James Grant, from his article upon visiting Singapore, in 1989.
March 31, 1989
Westward winged the jet across the wide Pacific. Eastward lagged the body. The destination was Singapore, that Switzerland by the equator, mecca of thrift and orchids and humidity, a city-state even less accessible than Fargo. The flight from New York took twenty-two hours, or rather the flight of the aircraft took twenty-two hours. The body, unkempt and feeling sorry for itself, straggled in later.
The purpose of the trip was to deliver a lecture on finance, but a glance at the local papers suggested that the visitor had more to learn than to teach. The interest rate situation, for starters, seemed just about perfect. Prime rate: 5.5 percent; thirty-year mortgage rate: 5.75 percent; five-year auto loan rate: 4 percent; five-year “business loan” rate, 7 percent. The ninety-day Treasury bill was quoted as 3.25 percent, and the five-year government note yielded 5.5 percent. Stocks changed hands at about twenty times earnings.
Other economic vital signs appeared in order. The warehouse occupancy rate last year was 93 percent. The consumer price index rose by less than 2 percent, and economic growth was a steamy 11 percent, up from 8.8 percent in 1987. […]
It goes without saying that, if the government wishes to undertake a certain course of action, that policy is necessarily wise and just, whatever it may be, but the ambition to create a local government bond market seemed a mystery. […] The Monetary Authority of Singapore (MAS), the national central bank, contends that the market will serve as a useful benchmark for pricing public corporate debt. It will provide a safe and handy investment for Singapore’s banks and savers and “a means of hedging interest rate risk.” It will help propel the city-state into the first ranks of world financial centers. […]
Probably not every Singaporean will rush out to lock in 5.5 percent in government bonds. Cab drivers play the stock market, and DBS Land recently changed hands at 109 times earnings. […] Also, it must be stated for the record that the Singaporeans put their pants on one leg at a time. There was a recession as recently as 1985-86 — a salutary reminder that, even in a land that has apparently attained nirvana, cycles turn.
-James Grant, Singapore Fling.
Some things have changed since Grant’s visit in 1989, especially the numbers.
But some things remain the same. And the cycles continue to turn.