touchring
12th February 2008, 04:03 AM
This is a sudden change in policy, from encouraging spending to now encouraging thrift.
Don't over-stretch yourselves: MM Lee
Financial prudence in periods of boom will enable S'poreans to ride out bad times
By CHEN HUIFEN
MINISTER Mentor Lee Kuan Yew last night urged Singaporeans not to over-stretch themselves financially in a period of boom, so that in the event of bad times, they would be better able to ride out the cycle.
Mr Lee: 'The government will not allow anybody to die of starvation, but we are not going to cover you for your indiscretions'
Describing the effect of the property cycle, he warned that property prices go in cycles and will not keep going up all the time.
'They go up, then they go down,' he said. 'So when they go up, don't believe that it's going to go up further and further, and you start buying bigger and bigger, and mortgage for bigger and bigger amounts. Because the day it starts to fall, the cycle goes around, you will find yourself with a negative value asset.'
It is by such prudent attitude that the government has refrained from spending the hundreds of billions of dollars of reserves that it has built up over the decades. Pointing to the recent investments made by the Government of Singapore Investment Corp and Temasek Holdings, Mr Lee said the two agencies were able to increase the value of their assets because they hang on in a recession, and sell part of their assets and keep cash when the boom becomes too intoxicating. The strategy ensured that when international banks like UBS, Citigroup and Merrill Lynch needed cash, GIC and Temasek would have the cash to invest in them.
Mr Lee was speaking at the Tanjong Pagar GRC Chinese New Year dinner when he made those comments. The constituency dinner, held at Farrer Park Primary School, was attended by some 1,200 residents and guests.
'We must press ahead and maximise our chances to break through in the coming five to 10 years to reach a higher quality of development.'
- Minister Mentor Lee Kuan Yew
Don't over-stretch yourselves: MM Lee
Financial prudence in periods of boom will enable S'poreans to ride out bad times
By CHEN HUIFEN
MINISTER Mentor Lee Kuan Yew last night urged Singaporeans not to over-stretch themselves financially in a period of boom, so that in the event of bad times, they would be better able to ride out the cycle.
Mr Lee: 'The government will not allow anybody to die of starvation, but we are not going to cover you for your indiscretions'
Describing the effect of the property cycle, he warned that property prices go in cycles and will not keep going up all the time.
'They go up, then they go down,' he said. 'So when they go up, don't believe that it's going to go up further and further, and you start buying bigger and bigger, and mortgage for bigger and bigger amounts. Because the day it starts to fall, the cycle goes around, you will find yourself with a negative value asset.'
It is by such prudent attitude that the government has refrained from spending the hundreds of billions of dollars of reserves that it has built up over the decades. Pointing to the recent investments made by the Government of Singapore Investment Corp and Temasek Holdings, Mr Lee said the two agencies were able to increase the value of their assets because they hang on in a recession, and sell part of their assets and keep cash when the boom becomes too intoxicating. The strategy ensured that when international banks like UBS, Citigroup and Merrill Lynch needed cash, GIC and Temasek would have the cash to invest in them.
Mr Lee was speaking at the Tanjong Pagar GRC Chinese New Year dinner when he made those comments. The constituency dinner, held at Farrer Park Primary School, was attended by some 1,200 residents and guests.
'We must press ahead and maximise our chances to break through in the coming five to 10 years to reach a higher quality of development.'
- Minister Mentor Lee Kuan Yew