THE BLOG'S THREE MAIN OBJECTIVES:
~*Revealing and Getting Rid of Scams | Creating Honest Sustainable Wealth | Offering Happiness, Safety and Legitimacy*~

Saturday, 19 November 2011

DPM Tharman warns of severe slowdown in global economy

SINGAPORE: Deputy Prime Minister Tharman Shanmugaratnam has warned of a possible severe slowdown in the global economy due to the debt crisis in Europe.

He said that this could test the leadership of Singapore's government and union movement.

Mr Tharman said: "Unfortunately, troubles are brewing once again, this time in the eurozone... We have to prepare for the possibility, the very real possibility of rough times ahead, a severe slowdown in the global economy. Once again, this will test leadership, leadership not just within government but leadership within the union movement."

He was speaking at a graduation ceremony for the Ong Teng Cheong Labour Leadership Institute, where Mr Tharman and Labour Chief Lim Swee Say gave out certificates and diplomas to 99 graduates.

Mr Tharman's comments come a day after the Monetary Authority of Singapore (MAS) warned that the global economy is at its most fragile state since the last financial crisis.

However, Mr Tharman believes Singapore will be able to use crises to become fitter, more skilled and more ready to take on future opportunities.

He said: "That has been the way we have dealt with past crises, not become all defensive, not retreat, but use the crisis as an opportunity to build up skills and build up competitiveness.

"And if we go through difficulties once again next year and possibly beyond, we will be able to once again show the world how we use crises to build up our competitiveness and to emerge even stronger, just like we did the last time."

Mr Tharman said Singapore's brand of tripartism (where the union works together with the government and companies), has resulted in Singaporean workers today enjoying better working conditions and higher salaries - something not many other countries have been able to achieve.

But he added that there is still the ongoing battle to uplift those with low wages who are struggling to survive, and to correct working conditions which are still substandard in pockets of the economy.

During the ceremony, Mr Tharman also highlighted graduates who made an effort to upgrade. One of them was 50-year-old Mohd Rasi Taib, president of the National Transport Worker's Union, who did not let age stop him from upgrading his skills.

Another is Mr Ramanathan Doraisamy. He was retrenched but picked up leadership skills learnt at the institute and secured a new job as a quality assurance engineer.

The graduates included union leaders, as well as industrial relations and human resource practitioners.

-CNA/ac

Tuesday, 15 November 2011

“Don’t Get Too Bearish”: 5 Keys to the Market’s Next Move

By Aaron Task

After a third quarter of wild swings and a big rally in October, the stock market heads into the home stretch virtually unchanged for 2011. After Monday's decline, the S&P 500 is down 0.5% year—to-date.

Four key issues hold the key to whether 2011 ends up being the first down year since 2008 or whether the Santa Claus rally comes to town, according to Greg Zuckerman of The Wall Street Journal:

The Core of Europe: Now that Europe's debt crisis has moved from the "periphery", markets will take their cues from interest rates in Italy and France. On Monday, for example, Italy sold $4.1 billion of 5-year debt at the highest yields since 1997, which pretty much set the tone for financial markets worldwide.

It's the Economy, Stupid: A big reason for the big rally in October was better-than-expected U.S. economic data. Many money managers were braced for an imminent "double-dip" and the positive surprises on GDP, employment, retail sales and other metrics helped account for the S&P's nearly 11% rise last month. Whether the economy continues to surprise on the upside, or slides back into the doldrums will go a long way in determining the market's next big move.

Junk in the Trunk: "The U.S. lending market needs to revive if growth is to rebound," Zuckerman writes. "To get an indication of the strength of lending markets, look to the junk-bond market" for cues on the ability of "lower-rated and riskier" companies to access the debt market.

China's Landing: Whether China's economy has a 'hard' or 'soft' landing is the critical question on many investors' minds. As the world's second-largest economy and a major importer of myriad commodities, the outcome will have a major impact on financial markets worldwide. "It's not yet clear if [Chinese leaders] will be able to slow things to a more manageable and healthy pace, or if a painful crash is inevitable," Zuckerman observers.

In the accompanying video, Zuckerman and I discuss these market forces as well as a fifth factor, which is less easy to quantify but potentially most important of all: Performance anxiety.

As of Oct. 30, the average hedge fund was down nearly 3% for the year and underperforming the S&P 500, according to Hennessee Group. Some noted hedge fund stars, like John Paulson, are faring far worse than the average (and the index), a sign of how even the "smartest" of smart money is struggling to make sense of (and profits in) an increasingly volatile market.

Considering the fees being charged by hedge funds and the "reputational risk" of lagging mutual funds, Zuckerman notes underperforming money managers may be tempted to "chase" the market if it exhibits any signs of strength.

As a result, Zuckerman's conclusion is that investors should "not get too bearish" before year-end, even if there are plenty of things to worry about these days.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com

Make Money in 2012: Investments

By Carla Fried

As some of the uncertainties surrounding the economy lift over the course of the year, attention is bound to turn back to the fundamentals of the private sector, says Katherine Nixon, chief investment officer for the Northeast region at Northern Trust.

And on that front, things don't look so bad. Corporate profits are hanging tough. Yes, growth has been slowing noticeably in recent months, but earnings for firms in the S&P 500 are still expected to climb an above-average 9% next year, according to S&P Capital IQ.

As for whether stocks represent a good value now, the picture is decidedly mixed. A conservative measure of price/ earnings ratios -- which relies on 10 years of averaged earnings -- would suggest equities are too expensive to load up on. But the S&P's P/E, based on projected profits, points to stocks being a decent buy. "Anyone willing to take on volatility and invest in equities today with a three-year time frame should see large positive returns," said Chuck de Lardemelle, a co-manager of IVA Worldwide Fund.

Meanwhile, interest rates are near all-time lows. That's good news for stocks, but fixed-income investors will have a tough time making money. Tom Atteberry, manager of FPA New Income Fund, notes 10-year Treasuries were yielding less than 2% in the fall. At that paltry level, a fraction of a percentage point increase in rates could wipe out what little your bonds are yielding -- and then some. Yet economists think 10-year rates will climb modestly. So it will be critical to diversify your bond portfolio into other areas, in particular, corporate debt.

The action plan -- In a market likely to produce only modest gains, diversify your fixed-income bets and focus on relatively safe equities.

Stocks: Ride the big dependables. Early on in a recovery, small-company stocks traditionally give you the biggest pop. At this stage, it's the big boys with balance-sheet might that are likely to outperform, as was the case in 2011. Not only do large firms provide greater exposure to foreign markets -- including emerging economies that are growing much faster than the U.S. -- their bigger dividends can account for a sizable portion of your gains in a low-return year, says Northern Trust's Nixon. Funds that pay particularly close attention to high-quality blue chips are Jensen Quality Growth and T. Rowe Price Blue Chip Growth. Both are on the MONEY 70, our recommended list of mutual funds and exchange-traded funds.

Seek out revenue growers. Brad Sorensen, director of market and sector analysis at the Schwab Center for Financial Research, expects businesses to upgrade technology to boost productivity. It's already happening. In the third quarter, business spending jumped 16.3%. Another area likely to enjoy better-than-average revenue growth is the industrial sector, where firms are seeing strong demand from emerging markets building out their infrastructure. For an added dollop of tech, go with the Vanguard Information Technology ETF, which bulks up on tech giants like Apple and IBM. For industrials, check out iShares S&P Global Industrials.

Investing: Throw out conventional wisdom

Bonds: Bet on high yield. As recession fears rose in 2011, economically sensitive high-yield bonds sold off bigtime. Result: The gap in yields between "junk" bonds and short-term Treasuries jumped to more than nine percentage points, up from six points in early 2011. "That spread represents a pretty good value," says Robert Ostrowski, in charge of taxable fixed-income strategy at Federated. LPL Financial market strategist Anthony Valeri says junk is trading as if defaults will spike to 9%, up from 2%. "We just don't see a 9% default rate as remotely likely," he says. Given junk's tendency to bounce around, Valeri recommends keeping a modest stake of 5% to 10% in these bonds. You can accomplish that through a diversified junk fund like Fidelity High Income.

Don't get stuck in the middle. On the other end of the fixed-income spectrum are Treasuries, which won't default but are at risk if rates rise. Treasuries maturing in five to seven years are paying barely more than cash, so it makes little sense to buy them. Ostrowski recommends a "barbell" strategy, with 80% of your Treasuries in short-term securities and 20% in long-term bonds. He says the Fed's campaign to buy long-term Treasuries, dubbed Operation Twist, should make long Treasuries less of a risk. And this strategy could yield around 2.5%, nearly a point more than what seven-year Treasuries are paying.

Dr. Dooms...

Though the economy is healing, some long-standing bears are still bracing for Armageddon. Yet each has a different take on how to prepare for the fallout.

Nouriel Roubini, Economics professor who called the mortgage crisis

Forecast: Decent chance of another recession.

Advice: Favor U.S. stocks over European equities.

Peter Schiff, Strategist who predicted a decade-long bear

Forecast: Expect an actual depression.

Advice: Avoid dollar-denominated assets. Buy gold and silver.

Marc Faber, Investment analyst who called the 1987 crash

Forecast: A collapse in China threatens the global economy.

Advice: Keep a quarter in cash, a quarter in gold, a quarter in real estate, and a quarter in stocks.

Henry Kaufman, Economist dubbed "Dr. Gloom" in the '80s for his general pessimism

Forecast: The U.S. economy will stagnate.

Advice: Buy stock in firms with strong balance sheets.

... And a Dr. Hope

Richard Sylla, Economist and financial historian who foresaw the "lost decade"

Forecast: Expect better returns over the next decade.

Advice: Shift from cash to stocks in stages, putting a quarter in every few months.

Why Investors Make Terrible Decisions

By Daniel Solin

There is much talk in the financial media about the market volatility that commenced in 2008. The markets experienced a very sharp downturn in 2008, and a remarkably quick recovery in the ensuing years. You would think that investors who relied on their brokers or advisers for advice during this period would have fared well. Market volatility should provide the perfect environment for investment pros who say they can time the markets.

Unfortunately, the opposite occurred. Investors were caught by surprise at the steep market decline in 2008, and some of them panicked, sold, and missed the market recovery.

According to an analysis by Byran Harris, senior editor at Dimensional Fund Advisors, the market began its steep decline in late 2008. It bottomed out in early March 2009 and then began a rapid recovery through June, 2011. During this period, investors dumped over $266 billion of their U.S. stock mutual funds. The biggest outflows occurred in early 2009, just as the markets began to recover. Net outflows remained negative even after the market recovery.

This pattern of bad investor behavior was not unique to this time period. Russel Kinnel, the director of mutual fund research at Morningstar, analyzed investor returns for the past decade in an article aptly titled: Bad Timing Eats Away At Investor Returns. Here's what he found: For the decade from 2000 to 2009, the average investor in U.S. stocks earned a pathetic 0.22 percent annualized, compared with 1.59 percent for the average fund. Investors in all funds also significantly underperformed the average fund, earning an annualized return of 1.68 percent, compared with 3.18 percent for the average fund. Investors in municipal bond funds did worst of all. They earned only a 2.96 percent return, compared with total returns of 4.57 percent annualized.

Kinnel has a number of suggestions for investors who want to avoid these dismal results. He counsels investors to "steer clear of higher-risk funds" that led them to make poor timing decisions. Curiously, he suggests taking a look at the valuations of your fund after rallies and sell-offs because "fund portfolios tend to be real bargains after a long sell-off and rather unattractive investments after a long rally." This seems like the kind of market timing that got investors into this mess.

Kinnel ignores the elephant in the room: The advice you received from your broker or adviser during this period. Many money managers advertise their ability to time the markets by telling you when to get in and when to get out. This data, and reams of academic studies, demonstrate they don't have this expertise. Relying on brokers has cost many Americans their opportunity to retire with dignity, if at all.

The real lesson is never mentioned by Kinnel. Fire any broker or adviser who tells you he can beat the markets by engaging in stock picking, market timing, or picking actively managed mutual funds or hot fund managers that will outperform the markets. Instead, focus on your asset allocation, the division of your portfolio between stocks and bonds. Purchase a globally diversified portfolio of low management fee stock and bond index funds, exchange-traded funds, or passively managed funds. Rebalance your portfolio once or twice a year to insure your risk level is appropriate for you.

Ignore short term market volatility. The greater your exposure to stocks, the more volatile your portfolio will be. If you are in the right asset allocation, you can ride out these bumps in the road and reap the expected returns that have historically been earned by long term investors.

The current system is fundamentally flawed. You don't have to participate in what amounts to nothing more than a charade of faux experts exploiting your nest egg.

Dan Solin is the author of the New York Times best sellers, The Smartest Investment Book You'll Ever Read, The Smartest 401(k) Book You'll Ever Read, and The Smartest Retirement Book You'll Ever Read. His new book, The Smartest Portfolio You'll Ever Own, was released in September, 2011.

The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

The 9 Steps I Took to Get My Finances Back on Track

by Mandi Woodruff

As the youngest daughter of two borderline baby boomers, like many other Generation Yers, I grew up watching my parents spend cash faster than they made it and had no concept of financial planning whatsoever.

When I scored my first full-time job after college, I'll never forget the rush I felt seeing all those numbers fill up my bank account. I bought new furniture for my apartment, stocked my closet with fancy new work clothes, and spent paydays filling my shopping cart on Amazon.com.

Ten weeks later, my entire department was laid off.

At that point, I had no savings, my credit score was crap, and I had absolutely no backup plan. I scraped by for two months with a few freelance jobs until I took a $10,000 pay cut just to get by.

Things finally turned around, and a couple years later, I found myself in the same place as many of my friends in their mid-twenties. We're paying rent comfortably for the first time and are able to start building our nest eggs. The problem is many of us have no idea how to start doing it.

Rather than turn into some sort of cautionary tale for future generations, I decided after my last birthday that I was going to take a good hard look at my finances.

I asked for tips from a trio of financial whizzes who broke down a few actions us 20-somethings can take today to start to getting our money on the right track. Here's how I did it and you can too.

Know your numbers

I have something akin to post-traumatic stress disorder from my days when I was in constant fear of over-drafting my account or bouncing my rent check.

But Chris Hobart, president and CEO of Hobart Financial Group, said knowing how much debt you have is the first step to chipping away at it.

I laid out how much I owe in student loans and on my two credit cards, set up auto-payments for each, and worked out a plan to start paying off more than my minimum payments each month to get rid of the debt faster and cut back on interest.

Get your credit score — every year

When my bank only gave me a $300 limit when I applied for a credit card as a college freshman, I didn't know someone had stolen my identity and had taken out a $12,000 Chase credit card. The person maxed the card out and defaulted on every payment, dragging my credit score down to the pits.

I got my first credit report only two years ago and that's when I found out. I was able to have it erased, but some damage was already done. During college, I was constantly turned down for credit limit extensions which hindered my opportunity to really build up my credit.

Avoid this by checking your credit report annually at Experian.com, Transunion.com or AnnualCreditReport.com.

Clean up your accounts

When I lost my credit card in January and was issued a new one, I went weeks before realizing my auto payments weren't being debited from my checking account and that my credit card was way overdue.

I could have avoided this if I'd simply checked my account once or twice a week to be sure everything was in order.

Now I watch my accounts like a hawk and updated them with my current email address so all my important bank alerts come to my primary email.

See that savings account? Use it.

The fail safe rule for savings is to have at least three months' worth of cash for an emergency fund, but Hobart recommends saving up for six months, given the current economy.

"Before you even start worrying about a 401(k) or investments, you should have emergency savings," he says.

Until recently, my savings account was more of a formality than anything else. I probably had $5 in the thing just to keep it active, but I started automatically shifting 10 percent of my income there per month.

Use that dirty B-word: Budget

As a reformed Groupon addict, nothing makes me less excited about finances than the idea of having a budget.

But it's a necessary evil and disciplining myself in how I manage my cash. An easy way to do so this is to set up a handful of savings accounts for different goals, says Casey Weade, a financial planner.

Have money auto-deposited from your checking account before you even have the chance to touch it, he says. You'll never miss it and your nest egg will grow.

Adjust your expectations

When I turned 18 and could start applying for credit cards, I just knew I wanted things. Lots of them.

"This is a very dangerous mindset," Hobart says, and it's commonly found among children of baby boomers. "Kids say they want their parents' life right away and they're willing to go into debt to get it."

I'm shooting for reachable financial goals now, like saving for a nice vacation and paying off my student loans, rather than beating myself up because I haven't bought a house yet.

Don't let terms like 401(k) scare you

Nothing sounded more grown up and terrifying to me than the idea of getting a 401(k).

But setting up a 401(k) with your employer is one of the first things you should do when you've got your first full-time job, says Scott Holsopple, president and CEO of Smart401k.

Ask your human resource department about a matching 401(k) plan and sign up if the company offers it. Otherwise you're basically turning down free money. If they have a matching plan, then contribute the maximum amount, Holsopple says.

Caution: If you're barely scraping by, it might be better to use a regular savings account that you can easily access for now. You'll lose money if you try to withdraw from your 401(k) before you retire.

Face it: Eventually you'll need to retire

Retirement, believe it or not, is something we should be thinking about now. But full disclosure: I couldn't have told you what an IRA even was or why we need one until I chatted with Weade.

He advises us to ask our employers about setting up a specific type of retirement fund, called a Roth IRA.

With a Roth IRA, you pay taxes on the money you put into your retirement account now. When you're ready to start using the fund once you've retired, the money is tax-free. This type of IRA is ideal for 20-somethings, Weade says.

"We've still got 30 to 40 years left to go before we even touch that money," he says, which gives it plenty of time to grow in value.

Find a mentor

Treat your finances like your career and find a mentor, Weade advises.

Like many 20-somethings, I can't afford to hire a pricey financial planner, so I turned to family for advice. My uncle is a pro at all things banking and he isn't afraid to give me tough love.

When he found out I was laid off and had no savings to lean on, he told me straight up what a moron I was (you know, in a loving way).

Needless to say, he's been checking up on me ever since.

Friday, 11 November 2011

3 ways to gauge a scary market

FORTUNE -- With the economy wobbling, what's the best way to tell whether the stock market is headed for a complete meltdown or poised for a roaring rally? Simple: Watch the spreads. No, not the latest lines from Vegas oddsmakers. Rather, experts point to three key metrics in the credit markets that have historically given investors a good sense of the risk environment ahead.

Start with the so-called TED spread, which measures the difference between the rates on three-month U.S. Treasury bills and the three-month London interbank offered rate, or Libor (the rate at which banks borrow from one another). The wider it is, the more skittish banks are about lending. Right now, the TED spread is telling investors to "tread lightly in stocks," warns Gina Martin Adams, an equity strategist at Wells Fargo Securities.

The TED spread has more than doubled since Jan. 1 and now hovers around 40 basis points (100 basis points equals one percentage point). That's a far cry from the 400-plus basis points reached during the 2008 financial crisis, but it's still a troubling trend. Wells Fargo's Adams points out that even as the S&P 500 (SPX) index was soaring more than 11% during early October, the TED spread continued to widen. That kind of divergence is "usually a warning sign worth noting," she says. "Credit markets have not confirmed the positive tone of equities."

Another gap worth watching is the difference between the yields on 10-year U.S. government bonds and high-yield (junk) bonds. It reflects the premium that investors demand for taking on the extra risk of default, and it has widened significantly of late. The spread between the Bank of America Merrill Lynch U.S. High Yield Master II index and 10-year Treasuries hit 7.6 percentage points in late October, well above the historical average of around six points. That indicates that bond investors are anticipating a rise in defaults.

Finally, keep an eye on the spreads for credit default swaps (CDS), contracts that insure a buyer of debt against the possibility of default. The spread represents the annual cost paid by the buyer of the credit protection; the higher the spread, the more skeptical the market is of the debtor's ability to repay.

Monitoring the heavily traded CDS market for sovereign debt is a good way to gauge the prospects of struggling European economies, says William Mast, director of fixed-income indexes for Morningstar. As of late October, for example, France's five-year CDS spread stood at 1.9 percentage points, meaning it costs an average of $190,000 a year to insure $10 million of debt. That's almost double the cost investors paid for that same protection in January, a reflection of the mounting worries that the eurozone debt crisis could deteriorate into a full-blown economic disaster.

Until spreads tighten again, it makes sense to stay cautious.

--A former compensation consultant, Janice Revell has been writing about personal finance since 2000.

This article is from the November 7, 2011 issue of Fortune.

Thursday, 10 November 2011

The latest round of layoffs feels like the macabre GFC all over again

Anonymous candidate

I will never forget that particular day in March 2009. Neither will 400 or so of my ex-colleagues who were laid off at the US firm in Asia Pacific that we all worked for.

In the months leading up to it, a circulated memo stipulated 20 per cent of employees would be given the flick. Working for a financial corporation brought to its knees during the global financial crisis (GFC), every single one of us were moving targets, and every day until doomsday, the fear became palpable and the nervousness among the staff was electrifying.

However, being part of a lean and small finance team i.e. under-resourced and over-worked, my colleague Anna and I were told by our manager, the CFO that the team was safe and there was absolutely nothing to worry about. Phew. What comforting words!

Broken promises

But in an instant, these words snapped like delicate glass. As I wander over Anna’s empty desk unwittingly thinking she was in a meeting, Mark, who sat next to her, solemnly said Anna had been summoned to the CEO’s office to be given the awful news she no longer had a job. Anna could return to her cubicle, swallow her pride and stay on for another two weeks or leave instantaneously. She did the latter.

The little bit of dignity Anna had left wasn’t enough to bring her downstairs, collect her bag and bid her colleagues goodbye. Mark had to bring her bag to her. Over the fence, a lady in marketing was also given her marching orders but went about her job as if nothing had happened and three women from other departments, who were all pregnant then, were also “coincidentally” kicked to the curb.

For those of us left behind, the crux of this demoralising experience was undeniably going through Anna’s desk, taking her personal belongings, sealing them in a box and mailing out the bits and pieces accumulated during four years of dedicated service. Feeling disgusted and infuriated, it seemed as though I was helping to put the finishing touches on the company’s dirty work.

None of it makes sense

It didn’t matter that Anna was unable to find a job for the next four months nor did it matter that the mums-to-be didn’t have a job waiting upon completion of maternity leave. It didn’t matter that as soon as Anna left, we were pulling our hair out urgently trying to tabulate and despatch billings she generated each month. Our manager hired a contractor from a place of desperation and threw him off the deep end to figure out where Anna left off. I’m not sure how all that even made sense, but none of it mattered to the firm.

I understand that if a company is on a downward slope— business won’t be what it used to be and the firm cannot feasibly support its existing workforce with whatever maladies economic factors impose. I get that. But as I looked around, CEOs were still frequently fly business class, upper management still got paid hefty bonuses, and a few weeks later, newly created positions were advertised and these contractors are all of a sudden made permanent.

Does anybody else see anything wrong with this picture? Has corporate greed and corporate stupidity become so widely accepted and expected that no one bothers to stand up against such practices until about a month ago when workers started occupying Wall Street, Rome, Greece and Sydney?

I wonder if these bigwigs sleep at night with the decisions they make. I often wonder if there are still leaders with a little bit of heart left, who make decisions based on what’s best for other people and not just his or her wallet. Just maybe, the entirety of the GFC and its ramifications could be avoided. Maybe.

Press repeat and play

Fast forward to the present and it seems to be business as usual. As I saunter over my manager’s office to get numbers signed off, she hastens past with her bag, rushes out the door and is unusually absent the rest of the week. In the most astonishing blow, she was mysteriously made redundant and we would never see her again.

A classic case of corporate karma perhaps?

Singapore PM: Economy Is Visibly Slowing Down

Singapore's economy is visibly slowing down and will continue to do so into the first half of 2012, as global economic conditions get tough, Prime Minister Lee Hsien Loong said Wednesday.

"We are now in a period where incomes will be under pressure at the low-end. I think even in the middle, white-collar workers will also be coming under pressure," Lee told CNBC.

On a quarter-on-quarter annualized basis, Singapore's economy grew 1.3 percent over July-September, after contracting 6.3 percent in the previous quarter, according Ministry of Trade and Industry.

Annual growth is expected to slow to around 5 percent in 2011, after a record 14.5 percent rise in 2010, the Monetary Authority of Singapore said late October.

"There will be uncertainties because the (economic) cycles are shorter, things go up, things go down," PM Lee said.

For the economy to continue to grow at a strong pace, Lee said Singapore needs "more workers, more skills, more talent."

Foreigners account for nearly one-third of the country's 5.18 million population, according to the Department of Statistics' latest data.

"The more you tighten the inflow, the slower growth is going to be and that's something Singaporeans will have to understand," he added.

Monday, 7 November 2011

The World in 2100: Ten Billion People, No Oil and Not Enough Food

by Eric Goldschein and Robert Johnso

With global population now at seven billion, it may be time to start planning for what the world will look like in the coming years.

Though most of us won't be around to see it, the United Nations has projected that our incredible population growth will level off at around 10 billion people by the year 2100.

Already, at seven billion, we are experiencing severe poverty, hunger, a shortage of resources, increased urbanization and climate change issues.

Will we be doomed by 2100, or can we make it work? Since we've only got one planet (so far), let's hope for the latter.

By 2100, 80 percent of the world's populations will live in cities.

Increased urbanization will be one of the main ways the planet will sustain 10 billion people. There will be a lot of new cities, and mega-cities (cities with a population of over 20 million) will become more common.

Possible candidates for mega-city status include: Beijing, Delhi, Jakarta, Mexico City, Mumbai, São Paulo, and Shanghai.

The world will have a few hundred languages at the most.

Right now, there are over 7,000 languages spoken. But lesser used languages will fall by the wayside, while English will become the most used form of communication around the world.

22.3 percent of people will be at least 65 years old.

That will be a huge increase, up from 7.6 percent in 2010.

The burden on the youth to carry the old will be greater than ever.

Most of the population growth will come from the developing world, especially Africa.

Africa's population will go from one billion in 2010 to 3.6 billion in 2100.

The demographic shift, and subsequent geopolitical shift, will be momentous, when there are "five sub-Saharan Africans for every European."

Other regions will see slower growth. For example, the U.S. population will rise from today's 311 million to 478 million.

Global life expectancy will be around 81 years.

Nowadays, our life expectancy is at 68 years.

The UN report does not, however, include the possibilities of improvements in life expectancy from "research in genetic engineering, nanomedicine, exponentially increasing intelligence."

It also doesn't consider risks such as alien invasion or pandemics in its projections.

An increasing population will see a food shortage — thanks to global warming.

We already have 925 million hungry people worldwide. An increase in population will add to that number, and global warming may hinder our ability to fight the problem.

Rising temperatures worldwide "shorten the growing season in the tropics and subtropics, increase the risk of drought, and reduce the harvests of dietary staples such as rice and maize by 20 percent to 40 percent." That means hundreds of millions of people will have to look elsewhere when traditional sources of food dry up.

The world's coral reefs, and the delicate ecosystems they house, could disintegrate.

Carbon dioxide is expected to reach a level of 560 parts per million by the end of the century, resulting in the destruction of over 9,000 coral reefs worldwide.

Besides being nice to look at, reefs are home to thousands of species of fish and are the feeding and spawning grounds of countless other animals.

The ability of coral reefs to regenerate is compromised when water acidity levels and temperature are too high.

Use of oil, natural gas and coal will drop to almost zero.

These finite sources of energy will eventually become extinct, especially at our rate of consumption. Some tables have oil use declining at five percent a year after 2040. Gas is expected to decline even faster.

Hydro energy and renewable energy (such as wind and solar power) are expected to see continued increasing use, and should become our primary sources of power by 2100 and beyond.

A more mobile talent market will mean less homogeneity in countries like China and Japan.

An increasingly globalized world will mean more and more people taking their talents abroad, crossing borders to find better opportunities. Diversity will become more common in countries that now have general ethnic homogeneity, as Americans travel to Asia and an even bigger melting pot in Europe.

Countries and cities that don't go after global talent will fall behind.

There might be up to five billion more of us — or a billion fewer.

The UN report that predicts 10 billion people by 2100 also had two alternate, though less likely, scenarios: there could be as many as 15.8 billion people, or as few as 6.2 billion.

While 6.2 billion would be manageable, 15.8 could be "a danger" to the planet.

We would need to take drastic steps to control population levels if we were to survive. 10 billion may be too much of a strain as it is.

Tuesday, 1 November 2011

Consumer confidence in Singapore hits 2-year low

By Magdalen Ng

Consumer confidence in Singapore has fallen for the second consecutive quarter to a two-year low, amid growing worries of an economic recession.

The Nielsen Global Consumer Confidence Index for Singapore fell nine points to 94 in the three months to September compared to the quarter before.

A number above 100 indicates positive consumer sentiment, while a figure below 100 indicates pessimism.

'Singaporean consumers turned into a more pessimistic group as the prospect of a prolonged global macroeconomic malaise became more pronounced. The continuing inflationary pressures and higher volatility in asset prices also contributed to a higher level of uncertainty among consumers, who are increasingly concerned about how to protect their wealth,' said Ms Grace Liu, head of consumer research at Nielsen Singapore.

OECD warns against EU failure to implement agreed measures; It says short-term economic uncertainties have 'risen dramatically'

Anthony Rowley; in Cannes


ON the eve of this week's G-20 summit in Cannes, the OECD warned yesterday that failure by leaders of the eurozone countries to fully implement the crisis-averting measures agreed to last week could have a dramatic impact on the global economy.

The warning came as leaders of the score of advanced and emerging countries that make up the G-20 prepared for a summit that is expected to be dominated overwhelmingly by the eurozone crisis because of its global importance.

Heads of the leading emerging economies, including those from China and Brazil, are expected to put strong pressure on their counterparts from Germany and France and others to ensure that the eurozone crisis is contained.

In return, these emerging economies, along with Japan, will probably offer to subscribe to new bonds to be issued by the European Financial Stability Facility (EFSF) to help finance the bailout of Greece and other economies at the periphery of the eurozone.

In a pre-summit briefing published yesterday, the Organisation for Economic Cooperation and Development (OECD) said that 'uncertainties regarding the short-term economic outlook have risen dramatically in recent months'.

A number of events, notably related to the euro area debt crisis and fiscal policy in the United States, are likely to dominate economic developments in the coming two years.

In an 'event-free' scenario and in the absence of comprehensive policy action to resolve current problems, real GDP is projected to grow about 3.9 per cent this year, 3.8 per cent in 2012 and 4.6 per cent in 2013 on average in G-20 countries.

'This average masks a wide divergence among country groupings, and emerging-market economies are much more buoyant, despite some softening,' the OECD said.

In the euro area, a marked slowdown with patches of mild negative growth is likely. Growth is also projected to remain weak in the United States, with a gradual pick-up from 2012 towards the end of the projection period. Unemployment is set to remain high in many advanced countries.

'A better upside scenario can materialise if the policy measures that were announced at the Euro Summit of Oct 26 are implemented promptly and forcefully. These measures go in the right direction and could help restore confidence and create positive feedback effects that could trigger a scenario of stronger growth.

'In contrast, the outlook would be gloomier if the commitments made by EU leaders fail to restore confidence and a disorderly sovereign debt situation were to occur in the euro area with contagion to other countries, and/or if fiscal policy turned out to be excessively tight in the United States.

'OECD analysis suggests that a deterioration of financial conditions of the magnitude observed during the global crisis (between the latter half of 2007 and the first quarter of 2009) could lead to a drop in the level of GDP in some of the major OECD economies of up to 5 per cent by the first half of 2013.'

To resolve the euro area crisis, it is important to clarify and implement fully and decisively the measures announced on Oct 26 to break the link between sovereign debt and banking distress, to deal with Greece, to ensure that the sovereign debt crisis does not spread to other European countries and to secure appropriate capitalisation and funding for banks.

Detailed information is needed on how the package will be implemented.

Businesses see dark clouds ahead; Three new surveys forecast gloomy days for most sectors

Melissa Tan


FIRMS in Singapore have turned decidedly gloomy about the business outlook.

Three newly released surveys suggest darker days ahead across most sectors as deteriorating global conditions continue to hobble the local economy.

A survey conducted by the Economic Development Board (EDB) found that manufacturers are expecting business conditions to worsen over the next six months through till March next year.

In all, 17 per cent of manufacturers expect things to get worse, a figure which exceeds their more upbeat peers by 10 percentage points, the EDB said yesterday.

The numbers are weighted according to 'contribution to employment and value added', EDB said.

This dovetails with the results of the D&B Business Optimism Index survey, also released yesterday, which found that businesses in Singapore are generally gloomier about the fourth quarter.

'Singapore's economy has been undermined by softening global market conditions weighed down particularly by currency volatility and weaker global demand,' said business information firm D&B in a statement.

'Closer to home, recent floods in Thailand have further dampened hopes of economic growth within the region.'

In the EDB survey, the gloomiest factory operators were those hit hardest by the global economic slowdown, such as electronics and precision engineering.

For both these clusters, the portion of firms with a pessimistic outlook exceeded the number of optimistic ones by a net weighted balance of about 20 percentage points.

UST Technology, which makes equipment and related products for micro-electronics companies, is among the doomsayers.

'I don't see any recovery in the next six months, and it will definitely worsen in November and December,' said chief financial officer Lee Yoke Keng.

'We're closed for a week in the last week of December, and also shut down every other Friday,' she said, adding that the firm was not replacing workers who had resigned.

She added that the floods in Thailand were a 'double blow'.

'My customers in Thailand, the semiconductor plants, are all shut and are not going to open until January due to massive damage to their plants. It will take time to clean up. All my orders have been pushed back.'

Mrs Lee said that the situation was not merely like a 'little flu where you just have some rest and you'll be fine, no need for medication'.

'There's no visibility, and for my Thai customers, we don't even know where they're headed. It's very difficult for us.'

The dampening of sentiment is not confined to electronics and precision engineering. The EDB survey found that 'all clusters in the manufacturing sector are more pessimistic in their outlook'.

Manufacturing output for the current fourth quarter is also expected to slacken compared to the third quarter.

The only bright spots within the manufacturing sector are the marine and offshore engineering, aerospace and land transport segments, the EDB survey found.

To make matters worse, the service sector, which accounts for around two-thirds of the economy, is also downbeat, according to a Business Expectations Survey conducted by the Department of Statistics.

It found that overall, the portion of pessimistic firms was a weighted 25 per cent, which exceeded the proportion of optimistic firms by a net weighted balance of 9 percentage points.

But there were a few notable exceptions - retailers, hotels and food and beverage firms see brighter prospects.

'For the next three months it should be good still because the year-end is coming with the festive season,' said Ms Yvone Lim, managing director of halal Japanese noodle restaurant Ramen Ten.

'Usually, after Chinese New Year, it's a slow period, so it's quite expected for F&B to slow down, but I'd think that for the mass market, people still need to come out and dine. After six months we wouldn't know, we would have to play it by ear.'

Goldman Sachs Information, Comments, Opinions and Facts