Title: My reply to a fellow brother's request for my opinion on global economy 2016-2019.
I m flattered u asked for my opinion. Dun wish to scare anyone but I think u r right....the world may be able to avert a currency crisis if and only if FED is able to adjust the rates carefully and in a correct manner.
The important point to keep in mind is, good bro, that oil is crashing and many economies can see it coming now. Previously, everyone's talking about oil crash but see nothing, but right now this moment in the market, everyone can SEE the crashing oil chart heading towards US$12 !
FED missed many chance to raise interest in previous rosy occasions but she chose to raise it at the most unsuitable time when everyone's slowing down. What will happen next in 2017-2018 is the possibility of a currency war leading to trade wars..only this time on a global scale.
This is what that is spooking investors right now..and why the equity markets are crashing right now.( Dun be too happy if u see a little bounce now and then, it will still continue to crash in the next sessions! )
For Singapore to go into recession is not impossible, but I think that our MAS and reserve are both resilient enough...so most likely a technical retreat at most, unless unemployment rates crept up to unacceptable level which I think is unlikely here.
Our government policy makers are fierce/resolute enough and I trust they can contain our domestic business cowboys impeding any massive capital outflows( I know some of them personally, so I can affirm the quality of their character & wisdom for u ) . That should put majority of us here in safe hands & our minds at peace.
However, we dun live alone..and because of this fact, we cannot control other nations' economic, monetary or forex policies. nations are made up of humans, so there is a very high possibility some of them might crack and become panic spiders...much like a demented fallen soldier shooting aimlessly with a machine gun.
They will do that because monkeys see monkeys do...they will follow FED's QE2Infinity example !
The difference this time is, these Quantitative Easing measures will set back the various economies many steps back due to the counter inflationary pressure that is going to be created on many common goods.(QE will inflate an economy, but at the same time if done wrongly, it could create a deflationary spiral when the capital outflow is too strong..the key is effective capital control which will inevitably resulted in draconian measures as most of these countries are usually not really free capitalist but socialist with a central control.)
u see, this is how we think the global scenario will turn out if a wrong move in interest rates is made by FED this year (2016, FED will have to make at least 4 interest rates maneuver this year). And why do we think FED's interest policy is so important: The reason is that oil is tied to US$ and US$ is in turn pegged to SOR or US interest rates.
We all know the final component here will be the FOREX or currency used for global trade. As such, the FOREX element will not only affect domestic economies like prices of capital, goods, labor and so on..but the trading partners of a country, agree ? This serious scenario could be compounded if UK successfully exit the European Union in order to protect her own trade or currency.
But I or rather, my comrades and I think that it will only take a single panic spider nation to start it's own massive QE and the rest shall follow like a domino effect, u know...this is the currency war everyone's talking about but have absolutely no idea that this is how it will happen..now they know..LOL.
If indeed that happens, trade wars will follow next like in every single previous grave enough recessions..during the 1930s-1940s Great Depression, Germany went through the same exact path with her neighbors: 1) Recession --> Capital Outflows---> High Unemployment --->Currency Wars--> Trade Wars and finally u know what happened next.
Good Luck and dun worry too much, if any problem can be solved with money or policies, it will not be a problem very soon.
(1) Just stay in Singapore Dollars since MAS already pegged a basket of currencies to it, so it is the most valuable or least risky currency in the world right now.
(2) Dun try to be a hero and unwittingly go and invest in any foreign properties of developing/second-tier countries (INCLUDING CHINA ) at this point in time ! Do it only after the storm has started or the durians have fallen from the trees
(3) Singapore has so many scholars that we paid millions for; so dun worry about it..anything happens, simply pick them up for a good scolding or take a cane and cane them at the Meet-the-People sessions can already..they will squeeze every single last drop of their brain juice to solve the crisis for us. We need not worry !
(4) Always prepared mentally for the stormy days and exercise due diligence in managing financial risk.
Your humble brother under the Grace of Our Father in Heavens,
Tay Sim Tian
a.k.a blackjack21trader
( TO BE CONTINUED )
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Originally Posted by Lord Anus
