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The Global Economic Forces (Part 2)| Richard Tan Success Resources
- 1. THE GLOBAL ECONOMIC FORCES: WHAT INVESTORS MUST KNOW? Part 2: Understanding The Push And Pull Factors That Will Affect Singapore
- 2. When the economy starts to sink, the stocks, bonds, commodities and real estate lose value and the seven billion people become endangered.
- 3. If the raft really goes under, government policymakers around the world are terrified this will turn into a replay of the Great Depression.
- 4. So, they respond by pushing the value of these assets back up whenever they become too weak. When they do, raft reflates, all the assets increase in value and the immediate danger to the world’s seven billion people diminishes.
- 5. This policy action has profoundly impacted Singapore’s economy.
- 6. For instance, when the Federal Reserve, the US central bank, prints money and buys assets (an operation known as Quantitative Easing), it affects Singapore in a number of ways, but we most keenly feel the pinch when it causes inflation in Singapore to soar by pushing up the cost of food and energy.
- 7. In China, it’s economy very nearly collapsed into crisis in 2009.
- 8. Chinese policymakers responded by allowing the total amount of bank loans in that country to expand by 60% in just two years.
- 9. That extraordinary expansion of credit not only pushed up global commodity prices, it also drove up property prices in Singapore as foreign investors in China parked their money here in Real Estate; driving up demand and causing property prices to rise sharply.
- 10. While the local government has taken steps to control the impact of the global economy on Singapore, there is only so much they can do.
- 11. We are in a state of extreme disequilibrium and this crisis is far from over.
- 12. Yet, fortunes will be made by the wise investors here who can accurately judge when government policymakers will reflate the raft with new credit and be prepared to respond accordingly.
- 13. Success Resources Pte Ltd Main Office: 10/11 Pahang Street, Singapore 198611 Toll Free: 1800 7822 377 Direct: +65 6299 4677 Fax: +65 6295 2441 Email: info.sg@srpl.net Website: http://www.srpl.net