Saturday, February 21, 2009

General Elections this year?

The boundaries of the polling districts have recently been altered. The details of the alteration can be found here. Does this mean that elections will be coming soon? The newspapers today are debating on this topic, and I agree with it. The answer is yes, in my opinion. Elections will be coming soon. I personally think there are mainly 3 reasons for this:
  1. I cannot understand why anyone will bother to extensively map all the polling districts (the attachment has 144 pages) if they do not intend to call for elections in an instant. The effort to look through all the polling districts is substantial, plus knowing the tapes, many approvals will be needed.

  2. My take is the financial crisis is still unfolding, and the situation is only going to get worse, not better. Many companies are surviving only on leverage. Regardless of the interest rate, if the risk level is high, no one is going to loan anything. The excess will need to be drained out. There seems to be many companies that have not been making any profit for years (GM is one example), and have been living on leverage for years! A few big companies are either going to go bankrupt, or they will be forced to merge.

    Once all these excesses are drained out, you will find that the world economy will be governed by the basic fundamentals once again. Population, and innovation. Economy is governed by the consumption of products and services. Many have been consuming on leverage. Once it is back to the basics, the increase of consumption will again come mainly from the increase of population. Innovation will lead to more hiring to research and develop new products and services. That would help drive the economy forward. As per my previous posts, I still liken this crisis to the great depression, regardless.

    There is no miracle pill that will restore the economy, regardless of how many billions, or trillions is spent to stimulate the economy. All these will only provide a base.

    Bottom line... Things are only going to get worst.

  3. Currently Singapore is still largely not that affected by the economy crisis. The evidence is clear. Walk around in the weekends and you'll still see restaurants (normal ones) full, and people shopping around. Queues are still formed at mobile shops. People are still flocking to travel fairs.

    However, this might not last for long. The MNCs and SMEs are all being affected, and most are just waiting out this crisis. This is not good... In this kind of crisis, the only way out is to innovate your products and services. Go out of the comfort zone... I see that more SMEs increasingly will fold, and I think there is evidence of this.

So the question is when the elections will come? My guess... After the next stimulus package.

The recently announced stimulus package in Jan in my opinion, is just to give temporary relieve. The government is unsure of how the crisis will unfold as this is the first major crisis they are handling since the existence of Singapore. It's one of its kind, and you can see evidence around the world that no one knows the solution. That's why the first stimulus package is called the resilience package. It is meant to ride out the crisis, not to meet the crisis head-on.

I strongly believe that there will be a next stimulus package coming soon, and will be this year. My guess is that this package will try to directly stimulate the economy by:
  1. Increasing domestic consumption
  2. Providing jobs by targeting major investments in up-coming sectors
  3. Proving more relief to the lower to middle income groups, and injecting money into the CPF to prevent foreclosures of homes.

So my guess is that the date of the general election will be 1 or 2 months after the unveiling of the next stimulus package. There would a feel-good effect after the stimulus package, if it is well-received by the public, and the global economy is stable. This would be the best time to hold a snap election, and get this "red tape" over and done with, so that the concentration will be on restoring the economy. This process would be a long one. Re-organisation and re-alignment of objectives will most probably be needed.

Guessing for the fun of it, I think the ideal time for elections would be the end of 3Q, to the start of the 4Q, this year.

Let's see how this year will unfold... It will definitely be more interesting than last year.

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