What some chiefs say about 2013 outlook.....





Courtesy from Straits Times

Last night our nation rang in the 2013 year ( chinese astrology termed it the year of water snake ) with spectacular fireworks displayed across the marina bay skyline. The fireworks, which illuminated the sky, also provided a backdrop for the hundreds of white spheres bobbing in the bay, each containing different wishes for 2013 penned by revellers. Watched by tens of thousands of attendees at the Bay countdown party, the atmosphere was electric as the crowd counted down the seconds in unison. The drizzle earlier in the day did not deter or drench down the spirits of the crowd.

As for the coming year businesses will be facing with probably some downsizing, relocation of or closure as a last resort.  The tightening of foreign labour will surely have great impact to businesses here especially like our shipyards depending on big pool of semi and skilled foreign labour.

Asia will continue to be the growth engine for the private banking industry. Significant amounts of new wealth continue to be created in the region and in China, Indonesia, Taiwan and the Philippines.

Most businessmen expressed mild optimism about their prospects for the coming 12 months. 

Yesterday, Prime Minister Lee Hsien Loong said that growth for this year would come in at 1 per cent to 3 per cent. All eyes will be on the global economy for further signs of recovery in the United States and a reversal of fortunes for crisis-hit Europe.

Courtesy from Straits Times

Our chief, Keppel Corp Mr Choo Chiau Beng said: "It depends on the world economy. If it's benign, then we'll be doing quite good. If it's tough again, we'll have to struggle with the slowdown in property sales."

At least politically, there is stability ahead, with the US presidential election and the China leadership transition completed.

The giant US economy is tipped to turn around and that could benefit businesses here. 

Courtesy from Straits Times

Singapore Exchange (SGX) CEO Magnus Bocker said: "Asia will continue to be the heart of economic growth, even with a more measured pace."

The SGX is also upbeat, tipping that low interest rates will act as a further spark for interest in stocks to grow.

Mr Bocker said: "The SGX continues to serve as the access point for global investors managing Asian equities. We are also seeing a returning interest from retail investors to the stock market."  

The robust regional economy is expected to boost local firms in the logistics and supply chain sector.

Private bankers are also bullish about the industry's prospects, albeit in a more moderate tone.

UBS' Mr Koh said: "We've seen significant growth in Singapore, Hong Kong, Indonesia and Thailand. While all the Asean markets are growing, I see tremendous opportunities in Laos, Vietnam, Myanmar and Cambodia."

One of the more upbeat industries in Singapore is construction, given the strong pipeline of government projects. "The outlook will remain positive but competitive," said OKP Holdings managing director Or Toh Wat.

"Based on expected expenditures announced, at least $55 billion worth of transport infrastructure is being built or will be built by 2021 in Singapore."

He is optimistic about his firm's prospects, noting that OKP is "well positioned to benefit from the public spending on transport infrastructure".

 How is the Global Economic Outlook for 2013  

The global economy has yet to shake off the fallout from the crisis of 2008-2009. Global growth dropped to almost 3 percent in 2012, which indicates that about a half a percentage point has been shaved off the long-term trend since the crisis emerged. This slowing trend will likely continue. Mature economies are still healing the scars of the 2008-2009 crisis. But unlike in 2010 and 2011, emerging markets did not pick up the slack in 2012, and won’t do so in 2013. Uncertainty across the regions – from the post-election ‘fiscal cliff’ question in the U.S. to the Chinese leadership transition and reforms in the Euro Area – will continue to have global impacts in sluggish trade and tepid foreign direct investment.

- Across the advanced economies, the Outlook predicts 1.3 percent growth in 2013, compared to 1.2 percent in 2012. The slight uptick is largely due to the Euro Area, which is expected to return to very slow growth of 0.2 percent after the -0.6 percent contraction in 2012. U.S. growth is expected to fall from 2.1 percent in 2012 to 1.8 percent in 2013.

- In the medium-term, the outlook expects the U.S. and other advanced economies to go some ways toward closing large output gaps – that is, the difference between current output and the level of output an economy can produce in a noninflationary way, given the size of its labor force and its potential to invest in and create technological progress. The current output gap is a result of weak demand due to the 2008-2009 crisis. This development should allow the U.S. to average 2.3 percent annual growth during 2013-2018 before falling to 2.0 percent in 2019-2025. In the same two periods, Japan is expected to grow at 1.1 percent and 0.9 percent, respectively.

        

- A more significant slowdown is expected for less mature economies over the next year – and beyond. Overall, growth in developing and emerging economies is projected to drop from 5.5 percent in 2012 to 4.7 percent in 2013, with growth falling in China from 7.8 to 6.9 percent and in India from 5.5 to 4.7 percent. From 2019-2025 emerging and developing countries are projected to grow at 3.3 percent.

The IMF’s forecast for China in 2013 is reasonable at nine percent inflation-adjusted growth. That forecast, however, assumes no collapse in Europe, which is a pretty big assumption. Companies doing business with China, as well as companies doing business with other companies that do business in China, should understand both the upside and downside potential for that country’s economic outlook.  China’s economic growth has been very good for quite some years. The consensus forecast now is that 2012 growth will be right in line with the country’s long-term growth potential of about nine percent per year. However, there are still five key sensitive issues to consider and which may turnaround the situation should there be any swing in circumstances :

• Inflation fighting
• Housing bubble
• Export markets
• Cronyism
• Value of the Yuan

What is a fiscal cliff ?

“Fiscal cliff” is the popular shorthand term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect.

Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, a rollback of the "Bush tax cuts" from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. According to Barron's, over 1,000 government programs - including the defense budget and Medicare are in line for "deep, automatic cuts."

In dealing with the fiscal cliff, lawmakers have a choice among three options, none of which are particularly attractive:

• They can let the current policy scheduled for the beginning of 2013 – which features a number of tax increases and spending cuts that are expected to weigh heavily on growth and possibly drive the economy back into a recession – go into effect. The plus side: the deficit would fall significantly.
• They can cancel some or all of the scheduled tax increases and spending cuts, which would add to the deficit and increase the odds that the United States could face a crisis similar to that which is occurring in Europe. The flip side of this, of course, is that the United States' debt will continue to grow.
• They could take a middle course, opting for an approach that would address the budget issues to a limited extent, but that would have a more modest impact on growth.

Can a Compromise be Reached?

The oncoming fiscal cliff is a concern for investors since the highly partisan nature of the current political environment could make a compromise difficult to reach. This problem isn’t new, after all: lawmakers have had over a year to address this issue, but Congress – mired in political gridlock – has largely put off the search for a solution rather than seeking to solve the problem directly. In general, Republicans want to cut spending and avoid raising taxes, while Democrats are looking for a combination of spending cuts and tax increases. Although both parties want to avoid the fiscal cliff, compromise is seen as being difficult to achieve – particularly in an election year. Currently, it appears that a meaningful deal won't be reached until after the December 31 deadline.

The most likely outcome is another set of stop-gap measures that would delay a more permanent policy change. Still, the non-partisan Congressional Budget Office (CBO) estimates that if Congress takes the middle ground – extending the Bush-era tax cuts but cancelling the automatic spending cuts – the result, in the short term, would be modest growth but no major economic hit.

Fiscal Cliff

Possible Effects of the Fiscal Cliff

If the current laws slated for 2013 went into effect permanently, the impact on the economy would be dramatic. While the combination of higher taxes and spending cuts would reduce the deficit by an estimated $560 billion, the CBO also estimates that the policy would reduce gross domestic product (GDP) by four percentage points in 2013, sending the economy into a recession (i.e., negative growth). At the same time, it predicts unemployment would rise by almost a full percentage point, with a loss of about two million jobs.

A Wall St. Journal article from May 16, 2012 estimates the following impact in dollar terms: “In all, according to an analysis by J.P. Morgan economist Michael Feroli, $280 billion would be pulled out of the economy by the sunsetting of the Bush tax cuts; $125 billion from the expiration of the Obama payroll-tax holiday; $40 billion from the expiration of emergency unemployment benefits; and $98 billion from Budget Control Act spending cuts. In all, the tax increases and spending cuts make up about 3.5% of GDP, with the Bush tax cuts making up about half of that, according to the J.P. Morgan report.” Amid an already-fragile recovery and elevated unemployment, the economy is not in a position to avoid this type of shock.

The Term "Cliff" maybe misleading

It's important to keep in mind that while the term “cliff” indicates an immediate disaster at the beginning of 2013, this isn't a binary (two-outcome) event that will end in either a full solution or a total failure on December 31. There are two important reasons why this is the case:

1) If all of the laws went into effect as scheduled and stayed in effect, the result would undoubtedly be a return to recession. However, Congress continues to work toward a deal that will alleviate the effects in some form. The chances that such a deal won't be reached at some point are slim.

2) Even if the deal does not occur before December 31, as appears likely, Congress can - and almost certainly will - act to change the scheduled laws retroactively to January 1 after the deadline.

At the same time, even a "solution" isn't necessarily positive, since a compromise will likely involve higher taxes or reduced spending in some form - both of which would help reduce the debt, but would be negative for economic growth.

With this as background, it's important to keep in mind that the concept of "going over the cliff" is largely a media creation, since even a failure to reach a deal by December 31 doesn't mean that a recession and financial market crash will occur.

Fiscal Cliff2

Unfortunately, the fiscal cliff isn't the only problem facing the United States right now. At some point in the first quarter, the country will again hit the "debt ceiling" - the same issue that roiled the markets in the summer of 2011 and prompted the automatic spending cuts that make up a portion of the fiscal cliff.

Finally, 3rd January 2013, President Barack Obama has signed with an autopen a bill that boosts taxes on the wealthiest Americans, while preserving tax cuts for most American households. The bill, which averts a looming fiscal cliff that had threatened to plunge the nation back into recession, also extends expiring jobless benefits, prevents cuts in Medicare reimbursements to doctors and delays for two months billions of dollars in across-the-board spending cuts in defence and domestic programmes.

The Republican-run House approved the measure by a 257-167 vote late on Tuesday, nearly 24 hours after the Democratic-led Senate passed it 89-8.  Mr Obama, who is vacationing in Hawaii, signed the bill using an autopen, a mechanical device that copies his signature. The US leader also signed a US$633 billion (S$772.5 billion) defence bill for next year that tightens penalties on Iran and bolsters security at diplomatic missions worldwide after the deadly attack in Benghazi, Libya.

Mr Obama had threatened to veto the measure because of a number of concerns, including limits on his authority to transfer terrorist suspects from the US military prison at Guantanamo Bay, Cuba, for one year.  US actions to avoid the fiscal cliff did not go far enough to address the country's long-term fiscal deficit and debt problems, the International Monetary Fund (IMF) said in a reaction to the the political deal.  "In the absence of congressional action the economic recovery would have been derailed," IMF spokesman Gerry Rice said.

China has a strong interest in a healthy US economy. It sits on the world's biggest pile of foreign exchange reserves, worth US$3.3 trillion (S$4 trillion), and as much as 70 per cent of the holdings are invested in US dollar assets, including US Treasuries, according to analysts.

Noting that the US will grapple with the debt ceiling next month, after which the "austerity time-bomb" will begin ticking again, Germany's Der Spiegel said: "We are... witnessing a superpower losing its way in a maze of details, propelled forward by grandstanding politicians".

After the fiscal deal signed by President Barack Obama, there is a "feel good" effect - most Americans can breathe easier now that they will not have to pay higher income tax and that a recession seen as inevitable has been avoided. But economists were less reassured, warning that it was still going to hurt, with slower growth and fewer jobs.

Most Americans will see no change in their income tax rates after the deal which included tax increases on the country's wealthiest 2 per cent and higher pay cheque deductions for all workers.

The biggest impact, say economists, will be from an increase in how much employees see deducted from their pay cheques for social security: After having been cut to stimulate growth in recent years, the rate goes back to 6.2 per cent from 4.2 per cent.

Mr Gregory Daco of IHS Global Insight estimated that will pull US$113 billion (S$138 billion) out of the economy - money that mostly would have otherwise been spent on goods and services.

"That is the measure that is going to hit the most people," he said - by itself cutting 0.4 per cent from potential growth.

An increase in tax rates for Americans earning more than US$400,000, to 39.6 per cent from 35 per cent, will not have as large an impact, he said: "A dollar for them is not the same as a dollar for someone earning US$50,000."

Moreover, politicians still face a battle over cutting federal spending - put off for two months in the wrangling over the cliff deal finally passed on Tuesday - that could further crunch the economy this year. That means more tepid expansion of gross domestic product (GDP) this year, with equally slow job creation as in 2012, by most estimates.

Economist Mark Zandi of Moody's Analytics said the tax increases and spending cuts still to be agreed will take about one percentage point from what growth could have been, had the 2012 tax rates and spending plans stayed in place.

"The result is that the US economy will grow just over 2 per cent in 2013, about the same as in 2012," Mr Zandi said.

In addition, he added, it will hold back job creation, "with 700,000 fewer net new jobs created and an unemployment rate about half a percentage point higher than it would have been if last year's policy had simply been extended".

Though the deal significantly raises taxes on the rich, with no expiration date. It extends tax credits for the poor and middle class. It provides more jobless benefits. Largely overlooked, it extends an alternative-energy tax credit that has helped create a clean-energy boom. And it includes almost no spending cuts.

For President Barack Obama and his Democratic allies in Congress, the fiscal deal reached this week is full of small victories that further their largest policy aims.

Above all, it takes another step towards Mr Obama's goal of orienting federal policy more towards the middle class and poor, at the expense of the rich. Yet the deal also represents a substantial risk for the president.Throughout the negotiations of the past two months, Mr Obama pushed for a larger agreement, one that would have cancelled other looming budget deadlines, starting with one on the debt ceiling.

He and his aides saw the so-called fiscal cliff, with its trillions of dollars in scheduled tax increases that Republicans abhorred, as leverage to start fresh in a second term and avoid more deadline-driven partisan fights.

When House Republicans made it clear that they opposed a big deal, however, Mr Obama decided to take the smaller deal, bank a series of victories and wait to fight another day. The alternative - debated inside the White House, but not ultimately a close call - would have been to go over the cliff in the hope of forcing Republicans into a larger deal.

Without that larger agreement, Mr Obama will be left to find solutions to future budget deadlines without the leverage that came with the prospect of automatic tax increases.

"The best world would have been a bigger agreement," an administration official acknowledged. "This is a big win in a second-best world."

As part of this week's deal, Mr Obama did make several major compromises. He accepted much less in overall tax revenue than the government would have received without any deal. He allowed a payroll tax cut, which applied to most households, to expire.

And he yielded both on aspects of the estate tax and on the level at which the top marginal income-tax rate would start, moving it to US$450,000 (S$550,000) for couples, from US$250,000.

Still, using inequality as a yardstick, he won much of what he had wanted. By holding firm to a top rate of 39.6 per cent - up from 35 per cent - he locked in a substantial tax increase for the very richest, who have received the biggest pre-tax raises in recent years.

The question that hangs over the deal for Democrats is whether they will have to play defence on the budget for the rest of Mr Obama's presidency.

But some of Mr Obama's allies wonder if he should have taken the risk of a confrontation now. A stalemate next time will bring no threat of higher taxes, and Republicans may stand firmer, demanding cuts that undo Mr Obama's recent gains.

“Downsizing”

Many mainstream articles, business press, etc,  characterize CEOs as “courageous” because they instituted a downsizing during the bad economy and worldwide business is showing signs of slowing down. The decision to sack or terminate employees is so difficult, the CEO who takes that path must be a brave and live a lonely soul. He’s putting the interests of the investors ahead of his own kindhearted inclinations, and making the difficult decisions that will allow the company to remain in the survival state.  How, exactly, did the company get into a situation where it needed to fire people in order to remain competitive? Sure, markets change like crazy in today’s world and business conditions become challenging. But isn’t it the job of the CEO and the management team to know or able to predict those changes, and to handle the company appropriately, and retrain staff to take on future competition, so that those challenges can be addressed?

Is Downsizing a sign of failure in business? Is it means that management has done poorly all these years and failed instead of doing the right thing — which is to quit without severance — they’re passing along the penalty for that failure to the staff who, in good faith, tried to execute the flawed corporate strategy that nowadays top executive management have been trained and pursued.

Is that why top managers chose the word “downsizing”? Does it makes the results of failure sound like a strategy, rather than a desperate way to remain profitable after the executive management has made a complete flop breakfast of things?

So, as we go forward, let’s stop calling it downsizing. Should it be called what it is: firing productive workers because top management was a bunch of overpaid pinhead losers who shouldn’t be allowed to run a company again.

“Leadership”

Before he passed away, Mr Peter Drucker was interviewed and in that interview, he pointed out what should be obvious to everyone — that all this talk about “leadership” is a bunch of bull "shit".

Yeah, yeah, the idea of leadership sounds neat — especially if you’re in management — and it makes a manager sound all charismatic and exciting.

But what is a “leader,” anyway? What does a “leader” do?

We could not hear the term without thinking of the leader as if a marching band. That’s the person who takes a big stick and makes it go up and down, while the band does the work of actually making the music.

One reason we thought of that image is that, in our experience, most of the time the “leader” of the team is the person who found a parade and then got out in front of it. The concept of a “leader” means that credit for what the team does probably would go to the leader. And you see it every day, in the bloated salaries paid to “business leaders” and in the ridiculous way that some CEOs parade themselves as if they were super rock stars.

You see it in the lower levels, too, where managers bloviate about leadership and “inspiring” people, when in fact they’re usually just making everyone under them want to "puke". Leadership is not gifted but through sheer experiences and years of learning and understanding the human side and the way to deal with day to day activities, the feedback and the nurturing of these knowledge and expertise that hone the individual to be true leaders.

What Drucker said — and most would agree with him — is that the business world doesn’t need leaders. It needs managers — one who can actually manage a team of staff in the big organization. Being a manager means being in service to the team of employees. It means giving the team credit and making everyone else successful.  So, as we go forward, let’s stop enabling all these tin-pot “leaders” by pretending that they’re doing anything other than grandstanding. Let’s value the real managers, who actually do the hard (and largely thankless) work of making other staff in the company productive.  Let's not bluff ourselves that young managers whom have started without much experience could act to be good leaders when they take on the throne.

“Empowerment”

 

Back in the 20th century, there was all kinds of talk about how technology was going to empower people. Applications like email and, later the Internet, would create a free-flow of ideas, making it possible for individuals and small organizations to counterbalance the power of large institutions.

Today, however, it’s abundantly clear that technology isn’t empowering employees; it’s empowering management to spy upon employees. And technology isn’t empowering small organizations; it’s making it easier for large organizations to drive the smaller ones out of business.

As evidence of this, look at what’s happening to Wiki-leaks, probably one of the only organizations in the world that’s actually making a stab at the kind of information empowerment that was promised in the past. The big financial institutions, one by one, are using their clout to shut it down, even though the organization has not been charged with any crime.

Consider as well, the so-called “net neutrality” act recently passed.

There’s a concept in business called “the law of inverse relevance” which can be stated as “the less you plan to do something, the most you must talk about it.” That generally takes the form of laws and regulations that do the exact opposite of what their title says they’re going to do.

The “net neutrality” act is a perfect example. Rather than making sure that the net remains neutral, it actually makes certain that wireless companies will be able to throttle any business or business concept that threatens their profits.

The way this “empowerment” concept plays out in business is the insane idea that new technology is going to make people more innovative, more entrepreneurial, more creative, yada, yada, yada. Such total BS. All those things come from the heart, not from the hand.

So, as we go forward, let’s stop talking about technology as “empowerment” and start talking about what really counts: human creativity freed from the limitations imposed by bonehead “leaders” who think they’re managing “human resources”.

Business Process Reengineering

The theory: Analyze the workflows and processes within your organization and rework them to achieve a defined business outcome. Set up cross-functional teams in order to re-engineer separate functional tasks into complete cross-functional processes. Integrate a wide number of business functions through enterprise resource planning, supply chain management, yada-yada-yada, etc., etc.

The reality: Forget about redesigning processes. Reengineering is all about layoffs. Top management uses the idea to justify firing people in order to make it seem like they’re actually doing something logical, rather than just temporarily boosting the stock price so that their short term stock options pay off big.

The result: A string of layoffs, followed by the total collapse of your company. Probably sooner rather than later.

The fad opinion: The whole idea is terminally idiotic. Massively changing a corporation while it’s operating is exactly like trying to redesign and retool an automobile while you’re driving down the highway. In any case, reengineering assumes that corporations fail because of lousy processes, when it’s almost ALWAYS the result of lousy management.

Your strategy if you do: If your company announces that it’s reengineering, suggest update your resume. Start networking and maybe line up your new position in another company as soon as possible. Even if you’re well positioned to survive the layoffs, you won’t want to work there after the reengineering has been going on for a while. 

Core Competency

The theory: Focus on the one thing that your firm does better than anyone else. That will make your strategy difficult for competitors to imitate and keep your organization from wasting time doing things that they’re not very good at.

The reality: Most organizations, like the managers that run them, are about as self aware as a turnip. As a result, they seldom know what they’re really good at. In many cases, organizations think they’re good at something but are actually successful for some completely different reason.

The result: Core competence generally ends up as a kind of myth that keeps a company locked into doing what it was successful at doing in the past. As a result, companies that focus on their core competence soon find that they have competitors running rings around them.

Like all management fads, this sounds like a great idea, but it must be implemented by corporate managers, which means that even if it were the most brilliant idea in the world, they would still bollix things up beyond all recognition.

Your strategy if you do: Get involved in the committee that’s suppose to determine the core competence. Make sure that whatever you do is the company’s core competence. If you fail, maybe better transfer to the group that did win the discussion.

Singapore 2010 brief outlook

Should history repeats itself, Singapore's stock market will undergo a major correction around June 2010 - 16 months after crisis began.  That is according to DBS Bank's analysts, who have noted that after the last two major recessions, the initial stock market rallies that followed lasted exactly 16 months each.

Mr Timothy Wong, managing director and head of group research at DBS, expects a bullish first quarter 2010, in which the Straits Times Index (STI) will hit about 3,080 points. But somewhere in the middle of the year, the markets will experience a sharp pullback.  If there is no major correction of 20 per cent or more in the first half of the year, there will "probably" be one in the second half.

The STI will likely rally again after the correction to finish the year at about 3,500 points for 2010, that is the likely indicator.....
Stocks in the services sector, including transportation, hospitality and high-end properties, which will be boosted by the opening of the integrated resorts in singapore this year.

Oil price has risen above US$80 per barrel and will more likely see those in the oil and gas sector businesses reaping some benefits.

The mood in the market now is optimistic rather than euphoric, but on the flip side, markets could be shaken by a sudden surge in inflation which already showing some sign.

MAS Singapore may return to the pre- recession stance of gradual Singdollar appreciation only in its following meeting in October, when inflation has picked up more significantly. A more expensive Singdollar helps to mitigate inflation here as it offsets the higher prices of imported goods.

As economic growth gathers steam and inflation returns, most of the other central banks in Asia will also start to raise rates this year.

For the property sector, the SIN Government is keeping a watchful eye on runaway prices in these sectors.

But high-end home prices will jump by 10 per cent to 15 per cent, due to more limited supply, the integrated resorts drawing in investors, and spillover demand from Hong Kong, where luxury home prices have skyrocketed. Similarly, luxury items will see some boost in demands in China,Hong Kong as well Singapore. Maybe getting into luxury car importer business is one good choice for some keen entrepreneur..

A Decade in Retrospect .....

Fall of the Dot-com
It started not with a boom, the prices of technology stocks that had been listed without their companies ever making a dollar of profit. It ended with a major bust.
All that was needed was the promise of limitless growth on the Internet's new e-commerce platform. By March 2000, the technology-heavy Nasdaq Composite Index in the United States had crossed the 5,000 mark - more than doubling its value in just one year. But that proved to be the peak of the bubble and the ensuing crash wiped out US$5 trillion in market value of technology companies from March 2000 to October 2002.

In Singapore, the pain of the dot.com bust was felt most acutely by some unit trust investors. Some had poured their life savings, after receiving their CPF retirement payout, into technology funds which were heavily marketed at the time - even to the elderly.
Tech funds lost as much as 70 per cent of their value following the crash, and most are still underwater even today.

Enron
It may have been named 'America's Most Innovative Company' by Fortune magazine for six consecutive years, but no one expected it to apply its creativity so expertly to cooking its books. From inflating revenues to hiding losses in 'special purpose' subsidiaries, the litany of sins revealed by a whistle-blower in October 2001 eventually led to what was then the largest corporate bankruptcy in US history.
The Enron debacle was followed by a series of scandals at big names like Tyco and WorldCom. The accounting scandals eventually led to the establishment of the Sarbanes-Oxley Act in 2002 (which punished fraud more severely) and a more general push for corporate transparency worldwide.

Greenspan's legacy
UNTIL his retirement in 2006, Mr Alan Greenspan was arguably the most closely watched individual in the world. As the longest-serving chairman of the powerful US Federal Reserve, he presided over the world's most important financial variables - US interest rates and the US dollar. Yet, he once famously said: 'I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said!'
What is now clear, however, is the octogenarian's principles and policies largely shaped the path of the global economy this decade. His favourite remedy of aggressively easing interest rates - and thus encouraging spending and borrowing - helped the world get back on its feet once again after the dot.com bust and the Sept 11 terrorist attacks.

OIL PRICE
In the 80s and 90s, the crude oil price generally remained stable at below US$30 a barrel, after adjusting for inflation, cheaper than you pay for same amount of say, orange juice...
But oil prices begun rising sharply in 2003 in tandem with a worldwide economic boom, hitting a peak of US$147.30 a barrel in July 2008. The boom was a result of rising demand for oil, particularly in rapidly industrialising nations like China and India. At the same time, oil supplies worldwide are dwindling. Financial speculators also moved in. The relentless trading of oil contracts exacerbated the price spike and led later to calls for increased regulation.

The story of too little supply chasing too much demand spilled over to other commodities such as agricultural produce, and the steel, copper and other metals that fed the mid-decade building boom.
The result of all this was the highest inflation seen in decades.

Back home here in Singapore, it hit almost 7 per cent, with the cost of everything from rice to cooking oil rising sharply. Some major companies were forced to make one-off payments to staff to help them cope. But just as it caused pain, the boom enriched oil-producing regions like the Middle East and Russia. Oil money would pay for some of the most spectacular urbanisation the world has ever seen, in cities like Dubai, Abu Dhabi and Moscow. 

World class oil rig builder Keppel FELS in these two years of high oil price, signed many rig contracts with deliveries stretched up to year 2011 and in 2009, it was the best year of performance with 13 rigs delivered to overseas client. Though contracts award was slow in 2009, the yard is still being kept busy with ongoing contracts.  The next wave of rig orders could be from Brazilian sector as Petrobras, the state-owned company, has already announced their few years ahead plan to explore new fields recently being discovered, one of them the Tupi field.


Property Craze 

PROPERTY will be a bittersweet note when investors look back on this decade.
In the US, cheap loans given out by banks, even to borrowers with terrible credit histories, helped chase up house prices. Americans felt richer and spent more, fuelling an export boom that drove much of Asia's phenomenal growth this decade.
But the eventual bursting of the property bubble - and the ensuing collapse in home prices - had the opposite effect on Asia as Americans slammed their wallets shut. Exports collapsed by up to a-third, sending countries like Taiwan, Korea and Singapore into their worst recession in decades.
The US was not the only place where property prices soared. The economic boom years of 2004-2008 also led to global investors putting their money in the promising property markets of Asia.
In Singapore, the boom in luxury property led to record prices of over $5,000 per sq ft, a frenzied market for the collective sales of old condo sites.  The bubble burst with the onset of the financial crisis late last year, with prices correcting 20 per cent to 30 per cent.
But a surprise boom in suburban properties followed barely six months later, ensuring that property stayed the way it was for most of the decade.  The Singapore government step in to cool the market by letting off new sites for development and increasing the numbers of HDB units to be built, either the design and build or the standard government highly subsidised 4&5 room units.

Sub-prime crisis
The global financial crisis of September 2008 will probably go down in history in the decade. But even though its story has been told countless times, it is still not fully understood by many.
What seems to have happened was that new instruments in the financial markets allowed banks to give 'sub-prime' loans to dodgy borrowers in an almost limitless way. This was because the banks were able to re-package and pass on the risk. The housing market collapsed in US, investments became close to worthless, most of the world's biggest banks and insurers had already chalked up trillions in inter-connected debts to each other, all related to these dodgy instruments.
The crisis bankrupted 158-year-old Lehman Brothers and its collapse in turn threatened to bring down storied names like AIG, UBS, Morgan Stanley and Goldman Sachs. Financial markets went into a tailspin and credit seized up. Panicked consumers and companies stopped spending, trade slowed and jobs were axed. By the time spring came round, economists were painting doomsday scenarios of double-digit declines and an uncertain, slow path to recovery.
In Singapore, many retirees sunk their live saving pension funds into minibonds suffered the same fate and their money invested became worthless and all of them are now still waiting on hope of getting some "refund" provided the law is on their side.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_291048.html

More than US$6 trillion in stimulus spending was pumped into economies early 2009 when Mr Barrack Obama just took over office from Mr Bush in a bid to get credit and business flowing again. It was not a smooth and immediate cure to the problem and took almost a year before we see some "green shoots" started sprouting in some global continents. China and India were surprisingly in better shaper than others.


"Chindia"  [ China & India combine ]

Ignoring the busting trends, the most enduring story this decade has been the rise of Asia's two economic giants - China and India.
In the last 20 years, China has been growing at more than 9 per cent per year, and India by about 6 per cent. China is already narrowing the gap with the world's No. 2 economy Japan, and by mid-century, it should overtake the US as No. 1. By then, China and India could be producing half the world's goods and services.
To make things more intimidating, China and India seem to complement each other's strengths. China is a manufacturing and engineering powerhouse, while India excels in services industries like software, accounting and design.
And that's not even considering both countries' rapidly expanding consumer bases. China is already the world's largest consumer of mobile phones and the third largest buyer of cars. India's rising middle-class is already making its presence felt, snapping up property and other investments in major cities of the world.

What happens next? Well, all eyes are on policymakers to see if they can properly control economies that are speeding trains that threaten all the time to veer off-course.
But an equally big worry is whether these giants will team up in future and dwarf everyone else. Annual trade between the two economies was just US$52 billion last year. Let's keep our finger cross.