The Ten Commandments(for the corporate world)

In his article on the global meltdown of yesteryear, Robin Chan listed down ten of the evils that led to the fall of corporate giants and threatening the collapse of the economic world order. His 10 points are: 1. The housing crisis was boosted by a booming stock market and low interest rates, leading to a housing bubble. 2. Financial derivatives of mass destruction like CDS and CDOs which the bankers called ingenious financial products were good for the industry. In reality these were highly leveraged debt which were restructured and layered and were not more than a house of cards. 3. The lack of rules and regulations, or deregulations, allowing financial thugs a free hand to structure secret or shady deals. No regulation is good for the market was the mantra of the day. 4. Irresponsible rating agencies operating under conflicts of interests and aiding the process of tradings in high risks products by giving them AAA ratings. 5. Fair value or mark to market pricing, allowing the market to determine the value of assets rather than its underlying value, believing that the market is the best judge of the value of an asset. 6. Reckless bonus payouts and huge salaries as an acceptable norm to corporate honchos which led to high risk taking for short term gains. 7. Big is good and big banks are better than small banks. The bigger the better. What happened was that the banks and pseudo banks became so big that they could not be allowed to fold no matter how big were their debt and mismanagement. 8. Curbing financial innovation is bad. Innovation is the way forward to creating wealth and profits. The CDS and CDOs are ok and they should not be blamed but for the lack of understanding what they were that led to the demise. 9. To save the economic systems, countries printed money and more money to pump the system, to encourage spending, leading to a disproportionate debt that itself becomes a problem for the future generations to bear. It created a new problem to save an old problem. 10. The death of the theory of efficient market, believing that an efficient market will take care of the loose ends. It failed miserably. The sad thing today is that the above 10 causes and consequences of the financial crisis are still there and kicking, alive. Nothing very much were done to tackle these problems and they are coming back, taking a new life of its own with renewed vigour. In order to stamp out these corporate sins, we need a Ten Commandments to deal with them. 1. Thou shalt not create a housing bubble. 2. Thou shalt not allow high risk derivatives and products to flood the financial industry. 3. Thou shalt not allow thoughtless deregulations to run the financial system and the economy. 4. Thou shalt hang irresponsible rating agencies and financial institutions. Actually should prosecute the CEOs. Amend this to, Thou shalt not bear false witness or tell lies. 5. Thou shalt abolish fair value or mark to market pricing of assets. 6. Thou shalt not cast lustful glances at your neighbours huge bonuses or lusting for them. 7. Thou shalt not allow banks or financial institutions to grow too big. 8. Thou shalt regulate the so called 'financial innovations' and make sure they are safe. 9. Thou shalt not print money and increase public debt. 10. Thou shalt not blindly believe in the goodness of an efficient market to self regulate and heal the evils in the system.

It is political, it is documentary, it is...

Coming hot on the heels of the reclassification of the 'Demons' In White to be not dangerous anymore, not enemies, we are seeing the reclassification of Martyn See's Singapore Rebel from a political film to a documentary film. See how outrageous things can be? It is political, no it is not, no it is,... depending on the tide and wave, I think. When is a person a good person or a bad person is also dependent on the situation and timing, and also which side one gets up from the bed. But the truth will still be the truth and any truth that has not surfaced will surface in a matter of time. The only issue is that it is not time, or the timing is not right. Will we see a new history to write something good about JBJ or Chee Soon Juan?

Property bubble to be raised in parliament

MPs are gearing up to raise questions on the buying frenzy for new properties and the escalating of property prices, both public and private. Would it be a concern all for nothing? Mah Bow Tan has said many times that HDB prices are affordable. So has HDB with their repeated explanations in the media, and today it came out with a detailed table to show how affordable the HDB flats are. The figures speak for themselves and why are people refusing to listen and accept the fact that HDB prices are affordable? A 3 rm flat at $150k only needs $460 pm to service. Very affordable for a household income of $2000. No need cash I think, just use the full CPF contribution. And a 5 rm flat at $330k needs only $1189 pm with a little cash after using all their CPF. The report did not say whether the repayment is 30 or 40 years. Anyway, very affordable, without much CPF left. While critics are embroiled in the issues of affordability and mark to market pricing, they tend to forget that maxing the used of CPF will mean compromising on the key role of CPF savings for retirement. No one is asking about the real cost of the flats and why pricing to extract the most from the buyers and eating up all their disposable income. This is public housing afterall and keeping the price low will allow the buyers to use their income in many other ways. The danger of a subprime crisis in our midst cannot be ruled out as the conditions are quite similar, low interest rate, liquidity, full employment, an economy that is still ticking. With such high leverage and big loans, a little flu in our economy will hit these high leverage buyers badly. When the price of a flat is dependent on mark to market pricing which is highly volatile and can go crazy, when a flat costing $150k can be sold for $300k or $500k, it can come tumbling down when the demand is not there. Would it not be better for a little intervention to moderate the craziness and not letting the bubble to expand to catastrophic proportion before bursting? Let the market forces or free market mechanism do its job? Where is the moral responsibility to be prudent and avoid plunging into a tragedy? Caveat emptor good enough?

She is rich, at least worth $300k!

Most Singaporeans owning a HDB flat is worth at least a couple of hundred thousand bucks. An owner of a 3 rm flat should be worth about $300k. Now that kind of wealth could make the person live like a rich gentry in many countries. In paradise, some of these people are living the life of vagabonds, scrapping a living collecting tin cans and scrap boards. This is real, no imagination. There is such an old woman shown on video. What she needs is to get a financial adviser to manage her wealth, turn the piece of asset into an income and live better. Or maybe she was just trying to keep herself fit and collecting scrap boards is just a form of exercise.

Anti Jews tattoo

Malaysia has its cow head stomping incident. We have our 'Anti Jews' tattoo incident. In our case it was a guy with a tattoo 'Anti Jews' done on his face. And he was charged in court for hitting a Jew. He really did that. Such anti racial or religious acts did not happen out of the blue. The govt has a prominent role to send the right message out, that it would not tolerate such acts and behaviours. Any govt that takes a partial attitude towards such infringements will only encourage and breed more of such behaviours. Any infringement of such a nature must be nipped in the bud and the law coming down hard on the culprits. The message must be loud and clear. By the way, how could someone wearing such a tattoo on his face in Singapore and get away with it? Nobody notices it? It is good that the Malaysian govt has taken action to charge those who were involved in the cow head stomping incident. If they continue to protect the culprits, more racial hatred will flare up. Now the whole community will be watching the case and see how partial or impartial will be the court's judgement.