Actually these two terms are two sides of a coin. When an entrepreneur succeeds, he is praised to the sky because his hare brain scheme becomes a success story. When an ambitious plan fails, it will earn the infamous status as a hare brain scheme.
A potential entrepreneur puts his resources, money and reputation at risk. He could become a winner and earns recognition, or a failure with people laughing at his hare brain attempt when it fails. It is fair game really.
Singapore’s ambitious plan to turn itself into the biggest financial centre in Asia could go either way. If it succeeds, the mastermind will gain immediate recognition as the brain behind the success. If it fails, people will be laughing at the hare brain scheme for sure.
Sometimes there is an in-between, when a plan is cleverly conceived on paper and could really succeed. But it could fail because of some other reasons, maybe poor execution or factors beyond its control. Sometimes it could be saboed, intentionally or unintentionally by others with their own hare brain schemes that destroy the main plan. There will be some that are hare brains from the word go as the assumptions are just unworkable.
Is the financial dream an ambitious and workable plan or just another hare brain scheme? The key to the success of Singapore as a financial centre lies in the creation of a sophisticated and highly capitalized stock market with a wide range of products and good quality stocks. This is not all. It cannot be as simple as that. The infrastructure, the hardware and software are easy to buy with the money. The managers too can be bought with a price. There must also be capital, provided by the big funds, and investors, big and small. And the brokerages to lubricate the system and execute the trades. Some thought there is no need for brokerages, just machines trading against machines and online tradings will do. Some even think that there is no need for small investors or traders. Just bring in the big guns with their war chests to fight among themselves and it will be flying to the moon. The big funds are not that stupid. They will play the game if they can find advantages, especially those enshrined within the system, like eating up the helpless small investors.
The horse is sick. The ambitious plan seems to be grinding to a halt. Now, what have gone wrong? Big money was spent in talents and machines, and big boys with their big guns were blazing. For a system to work, all the parts must function accordingly. The system is as strong as its weakest link.
The weakest link, in my view, is the small traders and investors. These seemingly irrelevant elements in the whole system, dispensable to the big empty heads, are just like the planktons that feed the giant whales. Without the planktons, the whales will perish. Without the little guys as cannot fodders, the big boys will go hungry.
Who and what contribute to the demise of the little useless guys? One major flaw is to make the little guys do battle with high speed machines and sophisticated computers and their algos. A mismatch, and the small guys simply got wipe out. They don’t stand a chance. There goes an important small part of the system.
The banks too think so, that the little guys are not important. They are only interested in their high net worth clients, not for trading in the stock market, but for their wealth management schemes, to invest big money in ‘sophisticated’ products and notes. And to retain these clients, they are prepared to sacrifice the small guys, lower the commission in the name of free competition. Again, the small guys paying higher commission would not stand a chance.
In order to feed the fodder to the big boys, the small guys were encouraged to play with new instruments that they have hardly any clue about while the big guys were the experts in such games. The small guys were eaten up for sure. They lack the financial muscles and the sophisticated team of staff to manipulate the range of trading instruments to their advantage.
A weak link in the whole system is all that is needed to break the system. It stops cranking without the little guys feeding the system and the pockets of the big guys. The lowest element in a food chain still needs to be fatten to sustain the whole system and those at the top of the food chain. Ignoring or despising the arse hole is proving to be a big mistake.
This ambitious plan is turning to look more like another hare brain scheme with many other hare brain schemes sticking to it to drag it down. Where are the cannon fodders? Everyone seems so happy that the planktons are wiped out. Every hare brain seems so happy that commission can be lowered further with no consideration that commission is all that feeds the broking houses and their staff to keep the system going. No commission means no broking houses.
How long can the system hold with the shit building up and nowhere to go? Nature is built on a system where every part has its part to play and feeds on one another. It is a symbiotic relationship, a cycle. It cannot be one way, where one party or a small group benefits at the expense of the other. Human beans, being at the top of the food chain, is constantly being devoured by the smallest and most insignificant bacteria to keep the system in check and going. This fundamental principle of Nature cannot be ignored by hare brain schemes.
9/25/2011
Gambling Divisions in banks
Kweku Adoboli may not have gambled away UBS but is currently the most famous bank employees after Nick Leeson and Jerome Kerviel of Societe Generale’s fame. The latter lost US7b while Leeson in a way gambled away a bank. Some may dispute calling them bank employees as they are employed by a different division of the banks, involved in gambling. Oops, they don’t call it gambling, but trading and traders.
The banks have evolved over the last few decades into the biggest gamblers of all time. They set up big divisions, run independently, as an investment arm of the banks. They could also be full investment banks as stand alone operations. Hiding behind banking terminologies like asset management, wealth management, private banking, or whatever, their key function is gambling with clients money.
They placed bets in all kind of things, including arts, wines, and anything that is collectible and has a value. Adoboli, Kerviel and Leeson were just traders, and the closest to pure gambling. A Korean banker was reported to have jumped off his window when his bank was under investigation for trading violations. It is a worldwide phenomenon. Whatever nice terms they used, it boils down basically to gambling with high stakes, and getting riskier.
To stop the disguises and the deception, banks should simply set up gambling divisions and head straight to the casinos. It will be faster, cleaner and less trickery. Just place money on the table and it is either win or lose. The only problem is that they are not allowed to take advantage of the game by using high speed computers. The casinos are not stupid. There are some regulations in the gambling industry that do not allow unfair practices or cheating. And high speed computers and programme tradings will definitely be banned from the casinos.
The banks still have a huge advantage in having a big war chest. They only need to steam roll with their money in games that have better odds, like black or red in the roulette table. No need to acquire special skills about reading people’s faces in poker or black jack. Oh, poker is also a game that big money has a huge advantage and the banks can definitely give it a try.
In the game of roulette, the bank’s gamblers, I mean traders, can simply put his bets in red or black. He could simply double his bets on, say red, until red turns up. It is a sure win strategy given the near unlimited funds at the banks disposal. Red must come after a few rounds, or a few tens of round. Just keep doubling until it comes. No need expensive and sophisticated high speed computers or elaborated graphs, charts and systems. Yes, just place the bets on red or black and doubling until the next win.
Maybe calling it a gambling division will upset the morally righteous and correct people. Give it another fanciful name and just go and place the bets. At worst it is losing the bank. The CEO only needs to step down. The severance pay is quite good too. This is how advanced and sophisticated the banks have become.
The banks have evolved over the last few decades into the biggest gamblers of all time. They set up big divisions, run independently, as an investment arm of the banks. They could also be full investment banks as stand alone operations. Hiding behind banking terminologies like asset management, wealth management, private banking, or whatever, their key function is gambling with clients money.
They placed bets in all kind of things, including arts, wines, and anything that is collectible and has a value. Adoboli, Kerviel and Leeson were just traders, and the closest to pure gambling. A Korean banker was reported to have jumped off his window when his bank was under investigation for trading violations. It is a worldwide phenomenon. Whatever nice terms they used, it boils down basically to gambling with high stakes, and getting riskier.
To stop the disguises and the deception, banks should simply set up gambling divisions and head straight to the casinos. It will be faster, cleaner and less trickery. Just place money on the table and it is either win or lose. The only problem is that they are not allowed to take advantage of the game by using high speed computers. The casinos are not stupid. There are some regulations in the gambling industry that do not allow unfair practices or cheating. And high speed computers and programme tradings will definitely be banned from the casinos.
The banks still have a huge advantage in having a big war chest. They only need to steam roll with their money in games that have better odds, like black or red in the roulette table. No need to acquire special skills about reading people’s faces in poker or black jack. Oh, poker is also a game that big money has a huge advantage and the banks can definitely give it a try.
In the game of roulette, the bank’s gamblers, I mean traders, can simply put his bets in red or black. He could simply double his bets on, say red, until red turns up. It is a sure win strategy given the near unlimited funds at the banks disposal. Red must come after a few rounds, or a few tens of round. Just keep doubling until it comes. No need expensive and sophisticated high speed computers or elaborated graphs, charts and systems. Yes, just place the bets on red or black and doubling until the next win.
Maybe calling it a gambling division will upset the morally righteous and correct people. Give it another fanciful name and just go and place the bets. At worst it is losing the bank. The CEO only needs to step down. The severance pay is quite good too. This is how advanced and sophisticated the banks have become.
9/24/2011
Freedom fight of the oldies
It is about time that the oldies stand up to fight for their financial liberation and independence from all the rules and regulations that are against their interests. Qualifications, the oldies exclude all the yodas that are being paid million dollar pensions or have several chairmanships or directorships hanging on their feeble necks.
In many mature and developed countries, the oldies will be entitled to privileges in view of their age and a little compassion or acknowledgement of their past contributions to the country. Many are enjoying their golden years, doing the things they want, spending their life savings to amuse themselves. For the fortunate, their children or grandchildren will be showering them with loving tender care and financial freedom. For the less fortunate, the state will assume the responsibility to see that they are housed, clothed and fed without worrying for the next meal, nothing extravagant.
What is the state of welfare for our aged here? The state keeps an arms length away, or betterer, a pole apart. The aged must look after themselves and provide for themselves. Don’t expect charity from the state. And to ensure that the oldies would not be a liability to the state that boasts of having hundreds of billions in the reserve, there are many regulations that will tie the hands and legs of the oldies in the name of protecting them and their money to last till eternity.
How sad that after slogging for a life time, they could not really lay their hands on their own hard earned savings, but instead, the audacious state took control of the money only to dispense to them in drips and drapes, at its pleasure. And the oldies are completely helpless. And the best part, under the current regulations, many will depart from this world, with plenty of money left for eternity. Yes, they will leave behind money that they could not spend. What an efficient and gracious system!
Then the part about force savings imposed on the oldies. Bloody hell, these oldies could be 6 feet in the ground the next moment, and the laws dictated that they must save for tomorrow or a rainy day that may never come. I am referring to oldies that are still working and have to contribute to CPF and Medisave.
Why is the state treating the oldies this way? To protect them of course. You cannot argue against such a noble excuse. And for them to work, to have their own money in their CPF Retirement and Medisave accounts will bring them financial independence and dignity, not being a liability to anyone, family or state. I bow to such brilliant arguments.
But I protest. I say, keep your noble and clever arguments to yourselves. I want freedom to manage my own life, my own finances, to amuse myself with my own money. Can or not? As oldies, what is there to save for tomorrow? We are living by the days and everyday is a celebration. The oldies must stand up to such nonsense and take control of their own lives and finances. They have lived their lives, made all the mistakes they wanted, and there are just so little time left to make a few more before game over. It is the last few luxuries left in life. Freedom from regulations and the chains that little boys and girls put around them, and telling them that they are unable to look after themselves, especially their money.
The saddest thing is that the oldies are no longer able to fight for their own liberation from authority and oppression. They are just like the helpless inmates of nursing homes, at the mercy of their caregivers.
Where is my money? I just want to have a good weekend. Just because god says oldies may live till 90, it does not mean that god can have the oldies money as well.
In many mature and developed countries, the oldies will be entitled to privileges in view of their age and a little compassion or acknowledgement of their past contributions to the country. Many are enjoying their golden years, doing the things they want, spending their life savings to amuse themselves. For the fortunate, their children or grandchildren will be showering them with loving tender care and financial freedom. For the less fortunate, the state will assume the responsibility to see that they are housed, clothed and fed without worrying for the next meal, nothing extravagant.
What is the state of welfare for our aged here? The state keeps an arms length away, or betterer, a pole apart. The aged must look after themselves and provide for themselves. Don’t expect charity from the state. And to ensure that the oldies would not be a liability to the state that boasts of having hundreds of billions in the reserve, there are many regulations that will tie the hands and legs of the oldies in the name of protecting them and their money to last till eternity.
How sad that after slogging for a life time, they could not really lay their hands on their own hard earned savings, but instead, the audacious state took control of the money only to dispense to them in drips and drapes, at its pleasure. And the oldies are completely helpless. And the best part, under the current regulations, many will depart from this world, with plenty of money left for eternity. Yes, they will leave behind money that they could not spend. What an efficient and gracious system!
Then the part about force savings imposed on the oldies. Bloody hell, these oldies could be 6 feet in the ground the next moment, and the laws dictated that they must save for tomorrow or a rainy day that may never come. I am referring to oldies that are still working and have to contribute to CPF and Medisave.
Why is the state treating the oldies this way? To protect them of course. You cannot argue against such a noble excuse. And for them to work, to have their own money in their CPF Retirement and Medisave accounts will bring them financial independence and dignity, not being a liability to anyone, family or state. I bow to such brilliant arguments.
But I protest. I say, keep your noble and clever arguments to yourselves. I want freedom to manage my own life, my own finances, to amuse myself with my own money. Can or not? As oldies, what is there to save for tomorrow? We are living by the days and everyday is a celebration. The oldies must stand up to such nonsense and take control of their own lives and finances. They have lived their lives, made all the mistakes they wanted, and there are just so little time left to make a few more before game over. It is the last few luxuries left in life. Freedom from regulations and the chains that little boys and girls put around them, and telling them that they are unable to look after themselves, especially their money.
The saddest thing is that the oldies are no longer able to fight for their own liberation from authority and oppression. They are just like the helpless inmates of nursing homes, at the mercy of their caregivers.
Where is my money? I just want to have a good weekend. Just because god says oldies may live till 90, it does not mean that god can have the oldies money as well.
9/23/2011
High salary is the root of all evil
Why are banks going down under so quickly? Greed, in the form of high salaries and high bonuses. Paying the top management a ransom is easy, but finding the money to pay is not. The money must come from somewhere. What business in banking can generate that kind of income to sustain the big pay checks and the big bonuses? Gambling and high risk pursuits, trading and selling dangerous products, encouraging clients to gamble and take risk.
The banks have no choice. Every monkey wants to be paid in golden peanuts. The good old days of slow and steady growth, with decent pay cheques are seen as backward and unprogressive, unproductive. The banks are only doing well if they can perform better than the market. That means if one bank or more banks are doing better or betterer, the market indicators will go up. And banks that failed to keep up are seen as failures. Even insurance and pension funds are in high risk financial instruments.
So, if the shareholders want good results, they need to pay golden monkeys to produce the gold. Really? In most cases the shareholders, mostly minorities, did not have any say. It is left to the top management and their self serving logic, circular logic, which all ended up in paying themselves crazy, at the expense of the small shareholders.
In a way, our little island is also caught in the same mousetrap. The high salaries are unsustainable. The money must come from somewhere, not just a few plates of char kway teow. It is more serious than that. The whole machinery needs to be lubricated with expensive oils. That is why high economic growth numbers are indispensable. That is why high population growth is indispensable. Who really benefitted from this high growth formula?
The little guys are constantly trying to make ends meet, told to tighten belts, while the big guys are crying salary not enough. The $200 pay increase will quickly evaporate by the rising cost of everything. The big guys know, and that is why they are asking for more millions. There is no real absolute gain or improvement for the lower income group. Only the small elite group and the super rich are seeing real growth in income and quality of life with million dollar bonuses and tens of thousands in increments. The cost of living cannot touch them. Their real income accelerates at rocket speed against inflation. Inflation only eats up the income of the average and lower wage earners.
High salaries are not sustainable and will add to a lot of costs to the system, including social and the intangibles. I know that some will disagree and will vouch that high salaries should be the way to go, like we have plenty of land to build more houses and facilities for an unending influx of foreigners, 10m, 20m, no problem at all. The secrets to our success are high salaries and high population growth.
No one will look further down the road to see the disasters that can be wrecked by these two gambits.
The banks have no choice. Every monkey wants to be paid in golden peanuts. The good old days of slow and steady growth, with decent pay cheques are seen as backward and unprogressive, unproductive. The banks are only doing well if they can perform better than the market. That means if one bank or more banks are doing better or betterer, the market indicators will go up. And banks that failed to keep up are seen as failures. Even insurance and pension funds are in high risk financial instruments.
So, if the shareholders want good results, they need to pay golden monkeys to produce the gold. Really? In most cases the shareholders, mostly minorities, did not have any say. It is left to the top management and their self serving logic, circular logic, which all ended up in paying themselves crazy, at the expense of the small shareholders.
In a way, our little island is also caught in the same mousetrap. The high salaries are unsustainable. The money must come from somewhere, not just a few plates of char kway teow. It is more serious than that. The whole machinery needs to be lubricated with expensive oils. That is why high economic growth numbers are indispensable. That is why high population growth is indispensable. Who really benefitted from this high growth formula?
The little guys are constantly trying to make ends meet, told to tighten belts, while the big guys are crying salary not enough. The $200 pay increase will quickly evaporate by the rising cost of everything. The big guys know, and that is why they are asking for more millions. There is no real absolute gain or improvement for the lower income group. Only the small elite group and the super rich are seeing real growth in income and quality of life with million dollar bonuses and tens of thousands in increments. The cost of living cannot touch them. Their real income accelerates at rocket speed against inflation. Inflation only eats up the income of the average and lower wage earners.
High salaries are not sustainable and will add to a lot of costs to the system, including social and the intangibles. I know that some will disagree and will vouch that high salaries should be the way to go, like we have plenty of land to build more houses and facilities for an unending influx of foreigners, 10m, 20m, no problem at all. The secrets to our success are high salaries and high population growth.
No one will look further down the road to see the disasters that can be wrecked by these two gambits.
OSA, ISA - The guardians of national interests
The recent calls for more transparency on the two sovereign funds and reports on their performance have elicited an official reply from the MOF. It is now official that GIC and Temasek would not report their numbers as disclosure would put the nation’s interests at risk. Thus divulging such information will come under the OSA, the Official Secrets Act. Maybe there can just report just the profit or loss without stating how this is related to the total assets. At least it will give the people a glimpse or feel of whether the two funds are making money or losing money. If not they will just have to look at other ways to guess if the funds are doing well. A convenient indicator is the CPF savings and whether more schemes will be schemed to delay or push back the withdrawal dates.
We are a small country and very vulnerable. Not only should GIC and Temasek be protected under the OSA, DBS, ST Eng and a few other big GLCs should also come under this umbrella. We just cannot afford to expose too much or else our security would be compromised.
The other important pillar of our national security is the ISA. Just because Malaysia is lifting this skirt, it does not mean that we should also do so. We are small and very vulnerable, especially with terrorism becoming a big threat. We should take this very seriously and not to compromise the happy situation we are having at the moment.
I would recommend that all the digital maps in the internet be removed and anyone in possession of them be monitored carefully. These are highly sensitive and strategic information that should not be easily made available. Also, the schedules of SIA and SMRT must also be made available on a need to know basis. Terrorists will be most happy to have maps and schedules to plan their operations.
Now what else should be protected and covered under the OSA and ISA? Some of you may not realized, taking photos of sensitive and security institutions and their infrastructure is not allowed, including embassy layouts.
Don’t pray pray with our national security. The OSA and ISA are the silent guardians of our national security and survival. Ok, please feel free to disagree with me. This is just my current view. I will change my view if there is convincing feedback to do so. I may even cancel this article.
We are a small country and very vulnerable. Not only should GIC and Temasek be protected under the OSA, DBS, ST Eng and a few other big GLCs should also come under this umbrella. We just cannot afford to expose too much or else our security would be compromised.
The other important pillar of our national security is the ISA. Just because Malaysia is lifting this skirt, it does not mean that we should also do so. We are small and very vulnerable, especially with terrorism becoming a big threat. We should take this very seriously and not to compromise the happy situation we are having at the moment.
I would recommend that all the digital maps in the internet be removed and anyone in possession of them be monitored carefully. These are highly sensitive and strategic information that should not be easily made available. Also, the schedules of SIA and SMRT must also be made available on a need to know basis. Terrorists will be most happy to have maps and schedules to plan their operations.
Now what else should be protected and covered under the OSA and ISA? Some of you may not realized, taking photos of sensitive and security institutions and their infrastructure is not allowed, including embassy layouts.
Don’t pray pray with our national security. The OSA and ISA are the silent guardians of our national security and survival. Ok, please feel free to disagree with me. This is just my current view. I will change my view if there is convincing feedback to do so. I may even cancel this article.
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