Iceland has taken an unprecedented step to indict its Prime Minister, Geir Haarde, for being the cause of its financial collapse. The charges were ‘intent or gross neglect, mostly violations against the laws of ministerial responsibility.’ According to another law maker, Ath Gislason, Haarde’s great sin was omission. He did nothing and allowed the world financial crisis to hit Iceland to ground zero.
Some law makers were kinder and put the blame squarely on his predecessor, David Oddson. Oddson did something very familiar to countries that are suckers to the flawed American financial system, by allowing the privatization of banks and ‘liberalized banking laws, paying the way for a brief period of prosperity and the bank’s risky and ultimately self destructive behavior.’
What happened in Iceland is a common phenomenon in many western countries, a brief period of ecstasy before doomsday comes. The stock markets too got a small lift, but the collapse is just around the corner. With liberalization, it is like giving a licence to kill to the bankers and big fund operators.
It is so lucky that we have no reason to indict any politician here. They have all done well in their ministries and everything is just fine. Some thought there were a few cases that deserved to be indicted. Some thought the time is not ripe. The financial system and the stock exchange, and the nation’s reserves, are still kicking and looking healthy, just like the housing bubble. Let’s hope that they stay that way and there is no need to indict anyone as the consequences of a bad judgment and decision can be fatally destructive and beyond redemption.
9/06/2011
When would stock exchanges be sued?
When the Lehman bonds and High Notes turned out to be lemons, many investors suffered huge losses across the world. There were compensations and pay back to some investors, notably the ignorant and less well educated uncles and aunties.
The well heeled and branded investors, known simply as sophisticated investors, were not so lucky. Even the sellers of the toxic notes were spared except some low level clever sales people who were found to have fouled only because they sold to the ignoramous. If the clever sales people targeted the intelligent and sophiscated investors, it was caveat emptor. No trouble at all. Under the same logic, they could even sell poison.
The bottom line is that the notes were dangerous but intelligent investors should know the risks involved. They were dangerous but not poison. They were not snake oil but high risks financial instruments.
The financial institutions were taken to task not because of faulty products but not telling enough of the risks. No one really was found guilty of any crime except some low level sales people, also not for crime but maybe a bit negligent.
Last week the American govt took up a suit against more than a dozen financial institutions for selling flawed products during the housing crisis. What this means is that someone and some institutions could be found guilty. The names of those senior people instrumental in the packaging of the toxic products have been compiled and awaiting prosecution. This is a serious development as the products were never seen to be at fault.
What if the banks and financial institutions were found guilty of selling snake oil or fraudulent products, or guilty of fraudulent practices? Would the banks and financial institutions here also be found guilty for selling snake oil as well? At the moment everyone is walking around with a hallow on his head, like angels. Water under the bridge, no point digging out shit to get people to court.
The seriousness of the American govt suit against the financial institutions and the legal implications can be widespread, depending on the findings. If fraud can be established, many heads will roll. Those heads over here may have to face the music as well.
An interesting article in the ST yesterday titled America’s great bank robbery by Nassim Nicholas Taleb and Mark Spitznagel is worth reading. It discussed the elaborate schemes of bankers and fund managers in transferring their client’s wealth into their own personal accounts. This kind of day light robbery is not confined to the US but affected all the financial systems modelled after them. The same players, the same systems and the same copycats, all lining their pockets with quick easy money.
Would the stock exchanges be next to be sued?
The well heeled and branded investors, known simply as sophisticated investors, were not so lucky. Even the sellers of the toxic notes were spared except some low level clever sales people who were found to have fouled only because they sold to the ignoramous. If the clever sales people targeted the intelligent and sophiscated investors, it was caveat emptor. No trouble at all. Under the same logic, they could even sell poison.
The bottom line is that the notes were dangerous but intelligent investors should know the risks involved. They were dangerous but not poison. They were not snake oil but high risks financial instruments.
The financial institutions were taken to task not because of faulty products but not telling enough of the risks. No one really was found guilty of any crime except some low level sales people, also not for crime but maybe a bit negligent.
Last week the American govt took up a suit against more than a dozen financial institutions for selling flawed products during the housing crisis. What this means is that someone and some institutions could be found guilty. The names of those senior people instrumental in the packaging of the toxic products have been compiled and awaiting prosecution. This is a serious development as the products were never seen to be at fault.
What if the banks and financial institutions were found guilty of selling snake oil or fraudulent products, or guilty of fraudulent practices? Would the banks and financial institutions here also be found guilty for selling snake oil as well? At the moment everyone is walking around with a hallow on his head, like angels. Water under the bridge, no point digging out shit to get people to court.
The seriousness of the American govt suit against the financial institutions and the legal implications can be widespread, depending on the findings. If fraud can be established, many heads will roll. Those heads over here may have to face the music as well.
An interesting article in the ST yesterday titled America’s great bank robbery by Nassim Nicholas Taleb and Mark Spitznagel is worth reading. It discussed the elaborate schemes of bankers and fund managers in transferring their client’s wealth into their own personal accounts. This kind of day light robbery is not confined to the US but affected all the financial systems modelled after them. The same players, the same systems and the same copycats, all lining their pockets with quick easy money.
Would the stock exchanges be next to be sued?
9/05/2011
A simmering dissent brewing
Over the weekend I read a forum letter in the ST expressing aloud the fear that there will be no minority president in the future. Today I read that the Tamil language on the sign boards of a hospital was removed and only English and Chinese were left. The fear on the president issue is the need for a popularly elected President and statistically it is biased in favour of the majority. The minority races would be disadvantaged.
The reason given for removing Tamil from the signboards was that the customer profile in Khoo Teck Puat hospital does not necessitate the use of Tamil language. The excuse is lame for sure.
Taken simply, the problems will only be solved if the proportion of minority races increases to a point where all are more or less equal. This, I think, shall not take too long and it is only a matter of time when all the 4 racial groups will form about 25% each of the whole population. And we will have our enlightened immigration policies to thanks for.
Don’t worry, everything will be fine. Govt policies are well thought out by the finest talents in the island.
The reason given for removing Tamil from the signboards was that the customer profile in Khoo Teck Puat hospital does not necessitate the use of Tamil language. The excuse is lame for sure.
Taken simply, the problems will only be solved if the proportion of minority races increases to a point where all are more or less equal. This, I think, shall not take too long and it is only a matter of time when all the 4 racial groups will form about 25% each of the whole population. And we will have our enlightened immigration policies to thanks for.
Don’t worry, everything will be fine. Govt policies are well thought out by the finest talents in the island.
Ministerial Salary Review
Read in the papers that the findings and recommendations of the Ministerial Salary Review Committee will be out by the end of the year. And they have received many feedbacks and will take them into consideration.
I just have one point to add on the new salary. It must be absolutely transparent and with little room for too much variations. If there is any provision for bonuses, rightly there should not be, it must be minimal, at most a 13th month.
The last thing I want to see happen is for a small fixed salary and a huge variable that can be paid as bonuses or whatever, like 24 or 48 months more. The tenure of office of an elected govt is 5 years and nothing more. The salary shall be fixed for 5 years and anyone taking office shall know exactly what to expect.
The practice of a fixed salary plus bonus plus bonus shall be done away with. Allowances shall be specified as well. The basic position is that there must be no room for doubts, suspicions and imaginations.
Is the CPF scheme turning into a scam?
It was a pillar of our social infrastructure. It gave the people a sense of assuredness, peace of mind, and a great feeling of security. That was our CPF.
Over the years the changes introduced to the CPF scheme have gradually transformed this institution of the people’s savings into an institution of grievances and frustration. It all started many years ago when some economic whiz kid discovered that there was too much money in the CPF waiting to be had. Anyone with a bright idea could lay his hands on this people’s treasure that have been laid aside to earn pittance from the interest rates.
Now you understand why HDB flats are affordable and why the CPF savings are no longer enough for retirement? The policy of pricing HDB flats according to affordability is like pricing HDB flats according to how much the people have in their CPF savings. Brilliant. And the rest is history.
This logic can be applied to the ever increasing medical costs. The CPF has been turned into a vehicle to enrich the medical profession. You have plenty of money in the Medisave or in medical insurance. Thus you can pay for the increasing medical fees. You can afford it, like it or not, your saving will be taken away from you in advance to fund the medical industry. And you may not need it at all. Medical fees and housing prices will keep going up as they are affordable, because there are money in the CPF savings.
Did anyone really scheme to use the CPF for his own gambling habit, to fund his big billion dollar bets? Did anyone think that in such big gambles he could reap millions in bonuses when luck is with him, and simply ignore the losses as the losses came from other people’s money, not his own pocket? No need to pay back. The CPF contributors would be made to patch up the holes somehow through the shifting of goal posts or more schemes. I really hope that no one really thinks that the CPF money is for them to play. It is theft of the people’s hard earned money in all disguises. The line differentiating gambling from investments is too fine to make a difference.
And I am very uncomfortable for anyone, or any economist, to lump the people’s hard earned money as the country’s reserves. It is the people’s money and not anyone else’s reserves. Once the reserves tag is glued on the people’s money, the one holding the key to the reserves may think that it is his for the taking or for his own schemes of things. I find it not only immoral but down right dangerous.
No one can argue about putting aside some of our income as savings. But there are other important things to consider about savings. For those who can afford to, by all means save as much as you can. There are many out there who cannot afford to save. Saving is like eating half a bowl of rice or keeping the stomach half empty, to put some money aside. Forcing people to go hungry is not helping the people but ensuring them a slow death. Help the poor is to make provisions from other sources of revenue to allow them to have their bowl of rice and not go half hungry and not go half hungry by taking away the rice.
And there is a time to say providing for the rainy day is enough. The insurance agents will tell you that there is never enough in the insurance that you bought. Hmmm, reminds me of the reserves in the NKF as well as the reserves in the country’s vault. How much savings will be considered enough? Never enough. But the pragmatic reasoning will say up to a point, one needs not keep stuffing into the tin can for the tomorrow that may never come. There must be a sense of proportion.
This brings to a point about savings by the oldies. At 60, 70, or 80, as long as one is self employed, one must continue to put money into the Medisave. What kind of stupidity or daylight robbery is that? At these ages, everyday is a bonus. If one is economically productive, one should be allowed to spend his keeps while he still can. Forcing grandpas to save! Economically active grandpas would have the comfort of his savings being left untouched. To add to more savings is the logic of an idiot, or robbing the oldies. Now why would people want to rob the oldies? Wicked isn’t it? No, they say they are helping the oldies so that they have more money to pay the hospitals when needed.
There are many things that make the CPF smells foul. When the noble objective of a scheme is twisted to serve less noble objectives, or warped objectives, all schemes will turn foul. There is no need for oldies to keep savings. There is no moral reason to deprive the oldies from their hard earned savings to enjoy their twilight years even if it is for the use of god.
Now what is the real reason to compel the old uncles and aunties to keep saving when they may hand in their identity cards anytime? Is it mercy or merciless?
We have a very regimented institutions forcing people to save and save and while making it very difficult for the people to get back their hard earned money. On the other hand we have institutions like the HDB and the hospitals who are trying to take your money because you have money in your CPF. They price their products and services according to affordability and market forces, or to take every cent from you. It is like a candle burning on both ends.
I have a better CPF scheme. Everyone must contribute 80% of his income to the CPF. Then he will have money to buy affordable flats, and money for all the medical bills, and for retirement. No more worries liao.
Over the years the changes introduced to the CPF scheme have gradually transformed this institution of the people’s savings into an institution of grievances and frustration. It all started many years ago when some economic whiz kid discovered that there was too much money in the CPF waiting to be had. Anyone with a bright idea could lay his hands on this people’s treasure that have been laid aside to earn pittance from the interest rates.
Now you understand why HDB flats are affordable and why the CPF savings are no longer enough for retirement? The policy of pricing HDB flats according to affordability is like pricing HDB flats according to how much the people have in their CPF savings. Brilliant. And the rest is history.
This logic can be applied to the ever increasing medical costs. The CPF has been turned into a vehicle to enrich the medical profession. You have plenty of money in the Medisave or in medical insurance. Thus you can pay for the increasing medical fees. You can afford it, like it or not, your saving will be taken away from you in advance to fund the medical industry. And you may not need it at all. Medical fees and housing prices will keep going up as they are affordable, because there are money in the CPF savings.
Did anyone really scheme to use the CPF for his own gambling habit, to fund his big billion dollar bets? Did anyone think that in such big gambles he could reap millions in bonuses when luck is with him, and simply ignore the losses as the losses came from other people’s money, not his own pocket? No need to pay back. The CPF contributors would be made to patch up the holes somehow through the shifting of goal posts or more schemes. I really hope that no one really thinks that the CPF money is for them to play. It is theft of the people’s hard earned money in all disguises. The line differentiating gambling from investments is too fine to make a difference.
And I am very uncomfortable for anyone, or any economist, to lump the people’s hard earned money as the country’s reserves. It is the people’s money and not anyone else’s reserves. Once the reserves tag is glued on the people’s money, the one holding the key to the reserves may think that it is his for the taking or for his own schemes of things. I find it not only immoral but down right dangerous.
No one can argue about putting aside some of our income as savings. But there are other important things to consider about savings. For those who can afford to, by all means save as much as you can. There are many out there who cannot afford to save. Saving is like eating half a bowl of rice or keeping the stomach half empty, to put some money aside. Forcing people to go hungry is not helping the people but ensuring them a slow death. Help the poor is to make provisions from other sources of revenue to allow them to have their bowl of rice and not go half hungry and not go half hungry by taking away the rice.
And there is a time to say providing for the rainy day is enough. The insurance agents will tell you that there is never enough in the insurance that you bought. Hmmm, reminds me of the reserves in the NKF as well as the reserves in the country’s vault. How much savings will be considered enough? Never enough. But the pragmatic reasoning will say up to a point, one needs not keep stuffing into the tin can for the tomorrow that may never come. There must be a sense of proportion.
This brings to a point about savings by the oldies. At 60, 70, or 80, as long as one is self employed, one must continue to put money into the Medisave. What kind of stupidity or daylight robbery is that? At these ages, everyday is a bonus. If one is economically productive, one should be allowed to spend his keeps while he still can. Forcing grandpas to save! Economically active grandpas would have the comfort of his savings being left untouched. To add to more savings is the logic of an idiot, or robbing the oldies. Now why would people want to rob the oldies? Wicked isn’t it? No, they say they are helping the oldies so that they have more money to pay the hospitals when needed.
There are many things that make the CPF smells foul. When the noble objective of a scheme is twisted to serve less noble objectives, or warped objectives, all schemes will turn foul. There is no need for oldies to keep savings. There is no moral reason to deprive the oldies from their hard earned savings to enjoy their twilight years even if it is for the use of god.
Now what is the real reason to compel the old uncles and aunties to keep saving when they may hand in their identity cards anytime? Is it mercy or merciless?
We have a very regimented institutions forcing people to save and save and while making it very difficult for the people to get back their hard earned money. On the other hand we have institutions like the HDB and the hospitals who are trying to take your money because you have money in your CPF. They price their products and services according to affordability and market forces, or to take every cent from you. It is like a candle burning on both ends.
I have a better CPF scheme. Everyone must contribute 80% of his income to the CPF. Then he will have money to buy affordable flats, and money for all the medical bills, and for retirement. No more worries liao.
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