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9/26/2011

Entrepreneur flair or hare brain scheme?

Actually these two terms are two sides of a coin. When an entrepreneur succeeds, he is praised to the sky because his hare brain scheme becomes a success story. When an ambitious plan fails, it will earn the infamous status as a hare brain scheme.

A potential entrepreneur puts his resources, money and reputation at risk. He could become a winner and earns recognition, or a failure with people laughing at his hare brain attempt when it fails. It is fair game really.

Singapore’s ambitious plan to turn itself into the biggest financial centre in Asia could go either way. If it succeeds, the mastermind will gain immediate recognition as the brain behind the success. If it fails, people will be laughing at the hare brain scheme for sure.

Sometimes there is an in-between, when a plan is cleverly conceived on paper and could really succeed. But it could fail because of some other reasons, maybe poor execution or factors beyond its control. Sometimes it could be saboed, intentionally or unintentionally by others with their own hare brain schemes that destroy the main plan. There will be some that are hare brains from the word go as the assumptions are just unworkable.

Is the financial dream an ambitious and workable plan or just another hare brain scheme? The key to the success of Singapore as a financial centre lies in the creation of a sophisticated and highly capitalized stock market with a wide range of products and good quality stocks. This is not all. It cannot be as simple as that. The infrastructure, the hardware and software are easy to buy with the money. The managers too can be bought with a price. There must also be capital, provided by the big funds, and investors, big and small. And the brokerages to lubricate the system and execute the trades. Some thought there is no need for brokerages, just machines trading against machines and online tradings will do. Some even think that there is no need for small investors or traders. Just bring in the big guns with their war chests to fight among themselves and it will be flying to the moon. The big funds are not that stupid. They will play the game if they can find advantages, especially those enshrined within the system, like eating up the helpless small investors.

The horse is sick. The ambitious plan seems to be grinding to a halt. Now, what have gone wrong? Big money was spent in talents and machines, and big boys with their big guns were blazing. For a system to work, all the parts must function accordingly. The system is as strong as its weakest link.
The weakest link, in my view, is the small traders and investors. These seemingly irrelevant elements in the whole system, dispensable to the big empty heads, are just like the planktons that feed the giant whales. Without the planktons, the whales will perish. Without the little guys as cannot fodders, the big boys will go hungry.

Who and what contribute to the demise of the little useless guys? One major flaw is to make the little guys do battle with high speed machines and sophisticated computers and their algos. A mismatch, and the small guys simply got wipe out. They don’t stand a chance. There goes an important small part of the system.

The banks too think so, that the little guys are not important. They are only interested in their high net worth clients, not for trading in the stock market, but for their wealth management schemes, to invest big money in ‘sophisticated’ products and notes. And to retain these clients, they are prepared to sacrifice the small guys, lower the commission in the name of free competition. Again, the small guys paying higher commission would not stand a chance.

In order to feed the fodder to the big boys, the small guys were encouraged to play with new instruments that they have hardly any clue about while the big guys were the experts in such games. The small guys were eaten up for sure. They lack the financial muscles and the sophisticated team of staff to manipulate the range of trading instruments to their advantage.

A weak link in the whole system is all that is needed to break the system. It stops cranking without the little guys feeding the system and the pockets of the big guys. The lowest element in a food chain still needs to be fatten to sustain the whole system and those at the top of the food chain. Ignoring or despising the arse hole is proving to be a big mistake.

This ambitious plan is turning to look more like another hare brain scheme with many other hare brain schemes sticking to it to drag it down. Where are the cannon fodders? Everyone seems so happy that the planktons are wiped out. Every hare brain seems so happy that commission can be lowered further with no consideration that commission is all that feeds the broking houses and their staff to keep the system going. No commission means no broking houses.

How long can the system hold with the shit building up and nowhere to go? Nature is built on a system where every part has its part to play and feeds on one another. It is a symbiotic relationship, a cycle. It cannot be one way, where one party or a small group benefits at the expense of the other. Human beans, being at the top of the food chain, is constantly being devoured by the smallest and most insignificant bacteria to keep the system in check and going. This fundamental principle of Nature cannot be ignored by hare brain schemes.

3 comments:

Anonymous said...

For me, it is good to know that those giant whales are going into extinction. It is not just planktons that they are gulping up, they consume tons of fishes too. Most consume no whale but many need fishes as food. So, me has no sympathy for those giants. On the contrary, me wishes that they go extinct fast.

However, like to say that unfortunately, before their good riddance, the whales would have wiped out much of the planktons. It shall be disaster for the ocean if it becomes devoid of life.

patriot

Anonymous said...

When the going is bad, just pretend to step down and claim back your position after getting a scapegoat to take the blame. Sounds familiar?

Anonymous said...

Why is Tony Tan keeping so quiet about the UBS debacle? Singaporeans are very disappointed with him. Having claimed that he has great experience and expertise in financial matters and investments, how come he and his talented buddies got GIC into great losses in UBS investment.IS it lack of foresight or a case of oversight or whatever other funny excuses. Very sad indeed, losing other people's money , in this case the tax payers' money seems to be perfectly alright. If GIC and Termasek Holdings keep on losing money at this rate very soon the financial wizard president will have no reserve to protect.Fortunately for him he still has his high salary and pension to collect. The government just have to collect more taxes from the people to replenish the reserve. Acquire more land cheaply and sell it at market prices. Increase GST by ten to twenty per cent or perhaps thirty to fifty per cent. Set up more ERPs at every road and collect tolls twenty four hours daily. These are only a few suggestions. I think the finance minister and the government would have many more up the sleeves.