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?

Reaching for the Pinnacles

The Pinnacles in Duxton Plain and many of the new HDB flats in town are priced to resale market prices, at a small discount. When has the policy of selling HDB flats at a subsidy, to selling at market subsidy, and now to market price discount took effect? What the latest policy means is that the price will keep going up depending on the demands. If people are still so crazy about pushing HDB prices to the pinnacles, let me remind them that the main cost of the current US financial crisis is due to high property prices, prices beyond what the average Americans can afford. Even the top traders in Lehman Brothers who were buying million dollars homes, more than one, were caught in the crisis. They borrowed money using their Lehman shares as collateral. When the shares became worthless, they were stuck with million dollar debt. Some several million dollars in debt because of the high gearing and high mortgages. We are in a similar situation. It will screw us when the time is ripe. The hardlanders' income is not going to rise like the million dollar man. In fact many were told not to expect any increases or employers were told not to raise their pay. How could they afford HDB flats that are going to cost more and more? Now, why must HDB flats keep going up just because the market prices are up and not because of cost? Profit is one reason. The next is the need to shore up the property prices so that those with expensive private properties can sell them at ever higher prices. Who are these people with vested interests to keep property prices going one way, up, up and away? The real losers, yes they are the losers, are the hardlanders. They will have to keep paying for the same little space in the air at higher prices. It will come, the bubble must burst. When salary does not rise as fast as the prices of HDB flats, prepare for the bust.

JBJ - The most enduring fighter

Yes, JBJ passed away finally. He fought a good fight. May he rest in peace. He is the most enduring fighter in the Singapore political scene. His political career stretched as long as those of LKY. And he fought LKY all the years, in elections, in Parliament and on the streets. Parliament will miss him. There is always the possibility of him returning to Parliament after he set up his new party to contest for election again. Now he is gone. Amen.

Paying forward - Electricity tariff 21.5% hike

Oil prices falling but Singaporeans are going to face the biggest electricity tariff hike in 8 years. And they are expected to pay 21.5% more for the rest of this year. And Singaporeans should count themselves lucky. The Energy Market Authority CEO Khoo Chin Hean said it could have been worst. Luckily we buy forward and thus only need to pay a smaller hike. Singaporeans got to be thankful. I think we should find a way to buy spot when it is cheap and buy futures when it is cheap. Can there be a way that does not restrict the buyers to just buy future when it is high despite cheaper spot price? Storage and delivery?

Bail out plan rejected

The Americans rejected their leaders. That is what it amounted to. And Dow Jones plunged 777 pts. The years of lawlessness, abuse of power, greed, corruption and lack of control over the recklessness of the Bush govt and the greedy men in Wall Street finally caught up. The Americans are not going to be led by these greedy and irresponsible men. Any lesson to learn? Don't forget that we are a small copy of corporate America.

Time to fine the SGX

xyIt is so easy to throw fines at small investors and remisiers for mistakes that they make. What about mistakes made by SGX? Should SGX be find for mistakes or non compliance to procedures or for sloppiness? It is time that MAS start to monitor and imposed fines on SGX for not doing what it is supposed to do. Only then will it be fair.

Opportunity to export our supertalents

The financial turmoil in the US provides a golden opportunity to export our talents to Wall Street. The fat cats there have discredited themselves so much that soon they will be behind bars if FBI were to do their due diligence. There will be a vacuum for supertalents in finance and cooking the books. We could export some of our top talents there, at a reasonable prize of course. But cannot be too cheap or it will be disgraceful to their talents and pride. Just ask for half the price of the current batch of fat cats will be quite reasonable. This is a new opening that will never come again in their lifetime or here. Paradise just cannot afford to pay them that kind of money and many are stuck as no other organisations could afford them anymore. We can start by fixing them up in Merrill Lynch before we sell out to Bank of America. Then there are Citibank, UBS and Barclay where we have substantial shareholdings. Time to tell them who is boss or the majority owner.

Want a Ferrari?

Few weeks back, the real race in the North South Highway saw a Ferrarri hitting dirt and Mercedes came out on top. Last night, the F1 night race again saw Ferrari hitting the wall with Massa dropping to the tail end and Raikkonen crashing out. Ferrari will still be a prized possession in paradise here. We are the best place for the affluent to flaunt their wealth, drive their Ferraris around in comfort and without fear. Paradise is good for Ferrari owners. Malaysia is also good for people who want to own Ferraris. And there are so many Ferraris for them to pick and choose along the North South Highway. Just place the orders and someone will pick it up for you at a small fee. Ferraris are not cheap cars to run and upkeep. Only the rich can afford it even if they can pick them up for free along the highway. And if they do not want a Ferrari, they can pick from the mobile stable of Lamborghinis or Maseratis or other exotic cars. I t is good to be rich and powerful whether you are in paradise or north of paradise. You can have your Ferraris if you still want them. The rich Singaporean owners will deliver them to you personally.