The local media blame the downturn on the declining worldwide demand and the economic failings in the West, which is partially true, but also conveniently styles the government as a blameless bystander. It need not have been just standing by. Singapore has its export-driven policies to credit for years of surging growth, but the same policies have hit it hard in the latest downturn. Singapore is so dependent on exports that they account for half of her growth year after year. In the wake of declining global demand, this growth has evaporated as operators have had little to move around for weeks.

A second, and equally important reason is the Asian obsession with saving. Thrift is sound advice for the individual at any time. The downturn has its roots in the US, where a combination of booming house values and unsustainable mortgages eroded the financial health of banks which fund mortgage loans.

Paradoxically, on a larger scale, saving is not the solution for tough economic conditions. An oft-quoted reason for economic slowdowns is reduced domestic spending. A combination of measures to curb inflation and rising oil prices have impacted domestic spending in Singapore, as Singaporeans try to avoid spending their lot.

Unilaterally announced price raises by local companies who hold uncontested monopolies have not helped the 80% of Singaporeans who do not own their own public transport. Transport companies raised fares last year (taxi fares, in particular, jumped spectacularly), pointing to rising oil prices, but did not see it fit to reverse the raises when oil prices later dropped to their lowest in years. The not very convincing implication was that annual wage increases and inflation ­- used by the regulatory authority to compute acceptable fares ­- account for an equal impact to a doubling of oil prices.

Singapore has built up massive resources through its foreign exchange reserves, which it will now use to fund a raft of policies for the downturn. In this year's budget the government announced plans to double GST credits (which offset the recent increases in the Goods and Services Tax, wage subsidies and cut corporate taxes, all moves that have been widely lauded by the press and bloggers alike as "bold" and "scoring on superlatives".

The latest measures are indeed "bold", but the superlatives end with their extent of these policies, which are catered for businesses rather than the individual. The corporate side policies, which include wage subsidies and risk-sharing schemes, are not guaranteed to save jobs, or stimulate investment. In particular, lower corporate taxes are unlikely to convince companies to invest in uncertain times.

Some economists have called for income tax cuts, but these are not beneficial if people do not spend what they save. What they really intend to recommend is increased domestic spending. To this end, Taiwan has taken the innovative step of issuing shopping vouchers worth about S$150 per person in a bid to directly channel money into domestic spending, in addition to planned income tax cuts. Less direct measures to improve domestic spending include investing heavily on infrastructure projects, as the United States and other countries are doing.

A truly bold but less publicised measure (not even the Straits Times can spin huge paper losses as a good thing) is to bankroll fallen American giants like UBS, Citi and Merrill Lynch through the state's sovereign wealth funds. This is effectively a risky bet in the billions that they will weather the storm with help from well-endowed benefactors (which include the Obama administration, Temasek Holdings and the Abu Dhabi Investment Authority), and reverse billions of dollars in paper losses.