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.