Singapore royalty slogs it out for the crown.

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neverfail
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Re: Singapore royalty slogs it out for the crown.

Post by neverfail » Sun Jul 12, 2020 3:39 am

Its not the size of the debt that counts but the ability to service the debt.

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Milo
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Re: This election marks the beginning of Singapore’s decline.

Post by Milo » Sun Jul 12, 2020 9:06 am

cassowary wrote:
Sat Jul 11, 2020 9:42 pm
neverfail wrote:
Sat Jul 11, 2020 2:29 pm
cassowary wrote:
Sat Jul 11, 2020 6:26 am

Thanks for the long and well argued reply, Neverfail. You have raised many valid points. But I will raise some points that you might have overlooked.

I find the constant change of governments in the mature and mostly western democracies to be unsettling. How is it possible for you to make long term plans? The answer is you can’t. Each opposing party changes policy when they attain power. You cannot do any long term planning. Some things need a generation or two to bear fruit.
Constant? Not always. Governments that govern responsibly and well with workable policy agendas tend to get re-elected so long-term planning can be and does get undertaken. It is the governments that screw up that get cashiered by the voting public..
I don't know about Australia. But I notice that the US and Western Europe (especially the PIGS) have horrendous government debt. Not only are their governments not being able to save for a rainy day, they incur debt that future generations have to pay for. So I don't see any long term planning in these countries. I think long planning ispossible when two equally powerful parties alternate in power. Both parties need to "buy votes" by spending lavishly to win elections. No time to think of the future generation, who of course cannot vote.
Not really! You are throwing out the baby with the bathwater stigmatising all governments in mature democracies as vote cadging irresponsible like that. We had the example (not a one-off) of a government led by John Howard (1997 - 2007) that repaid all of this country's remaining government debt and turned our Federal government into a net creditor (like your Singapore government).

Maybe Australia is a rare exception among the mature democracies.
It is relatively easy to run surplusses and save when things are going smoothly; whenmthe economy keeps on growing and tax revenues are growing from that expansion. But I fear that in the new, depressed and unstable era of world history we are entering now you will discover the hard way that the PRP has found no magic bullet and with returns from investments turning from posative to negative Singapore will not reap the dividend from "national savings " that it used to during the better times gone by but (the contrary) will find this more like a millstone around the country's neck.
I think I mentioned already that our government is taking from our reserves to spend on this crisis. That's what the savings are for - a rainy day. It is not just raining right now but a deluge.

Also note that our system allows us to bear short term pain in exchange for long term gain. Our choice of using English as an unifying language to create a new identity (Singaporean) among disparate ethnic groups caused pain for one generation.
Long term plans are often the way accidental results are explained.

neverfail
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Re: Singapore royalty slogs it out for the crown.

Post by neverfail » Sun Jul 12, 2020 2:32 pm

Returning briefly to the Japan scenario of Japan's national debt being domestically owed: it may seem like a good idea at first sight but Japan still pays a price for that. The price comes in having such an enormous amount of private capotal tied up with propping up the fiscal solverncy of the state. It means a corresponding derth of private capital for investment both within Japan itself and for buying profitable assets abroad.

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cassowary
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Re: This election marks the beginning of Singapore’s decline.

Post by cassowary » Sun Jul 12, 2020 7:50 pm

Neverfail,
neverfail wrote:
Sun Jul 12, 2020 12:09 am
cassowary wrote:
Sat Jul 11, 2020 9:42 pm

I don't know about Australia. But I notice that the US and Western Europe (especially the PIGS) have horrendous government debt. Not only are their governments not being able to save for a rainy day, they incur debt that future generations have to pay for. So I don't see any long term planning in these countries. I think long planning ispossible when two equally powerful parties alternate in power. Both parties need to "buy votes" by spending lavishly to win elections. No time to think of the future generation, who of course cannot vote.


The USA is a special case (I would differentiate it from Europe) because (as I have mentioned before) it's internal domestic political power structure is inane and the resultant political indiscipline makes a bi-partisan committment to curb spending and reduce the national debt impossible. Government in the USA does not solve problems (as they are elected to do) but allow them to accumulate.

Australia's national debt would by now be rising rapidly not due to lack of long term planning (both parties for years previously were committed to reducing and eventually eliminating the budget defecit) but due to an abrupt change in spending priorities. This was forced on our government by the need to mitigate the effects of the emerging coronavirus depression. Singapore is of course in the same boat as we except that as you point out your government is paying for your rescue package by selling off assets rather than incurring more debt. But wait a moment:

(the Americans have a saying: if something sounds too good to be true, it probably is.)
https://spendmenot.com/national-debt-by ... 20trillion.

13. National Debt of Singapore – 108.79%
( :roll: Boy, that's a USA grade of indebitedness!)

Despite that prudence in accumulating state assets as a hedge against a rainy day Singapore is still numbered among the 20 most indebted countries in the World.
You brought this up long ago. I explained to you then that the government owned assets far exceed government debt. I even remember your colorful reply, "A horse of a different colour."

I guess you forgot.

Explanation of Singapore government debt
At the end of 2017, the IMF measured Singapore’s national debt to GDP ratio as 110.86%. This is the 13th highest in the world when expressed as a percentage of GDP. However, no one seems to be worried about the country’s national debt. This is because, the headline figure reported by the IMF was gross national debt. When economists examined Singapore’s net national debt, they discovered that the country owes nothing at all.

The difference between gross national debt and net national debt is that the first just takes account of what the country has borrowed. The second deducts the cash, shares, debentures, and bonds that the country holds and deducts those values from the gross debt figure. As the Singaporean government’s assets outweigh its debts, the country has a net debt to GDP ratio of 0%. Why does Singapore borrow money? If the government of Singapore has so much money in the bank, why does it need to borrow money?

That gross national debt figure wasn’t invented. Singapore has borrowed a lot of money and continues to do so. The answer is that the government does not borrow to fund its running of the country. Instead, it borrows for specific infrastructure projects. Once those projects are completed, they result in assets, which have a value. So, all of the debts that the government carries are matched by assets of equal or greater value. Thus, despite having that large gross debt, the country has a very good credit rating. The long-term credit ratings of the country as awarded by the four largest credit rating agencies are shown in the table below.
Read more at: https://commodity.com/debt-clock/singapore/
cassowary wrote:
Sat Jul 11, 2020 9:42 pm
I think I mentioned already that our government is taking from our reserves to spend on this crisis. That's what the savings are for - a rainy day. It is not just raining right now but a deluge.

They can't keep on doing it forever Cass. Sooner or later they will run out of state assets to sell off leaving Singapore with only the national debt (see my link and note above). In your shoes Cass I would be praying that this Coronavirus recession (which afflicts all of Singapore's international trading partners as well) turns out to be a short sharp one; in which case Singapore can return to growth and prosperity and your government to its old game of accumulating assets against another rainy day. But I would not count on it. Like the 1930's Great Depression this one has the look of a game changer - in terms of more rancourous, abrasive international relations, not just pure economics.
I agree that the government cannot do that indefinitely. No country can.

A minor quibble. The government did not sell any assets to fund the current budget deficit. To do so would mean selling at the current distressed prices. Instead, it borrowed money.

As you can see from the link, Singapore debt is ranked at AAA, the best possible.
....................................................................................................................................
Out of curiousity I looked up the most and least indebeted countries in the world to see whether there was any link between indebtedness and adversarial party politics as you allege and found that the very most indebeted is neither in Europe nor was it the USA but is JAPAN.
1. National Debt of Japan – 234.18%

Japan is the country with the highest national debt to GDP ratio. The national debt is more than twice the amount of annual gross domestic product. It is estimated to be more than $9 trillion. Japan’s national debt is largely owned domestically, with the majority being held by the Bank of Japan.
Japanese, like other east Asians have an aversion to buying on credit but much prefer to salt something away '"for a rainy day".


That is true. East Asians don't like debt and prefer to save for a rainy day. That is why I view America's and Europe's huge government debt (which are not backed by savings or government owned assets) as a major fail in the one man one vote system. How could the voters have allowed this to happen? How could the voters keep electing politicians who promise huge spending?
Characteristically they deposit their spare cash in the country's Post Office Bank which their government then treats as a national asset: as though that enormous accumulated mass of savings were state property. May God help Japan if their public ever loses confidence in their Post Office Bank out of fear of imminent corporate and national insolvency.

Does this use of a national asset to counter-balance a high level of national debt resemble your Singapore scenario, Cass?
Yes it does. Most of our government debt is actually debt to its own citizens in terms of the CPF savings. CPF is something like your superannuation retirement fund. We save and the government borrows from us to build more infrastructure or acquire investments, often overseas.

The difference is that the Japanese government borrows and often build white elephants to stimulate the economy. Our infrastructure usually makes a profit - like our airport of seaport. Until now. With the coronavirus crisis, every business is dead.

Neverfail wrote:
Japan is also the most indebted country in the world in terms of national debt per person.
And yet, this isn’t the worst debt to GDP ratio in the history of Japan’s economy. Namely, the post World War II ratio exceeded the country’s GDP. It was the result of financing the costly war with government bonds. The government dealt with the debt by introducing war indemnity taxes and printing out more money.

The situation improved in the following years, however, it all came to an end in the 1990s – also known as Japan’s lost decade. It is no wonder that Japan is among the most indebted countries, with the stock market crash and the financial crisis in the 1990s.
There you have it. Since 1989 their governments have inagurated one multi-trillion dollar (equivalent) stimulous package after another to try and restore their stagnant national economy to growth and every one of them has failed to acheive that objective. The reason has nothing to do with competitive vote buying and everything to do with managing a refactory economy.
How can you stimulate the economy when the population is in decline. Building a sparkling new bridge to create jobs is not going to help when there will be fewer motorists. All investments must be based on a rational expectation of making a profit. Otherwise, they become white elephants. That's why their stimulus packages failed. The problem with Japan is their xenophobia aka racism.

They don't welcome immigrants and are content to accept a declining population.

Neverfail wrote:
Japan resembles Singapore politically also in that for approximately half a century after the Americans allowed it back its national soverignty it was governed by the same party which was reelected over and over again (and their party/s of Opposition were similarly ineffectual over that period) - called the Liberal Democrats Party . Different party name in a different country but corresponding to the same pattern.
Good catch neverfail, I mean good observation. Yes, Japan is effectively a one party state with a weak opposition. Its just like Singapore. I suspect Taiwan would be the same too, if not for the threat of China. This caused the opposition party to gain votes by taking a pro independence stand. This issue divides the Taiwanese.

Coming back to Singapore, I believe that there are no real burning issues that divide the population. Singapore is a mystery to foreigners and even to myself. This was a strange election. The only burning issue is how many seats the people want the opposition to get in Parliament.

You see, 99% of the population wants the PAP to continue to rule Singapore. But 99% of the population wants the opposition to have some representation in Parliament. Both PAP and the opposition parties know this. So the PAP warned the public of a fluke result.

If too many people vote opposition in the expectation of a PAP win, then by accident you may get an opposition coalition government. On the other hand, the opposition was warning of an opposition wipe-out. If people fear an accidental victory by the opposition leading to them taking over the reigns of government, they might lose all seats.

This is also against the wishes of 99% of the population. We battled it out on social media with PAP supporters warning of the PAP being thrown out of office and the opposition supporters warning of an opposition wipe out. Both sides are not much different. Both want the same thing - a PAP government but with sufficient opposition in Parliament. Other issues were secondary unlike in the US where economic and social issues are so passionately pursued by opposing sides. Unlike in Singapore both sides really want different things and a different government.

So the opposition side pointed out that the PAP won 70% of the popular vote last time in 2015. I recall one of my friends regretting her voting for the PAP after the results because the PAP did so well. Opposition supporters also argued that with this crisis, there would be a flight to safety and the PAP will garner enough votes to wipe out the opposition. The PAP side argued that with job losses as a result of the crisis will bring in votes for the opposition and they could end up forming the next government.

As I said earlier, neither PAP voters nor opposition voters want a change of government nor an opposition wipe out. I have friends who had earlier decided to vote opposition because they expected the PAP to do well like in 2015. But they later changed their minds and voted PAP because they found out that many of their friends were voting opposition.

I went into the voting booth totally confused and unsure what the outcome should be. When the results came out, I was shocked that the opposition won 10 seats. But after reading your post, I realized that 83 - 10 is not bad for the PAP. The PAP won 61% of the popular vote which I supposed would be considered a landslide in the US. But its down from 70% in 2015.
The Imp :D

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Sertorio
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Re: Singapore royalty slogs it out for the crown.

Post by Sertorio » Mon Jul 13, 2020 2:51 am

neverfail wrote:
Sun Jul 12, 2020 2:32 pm
Returning briefly to the Japan scenario of Japan's national debt being domestically owed: it may seem like a good idea at first sight but Japan still pays a price for that. The price comes in having such an enormous amount of private capotal tied up with propping up the fiscal solverncy of the state. It means a corresponding derth of private capital for investment both within Japan itself and for buying profitable assets abroad.
That's not what happens because the money of the public debt is not kept in a box, it went back into the economy, and is available to private individuals and firms to use. The private sector just lost the use of that money for a little while...

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Re: This election marks the beginning of Singapore’s decline.

Post by neverfail » Mon Jul 13, 2020 7:38 am

cassowary wrote:
Sat Jul 11, 2020 9:42 pm

I don't know about Australia. But I notice that the US and Western Europe (especially the PIGS) have horrendous government debt. Not only are their governments not being able to save for a rainy day, they incur debt that future generations have to pay for. So I don't see any long term planning in these countries. I think long planning ispossible when two equally powerful parties alternate in power. Both parties need to "buy votes" by spending lavishly to win elections. No time to think of the future generation, who of course cannot vote.



(I have had to snip away most of our combined accumulatred posts for the sake of brevity but I am now responding to points to raised. )

Points you made on the habit of East Asians prefering to "save money for a rainy day" while East Asian governments (Japan, Singapore, who else? ) do the equivalent writ large moved me to think about the prevailing scenario in Western civilisation in a new way.

We were not always spendthrifts Cassowary. I recall as a schoolboy back in the 1950's and early 1960's I was encouraged to be a saver - and I know from comparing notes with my schoolmates that I was far from being the only child in Australia with a school "Dollarmites" account. I made a point of depositing some of my boyhood allowance every week. The generation to which our parents belonged came of age during the Great depression and lived through the Second World war - when it was important even crucial as a survival tool to conserve, hoard and save.

Then came the double-digit inflation years of the 1970's into the 1980's. Saving money in bank accounts went out of fashion because the interest rate paid by banks to depositors was still in single digits while the cost of living kept rising in double digits. You need not be a genius to work out that the purchasing power of your savings was diminishing every day - so what was the point of saving money?

Borrowing was a different matter. If you were buying a big ticket item (especially) such as a home or a motor vehicle then no matter how hard you saved money you could never keep pace with rising costs. So even with the double digit interest rates charged by the banks you found that you were better off in the long run to borrow the amount and them pay it off over the following years. You found that while it was hard at first, with the passage of time it got easier - for the reason that high inflation meant that your principal (the sum you borrowed from the bank) diminished with time (i.e. the "purchasing power" of the money the bank loaned to you was declining fast - the bank's loss, not yours).

In summary, we developed a culture of credit card debt during those high inflation years. Despite the fact that the inflation rate dropped back to low single digits and bank interest rates with it, we have never dispensed with that culture since. Never revived our earlier culture of saving.

Which raises a question in my mind: bearing in mind that double digit inflation was NOT confined to Western countries but was as bad in the Asian ones as well (except in the PRC where they had a closed economy disconnected from the rest of the World) why is it that that these Asian peoples did not likewise jettison their culture of saving money in favour of one of borrow and repay as here in The West? The same pressures were upon them after all too.

Governments in the West seem to have likewise adopted the popular "culture of living off credit card debt" writ large. Especially so in the United States where this was first invented.

I hope this may clarify things for you. Before I read your latest I would not have thought of this.
Last edited by neverfail on Mon Jul 13, 2020 7:52 am, edited 2 times in total.

neverfail
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Re: Singapore royalty slogs it out for the crown.

Post by neverfail » Mon Jul 13, 2020 7:42 am

Sertorio wrote:
Mon Jul 13, 2020 2:51 am
neverfail wrote:
Sun Jul 12, 2020 2:32 pm
Returning briefly to the Japan scenario of Japan's national debt being domestically owed: it may seem like a good idea at first sight but Japan still pays a price for that. The price comes in having such an enormous amount of private capotal tied up with propping up the fiscal solverncy of the state. It means a corresponding derth of private capital for investment both within Japan itself and for buying profitable assets abroad.
That's not what happens because the money of the public debt is not kept in a box, it went back into the economy, and is available to private individuals and firms to use. The private sector just lost the use of that money for a little while...
They did: but as Cassowary points out they spent the money unproductively. Really squandered vast sums of borrowed money and with that Japan's future.

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Sertorio
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Re: Singapore royalty slogs it out for the crown.

Post by Sertorio » Mon Jul 13, 2020 8:26 am

neverfail wrote:
Mon Jul 13, 2020 7:42 am
Sertorio wrote:
Mon Jul 13, 2020 2:51 am
neverfail wrote:
Sun Jul 12, 2020 2:32 pm
Returning briefly to the Japan scenario of Japan's national debt being domestically owed: it may seem like a good idea at first sight but Japan still pays a price for that. The price comes in having such an enormous amount of private capotal tied up with propping up the fiscal solverncy of the state. It means a corresponding derth of private capital for investment both within Japan itself and for buying profitable assets abroad.
That's not what happens because the money of the public debt is not kept in a box, it went back into the economy, and is available to private individuals and firms to use. The private sector just lost the use of that money for a little while...
They did: but as Cassowary points out they spent the money unproductively. Really squandered vast sums of borrowed money and with that Japan's future.
No money is ever spent unproductively because that money is used to pay salaries or goods and services. And people (in the private sector) who receive those salaries and those payments can use it as productively as they want. The only difference is that the private sector instead of having that money on year X, will have it on year X+1. A delay which hardly ever has any relevance. The only way to spend money unproductively would be to burn it...

neverfail
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Re: Singapore royalty slogs it out for the crown.

Post by neverfail » Mon Jul 13, 2020 3:00 pm

Sertorio wrote:
Mon Jul 13, 2020 8:26 am

No money is ever spent unproductively because that money is used to pay salaries or goods and services. And people (in the private sector) who receive those salaries and those payments can use it as productively as they want. The only difference is that the private sector instead of having that money on year X, will have it on year X+1. A delay which hardly ever has any relevance. The only way to spend money unproductively would be to burn it...
The Japan Times and several other online sources beg to differ:
Meantime they have saddled Japaan with the highest public debt in the world: so gigantic it is impossible to see how they will ever repay it.

Whatever benefits the private sector gained from such reckless government spending was bought at too high a price.

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Sertorio
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Re: Singapore royalty slogs it out for the crown.

Post by Sertorio » Mon Jul 13, 2020 3:18 pm

neverfail wrote:
Mon Jul 13, 2020 3:00 pm
Sertorio wrote:
Mon Jul 13, 2020 8:26 am

No money is ever spent unproductively because that money is used to pay salaries or goods and services. And people (in the private sector) who receive those salaries and those payments can use it as productively as they want. The only difference is that the private sector instead of having that money on year X, will have it on year X+1. A delay which hardly ever has any relevance. The only way to spend money unproductively would be to burn it...
The Japan Times and several other online sources beg to differ:
Meantime they have saddled Japaan with the highest public debt in the world: so gigantic it is impossible to see how they will ever repay it.

Whatever benefits the private sector gained from such reckless government spending was bought at too high a price.
The Japanese government may be guilty of gross inefficiency but that doesn't mean that there was no justification for the government expenditure. Those are two different problems and should be kept separated.

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