[TinyRedLeaf]

Originally Posted by Vallen Chaos Valiant

My point is that people who aren't at the top income brackets aren't spending because they know they shouldn't. Because they don't want to go into debt. And that no matter how much politicians try to encourage spending, in either China or Japan, neither country's citizens will be willing to spend more than what they earn. Because neither have the debt culture to encourage it.

By all means, the billionaires should be spending as much as they can. That's the only part of Trickle Down that mattered. I just made the point that it is wrong to tell the average Japanese/Chinese family to spend more to boost the economy, when it would only end in tears that way.

Back to the point of debt, while Singapore isn't at all similar to China, in terms of the level of economic development, we have much in common with Japan. With that in mind:

Singapore debt levels 'among highest in Asia'

Singapore (July 3, Wed): Singapore households are among the most indebted in Asia relative to what they earn, according to a Standard Chartered report this week.

Households had borrowings worth 151 per cent of their annual income last year, second in the region only to Malaysia, with debt at 182 per cent of income.

This is mainly because consumers here take on large dollops of property debt, amounting to 111 per cent of household income — the highest level in the region, Stanchart said.

On the bright side, households have a robust buffer of financial assets from high savings, so their debt levels are relatively low compared to these assets, the bank added.

"We are not concerned about household solvency in Singapore," it said.

Thanks to low interest rates, the repayments that Singapore households make on loans are also among the lowest in the region as a share of income.

However, Stanchart warned that as rates rise, debt servicing may become more difficult for home owners who are over-leveraged.

Stanchart's data shows that the overall debt service ratio for Singapore households has been rising since 2008. But they remain moderate, with total debt repayments coming up to only 13 per cent of total household incomes.

This is lower than in Malaysia, South Korea and Australia, although higher than in the Philippines, Japan, Indonesia, India, China and Taiwan, which have debt service ratios between 2 and 7 per cent, it added.

But the report also highlighted the danger of the rapid increase in debt levels recently.

Singapore's housing loans grew at an annual rate of 12.1 per cent between 2000 and last year, but picked up pace in recent years to grow at an annual rate of 15.8 per cent between 2006 and last year.

The Monetary Authority of Singapore has recognised the risk of rising rates and last week introduced caps on total debt service ratios for property buyers.

They can take new mortgages only when their total monthly repayments, including other outstanding debt obligations, do not exceed 60 per cent of their monthly income.

THE STRAITS TIMES