Wednesday, February 6, 2013
Khaw Boon Wan's HDB prices
Hazrul was the first one to hit the nail on its head: It's the prices! He had plenty of company later.
But not being in their position, I have the luxury to return to some thought that I have often visited since I last read Niall Ferguson's, 'The Ascent of Money' a few years back.
When people here scream about runaway prices, I know we are getting nearer to the critical point. You understand it better if you have historical examples to compare against.
It is a matter of time but as usual who knows when that property will bring us to our knees? You see this happen everywhere but don't imagine Singapore to be immune. We just get to that point looking clever and then without knowing, we fall over the edge of the cliff.
Greed and fear, debt, the banking system etc., all converge at the real estate market. It is here we feel the pressure, over stretch and eventually throw prudence to the wind and nothing happen for a while as toxicity builds up beyond sight and then it collapses.
Elsewhere it is usually the banking system that is brought to its knees from reckless real estate financing. This is as unlikely as us facing conventional military attack. But just as the big guns were pointing south when the Japanese invaded from the north, it wouldn't be the financial system that would take us down. What might be our Achilles heel is being revealed. It is politics.
What is the least courageous way to solve the problem? Turn it into something Ponzi like. For that you need to build the 700,000 units MND is plugging for. This government will stake its political life on the Population and Land Use White Paper. Right now in private the Cabinet must be lamenting why the people don't understand. They forget that most voters are Type 2 smart and at the end of the day, you don't lead a people with reason but trust. Too bad, that has been destroyed because the PM was reckless entertaining a safe to fail policy even with housing and transportation capacity. He played it loose for not preparing the infrastructure in case the population surged. Inderjit Singh has wisely suggested how to regain the people's trust but would the government listen?
Posted by PengYou at 10:02 PM