Hong Kong watchdog may sue banks

Hong Kong watchdog may sue banks over Lehman minibond sales 31 October 2008 1343 hrs . HONG KONG - Hong Kong's Consumer Council said Friday it was considering suing banks which allegedly mis-sold minibonds backed by failed US investment bank Lehman Brothers as risk-free investments.... "We now have 16 million dollars in our legal action fund. But the government has promised that it will give us unlimited financial support once we have identified cases with good grounds," she said. (Johannes Chan, chairman of the council's legal action fund) Would any govt body or CASE take up the case of the minibond and high notes investors and sue our banks? Quite inconceiveable for it to happen. It even sounds queer.

The risks were clearly highlighted

Investors of High Notes and Minibonds are in for a tough time. The risks were clearly highlighted in the front page of the brochures with copies printed in the Straits Times. In the High Notes case, it states 'investors may lose their entire investment and may nor receive any principal amount on the Notes.' In the case of Minibonds, 'There will be no guarantee from any entity to you that you will recover any amount payable under the Notes and you could lose all or a substantial part of your investment in the Notes.' Given the above, it would be better if these were in big black bold letters, it is difficult for the investors to say they don't know or did not read. For those who cannot read English, there can still be an escape route. For the rest, jiat lat liao. The only thing now is whether such an important point has been carefully explained to the investors and they went in with their eyes wide shut. The other point is that indeed the products are highly dangerous and the issuers knew of this risk. The regulators who approved the products too must know of the risk. So it is not a case of nobody knows what they are selling. They are really toxic stuff. For the kind of returns, they should not be sold at all.

Don't forget personal responsibility

We espoused 'a financial system of free will and flexibility instead of a paternalistic one where the govt decides for the consumer what's risky and what's not.' Said David Gerald in the Today paper. 'Let people make their own choices and decisions, but within a proper system, and with appropriate safeguards.' He added. This is the crux of the matter. A proper system that is fair and transparent. And regulations got to be fair, consistent, transparent and not arbitrary. Gerald ended by saying, 'I expect the financial instututions to be fair to investors because they're going to them with trust.' When we have a fair and proper system, personal responsibility makes a lot of sense. The investors to the minibonds, or investors investing in the stock market must bear personal responsibility when this is the case. If the system is not proper, if the products are found wanting, it is not a simple case of personal responsibility. When you eat in a restaurant, you don't expect foreign objects or poisonous material in your food. Put it in another way, people going into a boxing match will expect that the rules are fair and to fight in their same weight. When a 50kg boxer goes into the ring to fight against a 100kg boxer, and has his eyes blindfolded, it is not fair and unacceptable. Or if the bigger boxer is armed with a pair of gloves with metal inserts, then it is not alright. Under such circumstances, caveat emptor and personal responsibility will not do. The administrators and regulators need to be hanged.

Will head roll?

MAS is still conducting its inquiry into the minibond fiasco. It has assured the public that if there are misdeeds, mis sellings etc, disciplinary actions will be taken. Will we see any heads roll? It's only $500 million under the bridge.

Selling water to Malaysia

The Marina Barrage is hailed as an engineering marvel, one of its kind and the first in the world. It delivers a number of direct benefit to the country. With its completion we should be self sufficient in our water needs and no longer be dependent on Malaysia. The Barrage is also one of the biggest land or water reclamation from the sea. It provides leisure and sporting activities as well as preventing tidal floods. And many things can be built around it. It is time that we negotiate to sell our water treatment plant to Malaysia and also to negotiate to sell them quality water when our water agreement expires in the near future. Now this will be a bigger feat.

Japan banned short selling

Nikkei has been up strongly for two consecutive days after short selling is imposed. SGX is still happily allowing short sellers to destroy the value of stocks. Today's hit is OCBC with the news or rumour that it may be affected by Great Eastern's lower profit forcast. And it got whacked all the way. This is how our market works. World class market. Shit market as far as I am concerned. As the way the game is being played, any stock that has value, especially blue chips, will be bashed down. SGX has a provision to take to task people who cornered a stock. Would they wake up from their sleep and take these manipulators to task?

Paying for nothing

You pay for a car you get a car. You pay for dental treatment, you get dental treatment. You pay for a massage you get a massage. You pay to a hospital to be healed. You die in hospital or your illness did not improve, you still pay. Is this fair? Why admit to a hospital to be healed but die instead and still need to pay hundreds of thousands or tens of thousands? Did the hospital fulfil its part of the contract, to heal or at least return you alive?

For the worth of $500 million!

How much did all the financial institutions made after peddling $500 mil of toxic notes to the consumers? (Heard that High Notes are practically worthless. Let me guess). At 5% commission, this will work out to be $25 mil. At 3% it will be $15 mil. Good money huh? For a profit of $15 - $25 mil, this was deemed good enough a business proposition to go out there and sell. And the loss from the consumers was a staggering $475 to $485 million. I would presume they know what they were selling, and thought that the risk was not high enough to become a reality. What if they truly understood the risk and decided, well, it was somebody else’s money to lose while they have to earn their bonuses? It is very patronizing to assume that these super talents being paid super talent salaries to match did not know what they were doing. Could it be a case of penny wise pound foolish, or penny for me, pound for you to lose? I got this scary feeling that in the financial system we have this same selfish attitude in many organizations that as long as they made their penny, others can lose their pants or go and die. Not their problems. They can sell any products or designed any flawed system is ok. Caveat emptor. How many organizations out there are making miniscule commissions while their customers are losing millions and billions, and they happily patting each other on the back for a job well done? Anyone got any sense of guilt, got a little conscience, that they have betrayed the people who faithfully believed in their leadership and in what they were doing? Or is the commission, translated into fat bonuses, really worth it?

Raising quality of our future generation

Graduates will produce graduates. Good graduates produce good graduates. We need to be careful in the new citizens we are bringing in or they will dilute the quality of our future generations. We must only bring in couples who are graduates, and from accredited universities. We need to check the quality of our new citizens. We cannot contaminate our stock with conmen, tricksters, cheats or third grade graduates from third grade universities. Quality control is the key. Don’t pray pray with our future. Oh, not to forget, Singaporeans must only be allowed to marry foreigners who are graduates of reputable universities. Marrying non grads like chef, musicians, artistes, singers, footballers, sportsmen and women, etc should be banned. In this way our future generations will all be of graduate caliber. A new super race!

Plaque of distinction

We have a superior system based on three pillars of integrity. No corruption, Transparency and No GuanXi. We should engrave these virtues in a plaque and hang them at the main entrance of all Ministries and even in the airport for visitors to see. This is our mark of excellence that we can wave to everyone. PS. I have amended Quanxi to Guanxi, which was originally intended. Thanks for the correction.

End of the road for hedge funds?

The end is near. Hedge funds, the plague of modern financial world is coming to its near death. Over the years these funds have wielded tremendous power to move stock markets across the world, bringing joy when they push up markets and leaving behind shattered dreams and destruction of lives when they depart. That is how powerful when funds, arms with hoards of money, working in collusion, could be. They can literally mow down countries with their selfish and singlemindedness, to make profit at all cost, with no qualms about responsibility to the rest that fell victims to their actions. Will countries wise up to the untold damage and consequences that hedge funds can inflict on them to stop them from resurrecting themselves again? Greed of the past, thinking that hedge funds can bring good, must be relook at. The goodness that hedge funds brought along is incidental and only for their own benefits. When their benefits are no longer there, they will turnaround to bite the countries and tear them apart. Unfortunately hedge funds will not go away and will morph into something else and will be wooed back to repeat what they had done before. The lessons of the Asian financial crisis was not learnt. That's why we are facing this second crisis in more severe manner. A retribution for greed and stupidity. Though they cannot go away, their activities can be curbed if regulators are doing their jobs and not fallen to greed. The juicy carrots dangle by hedge funds are tempting. Don't go for it. Limit their activities, limit the damages they can cause. They are the thieves and thugs of modern world, armed with Ivy League degrees and wearing the most expensive suits and ties.

Some things can be spoken, some can't

Speak your mind freely, but, one needs to have a little introspection to know that there is a limit to this statement. I would like to tell the world that I am a grad and my genes will produce another generation of grads. Please come and share my goodness. Telling this as a joke is acceptable. But telling this as a serious proposition is a no no. Why would people insist on saying such things? Sheer arrogance, or trying to tell the world of their good fortunes, that they are blessed? It can be a kind of conceit, or maybe deceit, that nature's endowment is forever, can be passed down through generations like monetary inheritance. Unfortunately, life or fate, has the habit of playing the most wicked jokes on human beans. When you think all is won, you can end up the loser. Or when all is lost, you may still come out the winner.

Paying the best and getting the best

This must be an open secret to all. We pay the best for the best to give the people the best. The result of this brilliant policy is for all to see. We have the best govt, the best infrastructure and one of the biggest national reserve on a per capita basis in the world. We have billions and billions to spend or to fall back on. We are the envy of the world. At the people level, more than 80% are home owners. The people can afford to buy anything that they want, and paying top prices for them too, happily. For they can afford to. They buy cars at a price beyond anyone's imagination. They pay for a govt flat that can buy them a sprawling home in Australia or in some cheaper countries. They are learning to pay more for medical and legal bills. All these are in tens or hundreds of thousands of dollars. No sweat. Singaporeans can afford to pay. They also pay top dollars for the best people to manage an efficient and reliable power system. And they have the privilege to pay one of the highest electricity tariffs in the world. This is what they get for getting the best to enable them to pay more for things which others will pay less for it. And at the end of the day, many will have several hundred thousands in their savings when they retire, or if they ever retire. And they can carry along with them into the next life with plenty to spare.

Thank you Mr Tan Kin Lian

'Thank you Mr. Tan. You have done a lot for us w/o any compensation. You are such as selfless person. We really appreciated it.' This is posted in Tan Kin Lian's blog by an appreciative anonymous blogger. Two things strike me. One, Tan Kin Lian is a selfless person. I thought such animals are already extinct in paradise, when everyone is working for money? And that's the second point, working for free. Now I understand why Tan Kin Lian is standing there all alone and no one else would want to do the same. Who wants to work for free? The other connotation is that his talent is worthless. If he is worth his salt, then people will pay him for his talent. Or he should demand to be paid. The worst case is that because he is working for free, people start to question his motive. Now that is bad isn't it? I would like to suggest to Kin Lian that he charges a small fee. Then people who question his motive will not have anything to smear him. The more he demands, the more transparent he becomes and the better appreciated will be his talent.

Why are Singaporeans not saving enough?

We have this marvelous scheme called the CPF. This is meant to take care of our savings for old age. We put in a big chunk of our earnings into this scheme, thinking that it would be enough. Now we all know that it will never be enough. Inflation is not the only thing that will eat away whatever we have put aside. That is why Singaporeans are constantly reminded to save, outside the CPF. What a joke! For the baby boomers, one of the most disastrous policy that affected their life savings was the liberalisation of the CPF on the belief that if you put money in the stock market, in the long run, you will be richer. It has been proven that it was a folly and many lost everything they had in their CPF. The stockmarket is not the stockmarket that we knew in the past. It is now a casino, without fundamentals. But what are the main causes to fail this great savings scheme? The biggest item that Singaporeans need to spend on is the flat or home. If we keep raising the property prices, mark to market, Singaporeans will end up saving just to buy a flat and be left with nothing. The younger Singaporeans shall give up hope of withdrawing any money from the CPF when they reach 55, or to receive anything when they reach 62. A big chunk of their money will be buried in the flat with the rest locked up in minimum sum and medisave. The CPF scheme is now a red herring. The Singaporeans are saving but spending at the same time. I should have called this saving scheme a myth.

Myth 193 - We think we know what we are doing

We are a small country, a small economy but with an ambition that is bigger than the universe. We made the world our hinterland. Instead of closing up and retreating into a small corner, we took on the world, open up, liberalised and become a player punching above out weight. We have our successes, and in fact very successful in many areas. We are a role model for many countries. These days, we are starting to feel the pain of liberalising too rapidly embracing everything the world could offer, the good, the bad and the ugly. We forgot to put on the french cap and we are exposed to all the slimes and the sophisticated cocktails of drugs in high society, disguised as a must have for those who have arrived. We forgot to discriminate! The financial fiasco, not only the minibonds, but the stock market and the whole financial system, is leading to a lot of simple questions. Why are we going into things that we don't know, or things that many do not know? Even the financial experts and professionals, the people who make a living in selling these products, in selling derivatives, are fumbling to try to explain things that they too found difficulty to grasp. And we expect the tellers, the retirees, the unschooled, the general public who are not financially trained, to know them. Isn't this amazing? It is good that we now admit that we don't know. It is good that we start to think that we have erred somewhat, that we should not think too highly of ourselves. The financial experts who really understand and know what these products are are very few in between. Most of the Relationship Managers, their bosses, the financial advisers, even the stockbroking agents, did not know their products or the complexities of how these things work or are able to take advantage of them. They ended up being losers. These instruments are only for specialists, not the man in the street. But we keep churning them out, expecting or pretending that people will know, from sellers to buyers. Complicated instruments and derivatives demands full time attention and monitoring, including the assistance of softwares, nothing like buying and selling ice creams. Do we know what we are doing? If not, we must stop doing them and roll back our plans. It is criminal to keep pushing these financial instruments and derivatives when the people and market are not ready for them. Stop deceiving ourselves. Then in education, we want to turn ourselves into an education hub. A good strategy and very lucrative. But do we need to let the slimes to come in? The slimes are like tainted milk. Once our reputation for integrity and quality is destroyed, all our effort will be gone and it will take generations to rebuild them. The latest fiasco of unaccredited university, West Coast University, banned in some American states, is not a laughing matter. It is silly and it undermines everything STB is trying to do. And WCU is only one of them. Do we know what we are doing? We believe we know. We know that if we adulterated the core Singaporeans that we have imbued with our Singapore brand of discipline and culture with too many foreigners, we will lose our cutting edge. So we tell ourselves, the foreigners content must be limited. So we know what we are doing. In reality, in practice, we are doing exactly the things that we want to avoid. We have about 5 mil people here and 3 mil are Singaporeans. So as long as the Singaporeans out numbered the foreigners, we are ok. What if we increased the Singaporeans to 90% by making all the foreigners Singaporeans? Statistically they are Singaporeans, 90% of them. But are we not diluting our base? The new citizens, despite the pink ICs, are not the Singaporeans that we know, that were nurtured from our system from young. It will take them years, maybe a generation or two to be what Singaporeans are. Having a few new and good genes to cross breed with old local genes are good. But to add in so many in so short a time will dilute whatever there is left of the original Singaporeans which we believe are the ingredients that make us different and competitive. Of the 3 mil Singaporeans, how many are Singaporeans like us? Do we know what we are doing?

Quote from HDB

'A new four room flat can cost close to $300,000 to develop, but is priced at about $200,000 to $260,000 in locations such as Punggol and Sengkang, said the board(HDB).' This is quoted from an article by Jessica Cheam in the ST today. Wow, selling at a loss. Real subsidy. And when the Pinnacles were being built at Duxton, they could priced them below $300,000 at the first launched. That price must be a discount too. But they also said the discount was marked to the market price of resale flats. Now that market price of resale flats have gone up, they are pricing them above $450,000! Big year end bonus coming. Why can't I get the reasoning right? I am very confused.

New and sounder system

'We are in the midst of a once-in-a century credit tsunami. Central banks and govts are being required to take unprecedented measures. In 2005, I raised concerns that the stock market mechanisms were flawed and the protracted period of its existence, if history was any guide, would have dire consequences. This crisis, however, has turned out to be much broader than anything I could have imagined. It has morphed form one gripped by liquidity restraints to one in which fears of insolvency are now paramount. Given the financial damage, I cannot see how we can avoid a significant rise in layoffs and unemployment...All of this implies a marked retrenchment of consumer spending as households divert an increasing part of their incomes to replenish depleted assets and stocks. A necessary condition for this crisis to end is a stabilisation of stock prices...the ultimate collateral support for much of the commercial backed securities....' The above is a doctored version of Alan Greenspan's testimony in Congress. But it does reflect in some ways to the crisis in the financial system and the stock market today. Greenspan had admitted that his blind belief in the free market and how financial institutions will protect their shareholders' interest was wrong. And every party in the system is an accomplice to this failure, from regulators, financial institutions, rating agencies and watchdogs. When greed is in the minds of management, regulators, and all concerned, the system will crack. Or when false premises or untenable missions and goals were set, things will go wrong. Perhaps this financial crisis is a wake up call to review what we set up to do, to achieve, and whether these are right, attainable, or flawed from the start. Do we want to be an international financial centre? Yes. Do we want a stock exchange that is number one is Asia? Yes. Do we want all the international financial institutions to be here, the hedge funds and all? Yes. Can we manage them? Or would we allow them to dictate to us how things should be to our detriment? Or should we scale down our lofty ambition and admit that we are small and there is a limit to how big we can grow before we get choke to death? We definitely need to reveal the existing structure, mechanism, rules of the game and the goals we set for ourselves. All organisations are run by human beans. And human beans are selfish by nature. They will think of their own interests first and the interests of the organisations they are in charge. As long as these organisations are profitable, the rest can go to hell. Doesn't matter to them. And that is what is happening today.

Do we need independent watchdogs

The answer is obvious. The formula of incestuous relationship and thinking that it will work has been proven beyond any doubt that it cannot work. It is just human nature, that when Quan Xi is part of the formula, when knowing who becomes too close for comfort, when you need to watch who you are likely to offend, who is paying your salary, people will compromise their professionalism and do things that are just short of being right and correct. Don't agree? Look at the mess we are in now. These are definitely avoidable if the lines drawn are clear. When business is business, when govt is govt, when people's interests is in conflict with commercial interests, when building a nation and building a business pull away from each other, you need independent bodies to stand firm in their missions. Business, govt, people, private shareholders, nation etc all have opposing interests. Recent events highlighted the inadequacies of many watchdog organisations, need not mention their names to embarrass them, as they struggled amid conflicting interests and blurring of roles. They failed miserably and still put on a front that they are doing their jobs damn well. It is fat hope to think that the present structure and organisations will be changed to provide a clearer distinction of govt, independent watchdogs and commercial interests. But it can be done if there is a strong political will to do so. Watchdog organisations can be mandated, with the blessing from the political masters, to be professional and work independently without having to look over their shoulders. CPIB is an example to emulate. They will also need to have strong individuals, stubborn individuals, passionate individuals, who are prepared to do what they are supposed to do, even standing up against political bigwits to put things right. We used to have such specie of human beans in the establishment. Seems like they are now extinct. But these are the prerequisites, this must be the case or these organisations will lose their credibility and relevance and become jokes in private conversations. And they are at this point in time. Just because the views are not articulated or not printed in the media does not mean that they are well regarded. Yeah, no complaint means everything is fine. There were no complaints about flawed financial products to raise the eyebrows, and no complaints about the flawed mechanism of the financial systems, the stock exchange etc. So everything is fine. Actually there are many complaints but no one is listening. No one wants to ruffle feathers or be the messenger of bad news. Can we walk around naked and deceiving ourselves that all things are fine?

Time to acquire local banks

With the stock market going into a tailspin, with banks and blue chips companies at fire sale prices, it is time for GIC and Temasek to consider buying them up in the cheap. The American govt is pumping in US$250b to buy up bank stocks. GIC and Temasek should find value to acquire or build up their holdings of local banks and blue chips. And with DBS being the smallest local bank, why not buy up the number One or number Two banks?

Selling ice cream!!!

Not everyone is a super talent. Not everyone can perform multi tasking effectively. Not everyone can wear 10 or 20 hats and still get the jobs done competently. And not everyone has the privilege of holding multi jobs and can get away with doing very little, or doing nothing, and still being paid handsomely. As each profession or job gets more complex, it will require higher level of knowledge and skills and attention to details. And if several professional jobs or trades, perform by different professionals, are lumped together and expecting people of diverse professional background to be able to execute them efficiently, what we are going to have is superficiality. It also insults the complexities of the nature of the jobs and the professions. The financial industry has undergone this phase of transition when insurance agents and stockbroking agents were ‘encouraged’ to cross train, to allow insurance agents to sell financial products and stockbroking agents to sell insurance products. What a silly idea. But it was done. So what can be expected? Each profession is governed by a series of stringent rules and regulations, laws and technical expertise that demand professional devotion. But some jokers thought that both professions were like car or ice cream salesmen, and a little training will do the job. So what we have eventually is the blurring of roles and the blurring of products. And there are many such products to complicate matters. And these inadequately trained people were out there trying to sell additional things which they are not familiar with. And they called them Financial Advisers, I think. And I think some of these financial advisers are now involved in the minibond fiasco. They are presumed to have the professional knowledge to sell financial products but now found inadequate. Some are going to be screwed till their anus burst for failing to exercise professional due diligence. Ignorance or inadequacy will not be an excuse. Financial products and instruments, derivatives etc are complicated stuff and cannot be administered superficially. There are many technical, financial and legal terms and conditions governing such products and these are not easy to understand. It is not like selling cars or ice cream. I have even been approached by bank tellers to buy such ‘ice cream’. Selling such products is not a once off the shelf, its over. They are dynamic products that require constant monitoring and attention. And the consequences for misreading, misjudging and mis selling can be very serious.

A gaping wide hole!

When the minibond crisis hit the fan, everyone ducked. Or at best, no one stand up except one, or a handful from the most unexpected place, the Hong Lim Speakers Corner. Where were all the people and organisations who are expected to fight or advise the citizens who are in trouble? And in the ST today, Chua Mui Hoong is asking for the setting up of an industry watchdog. She said this is an opportune time to push for it. You mean we don't have any industry watchdog? Oh, she said we have, but they failed to respond to the crisis appropriately. Or everyone was looking over their shoulder to see if someone was going to give the go ahead. Or they may not want to step on the wrong shoe or get involved into something that would put them in a bad light. This boils down to the incestuous relationship of corporate and govt in paradise. When govt is in business, not only that the roles of govt and corporations are blurred, you do not know who is what. Even the govt, the regulators, may unknowingly, unintentionally to put it nicely, compromise their tasks to regulate. It all added up to create this mess. Incestuous relationship is never healthy. And now we have all kinds of cries to question the selling of high risk products to the people. Why in the first place? Are these carefully thought over? We need watchdogs to look after watchdogs. That is for sure. We cannot have people floating in in their eight horse chariots when there is a crisis and rode away after slapping a few guilty ones. The watchdogs must really be independent, and not affected by incestuous relationship.

Judge I shall be

I reckon this is the most perfect position to be in life. Just sit in the office and waiting for people in trouble to come knocking. Then the judge will sit at the top of the bench and look down at everyone from the distance, totally innocent, calm and untarnished from the scuffles and mess in front of him. Better still, the judge should remain above and detach from the combatants. His role is simply to judge, dish out the punishment, who gets how many strokes, how much fines and how many years behind bars. Ideally a judge is best completely detached from earthly problems, and rightly he can remain blameless. For he is not involved, and has nothing to do with the problems people bring to him. In paradise, many in authority think and behave like they are judges. They may head ministries, corporations, administering big operating systems etc. And when trouble appears, they ride in in their 8 horse chariots and judge. Some will be fined, some whipped, some decapacitated. Then back they ride their chariots into the clouds to be near to god. Never mind if they are in charge of all the organisations, set missions, policies, directions, goals, systems, rules and regulations, they are blameless, like judges. Not involved. They are there to judge and punish. Even if they wake up late and turn up late is ok.

Preventing supernormal profits

Ho Geok Choo wanted to know why the govt did not set up an independent body to regulate electricity tariffs after the 21% hike. Iswaran's reply is that too much regulations mean that there will be regulatory risk. And 'If there's more regulatory risk, you must expect that electricity generating companies here will expect a higher rate of return than what they currently have.' And because we don't have independent regulatory body, 'Singapore Power...does not earned a "supernormal rate of return".' SP only earned $1 billion in profit last year. With independent regulatory body, they could probably earn $2 billion or more and the tariff hike could be more than 21%. Whew, Singaporeans are so lucky.

Milking to the max

When selling the flats during the first launch of the Pinnacles was already making a decent profit for the HDB, the additional $200k added to the second launch, when all the costs have been accounted called must be pure additional profit. And this profit is made from our citizens. And they called this subsidy. Then we keep wondering why our people did not have enough savings for retirement. The answer is simple. They were at the wrong end of the formula, 'Milking to the max'.

Australia continues to ban short selling

Australia must have seen the danger of short selling and is continuing its ban. And the Australian market is much bigger than ours. The US, probably the biggest market in the world, has now and then banned short selling. And we stubbornly or cleverly continue to allow short selling in our market. It must be good for us. I hope one day someone will have to account for this. And no one can claim ignorant of the damages short selling is causing to the investors and the market.

Thieves and Thugs

The thieves and thugs of today are not called Ah Seng or Ah Long. They don't have tattoos all over their bodies. They don't carry guns or knives. Very likely they come armed with a string of degrees from Harvard or Yale or some Ivy League Universities. And they are well connected and protected. Actually they are all very nice people. Dressed in designer suits and can be seen in all the high places. And for sure, they don't kill. They don't cheat people of a few dollars or a few cents. They only talked about millions and billions. They don't rob. They just reward themselves for their talents. Their rightful claims.

Myth 192 - The myth of top brand and reputation

Lehman Bros has more than 150 years of track record. A highly rated investment banks staffed by some of the best brains money can buy. And they were all paid damn well, many, not ten or twenty, were driving Ferraris and owning several multi million dollar castles in the US and in retreats across the globe. Working in Lehman Bros is like having it made. And their products were A rated and sold across the world. The more they were sold, the more credibility they earned and the stronger is the brand name. No one expects Lehman Bros to collapse. No one expects its products to be flawed. The only organization here that can match the reputation of Lehman Bros is Singapore Inc. Though it does not have the long track record, it is staffed by the best men and women, proven to be the best, thorough, hardworking, transparent, incorruptible etc etc. In other words, the brand and reputation alone will bring confidence that it will not fail. Whatever it does, its services and products are unquestionable. Today, not only Lehman Bros has fallen, Merrill Lynch, Goldman Sach, Morgan Stanley, Barclay, UBS, Citibank and a lot more big names with big reputations have fallen to the wayside. In terms of reputation, brand, expertise and capitalization, none of our local institutions is in their league. Some big local institutions are also going to be dragged down, despite their big reputations. Can we live and trust on brand names and reputations alone? When the people change, the ideas change, the values and products change, the brand, the mission change and the reputation must also change. When good people have left, when bad ideas and values replaced the good of the past, the goods and services will not be the same again. Sometimes the changes are incremental and small and are difficult to detect. But change is taking place. You want proof, call Lehman. One can choose to continue to believe that nothing has changed. Refused or cannot see the changes. Everything is fine. One can also be frighten, be very frighten, when one is perceptive enough to see the rot within. To each his own belief. But surely there will be many Lehmans to come along.

You want to be rich?

You want to have big house, big pay, world class transportation? Sure, who will say no to such offers? Saying yes is a natural response. But be careful, be very careful. Read the fine prints. This was exactly what happened to the retirees who converted their FDs to minibonds. You want higher interest? How can anyone resist such an offer. But they did not hear the whole story. There is a price for everything. There are consequences. You want growth, pay your price. More foreign workers to compete for facilities and fresh air. They need all the living space as much as we do. Growth also means higher cost for everything and many more. Don't just simply accept a statement at face value.

Time to change beneficiary in CPF

In the past it is normal to name our spouses as the beneficiaries to our CPF savings. With all the new changes to how we can withdraw our CPF savings and how we cannot withdraw them, naming our spouses as the beneficiary is becoming irrelevant. Quite a number of CPF holders will die together with their spouses, if the projection is correct, in their late eighties. What this means is that our spouses will not inherit our savings. Also, a huge sum of our savings will not be used even after we pass away. It is thus necessary to name our children or maybe grandchildren as our beneficiary. Our children may be too old by then.

The buck stops here! Blame the RM

All the fingers are pointing at the Relationship Managers for the fiasco of the minibond sales. They are the devils. Watch them, put them under the microscope, charge them, sue them. How convenient. And very familiar too. Does anyone want to ask who designed the minibonds, who did the clearance and approved these bonds for sale, who worked out the strategies to target the retirees? When the product is a problem, why blame the salesmen? These salesmen were released into the market to make their sales pitch and conclude deals. The more successful they were, the more they will be rewarded. Come on, this nonsense of going after the lowest rung in the pecking order must be stopped.

Is the stock market another casino

In many ways people may generalize the stock market as another casino where people place their bets and ended up win or lose. But the stock market is not meant to be that way. It has a different reason to exist. Investors buy stocks of good companies to grow with the company, earn dividends and benefit from the rising stock prices. Companies list in the stock market to raise funds for its own growth, business developments and expansion. And the stock market behaves according to some business rules and cycles. Well managed and profitable companies will see the values of their stocks going up and vice versa. Some investors will buy stocks to be kept as long term investments after careful research on the fundamentals and prospects of the companies. But when these principles are ignored or been made irrelevant, and when the prices of stocks no longer behave as they should but being manipulated with no respect to their fundamentals, something is seriously wrong. Yes, it is no longer a stock market but morphing into another kind of casinos. And this is exactly what is happening to our stock market. And this will lead to its demise in time to come. There is an urgent need to return the stock market to its fundamentals and to serve its original role as a market for the companies to raise funds. Failure to do this is criminal. The design of the stock market, the mechanism that determines its price movements, must be fair to all investors and the companies listing their stocks in the market. If the mechanism is unsound, unfair, then caveat emptor is not enough. Just like the minibonds, if the product is unsound, here to read if the mechanism is unsound, you cannot blame the investors or even the relationship managers. The problem is at the source. The designer of the product or the system must be held accountable when investors fell victims to unfair practices, exposed to undisclosed and unacceptable risks. As a financial centre, we need a sound stock market, not a casino. The stock market must function as a stock market.

Give the people a stake in the country

This was the magic formula of the first generation leaders in the early days of our history. They really built affordable, I mean really affordable, HDB flats for the people to live in. A 3rm flat in Queenstown cost about $7000! Ok, for a better perspective, that was a time when a teacher would probably be getting about $500 pm or $6000 pa. Today, a 4rm flat is $450k against a teacher's pay of $3k, $45K pa. Affordable! What has gone awry with this magic formula? Isn't it good that the flats are now costing half a million or 1 million? Don't the people feel richer with all the asset inflation? The trick then was that the people can live comfortably with their $7k flat while other costs were also relatively low. Living here was comfortable and manageable when compare to living in other countries. Today, living here is a big struggle even with a half a million dollar flat. Everything is too costly relative to options in other countries. The previous magic formula attracted people to want to stay here and have a decent living. The new formula says you will be better off selling what you have here, collect all the cash and move on to a relatively cheaper country where your wealth can be multiplied several times over. Yes, the system is designed for the average citizens to sell out and move out. The option of staying behind is a life of struggle to make ends meet while bragging about being very rich in the CPF and a half a million dollar flat. The new formula is flawed. Or maybe it is intended that way. Make your money, grow your assets, then go away in your golden years.

Dependancy on govt help

This is the stereo typed impression of Singaporeans. When they are in trouble, they will look to the govt for help. And this psyche is perpetuated by a govt that persistently insists to help, no matter whether help is wanted or unwanted. Very often help is shafted down into the throats of Singaporeans, like Peking Duck. We shall call it compulsory help. This dependency is so ironic. There is another dimensionally opposed view on this, that the Singaporeans do not want the govt's help and it is the govt that is insisting to help. Then on the govt's part it is telling the people that they should not depend on the govt for help. This is not a welfare state. But welfare keeps flowing out even to middle class citizens. It is really getting crappy and creepy. And we always compare ourselves with the more entrepreneurial and independent Hongkongers. The Hongkongers are admired for their streak of independence and for looking after themselves, not depending on the govt. The recent minibond issue has turned these perceptions upside down. The HongKong govt came out immediately to protect its citizens from the debacle, calling on the banks to act fast to buy back the bonds. On the other hand, the Singaporeans were expected to look after themselves and fend for themselves. The govt or authority only responded several days after the cries for help have subsided into a whimper. The Singaporeans were as usual looking up to the govt for help but must have been disappointed. And the usually responsive govt, always willing to help, insisting on helping the people, was slow in reaching out to the people. Strange developments and a rethink is needed on these new developments.

A desperate cry in Hong Lim

I was at Hong Lim Park this evening to soak up the mood of the victims of the minibonds and high notes and low notes. There was a little sadness, a little despair, and a little resignation in their faces. Many of these people would not have known how to go about trying to seek recourse for their plight. They need a helping hand. Now who can they turn to for help? Fortunately there is Tan Kin Lian who took the initiative to clobber up a petition for these helpless senior citizens. And Goh Meng Seng was there to repeat Kin Lian’s speech in Mandarin. I think there was still a group there that could only understand dialects and they found it necessary to be there. I wonder what would have happen to these people if Kin Lian had not taken up their case. I wonder whether the case would have been closed and forgotten, nothing heard except a few whimpers in cyberspace. You took your risk, made your decision to invest your money, who can you blame? One corner would have said this to them. Can Singaporeans afford to remain voiceless when they are in trouble? This case is a good example of how things would have turned out, or turned down, when Singaporeans simply accept that it is water under the bridge. Caveat emptor, they went in for higher returns and must bear the consequences of their decisions. I think this case would be much stronger if some MPs were to give Kin Lian their support by appearing at Hong Lim Park this evening. It was also a great opportunity for the MPs to be standing side by side with the people in distress, to be with the people in good time or bad time. If attending a citizen’s funeral wake is important, I think this is even more deserving of their presence. I sense that this is missing and is felt be the people there. Or maybe MPs should not be seen in Hong Lim Park. They have their own Speakers Corner in Parliament House. Yes, they will be asking many questions on Monday.

Everything is fine, don't question

Did I remember correctly that someone in this blog said we are so lucky. Everything is so fine, in good hands. Look at the poor Ah Peksand Ah Mahs and their lifesavings disappearing after buying financial products from reputable financial institutions with good faith, believing that everything is in control and safe here. Don't ask, don't question don't kpkb, count your blessings. We have a good brand. I am going to Hong Lim Park this evening to get a feel of the feel good phenomenon in Singapore. I bet many will be grumpy, angry, hostile, and will beat up anyone who tells them that they should count their blessings and go home. It is water under the bridge, let's move on. Too must trust, too much complacency, or just blind f0llowers or pure ignorance? Unthinking Singaporeans?

Reaching for the pinnacles the profitable way

Tan Kim Chuan wrote to the ST forum stating that the relaunch of Pinnacle@Duxton is priced at $200k more than when it was launched in 2004. Now this must be a mis statement. It cannot be. How could HDB priced its flats at $200k more than the original launch price? HDB is not a private developer existing just for pure profits. A whopping $200k increase all because the market value of these flats were priced at a discount to market value is simply atrocious. Most of these buyers are going to incur a loss very soon with the condition of the economy and the falling property market. Now, shouldn't this be a good question for the MPs to raise in Parliament? Or should Tan Kin Lian be responsible to talk about it in Hong Lim Park first? Tan Kim Chuan politely commented that this is either over pricing or profiteering from the property boom. Does anyone with political and moral responsibility to the people think that the pricing is grotesquely excessive and need to be brought down as the buyers are our people and many are young first timers? Or is it another case of greed is good, profit is good? What has become of the original HDB, the builder of affordable homes for the people. HDB used to be a nation builder with a national responsibility. Now it is becoming a commercial animal, and profit is all it sees. Come on MPs, ask some questions would you?

Need to be more proactive in asking questions

MPs will raise questions in Parliament on the recent financial turmoil. But most of the questions will be on the selling of risky bonds by banks and how these were done and the need for closer supervision. Isn't it a bit too late? Why wait until the coffin is about to be lowered into the grave to ask questions? I am hoping that some MPs will raise the issues of the stock market and the relevance of its mechanism. The amount of money wiped out from the stock market is much much more than the money lost in the risky bonds. Caveat emptor is no longer acceptable. The stock market must provide a level playing field for all investors and some of the processes that are anti investment or inherently negative to the healthy growth of a stock market must be reviewed and put right. The MPs should also look into the values that have been wiped out, the number of penny stocks in the market which is now a laugh stock, and how companies and investors are going to be affected by falling stock values. It is better to ask question before people start falling from the flats or jumping onto MRT tracks.

Right time to buy stocks -Warren Buffett

Warren Buffett Says Now Is the Right Time to Buy U.S. Equities By Alan Purkiss Oct. 17 (Bloomberg) -- Warren Buffett said he's buying U.S. stocks and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities. Writing in the New York Times, he said he's following the principle: be fearful when others are greedy, and greedy when others are fearful. Exaggerated concern about the long-term prosperity of the many sound U.S. companies is foolish, and most will probably be setting profit records in years to come, Buffett said. While short-term stock-market movements can't be foretold, the likelihood is that the market will recover before the economy or general investor sentiment do so, and ``if you wait for the robins, spring will be over,'' he said. The above is an extract of an article posted in 'Diary of A Singaporean Mind'. I agree that our stocks are very cheap. But some measures must be taken to stop short selling or the stocks can get even cheaper by the days.

Stop the massacre in the stock market

This is the second time I am making this plea. The first time was probably a couple of years back. The meltdown in the stock market is running out of control. Does anyone think that he has some moral responsibility to protect the small investors from the massacre? If not, does anyone think that he has some responsibility to protect the interests of big investors or companies listed in the stock exchange whose shares are turning worthless? They will suffer the same double whammy like the senior executives of Lehman when their shares pledged to banks as collaterals became worthless. The banks will call their loans and liquidity will become zero. Companies will be hit hard in such cases. Individuals could be bankrupt in the process. If these are not important, does anything think it is important to save the stock exchange and the financial industry from collapsing? The indiscriminate sell down of shares in the stock market is like a run on the banks. This is intolerable and unacceptable. I would expect a crisis meeting tonight and over the weekend to address these issues and some actions be taken to temporary stop the carnage. I would suggest the following measures be put into place over the weekend before trading commences on Monday. 1. Stop scrip borrowing for short selling. 2. Ban short selling, naked or with borrowed scripts. 3. Broking houses/funds shall not be allowed to trade without having to pay any commission except for a small clearing fee. A 0.1%, or more if appropriate, shall be made payable to the stock exchange for house/fund's own trade. This will restrain the indiscriminate selling/buying to sell down a stock. 4. A minimal commission be charged to big traders/funds, proprietary traders etc to level the playing field. This must be strictly enforced to prevent undertable deals. Commission can still be negotiable but subject to a minimum determine by the stock exchange. The above measures may greatly affect the volume of trades in the market. But it is healthier to have genuine investors trading rationally in the market, in smaller volumes, than allowing the market to be destroyed. Our market has been driven so low that many stocks are at very good value for investment and funds or rich investors will find them attractive buys at current levels. Let normalcy and sanity return to the market for the time being while more appropriate long term measures be introduced to ensure a market that is viable and sustainable in the long run. Something must be done quickly to prevent a crisis situation over the next few days/weeks. This is my plea.

Banks buying back risky mortgages

JPMorgan Chase is buying $6b worth of risky mortgages into its own investment portfolio. How could banks be involved in risky products? Or why would banks be allowed to take on such risk? Let's hope this kind of practices stay in the US and our local banks are not allowed to be too adventurous again. Banks are the bedrock of the whole financial system and should not be running around like koyok men selling anything that can make quick money. The dizzzy days of seeking quick profits for big bonuses and unrealistic pay at the top should be frozen. Banks should continue with its traditional business and roles, and grow steadily over time. And for that matter, as a country, we also need to stop this relentless drive to achieve everything in the shortest and quickest time. Population growth, high economic growth, high rental growth, property prices, undergrowth and whatever growth, should be reined in. Time to change the time scale and go for sustainable growth in a more unhurried pace.

Please tell Hsien Loong or Chok Tong

Some of you reading this may have access to either one of them and you have my permission to tell them of my views about the Stock Market. My position is that the mechanism and structure have many flaws and the Stock Market is unsustainable in the long run. It will die a slow death with many innocent investors losing their life savings. We should not wait till another minibond scenario before we wake up. It is in need of an urgent review. One main point is that our market is too small, too imperfect that it can be easily cornered by the big funds or houses and be played to the disadvantage of small investors. Short selling is one feature that is often used against the small investors causing big losses to them. Short selling also disadvantages the shareholders and the company by driving the share price down against its fair value. This has many consequences to the company in fund raising and to shareholders who may pledge such shares as collaterals. The smallness of our investor pool and their limited resources are severely stressed by a constant inflow of new listings and also new derivatives. Not forgetting cross listing of stocks from other bourses. To make things worst, many of the stocks listed have proven to be raw deals resulting in many investors losing their pants. Then there is the uneven playing field between small and big investors, trading houses and big funds in the commissions charged. This literally translated into different odds favouring the big boys. Even casinos do not have different odds for big or small gamblers. The above are brief outlines of the flaws in the present system. I could further elaborate on them if necessary. If these are not put right immediately, innocent investors will continue to lose money relentlessly in the stock market. It will lead to the stifling and eventual termination of all trading activities when the small investors lose all their money, and also lose faith in the market. When that day comes, even the foreign funds will pack up and go as there will be no players in the market for them to exploit. Companies too will find it pointless to list here as the value of their stocks will become worthless. They cannot use them as collaterals or to raise fund in the market. There will be no IPOs, or if any, probably will be fly by night companies coming in for a hit and run. This is the dire strait of our stock market. And everyone seems to be in a state of eternal bliss. Yes we have a lot of good rules and regulations governing trading in the market. The compliance people and regulators are efficient. But the flaws are systemic. Do something quick.

Unhappy with other people's news?

Start your own news and tell your own story. Increasingly people who are dissatisfied or disillusion with official news or other people's news are launching out on their own and start their own news. No need to live with news or views that they are uncomfortable with. This is exactly what the students at NTU did. Three students, Chong Zi Liang, Sakaria Zainal and Lin Junjie, have set up a news website called The Enquirer. They were formerly from the Nanyang Chronicle Editorial team and wanted to report 'in depth issues that matter to undergrads.' The internet is always available to those who want to speak out or to listen to different views. We will get more diversity of news as this trend continues. And The Enquirer is another new member in the cyberspace community.

The Golden Formula not working

Earlier I posted about the Golden Formula that brought us the Olympic medals. It was working or starting to work. But the flaws of such a formula are starting to reveal itself. It is a short sighted formula. It depends on foreign talents that can be bought but can go away as quickly as they come. Foreign talents that come to us in this way have no commitment to us. They are not one of us. Unlike our own children who are born and bred here. Even paying them peanuts or not paying them anything, they will still be here. We need to rethink this parasitic principle that we can live off the talents of other countries. it is poaching in one way. And we are happy when we poached other people's citizens but obviously we would not be happy if others do that to us. Now the table tennis fiasco is beginning to tell us to wake up and look inward at our own children. For they are all we have to depend on in the long run. And this does not apply only to sports. It is applicable to all industries. Take care of your children first, look after them well. Don't be infatuated by foreigners. They come smiling when you put money into their pockets. But they will not hesitate to turn around and slap you on their way out. We need to be more self sufficient in our own talent pool. Depending on foreign talents can only be a short term measure and opportunistic. Come to the crunch, the citizens are all you got. Don't neglect your own children. Did I here that we are going in a big way to get more medals and more foreign talents?

A third reply from EMA

EMA is replying to the rising criticism of the electricity hike today. But again it fails to address the issue of forward buying and spot buying as well as the composition of natural gas in the tariff formula. Oh, in the letter it said that all Singapore's electricity is generated by imported fuel! Does this include natural gas or oil alone? The people deserve to know what is in the formula. The EMA must also put into system a process whereby they can opt to buy spot when future is too high. If their buying process is so rigid to only buy using one method and ignoring the alternative of buying low, then it is not doing justice to the people. Another point is that the hedging or buying forward system sometimes lead to losses and sometimes to gains. When EMA gains, they keep quiet and happily enjoyed the bigger profits and big bonuses. When they hedged wrongly, the loss is immediately passed to consumers. This is unfair. In businesses, there are ups and downs and EMA must take in the profit and losses in its stride instead of one way, always win and no losses.

Hold off Mean Testing

Timothy Chin appealed to Khaw Boon Wan to hold off mean testing in his letter to Today. His justification is that time is bad and recession is here. He suggested that hospital should compete for high end clients but also provide for no frills wards for those who do not want the frills. Then he compared the charges for B1($165.85) and B2($51). In his opinion, the difference is too great. He then suggested an intermediate grade like B1a. His overall reasonings are reasonable until this point. By pointing out that charges for these two wards are too wide will prompt only one kind of reaction. Ok, B2 should be raised so that the difference is smaller. And this exactly the kind of thinking Singaporeans will have, a variance from his own B1a. My point is that the ward charges remain and mean testing stops. Let the people decide what they want. Let the people be thrifty and save if they can and want to. Do not imposed on people to spend. The latter kind of thinking is the most ridiculous and can only happen here. Making people spend according to how much money they have. This is one of the reason why Singaporeans have very little savings in their CPF for retirement, simply because HDB flats were priced on how much they can afford to pay. Higher income must buy bigger flats.

Where is CASE?

David Goh wrote a letter to the ST forum questioning why CASE did not say anything when oil prices has been tumbling down while petrol pump prices are still high. For that matter, what is the position of CASE on the 21% electricity tariff hike? For CASE to keep quiet suggests a couple of things. CASE is quite comfortable or agreeable with the pump prices and the electricity hike. Or CASE may be busy, either with more important issues or is still studying the two cases. And if both cases are justified, then there is no need for CASE to be involved. Singaporeans should be rest assured that their well beings are in good hands. No need to worry lah.

Is my memory failing?

If I can still remember, sometime, not too long ago, there was an official announcement that there will be no increases in govt services or charges. But today we are facing higher electricity tariffs, higher phone bills, higher transportation cost, while we were told to brace up for a recession. Maybe I did not read them or understand them correctly. All these are private organisations, so it is still correct to say that govt services and charges have not gone up. Would hospital or medical bills be considered private as well? How private are our private organisations? Can a govt organisation or govt linked organisation be private by simply restructuring it and call it private when the major shareholder is still the govt? These are difficult and tricky things for the simple minded Singaporeans to decipher. It is easier to just accept any thing as private when it has a private label. That all is well.

Disneyland or beggars paradise

Orchard Road is the closest we can get to being another Disneyland. The cool and rich shop there and are seen there. The heartlanders will find it quite an expensive place to be. The parking and CBD charges will be enough to burn a hole in their pockets, unless they go there by public transport. You need to pay to be in Singapore's Disneyland. But this Disneyland is in a state of transformation. Other than the foreign workers and maids gathering there to size each other up for a weekend tryst, or for some serious business transactions, there is another big group of people seen regularly at Orchard Road. The beggar sects of all the neighbouring countries have turned Orchard Road into their business district and playground. From buskers to beggars, to monks and conmen, they lined the famous sidewalks of Orchard Road, mingling around and inhaling the expensive perfumery, and the beautiful shops and their gorgeous wares. The Twains have met, in Orchard Road. Both extremes found Orchard Road a paradise in their own ways. The rich and famous, the poor and ragged, are all in Orchard Road. A Disneyland and also a beggars paradise.

CPF - Ignorance is bliss

This Ah Pek told his kakis that the happiest moment of his life was to read his CPF statement every month. He said he felt so rich, so comfortable knowing that he had so much money in the CPF. My money would not run away. It would be there, guaranteed by the govt. And the money is growing with very high interest rate some more. Hopefully the CPF is still there when he needs the money. My CPF money did not run away, except that it retreated away from me when I reached 55. Now it has ran 7 years away. And after that, I still cannot touch all of them. I can only take a few hundreds every month until it runs out or I run out or comes 80. No, not true. Some can only be taken out after I die, at least $30k in the Medisave. I am not sure whether to be happy for the Ah Pek. Obviously he is another ignoramus who did not know anything about inflation. When the interest paid to his CPF saving is less than inflation, his money is withering away, becoming lesser by the day. And when real inflation hits him, for the cost of basic necessities are shooting way more than the official inflation rate, he might as well forget about saving when it all comes to nothing. His $3 today that becomes $20 in 20 years time may just buy him another bowl of wan tan mee. No matter what kind of spin is being churned out, it is all craps. The best option is to take your CPF money and put it into your own pocket. Use them when there is still some value. Who knows, one might just kick the bucket tomorrow and not smelling the CPF savings completely.

New format

Hi everyone, I have just changed the template and trying to work around the system. For the moment I have lost the list of contributors and I will try to get it back asap. Will see how much or what else I can add to the new format. Cheers PS. Please click on 'follow this blog' to insert your name in the box. This should do the trick.

One week to change the world

In one week, we are entering a brave new world. The Americans are now the biggest communist country, with its banks nationalised and the govt in control of many private enterprises. State intervention instead of letting the economy running along freely under capitalist system. Govt handouts and state welfare to help the poor. In one week, the G8 countries were bankrupted, practically. All resorting to printing more monies to aid their ailing economies and the banking systems. The G8 used to be known as a rich man's club, with the world's richest as members. Now the world's richest, in terms of liquidity available in the trillions, are not in the club. These include China, India and the Arab countries. The latter should form a new G group of countries where the real money is. G8 is history. The 'diseased' Sovereign Wealth Funds, SWFs, that were once shunned by the West and kept at arms length like lepers are now the knights in shining armour, welcome by their detractors to save their arses. SWFs are now in vogue, they are cool. They have the money. In one week, Capitalism dies. The excesses and the extremism of Capitalism dug its own grave and buried itself. In one week, all the financial wizards and all the whiz kids in New York are in debt, running risk of losing their jobs, and many have been exposed as simply con men and greedy crooks. In one week, George Bush's name will be engraved in stone in the Hall of Infamy as the US President that only knew how to spend money in starting wars but forgotten that there was an economy to look after. And he broke the banks. In one week, Europe and America went around begging for financial aid. In one week, America and Europe were lost in what they could do to save themselves from the financial mess they created. In one week, the world will no longer believe that the West knows what they are doing and should no longer be in a position to teach or tell the whole how to run their economies. In one week, the power equation of planet Earth shifted.

Singapore power tariffs higher than the US or France

This the heading of a letter to ST forum by Bruno Serrien. He is asking if the power provider has done enough or their best to protect consumers from paying disproportionately high power tariff when they don't have to. So far we have heard that the current formula to price power tariff is the most efficient and equitable. Really? Spot price of crude oil has fallen to below US$90 and our tariff are still based on pay forward future oil price of US$150! Bruno also pointed out that 80% of our electricity is generated by natural gas instead of oil. So why is the formula simply based on oil price? What portion or percentage is being computed with the natural gas element or is this totally not in the formula? We need more transparency in this and the full formula to understand how it works and affects us. Are there measures to work out the possibility of buying spot when the difference is too high? Can the supertalents explain, please.

Demanding justice and fair play

Tan Kin Lian has started the first movement to lead the normally obedient sheeples to fight for justice. His petition, signed by more than 1000 Singaporeans who lost money from minibonds and notes, is asking MAS to commence investigation into the way the products were sold and whether the sellers have done their due diligence. This stamp from the American financial crisis where the culprits are still enjoying their good life from the loot they have taken from the market. We need to bring those who have done scrappy works that led to people losing their savings to tasks. These should include agencies that were supposed to do the auditing and financial reports of products or companies. The latter refers to companies/agencies that were involved in bringing doubtful companies for listing in the stock exchange. They cannot just be let off simply. They are expected to do the ground work to ensure that the companies they have researched on and auditted are sound. The interest of the masses, the sheeples, must be protected.

The assumption of virtues

Can virtues be passed down or assumed by the inheritance? Can the new employees take credits for the great works of their predecessors? Whenever we discuss about the govt, often we hear comments that the govt has done a great job and we should be grateful to the govt. Who is the govt anyway? The incumbents are the govt but not the govt that brought us here today. Ok, a few of the oldies deserve all the accolades and we should not dismiss their good work. The govt is just a nomenclature, a term for a group of people running the country. And this group of people changes over time. The fault here is that the masses tend to get mixed up with the people of the past govt and the people of the present govt and regard them as synonymous. This is far from the truth. Even if the present people in the govt assume or presume that they have done great things, the people should not accept such assumptions or presumptions at face value. Look at each and every one of them and ask what each has done that deserves greatness like their predecessors. Greatness of the past leaders cannot be passed down or rubbed down to new leaders. They must earn their spurs. And if they have not done anything great, they should not carry that air of greatness around them. Joining the party, wearing that badge or being in the govt does not automatically entitle one to greatness. Simply ask, what have you done?

The goodness of obedience

The thoughts of what is happening in Thailand today, when protestors were fighting and shooting at the police must give a great sense of gratitude that we are such a peaceful country with peace loving people. Those who still have doubts about the cancelling of the cycling event in East Coast Parkway should better appreciate the foresight of the decision. You need talents who can look a few steps ahead to make wise decisions. We did have people fighting the police in the past. But those were the days gone by. Today we have a different set of people that believe in the goodness of obedience. It is a diffferent kind of obedience, not those of a dictatorial regime, an authoritarian state or an archaic kingdom. Those were imposed obedience through the use of force or ignorance of the populace. That is one of the reason why some old feudal states chose to keep their people under educated. For with education comes knowledge and a questioning mind. The more education the people received, the more they can see falsehood from the truth and the lower will be their tolerance for inepts and bad policies. This is a little contradiction which requires a little explanation. We have a very high level of literacy in our people. Many are highly educated. But this does not bring about disobedience. In fact the people become more obedient than before. Thanks to several good men and their wise policies that brought us so far. And the people are grateful to the point that they will stand up to defend the govt against any critics. Critics are frown upon and set upon especially in the cyberspace. The kind of obedience among Singaporeans have been carefully cultivated through young and has become second nature to them. This is an achievement which many countries could not do. I cringe when I heard educators talking about teaching the students to learn critical thinking. Raising literacy in an orderly society is an achievement that many failed to appreciate. For that, our govt should receive a Nobel Price for Peace. More specifically, it should go to the good leadership. Not just anyone in the govt.

Wall Street's Perverse Pay Structure

In Ho Kwon Ping's commentary in the Today paper, he hit out at the perverse pay structure in Wall Street. How could people's daily wages be in the millions, in US$?!!! It was lunacy for many years over. And everyone was praising the great reward system and the great talents that deserved to be paid that way. No qualms, no guilt, only envy. The Wall Street model was actually our ideal model, the model that we modelled ourselves and wanted to be. It had caused a lot of grief among our supertalents when comparing the pittance they were getting with their peers in talents in Wall Street. Now that the truth is out, when talents were actually cheats, maybe we should come down to earth and look at reality against lunacy. Maybe our supertalents will now find themselves happier, that what happened in Wall Streets was a great hallucination that is turning into a nightmare. Ho Kwon Ping should shout louder, time to change the reward system and pay people their worth as human beans, and not lunatics.

Where is the stock market heading...

Oblivion! That is where our stock market is heading. And this is not due to the current financial meltdown across the world. There are just too many inherent weaknesses in the system that spells one way, doom. We were building a financial centre, a really huge one to befit our ambition, but relying on the foreign funds to come in and prop it up. For our own market, including funds and investors, is just too small. The over reliance on foreign funds and fund managers means that they can push it sky high and let it drop like a coconut when they decide to pull out. And they are just doing that right now. The next problem related to this wild ambition is the padding of the stock markets with as many stocks as they can grab hold of, and many were simply junk stocks. To make things worst, derivatives upon derivatives were created almost daily which means that the market is over diluted. Every dollar is spread too thin. As long as the foreign tap is open, and the funds keep flowing in, it looks sustainable. The commission structure that favours funds and house trading is a killer to the small traders. When big boys trade without having to pay commission except for a small clearing fee, how could small investors survive when they steamroll their way over them? Then there is the new game of short selling. Small investors normally trade one way. Investing for the long term and and normally long in the market. And the big boys just shorted them out, all the way. The more ruthless is the shorting, the greater the profit for the big boys. Where would all this lead to? The death of small investors. Small investors are being driven to extinction. All their money gone in a game with a loaded dice. Their money were also gone when IPOs after IPOs were listed and subsequently all melted away. The billions that were sucked out from the stock market are hundreds or thousands of times the fees that the SGX collected from the listing companies. What we have is a stock market that is not only leaking, but with a hole as big as a big longkang. Unless the whole system is restructured, fast, it will only head one way, for sure. The big volume of daily trading is only an illusion. The quantity of stocks is also an illusion. Many of the penny stocks are waiting to fold up. Just shell companies in a way. And the big stocks are also not spared from a system that allows shorting the stocks down, with no regards to their value and business.

Myth 191 - The Big Apple

The Big Apple is the greatest success story of modern history. After WW2, in a matter of 50 years, the US saw tremendous exponential growth to propel it to become the undisputable superpower in military, intellectual and economic terms. All the great success stories came from America. From rags to riches and from family fortunes to bigger fortunes. The best brains of the world are gathered in the US. But the moral of the story is that the shine of the apple is only the exterior. You do not know how bad is the rot. Even with the best and brightest running the show, it can still go wrong. The saddest part is that it was going wrong for too long but the Americans were lulled by the good times, the complacency, to know that hell is calling. Do not be deceived by the juicy big apple. Dig in to find the truth. Take the good news with some caution and scepticism. The financial failure and coverup were a near perfect job in deception at the highest level in corporate America and govt.

Of fine food and shit

The foreign workers problem in Serangoon Garden is like the traffic congestion problem. You squeeze at one corner, it will prop up in another corner. That is how small and how tight we are. We don't have the luxury of space. When your neighbour farts, you smell it. What we need is a special path direct to heaven for the foreign workers. I mean have a special express like helicopter lift, from dormitory to work place and back. You cannot have the cake and eat it as well. You want to eat all the fine food, be prepared for the smell when they are turned into shit.

Too much financial engineering

The financial crisis is partly caused by too much financial engineering and pushing sophisticated products, instruments and derivatives to the ignorants. The days of govt bonds, FDs, stocks and unit trusts were gone. It is now a jungle out there. These sophisticated instruments are meant for funds and finance trained professionals. They are the ones who traded in these instruments for hedging, arbitraging, taking advantages of market inefficiency and their timely news and network of information. Asking the Ah Peks and Ah Mahs to invest in these instruments and expecting them to understand what they are in for is asking too much from them. In the stock exchange, there all also many derivatives and instruments that are not easy for the average punters to understand. Even the remisiers and dealers will have a hard time trying to manage them and trade these instruments to their advantage. They lack the skills, equipment, softwares and resources to compete against professional fund managers. It is an uneven playing field. The O level students pitting against the PHDs. Training derivatives, with their high risks and leverages, should not be marketed to the average investors. The watchdogs should also spend time looking into these instruments and gauge their usefulness in a market with unsophisticated investors.

The badness of short selling

Short selling came to attention recently and the US even banned it for a short while. SGX did banned short selling which I find amusing for the reasons and the nature of it. SGX is only against naked short selling. But the big boys or anyone can short the whole market till kingdom comes if he has the ability to borrow scrips to cover his short position. Why is short selling bad? It goes against the principle of investing in stocks. Investors put money into stocks for its potential to grow. The better the company is managed, the better chances that it will make more profits to reward its shareholders, thus leading to higher share prices. With short selling, the fundamentals of share investment have changed. It becomes gambling. The funds are saying that they can make money by buying or shorting the market, regardless of fundamentals. It is no longer whether the company is good or bad. Good company can still be shorted and its price forced down by short sellers to make their profits. How so? Over the years, many small investors have lost their money in the stock markets for many reasons, a shrinking economy, too many stocks, too many derivatives, too little money and of course short selling. We have reached a stage when there are just not enough small investors in the market for fair play. And the shortists, mostly big funds and house traders, have unlimited resources to short out the buyers. The one who who is able to keep on buying or selling wins. This is the game in the market today. Even very sound companies are not seeing their prices moving up. They all fell victims to this new gambling strategy. When there are few small investors buying, the big boys just short and force them to sell at a loss. Investors beware. Only when the big boys start to buy up the market will the stocks run up. But there are no one buying the market except the small investors. And they are either stuck for the very long haul or have to cut losses and get out. This is the new game play.

Greed is fine.

Greed is fine. It's stupidity that hurts This is the title of an article by Steven Pearlstein in the Sunday Times this morning. I find the article of particular relevance to what can happen to us in the mirror of Wall Street. Read the article by substituting the words 'Wall Street' with the word 'paradise' and the similarity is remarkable. ...The big problem with 'paradise' isn't that it's greedy....the masters of finance start our with reasonably good products and good intentions, only to get swept away by their success. They become arrogant, take too many risks and begin to believe their own marketing spiels. Then, when the cycle turns against them and the risks turn sour, they try to cover everything up and begin lying to their customers, to regulators and to each other.Trust erodes, and the whole thing collapses. In the populist 'greed' fantasy, it is ordinary people who are the losers while the 'paradise' big wigs walk off with all the loot. Where is greed in paradise? You find there everywhere. The landlords just keep raising their rentals. The market can afford it. It is free market at works. Who pays? The property prices are at high heavens. Not the cost was running to heaven. It is the add ons called profits. How much profits depends on how the market is willing to pay. And who pays? If a HDB flat is built on a $50k construction cost, plus $50k land cost plus $50k technical cost, should it be sold at $500k or $600k? Why not $300K? Why should someone pay $500k to die in a world class hospital when he could die free at home? Why should a few medical checks or trials and a few visits by a consultant be $20k when the cost of equipment used and medicine, plus staff attendance may be less than a couple of thousands? Is it that being world class, everything must be paid world class prices? Don't forget that 90% of the people are not world class and many are just trying to make ends meet.

What a great idea

Recruit men from Nepal! Our police force and immigration officers are overworked. Many are leaving the services. There is a shortage of manpower. Why not recruit the men from Nepal to solve this shortage and make these services more efficient, and of course, at much cheaper cost. This is being suggested by Ravi Govindan in a letter in the ST today. And we can replace or reinforce those officers in Certis Cisco and Aetos as well. For such a great idea to deserve a big corner in our main media it must have be something worthy of consideration. And there is no shortage of supply to oursource these services to foreign mercenaries. If Nepal cannot provide the numbers we need, we can go for Bangladeshis, Indians and Chinese. Then we can free our highly educated local Singaporeans to take up better paying jobs. And if this proves successful, we can even recruit them for our armies and scrap National Services. The Singaporeans will be jumping for joy to leave the guarding of the country to foreigners and no more reservist duties to bother them. The hotels are doing very well engaging private agencies to run their security system. If hotels can do that, then there is no reason why a bigger hotel like Singapore cannot. Let's go for it.

A time to change

There is a tinge of sadness with the passing of JBJ. And there will be a little ceremony in memory of him at the Hong Lim Park this evening. Among political observers, there is a big load of mixed feelings when they look closely at JBJ and the path that he travelled, battered and trampled, in the pursuit of a cause and to lead the people forward in a different way. These are noble and honourable goals which every able Singaporeans should aspire to. JBJ could have chosen a different path, in the pursuit of material wealth, and he could be very successful as a practising lawyer. Instead he ended up in the pathetic state he was in, as a politician on the losing side. How could our political system that is supposed to throw up leaders to lead the people be so cruel, vicious and unkind to political aspirants? They are not criminals or people who want to destroy the country. They stand up to provide an alternative to the people, to offer a different way forward. The people are fortunate to have these men offering them more alternative ways. The country can be richer and benefit from more political aspirants making themselves available to serve the people. Politics need not be a zero sum game, need not be an arena for gladiators to fight and kill or maim one another. It is the highest office of the land and the rules of the game must be that of noblemen and gentlemen. And participants, winners or losers, should remain honourable, highly regarded and well respected by the people, and least of all, remain as worthy opponents and colleagues, if not even friends. There were too many bad blood being spilled in the political arena over the years through a culture of robust demolition of political opponents. The aim is to maim and destroy at all cost. The losers must not be left standing. Such a vicious culture has no place in a developed society that we aspire to be. There are great models of political culture and conduct in the West for us to imitate and adopt. In America and Europe, you do not see the extent of helplessness in defeat in the losers of an election. Life goes on and winners and losers continue to enjoy their social and economic lives without any acrimony. It is time to change, to redefine the rules of engagement in politics, to be more gracious in speech and in actions, to embrace political opponents as worthy adversaries and also as peers who can join you with a mug of beer when the jostling is over. The sadness that is being felt now, this evening at Hong Lim Park, should be a turning point in our political culture. Let this be the last sad story in our political history and be a new beginning, that politics is an engaging ambition for good people to step forward to serve the country in grace and humility. Let the winners and losers all be happy people, giving due regard and respect for each other. And on the passing of an elder statesman, be an occasion to relive the good memories of the past and comradeship. We deserve a better political system and culture for the good of everyone.

The first wrong turn

When thrift was punished. Can you believe it? This was the first wrong turn when propriety gave way to greed. When my generation was children in schools, we were encouraged to save by buying stamps, one stamp a day or a week, or even a month. Then we pasted the stamps into a book and when the book was full, brought it to the post office for entry into our savings account. We were encouraged to save, 5c or 10c at a time. Then some wise guys decided that small savers were a waste of time. Big banks didn't need savers that brought in 10c or 20c. No, not even a few hundred dollars. The big banks had no time for small people. So they made the small people pay a fee to keep their money in the banks which were meant for big and rich people. In other words, small people should not waste the time of big banks and bring their small money elsewhere. I lost my $200 in a deposit account which I forgot totally. too many accounts. Actually it was a leftover of an investment account. The bank just kept deducting the monthly $2 fee until it was empty. And they did not see it as their responsibility to rob me of my money. Happily they took my money away. This was the first sign of rot in a society when thrift was punished. If I am not mistaken, a local bank is rewinding the clock and is encouraging the children to open savings accounts again. I hope they do not charge them administrative fee if the amounts in the savings accounts are too small. Good riddance to greed and greedy men.

3 good men to the rescue

This is the price for keeping quiet and not complaining and allowing corporate abuses to continue for so long. Now with people losing their nest eggs, 3 good men are appointed to clear the shit. Gerard Ee of NKF fame, Law Song Keng and Hwang Soo Jin were appointed as watchdogs in the finance industry. It could be worst! Now we have 3 knights to the rescue. Anyone still harping that Singaporeans should remain dumb and quiet and all things are in good hands? Why do we have CEOs, Chairmans and Board of Directors? Aren't they are the one responsible for good corporate governance, good business practices, good corporate citizens and good ethical practices? Apparently they have failed. Now instead of self regulations, they have succumbed to greed and allowed unethical business practices to go on under their watch. I personally have seen many such dubious conducts in practice and have fought a few cases. Corporate misconducts are rampant to say the least. And often they must have the go ahead from very high level, to protect bottom lines. Do we have to appoint committees to watch over the watchdogs? It would be ridiculous. The appointing of watchdogs is already ridiculous. Can't we depend on the honesty and righteousness of corporate bigwigs to do the honourable? Or in our long run towards economic progress we have appointed thieves and thugs to high places when common decency and morality have been thrown into the longkang? Bernie Sanders, a US Congressmen, was in the news last night commenting about the current US financial crisis and the bailout plan. He was angry that the US govt is putting money into the hands of people who created the mess. It was like appointing foxes to guard the hen house, so he said.

Myth 190 - It could be worst

I am sure all Singaporeans are familiar with this myth. It could be worst. The current EMA raising electricity tariff by 21%. If not because of EMA and their buy forward policy, it could be worst. The raising of bus and MRT fares, it could be worst, or it could be more. The economy slowing down. It could be worst. Our high cost of living. It could be worst. We are all so lucky to be in good hands.

When the rebates stop coming

Landed properties owner can expect to pay between $570 to $1209 more for utilities this year, according to Today, or a monthly average of $78 for electricity. That should be chicken feat as these are the rich people. The increase is definitely affordable. For those in 3 rm and smaller HDB flats, they will receive rebates of up to $330 which should be more than enough. Bigger HDB flats will get a little lesser. So no problem also. What if the rebates stop coming in? Looks like the hardlanders will have to be dependant on rebates for the rest of their lives.

Pressure to sell

High Notes 2 is not low risk, according to Janet Mohan of DBS. And HN2 is rated A- by Standard and Poor. In fact most of the notes sold were rated A and above. And they were high risk. Why were there so many complains that the buyers did not know that they were high risk. And for HN2, the principal is not even protected? Can such notes be sold to the Ah Peks and Ah Mahs in the hardland? Looking at their risk profile and literacy, most of them would not know what they were buying. (I am waiting for something to ask S&P to explain what they were doing.) A letter to the Today forum by L H Tang said it all. A fresh graduate joining a bank and with a quota to fulfill to keep his job. By all means, get the sales or lose the job. And he is given the title financial consultant! And he confessed that he was 'under immense pressure to think of ways such products can be "beneficial" to them(consumers).' Performance, performance, performance. Profits, profits and profits. In paradise, high rewards and recognition will be given to whover can scheme something that can bring in more money. Whether suitable to the consumers, whether the consumers like it or need it, doesn't matter. Better still if it can be made compulsory.

No anger, no question, no protest

The announcement of the steep hike in electricity tariff is met with an expected silence. Not a single muffle of unhappiness. No one question why the hike is so steep, whether the formula is right, whether the mechanism in the forward purchase of oil is the best or whether there are better ways to protect the interests of consumers. This is the best kept secret of Singapore's success. Faith and confidence that everything is in good hands. It is the best that is being done. Accept it, or it could be worst.

Where are the thieves?

Cheap loans were bundled as triple A financial products for sale. Not unlike tainted milk. Rating agencies collaborated to give them the green lights. Govt regulators cheered them on or went to sleep. And the public were conned to part with their billions and trillions. And the thieves got rich, outrageously rich. Why is there no question being asked now, and why is it that no one is guilty for creating such a colossal financial mess? The anger in the main streets of America is understandable. The second point is equitable compensation. The super talents must be paid their worth in salary, bonuses, perks, stock options and golden parachutes. They deserved them more when they make millions and billions for the organisations. Pay must be performance linked. These sound so familiar and logical. Make billions paid millions. What happens if lose billions? Oh, sorry, just a bad decision. Give me my golden parachute. Bye. This is about the worst case scenario for corporate failures, the bankruptcy of mega institutions, the lost of billions and trillions of dollars and the lost of jobs for all the employees, not forgetting the destruction of a financial system. Where are the responsibility and accountability? The fat cats wanted to be paid in gold when they performed. But if they failed to perform, all they lose is the job. Is this an equitable formula? Gambling on billions of other people's money, risking other people's money, with only huge gains when the bet is right and nothing to lose when they lose? I sure love to be in such positions. Is it time to revisit such a sure win formula for success?