Friday, January 17, 2014

MAS vs Forbes Magazine

The rising Singapore property has been targeted by Forbes magazine with Forbes contributor Jesse Colombo warning that Singapore is headed for an "Iceland-style meltdown". In 2008, Iceland was brought close to bankruptcy due to the vast over-expansion of its banking system and he argued that Singapore is heading down a similar road.

With the report coming out, the Monetary Authority of Singapore (MAS) moved quickly. The MAS released a statement stating that Singapore is not facing a credit bubble and that "serious observers and investors are not in doubt about the country’s financial health."

Now I give them credit for moving so fast on the report, but that statement is just the wrong thing to say. This is Forbes we are talking about. They don't come any more respected and prestigious than Forbes. You are just not going to get any traction going against Forbes magazine. 

What the MAS need to do is argued against the case Mr. Colombo made against Singapore. Mr. Colombo say that Singapore's ultra low interest rates have led Singaporean households and companies to borrow more, fueling a surge in property prices that similar to the US housing bubble which imploded in 2008. 

The MAS should be arguing against this. They should state the various steps the Singapore government has taken to cool property prices (weak as they are) and that Singapore's position is hardly unique. For example, China's property bubble is far far worse than Singapore's. 

That's what the MAS should be saying, not going after Forbes. When you say "serious observers and investors", you don't get much better than Forbes Magazine.

4 comments:

Anonymous said...

Need to highlight your mention of China's property bubble..if it implodes...

How much damage to Temasek and GIC + Singapore banks "investing" over there in China then?

Won't Singapore be badly hit too?

zzz

Anonymous said...

I am not drunk. Hic!

Anonymous said...

Temasek and GIC (and the usual real estate companies under their wing) have invested a lot in China. Especially Capitaland. I know, because one of my friends work there and she is privy to the projects in China: condos and malls.

If China's bubble bursts, it could get very ugly. I hope and pray that the Singapore govt be honest, realize the severity of the situation, and implement policies that cushion the impact from the fallout.

The days of ultra low interest rates and loose credit has to stop.

Slamming Forbes is childish and reflects poorly on Singapore. The folks who contribute articles to Forbes are most definitely not daft people.

Ghost said...

To be fair, if China implodes everyone in the world be get it. Singapore will hardly be alone in the boat. That's why the bubble there is far more important than the bubble here.