Thursday, December 11, 2008

Why Singapore no fiscal stimulus?

I still do not understand the logic behind Singapore in not giving a fiscal stimulation to the economy. They kept emphasizing on the leakage but there's some important points which they miss out.

If we're given vouchers to buy goods and services, they are in actual fact preventing unemployment because the companies will be able to clear away their inventory, and yet keep people employed.

If we're kept employed, there won't be problems of people not being able to make their mortgage payments and our necessities. Most of us will just need to scale down on our luxuries.

Forget the leakage... It's no more about leaking money out but in keeping people employed. If people are employed, people still have the power to spend. Just by providing help to the businesses is not enough.

If I have 100 boxes of goods in my warehouse, that means somehow I have to sell it. It doesn't matter how much tax breaks you've given to me. I will need to sell it to pay my suppliers. Period. Just by giving tax breaks to businesses will do nothing to help the economy.

The problem has to be attacked from 2 sides. One side is to help the business to keep the cost down. The other is to help them clear their inventory. It's only with a "combo-attack" will then businesses be able to tide over 2009.

The game is just all about keeping people employed. That's it.

If the upcoming announcements are all about reducing business cost, then I can safely say 2009 will be a very bad year. -2%? Very likely that it'll be much worse than that.

Never rely on the market. Rely on yourself.


Anonymous said...

because all the money is gone liao :)

Anonymous said...

What Money you talkin about..?? America just print more..!!

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