The Pressures of Excessive Do-Goodness Even though this year's budget contains many giveaways, there are the predictable complaints that it has not done enough - not enough for the poor, not enough for the middle class, not enough for businesses. The responses from some office holders are also quite predictable. Singapore Angle has two rather good discussions about the budget debate (here and Is the Budget Inflationary? Even before the budget was announced last Friday, it was widely anticipated to deal with the thorny issue of inflation. Inflation in Singapore has reached multi-year highs. One of the contributing factors has been the rise in food prices. The price hikes of food and commodities could certainly have caused hardship for some Singaporean families, and also increased Talking a Policy to Death An Australian friend of mine once remarked - if the Singapore government wanted to do something, it would just announce the policy and get on with it. As Singaporeans would attest to, there is veracity in that statement. At its best, our government is often bold and decisive in implementing policies. The flipside of this boldness and decisiveness is that it will often Deadweight Loss of High Taxi Fare? The issue of taxi pricing has been a subject of some debate recently. Before the recent changes to the fee structure, the perennial complaint was too few taxis (particularly during peak hours in the city). After the increase in the structured fare, there are many empty taxis around waiting for customers. Nevertheless, many taxi drivers have reported that The Christmas Fog This is probably the last year I am in the UK. This Christmas, my wife Grace had planned to bring the family - including baby Elena - on a pilgrimage to Rome. She had booked the tickets and accommodation. More importantly, she had secured the tickets to the midnight Mass at St Peter's. The big fog on the 23rd Dec however put paid to these carefully laid out plans. We were The Post-Bureaucratic Age When I first returned to London in late September for the new school term, the new Prime Minister Gordon Brown was still riding the crest of a wave of popular support. It was the so-called honeymoon period for the new office holder. Since then, he has become the subject of much political ridicule. Brown's Troubles First, Brown prepared for a surprise election to cash The Price of Failure I watched England knock themselves out of the European Championship last week - when they needed only a draw, on home ground, gifted the first goal to the visitors, a team that had already qualified. One could not have imagined a worst manner to lose. The head coach, Steve McClaren, must undoubtedly take much of the blame. If I were to discuss his ineptitude, I could easily The Measures of Inflation Inflation in Singapore has gone up in recent quarters, prompting understandable anxiety amongst consumers. In the answer to a parliamentary question, the minister stated that consumers could choose cheaper alternatives to minimise the impact of rising prices. I shall not wade into the big debate whether it is a good enough or adequate answer, people have perhaps already Inflationary or Disinflationary? Rising oil prices, falling US dollar, skyrocketing commodity prices all point to more inflation for the US economy, or do they? What about the effects of a slowing economy and falling house prices? Just a couple of years ago, the world was toasting to the Goldilocks US economy, growing without inflation, not too hot and not too cold. Now, it is a case of one foot Not a Short Downturn Two months ago, I suggested that markets were overly exuberant after Fed's first rate cut, which if you recall sent US and local stock markets to record highs - as if the subprime problem never occurred. The market rallied, and for two months I was wondering if I was missing out on something. But the problems associated with the US housing market have not gone away. The US Save the Generals, Save Burma The moment the monks began openly defying the military regime in Myanmar, there was always going to be only one outcome - violent suppression. The fact that blood was spilled should not come as a surprise to anybody save the most idealistic and naive. The logic is perfectly simple - dictators who lose power often lose everything, and sometimes even end up in A Simple Welfare Analysis of Borrowers and Savers One of the missing piece in the discussion on CPF returns is the peg to HDB housing loan. This is an important point of consideration since any increase in CPF rates will have considerable welfare consequences on these net borrowers - people who took out a HDB loan which is larger than the available balances they have in their CPF accounts. I too CPF Reforms: Why Government's Critics Mostly Miss the Point The major piece of CPF reform was supposed to be about the Compulsory Annuity Scheme (my views here and here). Nevertheless, the relationship between Government investment vehicles (namely GIC and Temasek) and CPF has received much of the attention instead. I was absolutely tickled with Chua Mui Hoong's quip, "The more you know, the more Where Has the Exuberance Gone II? Clearly, I spoke too soon. The exuberance is not gone from the market, it is in fact being stoked by the Fed ("Cheering Greets Fed Announcement"). I find myself to be a rather curious situation. I personally want a significant interest rate cut because it will be good for my portfolio, but I am against it in principle. I am probably not the only one feeling Where Has the Exuberance Gone? Even though it is only September, June seems like such a long time ago. Back then, markets were on record highs every where, Dow crossed 14000 and STI almost reached 3700. Three months later, not only has the exburance evaporated, confidence in the global financial system has taken a serious hit. Locally, a lot of hot air has also escaped from the property sector. Insurance Misunderstood In 2005, Liverpool reached the finals of the Champions League (European Cup) for the first time in 21 years. Liverpool was clearly underdog to the stylish AC Milan. Big underdog. A lot was riding on that one match - Liverpool was 5th in the league that year, which meant they would not qualify for the competition the next season if they didn't win. Their captain, Steven A Right Step Towards Risk Pooling A couple of months ago, I suggested here (not wholly originally) that the major problem of the CPF system was not that returns were low, but the lack of risk-pooling to guard against "longevity risk". First on the issue of returns. Based on the sketchy information that has been brought to the public in the two days since N-Day rally, CPF returns would indeed be Market Hazards Like Lucky, I have spent most of my last three weeks tracking the subprime crisis, the market and my portfolio. Blogging comes second to watching my housing and retirement funds. Perhaps I would write something about the economics of it some other day when things are calmer. When the market is in this mood, there is really not much point in talking about fundamentals. Even as I Learning to Tie the Policy Hands In this post, I argue, using the current red-hot property sector as an example, how too much policy discretion over the economic cycle may actually compromise long-term objectives. Some "tying of hands" or credible commitment on the part of policy-makers can sometimes be better for the economy. The full article can be found on Singapore Angle. The Economics of Foreign Talent / Workers This post was first written by Aaron Ng, who posed a really difficult question: whether immigration of skilled workers (talent) lowered the wages of native skilled workers. The same question could also be asked for unskilled workers, whether the influx of unskilled workers depressed the wages of the low-skill, low-income groups. As we know, immigration The Lone Tree Hill Incident at Lim Chu Kang This post has nothing to do with economics. It is about 2LT Lee's letter that skipped the chain of command, weaved into a story about my one major regret. This incident happened more than a decade ago, but I have carried the burden of a blemished conscience ever since. It was a night in March 1996, my battalion was carrying out a routine exercise in Property Prices Spiraling Out of Reach? And Pitfalls of Property Price Index Here I am back in Singapore. The effect of the property boom is clearly evident from the numerous construction sites and cranes dotting around downtown areas. The news media reports property market news almost every day. The classified ads screams at you - "Buy now before prices go up!", "Sure En Bloc, it's a matter of Be Careful of the Property Price Index Here I am ... Be Careful of the Property Price Index Here I am back in Singapore. The effect of the property boom is clearly evident from the numerous construction sites and cranes dotting around downtown areas. The news media reports property market news almost every day. The classified ads screams at you - "Buy now before prices go up!", "Sure En Bloc, it's a matter of time!", "Don't miss the last chance The HDB Lottery? [This post was written on 21 June, but was accidentally deleted. It is reproduced here but some comments were lost]. How much does a good unblocked view in a good location add to the value of a property? A lot apparently. As every one probably knows by now, a flat in Tiong Bahru has just been sold for $720K, way above valuation, and double of what the owner paid 7 years ago. It The HDB Lottery? How much does a good unblocked v... The HDB Lottery? How much does a good unblocked view in a good location add to the value of a property? A lot apparently. As every one probably knows by now, a flat in Tiong Bahru has just been sold for $720K, way above valuation, and double of what the owner paid 7 years ago. It came on the back of another headline catching sale of $672K, another HDB flat in the same area. As noted in the news Some Further Discussion on University Admission Comments over university admissions are still coming in even though I posted the discussion (with an ensuing debate with Mr Wang) one week ago, probably due to the references from Lucky Tan's site. After the initial outburst, I think the quality of discussion has improved. There is a thread on university education as a signalling device model (due Did McClaren Favour a Fellow Brit? For the first ... Did McClaren Favour a Fellow Brit? For the first time in four years, I sat through an entire F1 race last night. I used to be an F1 fan, but got turned off during the Schumacher-Ferrari years. Michael Schumacher would always go out racing while Barrichello would always stay behind to block other drivers and protect the front runner. It was highly anti-competitive, and F1 became tediously boring. Putting Singaporeans First Five years ago, if someone were to suggest to me that Singaporeans should always come first, whether with regard to housing, healthcare or education, I would have agreed readily. But as you can tell from my recent posts, I have become more skeptical about these "Put Singaporeans First" instincts. Back in the 1980s, faced with competitive pressures from Japan, there Protection for Singaporeans? A letter to the ST Forum over the weekend called for university places to be reserved for Singaporeans. I suspect by Singaporeans, the writer Mr Ong meant Singapore citizens only (not including permanent residents). Globalisation has created winners as well as losers, relatively if not absolutely speaking. Being a small country market, Singapore has much to gain On Citizens, Permanent Residents and Bumiputrification I have wanted to write something about this for some time already, and my previous post serves as a convenient lead-in. Three Reflections Of the many national day rallies I have watched over the years, there is one that will be forever etched in my mind. It is the one when the then Prime Minister Goh suggested that Singaporeans who chose