Last week I read that Japan is encouraging its young to go home early to make more babies. The same justification as in many countries, an older and dying population needs renewal. You need two young to support an old. So the world is all clamouring for more babies with more monetary incentives. Is this a good thing? The equation, if fully practised, will lead to a population explosion. And this mother earth is already gasping for breath to keep up with sustaining a 6b population. They are expecting it to go to 8b in the near future. There are physical stress, resource stress, climatic stress and political stress facing civilisation and mother earth. Instead of a trimming exercise which nature does every now and then to shed some weight, we are trying to put on more. The ingenuity of humankind will find its way to survive with ever growing population, or it shall perish. When will human kind admit that mother earth can just support that much lives and it is time to stop adding on? Why the rambling, let's go for the 6m or 10m. Things will go work out naturally.
Gambling or trading with your home or gambling with your only asset or flat, private or HDB. Not many are house owners. Does this statement tickle anyone? Many of us just have a flat that we called home. This is all we got, the most expensive asset. Shall we be trading this every now and then? At the way we buy and sell our flats, and the way prices fluctuate up and down, we could be buying and selling the same flat over and over again. And if we are lucky, we may end up with some extra cash, or lose some in most cases as the transaction cost is not low. So, shall heartlanders be gambling with their only asset? Or is it a good idea for this asset to keep running up in value? Should be good isn't it, that a flat one bought 20 or 30 years ago is not worth 10 or 20 times its value. Time to cash out and downgrade, and make a tidy sum. The question is whether this process is worth it, downgrading for a little more pocket money. Often the downgrading is not meaningful as the price difference between a 5rm and 4rm or 4rm and 3rm is so small after subtracting transaction cost and the normal appreciation of the value of money invested. The small gain is an illusion. To be meaningful, the downgrade must be fierce, 5rm to 3rm or rental flat, or private to a smaller HDB flat. The other fallacy to this ever increasing price paradox is that property prices should go up in leaps and bounds over the years. Using the past statistics, a 5 rm flat that was priced at $27,500 in the early 70s is not priced at $500K, nearly 20 times in monetary gain. If this is to hold true into the future, a 4rm flat selling at $300k today must fetch $6m into 30 years time. How much will an average Singaporean's income be for him to be able to afford this palace in the sky? Would it be better if this only asset be allowed to appreciate in a slower pace over time without it becoming a betting instrument, swinging wildly, and owners sometimes happy, sometimes angry. For the young, always angry because it is like chasing a fleeting dream. Is it likely that our average young executive or a supervisor will be getting a monthly salary of $30k or $50k? Possible, and our currency will be no different from the infamous banana money. I think many countries are in such a state at the moment. We can be one too.
This is the heading of an article by Paul Krugman in the New York Times and reprinted in the ST today. His primary concern is the failure to look at the serious problem when all the early signs were there which led to this financial meltdown. America pulled throw several near disasters, at the brink of collapses, but instead of understanding how they got so close to failures, gave themselves all the encouraging and triumphant pats on their backs, and pronounced how clever they were to avoid the falls. The lessons to be learn is to sit back and take a quick look at our own situation and examine if we are sliding towards the edge. And I think we are. The psyche and culture of greed and instant wealth will burst our bottoms before we know it or see it coming. We are in a state of delusion and intoxicated in our past successes. We have triumphed over all obstacles and we think we can continue to bullshit our way through. The thing is that if we are hit by a version of the American financial tsunami, I don't think we can absorb the blow. We would have to sell everything, including father and mother, to get back on our feet. Where are the fault lines? The stock market is one. You cannot build a market that is dependent solely of foreign funds and support to survive. Trying to be a mountain when we are actually an anthill is not only being ambitious, but maniacal. For the moment our market still looks like it is a big market with huge volume of trades executed daily. In reality it is like a hologram. Fictitious trading, or left hand to right hand, is the reason for the high volume. Then there are the rules and mechanisms that do not provide a level playing field for all players have distorted the meaning and viability of the stock market. It is waiting to collapse. Wait till the funds pull out. We will be left with a gaping hole to fill. The high property prices, particularly in the private sector, which also affect the prices of public housing. When the citizens have to pay a life time ransom for a place to stay is perceived as good and healthy, it tells a lot about the faulty mindsets of supposedly brilliant people. The high cost of properties is unsustainable in the long run as it will require a high income to support the prices. In the case of private properties, the few local super rich have bought whatever they could and are waiting for some suckers to offload from them at a profit. But the locals from public housing would barely be able to do it, except for a very few. So open the flood gate for foreign suckers to come in. And that is good. Sell our limited land to foreigners with the dole. Keep building more and more and at ever higher prices. The music will stop one day. The corollary to this madness is the rentals of shops, houses and factories. Just keep driving them up and the landlords will laugh all the way to the bank. One Tay Boon Yong wrote to the ST this morning complaining that his landlord, the HDB, has just informed him that his rental will go up by 20% in January 09. I presume someone will say this is inevitable, imported inflation, or HDB is now a private organisation and must answer to its shareholders, or profit is good. I am so tempted to use the 4 letter word here. Quick profit, by sheer market forces of supply and demand, is the easiest way to make money. The next easiest is monopoly or by edict. In the tiny world of ours, it is so easy to corner the market and put undue pressure to create the forces that favour high prices of everything. Even public transportation will be a victim of such a mentality. Hospitals, education, and anything, can be manipulated by quoting market mechanism or forces as an excuse to raise cost and price. If we keep going down this road unchecked, a few silly buggers who think that they are smart enough and fortune will smile on them forever, will think this is the best way to go. But the majority, which will also count these silly smart asses, will not be able to cope in the long haul. Many will have to struggle all the way while the few smart asses will have their turn to cry when fortune slams the door in their faces. The ancient wisdoms of thrift, lower cost, steady and sustainable growth in small increments are not called wisdoms for nothing.
Recently there seems to be a lot of complaints that Singapore is very uptight and lack of freedom of expression. People even got worried about what kind of T shirts they are wearing. Where is the sense of humour? Huh, what's humour? I think it is all a mis representation. I have all the freedom of expression that I need here, writing my forum/blog. I can even call Bush an idiot. No one has ever said that I can't write such stuff. We are very free actually, and very mature as a people.
There were two letters in the ST forum on the various charges that commuters need to pay for taking taxis. With the economic situations getting bad, many are trying to find ways to save a few cents if they could. The two letters made suggestions to the taxi operators to waive these surcharges or that fees to make it less expensive. Strange that these people who can afford to enjoy taking taxis will be bothered with these small charges. I cannot afford to take taxis so I choose to take MRTs. Much cheaper and can save dollars instead of cents. I am sure many of you will agree with me that if cannot afford, one should not take taxis. If want to take taxis, then be prepared to pay the price. If everyone can afford to take taxis, then the roads will be congested again and more ERPs will be up. Let the price mechanism determines who shall have a free ride down the expressways, who shall ride on taxis, who shall take MRT and buses, and who shall ride bicycles or walk. There is a price for everything.
I was not too convinced even with the regular gaffes coming from George Bush that the democratic process of electing leaders is not workable. Now we are seeing another Bush in Taro Aso, making as many gaffes as Bush in a single day. Then in Europe you have Sarkozy that is not cut out to be a President but more a socialite. The other aspects of failed democracies are the less than able leaders being elected for queer reasons all over the world. And democracy, without power and good leaders, will fail badly like what we are seeing in Thailand today. We must thank ourselves for the great political system that we have in throwing the best leaders from a land that is lack of talents. I am now convinced that we should have a one party system, and do away with elections forever. Oh, election within a one party system should still take place, not the multi party democratic election. In that way we can ensure that only the best leaders are kept in power to help run the country for as long as they can. Our model will be the model for the rest of the world to emulate and to reject at their own risk.
I went to the HDB website to troll for some figures on the much hyped discount given to Pinnacles at Duxton. There were some comparative figures on the average price of a resale flat in the same location. The average price of 4rm resale flats was $508k while the prices of 4rm Pinnacle flats are from $457k to $555k. Taking the average of the two, the average price of 4rm Pinnacle flats is $506k. If there is any subsidy, it is only $2k! (Note: the numbers were taken from HDB's site) Hey, can you call this a subsidy? I thought I read somewhere that the subsidy is about 20% off market prices, which means that if average market price is $508k, then average 4rm Pinnacle flats should be $407k. Now where is the subsidy that we were told? What happens, and it is going to happen, is that market prices are sure to fall given the poor economy. Would the new buyers of Pinnacles feel like instant suckers? MPs please ask this question in Parliament. And if Parliament is in recess, please email to the minister in charge for an answer. Can't believe no one pick this up.
After going through Teo Ho Pin's explanation on the investment of Town Council Funds, I got the impression that the investment objective is just to invest for better returns. But the returns will not be translated to direct benefits to the residents. It is just investment for investment's sake. Thought any gains should be returned to the residents in some ways like lower S&C charges. The other point that came through is that the investment is for long term and gains or losses do not mean anything or have no impact on the residents. They will not affect the residents in anyway. Really? Another point I thought Teo Ho Pin should address is the Sinking Fund. How much is enough? The NKF's 20 year reserves came to mind. There must be a limit on how much should be set aside and when enough, the burden of payment by the residents could be proportionately reduced. What we are hearing is that residents shall keep paying regardless of how much is already in the reserve. Collection of public money must be capped at some point. It must not be unlimited and unconditional.
Money In My Mind What I built, the people called homes With loving care, all very affordable Big or small, I have them all For the money in your drawer I move people by the loads On the streets, high above and down below Ordinary is not good enough World class or nothing less When you're unwell, no worry We look after you, in fine luxury Fame physicians there will be You, our treasure, the best is to be Your money we will keep Safe and guaranteed a life time, (have a good sleep) Your money will grow, in great numbers, (in times to come) Be comforted, plenty will be left when the end has come. Chorus: I’m not for glory I’m not for fame I’m not for anything Only money in my mind The above is copyrighted by redbean
Many of you are just looking at the 19% pay cut for ministers, top civil servants and the President. Actually the cut is deeper and much more than reported. You must remember that they were underpaid according to the benchmark and are due for a third adjustment in January next year. To take a pay cut of 19% from their current salary is thus short changing them. Technically, they should get their adjustment in January first to put their salary to their rightful place. Then the 19% cut can come in. That will be only fair. What's happening is that they did not get what they should get and got a cut instead. Then there is Hsien Loong who has pledged to donate his last pay rise to a charity. Now he will be worst off than the rest. He did not benefitted from the last increase like everyone else, and still kena cut as well. Someone did not do the sums right this time.
The minibond and high notes case is still unsolved and the general impression is that they are toxic, or this is what they are called. But the only people using this term are the critiques and those badly affected by them. The media conveniently used the term as a reflection of the general sentiment. But are they toxic? Till today, the creators and issuers of these products have never admitted that they are toxic and not been charged. Selling toxic products must be a criminal act as there must be more dangerous than just drug abuses And the financial institutions selling them too have never admit this new status. Neither have the regulators. The official view, if I am not mistaken, is that they are just high risk financial products offering a relatively higher return. They are perfectly legitimate financial products that can be marketed to the investors. And we are hearing nuances from financial institutions that new products of similar nature may still be offered some time in the future. So, are these products toxic? Officially and legally theyare not. Or else all the parties would have been dragged to the courts for a criminal act.
The legend of Sago Lane She’s the legend of Sago Lane A haunting figure of the past Before the sunrise she was there Heaving and pushing her towering wares She had no recollection of her years Did not remember anyone that was dear What she did today, tomorrow and thru the years She did the same everyday, and every year She could be a good looker for all you know The darling daughter of a mother, we were told Or the pride of some dashing suitors already past Never would she know how things had gathered dust Her stature had diminished with the ravages of time Standing with a stiff hunch, she was half her height With cardboards stacked high in her cart Stretching her neck, she could see not much ahead Chorus In a city without tears Where the wealthy indulged all thru the years Parties and celebrations in glittering lights There’s another world in the city, under the amber glow of backstreet lights. The above is copyrighted by redbean
High property prices are good. High salaries are good. So we continue to raise the cost of properties, rentals and of course salaries, and also the cost of everything. The cycle is unsustainable as the payers cannot afford to keep paying. The salary portion of the equation cannot keep going up. Now that salary is coming down, would high prices come down? Would the cost of living come down, prices of property and rentals, will they come down? Or shall they be propped up to give the impression of wealth? The artificially high prices of properties, by fidgeting with the supply of land cannot be sustained for long. The truth will break it apart. The American model of printing money and living on borrowed money is breaking down. Living from future income is only passing the buck. But the music will stop some time in the future. The music has stopped and the high cost model, when high cost is deemed as high quality, and good, is going to crumble. Are we still living in the beliefs that salaries can go up and up, and prices can go up and up? The higher the better?
Singapore is, and still is, the ideal convert of the Great American Dream. Everything American is good, except the bi party system. We adore all the big names, the great talents and the American melting pot. We plugged into America more than just to the world. We aped almost in entirety, the American financial system and their greed. And we are the first to pay the price of our childish phase of growing up. Big names, tested names and great talents cannot be wrong. Just pay them as much as they asked for, for they are worth every cent of it. We have seen many American myths in the past that went up in smokes. But those were totally ignored. Now this final disclosure of the colossal mismanagement and cheating by the financial whiz kids and their dirty dealings that cheated a whole nation and the world being opened up for all to see. Real talents would not have dug a hole that is so big to bury America and the world. Million dollar and billion dollar talents are everywhere on the streets of New York. Are we eagerly waiting to grab them to create our own myth? We have been conned by the juicy big apples of big names like Merrill Lynch, Citibank, Goldman Sach, Morgan Stanley etc etc. I too thought it was a great idea to put a stake in these great banks. I too was conned by this American Myth. Shall we continue to go along as a bright eye kid and saying yes to anything America? Pay big money for big talents, buy up big American banks and duplicate American financial systems and practices without a second thought to their relevance and extravagance?
This talk of a single party political system, is it real or just a trial balloon? If it is real, if the ruling party thinks that this is the way to go, I think we really need a referendum on this. The political system of the country must be decided by the people, not by a small group of wise men who thought they are wise enough to decide the future of the country and the lives of the people. From the way TOM is generating more news that favours such a system, it gives the impression that there are people who seriously believe in it and wanted to change it. And the sleeping opposition parties and all the learned men in our midst are also sleeping. Would there be any learned man of some stature who dares to speak out on this foolish idea?
Eternal Child For 2000 years I have no intent of returning The ethereal world was all peace and harmony All sound and light and no fury Nothing to stress out, nothing to fear Now I am told and on my way To the earthly place I bear no memory I descend through the layers of time and space The scents of matter bring me to my sense Oh mother earth, here I come Your eternal child of another time Bless me with all your loving kindness For a life within your arms I’m now hovering on the ceiling Staring at the lights I’ve long not seen Bright lights that blind, brightness of a different kind The woman lying there, shall bear me a new beginning Why shall there be so much agony, and pain Even before I set foot on earth again I hear her cry, my spirit shivers and wants to die This is not the place for me to start again Oh mother earth, don’t wait for me Your eternal child of another time I can’t bear to know what lies ahead for me I shall miss this reunion and return to where I rather be The above is copyrighted by redbean
The declared intent of Tan Kin Lian to enter the political arena offers a great opportunity for our political system to progress to the next level of maturity, a multiparty system with equally good men and women from both sides. If another 20 people of Tan Kin Lian's calibre will to step forward, then we will see more genuine representation of the people's interest at the national level. Politics will could or should become less abrasive but more sophisticated, a big departure from the gutter politics that we see today. The future of Singapore lies in its ability to evolve and adapt from the best political systems that are available. Under the present mindset of I am the only solution, the thinking is so skewed to the extent that people could not see any further than two fingers ahead of them. We are hearing views that either we have a one party or multi party and nothing else. We are what we are today because of our adaptation to what is available. We should seek to embrace the best of different systems as all have their dangers and flaws. A one party system is as treacherous as a multi party system. Flirting with the thought of a one party system at this point of our political development can only come from a inflexible mind. We are a multi party system but with a strong leadership to see things through, without going too far like an authoritarian state. If we become a one party state, things may not be what it is like today. It is scary that people are denouncing the merits of a multi party system wholesale and the choice is either or. Quite an extremist and naive approach in my view.
When I read this in the old media, I was thinking that this must be gov'ts money. Actually it is not. It is the people's money in the Medisave. Singaporeans have $40b in their savings parked in the Medisave. Now why is this called 'reserves?' Your money, my money, my money your money? Is it not wrong for people to understand that when we use the word 'reserves' we are referring to the general public or govt's money in the national reserves. Why are the people's money in the CPF or Medisave referred to as 'reserves' and not the people's savings? Ok, it did mentioned that it was both. Here is a clip of the press statement. SINGAPORE: Health Minister Khaw Boon Wan said healthcare costs will not be a problem during this recession. Speaking at the NHC Time Capsule event on Saturday, he said most Singaporeans have sufficient savings in their Medisave accounts, and hospitals will be more generous with Medifund applications during these hard times. The total reserves for healthcare stands at S$42 billion, 14 times the annual health expenditure. S$40 billion is parked in citizens' Medisave and it is growing at S$2 billion a year with contributions from workers.... Copied from CNA.
Just a few months, and all the iconic institutions of the USA are bankrupt? From investment banks, financial institutions, airlines and the three auto giants, are collapsing? What else is going down? All the hype about AAA ratings of American institutions seemed so real and now a fairy tale. Institutions that are sound, and of that size, cannot be wiped out overnight. The rot must have started long ago. The only problem is that the rot was hidden, concealed, and outside parties are not allowed to know. In fact all the thieves were paying themselves ridiculous salaries and perks and churning out glorious figures of growth and profits. Where is the transparency, accountability and responsibility? Big names never fail, very reliable, proven with good track records. And managed by the best talents money can find.
Got my pay check finally Only the numbers look funny Cause they keep something for me It’s for your own good, be happy The day came to get my money back Rules change, it will be ten years late Or when I’m lying in a hospital bed It’s good for you, be happy Then when I am 85, and I’m still alive My body’s weak, I can do no vice Then a mail came, my savings fine They think I can live till a hundred and five Chorus Oh hear my cry It’s my money It’s my money It’s my money But they don’t reply The above is copyrighted by redbean
I remember a parliamentary session when it was told that HDB lost $500m in one year or something like that, and the reason was the sale of flats below cost. Someone please correct me if the number of $500m was wrong. What is puzzling to me is that if you are running a business, with the best talents, and you decide on the cost of land, the price you are paying the contractors, and you also decide the price you are selling to the customers, and you lose money, $500m! What shall I say? Must be a lot of subsidies at cost. And who decides what is the cost?
We have seen how powerful the sales people were in the current financial crisis. They have made thousands of people part with their money to buy toxic financial products. Isn't it frightening, and a case of irresponsibility? For a product to be labelled and widely acknowledged as being 'toxic' and that respectable people still thinking that there is nothing wrong with them, and to think of peddling more to the people in the future, my god, we need to change the meaning of the word toxic. For all I know, toxic is even more dangerous than drugs, and drugs are banned. The power of persuasion and convincing the masses to do things against their interests is phenomenal and deadly. Imagine telling the people that it is good to hang a noose around their neck? Or imagine selling them a new bogus religion? Reading the media, I am fully convinced that Singaporeans are easily duded to believe in anything, even if you take their money away and give them a fictitious reason, they will go along. Now you can tell them that building an abattoir for their eventual slaughter, as long as you tell them that it is good for them, they will just go along. Can they really think?
We need a good political system to ensure our viability. Many gods have spoken on what is the best system for us to go forward. Demigods also have spoken of their ideal systems. All the systems on the table look quite similar, all very godly. Do the people have any say as to which system is good for them? Who shall decide what is good and bad for the people? Or put it in another way, shall we let the gods and demigods decide on a system which is good for the gods and demigods, and maybe good for the people also? Or shall the people say, look, look, we are also owners of this place and we want to decide for ourselves what is good for us. We don’t need to buy your godly ideas. Ultimately who shall have the final say for their own well beings and the future of this country? The gods, demigods or the beans?
Mas, Mas Selamat A warm tropical night, along the western shore A flickering light, and the sound of oar The boat hit sand, and they waded ashore Three shadows wavering on glistening water, nothing more For three years, they kept him, behind closed doors No one sees him, only his plans, To blow up planes landing in Changi Our gateway to the world, were known to all Food were plenty, they feasted him But wines and songs, were not for him They adore him, what a fellow When he’s confined, living in his own shadow The guards came down, out of the window He hit, toilet rolls on the ground Over the fences he flew, stealthily like a cuckoo His freedom run was more a walk, just for fun Chorus: Where are you Mas, Mas Selamat Tell us please We need a little peace Spare us your plans and let us live in one piece. The above is copyrighted by redbean
The Sunday Times published an interview with Tan Kin Lian and his aspiration to run for the elected President or a MP. The startling point is that he is going to run as an opposition candidate, giving reasons that he did not agree with the ruling party which he was once a member. Tan Kin Lian has all the prerequisites of a professional, and he fits the mold of what the people have come to expect of a MP. Though his wife expressed fear of a political backlash, Tan Kin Lian is still keen to push on if the people give him some endorsement of support. We will need more able people like Tan Kin Lian to step forward, maybe form a new party of like minded people and stand in the next GE. A party with creditable professionals will stand a very good chance of taking on the ruling party. There are many able people out there who are as good if not better and it is about time that they do something for the people and country. The country needs them, the country needs new blood and new direction, new philosophy and policies, and a new set of moral principles that are people oriented, for the well being of the people. The seed of a new political era has been planted and a new leader is emerging. The good men and women should rally behind him to provide a decent and respectable alternative to the people. There must be many talents out there who are ready to serve for the interest of the people.
ST correspondent Lorna Tan did a simplified version of a summary note that is easy to understand to the investors. She used a copy of the DBS High Notes 5 prospectus and gave her own inputs which I find very comprehensive, at least to a layperson like me. The key features of her take are: 1. It explains that the investor's money will be used to buy a basket of securities. This is then used as a collateral for a bet. 2. The bet is on 7 selected financial institution and one country, that should any one of them got into financial trouble and becomes 'bankrupt', the investor will lose all his investment. 3. The 7 entities have nothing to do with the money invested. 4. The product is thus not suitable for people who cannot afford to lose their principal sum and who need the money over the next 5 1/2 years. I would like to make a few amendments to her take. 1. Change the title of the Notes to Toto High Notes 7 2. Allow the bettor to choose 7 entities from a list provided 3. Allow the bettor to pick 1 country from a list of countries 4. The product should be sold at Toto booths 5. Financial institutions should not be allowed to indulge in such gaming products. From the nature of the products it looks to me more like betting than a financial product. And it is much easier to run such a betting scheme than the S League. So much cheaper.
If anyone or any party can convince well educated, highly educated people to believe in what they said, it must be a very capable party, or least in its ability to win converts to its cause. The idea of a one party ruling system, akin to a benevolent dictatorship, is like convincing the livestock to walk into an abattoir. A walk to no return. I still cannot believe that this is possible, but to hear them sing praises of a one party system, they appear real, fully bought the idea, hook, line and sinker. I must say, great job, well done. The other way to look at it is that livestock are meant for the slaughter house. They can't differentiate between that and a home. They are bred just for that, unthinking or thinking, that that is the only way to go. You see how happy the sheep in the field and the herd of cattle grazing, or how the chicken enjoy themselves when the farmer appears with their feast. They won't trade that kind of life for anything else. It is very comfortable and assuring.
45 years and more The crowd came, hungry and lost Pleading that I be their boss I led, they follow, no question ask, not a single doubt For they trust, I the boss For the hungry, they I fed For the jobless, work I gave The uneducated, schools I built, an education they got Most of it all, it's dignity they had My hair grows white, my hearing fails My eyes weaken, so my sight No longer do I think, nor see the things I see Never will I need to hide Where are they who came to fight Where are they who crumbled, left in flight They made me mighty as they humbled themselves And trembled at my sight Chorus For 45 years, I'll said it all Things need done, I'll done it all Take me on, I'll beaten them all 45 years on, I am waiting for more The above is copyrighted by redbean
Tripartism is the cornerstone of our labour management relation. Its existence and being part of the institution of Singapore Inc have been going on for too long and maybe forgotten. Union was claiming that they got only 3 days notice of a big retrenchment. And I wonder how many days did the MOM got. MOM had to rush out a new set of guidelines on what a corporation should do before drawing out the butcher knife. And the Union is crying foul. The rhetoric is getting stronger by the day. Last night we heard Swee Say talking about cooperation to confrontation if management took the Union for granted. How could our labour management relation suddenly took a plunge? Someone sleeping or someone thought that they are also the govt or the Union was not consequential? Maybe it is forgiveable if decisions were made by FTs who are new to our unique brand of tripartism. Incidently, were locals let go at the expense of retaining FTs? There was this motherhood statement that the foreigners will be the first to go and the jobs of the locals will be protected. How many were locals and how many were foreigners that were retrenched?
The last few days more views were out in the old media about the merits of a one party political system. Two writers, Dr Tan Wu Meng, the Organising Secretary of Young PAP and Tim Mou Hui put their views on the merits of a one party system in the ST today and pointed out the shortfalls of a two party system as mentioned in Gilbert Goh's letter. Against all conventional wisdom, or it is their new wisdom, that a one party system is the way to go. They have thrown away all caution of how treacherous is this path if we are not careful. It is a path of no return. Singaporeans have already flirted with the danger of a one party rule with more than 2/3 majority in Parliament all these years. This is no small matter as it means that the majority party can do whatever they like. They are given a blank cheque to even change the constitution to their likings. In a worst case scenario, a rogue govt can simply amend the constitution and change a democracy into a dictatorship. Singapore is lucky that we have a kind of benevolent dictatorship as coined by Chua Mui Hoong, and survives, prospers and progresses over the last 45 years. In different hands, we will be in dip shit. Definitely this is no justification that things will be the same going forward. Should Singapore really go all out to embrace a single party system or even a dictatorship? I try to appreciate the reasoning of this new wisdom. But my instinct and old wisdom say this is highly dangerous. It is thoughtless and senseless. And to think that thinking people even clamour for such an eventuality is really frightening.
The ungrateful Singaporeans are complaining again. This time for the loss of a miniscule $18m from Town Council fund, which is so small compares to the $2 billion it has hoarded. And if the $2b is not enough, they could easily raise the conservancy charges and build the reserve to last 20 years for a rainy day. Singaporeans did not realise that this is the best team handling their money. It could be worst, and all the money could have been gone if a lesser team was in charge. Please count your blessings and be grateful, and thankful. Your money is in good hands.
I was in a karaoke room with some friends and I could hear the songs that they belted out with gustos after a few drinks. Hotel California, Bridge Over Trouble Water, My Way, Heartbreak Hotel, Leaving on a Jet Plane, I don't want to talk about it, etc etc. All the all time favourites were foreign and bears no relation to what we are or to home. Instantly many song titles flashed through my mind which will make great home songs for Singaporeans. Songs that we can sign and share with emotions. Let me share some of them here. Money in My Mind More Good Years Let's Move On 45 years and more I punch an MP No charity at home Say Yes to more leeways It's only peanuts Help is on the way Highway to Paradise Twilight in golden years There were many more which I were unable to recall at the moment. I shall try to put some lyrics to these songs if I can find the inspirations some day.
More are singing the song of no talents in paradise and the soundness of having only a single political party to rule the country. How could there be no talent in a world class city when hundreds of straight As students were sent overseas to Ivy League universities for at least the last 20 years? At 250 a year, we should be having at least 5000 of the brightest living among us. Or are they fake? Their straight As were fake, their first class honours were fake? We are crying that we can only find 10 or 20 of them to serve in the govt and the rest were not good enough or not willing to serve. This is a myth that the simple minded Singaporeans are fed and expected to believe. For every first class doctor or lawyer or engineer in the govt, there will be at least 10 or 50 of them out there with as good a qualification. How can we dismiss the rest as no talent? Actually we are all talking bull. Political talent is not equated with professional talent in other fields. Just because someone is an excellent doctor or lawyer or engineer, does not make the person a great politician or leader of a country. People are gifted with different talents for different things. It is more likely that when one is gifted in one area, it is unlikely that he is equally gifted in other areas, accepted that this is not always the case. Neither is it the case the other way round. Do not think or believe that an excellent doctor, lawyer or engineer will make an excellent politician. This is a fallacy that must not be sold to the masses. We have actually seen the reverse as a bigger truth. Please stop singing the one party song and think. What we need are leaders and good men with a heart for the common people. No need for first class doctors or lawyers or engineers when the heart is not in the right place.
Rupert Murdoch has warned against the role journalists and old media have been conducting themselves. Soon they will run out of readership if they think they are still demigods. This is what Murdoch said, "It used to be that a handful of editors could decide what was news--and what was not. They acted as sort of demigods. If they ran a story, it became news. If they ignored an event, it never happened," Murdoch said. "Today, editors are losing this power. The Internet, for example, provides access to thousands of new sources that cover things an editor might ignore. And if you aren't satisfied with that, you can start up your own blog, and cover and comment on the news yourself. Journalists like to think of themselves as watchdogs, but they haven't always responded well when the public calls them to account." We shall write our own news and in the way and style we deem fit. We can shout and scream and kpkb. The old media cannot beat us on these.
There are many myths that have fallen flat on the ground. We used to be told that if people invest their money in stocks, in the long run they will be better off. This tooth has been proven beyond any doubt, that this is not the case. Many have lost their CPF savings when they put their money in stocks. So the next truth is to not to put money in stocks but in unit trusts to spread the risk. The result is the same. Kaput. Ok, try another option. Put your money with the experts. Let the fund managers handle your money and invest for you. What a wise recommendation. Another kaput. Trust only the big and proven funds. The bigger the better. We all know where it will all end up. The final option, keep your money in CPF. Very safe. Guaranteed. This one will surely not become a myth.
This familiar song has been sung with increasing frequency and the singers are getting much more comfortable singing it. It sounded to me as a cocky and arrogant tune. If you cannot afford 4rm, go for 3rm or 2 rm. And if you are so desperate, don't worry, more rental flats will be built just for you losers. What happens to the more good years and Swiss standard of living? Why are we spiralling down instead of being better off? The losers have been 'encouraged' or dismissively told to live within their means. That is their lot, that is their station in life. But should that be the way to go? Can we lower the prices of flats? We have this game of downgrading. On the other hand there is another game of pushing up the prices of properties. Land sale will be withheld if they cannot fetch high prices to protect prices of properties from falling. Very good reason. Property developers, private or public, privatised public developers, will only have one choice, raise property prices as the cost of land can never come down, and so were other costs. It is forgiveable and unstandable for commercial developers to want to max their profits. But in so doing, they only facilitate the privatised public developers to raise their prices. No need to look at cost. Just look at market prices. Market price up, just up the price accordingly. Then tell the losers to downgrade their expectations. When one side is told to downgrade and the other is running away with higher prices, where will this lead to? Will it snap? Can we ask people who are earning millions to downgrade their lifestyle if they cannot keep up with those earning more than them? Or shall we give in to their demands and give them more money to spend? And mind you, giving money to millionaires is no small matter. They will not accept anything less than a peanut.
We have 45 years of success under the able leadership of the ruling party. I think people will have a hard time trying to disagree with this truth. We are here today because of the unique political system that we have developed and copyrighted. And it is a system that is not easily replicated. It is a system based on able and benevolent leadership, tough paternalistic and incorruptible leaders. What is the referendum all about? We need to give the people a choice to choose a political system they want. We have a tested system that the people have lived in and proud of. It has been proven beyond any doubt, comparing to the countries around the world, that our system delivers. This one party dominance system must be one of the two choices to be offered to the people. The next is a benevolent dictatorship, a slight variance from the current system. The conditions for its success are quite similar from the one party dominance system except that you can do away with elections. Let the benevolent dictatorship rule and make everyone rich and happy. Both may not be near to the ideal western model of democracy, but both work efficiently to provide the people with the best leaders and a high standard of living. There is no need to blindly follow the West to want a western democracy. What the people should decide is what is good for them. Let the people choose in a referendum, for a one party dominance govt or a benevolent dictatorship. The people cannot claim that there is no choice. Just choose one.
There have been many criticisms on the no show of opposition as well as ruling party MPs at Hong Lim. Let me try to address the opposition side of the unhappiness. Many would have seen this as a golden opportunity for opposition MPs to dig in and side with the people, and score political points. It is a straight forward expectation of how things should be. But look at it closely for a moment. What could the presence of opposition MPs help the distressed investors? I think it will make things worst. They would have politicize the issues and make life more miserable for the investors. By not taking the sides of the investors, the ground is left open for the govt to step in to do the right thing. The govt need not be seen fighting with the opposition for credit or becoming defensive with their presence. And the issues can be handled in a less complicated and proper way. Tan Kin Lian’s presence should not pose too much of a problem as he is just an individual and does not belong to any political party. Is my explanation logical?
I wonder how many of you believe that there is a lack of political talents in paradise. I, for one, agree that there is really a lack of political talents. Look at everyone around, you can hardly claim that they are talents. This is the sad state of affair in paradise. Everyone is excellent in making big bucks, but being a political talent there are so few in between. Oh, please disagree with me if you think you are better than whatever talents there are out there. Don't feel slighted. We just got enough for one political party. And that is a fact. Oh dear, those not in the ruling party are going to be angry with me. I am just telling the truth. If they are good enough, they should have won the election and form a new govt. But they have lost to more able opponents, more talented than them. Anyone want to prove me wrong?
Shall we enshrine our one party political system into our constitution? There are views that a two party adversarial system is not good for us. According to who and who shall determine what is good and bad for us? Maybe I should ask who is the 'us'? And there is also this view that we don't have enough talents to run two good political parties. Really, we are so short of political talents? In the artificiality of our existing system, politicians can be created by drawing them out from a hat. And you can draw out as many as you want. There cannot be any shortage of political talents using this method. If our political system should only have one party, why waste the time of having so many political party registered? Or can we have a strong Workers Party or a New party with strong and able candidates? Or one party dominance system means only THE PARTY and nothing else can do? Definitely a one party system does not mean a Workers Party govt or any party govt.
Should we be frightened by it again? We have experienced many helps in the past that we wonder whether we are better off with or without the help. Like it or not, the people will be getting help. We get help in good times and in bad times. And help reaches everyone other than those that are really rich. So should Singaporeans be looking forward for more help? In the current state of the economy, Singaporeans have no choice but to look for help. The richest country in Asia next to Japan and its people are in trouble and waiting for help. This time it will take more than a Tan Kin Lian to help them. What if help does not come? Can we imagine how paradise will become?
The announcement of Pinnacle Notes 9 and 10 becoming worthless is another bad news to hit the Singaporean investors. Another 700 investors are hit this time, adding to the earlier lists involving minibonds and high notes and low notes. These are events that have come to fruition and now it is only about picking up the pieces. I am looking at another Pinnacle that may hit the innocent Singaporeans. This one is waiting to happen and can still be avoided. I am referring to the Pinnacle at Duxton. The HDB has happily added another $200k to the prices of the flats on offer in the second round. It claims that it is justifiable as the market prices of similar flats in the same area have gone up much higher. Actually it could be more than $200k if not of the subsidies against market prices. Now, given the recession, people losing jobs, losing money in investments, property prices coming down, there is a high possibility that if these new buyers are going to pay $200k more, they could find themselves paying much more before they move in should the market turn down. So there will be another batch of eager buyers going in with their eyes wide open. Should that happen, it probably may not, Tan Kin Lian would be very busy again. And Hong Lim Park will see more activities and visitors, this time from new home buyers. Would this Pinnacle crumble like the Pinnacle Notes 9 and 10? The flats would not become worthless for sure. But if the price drop is substantial, the new flat owners would not be too happy either.
Were they abandoned? They were frightened, lost, in despair and crying for help. But their voice was lost in the din of heavy traffic and the vibrancy of a city in a hurry. No one heard them. For many who heard, the replies were rather dismissive. They were greedy. They knew what they were in for and they should walk away without an arm or a leg. That is the rule of the game. In their hour of desperation came a shining light. He came not sitting on a golden chariot. Neither did he have any trappings of authority or marks of approval. He stood on the mount in Hong Lim. He spoke and they listened. And they followed him. A leader has risen in adversity. A bond has been built between the lost sheep and the man who is to lead them. He could be the stone that the builder has rejected. And this could become the cornerstone of a new movement. There was a genuine and urgent need for leadership of a different kind, a leadership that is built on the need and helplessness of a people who are looking for one. It was a classic storybook scenario for great men to rise to lead. The natural leaders of the people will come forward to serve, not for money, but to answer the people’s call. This is real leadership.
The ideology of Confucianism is very clear about the roles of people and their relationship in society. Everyone has a proper place and should behave accordingly. The king must behave like a king and be responsible for his kingly roles. The people must be people and go about their lives as the ruled. Also, people must behave responsibly to fellow human beings. The father or mother must be what they are, as responsible parents. Relationships and roles are clearly structured, no overlapping or crisscrossing, no confusion. And no wearing multiple hats of conflict and contradiction. When such conditions exist, society or country will be orderly and peaceful. When the roles are mixed or interwoven, when king acts like commoners, or parents like irresponsible children, or acting as both, everything under heaven will be in turmoil. Applying these to our present polity, I can see only Confusionism instead of Confucianism. What we have today is a govt that is not only the govt but also in business. And businesses, with govt participation, think or sometimes behave like they were the govt. The workers are represented by the Union. The Union is also the govt, or led by the govt. So the govt is the union and is the worker and vice versa. This confused or complex state of beings has completely blurred the respective roles and responsibilities of the organizations. Obviously the design of these organizations to be in this way was cleverly crafted to operate in harmony and efficiency. When things are running smoothly, the system will be greatly admired and appreciated. We have attributed our success and good fortunes to these creations, tripartism, Singapore Inc, privatized public hospitals and privatised public business organizations etc etc. But when things start to go wrong, when there is conflict of interest, people get confused. What are they supposed to do when they are 3 in 1, govt, business and people? The holy trinity is supreme only in the heavenly abode when each can switch roles instinctively with ease without compromising one another. In the earthly dimension, human beans are not that godly to be able to switch their roles efficiently. A time delay often occurs when the incumbent responsible has to decide which hat he wants to wear or should wear. The minibond crisis and the great retrenchment are classic examples of how people got confused in their roles. There are many other examples. Should they act on the side of the govt, or on the side of business, or on the side of the people? Which is the correct role to play? It is Confusionism at its best. In the midst of this confusion, Tan Kin Lian rises to lead the people when many people and organizations should be doing so but not doing. Once the void is filled, the divide gets clearer and wider by the days. Confucianism is good when there is no confusion. Confusionism is troublesome.
We have been talking about being a gracious people for many years with campaigns and leaders teaching and guiding the people on how to be gracious. I think being gracious must be something good and desirable. It speaks a lot about what a person is when the person is being complimented as a gracious person. Straits Times Senior Correspondent, Lim Siew Hua, wrote an article about how gracious McCain was in his concession speech after losing the Presidential Election to Obama. Or was it American graciousness rather than the graciousness of a single man? Al Gore was equally gracious when he lost to George Bush. And that incident was particularly disturbing and veered towards the element of fraud or misdeeds. It would be disastrous if it happens here. So were the other losing Presidential candidates. They all had kind words to say about the victors. But graciousness is not only from the losers. The victors were equally gracious and magnanimous to their defeated opponents. They only have praises for them and could have hugged and kissed them once the election is out of the way. Obama talked about what a wonderful man and hero McCain was. And after the election it begins a healing process when both parties come together as one people. There will be post mortems, but not to find out what wrongs were committed by the other party and to settle scores. No one is going for the butcher knife. That is the graciousness of a people of a great country. But America has more than 200 years of history to learn how to be gracious. It takes time to learn the nice things about life. Learning to be an expert in expletives, in being bad, is easy. In fact it is so natural that no learning is required. To be gracious is a difficult thing to learn, and to be.
Not only are the people ready for a minority PM, the political system is also ready for it. We have the GRC to ensure the presence of minority MPs. And we have a system whereby the PM is elected by the cabinet or core leaders which can be counted by a pair of hands or maybe add a pair of legs. These are the wise men and women that decide who is the PM, not the people. The people are not ready? Who says so? Is there a poll being conducted? From the discussion in the media and cyberspace, the majority are all very happy to have a minority as a PM. They all believe in meritocracy and the best man or woman wins. And this feeling for a minority PM is especially more pronounce among the majority as many have already been colour blind after 45 years of being a Singaporeans. Look at the inter racial marriages taking place and you will know that the majority loves the other races more than their own kind, and have no inkling of racial differences. Malay, Indian, European, all are happily married to the majority. And many from the majority have spoken up in favour of a minority PM. And we have tested this with the elected Presidency. The current elected President is a minority and happily accepted by the majority. He is also very popular across the races. In short, Singaporeans are already colour blind. I am not too sure of the new citizens who are still very conscious of their own ethnic identity.
With Singapore's number one bank firing 900 staff, other banks and companies could take the cue and go into full drive to shed the unnecessary fat that they have accumulated during the hazy days of good profits. Time to start trimming the excesses and grow lean. What will the union do in the face of more workers facing the chopping block? Lim Swee Say has made the harshest comment so far on DBS. But what's next? We have more than 10 years in converting our rigid pay structure to a flexible one with built in flexi wage and bonuses just for a day like this. Apparently this has been forgotten and everyone is happily wielding the axe as the cure all of the ills of years of irrational exuberance. There are many other measures that can be implemented other than just axing staff, plus the flexi wage system. There is still a last cut from the CPF. But this is still a long way off. For companies that believe in equal misery and every employee is a member of the big family, that they are caring employers, the first thing to do is to cut bonuses and later wage reduction, early retirement etc. Given the present crisis, some jobs will not be there anymore and this is a unique problem of its own. The unions must have a list of criteria to look at before giving the nod for companies to cut jobs. Are the companies still profitable? What is the bottom line before union will agree to such a drastic measure? Have other alternatives been explored and adopted that are less painful? Would the retrenchment mean that those who stay will enjoy no loss in pay or benefits? And like it has happened before, after a few months, companies that retrenched staff start to hire again and paying huge bonuses that they benefited from the retrenchment. Companies also have a responsibility as a corporate citizen. If everyone is so trigger happy to cut staff, we will have a big unemployment problem in hand and many families are going to have a hard time. It is time that companies, especially those that are 'protected' in some ways be it monopoly or special privileges, connections etc be made to absord some of the pains of the recession and stop thinking that making profit is a guaranteed right of being. It is time that they accept that in bad times, they must absord some losses and look after their employees. The investors were told to take their losses for bad decisions in investing in wrong notes. The union should pass this message through and wave the red flag and cry foul.
The lesser beans in Japan and Australia are trembling in fear of short sellings in their stockmarkets. Australia yesterday announced that they would continue to restrict shortsellings in their market. The higher beans in paradise are still so confident that they can manage short selling in the market and are not doing anything about it. Or they are oblivious to the damage that it is causing to the investors here and the viability of the stock market in the long run. We are simply brilliant!
How ethical are we? The word ethics becomes popular over the last few weeks. Even the minibond fiasco becomes a case of ethics to some. But that was pushing it a bit far. The minibond issue is a simple commercial issue, a contractual issue, with legal documents. Once you sign on the dotted line accepting what were written in the document, and if it says you will die after reading it, just too bad. Go to courts, they will interpret it legally. There are contractual terms and obligations. Tough huh? Ethics became an issue in the case of donors of human eggs for scientific experiments. These donors can donate but cannot reap monetary benefits from it. Next came the issue of organ donors. They too should not benefit from donating their organs. But the committe back off a little by saying that some compensation can be made as long as they are not worst off or better off. So the pedicab drivers cannot take more for donating their organs. It will be seen as organ trading. But the specialists operating for these organs can charge for the sky and be paid handsomely for it. Both are saving lives. To stretch the argument a little further, can hospitals whose mission is to save lives be allowed to charge as much as they want as long as the patient can afford to pay for it? Is this a matter of ethics or a matter of business? Is it ethical to keep raising prices of everything because it is convenient to do so and the people cannot object to it? It is quite strange to be discussing about ethics and not being ethical to make money when everyone lives by that principle. Make profits, legally or illegally, is an admirable trait. It is called talent here.
I posted about the possibility of a minority PM and issues like keeping foreigners as PRs as well as having different PMs for different ethnic groups. I am not having much of a discussion, or interest shown in them. Is it a case of distinterest or apathy? Anyone agree or disagree with what I have said? I taunted by saying that the 3 Indian ministers are better than the rest of the majority and I thought this will provoke some reactions. Maybe everyone agrees huh? Or maybe not. Maybe all our locals are not good enough and we should be looking at the new citizens, the FTs that are presumably better than the locals and are here to save us and provide us with better genes. The first foreign talent I have in mind is Gong Li. She is making a lot of money and well known internationally. How? At least she makes more money than any of our ministers and should qualify as a supertalent. The next possible candidate is Taksin. A former PM looking for a job and a home. And he has proven himself more than worthy in all areas to be a possible PM. I think he will have no problems blending in here as he has been here many times. And he has money! Hey, how about Vijay Singh? He was here before, like Obama in Indonesia. He should feel very comfortable being one of us. And he is a supertalent as well, making a lot of money and world famous. These are candidates that we can identify with. And there are many more who are already citizens and living with us. I think our talent pool is much richer now with all the FTs who have turned citizens.
The pricing of HDB flats to market prices is just a natural and convenient process. When market prices go up, prices of HDB flats must go up. But HDB is also kind enough to price them with a market subsidy so that the buyers still pay less than the market price. Is that not fair? Yes it is fair, and very logical and very reasonable too. What about the immediate and long term consequences of higher property prices? The immediate problem to the new buyers is that their money shrinks every time the market price goes up. The young couple could be saving for their $300k dream flat. And they think they have saved enough only to find that money still not enough because the $300k flat is now $500k. Thanks to the appreciation of property prices and HDB’s pricing policies. And thanks to the great subsidy the HDB is giving them. But money still not enough after several years of savings. It is like chasing an illusion. Ok, buy a smaller dream flat. Don’t buy what you cannot afford. That’s life man! Profit is good. Why shouldn’t HDB make the extra profit when they can? Making profit from who and for what? The person who made this clever decision should be rewarded with a $10m bonus. The decision is so brilliant and the profit so clean and easy. But he shall remember that he has just hung a $200k millstone on the neck of the new buyers. And the affected buyers are not going to think kindly of it. Even donating his millions to charity will not be enough to amend the losses or burdens that the people will have to carry. As a govt body, the mission is to serve the people, not simply making more profit from every opportunity. It is an unnecessary decision that HDB need not make. A smaller increase would be much palatable. Instead, the $200k will be seen as an opportunistic decision by a mixed up organisation that forget its main mission. And it will reflect badly on what govt is all about. When the roles of govt and business got entangled and the bearing lost, this is what the people can expect. When the govt thinks it is doing business and when business thinks it is the govt, everything will be turned upside down.
During the early days of our independence, we were still suffering from the colonial hangovers. The residence were not all citizens and still lived as if they were British subjects. Home or obligation was to their motherlands. This island was a transitional place, to make a living and to return to their homelands. Do they bother about who became the Prime Minister or was he of a particular race? In fact they were more accustomed to a European face as the political master. And if not, anyone would do. It was not their concern. For those who were eligible to vote, a minority, they could vote whoever they want. No hard feelings, no emotional attachment, no ethnic pride to boot. They knew that they were just migrants, did not belong here. After 45 years of independence and nation building, we have created a fragile nation from the various races. We wanted one people regardless of race and religion. But we also want every race to retain their own identity as their cultural ballasts. The is our paradox. We want to be one but our policies do not turn us into one. Our identity card still says we are of this or that race. Can we then rise above our racial divide and become one people? There was a time when we were moving closer as one people. Then we have this influx of foreigners whom we called new citizens. They came and they accentuate our differences more distinctly. We are back to square one, to redevelop a new people from all over the world. As the number increases, prepare for more diversities and pulls into all directions. If we have let our socio political development to continue without the disruption of the new citizens, the issue of what colour is our PM will be naturalised over time and a good man will be seen as a good man, regardless of race or religion, and will just fit into the shoe without much hullaboo. The more we raise such questions, the more will be the awareness of our differences and the sensitivity of why not a minority PM. Only time can overcome such differences. But if we keep diluting the pot and prevent a Singaporean identity to surface, we only have ourselves to blame. Two possible path forward to alleviate such an issue. Since we have regarded PRs as locals, it may be better to keep them as PRs. Then they will know how to shut up and stop demanding for their rights as a citizen and for their own PMs, like what we were during the colonial time. The other is to continue what we are doing, have more new citizens and be prepared for the new interest groups to demand recognition of their tribes. Maybe we should evolved a system with 4 or 5 PMs each of difference races.
When asked, Lim Swee Say said that cutting CPF is a last resort and should only be used after all measures have failed. I would presume that retrenchment should be a last resort for companies to take when they are trimming cost. Retrenchment is a very painful process and has a serious psychological effect on the affected staff and should not be treated lightly. Are we going to see more companies starting their retrenchment exercises as we enter a phase of recession? If that is the alternative, pay cut or CPF cut could be more palatable. The Union's stand is that no company will be allowed to take the easy way out by retrenching staff in difficult times.
It took so many years and a big bust to realise how dangerous the pseudo bonds and notes were. Many the world over were mesmerised by the 'sophistications' of these derivatives and other similar products like CDOs and credit default swaps. As long as they are from Wall Street, as long as the Americans think that they are good, who is wiser to say no to these products. We do now although many still think that there is nothing wrong with such products. Whole industry has sprung up to service and participate in the euphoria of these high earning and high growth financial snake oils. Their failure will now see the industry collapses and many people going out of job. No one is going to touch any of these derivatives for a long time to come. But they will mutate and sneak in again in different forms. Hopefully everyone will be wiser and more careful in scrutinising any such products in the future. There are similar products in the stock markets that are no better than snake oils. There are many highly sophisticated instruments being peddled to the unsophisticated punters who just know how to punt without the knowledge or ability to understand how they work. And there are the flawed IPOs that should never be listed at all but only through the collusion of a number of participants that made them possible. And the end result is that they collapsed within a few years but after taking all the money from the innocent investors. So far no one has been taken to task or held accountable for such misleading IPOs and products. The auditors and rating agencies and issue managers just pat their backside and life goes on as if nothing happens. The investors who lost their monies are expected to accept their fate as a bad choice, as something inevitable. It is time to stop snake oils from being peddled to innocent investors. No snake oil or tainted milk is allowed in our financial system. We have seen it, know what they are. There is no reason to let it be and do nothing. It is irresponsible to let them come in after seeing the dangers they pose to the investors. We must be responsible to ensure that innocent investors are protected from snake oils and tainted milk.
Sued for misleading investors Nov 10, 2008 Suit against Lehman, UBS seeks an order certifying it as a class-action. LEHMAN Brothers Holdings Inc's Chief Executive Officer Richard Fuld and UBS AG's US brokerage were accused in a lawsuit of misleading investors who bought Lehman's 'principal protected notes' before its September bankruptcy. The complaint, filed on Nov 6 in federal court in Manhattan, claims Mr Fuld and 10 other past and current Lehman directors deceived investors about the risks of buying notes that are now almost worthless, Bloomberg news reported on Monday. The suit seeks unspecified damages and an order certifying it as a class-action, or group lawsuit, on behalf of other investors.... The above was posted in Tan Kin Lian's blog. I am just wondering how it will affect the cases here if Lehman Bros is found guilty, and has to compensate the investors in full. Will the investors here be entitled to the same full compensation, maybe with damages as well, despite the fact that they have read and signed the disclaimers, that they are implied to have agreed with all the terms in the sales agreements?
Too coincidental, too bad. Believers of these signs will say, 'I tell you so.' These are signs that may not be relevant to the non believers. But these are not the only signs that are appearing since the ominous day of 06.06.06. Things are happening and getting more serious in nature. The very first inkling of things going awry was the Wee Shu Min episode. This established the kind of discord and the distancing of the elite from the losers in paradise. The divide was not only widening but became public. Then came NKF, Mas Selamat, delay of CPF withdrawal, the ERPs, no pay rise for the workers, high prices of everything, and now the financial crisis. I must not forget to mention the banning of a cycling event in a park. Though these events were trying, testing to the govt, they could be handled and turned towards the govt's favour. Unfortunately every single event was handled in a way that left much to be desired. The consequences were the lost of political capital. Wonder if there is any left in the bag for the next general election. To make matters worst, the comments from the leaders were less than enlightening. Often people felt so hurt by them that they reacted by ridiculing the speakers. Throughout our independence, never have our leadership been found so wanting, so wishy washy in tackling problems and in siding with the wrong side, not on the side of the people. The leaders may think that they were speaking from a legalistic or factual point of view and expected the people to see the logic and wisdom of their words. Would the people be so rational and so sheepish, and accept the profound wisdom, and move on? Apparently the people are dumbfounded.
There were many discussions about the eventuality of a minority PM in govt. This is a rather sensitive issue that is close to the hearts of the minorities. It is only a natural human instinct that they want to see their own kind becoming successful, rising to the peak of any profession. And as the number of the minorities grows in strength, the voice will be louder. The rooting for a minority PM should not be seen as a racial thing. It is just their aspiration. But if the majority takes a stand that the PM must be from the majority, then it may be seen from a different light, maybe a racist thing. So the majority should not talk too much about such an issue and let the minorities air their 'grievances', a bit of letting off the steam. From my observation of events, it would not be long before a minority PM be elected by popular vote. We have excellent minority ministers in the like of Tharman, Vivian and Shanmugam. They stand a head above the others in terms of leadership quality, charisma and eloquence. And professionally they are the cream of their profession. All they need is to turn on their offensive charm. And knowing the shallowness of the majority politicians in politics, though they all believe that they are shrewd and inborn politicians, they will soon vote for a minority PM. As far as politiking is concerned, the majority is at best naive or plainly inadequate. Look at all the interest groups and associations and it is no surprise that the one that is calling the shot is often from the minority. Anyone from the majority that assumes the position of chairman or president is likely to be a pet of the real power holder. Another point in favour of the minority is that the majority are also believers in meritocracy. And when they see a better candidate than themselves, they will be the first to give the candidate their full support. My advice to the minorities is to be impatient. A minority PM is a high probability. And they may get a bonus, with a minority President and a minority PM at the same time. They need not wait for long.
There are many people demanding that Temasek and GIC should be more transparent and to reveal how much they really have in their portfolios. We have heard of $200b or thereabout. Some speculated that it could be more. Temasek and GIC’s stand not to disclose what are in their coffers should be appreciated. The world is infested with ruthless and greedy predators and they are constantly eyeing any organisation that has money. When they have winds of that, soon they will make their way in with their brilliant proposals only to con these organisations of their hoards. To these financial experts, it is as easy as ABC. We have seen this happening a bit too often. The moral of the story is not to let people know that you have money. They will come and help themselves with it. And the $200m per annum calibre thieves from Wall Street are not easy to parry off especially when your treasures are guarded by $20m calibre material. No fight. Alternatively we may want to employ the $200m type to prey on other smaller funds managed by lesser material. Let’s be prudent and not to tell anyone about how much we have in our savings
I just read Gerald Giam's article on axing staff by companies to boost profitability. Down sizing is always a last step in a company's list of options to cut cost as its impact on the affected employees is more than just losing a job. It is something that responsible management should think very carefully before doing. Maybe the trade unions should take a stand on this issue. Companies that are still making profits, though lower, should not be allowed to axe staff. Such a measure can only be supported by the unions when the company is going into the red. A few years of lower profits or even no profit is not something that is intolerable. And just a play on numbers. If companies are paying 12 mths or more bonuses, by halving the bonus payout is equivalent to cutting the staff by a quarter. And to cut a 10% workforce, the company could simply reduce the bonuses by 20 or 30%. No need for desperate measures like retrenchment. Companies have a social obligation to their employees and to society to avoid such drastic and destructive measures. Do companies resort to retrenchment to protect their big bonuses?
Marina Sands in trouble? Fear Not. Vegas, Sands or whatever, are not the only casino operators available. If Sands could not complete the job, there is Genting waiting in the wing. And if two Gentings are too much to stomach, we can always invite Uncle Ho from Macao to pay us a visit. I can't remember why he was not allowed to bid for the Marina Sands then. Maybe he was viewed as another SWF, not welcomed. But now that SWF are welcomed the world over with open arms, being courted even by the US and EU, it would not be too much trouble to tell Uncle Ho that he is welcomed to take over from Sands. There will be many suitors waiting in the queue in case Marina Sands throw in the towel. And it could be had for a song. What a great opportunity! Temasek should seriously consider running it on its own, 100% Singapore owned.
When all the banks were selling minibonds and high notes, the world then was a vastly different place. It was like in the 19th Century when the British and the Europeans were selling opium to the Chinese. It was a different world then. America too was a different place when Africans were caught, bought and sold in the market place. At times when everyone is doing it, it is acceptable to join in the fun. When time has caught up, when the moral of the time changes, whatever happens should be relegated to the backyard of history. Let's move on. We are still living in a time when greed is good. It is a time when talents are measured by how much they can command. We will have to wait till this phase of civilisation is over before selling toxic stuff or cheating is found to be criminal. Is it pragmatism, survival instinct, or simple weakness of human beans? Or is it talent at its best, seizing on the opportunities of the moment to make a pile?
This is becoming the new state of affair all over the world. No one will be held accountable for failures or mistakes. And to make it more amusing, the higher the position of power, the lesser is the risk of being held accountable. Only the front line workers will be held responsible and be blamed. The is the Paradox of Power. We have seen this in the Mother of All Mistakes, the invasion of Iraq on the ground that it possessed Weapons of Mass Destruction. All that is passe. Everyone knows that it was a lie. Then the happenings in Guantanamo and Abu Ghraid Prisons. No one will he held accountable for the abuses of prisoners and wrongly held prisoners. No one will be held responsible for the hundreds of thousands of wounded and death, and destruction in Iraq. The latest shit is the financial crisis. Everyone now knows who created all these shits, all the collaborators, from the financial genius who created the products, the rating agencies who colluded to rate them as super safe, the management who approved them for public consumption and the regulators who went in bed with them. None of them will be held accountable. They will go on to live happily with their loots. Our mini version of the minibonds and high notes will go the same way. No one will be held responsible. The fingers are only pointing at the relationship managers. The rest of the gods are simply innocent.
We apply satellite technology to track taxis around the island. We also apply the same technology to tell people how to go from point A to B in this 700 sq km of rock. We wired the island to tell drivers that it would take 5 or 10 minutes to reach somewhere along his destination when you can reach the other end of the island in 30 minutes. We wired the city to tell drivers where got car parks. These are abuses of technology and a big waste of money. Technology and equipment cost money. Then there is the regular maintenance, servicing, repairs, replacement etc. Who is paying for them? Even in MRT stations, you can see technology everywhere. Many are unnecessary or a cheaper form will suffice. They have tried mobile TVs in the train and failed miserably. Last night I heard another childish gadget is going to be installed in the trains. The SMRT is trying out an electronic station map to let passengers know where they are and which is the next station, and which train line they are on, electronically wired to the trained grid. And to make it meaningful and readable to all the commuters, which probably 1% will need it, these expensive and high tech gadgets will be installed generously along the walls of the trains. Who is paying for these toys? I remember that whenever a train approaches a station, they will be a voice calling out the station's name. And before the train moves on, the same voice will say, 'next station, Bishan or City Hall'. Not good enough? Please tell us how much these new toys will cost the commuters. Yes, the commuters will be paying for such bright and ingenious ideas that only super talents can come out with and find them necessary and futuristic, befitting a world class transport system conveying third world illiterate workers. And with such great improvements, fares will have to go up to match the technology.
In good time we spend because money was aplenty. In bad time we lagi need to spend to help the economy. For those who don't have much cash, look into your CPF. There are plenty of money there and it is time to do national service. Use them to revitalise the economy. Go for a stay in the hospital for a good annual checkup, if you can charge it to the Medisave. Or those who have serious illnesses and are not treating it, treat it now. Maybe with recession, the hospital may charge a little less. Then those who are planning to buy a flat, go for it now, and use your CPF. Buy before the price comes down. There is also the spend first pay later schemes like going for a holiday or charging to the credit cards. Do something for the country now. Such benevolent acts will help the economy from going down and the suppliers of goods and services very happy.
All the kpkb in cyberspace, especially in TOC should be toned down. It is a lesson that Singaporeans have not learnt. You know what will happen if Singaporeans complain too much? Of course we all know. Let me put it this way. I can think of 100 and 1 reasons to raise electricity tariff two or three folds. And the logic will be so easy to understand and the people will have to accept them, like it or not. That is the power of good reasoning. All about logic. The first premise is that energy is a precious resource and should not be wasted. People must learn or be taught the hard way to conserve energy. And it is not just about the green movement, to save the earth. Oil and gas are not replaceable unlike water. Water will return to earth after use. But oil and gas will take millenium to reprocess themselves. I think the above are very good reasons to use less energy and not to waste them unnecessarily. Singaporeans must be taught, in the same way we conserve water, to pay more for this precious resource. We will start by a 100% energy conservation tax. Then top it up with a green tax. And to reinforce the message, add another 100%, call it whatever you like, to make sure that Singaporeans will get use to paying high energy tariffs. That will shut them up and they will not have time to complain so much. The Singaporeans had it so good for so long with cheap energy tariffs. Time to make them pay.
According to Geoffrey Lim of LTA, our train capacity is 1,600 or 4.9 passengers per square metre. This is lesser than 7 passengers in Tokyo. So we are better than Tokyo. Anyone try to imagine what it is like to stand 4.9 people in a one square meter box? That is not my standard of world class transport. Can we set a standard of our own that we deem as comfortable or decent for our people instead of relying on other people's standard? I reckon that a decent standard should be 4 passsengers per square meter. That will save one from sharing the bad breath and body odour of the other person. And for the ladies, they will be spared the unintentional gropping or rubbing. Let's set our own standard can? Let's show the world that we are a leader and we set what we think is good for us and the world.
I heard this over the news last night that energy prices will fall by 20% over the next 5 years because of greater competition and LNG. I went really, uh, am I dreaming or is it a joke? Would anyone of you believe that this can really come true? We have heard so many great speeches that privatisation and competition will improve efficiency and bring down cost. I have yet to see one instance that it really happens and the consumers were paying less for improved services and products. All we know is that they were craps. I for one will not believe that energy prices will come down by even 1%. But time will tell. Just hope that everyone reading this will remember it and start counting to see if it is a truth or another tooth in the next 5 years to come.
I have held back this post for a few days. Now I read that Andy Ho is also thinking along the same line. Yes we need an agency to police financial products. Apparently and already confirmed, more needs to be done to ensure that financial products, derivatives etc are safe for consumption just like what AVA is doing for food and edible stuff. There is no running away from this. We need an AVA equivalent for the financial industry as a safeguard to protect the vulnerable from the highly technical and financially clever products that could be toxic and dangerous for the public. Let’s set up a watchdog quickly before more lethal products are being designed by the financial wizards to be sold to the gullible. Andy Ho lamented that there was lack of regulations in the financial industry. Actually there are plenty, targetted at the small thieves, the front line staff. These people are watched like a hawk, made to undergo a lot of courses, and sign a lot of documents. But they forgot that the real thieves, the big thieves, are the big boys. These are the ones that designed and pushed out the foul products. And they got away with murder while the little boys got roasted. Just a couple of days I was calling for the setting up of an Ethics Committee. Now I am calling for the setting up of another watchdog organization. I know that nothing will be done to all these calls. But it is still necessary to kpkb knowing very well that no one wants to know the truth.
The neglect or non recognition of the pre school teachers is starting to stir. Dr Christine Chen, President of the Association for Early Childhood Education is making a call for all the childcare teachers to come together to fight for their neglected cause. And since no one is interested in them except for some lip service, they would rather take the future of their profession into their own hands. Don't be surprise that the next group of people mounting the mounds of Hong Lim Park will be your childcare teachers. Many of them are quite well qualified, with diplomas and degrees and even PhDs but chose to look after children for the love of them and passion. Let's see whether their cause will be taken up and who will take the lead.
While the world is engrossed in the melamine scare, do we have the same problem in our backyard? I am not too sure. From some of the snippets that I have heard, the story goes like this. In order to keep goreng pisang and fried chicken wings from turning limp after hours on the shelf, the hawkers just throw a plastic bottle into the boiling oil before throwing in the pisang and chicken wing. And the melted plastic, probably melamine, will coat these foodstuff with a layer of plastic to keep them hard and firm. When you bite into them you know that it is not the natural crispyness, but hardness. The AVA should take a look at the pasar malam stalls selling such products and ensure that they are not plastic or melamine coated.
Freedom of fear and free to live life. These are the things that make America a great country. I feel so impressed by the way the Presidential Election is being conducted. Both candidates were free to run their election campaign the way they want it without any bureaucratic obstruction. Obama was allowed to buy network time to reach out to the people. In some countries these will definitely not be allowed. And the bureaucracy, the law enforcers, the election committee etc etc, all play an impartial role in allowing both candidates equal room and space, without any favour. And the two candidates fought each other aggressively but without resorting to any threats or underhand tactics. Somehow, while I am immensely impressed by the American ways of democracy and equality in the eyes of the law, I got this feeling of shame.
The govt is withholding the sales of land for the moment as demand for properties have fallen. That makes good business sense. Sell when the demand is high, to command higher price and also to prevent prices from escalating. Very logical. A letter by Ee Teck Siew in Today questioned the tempering of the supply and demand of land as it will artificially prop up prices but will not allow prices to fall to their real values. His reasoning is that people are complaining that properties and rentals are too high. Shouldn't we let the market determine the price? We have a free market don't we? Now property owners will be up in arms against him. How can he suggest that we let property prices to fall? My property is all I got, my HDB flat is all I got. But the young who are looking for a cheaper flat will be supporting him. Ya, let the market decides the true value of properties. Stop meddling with supply and demand. We cannot buy expensive flats at sky high prices. Let it drop the natural way. Who is tempering with the free market forces?
The Bioethics Advisory Committee(BAC) does not agree that women who donate their eggs for research should be reimbursed except for expenses like cab fares, loss of earnings and loss of time. 'They should not, however, expect to be paid for the inconvenience, the pain they undergo, nor the risks involved in egg extraction.' BAC said. The procedures involved in egg extraction go something like this. Women go to hospital daily for 2 or 3 weeks, undergo tests and hormone injection to harvest their eggs, put on sedation and needle injected to remove eggs in a 20 minute operation. I have seen how guinea pigs were handled in the lab. Not much difference. And it is ethically correct that women should be carefully scrutinised and those who gave their excess unwanted egg should not ever think of being reimbursed. The BAC is very clear about using money as an incentive. The amount reimbursed should not be so big that it becomes an inducement. Inducing people to do things with money and more money is unhealthy and unethical. People who are induced to do things because of money are money minded, to say the least. So as for the Ethics Committee that I am calling for yesterday, look no further. The people in the BAC are just the right people to sit in that Committee. These are ethical people that will not be induced by money to do unsavoury things. PS. If I am a woman, I will demand my price for the trouble that I have to go through. And if my genes are of graduate quality, I will demand a ransom for them.
We may be transparent, not corrupt and have no guanxi to worry about. But we still have serious flaws in terms of ethics and morality in the way we do business. Unless we are saying that in business, ruthlessness to make profit is the right way to go forward, then we should not even waste time listening to the victims of minibonds and notes. They did not do their homework and became suckers is their own fault. I am still puzzled that if their cries were not heard, if the people’s hero did not stand up to organize them to take on the financial institutions, will it still be business as usual? That ethics and morality can go into the longkangs? That the minibonds and notes and other toxic products will still be sold to the unwary? I have encountered many cases of unethical conducts in organizations. Some I have fought and dealt with. Some are still waiting for the right opportune moment to do battle. Many corporations stink of lowly creatures in their midst. What we may need now is an Ethics Committee to be appointed in big organizations, private or public, to deal with unscrupulous management who just care for the bottom line and their perks and bonuses. It is a sad call but a reflection of how far down we have gone in decency and respectability. And please, these committees must be made up of people that do not have any incestuous relationship with the management. They must be steadfast and with a conscience to do the job they are assigned to and not be beholden to the people who appoint them. To be real, this is just fat hope.
Shanmugam is emphasising on the importance of having foreign workers again, as if they are indispensable to our growth and viability as a country. Yes, I agree, we need foreign workers, at least to upgrade the depleted and poor gene stocks we are having today. Then the question is how many and how fast? We are not a continent like Australia or the US. We are just a little piece of rock. We cannot keep filling this rock with more people. When shall we stop? 5m, 6m, or 10m? And when we reach these numbers, will we keep adding on? Don't get too ambitious about how big we can be. Just like our financial centre, it has limitations because we are just small. I wish I can type this word small in size 1 to emphasise how small we are. Don't get carried away by pushing for more foreign workers and growth and growth. There is a very heavy price to be paid.
Does this tickle your senses and thoughts? The Russians sold Alaska to the Americans for quite a sum of money in those days. By now the money would have been spent and lost. But Alaska still stays, maybe in perpetuity, as a state of America. How much should the Russian price it to make the deal worthy of the land that will be there forever? We have our own equivalent of selling Christmas Island to Australia. Accepted that it was all a British deal and there was nothing we could do about it. The moral of the story is that you do not sell your land, the motherland, away for cash. Cash disappears or becomes worthless, or diminishes in value. The motherland is forever, there, as an inheritance for the future generations. I saw this advert yesterday of this beautiful island called Sentosa Cove. I wish I have the money to buy a unit there. What saddens me is that it is for sale to foreigners. Do we need the cash? Do we need to sell the limited motherland that we have to foreigners for cash, like selling Alaska? Even the Indonesians have better cow sense to lease their lands to foreigner for only 30 years. As a temporary short lease, I have no problem with it. But to sell our inheritance away, my god, what do we have left for our future children? Or are we preparing to migrate to the moon when we have sold off everything?
There are many trade fairs and pasar malams that provide opportunities to peddle soft drinks. It can be a very profitable franchise to sell caustic soda and lehmon juice with minimal cost and high returns. Of course there are risks involved. Caustic soda is poisonous. What about lehmon juice? Don't have a clue what it is, but as long as it sells, why not? All that is required is to take a few precautionary measures. First, print a 10 page disclaimer, frame it nicely and hang it in the stall. Can even say specifically that caustic soda can kill. Don't worry, no one will be bothered to read it. The next thing is, yes franchise it. Let other people do the selling. And when trouble starts, let the franchisees take the blame. Just point the finger at them and lie very low. Do everything that is possible to put the spotlight on the franchisees, not on the caustic soda or the lehmon juice or you, the originator of the product. This is entrepreneurship at its best. It needs a lot of talent to come out with it. Entrepreneur of the Year Award akan datang.
The gays are planning for a demo at Hong Lim to champion their rights, among which is to repeal the law against homosexual sex and their right to live their lives. Our society has progressed quite far in this area and gays are generally accepted as part and parcel of life, with hardly any discrimination or aversion against them. They are accepted in the profession and as friends and colleagues. The question is whether it is a good idea to champion their lifestyle and sexual preference? Would we also popularise incest, after all incestuous relationship is a secret to our success? Or what if someone's sexual preference is for animals? He/she is not harming anyone in particular and the animal may enjoy the intimacy? I think the gays are pushing their luck too far and may turn society against them if they try to make their lifestyle as a glamorous way of life. Better to just live their life without disturbing anyone than to invite people to look at them under the microscope.
Article by WisestSage posted in Singapore Kopitiam. He puts everything about the collapse of subprime loans, minibonds etc in a simple way for all to understand. Greed, corruption, collusion, irresponsible govts and rating agencies are all accomplices in this fiasco. Now it is a case of blame game and see who ended with rotten eggs in the face. In recent months when the subprime-related securities trigger the collapse of Lehman Brothers, many Asians, including Singaporeans, got their fingers burnt. Some 10,000 Singaporeans have lost $500 million in their investments in Minibonds, DBS High Notes, Jubilee Notes, and Pinnacle Notes, some of them becoming worthless overnight. Asians have a reputation of saving habits as they need to save for the old age while most Asian countries do not have social welfare safety net. They inevitably become the victims of the structured products which have been marketed by the greedy bankers and the Wall Street crooks from the west. How come only Asians from Hong Kong, Singapore, and Taiwan are hardest hit by Minibonds, DBS High Notes, Jubilee Notes, and Pinnacle Notes, but none of the western countries is affected? Let me explain why the situation is so dire and dangerous. When the financial shits hit the ceiling fan, I was hoping that the so-called leading economics and financial commentators and opinion makers would explain the situation to the public via the national dailies, the blogs and the TV network. I came across not one article or broadcast that explains the underlying reasons for the inevitable dire consequences. Sure there were articles on the crisis, but they were merely describing the rescue of the largest insurance company in the USA (A.I.G.) if not the world and the amount involved. No explanation whatsoever, as to why only a few days earlier the Fed and the Treasury allowed the 4th largest investment bank, Lehman Bros to fold up but rushed in to rescue AIG with an unprecedented US$ 85 billion. In my various articles published previously, I explained in great detail the corruption within the global banking system and how these financial leeches through fraud and political protection created and amassed a global financial fortune in excess of US$500 Trillion. Let me assure you that this is not a typo error. You got it right. It is not billions but a whopping US$500 trillion. I have been advised that as of the Q2 of 2008, the figure may have reached US$565 trillion. This is a complex subject but I shall endeavour to make it as simple as I can. Starting Point The Ponzi Scheme The crux of the fraudulent Ponzi scheme is the twin pillars of: 1) Fannie Mae & Freddie Mc – the two giant mortgage corporations of USA 2) The Derivative financial tool known as Credit Default Swap (CDS) Once you have a grasp of these two concepts, you cannot but agree that we are facing total global banking collapse. Why? Because the entire global banking system has been built on these two financial pillars! But the system became irreparable in the last 7 years when CDS became the linchpin in the massive expansion of derivative trading and financial engineering. The Mechanics 1. Banks became greedy and were unwilling to earn safe and steady profits from mortgages for housing and commercial properties which usually spread over a period of between 5 to 30 years. 2. Banks wanted massive profits in the shortest period of time and the ability to lend massive amounts and not be regulated as to how to do it. 3. The crooks devised a scheme. It was a simple idea. 4. Banks will provide mortgages to all and sundry. 5. I am going to use a simple example and using small numbers to illustrate for ease of calculation. Thus, assuming the Bank gave out US$1 million to finance mortgages, bearing interest at 10%. 6. The bank then sold the mortgages to Fannie Mae and Freddie Mac at a discount. Fannie Mae and Freddie Mac being Government Sponsored Companies (GSCs) are able to get cheap financing to purchase these mortgages as they were assumed to be “guaranteed by the US Government”. 7. Fannie Mae and Freddie Mac then package these mortgages into all sorts of structured financial products and these were sold to investors (private as well governments). Central Banks hold massive amounts of dollar reserves and they need to find a safe haven for them. Hence, and invariably, Central Banks invest their reserves in US Treasuries and financial “mortgage-backed" products issued by Fannie Mae and Freddie Mac as well as other US financial institutions. 8. With the payment of US$ 1 million by Fannie Mae / Freddie Mac, the bank by law, can lend ten times the amount after keeping 10% reserves i.e.US$100,000. Therefore, the bank can lend US$9 million by “creating money out of thin air” i.e. by crediting the borrowers in their loan accounts in amount of the loans extended. These US$9 million loans secured by mortgages are then sold to Fannie Mae / Freddie Mac again. The cycle keeps repeating and the banks keep creating more and more loans. It was so easy that the banks decided to create dubious loans called “Liars Loans” whereby the borrower need not state the actual income and or ability to repay. 9. As more and more of these loans were created, investors (government and private) demanded assurances that these loans were good for investments. The rating agencies (e.g. Moodys, Standard & Poor and itch etc.) who in collusion with banks, gave AAA ratings to what were essentially junks. This fraud led investors to believe that these financial products were good investments. 10. The rating agencies were only too aware that this scheme needed something more concrete to prolong the fraud and induce the investors to part with their monies. 11. The insurance companies like A.I.G. came into the picture. They were seduced by the idea that if they can insure against risks of accidents, storms etc., they could also insure risks against default by the mortgage holders. Thus was born the financial innovation – Credit Default Swap (CDS). Any financial product with a sound CDS would be rated AAA. It was as good as being guaranteed by Uncle Sam. Assholes the world over, especially central banks, fell for it – hook, line and sinker. 12. The scheme works out like this – AIG sells protection – i.e. in the event there is a default, AIG will pay out to the buyer who buys the protection (the CDS) in exchange for the payment of premiums covering the period of protection not unlike your usual insurance policy. It was easy money for everyone. The banks get to sell their loans and have the liquidity to create more loans. Fannie Mae / Freddie Mac and other financial institutions get the opportunity to repackage these loans / mortgages and sells them to investors with a tidy profit. The investors are happy with their so-called guaranteed returns. The insurance companies, investment banks and other players get their premium income for selling protection. It was old fashion mafia loan sharking and protection business dressed up in modern financial jargon and everyone was too arrogant and greedy to see through the fraud. 13. When loans default and continue to be delinquent, the law (depending on each country) provides that if the loan is in default for 90 days or more, it should be declared a Non-Performing Loan (NPL) and banks must provide reserve to cover the loss. 14. What happened was banks were covering the defaults and kept them on the books for two years or more in the hope that no one would be wiser and interest income from new loans would cover the defaulted old loans – the classic ponzi modus operandi. 15. When the two years default reached critical proportions starting with the sub-prime loans, the fraud began to unravel. Investors began demanding their protection money for the losses arising from these defaults. It has been estimated that the market value of the CDS was in excess of US$60 trillion but the capital of the insurance companies like AIG are only in the billions. It is therefore a physical impossibility to make good the demand for payment for the defaults. 16. If AIG the No. 1 insurer in US and the world is in default, it means the rest are in deep shits. You can take it as a given that no one and no one has good coverage and protection anymore. 17. When there is no coverage and protection, how can there be AAA ratings for new issues of such financial products? Fannie Mae/Freddie Mac etc. cannot package these products for sale to investors and if they cannot sell, they will have no funds to buy more dubious mortgages from corrupt and fraudulent Wall Street banks. With no additional funds, these crooks in JP Morgan Chase, Goldman Sachs, Citigroup, Lehman Bros., Morgan Stanley, Merrill Lynch, Bank of America, UBS, Barclays, HSBC, Deutsche Bank, Credit Suisse, etc. will have difficulty extending new loans. The “Musical Money Chair” will have to come to a complete halt. The entire system gets into a gridlock. Given the above explanation, can the US government and the Fed continue to bail out banks and other financial institutions? When US is in deficit in both the budget and current accounts, where else can they get the extra monies except by creating out of thin air (virtually by keying digits into computers) or print more dollars. If you are a sovereign lender or a private hedge fund, knowing the situation, would you lend more monies to the US Treasury knowing that each dollar issued (whether digitally or in printed notes) are not worth the value stated therein. These dollars ARE NO BETTER THAN TOILET PAPER. When the Asian investors become the insurers of the structured products like Minibonds, you know why they have been conned. It is inevitanle that they would lose their pants through the investments in structured products like Minibonds, DBS High Notes, Jubilee Notes, and Pinnacle Notes. Have you wondered why MAS and other financial regulators allow these structured products to be marketed to the naive general public? If they are not sleeping on their jobs, what are they doing all day long?