bit of Paul Krugman and his pal, Joseph Stiglitz. A bit too leftist for my taste. But his analysis of the Euro (and Europe) is a fair one I believe.

[MadScientist]

3Boys:

MadScientist:

As for Europe, Paul Krugman is one of the best NYTimes writers...
in his recent article:
http://www.nytimes.com/2011/09/26/opinion/euro-zone-death-trip.html?hp

Cheers!

Well, I read quite a bit of Paul Krugman and his pal, Joseph Stiglitz. A bit too leftist for my taste. But his analysis of the Euro (and Europe) is a fair one I believe.

I have to agree with you on that.

I also like John Mauldin's editorials about Europe. Very comprehensive and easily digestible.

[MadScientist]

http://www.washingtonpost.com/business/clsas-napier-recommends-buying-asian-currencies/2011/09/23/gIQAJfWgpK_video.html


One of the best economist/analyst IMHO... one that is about 95% accurate since 2005! He is the authour of Anatomy of a Bear.

[MadScientist]

Moving into October, after the typically worst month of the year (September), we find October to be the month of crashes... not a good record really.


And... to see these reports on the first day of October is an omnious sign, if at all.

http://www.marketwatch.com/story/new-greek-austerity-plan-short-of-target-report-2011-10-02

http://money.cnn.com/2011/10/02/news/international/greece_budget/index.htm?iid=HP_LN

[Fxman]

next coming report, Non Farm Payroll in the US. This is a high impact news for the global economy

[peapot]

Hi mad scientist, think you have the passion for investing. Do you think if someone offers u $200,000 to invest and you need to return yearly say with a 5 percent interest charged for loan term of say 5 years, would you take up such offer?

[MadScientist]

peapot:

Hi mad scientist, think you have the passion for investing. Do you think if someone offers u $200,000 to invest and you need to return yearly say with a 5 percent interest charged for loan term of say 5 years, would you take up such offer?

Hiya peapot!

Thank you for your vote of confidence... yes, I've had that for years now... only recently, taking it more seriously... just in time as the global movement will also shift wealth across social stratas.

With regards to your question...
I'd restructure the deal...

[mummyhk]

Hi MadScientist,


Thanks for all your insights into the global/regional economy and your perceptions of the challenges ahead.

I specifically wanted to get your views/thoughts on the Singapore Real Estate Market. There has been murmurs of a slowdown/scaling back on rental and sale prices. There has also been the implementation of a reinforced stamp duty which is deemed to be somewhat punitive and flushes out the short term investors. I am less optimistic about all these having a dampening effect on the market. I worry that as rest of world (US and EMEA) getting into a bind, we will see hot monies flowing into this part of the world. And as our properties are considered to be somewhat affordable to this flow of funds, we might still get the properties prices trending upwards.

Would love to hear your views. Don’t get me wrong, I prayed for a price correction in the Singapore property market. I just don’t think we will see that happening at all.

[dicky]

Price correction will be there, and like you I don’t see that coming anytime soon. This is not a rumour, everyone can see that coming, but no-one can truly say when…


Because at the moment everything is in theory (launches, land supply etc), but homing supply in practical is not there yet. Hot money can flow in, but without good rental due to coming large supply and cut in foreigner quota, they get out easily too.

I’m 2nd guessing that at best price will moderate, not fall as long as stock mkt remains volatile and gold prices remains high. As for news on world economy, it doesn’t affect pty mkt on the same scale as stock mkt…

[MadScientist]

mummyhk:

Hi MadScientist,


Thanks for all your insights into the global/regional economy and your perceptions of the challenges ahead.

I specifically wanted to get your views/thoughts on the Singapore Real Estate Market. There has been murmurs of a slowdown/scaling back on rental and sale prices. There has also been the implementation of a reinforced stamp duty which is deemed to be somewhat punitive and flushes out the short term investors. I am less optimistic about all these having a dampening effect on the market. I worry that as rest of world (US and EMEA) getting into a bind, we will see hot monies flowing into this part of the world. And as our properties are considered to be somewhat affordable to this flow of funds, we might still get the properties prices trending upwards.

Would love to hear your views. Don't get me wrong, I prayed for a price correction in the Singapore property market. I just don't think we will see that happening at all.

Hi mummyhk,

You are most welcomed.

I too pray for a serious correction... But a mild one at best is what I expect. Not just yet, but soon enough.

Why I think that the RPPI will correct:
The global crisis will send shockwaves out and almost all markets will feel the hit.
There will be a recession, and at least job losses.
Leveraged buyers may face some difficulty due to a recession.
The recent run up is technically way above itself and overextended.

What I think will not be a major correction like 2008:
Our floodgates are open... And there is probably backlog of new citizens coming online
Our interest rates are super low
Our supply levels are not ramped up until 2013
We do not have proper capital controls, and are very very unlikely to do so.
The current measures actually work against proper market forces

You are probably right about the fund flows... http://www.dnaindia.com/money/report_singapore-gold-only-safe-havens-russell-napier_1594372
However, in a panic, it will be a panic and fund flows should be running into short term money markets like bonds and USD.
What would follow next is an unintentional synchronized outflow into safe haven assets that have better yields and one of the Asian flavors is SG. Note also that this time, smart and ot money already knows which havens to run to... So the moves would be very much quicker.

We have the power to minimize it but seems like we choose a high price for economic growth.
More importantly, there would be an onset of hyperinflation...
Not only about hot money inflows, which would increase the SGD (counterintuitive to inflation argument for now but bear with me) and make our exports weaker... But also our CPI is linked to COE prices, and the recent announcement tells me that inflation will set due to higher COE. PLUS, the current floods in Thailand will bump our imported rice prices to over $30/10kg bag by the next harvest (which is non-existent).
Property prices would also increase and this adds to the inflationary environment.

Thing is, with bad exports due to apparent high export prices, the growth of our manufacturing sector may be stunted. Which means wage growth is likely to be low.

And, oh yeah, it appears to me that by some longshot, Eurobonds will be the order of the day to save Europe really... The last time a few trillions were pumped, we had a decent inflation... Another trillion perhaps?

It could turnout to be the 70s all over again...

Now... That would signal to me that we are at the beginning of the end. The bubble will burst when interest rates start rising, then leading to the third and final bust.
We can buy cheap properties then, only if we still have any money left...

So, that is my realistic views, subject to change. I may be wrong... And I was about the RPPI in 2009, as I didn't count on inflows. This time, it's part II, and some conditions have changed, whilst others have not.