Awarding the Plaque of Distinction

I was considering very carefully whether the Energy Market Authority should be awarded this plaque. In order to qualify, it must satisfy the three conditions, ie no corruption, no guanxi and transparency. I can waltz pass the first two conditions easily. Next, transparency? EMA has been actively engaging the public for their criticism of the 21% tariff hike and has given all kinds of explanation and justification for its high electricity tariff rate, one of the highest in the world, as the best they can do with the electricity price. And it is good to see public bodies communicating with the people when issues are raised instead of hiding under no comments or just keeping mum. What would be better is for EMS to show the public the formula and methodology used to compute the tariff rate which it so far have yet to reveal. If the formula and methodology are so efficient and effective, then all the more EMA should share it with the people and for the rest of world to learn from it. It cannot be an issue of patent or copyright. If only EMA can publish this for all to see, then it shall deserve the Plaque of Distinction. Where is the transparency? Compare to the high water tariff and the rationale behind it, at least the latter is transparent. The Minister said it out front that the exceptionally high price of water was to discourage people from wasting water as water was a precious commodity. And it was charged very high to prepare the people to get use to paying high water prices in the future. I may find the reasoning cocky, callous, arrogant, unreasonable and distasteful, but at least it is transparent.

Hong Kong watchdog may sue banks

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

The risks were clearly highlighted

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

Don't forget personal responsibility

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

Will head roll?

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

Selling water to Malaysia

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

Japan banned short selling

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

Paying for nothing

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

For the worth of $500 million!

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

Raising quality of our future generation

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

Plaque of distinction

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

End of the road for hedge funds?

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

Some things can be spoken, some can't

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

Paying the best and getting the best

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

Thank you Mr Tan Kin Lian

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

Why are Singaporeans not saving enough?

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

Myth 193 - We think we know what we are doing

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

Quote from HDB

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

New and sounder system

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

Do we need independent watchdogs

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