It's Aku lah (CantoStories / General Interest Blog): Public debt: US$70k per Singaporean?

Public debt: US$70k per Singaporean?

Posted by theonlinecitizen on September 8, 201148 Comments

~by: Leong Sze Hian~

According to the Economist’s global debt clock (see HERE), Singapore’s public debt is US$214 billion, public debt per person is US$42,265, public debt as percentage of GDP is 102.8 per cent and the total annual debt change is 8.2 per cent.

Actually, the public debt per Singaporeans is higher at about US$70,000, because the Economist calculated its figure based on the total population of 5,068,219 which include about 40 per cent of non-Singaporeans.

Owe a 2-room HDB to every man, woman and child?

Using HDB as a yardstick, US$70,000 (S$84,604) per Singaporean of public debt is like owing a new 2-room HDB flat to each man, woman and child.

The United States, which has the largest public debt in the world, in contrast, has a public debt per person of US$28,775, which is less than half of Singapore’s. And Hong Kong and Malaysia’s public debt per person is only US$7,877 and US$4,136.

Why is our public debt per Singaporean about nine and 17 times more than Hong Kong and Malaysia, respectively?

How much reserves?

Since the total reserves of Singapore is not known, what is the total reserves less the public debt?

As the key reason for establishing the office of the Presidency was to guard the reserves, perhaps these questions may be answered in the future.

Central Provident Fund

As the bulk of our public debt is due to issuing non-marketable government bonds to the Central Provident Fund (CPF) Board, in exchange for CPF funds at the interest rates paid for the various CPF account types, Singapore may actually be in a very strong financial situation, as we hardly have any external debt.

However, the public debt may be problematic, if we decide to pay higher rates of interest on CPF funds, such as Malaysia’s Employee Provident Fund (EPF) which pays actual returns of the fund every year, or if we decide to allow CPF withdrawals at earlier ages, or lower CPF Minimum Sums withheld until age 65 and beyond.

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48 Responses to “Public debt: US$70k per Singaporean?”

popcorn8 September 2011
Mentally, guess we have to write off our CPF savings as zero, there may not be any to draw upon on reaching 55 years.
Stevenkhorfather8 September 2011
By the time we can actually & physically feel the “backlash”, these Million Dollar Paid “Paul Li c” Makers would have long gone ( either dead or established themselves as New Citizens elsewherelike jacobs ikbrahim family and so many others)
What can I say, we are all “Dafts” as boldly claimed by the same guy who “screwed” you !
Fat, Dumb & Happy8 September 2011
Won’t have such problem as gahmen is not paying actual returns of the fund but keeps the difference (if any), and will continue moving the twin goal posts of higher CPF withdrawal age and CPF Minimum Sums.
iVOTEahMENG8 September 2011
wei wei i am not payin the pubic death/debts.. the the world banks sued singapoor inc and bankrupt the nation…
afterall we hav nothin ere to pawn nor sales..nuclear power..sold to the koreans
dbs/posb banks..alredy whored to temasick inc…
pubic transport? give me free i also don’t 1…
since leekingyou/son/hoching already pockets(not corruptions hor) legally with the blessin of naathan the frickin timid tiger…
what else can i sell? me karchng perhaps..
Mike8 September 2011
I wonder what Leong Sze Hian is trying to achieve in this article.
If public debt were an issue for Singapore, the world would have punished by selling off Sing dollars, etc. We won’t have an appreciating Singdollar to help us fight inflation and we will lose our credit rating of AAA.
TOC should keep to a strong editorial standards and quality of articles, and not blindly follow TRE in the fight for online visitorship.
Titiana Ann xavier8 September 2011
The bulk of government debt is in the borrowing of the people’s savings in CPF. This probably explained why Singaporeans cannot take back all their money once they reach 55. All the schemes by the government to delay payment of CPF is probably due in large part to its huge debt to the people.
maluman8 September 2011
One wonders what the muppets at ST think about this?
But then again, unlike Chua Chin Hon(ST’s man in the US)..no one in Singapore ..dare ask the gahmen anything.
And in any case.. NO one at ST..is allowed to THINK.
maluman8 September 2011
One wonders what the muppets at ST think about this?
But then again, unlike Chua Chin Hon(ST’s man in the US)..no one in Singapore ..dare ask the gahmen anything.
And in any case.. no one at ST..is allowed to THINK.
Exclude those below 188 September 2011
Should exclude those below the age of 20. Since boys go to NS at 18, and girls start to work at 18/19….the population size of this group should be excluded in total. They also have no cpf. SOmeone should do a graduation of CPF over the years of individual accumulation and see what this public debt is all about?
Nexi8 September 2011
Singapore does not have any public debt! Instead we have a surplus!
The Economist merely counts how much Singapore owes, but does not count how much Singapore sets aside to pay the debt!
Please, go do your homework and find out the net public debt instead of showing us these inaccurate sums.
kenneth8 September 2011
I have said many times here, public debt, be it internal or external, as long as the GOV owe more than a Country can earn, in this case > 100% of GDP, somethings are very wrong.
iVOTEahMENG8 September 2011
Nexi8 September 2011
Singapore does not have any public debt! Instead we have a surplus!
The Economist merely counts how much Singapore owes, but does not count how much Singapore sets aside to pay the debt!
Please, go do your homework and find out the net public debt instead of showing us these inaccurate sums
…………….
and would YOU cared to share ow is the debts bein settle?
i am ALL ears…
don’t talk or sink karoki ere hor…
if so ez to settle would had reported in the 143th newsmedia prior to the generals erections…
recently accordin to finance minister annual reports it was stated temasek inc made a few billion$ profit$ and on the way up the GDPs scale…
are you sayings the finance minister LIED?
kenneth8 September 2011
@Nexi
Seems that you have done your homework or you merely look at one side of the coin or one side of accounts book and you think everything is OK? Do not be surprise when you see a flower on one side of our coin, the other side is a flat smooth surface. Please show us what homework you have done that President OTC took six years but did not complete. He was not able to have the current asset value GOV was holding which can easily means if the values of assets, inclusive or reserves is below our public debt. Singapore is already bankrupt. PAP being a proud GOV who release all kinds of nice figures seem to be very shy when asked about this very important figure about Singapore. Why do they need to hide? Do not tell me the shit about official csecret act when it come to Singaporean’s money. They cannot tell the different it is Singaporean’s money, not PAP’s money.
EconomistSiao8 September 2011
Net public debt will be a better gauge of Singapore’s fiscal health. Despite its large public debt, Singapore has large structural surpluses. A good article explaining Singapore’s anomaly is ‘What S’pore debt reveals’ by NUS Prof Mukul Asher (http://bschool.nus.edu.sg/LinkClick.aspx?fileticket=91h8yl55Smo%3D&tabid=1445&mid=5733)
kenneth8 September 2011
@Nexi
The Economist merely counts how much Singapore owes, but does not count how much Singapore sets aside to pay the debt!
——————–
I am very interested to tell me where were the money set aside from surplus to repay us. Do not give me answers like bonds or treasury funds like US Bonds or Treasury fund. I can tell you, as long as money is in somebody else pocket, there is not guarantee that they can pay us. I can tell you now that if Singapore had bought these “assets”, we are already losing due to USA printing money faster than we can earn, they infract it on purpose and the american had long ago used up or lost these money which is our hard earn money. where else do you think PAP GOV, GIC or TH will park our money? If you look at numbers, equity market not very well, bonds not too good, where else can our money be? YES, you want to guess, gold market! Is SIngapore GOV holding a lot of gold? But in whose account?
iVOTEahMENG8 September 2011
for the frickin BLIND eyes of NEXI the LIAR…
courtesy of backdoor parliament debates
…………
Summary: Government to spend up to 50% of Net Investment Returns
As I mentioned earlier, we will retain the 50% cap on the amount of returns that can be taken out for spending. This is in addition to setting aside the full inflation component of our returns in past reserves. In this way, the real returns on investments will be shared between the current Budget and past reserves. This allows the past reserves to grow in real terms, and thereby provide for a growing economy in the years to come.
To summarise, the Government will spend up to 50% of our Net Investment Returns (NIR). NIR is the sum of: (1) the long-term expected real rate of return on the reserves invested by GIC and MAS, and (2) the NII on the remaining assets, comprising primarily Temasek for which there will be no change.
This framework strikes the right balance between the needs of current and future generations of Singaporeans. It would allow us to take in more for spending, but not so much as to prevent our reserves from growing in line with the economy and providing for future generations.
Presidential safeguards
Let me finally return to the issue of governance procedures. The new framework will require an important change to the budgeting process each year, so as to operationalise the concept of long-term expected returns and ensure that the Presidential safeguards on our reserves are maintained.
The projection of the expected long-term real rates of return is not a mechanical process, but one that involves both professional expertise on the part of our investment agencies and sound judgment. We have therefore designed a systematic and robust process by which the Government determines the NIR each year for spending, and by which the Elected President can perform his role as custodian of our reserves. I will bring the House briefly through the sequence of events that will take place each year.
Before the start of each financial year, the Government will propose the expected long-term real rates of returns for GIC and MAS for the President’s agreement. In order to do so, the Government will ask the Boards of the GIC and MAS to provide and certify estimates of the long-term expected rates of return on the assets they manage. These Boards would evaluate the future outlook on their portfolios, taking all factors into consideration – including the overall investment environment, bottom-up assessments for each asset class and peer comparisons of expected returns. They would take into account historical rates of return, which provide a useful check for what is realistic going forward. Although the measure of expected returns is fundamentally forward-looking, the projections cannot completely ignore historical performance.
………………………
not i says hor..shadmudgum the finance ministers say 1 hor…
so naaathan where were you all this time jargain the reserves? eatin the thosais or visitin joochiat vietcong’s streetwalkers?
and since tonytan assumed the palace’s throne..its time to WORK…
Ask Question8 September 2011
@Mike
There is nothing wrong to ask question if if they are supposedly stupid questions. The problem only arises when you do not even get a simple answer for a apparently stupid question.
So the question remain – what is Singapore actual reserves less the public debt. Who is managing the investment of cpf money via SGS bonds? There is NO clarity!
kenneth8 September 2011
@EconomistSiao
Net public debt will be a better gauge of Singapore’s fiscal health. Despite its large public debt, Singapore has large structural surpluses. A good article explaining Singapore’s anomaly is ‘What S’pore debt reveals’ by NUS Prof Mukul Asher (Professor at LKY public policy, NUS???……..)
————
Without he numbers President OTC wanted, I just wonder understand what basis he thinks that the GOV can pay. Yes, the mentioned “structural surpluses”, surpluses generated by over taxing SIngaporean, wow wow PAP GOV is over taxing us to keep us afloat. Set aside money where? To pay SGS (Singapore Government Securities), AAA rated, they did set aside money to pay so as to remain AAA, but SSGS (Special Singapore Government securities) where CPF money parked, GOV had never repay any amount in principal amount loaned, just pay interest every year, I doubt they have set aside to pay, else CPF minimum sum will not increase as well as withdrawal age increased to avoid SIngaporean from withdrawing from CPF.
@Mike8 September 2011
This reference on soverign debt had appeared in the August 15, 2011 issue of Fortune Magazine, indicating an amount of US$254 billion for Singapore, which is 95% of the country’s GDP. This puts Singapore at 8th position as one of the world’s most indebted nations.
Following the publication, the Ministry of Finance had clarified that Singapore’s financial reserves are well in excess of its debt and that it is a net creditor country.
http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={903818759-9994-3676263689}
Besides creating more awareness of Singapore’s high debt to GDP ratio, I believe the message of the author is found in his last ending paragraph.
Even though Singapore’s reserves can more than cover all the debt, the government is likely to be restricted by the huge size of the debt (which consists mainly government bonds and our CPF) and unable to return us our CPF money with more favourable terms – unless GIC can invest the money to generate super returns successfully. This may also contribute to explaining why the return on CPF ordinary account has not moved in tandem with inflation rate, and we have to pay ourselves the withdrawn CPF amount plus the accrued interest upon a sale of our property.
zzz8 September 2011
Singapore’s debt will be significantly lowered by 2/3 if they stop borrowing from CPF, and return all the cash to CPF.
Solutions
1. Return all money, let CPF deal with their own investing (anything EXCEPT govt bonds)
2. Let the money sit in CPF uninvested, and the government raise money to contribute interests.
3. Abolish CPF, return all money to the people
4. Prevent population from growing, thus less contribution to CPF.
5. Set a percentage limit on how much CPF can be used to buy gov bonds.
Nameless8 September 2011
The Singapore government issues bonds so that the local bond market exists, i.e. to increase the depth of the bond markets. Using these government bonds as a benchmark, it is hoped that the corporate bond space will developed so that companies have an alternative source of funds besides bank loans and issue shares. This is pretty well known in the financial world. For the record, I am not a PAP supporter, but let’s be fair. Fiscally, we are probably in good shape as a nation.
The real problem we have is income inequality. The rich and the older generation are beneficiaries of the Singapore system. The younger folks are struggling because of high housing prices. In effect, there is a transference of wealth from the young to the old, from the poor and middle-income to the rich. This is a consequence of a pure capitalist market system. Something needs to change policy-wise to lessen the burden on the younger generation and improve their sense of happiness, which will in turn result in more babies, which will solve our population problem, which will result in less need for immigrants. There has to be more support for young people, more career and entrepreneurial opportunities stemming from government driven initiatives.
Look at the US, they are a highly developed country will a high GDP but their birth rate per couple is more than 2. The reason is because government policies are more “populist” and citizens are better taken care of. We may not be able to follow their model fully, but some middle ground should be achieved.
Sing Bond Market Is necessary9 September 2011
The Asia Crisis pointed towards a need to have a domestic Sing bond market to balance against equities and properties.
The S’pore govt has done well in building up the Sing govt bond mkt, even though there is no actual real borrowing need.
Sing bond mkt has helped developed our capital mkts.
The only adverse implication will be the $250bln raised has to be managed well.
These monies are likely to be managed by GIC & Temasek. This is like a leveraged giant hedge fund.
Therefore the skills of fund management there is crucial.
The key problem is that it is difficult when politicians and managers work in an opaque environment, they can improve their skill levels to top global standards.
Accountability, competition and transparency in an environment of admitting mistakes with minimal ego are quite necessary for improving performance.
fpc9 September 2011
This is a joke.
Your article suggests that the govt WILL NOT increase the interest rate of CPF funds.
Reason: that will escalate the amount of this public debt.
This is a joke
Ah Gong9 September 2011
@Sing Bond Market Is necessary
Are you saying when GIC lost up to $60Billion in 2008 is “skills of fund management there is crucial”?
Sing Bond Market is necessary9 September 2011
can they improve their sills to top global standards?
good skills needed9 September 2011
not sure gic & th people have the necessary skills in that kind of environment.
sing fx reserves probably very high….th$200bln public info, mas$300bln public info, gic $500bln? don’t know ask the old man, bigger gun bigger sum? or new president tt?
Bernard CHAN9 September 2011
Leong is an extremely good writer and he speaks well also…..straight to the poins and speak without slangs.
I hope when I’m Singapore for my dad’s 90th birthday next March 2012, I can meet up with him.
zzz9 September 2011
http://www.ifaq.gov.sg/mof/apps/fcd_faqmain.aspx?qst=2fN7e274RAp%2bbUzLdEL%2fmCxs7iwcgv8gv2atNDOvsLCoQoU64dOP35IEnfd9iE4kL2UilxIJ%2b%2bVQbp%2bLUq1nUmRsFKjKnwj7Z2X9eSNl6rfClotTltOiE4C8Y7Gy0KRERxY9y1j5Dai3srs0hHY6XMnLrpGOfmrFXiSppPEHGfH0Hjdfvd8sXmrtM2VuuPeRYI3KAvGQd5GEl%2fWC0w4ciumH2cbfRlszVDmShVQKKdKdxuZS9yBNUWd98vS4KWZuMsArfGqRoz87jobZK6jYsGEiYDdg8rgooZ4wFb5aCFiAPjPTAet8HH4jWHMe1ytJHI3aZ%2b8taVM%3d
Label me whatever you wish. But please spend some time to read the FAQ before consuming statements like “total reserves of Singapore is not known” at face value. Even if you think there’s nothing but lies from our rapist government, discern the minimal info that maybe helpful.
californian9 September 2011
Er, comparing those numbers with the US is not accurate. For the US, there is also Social Security, Medicare, etc, that are not counted as public debt, but are obligations for future generations to come. And for the US, it has been operating on a deficit for years.
hello9 September 2011
I would presume this debt takes deposits in CPF are liabilities as well. But they forget to consider the assets which to back up the debt. Likewise, the above is aso, a bank which take in deposits will have huge liabilities on its balance sheet thanks to its deposits but it does not mean the bank is insolvent or heavily indebted. Not a good comparison for debt when, as californian said, medicare and social security costs way way more generational imbalance, aka, it would take more than 4/5 generations of deficit cutting (which assumes the later generations would not enjoy the same perks as today’s generation) to eliminate this debt.
ngpy9 September 2011
I am simple and only simple arithmetic I understand.
PAP force save CPF funds are contributed by CPF members. Does not come from the State or PAP’s pocket.
They are with holding onto every member’s CPF money for at least 30 years before they commence paying. Assuming force saving starts at age 25 and withdrawal at age 55, PAP controlled CPF has got no burden at all. Because the money accrued with member’s money generated in investments and interests and returning to them. So What Problem In Paying Back To Members In Full.
Why are they not able to release monies with held by CPF for member’s own medical uses in full and refuse to pay in full to members upon maturity at 55 year of age, ONLY till death do they pay to next of kin the medisave money, Why?
Intelligent singaporean9 September 2011
What the article calls public debt is largely the cpf savings of singaporeans. The mas issues bonds to the cpf board, resulting in the creation of this “debt”.
However, you can see from Mas’ balance sheet that mas has more than 280b in foreign financial assets. So there is no net debt. This is even before the reserves managed by Gic
http://www.mas.gov.sg/about_us/annual_reports/annual20102011/fs05.html
anthony9 September 2011
CPF is actually a kind of tax in Singapore. It is a tax for Singaporeans. To make everyone stay and work hoping one day u may get ur money back. U WILL NEVER GET TO SEE UR CPF MONEIES!!!
If u add CPF and other taxes together,we actually has the same taxes as America. So f u all Singaporeans.Because all u been con without knowing it.hahahahaha
yeoman9 September 2011
not only our ‘public’ debts are rising;individual’s ‘private’ debts are rising too,i believe?
‘squandering’ our national reserves away in bad investments in recet years must have contributed to these debts.
many among our body POLITIK thinks that ‘national reserves’ are consitituents of past savings,of taxpayers’ monies that have not been disbursed.
the hard truth is that our national reserves must be looked at in the context of the gsinful employment of the CORE CITIZENRY,no less.
afterall,national reserves are the aggregate of the blood,sweat and tears of all true blue singaporeans,past and present ,is it not?
many good singaporeans have been rendered redundant and because fo this,countless have been also MADE INDEBTED; this is no good both socially and economically as it will give rise to personal financial indebtedness(praivet debts)that will ultimately spur an increase in our PUBLIC DEBT,like it or not.
LOOK AT THE USA,its huge UNEMPLOYMENT of its core citizenry has already caused its publuc debt burden to balloon like never before,the same for many countries in EUROPE.
the worls’d leaders need to come together in a ROUND TABLE to discus how to resolve this world’s persistent unemployment problems of so many countries.
in Singapore,our govt too has allowed countless FTs to rob jobs singaporeans were once doing,mostly not for better producitivity reasons but for some other reasons.
is is time toreturn decent ans gainful jobs back to singaporeans to avert more private indebtedness that will add wmore weight to our already high public debt.
cesspool9 September 2011
Govt can only borrow when someone is willing to lend. I, for one, is not willing to lend them my CPF. So if someone is not willing to lend, how did the government manage to get the money? Lenders are supposed to dictate terms (like amount, tenor, interest rate, collateral). But in this case, how come we as lenders have no say at all? Instead the borrower (govt) dictate all the terms? Is this not plundering?
As for repayment ability, on surface, value of reserves & worth of Temasek/GIC investments should easily allows govt to repay what they owe us, unless of course, the assets held by these 2 are not what they seem. Will the president ever probe & declare the true worth of these assets?
Mislead the PUblic9 September 2011
A lousy article written by a lay man to discredit the government.
The author has zero financial knowledge and TOC is discredited by a badly written article.
TOC if you want credibility , you should eradicate such lousy editor.
New Citizen9 September 2011
WP,
Please find out for us what is happening to our CPF.
Those who steal or lose our CPF, you will die ugly one day.
Questioning Singaporean9 September 2011
@Intelligent singaporean
If MAS is holding the CPF money and investing them in financial assets, what are all these financial assets? I hope they are not US 10-year treasuries or European Bonds from the PIIGS!!!
Steven Kho9 September 2011
The Economist is not a reliable source of information. It adopts liberal views politically, socially, & economically, advocating handouts. The standard of its journalism & analysis is very poor.
Singapore’s debt is all owed to Singaporeans, not foreigners, so we will never have a crisis. We all have a stake in the future of our country, so we will not and should not call on our government to pay us back the CPF immediately. Even if we don’t get back our CPF, our beneficiaries will get it. So, it’s wrong to say Singapore is in debt when it merely reflects CPF savings of Singaporeans. And we all support the government to continue investing our CPF so as to generate better returns.
Texi9 September 2011
//Nexi 11 hrs, 3 mins ago
The Economist merely counts how much Singapore owes, but does not count how much Singapore sets aside to pay the debt!
Please, go do your homework and find out the net public debt instead of showing us these inaccurate sums.//
Bingo. That is what most people are scratching their head. Now, valuation please on the asset side. You may want to tell us if you think you have the information after your homework.
Robert Kho9 September 2011
“Singapore’s debt is all owed to Singaporeans, not foreigners, so we will never have a crisis. We all have a stake in the future of our country, so we will not and should not call on our government to pay us back the CPF immediately. Even if we don’t get back our CPF, our beneficiaries will get it.”
The mix is different. Now we have a lot of outsiders short-cut into our country to become citizens to share our future stake.
Still I prefer to hold on to my share before I pass on and let my beneficiaries earn their own keep – knowing the possibility that my beneficiaries my encounter some change of rules again.
Hello9 September 2011
Steven Kho, did you even read the Economist often at all? I, for one, read it often and they don’t promote handouts like social security and medicare in the US….don’t know what you talking about. Also, I agree this article is misleading as it reflects the countries’ debt without spilting which is foreign debt or which is, as I mentioned, (forced) deposits made by citizens (which could be easily repaid by printing more money, hence causing inflation). However, without transparency in the asset side of the balance sheet for all this debt, we will never never really know how safe our money or CPF is, without the effect of printing more money to repay our CPF.
eaglefly9 September 2011
This allows the past reserves to grow in real terms, and thereby provide for a growing economy in the years to come.
HOW DID TH AND GIC GROW IN REAL TERM WHEN ALL THEY DO IS, “OUR RESERVES HAS 20% GROWTH FOR THE PAST 20 YEARS”
IS THIS WHAT YOU CALLED REAL GROWTH ?
SINCE MOF ISSUES BONDS AND TH ALSO IN SAME CRAP, TO BORROW YOUR MONEY AND TH, TO GET MONEY, IN OTHER WORDS, ALL ARE IN ERROR, MONEY BORROWED HAS NEXT TO ZERO RETURNS WHEN THESE INCESTMENTS FAILED WITH ABOVE STATEMENT, “WE MADE MONEY LAST 20 YEARS IN 8% OR 20% RETURNS
SHOULD WE TRY 50 YEAR BONDS ?
ARE WE HAVING LEHMAN’S STYLE ACCOUNTING ?
ARE WE HAVING TALENTS TO COOK THE BOOKS IN WHATEVER WAY DEEM FIT, VIA INT OF POLICY STUDIES, MOF, S%P, MOODY , TO MAKE ALL NUMBERS CORRECT AND FITTING ???
HOORAY, ALL OF YOU ARE RIGHT, WE HAVE SURPLUS IN THE TRILLIONS, REASON WHY OUR MINISTERS ARE PAYING THEMSELVES
“ALL THE WORLD MINISTERS AND PRESIDENTS, WAGES”
GERARD EE WILL APPROVE,
DON’T WORRY, BE HAPPY, WE’RE IN SURPLUS !
Dead Broke9 September 2011
Since the bulk of the public debt is in CPF savings the quick fix for the government to reduce public debt would be to increase the prices of public & private housing exorbitantly. With almost all Singaporeans buying properties using a chunk from their CPF savings it is a no brainer. Over a 30 years mortgage loan you now owe the government plus interests instead of the government owing you. We will have little or nothing to retire on.
zzz9 September 2011
Regardless of the political slant, I trust economist 1000% more than BS blog postings such as this one (and most of the comments).
You can quote economist, wikipedia, fortune, CIA factsheet, because those are a single data point. But more often, it is the people citing who are blatantly cooking in a “twist” with intention to mislead.
The debt issued is high because a lot of people saved a lot of money, and opted to buy the safest investment option : government debt.
DaveDave9 September 2011
US Fed. uses accounting gimmick to hide losses
During the economic crisis, the Fed created trillions of dollars to bail out foreign institutions, buy up lousy mortgage-backed securities, manipulate markets, and more. But enormous potential losses on the central bank’s “investments” could be coming back to haunt it. So, on January 6, in a barely noticed policy change buried in its weekly report, the Fed said it would simply stop treating its losses as a liability against its capital base.
Basically, the change means that when any of the Fed’s regional branches lose money, that loss would be recorded on the Treasury’s books instead of as a hit to the central bank‘s capital position. Then, in theory, the Fed would send more of its future profits to the government to make up for it. The measure would essentially mean that, on paper, the Fed could never show a negative capital position.
http://www.thenewamerican.com/economy/economics-mainmenu-44/6015-fed-uses-accounting-gimmick-to-hide-losses
—————
Ratings are given based on “confidence”. But confidence is the perception that you create. That is why hand-waving arguments like “I have fulfilled the requirements of …” should be treated with suspicion. When people ask a direct question, it warrants a direct answer.
Steven Kho Uncle9 September 2011
@Steven Kho
I know you do not read the economist because it is beyond you. So, pls shut up!
daft singaporean9 September 2011
“”zz 9 September 2011
The debt issued is high because a lot of people saved a lot of money, and opted to buy the safest investment option : government debt.”"
Do you mean govt debt like those so-called safe govt bonds in Europe which some distressed southern european countries have been issuing.
The europeans are issuing it to outsider countries and hehehe we are doing it to ourselves. europeans know how to protest but daft singaporeans are more easier to convince.