Finance industry – of ethics and trust

I once wrote to a CEO of a bank when he spoke about ethics and trust in the industry. He didn’t like what I told him. He was embarrassed. But he did put something right after my tea session with him.

Timothy Massad, Chairman of the US Commodity Futures Trading Commission and Ravi Menon, MD of MAS, spoke in the same seminar attended by the Who’s Who of the Singapore finance industry. The main points both spoke off are ethics and trust in the finance industry. The very same issues that the CEO I spoke to was lamenting about. I am feeling funny when people in a position to do things right and in their watches could be talking about the flaws of the system as if they are helpless about them. What are they going to do about it is my question. The problem in many cases is that they know even know why. When they know what is the cause or source of the problem, then half of the problems is already solved. What a great puzzle for someone saying he knew the problem but cannot solve it or did not know how to solve it or not doing anything about it.

These are what Ravi Menon said, ‘there are deeper issues of trust, ethics and culture in the financial industry that have to be confronted,…Finance is at risk of becoming more “de personalised”, as long term relationships with customers are replaced by transcient transactions with “counterparts”…departures from ethicalconduct are too easily tolerated as the norm….’ Menon said a lot more and concluded by saying ‘Reform of the financial industry will not be complete until this issue of trust and ethics is addressed,…Without sound ethics, there can be no trust. Without trust, there can be no confidence. And without confidence, there can be neither growth nor stability.’

Timothy Massad was smarter. He put the blame on the Asian countries for allowing the allowing the financial industry to sink to the bottom. It was not the Americans or the western govts’ fault. The Asians govts must build a strong regulatory framework for derivatives, must agree on a set of reforms to regulate derivatives. He totally forgot about the American quest for deregulations to allow the financial thugs to do as they pleased that led to the global meltdown. But regulations are a big farce when the rot is in the core, in the system. Derivatives are fraudulent financial instruments that are waiting to blow up in the faces of the regulators and the govts. The govts and regulators cannot allow people to simply write money out of nothing, and derivatives are just that, selling pieces of papers as ‘promissory notes’ or gambling chits. There is no point in having all the regulations when the thugs are allowed to write their own rules and how the games are to be played.

Look at the system of the stock markets and how HFT, algos and computers are allowed to operate in the system with unfair advantage over the innocent investors. Can they see anything wrong with them? Or are they turning a blind eye to the crooks and allowed them to do as they pleased, with no regulations but trying to throw the books at the innocent investors and small time speculators? Why no one is seeing the elephant in the class room? They are not duds or idiots for sure.

China is offering Shanghai Exchange as an alternative to the flawed and heavily manipulated American and western modelled stock markets. No HFT and algos to take advantage of the super computers to manipulate the system to rip off innocent investors. The Chinese regulators have been studying the American model and have seen all the faults and would not want to join the farce. The Western players are forcing HongKong to adopt the so called ‘international standards and flawed western model’ to allow them to manipulate the market at will, with no regulations or regulations to their advantage. China would not allow HKSE to go the NYSE or Singapore way.

What is going on? Does anyone know what is going on? Perhaps they knew but looking the other way, pretending that everything is fine. The truth is in the sorry state of the stock market, an industry that is dying. What further proof is needed? Waiting for mortis rigour?

What ethics and trust are they talking about? Everyone is clapping and saying the stock market is doing fine, doing very well, exceptionally well, as planned. Really? When are they going to remove the blinkers?

Pity the Man in the Sandwich

While the young men all over the world are striking out to make a career, to make their pot of gold, our young men are struggling and beating around the bush and straggling in the river, preparing for a role that would see them putting their lives on the stake for the sake of country. And better still, foreigners, plus young men of their peers, were brought in to do the jobs they were supposed to do and eventually become their bosses to order them around in the country they have pledged and trained to die for.

Next change, a new law is being passed to add a new burden to these Men in the Sandwich. Our young men are expected to get married and bring up a family. He is expected to bring up his children to the best he could to be the nuts and bolts of our economy. Now he has to pay for their medical insurance from birth. Gone were the days when a civil servant or a soldier would have the medical needs of his family paid for by the govt and the services. Now the Man in the Sandwich would have to carry the full burden of bringing up his children for the country, to be NS men to keep the machine turning, and to pay for their medical fees to be healthy and alive, from birth.

Another burden, who do you think would be paying for the seniors, the Silver Brigade’s Medishield Life Premiums when they have no income? No prizes for the correct answer. The Man in the Sandwich will have to pay for them or they would be sent to jailrock. How could they not be paying for them when no one else will? Looking from the positive angle, this Man in the Sandwich is likely to be a magician and can pull a lot of money from his hat whenever he needs it. Have faith in the Man in the Sandwich to pay for everything.

In SG50, let’s celebrate this Man in the Sandwich. And if he is unlucky, he would lose his job to foreigners before he is 50 and expecting his children to pay for his Medishield Life Premiums in some cases. And many could look for a very long and rewarding career of plenty as security guards and taxi drivers. The latter is protected by legislation for them, a privilege exclusive for citizens.


Trading generals

Many must have heard to the Israelis offering their generals in exchange for American general when the Americans were all speaking in awe of the feats of the Israelis. And the Israelis were most happy to swap until they disclosed who they wanted for the exchange.

Maybe we can swap of our generals with the Americans. Ours are young and strong with many more good years to go, and highly talented, all scholars, very bright and brilliant. When they walk around the spectators need to wear sunglasses. The only thing the Americans may object would be their pay. They would not be able to afford to pay for your generals. And they will go bankrupt if we offer them 2 for 1 in exchange.

And all we are asking for would be the same generals that the Israelis were asking then, General Motors, General Electrics and General Dynamics. I think it would be a good deal even if we offer them 3 for 1 of theirs. We are producing generals like mass production in a factory. But these 3 American generals are difficult to duplicate.

Just a rehash of an old joke for a Sunday morning. There is something that we can do with so many generals in our armed forces. They should be put to good use. Trading generals is a good thing if it can be done. If not, in the next General Election it will really become a general election, we may be electing more generals into politics. And Annual General Meetings will be the meetings of generals. And the general public will be a public of generals too, generally speaking.

When one is in power, everything is right

When one is in power, everything one said is right, everything one do is right, every reason or excuse is the right reason and right excuse. Often people in power are so intoxicated in their self delusion that they would not want to believe that they can lose power the next day and everything they said, do, and every reason or excuse, will become wrong, not only wrong, but illegal or criminal.

We have seen this repeated over and over again in history when a dictator, or even in so called veneer thin democracy, the despots would be charged and thrown into jail once they lost power. And their henchmen and cronies too will end up in the same fate.

When one is in power, do not get carried away and think that you would not be caught. When your luck runs out, the table will be turned and it would be too late to cry. For those who think they can bulldoze their way through, amend constitutions and laws to their benefit or against the people, pray very hard that you don’t have to face the wrong side of the law. You cannot run and cannot hide. Whatever you do today will be the evidence to hang you high and dry when your turn comes.

It is always good to leave a way out for yourself. Always remember that in a democracy, govt changes like changing diapers. Maybe a dynasty or monarchy would last longer. But they too failed and the last emperor and his families did not end well. History has changed and social structures too, and governing of a country as well. No one can call the shot for a life time. Very few has that good fortune to enjoy that rare privilege. Live well and do not trample on the downtrodden. Do not piss on the ashes. It would be lucky if a phoenix rises from the ashes. If it is not a phoenix but a vindictive monster, things can take a very bad turn.

Do not abuse the new social contract and be grateful to those below, look after them well and be well rewarded. Live by the sword, die by the sword. Yes, you are always right, with a sword in your hand.

Singapore Public Transport Operators Breach Social Contract

In Breach of Social Contract in Public Transport

Some years back in 1996, it was clearly stated in no uncertain terms that “a kind of social contract (exists) among the Government, the people, and the transport service providers on the kind of land transport system we want”. 

It is another fine example of Tripartism as the organizing basis for Singapore society by nurturing and promoting the partnership between the government, people and private enterprises through dialogue and mutual understanding for long term beneficial benefits.

This sacred Social Contract in Public Transport emphasises a strict sense of social responsibility and social conscience in that “it will NOT leave it entirely to market forces to determine the market structure and fares. Instead, it demanded public transport operators (PTO) to embark on long-term strategic planning, fiscal prudence, and the efficient allocation of resources through market forces.  In essence, competitive market forces shall be leveraged wherever possible to impel and drive PTO to operate in a socially responsible manner by being efficient, productive, improving services continuously and provide value to the commuters (people). 

In return for PTO’s corporate social responsibility in managing public transport, the government (representing the people) would continue to develop and invest in the train and public bus infrastructure, as it does in roads and public works for other road users.  

PTOs as private enterprises are expected to manage the MRT and public buses efficiently and “profitably” insofar as to enable revenue to  recover the use of operating assets while maintaining a socially acceptable level of quality services.  At the same time, they (particularly, for MRT operators) have to set aside and accumulate sufficient reserves, like any prudent management, to replace operating assets fully. 

An examination of recent SMRT Annual Reports reveals that it has grossly inadequate provision in its Reserves for the replacement of operating assets.  Its first set of operating assets is supposed to be replaced in 2017 at a estimated cost of $6.9 billion, and SMRT’s share is to be $1.6 billion with the government paying the rest.  SMRT Reserves has set aside more money for the issue of employees share options and performance shares for Management than for the crucial replacement of MRT operating assets for the continuous benefits and enjoyment of MRT commuters.

Clearly the SMRT, like other PTOs, has no sustainable policy on MRT and public bus assets development. These profit-seeking private companies expect the government ie the people to continue pumping public funds into THEIR operating assets!

In 2013, the government announced that it would inject an awesome S$1.1 billion to help the PTOs purchase 800 brand new buses PLUS helping them finance the operating costs of these buses for the next 10 years. This is in addition to the government’s unceasing efforts in expanding hundreds of kilometer of MRT tracks and builds the associated infrastructure for more MRT stations.

Interestingly, one should note that in 2011, SBS Transit made $36.7 million overall, when included revenues from its other businesses (e.g rail and advertising) but it announced an operating loss of $6 million on its bus business.  Similarly, SMRT made $119.9 million in FY2012, even though its bus operations incurred an operating loss of $11.6 million.

The SMRT is also expected to increase revenues from its new Kallang Wave Mall, 70% owned with NTUC Fairprice, with over 41,000 sqm of retail space. It has already reaped bumper profits from train operations in 2014 as well as from the leasing of approximately 34,000 sqm of commercial space along its rail network, together with 700 shop spaces, 80 event spaces and 16 push carts.

And with fuel costs sharply down and huge bumper profits, both SBS and SMRT apply for fare hikes citing rising costs and lower profits.  Quite unbelievably, it has been announced that public transport fares will increase 2.8% by April 2015.

Affordability, a key Principle of the Social Contract, is defined as “fares had to be realistic and revised periodically to adjust for justifiable cost increases”.  This is breached in the light of the latest arbitrary, non-transparent and unreasonable public transport fare hike.

Non-Affordability is evident from the fact that government has to use S$7.5million of public funds to subsidise the latest fare increase in order to mitigate its impact on more than 1.1 million commuters.  This is tantamount to subsidising the profits of highly profitable private PTO companies.
In fact, the Social Contract in Public Transport has been eroding over the years as the temptation for profits in PTOs precedes their duty of social responsibility. The obsession with profits without social conscience means a “race to the bottom” in terms of public service quality. Without operating assets development and timely replacement, the current MRT and public bus systems are plagued by overcrowding, delays, breakdowns and other manifestations of poor service. Without investing in operating assets, which is another breach of the Social Contract which demands a “Longer Term View”, any amount of fare increases for better revenue is counter-productive for service quality.

Singapore Public Transport Operators Breach Social Contract
In Breach of Social Contract in Public Transport

We need to have a new Social Contract in Public Transport with more socially responsible National PTOs beyond the current types and model of private obsessive profit-seeker types of companies. We need Public Transport Social Enterprises that have embedded social responsibility values into its leadership and management. 


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Chan Chun Sing, the PM in the making

Today’s front page material on the ST, nearly half a page, plus another three quarter of the page inside, with beautiful photographs of Chan Chun Sing must be a very clear indicator that this is the PM PAP is preparing for the Singaporeans. No minister has been given so much coverage by the media other than him. And he is being rotated quickly around the ministries, army style, to get him familiar with their workings to give him an overall feel of the job. This must be familiar to Chan Chun Sing as well. Mindef did that to all its Overseas Scholars, especially SAF cum President Scholars, to rotate them around quickly before putting them in charge.

Now Chan Chun Sing is going to be the Labour Chief, a post held by several top notch ministers like Lim Chee Oon and Ong Teng Cheong. His career path is cut and he is warming to his destiny in time to come. He is full of confidence especially in the Huffington Affair. Who in the whole world would dare to write to a controversial American newspaper that could show you the middle finger and to tell the newspaper what it should do and could write about? I don’t think Obama would dare to do that. That separates the boys from the man. You need a man brave and confident enough to tell the Huffington Post off. Remember, the Huffington Post is not any media to trifle with.

And it was no holds bar when he talked about Chee Soon Juan as a failure and with questionable integrity and character. This is all about confidence that he is The One, the PM to be. If you are not The One, you would not have the audacity to stand up above the crowd to say and do those things.

Hsien Loong must be pleased with his performance and must have said job well done, and time to take on a new portfolio, as the Labour Chief. This is a man on a mission, a man that means business. He is the PM to be by all readings and signs given by the govt and the media. After this exposure in the Union, his next post will be somewhere up there, very likely the Minister of Defence cum Deputy PM. Just my guess. And this is likely to be soon after the next GE when the PAP scores another big victory and Chan Chun Sing being carried on the shoulders by the workers, a privilege LKY used to enjoy. He is a political titan in the making.

No need for nursing homes

There is this kopitiam talk that nursing homes will go out of business when Medishield Life is in operation. How so, the oldies are now working their feeble minds on how to capitalize on this piece of ingenius legislation. Most of them would not be able to pay for the costly nursing homes and the medical fees that they will incur. Medishield Life is a life saver that comes right on time and would be something to celebrate for during SG50.

You people still wondering what I am talking about. See, the Silver Brigade may be retired, but their minds are still functioning well, though a bit slow. With a few days to contemplate on this compassionate and caring scheme, they have worked everything out and are now smiling. They are going to say a big thank you to the govt and the committee members for coming out with this wonderful scheme.

They are going to tell Redbean that his thinking is all wrong. They will go to see their MPs on this scheme but would want their MPs to vote for the scheme lock, stock and barrel. They would want the Parliament to pass this bill especially on the part of jailing those who refuse to pay. And they would object to Redbean’s suggestion that there should be a cut off age where seniors need not have to pay. There shall be no cut off age and seniors shall continue to pay until they die, with no subsidies.

And when the bill is passed, all of them would not have to pay a single cent for the Medishield Life. And they will be invited to stay in the big bungalow in Changi, free lodging, food and medical, for life. With high cost of living, housing, medical and security, Changi Resort is the ideal abode for the Silver Brigade. Why waste such a big real estate on the criminals? Boon Wan would have his nursing homes problem in JB solved instantly. In fact he would have to build a bigger Changi Resort, an entire estate, for the Silver Brigade, half a million of them at least.

How come I did not think of this? And all their children will visit them regularly to show them their tender loving care, without having to pay for their Medishield Life premiums and no need to feed them, clothe them, house them and no need to pay for their medical bills.

Changi will become a famous resort for the Silver Brigade to retire, another Jewel in the making. With the money saved, the children and grandchildren will have more disposable income to shower luxuries on their parents and grand parents when they visit them in Changi. And they will be so grateful to the govt that they will only vote one way in the next GE.

Sorry opposition parties, you would not stand a chance with this Medishield Life Scheme. The PAP is going to sweep every seat and GRC at stake. It will be a walkover! Brilliant, just simply brilliant and deserving of every million paid to them.

Who needs nursing homes anymore? Where can you find nursing that is so safe, with 24 hour security services and doctors and psychiatrists in attendance, and preachers telling them stories about heaven and paradise?