July 23, 2021

10 thoughts on “Rolf’s View of the World and Singapore’s Economy – The whole world has been leveraging up! (Part 3)

  1. as of now, it seems while EU and BOJ haven't abandoned their monetary stimuli, the Fed will continue to hold off any rate hike.

    BOJ's recent action has caused a noticeable reaction on long dated treasuries.

    When debt becomes so huge, even a less than substantial increase in borrowing rate can bring about significant interest repayments.  

    productivity growth can no longer lead to jobs and higher income due to technology.

    it may become more relevant again with higher acceleration of consumption demand.

    consumption demand by itself will not help much, only acceleration of its growth will.

    productivity growth is an old metric. and i suspect increasingly irrelevant.

    Recently he also discussed the biggest worries in US now is the low productivity growth that will eventually lead to economic stagnation particularly in most developed OECD countries.  

    i believe this stimulus disappointment was the best move by BOJ at this current juncture due to previous stimulus moves resulting in higher yen.

    http://shiohmekiah.blogspot.com/2016/08/boj-buying-up-japanese-etfs-and.html

    the problem with Japan is a mentality problem that won't go away easily.

    but demographics are changing and the younger guard are bringing back some energy and new ideas and new changes.

    it will take time though.

    Just recently, PM Abe had announce another round, >28 trillions yen ($265b) of stimulus. However its effectiveness remains to be seen. Many suspect if this strategy is to fail, Japan may need more dramatic strategy ahead, such as "helicopter money"! 

    1. it will require coordinated central banks together with coordinated fiscal policies.

      Janet Yellen, the current Fed chairwoman was left behind an enormous public debt problem in US today (~19 trillions) that I reckon there is no way she can turn back, but to continue the artificial support of the world’s economy. It is possible that any major tightening of money supply will possibly lead to collapse of the entire market. 

      for the personal, just simply reduce your debts.

      but the interesting immediate consequences of a gradual rate hike is the effect of this on currencies and trade balances.

      surprisingly, I think the cheap devaluation of GBP and EUR (without spending upfront money, they may pay for it with legislation and restructuring of economic policies later on) has given them some help. we may see this positive aid in figures later this year granted confidence hasn't totally abandoned EU with the recent bank stocks collapses and being kicked out of STOXX and the recent terror attacks and the recent migration of more elites from Europe to US and other countries.

      the problem with europe is long term and cannot be solved easily.

      They will still do better as a trading bloc but it is not so simple; binding one size fits all legislation, binding currencies out of sync with the economies, tyranny of the majority votes in EU, conflicting interests.

      they can do better with a looser structure but the EUR is important for them.

      The recent Brexit does not bode well for the EU. About half of UK imports come from EU. In particular France and Germany are UK largest trading partners after the U.S. Brexit also further dampened the solidarity in EU.  Already cohesiveness is low because the core economies do not like the idea that they need to support the countries that cannot pay their bills, which includes Greece, Portugal, Spain, Ireland and Cyprus who defaulted resulted in the Euro Debt crisis after the GFC.

      China has devalued this year too.

      but comparatively, they are quite nice already. they didn't devalued too much.

      even given their long transition pains from export to self sustainable economy.

      they are already being nice to global community so far.

    2. Hi SMK,

      As usual thanks for the long comment.

      Any rate hike less than 100 basis points is to create confidence in the market perception, not necessary means fundamentals improved, just like end last year 25 basis points hike.

      About productivity growth, u r referring more to developed ctries I supposed. Emerging economies productivity growth is still important n relevant. We have to see the stages where the ctries economies are.

      About Japan, the older generation is really the hinder. Most are much richer and holding higher positions in most big organizations in Japan, having the say.

      The young can differentiate right and wrong, but they cannot oppose the "big picture long term" wrong enforced by the old, who tends to act base on benefits of staunch past out-dated cultures and short term benefits for their generation.

      I reckon in my generation, I will not see this once Asia rising sun, shinning bright again.

    3. The world is chaotic now. We should already be contended if there is no war upcoming let alone a coordinated central banks worldwide. Remember : US, EU, Japan Central bankers cannot represent the world. Unless China, Russia or Middle East for that matter, can sit in the same table smilingly discussing how to save the world. Possible?

      About Europe, I agree with you that problem is long term. Being relatively familiar with European cultures myself, one huge problem in itself is to force them to gel given their diverse cultures and high egoistic character about their own country's culture and benefit. The Northern Europeans should be able to do better by themselves without the bloc.

      About China, they are one country that is being most misunderstood by the world, thanks to the proliferation of manipulated global media from the west.

      IMO, in the long run after the next global crisis (if any), China will learn from their lesson, recovers and become stronger. Having work with the Chinese for so many years, they are one of the best learners!

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  3. Economy questions are not the one I'm good at but I still know something about that. I know that our economies suffer from the unemployment and poverty rates. In a time when we have the lowest salaries, the government tries to get benefit from that. When people lack money for a simple monthly living, they refer to the banks and take out loans to support the family. IN turn, banks provide the highest commissions rates on payouts and they make people get into the debt pit they will never get out from. I would recommend referring to the online Installment Credits service, the payday lender who provide small commision and doesn't pay attention to your credit history.

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