Forbes commentator Jesse Colombo predicted that Singapore was headed towards an economic meltdown. The Monetary Authority of Singapore rejected his views. Now Colombo gives a point-by-point rejoinder. Here is an excerpt:

The MAS said the government has “taken decisive steps to cool property demand and prevent excessive leverage”.

As I’ve stated in my report, Singapore’s property bubble cooling measures have only slowed the rate of the bubble’s inflation, but do nothing to truly unwind the damage that has already been done, from sky-high property prices to the already-inflated bubble in mortgages and household debt. These cooling measures are ineffective because they simply do not address the primary cause of Singapore’s bubble problems: abnormally low interest rates. Also, my bubble warning did not focus solely on Singapore’s property bubble, as it explored numerous areas of risk and imbalance.

Household balance sheets are on the whole strong and property asset values are significantly higher than the debts incurred.

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The MAS explained that “the average loan-to-value ratio of outstanding housing loans stands at a healthy 47 per cent as of the third quarter of 2013, implying a large buffer in asset values.”

After rising by 60 per cent since 2009, Singapore’s housing market is now 57 per cent overvalued versus its long-term average. With such an inflated property market, homeowners will need every bit of buffer they can get. Also, household balance sheets are typically strongest in a low interest rate and high asset price environment; the time to worry is when interest rates rise and asset prices fall.

The MAS said Singapore’s financial system is robust, citing a recent assessment programme by the International Monetary Fund that showed Singapore’s financial system would remain sound even under severe stress scenarios which include a sharp increase in interest rates – together – with a steep decline in property prices.

The MAS said Singapore’s banks are resilient, with strong financial and capital positions.

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The MAS said Singapore’s triple-A rating from all the major rating agencies is not an aberration and that it attests to the country’s economic and financial strength, including its sizeable foreign reserves.

The IMF is not factoring in the risk of a bubble-induced bust in the Asean region, let alone a crisis that includes China and East Asia. Let’s not forget the fact that the IMF – like the US Federal Reserve – completely missed the warning signs that led up to the global financial crisis as well. The IMF and similar institutions have very little credibility when it comes to spotting and preventing economic bubbles.