Its been a long time.

Its been more than a year since my last post. I have been so busy lately. Time has seriously flown by and I have had no time to write any posts or even a short update.

Having graduated from my alma mater, University College Dublin from Ireland. I have now gotten myself a job in the Aviation Industry. It would be great to have time to write most posts to exercise my joy for writing and sharing my views on things that go on in this wonderful place we call home, Earth.

I hope to write another entry soon. Lets see, what comes to mind? Perhaps why the sudden dip in gold prices?

Competitive Advantage of SMRT

With the recent news of the chain of SMRT trains breaking down in Singapore and the scrutiny that the SMRT's top management has been put through, which led to the resignation of their then current CEO, Saw Phaik Hwa, having to indadvertedly step down.

Plus just a couple of days ago, it was announced by SMRT that it will put the current train systems under a $ 600 million dollar boost to improve all its systems.

This current hiccup of SMRT, could possibly pave the wave for other competitors, making it easier for them to challenge SMRT in bidding for future constructions of train lines. Hence this lead me to do up a Porter's Five Industry Analysis for the industry SMRT is in. Not limiting myself to the train service alone but, an analysis on a whole, looking at the entire public transport industry. 

Porter’s Five-Forces 

The Porter’s Five-Forces is an analytical tool used for examining the competitive environment and forces, which affects the Public Transport Sector within Singapore. 

Threat of New Entrances

In the case of SMRT, we look at the public transport industry as a whole within Singapore. Firstly having been established and a recognised brand, SMRT has a competitive advantage over new entrants coming into the industry. Looking at Economies of Scale, referring to the spreading of costs of production over number of units produced, deters entry by forcing to come in at large cost (Dess at el, 2010). 

We see from Rajan (2006), The Straits Times, “MRT Trains get $145 million overhaul” stating that $145 million was spend just on the refurbishment of trains interior alone. Thus we can see that Economies of Scale and Capital Requirements in this industry is very high. From Land Transport Masterplan (2008), requirements for start-up and prices of fare are all government regulated and require approvals, from the government and Land Transport Authority (LTA), making threats low. 

The Bargaining Power of Buyers

Buyer’s bargaining power is high as minimum switching cost is incurred, as public transport industry is similar and undifferentiated. Buyers have other alternatives of transport via buses and taxies, making their bargaining power higher. There is hardly a threat of backward integration by buyers as it requires massive amount of capital. As a regulated industry, prices are fixed and determined by the government. Hence shifting the bargaining powers of buyers moderately. 

The Bargaining Power of Suppliers

SMRT has a choice of suppliers to choose from, in the example of taxies if Mazda offers a better package as compared to Toyota they can have a variety of choices as well as substitutes. From SMRT’s fleet of buses, taxies and trains they have number of suppliers. Being the market leader in the Mass Rapid Transit industry and second for taxies, they have a stronger leverage and purchasing power, reducing bargaining power of suppliers. Forward integration is highly unlikely by suppliers due to the establishment of SMRT, making suppliers have a low bargaining power. 

The Threat of Substitute Products

For SMRT, there are only limited substitutes such as walking, cycling, taking private or chauffeured transport. Other than car ownerships we do not see much other threats of substitutes. With recent interventions by the government to increase ridership on public transport, the Certificate of Entitlement (COE) for private motorcar ownerships has increased dramatically. Which has resulted in overall sales of private vehicles declining, as seen from an article in Singapore Business Review (2010) titled “Car sales in Singapore on a downhill” show that sales has reduced by 17.4% in September 2010. Differentiation of substitute product is low and rate of improvement in price-performance relationship of substitute is low, leading to a low threat of substitutes. 

The Intensity of Rivalry among Competitors in an Industry

To have a clearer picture of the rivalry levels within the public transport industry faced by SMRT we have to take a three-tier approach looking at each individually. 

Firstly, starting with railways SMRT has hardly any rivalry with the only one coming from SBS Transit. Secondly, within the bus industry once again SMRT falls behind to SBS Transit who is the market leader, owning 75% of the market shares (SBS Transit, 2011). 

Lastly, for the taxi industry is not SMRT the market leader and trailing behind to Comfort DelGro who owns 15,000 taxies and a handful of smaller players. SMRT has to fight intensely for a bigger share of the market (Taxi Singapore, 2011). 

These lead to intense levels of rivalry, especially among the two market leaders SMRT and Comfort DelGro who are owners of SBS Transit as well. With the type of services being almost equal on all grounds it leads to little differentiation among products and services. SMRT would have to rely on its core competencies to overcome stronger threats such as being voted Most Eco-Friendly Transport Partner Land Transport Excellence Awards 2010 (SMRT, 2011). 

The level of intensity is high due to such high start up costs, excess revenue for maintenances and construction of depots, creating a high barrier to exit due to big investments. It adds even more intensity from as competitors are all fighting for the same pool of customers. 

Final Deductions

As identified from above:

· Threat of new entrants is low

· The Bargaining Power of Buyers is moderate

· The Bargaining Power of Suppliers is low

· The Threat of Substitute Products is low

· The Intensity of Rivalry among Competitors in an Industry is high.

From the above information, we can see that the industry is in its maturity stage being a consolidated industry, where few large firms, who find it hard to differentiate their products, dominate it. Overall with Porter’s analysis done, it would be an attractive industry to invest in but high start up costs, government regulating and high barriers to exit all hinder many from entering this industry.

A short expose on Corporate Social Responsibility

Corporate Social Responsibility is a view of the organisation and its position in society that accepts a liability among corporations to work for targets as well to aggrandizement profit and a responsibility among affiliated stakeholders to hold the firm answerable for its actions. (Werther and Chandler, 2011) 

CSR is becoming increasingly important to shareholders and stakeholders because it represents change, which will move towards a crack to identify the future of our society. Positively on grounds of generating revenues, rethink on the conventional ways of a business is run. Conflictingly, due to the substantial amount of ethical breaches in recent years, corporate governance has taken higher stance. As changes and diversity in business relations, hierarchy and systems pose insurmountable difficulties in keeping track of a company’s financial stature. (Moorhead and Griffin, 2010) 

CSR is having a wide range of positive impacts across the globe. We can see from this article by Gulf Times (2010), “Vodafone showcases CSR strategy at conference” that CEO of Vodafone Qatar held a meeting to showcase and lay the building blocks to apply principles of social responsibility in Qatari Companies. Saying, that every individual plays a part in shaping what kind of world we want to live in. Explaining how he believes that being a responsible company would make substantial difference to the local people. Not only making money, but having the ability to help those less fortunate, using resources wisely with dignity and integrity. Vodafone went on to further cement this commitment by commissioning the first hybrid powered Base Station in Qatar combining the use of solar and wind energy. Further yet, they launched the first mobile recycling program in all its retail stores. Initiatives are still coming strong till date, with the likes of a charitable fund and many more. 

On the opposite end of the table we have cases such as embezzlements, like this article by Belson (2005), “Out of the boardroom and Into the Courtroom; Bernard Ebbers: Victim Himself or Mastermind?” states how Mr. Ebbers the CEO of WorldCom, over years told countless number of lies to cover up company’s incremental losses, used millions of his shares for personal loans. Claimed to be in the dark about the fraud, stating that he relied on others to handle accountings, accused his Chief Financial Officer of masterminding the fraud.

Which we see how these individuals impact have added to a greater weight on CSR as their actions have made stakeholders more vigilant and interested to know where their investments go and it is towards a good and profitable cause. 

Companies like Body Shop and Proctor and Gamble are known for being a strong advocate for CSR and hence people support them and are willing to pay a higher premium for their products, hence giving them an extra competitive advantage in relation to the competitors. 

Looking more in depth at P&G's CSR, P&G attained huge achievements in business ethics, ranking second in the 100 Best Corporate Citizens list (Baker, 2004). P&G spent great effort in performing good business ethics, and promoting environmental-friendly approach. As Baker (2004) suggested, CSR increases the competitiveness of business under proper management while contributing wealth creativity to society. Several programs such as “Tides Loads of Hope” and “Duracell Power Relief” are launched by P&G to assist those affected in natural disasters. These initiatives has helped P&G in building up its image as a reliable and trusted company, in which people do not mind in paying more for. As you do see parts of their profits do go back into aiding the society.

With much of Europe supporting companies with a 'Green' image, giving back to the society and having a clean image garnering much support from the their countrymen it leverages them to a higher position in comparison to their competitors around the globe, while looking at the regional level.

In concluding we can see how organisations use CSR to their benefits. It will have long lasting positive results, which can propel the company to do better and even gain a liking among the community. On the other hand CSR has also brought to light some negative cases which has affected the organisations involved, and due to these reasons certain companies are affected in many way and need to built back a trust factor among their stakeholders. Hence adopting a CSR policy does aid in helping move a company forward.

Some Research on Organisational Behaviour

Not too long ago I did up some research and on Organisational Behaviour just to kind of explain what exactly it means and compromises of in relation to an orgainsation and its managers. So here is the work I have come up with, its is succinct and straight to the point, not too long. 

According to Robbins, S. P.

"Organisational Behaviour is a field of study that investigates the impact that individuals, groups and structure have on behaviour within organisations, for the purpose of applying such knowledge towards improving organisation’s effectiveness"

This three-pronged relationship can be focused upon individually and would be fully effective only if all three are comprehensively covered. As the organisation and individual has the power and capacity to influence each other. Organisational behaviour, is more than just for managers as it can work towards enhancing people skills, motivating and stimulating towards innovation and transformation while improving ethical behaviour. From the aforementioned statement, it is evident that Organisational Behaviour is beneficial not only people in management careers but all individuals. Its importance can be seen strongly on how it shapes an individual’s life, as most people are taught and educated in organisations, acquire their creature comforts, start and retire, engage in organisational societies and becomes an integral part of their lives due to duration spent in a corporation (Moorhead & Griffin, 2010). 

Organisational behaviour blends technical skills from various behavioural disciplines principally: psychology, sociology, social psychology, anthropology, and political science. Psychology being the main pillar of study at the individual level and the other mentioned disciplines have helped us understand macro notions such as group processes and organisation (Moorhead & Griffin, 2010). 

Thus, its evident that Organisational Behaviour is beneficial to not only people within management careers. Within individual levels psychology leads to contributing factors such as learning, perception and job satisfaction amongst others. Within the group levels we can infer further and see more support of positive behavioural improvement and attitude changes. This helps in the understanding of individuals better and aids understanding. 

Organisational behaviour amounts too much more than just the role of the manager as, employees who commonly absent themselves adds scarcely in supplementing towards productivity and development of the organisation. Job satisfaction is paramount to analyse performance of an individual towards his work. Contented employees are productive and contribute towards fulfilling an appropriate work culture in an organisation. (V.G. Kondalkar, 2007). 

From the above statements, it further clarifies that organisational behaviour does not only benefit managers but right down to last individual in the organisation. As everybody’s action and reaction affects the organisation. Furthermore theories and models such as The Expectancy Theory of Perspectives, is used to get employees to chart down and measure what motivates them. Thus, the benefit of organisational behaviour is invaluable to the entire organisation as it educates and prepares everyone for this positive change of attitude to work, towards a successful organisation where every individual can reap the rewards. 

We can gather and affirm that organisational behaviour definitely affects the entire organisation and pertains to everybody and not only for people who choose to pursue management careers, to play their functions and roles to move towards improving and building a flourishing organisation.

What makes car prices so steep in Singapore?

This has been a question that I have been curious about for quite some time, what justifies the reasoning behind the extraordinarily expensive car prices in Singapore? I have been asked this question a number of times but did not have any concrete answers, so this lead me to unearthing the answer.

Well firstly. lets state the obvious, car prices as high due to the land constraint, keeping the number of privately owned cars on the road in control to subdue traffic congestion, help control the emissions of green house gases and keep the air clean and reduce pollutions.

So lets delve straight into it and let us compare a particular model of a car and its price in America and Singapore. For example a Toyota Camry 2011, from Europe Car News website, in America, the model base price is at $ 21, 240 (USD) which is  $27,445.40 (SGD). The price of a Toyota Camry 2011 in Singapore listed online from Sgcarmart.com cost $157,000. That is a difference of $129, 554.60 (SGD), and both the cars sold in America and Singapore are manufactured in Japan.

What I want to know and find out is how does the Land Transport Authority (LTA) calculates what is the right amount to slap on to a particular car when sold in Singapore? Is it justifiable or not. Are they transparent with their frameworks or methods in coming up with the cost of a car sold in Singapore?

From the LTA's website, on Vehicle Ownership, the only breakdown the individual charges that need to be paid when owning a car. Which compromises of:

1. Registration Fee

2. Additional Registration Fee which is that of Open Market Value (OMV) ranging from 100% to 130%

3. Certificate of Entitlement (COE)

4. Exercise Duty (20% of OMV)

5.Life Span of 10 years upon winning the COE.

The above figures are only relevant to buying a car and does not include all the other additional fees incurred once a car is owned and driven in Singapore, like road tax and insurance.

No where on the LTA's website did I find them explaining how do they calculate OMV and COE of cars.

Although there is an online tool which calculates the OMV for you based on a selected car model, available at,  http://app.lta.gov.sg/motoring_vo_omv.asp 

I guess according to them we need not know the process behind it, but just the end result?

Anyways upon searching more, I did find out from One Motoring's website what does the OMV compromises of, taken from there website listed below,

        " What is OMV? It stands for Open Market Value.OMV is assessed by the Singapore Customs (Tel: 6355 2000), taking into account purchase price, freight, insurance and all other charges incidental to the sale and delivery of the car from country of manufacture to Singapore."

Apart from the OMV, from Motoring One again, the other miscellaneous fees include, Vehicle Tax Structure, Goods & Services Tax (GST) of 7%, Vehicle Number Plate, on average, the cost of a set of normal number plate will range between $25 to $30 (special numbers like 888 or 9 can cost an extra of about $5000 dollars and above), Motor Vehicle Insurance and Profit Margin for Motor Distributors after taking into consideration the above variables.

So from researching and reading up, OMV constitutes the amount is cost to bring a vehicle into Singapore without being able to drive it on the roads, and  how much your vehicle is valued. This price is assessed by the Singapore Customs, which includes purchase price, freight, insurance and all other charges incidental to the sale and delivery of the vehicle to Singapore. 

That is the first major aspect of the cost of purchasing a car in Singapore. The other aspect is that of attaining a Certificate of Entitlement (COE). We all know the COE was instituted in 1990 to limit the number of car ownership in Singapore. 

For more information about the COE you can visit the National Library of Singapore website at http://infopedia.nl.sg/articles/SIP_1005_2006-04-07.html 

The COE prices are differ along categories which are broken up into CCs or vehicle types. I have come across so many sites explaining to me the various types of COEs (Non Guarantee COE, Guarantee COE at $XX, etc), guides to purchasing COE and so on. Also if you decide to sell off or de-register your car, how much of your COE can you get back. Based on certain calculations and depreciation of the vehicle you can get back a certain sum of your COE. 

It seems that my search for finding out the calculation of COE prices is more elusive than I thought. There may be information available which justifies the figures for the COE prices but it just seems to difficult to find, or at least for me. From all that a have read or been trying to find out, it has lead me to conclude that, it seems as though the prices of the COE is not questioned and accepted.

Although I do understand the reasoning for the measures taken by the Singapore Government to curb the number of privately owned vehicles on the road, the transparency for the figures that one has to pay in order to own a vehicle is not openly defined. You just have to pay and not know what exactly does the payment compromises or constitutes of. 

I sure do hope this that shed more light on the understanding of car prices in Singapore. It has surely painted a clearer picture for me. Although not all the questions could be answered, the majority of  them have been put to rest.

Will USA still be a Super Power in 2050?

I question which I have been surrounded with as of late, is that of, will the United States of America still be an economic super power in 2050? With surmounting debts racked up during the Bush Administration, a bulk of it being owed to China. Along with a number of financial crises involving big American MNCs like AIG, Lehman Brothers and Bear Sterns to name a few, the future looks bleak for America's stranglehold on the global economic front. 

USA Today 

USA has the biggest economy in the world, according to the International Monetary Fund (IMF) statistics as of April 2010, valued at an estimated US$14.7 trillion dollars. However, they are not the richest country in the world and are currently ranked 7th by GDP (PPP) per capita. As of 10th May 2011, according the US Debt Clock, they are US$14.3 trillion dollars in debt. (Accessed 10th May 2011) They are responsible for the Sub-Prime Credit Crisis in 2008, in which we saw a national bailout for AIG, the bankruptcy of Lehman Brothers and brought about a recession globally. Due to the current situation, it is highly unlikely that USA will continue to hold its position as an Economic Superpower in the year 2050. Reasons for this assumptions are as discussed below: 

Increasing Defence Budget

Online information from the White House shows a $553 billion defence budget about 4.3% of the national GDP. (Accessed 10th May 2011) This amount could be used to pay off its global debt or help its people but is used instead to service a war budget of which does not seem to be sated in the near future. 

Devaluation of Currency

An article from Seeking Alpha (2007), ‘A Closer Look at Euro Currency Trading’ says global banks have cashed in American dollars in favour of Euros. (Accessed 10th May 2011) Demand for Euro has resulted in it strengthening and a weak dollar creates import and export problems with rapid fluctuations affecting international dealings in US currency.

The Economist (2008) article, ‘Revaluation by Stealth’ states China’s currency has been deliberately deflated and pegged to the US dollar by the Chinese government, rarely allowing the Yuan to go up in value. Right now the Yuan is worth about half or one-third of what at it should really be worth. An article by Hughes (2005), titled, ‘A Trade War with China?’ states that this is an unfair practice and the WTO has been pressuring China to allow their currency to float in an open market, but have been met with strong rejections.

Labour Market and International Competition

Competition from emerging collective labour markets in Asia such as Laos and Vietnam makes it hard for USA to compete due to its collective strengths. Another major competition comes from Brazil, Russia, India and China also known as the BRICs. In a Global Economic Paper by Goldman Sachs, titled, ‘Dreaming with BRICs: The Path to 2050’, it states BRICs economies will be a much larger force in the world economy even surpassing the G6 in US dollars by 2050. Other factors creating more problems for America comes from Corporate Corruption and Crime like Enron, WorldCom and high bonuses paid to CEOs after the financial crisis of 2008. These has dropped the Investor Confidence Index (ICI) which measure the attitude of Americans to foreign investors to risk which was 99.3 in August 2007 to 48.0 in December 2008 as a result (State Street Global Markets, 2011). Lastly, with Inflation and Interest Rates as Laffer (2009) in, ‘Get Ready for inflation and Higher Interest Rates’ says such debts guarantees higher interests rates, massive tax increases and partial default on government promises.

End of USA’s Superpower Era by 2050?

Given the aforementioned facts, USA economic future looks sombre. By 2050, given the economic woes, which see USA unable to surmount, it looks set to lose its Superpower position to rapidly growing economic Superpowers such as China and India. With the devaluation of its dollar against most world currencies and its rising debt unsettled, USA night have to concede ‘defeat’ and relinquish its title to more prodigious nations who may come into economic wealth by then. 

I personally do hope that USA manages to overturn the current state it is in, as USA to me represents the world as an official partner for the United Nations and have championed many noble efforts to aid people and countries in need. Especially, in aiding poverty stricken countries around the world, offering aid and sending diplomats to ease situations. Therefore, thus far given all its economic wealth and superiority it has continued to help out nations in distress, a nobel and valiant effort in which the USA can be commended for.

On a side note, looking at History, somehow you can see a distinct transfer of Powers and wealth constantly between the East and West. Looking at the (may not be in chronological order) Babylonians to Persians to Roman/Greek to Ottoman to Tzars to Hapsburg to the British Monarchy and recently USA being labelled a Superpower and now analysing it seems as though it is shifting back to the east with the emergence of China and India. By and taking into account what Nostradamus said in relation to these predictions, 'by studying the past you can predicting the future based on the fact that what happened in the past was bound to happen in the future again', a fairly simple theory to understand.

This is just a theory if you were to look at it from another point of view, which there can be no concrete evidence, but looking at Nostradamus's track record and history it really leaves you to ponder. 

I am Back

The past weeks have been quite hectic finishing up projects and studying for exams. Finally, its all over and the holiday season is around the corner, which means, its time for celebration. As well as more time for me to expound on more topics or just write what is in my mind to exercise my freedom and takes on what is going on around the world.

Crediting your Sources is the Right way to go.

I am a strong advocate against Plagiarism, and firmly believe in citing and crediting my all sources. It is only fair that you do give credit and acknowledge someone else's work. As for me, starting up myself, I see the importance of having creditable sources to make my articles or discussions more compelling. I myself hold no weight in my comments (just personal opinions for now), yet. When the day comes that I too may publish or write any journal or research papers, I would love if someone were to use my information in whatever what possible and credit the source, by simply citing that individual. Just my two cents worth. So, citing is the way to go!

Discussing the Issues of Rising Home Prices in Singapore

Starting from the article, Singapore Tightens Mortgages to Cool Property Market by Shamin Adam and Joyce Koh, Dated August 30th 2010 from Bloomberg Businessweek

With the issue of housing hot in Singapore, this article states measures taken by the government to subdue rising prices, which surged 38 % in the second quarter of 2010. A number of Quantitative Tools were quickly introduced, the most notable being increments of down payments for second mortgages and seller’s stamp duty (SSD) imposed on property held for less than three years.

The government reacted without incurring much time lag, implementing these policies, to ease the property market amid concerns that asset bubbles are forming with increasing prices. Majority of this policies are targeted against repeat buyers and speculators who buy and sell over short term, seeing it as an investment and have readily available money to pay for housing. This was done to aid first time buyers and locals who seek homes but do not have enough money and CPF to pay. Giving them the opportunity to be homeowners.

A Further Tightening Grip

Following the implementations in 2010, the property market still did not cool down as expected. Despite these steps prices rose by nearly 40% of the second quarter, after a rise of just over 25% in the year to the end of the first quarter. So measures were taken further and in a press release from the MAS as of 14th January 2011 the SDD is now increase to four years and individuals who have more than one outstanding loans from financial institutes can only loan 60 % of the value of homes.

Stamp duties

SSD was imposed for property held for less than four years, to aid people who were looking for a home to settle down, reduce buoyancy of the property market and buyers who were looking to make a quick dollar. The Inland Revenue Authority of Singapore (IRAS) states that SSD is a tax on executed documents relating to properties or interest in properties and shares or interest in shares. These documents include a lease, sale and purchase, gift or mortgage of property.

The SSD rates are 16%, 12%, 8%, and 4% for properties sold within first, second, third and fourth year respectively. From the table below it is calculated how much SSD is to be paid and percentage gains for selling a property within a given time. Hence the introduction of SSD is a good policy that has significantly reduced profits of selling homes. Looking less appealing for investors and helping to aid individuals who are in a real need of homes.

Tax Incidents 

Tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that, at the end of the day, bears the burden of the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply (Baumol and Blinder, 2009).

From IRAS, Property Tax in Singapore is calculated by the percentage paid per year of the Annual Value (AV) of property, tax rates for owner-occupied homes is 4% per year and 10% for all other properties. The Singapore Budget 2010, the government decided to move from a Flat Property Tax rate to a system of Progressive Property Tax based on AV of properties, stating this system of tax incidents are more beneficial for low income families. Leading to collection of more taxes from top income brackets, systems of property tax rebates aimed at supporting the lower and middle-income groups by significantly reducing the tax payable by HDB flat owners.

Results of cutting mortgage loans 

By reducing the percentage of loan granted to individuals who have more than one outstanding mortgage to 60%, of the loan-to-value limit of the home. How this works in easing the market is as such, if investor Mr. A has 1 million dollars, prior to this he could get a loan of 80% from the bank. If a home cost 1 million dollars and minimum down payment is $200, 000: 

          Mr. A could then purchase 5 homes with a down payment of 20% relating to $200, 000 and get a bank loan of the remained 80%.With the new system, Mr. A can only purchase 2 homes now, as he can only loan 60% of the value of the home and now he must pay a down payment of 40% of the home. 

The purpose is to make sure in the long-term making homes are affordable. The government’s objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. 

This implementation to cool the market has shown some benefits, an article by Rashiwala (2011), ‘Latest property measures more effective: NUS Study’, the Singapore Residential Price Index (SRPI) has increased only about 0.19% per month since the January 2011 measures were introduced as compared to about 1.23% in February 2010.

Additional Measures Adopted

With press releases from the Housing development Board (HDB), Mr. Mah stated that supplies of flats in 2011 would increase; there will be a revised Income Ceiling for Purchase of 3-room flats and Special CPF Housing Grants (SHG) to bring home ownership within reach of more low-income families.

Effectiveness of measures  

The effectiveness of these measures needs to be weight out and can only be seen in the years to come as housing can be catergorised as Inelastic Supply as a big change in price only results in a minor change in the quantity supplied, the supply curve is steeper and its elasticity would be less than one. 

Effectiveness of these measures can be further advanced by the government realising that private housing and public housing should not be intertwined, as property developers are not concerned for poor Singaporean who can't afford HDB flats due to trade, who welcomes foreigners, PR to buy public housing thus raising the price of HDBs. 

Additional measures can include changing the public housing ruling such that PR's are not allowed to buy HDB flats as more than often these people do not use this flats but instead rent it out to make their investment fruitful and when the time is right will cash out their properties.  

Funny enough with all the talk with the rising housing prices, the government ensured that this issue of housing prices was a key mandate of their polices right before the 2011 General Elections. They were looking into it and trying to make housing 'affordable' again for all Singaporeans. So after the elections were over and the ruling party won again, they did some major reshuffling. At that time, Mr Mah stepped down and retired from politics as the minister for National Development. The government tried to freshen up their image to showcase that they were keeping up with times in giving the citizens what they wanted. But not long after the elections when the hype died down, it seemed everything became stagnant again. 

Months later with a new minister at the helm, Mr. Khaw, people were looking forward to see what was the new steps the HDB was going to take in easing the volatile and increasing house prices. From Channel News Asia, 'Unit prices for DBSS project in Tampines hit record high', in June 2011, the HDB announced its latest project Design, Build and Sell Scheme (DBSS) in Tampines priced at a whopping $880, 000 Singapore dollars for a HDB flat. This new project sparked a pandemonium among locals. There was a serious amount of unhappiness among the society and everyone questioned the HDB was pricing public housing at such a exorbitant price. After the uproar from the public, the price of the 5 room flat fell from $880, 000 to around $780,000, approximately $102, 000. Which sparked even more questionings, if it could reduce the price by so many in such a short time, why didn't they just market it at that price.

With all the unnecessary attention garnered by the DBSS in Tampines, the HDB decided to scrape a similar DBSS project in Sengkang, from Asiaone 'HDB withdraws Sengkang DBSS site'

So what lies in the future for Singapore's housing issues is still unsure, whether if the government sticks to their promises of trying to find a solution for affordable homes for its people or not.Or if another shocker comes again like that of the DBSS scheme, its something we do not know. As of now, it seems that the new minister is trying to come up with ways to ease the market and prevent the 'Rich' from exploiting the market and making it harder for middle and low income families to have the chance of owning homes.

In conclusion, much has been done in improving the rising cost of home ownership but in order for policies to continue to work well, the government has to remain open and readily alter polices to suit current times. As I see housing as an issue, which evolves over time, with the influx of many foreigners, income gap increasing within Singapore’s rich and poor, such policies may only remain valid over one or two business cycles. Which needs to be rethought with the chances in the economy, if inflation or recession is to hit our shores or any other issues, which can stir up this volatile market.

My take on Greece's Debt Crisis

Well how fitting that in my first post, I would like to discuss and give my views on the Greek debt crisis. It has been almost 3 years now. With still no concrete solutions, but with the latest measures, I surely hope it eases the issue and allows the EU to get back on track and start concentrating more on Italy, Spain Portugal and Ireland.

So here it is, firstly based on "The Bitter Pills in the Plan to Rescue Greece" by Dan Bilefsky and Landon Thomas Jr., Dated 30th April 2010 from The New York Times

Bringing the Article to Light

The shocking news of Greece’s degrading economy only came into light in 2009 when, she sought economic financial aid from the European Union (EU) to avoid a debt default and agreed to austerity measures totalling 24 billion euros, known as a bailout. An agreed 130 billion euros aid is to be given over three years with reasonable interest rates, in return to cut public sector spending by 8 billion euros.

Measures taken by the government included increasing taxes on fuel, tobacco and alcohol. Laying off public sector workers, whose low levels of productivity and high wages are big contributors to Greece’s debt problem. Allowing crucial sectors like health care and energy and to go into private investment.

Central bank data showed that business and household deposits at Greek banks fell, bringing total losses in the first quarter of 2010 to 10.6 billion euros. Moody’s Investors Service downgraded its credit ratings on nine Greek banks.

To sum up, speculation that austerity measures would include new taxes on savings had caused some wealthy Greeks to move their funds to foreign banks. Though Greek government had pledged to guarantee deposits at banks. But some business people said that the credit squeeze was growing worse and some foreign banks were refusing to accept credit guarantees from Greek banks, citing the economic instability

How did Greece’s Recession begin?

An article by Nagle (2010), “Bailout Talks Raise Tension between Greece and Germany”, states Greece’s mounting imbalance and growing debt over the period 2000-2007 would make you wonder how it was possible for such a wide gap between the country’s income and expenditure to be maintained throughout this period without some sort of stabilising mechanism setting in to restore equilibrium. Had Greece not acceded to the euro zone, high external imbalances would sooner or later have triggered a devaluation of its currency that would, curtail the demand for imports while helping to boost exports. Greece’s participation in the euro zone entailed an exchange rate virtually independent of the country’s external position.

Implementations in place

Austerity measures make up policies of deficit, cutting, lower spending and reduction in the amount of benefits and public services provided. An article by Wesbury and Stein, titled ‘Government Austerity: The Good, Bad And Ugly’ and, Traynor and Allen titled, ‘Austerity Europe: who faces the cuts’ stated, Austerity policies are often used by governments to reduce their deficit spending while sometimes coupled with increases in taxes to pay back creditors to reduce debts.

Greek citizens have to work harder, for longer hours with less pay and the state also has to sell off some investments. It would mean cheaper (below market rates) funding for Greece. The cost is borne by the taxpayer, as the lenders will not be charging Greece sufficient interest to compensate for the risk of default.

Public sector pensions are to be slashed. Tax increases and moves to combat tax evasion. The labour market is to be liberalised, private sector workers will be able to be fired and restrictions on part time work are to be lifted.

Below discussed are the approaches and policies, which I feel, could have a positive impact in improving Greece’s economic woes.

Fiscal policies by government

Looking at the current situation faced by Greece, Discretionary Fiscal Government Polices should to be implemented. By introducing fiscal stimulus package equivalent to, an increase in government spending.

The Keynesian framework states that effects of fiscal expansion on demand, increase in government spending would have positive effect of the economy’s GDP having a multiplier effect (Case et al, 2012).

Below shown is how, Government Spending Multiplier would work in a fiscal policy:

To illustrate let us assume MPC = 0.75

Government Spending Multiplier = 1/*MPS

= 1/(1-^MPC)

=1/(1-0.75)

=4 (is the size of the multiplier)

Hence, if government spending is 30 billion euros,

Multiplier Effect = 30 billion X 4 = 120 billion

*Marginal Propensity to Save (MPS)

^Marginal Propensity to Consume (MPC)

So in this scenario, the government spending multiplier ratio of change in the equilibrium level of output to a change in government spending is 4.This is further exemplified in the graph below,

In addition, for government to spend and multiply more and to pay off debts incurred, taxes have been raised across the country. Thus this makes government spending fiscal policies one of the most feasible approaches to take. Another reason why this would be better is because government spending has a bigger multiplier because as households may not spend all the money given to them and thus leading to a smaller multiplier effect.

Reversing scares of Depositing in banks

The role of banks in money creation could be a key tool in aiding to alleviating the current debt crisis in the long run, but in order for that to happen firms and households need to deposit money into banks again.

The most basic way to do this is to increase the interest rates offered in turn resulting in decrease of money demanded, which can be see in Graph 2.

Once this is done, new money or loans can be created by reducing the, Required Reserve Ratio (RRR), the percentage of its total deposits that a bank must keep as reserves and reducing the currency drain ratio which refers to the proportion of money households want to hold as currency, both of which leads to the creation of new money (Case et al, 2012). With excess money readily available for both loans and investments, his will create a money creation cycle that goes on, increasing revenues for local banks. Which in turn can pay back to the central banks that can pay off more debts.

Another suggested approach would be to manipulate the currency in a flexible exchange rate system, but due to the fact that it is using euro as its currency, which is shared among many countries, it would not be possible.

Once again all this are just opinions and although it may look good in theory, it might not exactly bring about the changes it states to. But such measures are better than no measures at all.

Greece’s Future

With the above mention methods proposed to aid in the economy of Greece is based on theoretical outcomes, but in reality such a hefty debt incurred over they years by Greece due to imbalances in devaluation of its currency compared to the euro, entailed an exchange rate virtually independent of the country’s external position.

The very reason it led to this bailout and has hurt its economy from what it seems like there is to be no return. From a recent article by Fouquet (2011), “Greek Aid Package to Be Decided by End of June, Juncker Says, " Two years on and there has been little improvement and more aid and rethinking of measures need to be introduced, such as Funding Bills."

I feel that time is running out for Greece’s economy, with surmounting debts and more Europeans countries seeking aid and bailouts such as Ireland and Portugal to name a few, funds meant for Greece needs to be carved up to help other economics in need of aid but not in such a dire condition as the economy of Greece. All directions seems to point towards Greece declaring itself bankrupt in order to forfeit all debts and available from Moody’s website, it has lowered credit rating of Greece to Caa1 with the constant threat of going bankrupt.

But in a twist of events, I guess done so in order to help save the entire EU, and not allowing one of its own to be left behind and being devastated, seemingly something which came as much of a surprise to me was that, the EU decided to write off half of Greece's debts in a bid to help salvage the euro crisis. 

From BBC, in an article titled 'Greek Crisis: Papadreou Promises referendum on EU deal', analysts think a referendum could derail the wider deal on the euro debt crisis. This Greek rescue package is a key part of the agreement reached last week after marathon talks between euro zone leaders. This Greek plan has rattled the financial markets leading in a domino effect in stocks worldwide. On its announcement, the FTSE 100 in London opened 2.2% lower, the Dax in Frankfurt fell, the Cac-40 in Paris dropped. 

Mr Papandreou together with his governing Socialist party said that Greek people would have the final say on the package, which is designed to reduce Greek debt by about 100billion euros. No date has been for the referendum, but indicated that it would be held after details of the deal have been finalised with the EU and the country's creditors.

It seems as though there is no solution in sight in the near future, the Greek government has to be grateful for all the help the EU has been giving them. Something concrete has to come out among the Greek government. It would be sooner or later that the rest of EU might realise that the imminent debt of another of their members comes looming on them. Focusing too much on Greece might hinder them to rectify the rest of the problems going on financially in Europe.

Well that is all I have to say for now. How this matter plays out is of great importance to the entire world and especially the European Banks and economy. Hopefully, a positive outcome unfolds in the near future.