A friend of mine shared a video clip that showed some Americans who thought Singapore is somewhere in China. This isn't the first time I have been shown somewhat similar videos. The insinuation is the ignorance of Americans. Some Singaporeans think Singapore is the centre of the Universe and every human being, including American hillbillies in the Apalachians, ought to know where to pin our Little Red Dot on the World Map. A little humility is in order.
The Bank of Singapore was once caught in a scandal for which it then collapsed. Singapore itself disappeared in the 1970s, buried under shifting sand. Thankfully, that is not the Little Red Dot. So those Singaporeans who deride American ignorance, how many know of this Singapore? Friends of PM Lawrence Wong, or some of you, may have heard him mention this peculiar place before. The PM is an alumnus of the University of Ann Arbor, Michigan, so he would have heard about the town of Singapore on the South-Eastern shores of Lake Michigan.
In sharing the story of this oddity of our namesake town, I thought there are lessons for us. I always try to capitalise on stories with teaching moments.
The town was founded in 1836 by New York land speculator Oshea Wilder. His idea was to build a port town to rival Chicago and Milwaukee. There is no record as to why he chose to name his town Singapore. Well, well, what do we know. Perhaps, after all, some American hillbilly had actually heard of the port that Sir Stamford Raffles built in the Orient.
As the township commenced development, there were some start up businesses such as lumber industry. Soon The Bank of Singapore opened for business. In those days there was no Federal banking regulation. These were independent banks with state charters. They printed their own banknotes. In Michigan, banks needed to match 30% of banknotes issued with specie coins which were coins minted in gold or silver. There were no bank inspectors and no one knew for sure if the reserves of specie coins were in those boxes in the vault. Just like today, no one really knows if the US government's gold bars are really in Fort Knox. Eventually, truth caught up. There were no specie coins in the vault. With no reserves to back up, the banknotes were just pieces of paper. The Bank of Singapore collapsed after two years operation as a result of the scandal.
In Singapore, the MAS prints the fiat banknotes, unofficially backed by huge reserves of the country. Banks print digital cash in the mechanism of fractional banking. Regulatory measures require banks to maintain a Liquidity Ratio, meaning they need to maintain certain levels of their assets in liquid form. This is to ensure banks have enough liquidity in the event of a bank run. The ratio is carefully calibrated at a level that ensures banks have sufficient level of liquidity as well as keeping in sync with monetary policies. It is not a line to flag insolvency which is monitored from regular financial reporting by banks. Thus regulators monitor the financial health of banks for liquidity and capitalisation, ie their solvency. Essentially MAS monitors to make sure banks have the reserves to back their net liabilities thus preventing banking failures like The Bank of Singapore, Michigan.
The same kind of monitoring mechanism and transparency in banking does not extend to the national level. I am referring of course to our national reserves. We don't even know how much is the reserves. How do we know the 'specie coins' that form our reserves are there. Our reserves are like Shroedinger's cat. When not observed, it is in both states of existence and non-existence. Only when observed does it manifest it's real status. Theoretically therefore, The Bank of Singapore, Michigan event is possible.
In late 1871, wildfires swept through a large swathe of land in Michigan Lake area, including the City of Chicago. The rebuilding after the fire saw a short-lived boom in Singapore's lumber industry. So much lumber was required and the urgency of the demand that all the forest around Singapore were totally destroyed. As the land laid barren it became unprotected from the sand blown across the lake region. By 1875, the town was completely buried under sand. The death warrant of Singapore was due to their neglect to protect their forest reserves.
Epitaph of Singapore, MichiganWhen critical resource is not managed but abused for short-term financial gains, disaster looms at the far-term. It's often been said over and over in various circles, Singapore the Little Red Dot, has only one resource -- its people. In the past several years, our economic policies and the direction the Singapore government is headed, seems to be analogous to the chopping down of the trees in the hills of the eponymous township in Michigan. Will someone some day write an epitaph for us, not of a city buried under sand, but buried by an onslaught of rich foreigners and foreign workers given one of the best passports in the world.
Note: With apologies to some of my readers who clicked on the blog "Microsift Just Jolted The Competition In The Quantum Computing Race" which I accidently published last week. It is a work-in-progress blog.
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