My Macro economics revision

Paying over the odds for Shincorp was bad. Once taking over, they realised subsidiaries were incuring debts during Thaksin's reign but were closed one eye(for obvious reasons) and that now they have to bear the brunt of it which equates to S$3billion. You might have heard similar dissenting remarks in connotations of "Cheng hu give bigger progress package to Thailand!!".

Then we start infering that the deal was not adhere to legally and now are forced to reduce the stake to 49% down from 96-97%. This forced sale if given the green light equates to Thai baht $20 billion loss. Simple math conversion points this to S$847 million additional losses.

You thought Suzhou was bad, but the Shincorp saga takes the cake literally. But Temasek takes on multiple investment portfolios, so in theory the damage is 'cushioned' but is definitely very substantially damaging as seen from reports of Singapore trying to salvage the Shincorp saga with Thailand's which I would like to put it, unofficial psuedo government.

So what are the repercussions? From economics 101, this points to a government budget deficit. And no one likes to see or think about 'deficit' because this means higher interest rates. Good for for saving but not for investment. This only accelerates the relocation of factories which translates loss of jobs.

Of course, to rectify it, you just need to collect more taxes and pray your other investment are making returns. Hence GST 8% comes nicely in place next year. And then we get a reality reminder from Mr Brown's rants before he got browned by Bhavani, that prices were rising.

Indeed but hey! No prizes for guessing who shoulders this burden.

"More good years ahead."