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Monday, 8 June 2009

What if 'green shoots' turn out to be weeds?

TALK of 'green shoots' have sent Singaporeans into overdrive.

Big ticket items are being snapped up.

COE prices continue to rise, reaching an eight-month high of close to $12,000 earlier this week. This, despite rising pump prices.

The property market has started to stir after sleeping for about a year.

And the stock market is on a run. The STI has risen some 60 per cent since March.

Buoyed by such consumer sentiment, retailers have also jumped in, eager to bait Singaporeans who have money stashed under their pillow with creative promotions.

Such behaviour doesn't have a cautious ring to it.

The National Wage Council (NWC) warned this week that Singapore's recession has not reached a plateau and an upturn is not yet in sight.

The council urged companies to further cut cost and improve productivity.

The following day, the civil service announced there won't be mid-year bonuses this year. This means real wages for civil servants will drop six to 21 per cent thisyear.

Many other companies are likely to follow suit.

Earlier this week, Prime Minister Lee Hsien Loong also warned against proclaiming that we're out of the woods, things are just not 'turning bad as fast as before'.

In the US, GM's Hummer may now become a Hummer QQ. Foreclosures reached a high in April and it's still climbing. Unemployment surpassed 9 per cent last month, the highest in 25 years.

True, the economic slide has tapered a little but it doesn't mean there's been a sudden upswing. Hitting a plateau doesn't equate an uptrend either.

Corporate earnings that recently showed 'better than worst-case scenario' also does not equal a good scenario.

So where is all this tizzy of optimism come from?

Probably because we are complacent.

Fortunately, we tend to be good savers. We squirrel away money (and complain loudly when there's a one-cent increase in transport fares) which explains how Singaporeans became cash rich.

We enjoy good governance that has inadvertently led to the belief that 'the government will look after us no matter what'.

The Government won't let the economy get so bad. The Government will make sure we won't lose our jobs. The Government will help us if we can't pay our bills. The Government won't let us go without a roof over our heads. The Government will protect us.

And so we throw caution to the wind and spend.

What'll happen if the green shoots turn out to be weeds?

Or worse, what'll happen when the Government no longer has the face of a doting parent, or simply becomes overburdened by a population of spoilt, over demanding citizens it scant can support?

Better - safer - to be kiasu and kiasi than be without a home and worrying about my next meal.

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