A stark contrast of outlook

At this point in time, senior management of established companies like Boustead, Lee Metal, Hoe Leong are being cautious in the outlook for the next 2 years. In stark contrast, people are very optimistic about their future. Their optimism has spilled over to the housing and car market. So much so that the HDB flat cash over valuation has even hit $50,000. This $50,000 is the cash forked out by buyers, which does not include agent fees, lawyer fees. Car COE (certificate of Entitlement) has reached $57,000. This piece of paper to buy a car has probably exceeded the cost of manufacturing the car.

Only one party is right. I choose to stick with the senior management of established companies because of their experience and knowledge of their business. Every decade has excesses which will eventually be cleaned up. This decade is no exception.

Will the buyers of HDB flats, condominiums and cars suffer buyer’s remorse in later years? Time will tell us.

An example of deleveraging

I would like to use my neighbor example to illustrate an example of deleveraging.

My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle. A year later, even the house was sold.

This is an example of deleveraging.

I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.

A suggestion to help our people

My sixth sense flashed an idea to help the people here. Every block of flat has about 100 families. Each block can elect 5 village chief or assistants or ( block chief) to assist needy families with unemployment issue, family conflicts, financial difficulties, marriage problems or addiction issues. If these volunteers are busy to help, the needy families can seek help from adjacent block chiefs.

Our flat void decks has plenty of spaces for us to build business centers to help small business to grow into future Google, Apple, Microsoft.

We have plenty of elderly and teenagers who can help to paint motivational slogans, beautiful paintings or anything that interest them on our void deck walls.

The collapse of Europe

What does the collapse of Euro means to the rest of the world?

A cascading effect that will flood the USA, Asia and the rest of the world with bad news, interest rate hike, company restructuring, retrenchment followed by a collapse of the car resale market, stock market, housing market and bond market. Usually, the stock market will react followed by real economy like car resale market, bond market and housing market. This is similar to a household deleveraging. What are the items to be sold first? First in line is stock, bonds, cars, boats and lastly houses.

I hope that the process will be quick and painless for many people though I doubt so. God bless us.