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.