MAS Record Loss! - An explanation

[scroobal]

You are right, CPI imputed rental including values assigned owner occupied accommodation. Does not include purchase of property. MAS core inflation measure does not even include accommodation costs.

What he is driving at is that general cost of living and acquiring a home has gone significantly up to the detriment of the young who find it hard to get homes and raise a family. It is one of the main contentious issue during the GE.

Singapore CPI and Inflation measure is very misleading. The traditional measure of inflation is too much money chasing too few goods. The money is coming in from foreigners who have been given access to housing inluding public which drives up housing prices across the sector.

It is not asset appreciation which carries a neutral tone. It is indeed asset inflation due to its significance rise. The property lobby is the second most powerful lobby after SCCC.

I do believe housing as a component of CPI and even property tax are computed on a rental value basis. Property price is a separate thing. For example, you bought a property at $500k. It appreciated to $1m 5 years later. That's not inflation for you, that's asset price appreciation for you. You've already owned it at $500k. If you missed buying it 5 years ago at $500k, you have to pay $1m for it if you want it now. That's also not inflation. That's still asset price appreciation except you're on the wrong side of it. If you count this as inflation, car prices and share prices would also have to be counted. CPI would be gyrating in 20 to 30% band annually.

 

[Forvendet]

You're right too, CPI is a bit misleading and can't reflect true cost of living increases. As the name denotes, Consumer Price Index, the heaviest weightage is on the consummables, i.e. goods and services that are essential but can't last long and have to purchased over and over again over a consumer's lifetime. Sounds like Windows.

 

[scroobal]

If you look at Singapore CPI time series, you will laughing till the cows come home. It is so low that over the years that you think chicken rice is still 1.50.

MAS therefore does not use the CPI from our Stat Dept but it own measure to derive inflation rate to avoid being embarrassed internationally.

 

[Unrepented]

Thanks for your comments.

There is no hedging required. They are buying foreign currencies and squirrelling it away. So their foreign currency book is growing bigger than SGD book. For accounting purposes, the figures are reported in SGD as we are Singapore. If I used a hypothetical neutral currency, I can bet you that in real terms, we made a lot. ......

 

[Unrepented]

Yes interesting, I am trying to find the correlations sgd, usd and rmb. Rmb is very much dependent on the decisions by the commie party.

Chinese RMB would be interesting to see how this falls out.

 

[scroobal]

Don't touch the RMB even with a 10 foot barge pole. People have been waiting since 1982 to see its value go up. It is so severely undervalued that it is unbelievable. Imagine waiting for 30 years to appreciate because all the fundamentals show that. Yet the PRC keeps screwing around.

 

[Ash007]

The RMB has been artificially undervalued by the chinese government in order to maintain its exports. That is why you don't see any significant appreciation over the years at all. In fact, if you look at the recent devaluation of the USD it still maintain a rather tight band against it. Like I've said, it is interesting to watch because there are growing pressure in china how this policy is impacting inflation in the country. For one, I'm hearing rumors that properties in 2nd tier cities are falling. How this would translate into 2012 would be very interesting indeed.

Don't touch the RMB even with a 10 foot barge pole. People have been waiting since 1982 to see its value go up. It is so severely undervalued that it is unbelievable. Imagine waiting for 30 years to appreciate because all the fundamentals show that. Yet the PRC keeps screwing around.

 

[Papsmearer]

I do believe housing as a component of CPI and even property tax are computed on a rental value basis. Property price is a separate thing. For example, you bought a property at $500k. It appreciated to $1m 5 years later. That's not inflation for you, that's asset price appreciation for you. You've already owned it at $500k. If you missed buying it 5 years ago at $500k, you have to pay $1m for it if you want it now. That's also not inflation. That's still asset price appreciation except you're on the wrong side of it. If you count this as inflation, car prices and share prices would also have to be counted. CPI would be gyrating in 20 to 30% band annually.

This is the most illogical thing I have heard in a long time. Property price affects the CPI in a direct manner. Using your example of the flat, for the flat seller its price appreciation, for the flat buyer, its inflation. Why? The flat buyer could have bought the flat 1 year earlier at $100K less, the increased price definitely is inflationary for the buyer. Also, when property prices go up, what else goes up? U think your property tax going to be the same at $1 million valuation as at $500K? Once the property prices go up, everything real estate related will go up too including rents. So, it does impact the CPI. Car prices are counted as CPI, not share prices. U cannot consume shares. But other consumer goods and services are in the CPI basket.

 

[scroobal]

Purchase price of house/properties as well as property tax are not in CPI.

This is the most illogical thing I have heard in a long time. Property price affects the CPI in a direct manner. Using your example of the flat, for the flat seller its price appreciation, for the flat buyer, its inflation. Why? The flat buyer could have bought the flat 1 year earlier at $100K less, the increased price definitely is inflationary for the buyer. Also, when property prices go up, what else goes up? U think your property tax going to be the same at $1 million valuation as at $500K? Once the property prices go up, everything real estate related will go up too including rents. So, it does impact the CPI. Car prices are counted as CPI, not share prices. U cannot consume shares. But other consumer goods and services are in the CPI basket.

 

[GeylangCheongster]

A loss is a loss.

 

[Forvendet]

This is the most illogical thing I have heard in a long time. Property price affects the CPI in a direct manner. Using your example of the flat, for the flat seller its price appreciation, for the flat buyer, its inflation. Why? The flat buyer could have bought the flat 1 year earlier at $100K less, the increased price definitely is inflationary for the buyer. Also, when property prices go up, what else goes up? U think your property tax going to be the same at $1 million valuation as at $500K? Once the property prices go up, everything real estate related will go up too including rents. So, it does impact the CPI. Car prices are counted as CPI, not share prices. U cannot consume shares. But other consumer goods and services are in the CPI basket.

Illogical or not, up to all to judge for themselves. I don't set the rules and formulae. It's just my understanding as it is. Property is not a consummable, it's transferrable asset. It changes hand at different times at different prices. You buy a burger at $2.00 yesterday and ate it. You buy another of the same burger today at $2.10, that's inflation. You paid more but still ate it. You don't hold it for price appreciation and sell it.

If your point is that PAP is misrepresenting the CPI, almost all governments in the world use more and less the same rules and formulae. If your point is property price directly affects CPI, I'd say it's indirectly, yes.

 

[Papsmearer]

Yes. Finally someone gets it. Watch March 2012. This is not an investment per se, but a fighting fund for monetary control and for fiscal expenditure.

You cannot sustain high SGD in an economy where high value exports are needed to keep the economy and the MNCs who have invested happy.

Well, who is coming up with all these policies and who masterminds the MAS gameplan. cannot be Ravi and Heng, they are PAP loyalists and they do as they are told. Must be someone at MOF.

 

[scroobal]

This is how all central banks operate or would like to operate. Singapore did not invent this model. It is just that we have a tighter control of the SGD because of our unique environment.

You drop Yoshei, Sven, Ralph, kinyany from their respective countries into MAS and they will do the same. The developed countries are sevearely undervalued and people take advantage of it.

Well, who is coming up with all these policies and who masterminds the MAS gameplan. cannot be Ravi and Heng, they are PAP loyalists and they do as they are told. Must be someone at MOF.

 

[cunnosieur]

If you ask MAS Director about the LOSS...

MR RAVI MENON

He will 'shake his head' to you....

 

[Thick Face Black Heart]

a fighting currency fund of $300B, the bulk of it is in foreign currencies. It determines the value of SGD against a basket of currencies which is an official secret but over the years USD, AUD, Euro and Yen are definitely in and in that order.

Singaporeans are generally screwed by the PAP but this is not one instance.

Should be USD, EUR, AUD, YEN

Agree on the screwing part. S$150 billion will serve the country well and can backstop any bank run. $300 billion is grossly excessive and serves only the corridors of power. Imagine what the people could have been if $150B was instead spent on infrastructure, public tpt, public welfare, education, universities, sports, etc, over the last 20 or so years.

 

[Sperminator]

Andrew Loh
Mr Tan Jee Say is one of the four Singapore Democratic Party (SDP) candidates for the Holland-Bukit Timah Group Representation Constituency (GRC) for the upcoming General Election.
Mr Tan, 57, was with the Ministry of Trade and Industry from 1979 to 1985 where he headed economic and manpower planning and also served as secretary to the late Dr Albert Winsemius, the economic adviser to the Singapore Government.
From 1985-1990, he was the principal private secretary to Mr Goh Chok Tong, who took office as Singapore’s Prime Minister in 1991.
In 1990, Mr Tan went into investment banking and subsequently took up fund management. He is a Chartered Fellow of the Chartered Institute for Securities & Investment, and a graduate of Oxford University where he read philosophy, politics and economics.
Mr Tan was one of the panelists in a public forum organized by TOC in February, following the Government’s Budget statement. At the forum, Mr Tan spoke on the Foreign Worker Policy and the casinos.
You can read TOC’s report here: Foreign worker policy and casinos will break up society – Tan Jee Say.
Mr Tan’s ideas in a 45-page paper, “Creating Jobs and Enterprise in a new Singapore economy – Ideas for Change”, have been in the news since his candidacy for the elections was announced. It has attracted the attention of the Minister for Trade and Industry, Mr Lim Hng Kiang, who disagreed with the ideas in the paper.
Earlier The Online Citizen presented a three-part summary of the paper.
They are:
1. What’s wrong with the current Singapore growth model?
2. A S$60 billion National Regeneration Plan
3. Improving Singaporeans’ standard of living
Here, because of the interest generated of late, we present the 45-page paper in full.
You can view it here.
We thank Mr Tan for allowing us to publish the paper here on this website.

http://theonlinecitizen.com/wp-content/uploads/2011/04/New_Economy_-_Jobs_and_enterprise_Singapore_15_Feb_11.pdf

If Singapore have SGD 300 Billion funding, SGD 60 Billion will really be a good investment to reform Singapore's Market.

I hope Mr. Tan Jee Say can be president of Singapore, and find a way to enforce his powers to make the Parliament implement a Economic Reform Policy!

 

[Sperminator]

I am truly sicked and tired of the Multi-Millionaire Ministers... all sitting on their laurels, and listening to old man senile LKY, and his daft son, LHL.

God gave each of these Ministers a brain, and they are just interested in their pockets, not willing to challenge the status quo.

Mr. Tan Jee Say is someone who believe that the nation needs reforming.

We the Citizens of Singapore agree that it needs reforming, geared towards the new economy of the future.

And we have the PAP blocking the sentiments, and views of educated Singaporeans.

Why are the 60% so foolish, so dumb, so reliant on a non-functioning political party, that is clearly self serving?

Being a Singaporean today is as good as a slave to HDB flat, car (if you own one), tution fees (for your children), spiraling upwards cost of living, reservist (if you have not finished your 13 year cycle, or worst till 50 if you're an officer), your meagerly paid job, etc... the list goes on.

Do your part, my fellow 40%, convince with your believes that PAP need to have a counter party to check and balance on their policies... this corruption cannot go on forever!

Wake up the remaining 60% for they are the sleepers... I think we have success over the years in this forum. We manage to sway more votes towards alternative party.

Only this time, I hope that by 2016, there are at least 33% seats for the opposition, best is for opposition to have more than 51% so that there is a coalition government, and hopefully, Mr. Tan Jee Say can implement the badly needed Economic Reform Policies for the good of Singaporeans.

If you are reading this article Mr. Tan Jee Say, I will vote for you!

 

[Papsmearer]

If you ask MAS Director about the LOSS...

MR RAVI MENON

He will 'shake his head' to you....

If u ask Ravi, he will smoke and bs u until the cows come home. This guy was a die hard PAP lupcheong sucker since his RI days. U will not get a straight and honest answer from him.

 

[Aussie Prick]

My point is; why didn't MAS themselves hedged to prevent a significant loss amount since there a few components in the translated figures.

But its not a loss in realized terms. Its only a loss as its being reported in our grossly overvalued S$ @ 1.21. MAS has actually made a tidy sum when correlated.

I can tell you policy is under threat right now as MAS cannot allow currency appreciation as a hedge against inflation forever. Already there is tension in our export and tourism sectors.

We have a serious threat in Singapore - inflation. We are running out of tactics just as the Fed is. If we over-tighten we stand the risk of crashing our economy - so the question is what mode of tightening will the MAS undertake? Interest rates? Reserve requirements?

All eyes are on the looming Aug 2nd deadline and Jackson Hole later this year.

But Singaporeans should take heed. 5% inflation is serious. And there are many types of inflation besides food. We dont see wage inflation (shall we thank our FTs?) but inflation is wreaking havoc in Singapore as it is in China.

 

[Papsmearer]

But its not a loss in realized terms. Its only a loss as its being reported in our grossly overvalued S$ @ 1.21. MAS has actually made a tidy sum when correlated.

I can tell you policy is under threat right now as MAS cannot allow currency appreciation as a hedge against inflation forever. Already there is tension in our export and tourism sectors.

We have a serious threat in Singapore - inflation. We are running out of tactics just as the Fed is. If we over-tighten we stand the risk of crashing our economy - so the question is what mode of tightening will the MAS undertake? Interest rates? Reserve requirements?

All eyes are on the looming Aug 2nd deadline and Jackson Hole later this year.

But Singaporeans should take heed. 5% inflation is serious. And there are many types of inflation besides food. We dont see wage inflation but inflation is wreaking havoc in Singapore as it is in China.

I don't think 5% inflation is an authentic number. Its much higher. There is no wage inflation because mass FT importation is depressing wages, that would have naturally rise with some correlation to the inflation rate.