Lessons for Singapore from China's 2008 $600 Billion Big Bang: Effect and Side-Effects.
As Singapore faces a possible economic technical recession, many are hoping that the government will unleash a slew of measures that will stimulate the economy, and hopefully keep it from falling into a recession. But like medicine, economic stimuli only treat the symptoms and effect a temporary cure. Also, like medicine, economic stimuli (especially of the loose monetary policy kind) will have side-effects. China's bold economic stimulus in 2008 is an example of what can happen with loose monetary easing, which the Americans euphemistically call 'quantitative easing'. In 2008, the world faced a financial crisis as the fall-out from the US sub-prime mortgage crisis caused a liquidity crunch in the global credit markets. Over the years the world, and all financial markets- debt, equities, forex, commodities- had become increasingly intertwined due to the instantaneous flow of information made possible by advances in communications technology. At the onset of th...