Since the last “reduction” in employees’ CPF contribution (gradually down to a maximum of 20% of S$6000), some of us have to shoulder higher taxes but disposable income remained the same…

Why? Because some of us now have to come up with more cash to service our housing loans as opposed to all CPF previously…overall disposable income is the same or even less (due to higher taxes)…

In this sense, the government gets a bigger bite of our cherry…

thanks smallvice, thats the one i’m talking about

apologies i didnt bother to go to his site to read in his site, i glanced through it sometme ago or over the past weekend

just knew it was something to do with an individual and more effective and do-able =D

I thought TKL suggested an unemployment insurance scheme, not recession insurance scheme?

“n insurance payout is triggered when a pre-determined indicator of the economy drops below a specified level.”
these numbers are bandied around and more often than not, in hindsight.
you would need sophisticated risk management to set the kick in/out figures.

” Moreover, these recession insurance contracts may be sellable in the secondary market, thus setting up a market index to gauge the likelihood of a future recession.”
please elaborate how the above quote links to
“government who administers the recession insurance scheme. ”

thanks

Would you elaborate on how recession insurance leads to CDS explosion? I was thinking along the line of a transferable insurance whereby the source of the insurance payout remains the government who administers the recession insurance scheme. The reason why i suggested to exclude financial firms is precisely to make it difficult for them to create financial engineering products around this scheme.

1) reduction in CPF rate. A good concoction of bad discipline and greed in Singapore has made this current situation as such. Housing prices are too high and it is a social norm to “wipe out your cpf” for HDB flats since there is no other use. HDB does not publish detailed statistics about the arrears in payments on HDB flats. By removing contribution in CPF + variable wage, its a double whammy. Prices are already artificially held but most have committed during the boom years. This is the first making, of a Singaporean subprime.

2) Your insurance suggestion also would be another CDS explosion if risk is not managed. It would be a clash of interest unless the government acts as a central clearing house for these insurance else limiting the quota of your suggested insurance would be akin to introducing another financial engineering product.
CDS were meant to be insurance against negative events, but look where it brought us.

If memory does not fail me, TKL has suggested a similar thing but on an individual basis. This seems more viable, and for obvious reasons, i would rather trust NTUC, TokioMarine, GE or any other local banks on risk management, than the blind geese out there, throwing our CPF monies and National assets/Cash around. For a Sov fund with long term investments, if their post-hedge performance is -33%, are they too risky? or they do not know how to risk?
Either way, its a FAIL.
TokioMarine insurance for one, is an impressive company that has managed to keep very good investment returns over the years.

Appreciate this article though, i hope to see more alternative views, as if the 66% change their mind, we are in need, of a newly improved social net. CPF has become too complex for our own protection