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.