Ha Ha Ha…

It had been quite some time since our meeting had so much fun. But thanks to Toastmaster Angela, who spoke on laughter yoga, and got us laughing, lifted our energy level and broke the ice among members and guests.

Coincidentally, we were assessed by the area director Jacky at this meeting, so we were lucky to have Angela spiced up the meeting.

Angela would have been the club President but her work projects assigned to her last minute made her give up the post and I took over.

Besides Angela, I’d like to highlight Prabhakar’s commendable effort. He was the Toastmaster of the Day for the first time and he not only had a script but also emailed it to us before the meeting to proofread.

Taichi spoke about his job interview for his Humorously Speaking manual. Toastmasters didn’t appreciate it when he said:

“One of the common questions you may be asked during job interviews is ‘where do you see yourself in 5 years?’ I found the correct answer to this question… ‘in a mirror’.

He also talked about his experience but his experience wasn’t peculiar to him as it reflects the current situation most employees are facing:

I learnt important lessons from this experience. Preparation is most important for job interviews. This is especially true if I am doing the same job for many years. What I do every day may not be necessarily helpful to get me next job.

An even more important lesson was that this experience made me realize, although I was working very hard in my last job, I did not try to expand my knowledge or improve my skill.

But Taichi being the optimistic Taichi said:

There is one good thing that I did not expect. While I studied for the job interviews, I found computer science very interesting. So, I am still studying it now even after I got the new job. Thanks to this experience, I like what I’m doing more than before.

Quantitative Easing

It took me a few weeks to nail down the subject for project 7 “Research Your Topic”. I had wanted to present on slogans but couldn’t get statistics. I had toyed with the subject on customer loyalty before settled on Quantitative Easing.

As a result of not deciding on my subject fast enough, I was still amending my script the night before, despite the fact that my last project was two months ago.

I went through a lot of research but only a fraction of what I found was used.

Lynn evaluated my speech and I agree with her that the closing could be improved with a call to action such as advising audience not to take on excessive financial risk or suggesting what to do when savings interest rates are ultra-low.

Here is my script for Project 7: Quantitative Easing.

In November 2008, the central bank of US, the Federal Reserve, started a programme analogous to printing money known as quantitative easing to stimulate the economy during the Great Recession . It created money electronically at the stroke [BOE’s image] of a computer key, increasing the credit in its own bank account, and bought government bonds and other securities from commercial banks with thenew money. As a result, the increase in money supply, interest rates dropped, while the banks that received the funds were supposed to make loans to households and businesses, encouraging them to spend and invest.

In the years that followed, the Federal Reserve created out of thin air, not millions, not billions, but trillions and voila, the central bank added a string of zeros to its account.

Prabhakar, have you got any idea how many zeros are there in a trillion? To give you some perspective, there are 3 zeros in a thousand, 6 zeros in a million. The number of zeros in a trillion is [show fingers] zero, zero, zero…12 zeros.

【PAUSE】

Some of you might think that’s US’ business. What has that gotta do with us, miles away from the world’s number one economy.

But it’s not that simple, in fact it has far reaching implications for you and me.

Today, I’m going to talk about 3 aspects the quantitative easing has affected us, they are:

1) interest rates
2) real estate
3) exchange rates

★Interest rates★
By flooding the banks with money, the Federal Reserve drove the interest rates down.

Here, in Singapore, the interest rates are closely correlated to the US rate, and they are at historic low, having languished at almost zero levels for years.

How many of you have savings accounts with POSB? Did you know the current interest rates?

Let me tell you, for the first $350,000, the interest rate is 0.05% per annum. For example, a $1000 deposit earns you a paltry $0.50 a year in interest. What could $0.50 a year buy you?

Hmm, five visits to the …public toilet, that charges you 10 cents per visit.

As you have heard, low interest rates as a result of quantitative easing punish savers like you and me.

★Real estate★
Given such low rates for savings, some of us would look to investment with more attractive yields. Some might take advantage of the equally low mortgage rates to buy properties as well.

Indeed, that’s what happened after quantitative easing began.

According to an article published this July in the newspaper Today, private home prices in Singapore surged more than 60 per cent after the great recession in 2009 to peak in the third quarter of 2013.
Monetary Authority of Singapore in a statement in 2014 said “it is clear that unusually low global interest rates have stimulated credit growth and an increase in property prices in recent years.

“That is why the government and MAS have taken decisive steps to cool property demand and prevent excessive leverage.”

A Straits Times article published two weeks ago related a woman’s experience in being caught in the easy credit trap.

The easy credit made available by the ultra-low interest rates had turned this woman into a big risk-taker; she invested in eight properties six years ago. Each time a property she owned went up in value, she would get an extra credit line on it to make a down payment on another.

When high-yield bonds became the craze, she hopped onto that bandwagon as well, using credit lines from her properties to subscribe to the bonds. It was leverage upon leverage.

Her house of cards started to collapse came the cooling measures.

Cheap and easy financing can turn otherwise sensible people into credit junkies in their quest for yield, to take extreme risks.

Indeed, the International Monetary Fund has warned of the danger of excessive financial risk taking as a result of quantitative easing.

★Exchange rates★
An effect of quantitative easing was a sell-off in the US dollar, as the freshly minted money hit the financial markets.

This with the nagging concerns over the recovery of the world’s largest economy, depressed the greenback against other major currencies.

Funds seeking higher returns than in the US moved towards Asia, including Singapore as hot money sought a safe haven as well as looked for something more lucrative, thereby drove up the Sing dollar.

The Sing dollar hit an all-time high against the US dollar at 1USD to S$1.2, as seen in this table.

What does this mean for us?

A strong Singdollar against US dollar makes holidays in the US more affordable and online purchases denominated in the greenback cheaper.

Closing
Quantitative easing is not just a matter that concerns the United States. Although we live in the other hemisphere, there are significant implications for us. Whether it’s interest rates, real estate or exchange rates, quantitative easing has impacted us – either positively or adversely.

Thank you.