Looking for an Ethics Committee?

The Bioethics Advisory Committee(BAC) does not agree that women who donate their eggs for research should be reimbursed except for expenses like cab fares, loss of earnings and loss of time. 'They should not, however, expect to be paid for the inconvenience, the pain they undergo, nor the risks involved in egg extraction.' BAC said. The procedures involved in egg extraction go something like this. Women go to hospital daily for 2 or 3 weeks, undergo tests and hormone injection to harvest their eggs, put on sedation and needle injected to remove eggs in a 20 minute operation. I have seen how guinea pigs were handled in the lab. Not much difference. And it is ethically correct that women should be carefully scrutinised and those who gave their excess unwanted egg should not ever think of being reimbursed. The BAC is very clear about using money as an incentive. The amount reimbursed should not be so big that it becomes an inducement. Inducing people to do things with money and more money is unhealthy and unethical. People who are induced to do things because of money are money minded, to say the least. So as for the Ethics Committee that I am calling for yesterday, look no further. The people in the BAC are just the right people to sit in that Committee. These are ethical people that will not be induced by money to do unsavoury things. PS. If I am a woman, I will demand my price for the trouble that I have to go through. And if my genes are of graduate quality, I will demand a ransom for them.

An Ethics Committee is needed

We may be transparent, not corrupt and have no guanxi to worry about. But we still have serious flaws in terms of ethics and morality in the way we do business. Unless we are saying that in business, ruthlessness to make profit is the right way to go forward, then we should not even waste time listening to the victims of minibonds and notes. They did not do their homework and became suckers is their own fault. I am still puzzled that if their cries were not heard, if the people’s hero did not stand up to organize them to take on the financial institutions, will it still be business as usual? That ethics and morality can go into the longkangs? That the minibonds and notes and other toxic products will still be sold to the unwary? I have encountered many cases of unethical conducts in organizations. Some I have fought and dealt with. Some are still waiting for the right opportune moment to do battle. Many corporations stink of lowly creatures in their midst. What we may need now is an Ethics Committee to be appointed in big organizations, private or public, to deal with unscrupulous management who just care for the bottom line and their perks and bonuses. It is a sad call but a reflection of how far down we have gone in decency and respectability. And please, these committees must be made up of people that do not have any incestuous relationship with the management. They must be steadfast and with a conscience to do the job they are assigned to and not be beholden to the people who appoint them. To be real, this is just fat hope.

Foreign workers indispensable?

Shanmugam is emphasising on the importance of having foreign workers again, as if they are indispensable to our growth and viability as a country. Yes, I agree, we need foreign workers, at least to upgrade the depleted and poor gene stocks we are having today. Then the question is how many and how fast? We are not a continent like Australia or the US. We are just a little piece of rock. We cannot keep filling this rock with more people. When shall we stop? 5m, 6m, or 10m? And when we reach these numbers, will we keep adding on? Don't get too ambitious about how big we can be. Just like our financial centre, it has limitations because we are just small. I wish I can type this word small in size 1 to emphasise how small we are. Don't get carried away by pushing for more foreign workers and growth and growth. There is a very heavy price to be paid.

Selling Alaska

Does this tickle your senses and thoughts? The Russians sold Alaska to the Americans for quite a sum of money in those days. By now the money would have been spent and lost. But Alaska still stays, maybe in perpetuity, as a state of America. How much should the Russian price it to make the deal worthy of the land that will be there forever? We have our own equivalent of selling Christmas Island to Australia. Accepted that it was all a British deal and there was nothing we could do about it. The moral of the story is that you do not sell your land, the motherland, away for cash. Cash disappears or becomes worthless, or diminishes in value. The motherland is forever, there, as an inheritance for the future generations. I saw this advert yesterday of this beautiful island called Sentosa Cove. I wish I have the money to buy a unit there. What saddens me is that it is for sale to foreigners. Do we need the cash? Do we need to sell the limited motherland that we have to foreigners for cash, like selling Alaska? Even the Indonesians have better cow sense to lease their lands to foreigner for only 30 years. As a temporary short lease, I have no problem with it. But to sell our inheritance away, my god, what do we have left for our future children? Or are we preparing to migrate to the moon when we have sold off everything?

Selling caustic soda and lehmon juice

There are many trade fairs and pasar malams that provide opportunities to peddle soft drinks. It can be a very profitable franchise to sell caustic soda and lehmon juice with minimal cost and high returns. Of course there are risks involved. Caustic soda is poisonous. What about lehmon juice? Don't have a clue what it is, but as long as it sells, why not? All that is required is to take a few precautionary measures. First, print a 10 page disclaimer, frame it nicely and hang it in the stall. Can even say specifically that caustic soda can kill. Don't worry, no one will be bothered to read it. The next thing is, yes franchise it. Let other people do the selling. And when trouble starts, let the franchisees take the blame. Just point the finger at them and lie very low. Do everything that is possible to put the spotlight on the franchisees, not on the caustic soda or the lehmon juice or you, the originator of the product. This is entrepreneurship at its best. It needs a lot of talent to come out with it. Entrepreneur of the Year Award akan datang.

Gay rights and gay movement

The gays are planning for a demo at Hong Lim to champion their rights, among which is to repeal the law against homosexual sex and their right to live their lives. Our society has progressed quite far in this area and gays are generally accepted as part and parcel of life, with hardly any discrimination or aversion against them. They are accepted in the profession and as friends and colleagues. The question is whether it is a good idea to champion their lifestyle and sexual preference? Would we also popularise incest, after all incestuous relationship is a secret to our success? Or what if someone's sexual preference is for animals? He/she is not harming anyone in particular and the animal may enjoy the intimacy? I think the gays are pushing their luck too far and may turn society against them if they try to make their lifestyle as a glamorous way of life. Better to just live their life without disturbing anyone than to invite people to look at them under the microscope.

Of greed, corruption, collusion and irresponsibility

Article by WisestSage posted in Singapore Kopitiam. He puts everything about the collapse of subprime loans, minibonds etc in a simple way for all to understand. Greed, corruption, collusion, irresponsible govts and rating agencies are all accomplices in this fiasco. Now it is a case of blame game and see who ended with rotten eggs in the face. In recent months when the subprime-related securities trigger the collapse of Lehman Brothers, many Asians, including Singaporeans, got their fingers burnt. Some 10,000 Singaporeans have lost $500 million in their investments in Minibonds, DBS High Notes, Jubilee Notes, and Pinnacle Notes, some of them becoming worthless overnight. Asians have a reputation of saving habits as they need to save for the old age while most Asian countries do not have social welfare safety net. They inevitably become the victims of the structured products which have been marketed by the greedy bankers and the Wall Street crooks from the west. How come only Asians from Hong Kong, Singapore, and Taiwan are hardest hit by Minibonds, DBS High Notes, Jubilee Notes, and Pinnacle Notes, but none of the western countries is affected? Let me explain why the situation is so dire and dangerous. When the financial shits hit the ceiling fan, I was hoping that the so-called leading economics and financial commentators and opinion makers would explain the situation to the public via the national dailies, the blogs and the TV network. I came across not one article or broadcast that explains the underlying reasons for the inevitable dire consequences. Sure there were articles on the crisis, but they were merely describing the rescue of the largest insurance company in the USA (A.I.G.) if not the world and the amount involved. No explanation whatsoever, as to why only a few days earlier the Fed and the Treasury allowed the 4th largest investment bank, Lehman Bros to fold up but rushed in to rescue AIG with an unprecedented US$ 85 billion. In my various articles published previously, I explained in great detail the corruption within the global banking system and how these financial leeches through fraud and political protection created and amassed a global financial fortune in excess of US$500 Trillion. Let me assure you that this is not a typo error. You got it right. It is not billions but a whopping US$500 trillion. I have been advised that as of the Q2 of 2008, the figure may have reached US$565 trillion. This is a complex subject but I shall endeavour to make it as simple as I can. Starting Point The Ponzi Scheme The crux of the fraudulent Ponzi scheme is the twin pillars of: 1) Fannie Mae & Freddie Mc – the two giant mortgage corporations of USA 2) The Derivative financial tool known as Credit Default Swap (CDS) Once you have a grasp of these two concepts, you cannot but agree that we are facing total global banking collapse. Why? Because the entire global banking system has been built on these two financial pillars! But the system became irreparable in the last 7 years when CDS became the linchpin in the massive expansion of derivative trading and financial engineering. The Mechanics 1. Banks became greedy and were unwilling to earn safe and steady profits from mortgages for housing and commercial properties which usually spread over a period of between 5 to 30 years. 2. Banks wanted massive profits in the shortest period of time and the ability to lend massive amounts and not be regulated as to how to do it. 3. The crooks devised a scheme. It was a simple idea. 4. Banks will provide mortgages to all and sundry. 5. I am going to use a simple example and using small numbers to illustrate for ease of calculation. Thus, assuming the Bank gave out US$1 million to finance mortgages, bearing interest at 10%. 6. The bank then sold the mortgages to Fannie Mae and Freddie Mac at a discount. Fannie Mae and Freddie Mac being Government Sponsored Companies (GSCs) are able to get cheap financing to purchase these mortgages as they were assumed to be “guaranteed by the US Government”. 7. Fannie Mae and Freddie Mac then package these mortgages into all sorts of structured financial products and these were sold to investors (private as well governments). Central Banks hold massive amounts of dollar reserves and they need to find a safe haven for them. Hence, and invariably, Central Banks invest their reserves in US Treasuries and financial “mortgage-backed" products issued by Fannie Mae and Freddie Mac as well as other US financial institutions. 8. With the payment of US$ 1 million by Fannie Mae / Freddie Mac, the bank by law, can lend ten times the amount after keeping 10% reserves i.e.US$100,000. Therefore, the bank can lend US$9 million by “creating money out of thin air” i.e. by crediting the borrowers in their loan accounts in amount of the loans extended. These US$9 million loans secured by mortgages are then sold to Fannie Mae / Freddie Mac again. The cycle keeps repeating and the banks keep creating more and more loans. It was so easy that the banks decided to create dubious loans called “Liars Loans” whereby the borrower need not state the actual income and or ability to repay. 9. As more and more of these loans were created, investors (government and private) demanded assurances that these loans were good for investments. The rating agencies (e.g. Moodys, Standard & Poor and itch etc.) who in collusion with banks, gave AAA ratings to what were essentially junks. This fraud led investors to believe that these financial products were good investments. 10. The rating agencies were only too aware that this scheme needed something more concrete to prolong the fraud and induce the investors to part with their monies. 11. The insurance companies like A.I.G. came into the picture. They were seduced by the idea that if they can insure against risks of accidents, storms etc., they could also insure risks against default by the mortgage holders. Thus was born the financial innovation – Credit Default Swap (CDS). Any financial product with a sound CDS would be rated AAA. It was as good as being guaranteed by Uncle Sam. Assholes the world over, especially central banks, fell for it – hook, line and sinker. 12. The scheme works out like this – AIG sells protection – i.e. in the event there is a default, AIG will pay out to the buyer who buys the protection (the CDS) in exchange for the payment of premiums covering the period of protection not unlike your usual insurance policy. It was easy money for everyone. The banks get to sell their loans and have the liquidity to create more loans. Fannie Mae / Freddie Mac and other financial institutions get the opportunity to repackage these loans / mortgages and sells them to investors with a tidy profit. The investors are happy with their so-called guaranteed returns. The insurance companies, investment banks and other players get their premium income for selling protection. It was old fashion mafia loan sharking and protection business dressed up in modern financial jargon and everyone was too arrogant and greedy to see through the fraud. 13. When loans default and continue to be delinquent, the law (depending on each country) provides that if the loan is in default for 90 days or more, it should be declared a Non-Performing Loan (NPL) and banks must provide reserve to cover the loss. 14. What happened was banks were covering the defaults and kept them on the books for two years or more in the hope that no one would be wiser and interest income from new loans would cover the defaulted old loans – the classic ponzi modus operandi. 15. When the two years default reached critical proportions starting with the sub-prime loans, the fraud began to unravel. Investors began demanding their protection money for the losses arising from these defaults. It has been estimated that the market value of the CDS was in excess of US$60 trillion but the capital of the insurance companies like AIG are only in the billions. It is therefore a physical impossibility to make good the demand for payment for the defaults. 16. If AIG the No. 1 insurer in US and the world is in default, it means the rest are in deep shits. You can take it as a given that no one and no one has good coverage and protection anymore. 17. When there is no coverage and protection, how can there be AAA ratings for new issues of such financial products? Fannie Mae/Freddie Mac etc. cannot package these products for sale to investors and if they cannot sell, they will have no funds to buy more dubious mortgages from corrupt and fraudulent Wall Street banks. With no additional funds, these crooks in JP Morgan Chase, Goldman Sachs, Citigroup, Lehman Bros., Morgan Stanley, Merrill Lynch, Bank of America, UBS, Barclays, HSBC, Deutsche Bank, Credit Suisse, etc. will have difficulty extending new loans. The “Musical Money Chair” will have to come to a complete halt. The entire system gets into a gridlock. Given the above explanation, can the US government and the Fed continue to bail out banks and other financial institutions? When US is in deficit in both the budget and current accounts, where else can they get the extra monies except by creating out of thin air (virtually by keying digits into computers) or print more dollars. If you are a sovereign lender or a private hedge fund, knowing the situation, would you lend more monies to the US Treasury knowing that each dollar issued (whether digitally or in printed notes) are not worth the value stated therein. These dollars ARE NO BETTER THAN TOILET PAPER. When the Asian investors become the insurers of the structured products like Minibonds, you know why they have been conned. It is inevitanle that they would lose their pants through the investments in structured products like Minibonds, DBS High Notes, Jubilee Notes, and Pinnacle Notes. Have you wondered why MAS and other financial regulators allow these structured products to be marketed to the naive general public? If they are not sleeping on their jobs, what are they doing all day long?

Minibonds and High Notes - Any mis selling?

It is difficult to find an acceptable definition of mis selling or fit a case under it unless it is an obvious one. What could be more reasonable to ask is whether a toxic product is sold to customers that obviously have no stomach for high risk. The Financial and Securities Acts have provisions to prevent selling high risk products to inappropriate customers. Some customers, especially the old, retirees, the uneducated, unsophisticated, people who are living on their lifesavings, are clearly not the type of risk takers that such toxic products like minibonds and high notes are meant for. The risk of losing everything is simply unacceptable to these people. These are people who are trying to earn a little better interests to live the rest of their lives without bearing the risk of losing their capital. And at 5%, even savvy investors would think very hard to want to risk losing everything. So, why were these retirees targeted in the first place? It seems that there is a pattern of execution, that when someone is about to renew his fixed deposit, regardless of risk profile, he will be approached to switch to these high risk instruments. Were these moves the initiatives of the relationship managers? Or was there a systematic plan to target these investors who are clearly not appropriate for such instruments?

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.