Credit Suisse: Singapore Likely To Be Among Worst Hit Countries If US Defaults!

• This coming sovereign debt crisis is a global crisis. The idea that strong Asian economies will not be affected is nonsense. China will be hit hard because it is largely reliant on exports. The Asian Tigers: Taiwan, Hong Kong, Singapore and South Korea will be hit hard too. Singapore despite having probably the 3rd strongest currency in the world will not be spared. Because it is a financial hub and forex hub (the largest forex hub in Asia) it will be hit hard. The world is too inter-connected for countries which are ‘globalized’ to escape this coming global economic, financial and monetary collapse! (emphasis mine)
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  Singapore ‘likely to be hit’ if US defaults
  By Aaron Low, The Straits Times
  SINGAPORE is likely to be among the worst-hit countries in Asia should the United States default on its massive debts leading to a financial crisis, warned Credit Suisse yesterday. This is because US banks account for almost 15 per cent of total domestic bank lending here, said the bank in a report.
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  In such a default cum credit crunch scenario, American banks would almost certainly withdraw their funds from the region, including Singapore, said Credit Suisse head of India and South-east Asia economics Robert Prior-Wandesforde. ‘Should the US default and a credit crunch happen, it would make the fall of Lehman look like a picnic,’ he added, referring to the collapse of Lehman Brothers investment bank in September 2008, an event that triggered the financial crisis.
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  If the US fails to raise this debt ceiling, it could default on its obligations – sending shock waves across global financial markets, said analysts. For Singapore, Mr Prior-Wandesforde noted that banks and financial institutions here are the second-highest holders of US debt and equities after Hong Kong. The size of US debt and equities held by the private sector here is as high as 22.7per cent of Singapore’s gross domestic product, said Credit Suisse.
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  Mr Prior-Wandesforde noted that banks here are very well-capitalised but this would ‘not matter in the event of an extraordinary credit crunch’.

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