The need to control the beast

We have seen what had happened to the great American genies and how clever they were in bringing down the whole of America, not just the industries or the financial system. America will now be in debt for centuries to come. It is bankrupted many times over. The cause is simply too many clever people who thought they could make a lot of quick money by being too clever. They were not concern about real productivity, providing more goods and services, they were only interested in churning out numbers to represent huge paper profits in the short term, for their own vested interests, for the huge bonuses that they stood to win in the huge bets they put into the financial market. There was no responsibility, no conscience, no morals, no nothing, except how much was in it for them. And the tool that helped them to acquire their ill gotten gains at the expense of everyone, is derivatives. The first giant to fall because of gambling in derivatives is LTCM, or Long Term Capital Management, a hedge fund. Without the US govt intervention, the domino effect would have toppled many more financial institutions in 1998. That was just a warning but went unheeded. In a 2004 Bank Derivatives Report it was stated that the total values of derivatives held by US Banks was US$84.2 trillion. The bank risk exposure was US$804 billion. Today we know the answer of exposing to such high risk. The house of cards has collapsed. But be frighten, be very frighten, not because the America house of cards has collapsed. Be frighten because many are still convinced that derivatives and hedge funds are the way to go into the future. And they are pumping more money into these two beasts. How on earth would clever people be convinced to do so, when all the evidence of the disasters that can happen and already happened, be blinded to go along into the deeper and more dangerous end? They must be convinced by cleverer people that it is safe and the way to go. In relative terms, the clever people are smarter people and the clever people are just plain stupid. Way back in 2003, Warren Buffett had warned that derivatives are 'time bombs, both for the parties that deal in them and the economic system....In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that while now latent, are potentially lethal.' These words were more than prophetic. It has come to reality. At that time Buffett admitted that he could not understand how much risk the major banks were running themselves in. 'The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and govts have so far found no effective way to control, or even monitor, the risk posed by these contracts.' Do we not know the answer today? Do we still want to dabble in derivatives and allow them, and hedge funds to mess around with the financial system and market? We need independent bodies with different interests and missions to control and regulate the financial systems, the banking industry and the stock market. These institutions have their own short term interests to guard and will be blinded by them to take on higher risks than acceptable. Their exploits to grow and make more profits must be reined in by independent bodies whose interests are long term and the viability and sustainability of the system and institutions, and the foundation of a stable nation state. The financial system and the stock market must not be turned into high risk casinos. There is a need to control the beasts before they destroy everyone, every institution and the nation as a whole. The people within the industry are the most dangerous people to be tasked to regulate themselves. There is simply a conflict of interest, and self interest, short term interest will override the longer term interest and interest of other parties.

Promotions, promotions and promotions

Everyone is happy when they are promoted. But promotions do not come free. It means more pay! How much more pay and who is paying? Where are the money coming from?

Would Wee Cho Yaw pay himself $20m bonus?

He owns the biggest bank here. The turnover of UOB is not less than Capitaland. The profits made by UOB were consistently higher than Capitaland. Why did Wee Cho Yaw pay himself a miserable $6m or thereabout when an employee in a public listed company could be paid $20m? My take is that in the case of UOB, there is ownership. When you own the company, when you know that it is your money, you will be more careful. You would not just pay away the profits of the company. If the top guy got $20m, what about the next 10 guys and the next 100 guys? Together, their bonuses will become a bomb, maybe $100m or more. The rot in Wall Street was exactly due to a lack of ownership. The Wall Street thieves and robbers literally robbed their shareholders of their wealth by paying themselves crazily. And the small minority shareholders got the crumbs and paid for all the losses should the companies go bust. The employee CEOs and top management staff will just send in their resignation letters and laugh all the way to the bank. This is the anomaly and injustice in public listed companies, where the employees just dipped into the coffers, legally, all approved by the board of directors. Very familiar isn't it?

UMNO will still be UMNO

I thought after the General Election UMNO will really reinvent itself to be more national than communal. And the PM to be also called for big changes to remain relevant. Yesterday's election of Khairy as the new UMNO Youth chief confirms that UMNO will still be the same UMNO. Nothing will change UNMO. It will be what it was and will be today and tomorrow. The kris was wave and kissed again. It was handed to Hishamuddin by non other than Khairy, who looks like having a higher potential to use it. Good luck UMNO. Good luck Malaysia.

What? Too much?

These seem to be the reaction of the public and the letters to the media forum. They are envious of the huge bonus that Liew Mun Leong has been rewarded. But what Liew got was all legal and just reward for his talent. Come on, what he got is peanuts compare to those in Wall Street or in Fleet Street. If we aspire to be a nation of rich billionaires, we must learn from Wall Street and pay the best talents their just rewards. Then only we can have more billionaires. I hope no one is going to call Liew Mun Leong to return his big bonus or a new law being passed to tax it at 90%. That will ruin our policy of rewarding real talents. All our talents will run away and we will end up as the net losers. In fact we should reward more to those who are underpaid when their responsibilities are much greater than Liew Mun Leong but getting less than him. Let Liew Mun Leong's bonus be the reference point to attract more super talents to our shores. Liew Kai Khuin wrote to the ST about the grotesque 700,000 pounds pension being paid for life to the former CEO of RBS. Why should it be troubling to pay him so much for life when his contribution and merits will be good for life even after he has left RBS? His contribution will continue, everlasting. And the public anger in the US over the bonuses paid to AIG was also raised. But we are different. We are making money, a lot of money! In the ST today it was reported that the homes of Sir Fred Goodwin, the disgraced CEO of RBS, has been attacked. And the attackers warned that it was only the beginning. They called themselves 'Bank Bosses are Criminals.' What is the world turning into? People getting honest rewards, just because the losers think that the rewards were a bit too much to stomach and they want to attack them? The losers must be put in their place. They must be reminded that if they were just as good, they too would be getting the multi million dollar bonuses. Please don't begrudge talents being paid their worth. Can I have some crumbs?

To spend or not to spend

Like real, as if I got all the money in the world to spend, to help the economy. I was planning to go for a foot massage. But now I am not too sure. LKY said, "I've got economists saying you've got to change your system. Wall Street Journal has said, 'Oh, this won't work, consume yourself'. Four million people to consume and keep an industry that supplies the world with top-end goods - it's rubbish." If what we spend, no matter how much, is not going to make any difference, I think I better save my $20.

34 more subsidised hospital beds

This is the bold headline in My Paper. Because of rising demand due to population growth, about 1 mil more non Singaporeans, and an ageing population, 34 more subsidised beds were added to bring the total to 3,656. Shall I congratulate the MOH for such a big increase in number of beds available?

Celebrating Singaporeans - Liew Mun Leong

Finally we have a Singaporean that could command a multi million dollar salary, getting closer to the talents in Wall Street. Liew Mun Leong of Capital Land was paid a performance bonus of $20.52 mil for year 2007. His total pay packet came to $21.7 mil as reported in Today. Can I presume that his annual salary is $1.18m or less than $100k pm? If that be the case, how many months of bonuses will his $20.52 mil equate to? 205.2 months! I am beginning to doubt my arithmatic. Did we have another world record? Well done Liew Mun Leong.

What is going on?

Tuesday, March 24, 2009 This blog is down until further notice. a. Regular CNA forumer JohnLaw who first reported on the CDC bonus has not been seen. b. Wayang.Party has been shutdown by ISP. c. Blogger PoThePanda was investigated by the police & ISD for his articles. I receive a few emails that a number have been followed. Something may be on. I'll be back once the picture is clearer Posted by LuckySingaporean at 3:24 AM The above was posted in Diary of a Singaporean Mind. What is happening? WayangParty reported that it is now back online and is investigating the cause of the breakdown. They suspected foul play. Coincidently Redbeanforum was also out on Monday evening. Are we thinking the same thing that something sinister is brewing? Who on earth would want to do such a damn thing? Lucky Tan's post makes one thinking of some forces at work, that we are being watched like the Communist countries or the days of Gestapo. I think it is all our imagination. Our security personnel are paid by public money and have better and more important things to do than to stoop so low and become petty pawns in a political game. The only reason for them to act will be threats to national security or terrorism. I don't think bloggers belong to these two categories. Should my postings be interpreted as a threat to national security, please email me or give me a call. I shall cease posting. Or maybe I shall post about lingeries and underwear, or which celebrity is sleeping with who. Or maybe I shall write about cookings, or better still write a cook book. That should be safe enough for good Singaporeans. Then I shall write about the most intellectual pursuit of Singaporeans, writing cook books. Then we will become the most intelligent

A Govt in a Forbidden City

Over the years we have seen more liberalisation in the economy and financial industry. The reverse is true after new and more stringent laws were enacted yesterday on Film Acts and Control of Public Demonstration, in the political arena. Why is there a need to keep increasing govt control of the people and public demonstration? Is there a perception that there will be more demonstrations and the demonstrations will become more serious? The new laws point to such a scenario or perception. Will we see more barriers be erected around the Govt or Parliament House and the Istana? Would these eventually lead to a physical wall around them and even guns and barb wires? A govt that keeps protecting itself from the people, and barricading itself behind laws and walls will end up holing itself inside a forbidden city. When such an eventuality becomes a reality, it is a sign that the govt is no longer with the people. It will be a govt that is afraid of the people. And the fact is that no govt can hide itself behind high walls and barricades even protected with guns. The most powerful wall that can protect and safeguard a govt is the Wall of Hearts and Souls of the people. Such an invisible wall does not divide but protects the govt by the people. It is not a govt against the people but a govt with the people. In the past, our ministers could walk around and mingle with the people freely. Today, the body guards are everywhere, shoving and pushing the people with their hostile looks, very familiar with the outings of a triad boss. And even ordinary MPs are being threatened by the people and attacked by the people. How and when have we reached this state of being when ministers and MPs are afraid of the people? They are the representatives of the people, elected to look after the people and should be loved and respected by the people. Why the protection, news laws to control the people, dishing out freedom to the people as if the freedom of the people is for the govt to give? Who is the govt representing? Who elects the govt? Where are we heading?

Buangkok East Drive saves 7 minutes

Buangkok East Drive saves 7 minutes The openinging of the Buangkok Drive extension has made travelling to the city that much faster, by 7 mins. Wonder how much was spent to save that precious 7 minutes. And there is great expectation that this new road will make travelling on the KPE more popular. I will probably agree if the ERP charges are not too prohibitive. A lot of planning and resources have been invested into this new road. And many more resources and planning will be invested building more new roads and extensions to improve traffic flow. The thing that motorists must know is that we are in a phase of diminishing returns. With so many vehicles on the road and a limited number of roads, this is the best that can be done. A few hundred millions more may save another precious few minutes as we explore more space for roads.

An end of a legacy and a new one in the making

I did not sign up for the opening ceremony of the new Kent Ridge NUSS Guild House, which was also an occasion to listen to LKY in person. Neither did I read his speech in the media except glancing over a few key points. Nothing unusual actually. But in a bigger perspective it marks a change and a new beginning. LKY has created a legacy for what he has done to this little island. He used to hold his audience in awe when he spoke. Two generations of Singaporeans grown up under this spell. Even foreigners looked forward to hear him speak. After last Friday, that chapter was closed. Somehow, though he came through on the TV as still very forceful and lucid, he looked like a man out of time and out of place. LKY did not say anything new. He reiterated old values that have been flogged over the years. Saying those things to wide eyed and young eager beavers may make some sense. I am just wondering how many people were with him when he said those things, or how many were just twiddling their thumbs and rolling their eyeballs at the new meanings of those values and virtues. As what the elites are for the past years, they will listen and just shut up. If there were anything they want to say you will know hear them unless one is in their circle of confidante. The views in cyberspace were more robust and direct. And the views expressed, if they are anything to come by, is an indication of an old legacy forgotten and a new one in the making.

Hospital fees, legal fees and insurance premiums

The combination of these three elements in one go is the best we can get to emulate the great American society. We have arrived, in a way, like the Americans. And soon what is happening to AIG and the strong detest of the way they paid themselves will affect the people here. The AIG executives are living in fear of the brickbats that are coming their way. How long can they go on ripping the people off? The Americans are up in arms. And with the availability of firearms, do not be surprised if a few of them will be shot for crimes against the American public. The American society is plagued by huge hospital fees, huge legal fees and huge insurance premiums. And the way things are, we are heading into the same quagmire. The beauty of it is that we know exactly what it is going to be and we believe that this is the solution for a rich country like ours, like the Americans. Just pay your way through. No money no talk. How could the medical bill for a student suffering from leukemia reached $400K? Sure, you can count every item in the whole process, from ward charges to medicine and professional fees. So it is justifiable to charge that kind of inhuman fees? Totally transparent and accountable. This was the bill for Zhang Xiaoou that was highlighted in the Sunday Times today. How many people can afford this kind of money? Even $20k is a big problem to many. Then the whole process, in the case of car insurance and claims for damages and injury involving legal fees, my goodness, we have progressed as a nation, as a people beyond any means. Everyone is getting rich in the whole process without asking anything about the conscience of making money. Just find the reason, right or wrong, legal or illegal, and make the other party pays. And finally the innocent motorists will be the ultimate paymaster. And this is a free market economy. Nothing can be done. Everyone is paying market price for everything. It is the way and it should be.

A team of rivals

This was the main theme of an article by ST’s China Bureau Chief, Peh Shing Huei on Saturday. He was referring to the Obama Administration which is made up of both the Democrats and Republicans, some from the George Bush Administration. This rival mix in politics is gaining popularity out of necessity and expediency. China has started this trend after Deng Xiaoping’s successors took over the leadership. The current Thai govt is also a gathering of a mixed bag of politicians. And so is the State Governments in Malaysia. In fact UMNO is also an alliance of convenience among the communal parties. Singapore’s history also took off with a team of rivals, the left wing Barisan Socialis and the right wing or socialist PAP. But the marriage of convenience was shortlived and the Barisan Socialis MPs were either imprisoned or fled the country. I wanted to ask if such a marriage of convenience is possible or workable for the long term good of the component members and the country today. The answer is quite obvious. It cannot be and will only lead to one party swallowing the other or running down the weaker party. Politics has never been a pleasant tea party of friends but of vicious politicians trying to out manouvre each other with the winner takes all before the party is over. It was never meant to be a game for ladies and gentlemen but for schemers and cunningness to fix up or destroy the enemy at all cost. Have things changed? Has the world changed or the people changed to such an extent that the thought of partying with the rivals is now relevant and a necessity? Would we see the different political parties coming together after a general election as national leaders sitting in Parliament to agree and also to disagree without trying to take a swipe at each other at every opportunity? Looking at the ethics and temperaments of politicians, we are still a long way off. We may be emulating the Americans in many things. But the new trend of embracing rival politicians like what Obama is doing is the furthest thing that will be copied here. The medieval rules of the survival of the ruthless, and the destruction of every opponent in the way, will still be the political ethos and morality of politics here. Am I wrong?

Eunice Chew Li Xin

Another pathetic story of a 14 year old girl who died unnecessarily in this very unforgiving city state when you can't go on living without money. According to the story in AsiaOne online, her mother was so broke that she had not eaten for a few days. This 14 year old girl had to work in fast food outlets to buy food for the jobless mother who is also having medical problem. Her parents were divorced. And Eunice was stabbed to death by her mother, probably in a state of despair after days of hunger pangs. No matter how wide is the safety net, as long as the cost of living is high, there will be many that will not be discovered and will continue to live in a life of drudgery. Wonder if they qualify or were on public assistance programme. In a country that is so kind and compassionate to the losers in life, we need not do anything to be cruel.

The AIG fallout

The stubborn persistence to be paid huge bonuses even when the company was going bust and needing US$185 billion in public money to keep it afloat is the height of plain stupidity and abusive arrogance. The House Ways and Means Committee Chairman Charles Rangel called it 'Near criminal indulgence.' The Americans were outraged. But will the expectation of high and exorbitant pay and bonuses continues to be the way of life or will they see the end of an era of robbers and thieves? Paul Heng, the MD of NeXT Career Counsulting here thought that it could be the beginning of the end of big, fat, obscene bonuses. Singapore is not free from such near criminal indulgence. We have been blindly and greedily following the Wall Street thieves in their daylight robbery and extortion of public money or shareholders money. And the best part is that we are proclaiming that our pay is still too low, not enough, they needed to be pay more. How much more? How much is enough? When an employee can throw away $50k for a cooking course, you cannot be so blind not to know that he is obviously being paid too much that he can't wait to burn it away. As a public policy, it is of great importance to pay the employees well, especially the talented, for them to live well and contribute well to society and country. But when paying well becomes excessively well, something must be gravely wrong. Then there are other consequences in the formula. High pay, high consumption, high cost of living, high cost of everything that needs higher pay is like a dog chasing its own tail. The workers are working just to keep paying for their food and essentials. At the lower end, the high cost of living is just that. No money left for anything, not even for retirement. And forget about an expensive cooking class. The govt has a very important responsibility to grapple with high cost and high pay controversy. What it should least do is to add to it and make this vicious cycle turn even wilder. The workers can never earn enough when other agencies are all waiting, counting how much they have in their pockets and CPF, and price their products and services to make sure that every cent is taken away from them. This is called affordability pricing or market pricing. A way to make sure that what you earn is just enough for them to take away. Many still cannot see the woods from the forest and think all these high property prices and high pay is a good thing. So the high HDB price, the high medical fees, education, etc are all affordable and good. The high rentals that the landlords are charging the shops and businesses are paid by the consumers, every cent of it. What is important is to curb the growing cost that often is unncessary and self inflicted. When cost is lower, the people can live more comfortably with lesser pay. The value of money is not eroded away that fast. Otherwise the money in the CPF, even a few hundred thousands, may worth nothing when it is time to take them out. And if the cost of 2 or 3 bungalows continues to go up, the public employees will demand that they are not paid enough and want to be paid in 10 or 20 millions. Hold the madness. Stop the dog from chasing its tail. It is never ending. It is unrestrained greed. The best part, the balloon must burst one day.

CPF savings not enough for retirement

I fully agree with Aaron Low, ST's political correspondent, on his view that CPF savings will not be enough for retirement. At the rate inflation is eating up the value of the savings, many will be hard push for money to pay for their basic expenses. The question is why CPF savings, about 40% of a person's life time income is not enough. Oh, they have been buying affordable housing and paying for affordable hospitable bills. Ok, these are affordable expenses and reasaonable to spend them. So how to make sure that after spending on these affordable items at affordable prices the retirees will still have enough money to live on? One way as suggested by Aaron, is to give up the idea of leaving something behind for the children. Have an inflation pegged annuity plan that will ensure that every cent is used up. Nothing to be left behind. I have another brilliant idea. Raise CPF contribution to 60%. This should work for a while if inflation is still at 6-8%. But if the price of housing and medical bills keep going up according to market prices, or if inflation is higher, this may still be short. If that is the case, we can raise it to 80%. It is prudent to save for the future. Tighten the belt if need be.

Time of Great Opportunities

The world financial crisis has thrown open the door to great opportunities if we are prepared to take a step back and assess how best we could benefit from it. One area that we can seriously take a relook is the policy on foreign talents. Now is the time to go out there and mount a major recruitment exercise to bring in the real talents from America. We can go for the top notch talents instead of the third or fourth rate talents we were getting in the past. We could go for the best 200 or 300 CEOs to replace all the CEOs in GLC linked companies. The CEOs of Citigroup, AIG, GM, Ford Motors, Fannie Mae and Freddie Mac, the financial institutions and the airlines, the aerospace industry etc, all are available at a price that is now affordable. We can than go ahead and acquire the Citibank Asia operations, AIA, replace the CEO of HDB with Fannie Mae or Freddie Mac, build car factories in JB, Batam and Bintan with the help fo GM and Ford Motors. The experts and top talents from Wall Streets can replace the local talents in our finance industry, and the possibilities are just enormous. Go and get them before it is too late. And we can truly transform ourselves into really world class. Our corporations all headed by the best foreign talents and supported by the best local talents. We will be world beaters.

The motorists are angry, very angry

The high insurance cost now, and the coming future, is making many motorists angry. And the fact that this is a mandatory requirement really is a pissed off. It is like legalising daylight robbery. It is not the point to tell the industry to reduce the insurance premiums. The govt must step in to stop the malpractice as the legal requirement for car insurance is from the govt. How can this thing be left to the insurance industry completely to decide how much they want to charge when it is obvious that frauds, abuses and malpractice are the cause. And don't forget that pay is also a major concern. How much is the cost going to the pay of the industry players? Big pay means big cost, don't ever forget that. Someone must pay for it. 8 month bonuses or 12 month bonuses or more?

Newton BBQed

It is good that the Newton BBQ stall has been suspended from business for 3 months. That is what the Singapore Brand is worth. I thought the Singapore Brand is worth more than that. But I hope all the tourists would avoid Newton altogether. The locals should avoid the place as well. And another big mess in Sim Lim and other shopping centres are about to unfold. Maybe the shops will also be suspended from operating for 3 months if they are caught fleecing their customers. In the case of Dr Clemen, he did not fleece his customers. They came willingly to give him the money.