Recession looms for Singapore : economists

last SG · 2008-10-09T15:22:44+00:00

the ministers should lead by example..pay cut for ministers...and possibly retrenchment..

Poh Ah Pak SG

Time for a pay cut.

I think gold must fall from sky before our beloved PAP ministers will take pay cut.

SWAT_SG SG

By Juan Lagorio and Bill Rigby

NEW YORK (Reuters) - Prudential Financial Inc (PRU.N: Quote, Profile, Research, Stock Buzz) is the latest major insurer to warn its quarterly profits would miss forecasts, as the shares of rivals were pummeled on concern they would need to raise capital.

The second-largest U.S. life insurer said on Thursday that third-quarter profit would be cut sharply by losses on poorly performing annuity and investment products and a charge for a legal settlement.

That followed recent profit warnings at at U.S. life and property insurer Hartford Financial Services Group Inc (HIG.N: Quote, Profile, Research, Stock Buzz) and MetLife Inc (MET.N: Quote, Profile, Research, Stock Buzz), the largest life insurer in the United States.

The latter sold new shares at a discount on Wednesday to bolster its capital, raising $2 billion, while Hartford earlier this week received a $2.5 billion capital injection from Allianz SE (ALVG.DE: Quote, Profile, Research, Stock Buzz), Europe's biggest insurer.

"Insurers made big investments in mortgage-related securities and are also big holders of stocks and bonds in financial firms that have been wiped out or badly damaged by the credit crisis, such as Lehman Brothers and Washington Mutual, said Alan Rambaldini, a life insurance analyst at investment research firm Morningstar.

"On top of that, bigger life insurers like Prudential get fees on the size of stock investments behind annuity products they sell to customers, which will drop sharply as the broader market plummets," he said.

'TRADING ON FEAR'

Among other life insurers, Lincoln National Corp (LNC.N: Quote, Profile, Research, Stock Buzz), fell 35 percent to $18.31, Principal Financial Group Inc (PFG.N: Quote, Profile, Research, Stock Buzz) lost 27 percent to $15.79 a share and Unum Group (UNM.N: Quote, Profile, Research, Stock Buzz) fell 30 percent to $14.77.

Life insurance, as measured by the sectoral S&P Life & Health Insurance index , was down 17 percent, making it the second-worst performing sector after automakers.

Even beyond life, XL Capital Inc (XL.N: Quote, Profile, Research, Stock Buzz), a large Bermuda-based reinsurer, fell 54 percent to $4.01.

"The group (insurers) are trading on fear right now," said Bret Howlett, Standard & Poor's life insurance analyst. "A lot of investors are worried about capital positions in this unfavorable operating environment.

"People are worried about whether these companies are going to need to raise additional capital. In this environment, it's going to be difficult to raise that capital."

American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) shares fell 25 percent to $2.39, one day after the company said it would get more liquidity from the government.

AIG, once the world's largest insurer, got an $85 billion loan from the government three weeks ago when it was on the brink of collapse. Under the new plan, the Federal Reserve Bank of New York will take up to $37.8 billion in investment-grade, fixed-income securities from AIG in exchange for cash.

"The government has effectively provided them support for $110 billion. I think they have exhausted that avenue and so I think as they move forward their options have diminished," said Keith Wirtz, president and chief investment officer of Fifth Third Asset Management.

UNDER PRESSURE

Citing market volatility and extraordinary events affecting financial markets, Prudential has suspended all purchases of its own stock.

It said it has liquidity to meet requirements at the parent company and at all operating subsidiaries and, unless it enters into any strategic deals, its need to access the capital markets before the end of the year would be modest.

"We are comfortable with our risk profile and believe that we are in a strong position to manage through the current environment," said Prudential Chief Executive John Strangfeld, in a statement.

Prudential did not say when it would report third-quarter earnings.

Insurers have been under pressure to keep solid capital positions to maintain their ratings after their investments lost value as financial markets sank in recent weeks.

Keeping high ratings is essential for insurers because lower ratings can mean higher costs and, in some cases, even a loss of business.

(Editing by Toni Reinhold and Andre Grenon)

________________________________________________________________________

likedatosocan SG

I like to tompang this thread and digress a lil to ask

Who shall bailout the SWF?

"brace yourselves"

Mummified SG

Nonsense.

They need a pay hike to bring the country out of a recession.

LOL

Mummified SG

Time to bay for blood. Ministerial salary has always been pegged to the economy's performance. Time for a pay cut.

When our economy does recover in future, it is thru no great effort of the PAP since we are so dependent on the US.

Blood!!

thats not true i found this clip search for " one nation under L** " in youtude

Arapahoe SG

I think this recession will hit singapore hard as govt was the # 1 organization in SG to spearhead high wages to crowd out talent pool to private enterprises. Inviting expensive executives to relocate to SG

encourage high value property market. and result in distoring property market in sg. This global downturn would trigger another round of shake up by MNC to relocate to cheaper countries.

The theme of increasing population isn't new. It started back in PM Goh. This is a lazy way for govt to spur domestics demand. Perharps SG govt is thinking about it by increasing transit residents.

But i am amaze that after all these years SG govt had not comprehend how to built up domestics solution for the domestics economy. Domestics economy isn't just about having a population. It is about having Singaporean own businesses that provide local economies and perharps extend itself to the various regions. These are the key driver to keep singaporean employed when recession or MNC decided to quit SG.

charlize SG

I also think the recession in singapore this time round will be very bad, much worse than previous ones.

As it is, the only solution the people at the top can think of to help the economy grow is to import more and more people in to inflate demand for goods and services. This is how they "create" jobs. Notice a huge chunk of jobs created are in the services industry to cater to this increase in demand for goods and services.

Come recession time, you will see the drawbacks of this policy.

dumbdumb! SG

Nonsense.

They need a pay hike to bring the country out of a recession.

lol i dunno why everyone can laugh. i'm feeling nervous lor.

charlize SG

lol i dunno why everyone can laugh. i'm feeling nervous lor.

You should be.

An increase of x number of imported demand (workers) resulted in a booming economy for the past few years.

Now imagine the decrease in that same x number of demand ( I am assuming what the people at the top says is true, that foreign workers will bear the brunt of retrenchments during a downturn), and the impact on the economy.

Plus the fact that this is not a typical economic down cycle with the credit crisis and all.

It's a double whammy. Or maybe 3 times worse.

AndrewPKYap SG

Time to bay for blood. Ministerial salary has always been pegged to the economy's performance. Time for a pay cut.

When our economy does recover in future, it is thru no great effort of the PAP since we are so dependent on the US.

Blood!!

What pay cut only? Since they tied it to the economic performance, positive econoimic performance, get paid (the higher the economic growth, the higher the pay); negative economic performance, they, instead of getting paid, come out money from their own pockets and return the money to the people.

"to build a democratic society. based on justice and equality ..."

If they think that is unfair, let them resign, good riddance...

GHoST_18 SG

You should be.

An increase of x number of imported demand (workers) resulted in a booming economy for the past few years.

Plus the fact that this is not a typical economic down cycle with the credit crisis and all.

It's a double whammy. Or maybe 3 times worse.

so do u think the govt will still go ahead with the workers' dorm in serangoon gardens?

googoomuck SG

Oh fuck !

SINGAPORE: Singapore has become the first Asian economy to fall into recession, analysts said yesterday, after the government revised downward its full-year growth estimate and eased monetary policy for the first time in years.

The Ministry of Trade and Industry lowered the city-state's full-year growth forecast to around three per cent, citing a slowdown in the global economy and key domestic sectors.

The move came as the ministry released preliminary data showing that real gross domestic product (GDP) declined by 6.3 per cent in the third quarter after contracting 5.7 per cent in the previous quarter, the ministry said.

While it did not describe the economy as being in recession, a technical recession is generally defined as two consecutive quarters of contraction in economic output.

likedatosocan SG

I also think the recession in singapore this time round will be very bad, much worse than previous ones.

Come recession time, you will see the drawbacks of this policy.

I also feel that no one really knows how bad this recession is and will be unless there is Full Transparency of all relevant information. This is a no brainer.

The world seems to only know after-the-fact. I often see well known economists commenting after-the-fact and they really sound so bombastic. I wonder why they did not alert the world earlier and prevent the problem ? Thus, usually i see is bombastic comments after-the-fact.

But then I am just a layman, brudder, uneducated in these sort of bombastic thingies.

likedatosocan SG

Damn, recession means less jobs available.

But population will keep increasing.

So how?

was it that our beloved Lim SS advised on Front Page news of the MSM advising the people to Upgrade their Skills? I wonder why? Anyone knows? What does that mean? I thought we have already been upgrading skills for so long right?

Brace ourselves!

dumbdumb! SG

...because we expected it from a really long time ago...

hmm. expected.. don't mean no worries mah. haha everyone still joking etc.. i really am worried.

Atobe SG

With the Foreign Reserves managed by the GIC and Temasek, and invested in the many questionable high risks ventures as publicly seen since 2006, can there be any left to help Singaporeans ?

Even prior to all these investments made since 2006, the Government had been reluctant to open the Reserves to help Singaporeans during the recession of 2002, 1997 currency crisis, and 1987 economic downturn.

This current recession has been brought about by this Government since 2007, as much as its appearance had been accelerated by the events unfolding in New York's Wall Street.

With GST of 7 per cent implemented on 1 July 2007, the economy had turned more sluggish when it was already trending downwards since 2006.

With the cost of living worsening as shown in the published consumer price index, it was already causing a tightening of domestic consumption, as well as causing business costs to go up - even when wage increases were kept under control by a Government controlled Wage Council.

To make matters worst, despite a healthy Balance Sheet and Profit Performance for the preceding year - with healthy reserves - the Government Linked Companies had to feed their greed by demanding increases in all the various rates charged for the consumption of essential services and utilities that are all controlled by these GLCs.

Singaporeans should ask ourselves whether we can believe our Ministers are the Top Talent that the PAP has claimed to be deserving of the Million Dollar paid for their supposed talent - when they are mis-managing our political system, as much as they are mis-managing our economy.

It is easy to operate and manage a political system that mirror the image of the Stalinist-Communist Political System with the aid of Internal Security Agents; while claiming to be operating in an Open Market Economy.

The Singapore "Open Market Economy" is heavily dependent on the heavy hand of the government - with legislations to prevent local private investors from competing with the Government Linked Companies, or to legislate laws allowing these pseudo-Private Companies to charged the rates necessary to make the returns to the capital provided by the Government.

Under such circumstances, it is not surprising that Singapore take the pole position in experiencing recession before even Japan make any declaration to such a state.

likedatosocan SG

hmm. expected.. don't mean no worries mah. haha everyone still joking etc.. i really am worried.

u definitely should worry more than ever before. But caution. Worrying weakens you as it saps away your energy and life. You grow older faster. Your libido lowers. your taste buds dont function as well as before due to stress. You eat less and sleep less if not lower quality.

Meanwhile, influx continues at a pace never seen before, like 10 years before.

Why not? Remind you, ah gong said "No one owes you a living" , you break your rice bowl, that are you's parsah.

Employers look at bottomline and that means they always choose the cheaper labour.

But dont worry too many much. I keep myself optimistic by dreaming of more good years.

reyes SG

i can find similarities between Wall street financial crisis and PAP politics .

Personal profits and social risk

meaning, in good times, they get pay rise, in bad times, ppl like us take pay cut to drive up the economy .

heil hitler!!

likedatosocan SG

When economy bombastic, who may take credit?

When economy not bombastic, who may not want the debit?

yibah yibah untooneh!

Believe lah .

charlize SG

so do u think the govt will still go ahead with the workers' dorm in serangoon gardens?

When the economy turns really bad, they might try to score brownie points by telling people that hey, they won't need the dorms anymore as there aren't enough jobs for these workers.

Then they will tell you, see how much the government listens and cares for the people.

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