Complicated or dangerous products

A Loke Siew Keong had written to the ST forum raising her concerns at the new requirement from MAS for remisiers and futures brokers to take and pass a Capital Markets and Financial Advisory Services Module 6A. The complexities of financial products especially derivatives and ‘other embedded terms and features’ are difficult to understand by retail investors and even financial advisers, including remisiers and future brokers. The problems do not lie in just understanding the products and derivatives but the high risk involved in wrongfully selling such products to clients who did not know what they were into. Serious consequences can result like the Lehman Bond and toxic notes incidents.

Attending and passing the module is one thing, understanding the complex products and risk is another on the part of the advisor and the buyer. Many of these high risks and complex products are simply not suitable to the ordinary retail investors and should not even be in the market.

The main issues thus is for the authority to first identify the risks of the products and their suitability for the local investors, retail or sophisticate investors. The latter can be further divided into highly intelligent or highly stupid investors but both are highly qualified to trade in such products as they are considered highly sophisticated. Goldman Sach and other big funds have plenty of such investors. And also they have highly trained and highly sophisticated advisors who specialized in such products.

It is necessary and simply being responsible to set these highly risky products aside and tagged them with warning labels like those on cigarettes, that they are not suitable for consumption by the ordinary guys. Only good for the sophisticated investors.

The second part is to allow the remisiers and future brokers to choose if they want to be in the party to advise and sell such high risk products. Many responsible remisiers and future brokers know how risky, treacherous and flawed are such products that they would not want to touch them with a thousand metre pole. They must be given the option to stay away from such dangerous products and need not try to be clever to pass an exam that would even floor CPA trained graduates. And passing a module is not going to make them any wiser.

There are many skill levels and professional training required to handle more difficult products and procedures in various profession. And those who are not up to it or who choose not to engage in dangerous games are only exercising their right and moral responsibility not to get involved or get their clients involved. They cannot be forced to take poison. It should be voluntary. Let the brave and clever take the plunge.

The best alternative is for them to go through an appreciation course if understanding of the financial market is important, without examination, unless they want to deal with such products. There are things that are good to know but not to be consumed. And the authority has to clearly redefine what is dangerous and what is not dangerous and not simply lump them together in one basket.

Many overseas products listed in foreign markets like stocks and shares are not dangerous, or at least the blue chips. As we open up our investors to the world, we are exposing them to more risks and uncertainties. The right to say no to high risks and complex products must lie not only with the investors but also the remisiers and future traders.

The whole concept of the requirement to pass Module 6A and the introduction of high risk products must be rethink through carefully. Many people do not have the appetite and the intellect to play with unknown dangers. Who is responsible to protect the ordinary investors from being exposed to poison and snake oil if they are not filtered out at the first pass? Is it a responsible thing to do to allow dangerous and high risk products into the market? Shall we sell poison by educating the buyers and sellers that it is poison and claim it is their fault if they are hurt?

Gemini Cheat Fund

Many of the older generations would remember the fame Gemini Chit Fund of the 1970s when depositors were promised high returns for their savings. Like all cheat funds, once an institution goes down the road of cheating, its days are numbered. No cheat funds can last for long.

The cheat funds operate on a very simple business formula. Get in as many depositors as possible like the Ponzi game. The fictitious payout can continue from getting more new depositors even if the investments of the collected money are not making good returns. Making lesser returns than the payout is making a loss. And some may wonder if the collected money were actually invested. There is no need to if more new money is flowing in. And in those days the cost of rental and payroll were minimal unlike today.

Cheat funds are limited in what they can do. If they can as they please, cheat funds can really go on in perpetuity as long as the conditions for more funds to flow in is non stopped. Cheat funds would be very pleased if they could keep on increasing their contributing members from 1m to 2m to 5m to 10m and ever increasing. This is the first part of the equation.

Cheat funds could also stop or delay their payouts by encouraging depositors to reinvest their profits ala bucket shop. One sound product is housing. Cheat funds can sell housing in short leases of 30 years or 60 years. The shorter the better as the money invested in these leases will eventually come to zero at the end of the lease even if the property prices could peak at several millions in between. There is an end game in property leases.

Other products that cheat funds can sell to their depositors include insurance for life and medical. In the case of life insurance, they must attempt to convince their customers that their lifespan is forever, or the longer the better. The trick is to keep the money in. And innocent laymen would love to hear that they can live forever, undead, and would need to park more money for their days of being undead.

Medical insurance is also a good product when medical bills are getting more expensive. The cheat funds could even set up their own hospitals and sell their own insurance. It is kind of ‘pau ka liau’ business. And the effect is the same. Every cent collected will be kept inside the vault.
Today, cheat funds could actually operate more effectively and efficiently with more products and schemes to entice and trap the depositors. It is a good and very profitable business as long as there is no run on the fund and the number of depositors keeps on increasing.

Time to revive the Gemini Cheat Fund and calling it any other name will do. A rose is a rose whatever you call it.

How to justify or defend a mass murderer?

Robert Bales is a good man. He is a wholesome family man who loves children. He is also the man who massacred 16 Afghan civilians, including children, in a killing spree. And the American public was shocked. They could not see it coming, just like they could not see the American soldiers killing hundreds of thousands of Arabs and Afghans in the two wars, including civilians, old folks and children. And they are still killing them today and tomorrow and until they stop the massascre. They only think that it is a war and the casualties on the other side, they called it collateral, a term the bankers used, inanimate.

America is country of murderers, committing murders everyday in the name of their national interests. And killing their tagged enemies is a way of life. The whole nation has been taught and fed with the doctrine that war is the right of the Americans, and killing other people is only a natural thing. But killing Americans is abnormal, unacceptable. Robert Bales will not kill American children. He will carry them and kiss them. As for aliens who are branded as enemies, it is fair game.

According to an article in mypaper today, David Brooks of The New York
Times, I quoted, ‘The monstrosities of the world are caused by the few people (like Hitler or Idi Amin) who are fundamentally warped and evil.’ How blind can he be? No, he is not blind. He is just American. He could not see the real monsters that were killing the Iraqis and the Afghans were George Bush and Obama and their colleagues.

Maybe they were in Iraq and Afghanistan hunting for bears. Who are the warp and fundamentally evil people today?

Cyberspace a threat to national security

Chee Hean is talking about the danger of cyberspace as a threat to national security with bloggers posting all kinds of vicious remarks on race and religion. So what, clamp it down? The problem is not really cyberspace but race and religion themselves, and of course the individuals who are there to propagate hatred and mischief. And they are out there, with or without cyberspace. Race is divisive and so is religion. But race is something that is a natural development and without provocation, without politicization, different races can live peacefully together. The most successful country in peaceful racial coexistence is China. Ha, all the eyes popping out.

China has 56 ethnic racial groups and all have been living fairly comfortably together for centuries. The stereotyping of China in the West as a country where minorities are victimized and discriminated is a Western myth that the dull have been fed with for the last few centuries of colonization. Their minds and thinking are still subjects of the colonial powers. The truth is far from it. Tibet and Xinjiang were often brandished as examples of domination and suppression of minorities in the two regions. What is happening is politics and also religious antagonism. Books can be written to discuss such issues into perpetuity.

What were more troublesome are the entrenched and etched beliefs of religions in their holy books. Only the three proverbial monkeys would fail to see the destructiveness and divisiveness in these books. Unless they are edited out from the ‘holy’ books, religion will be the main source of conflict and intolerance. They are not the words of Gods but words of vicious bickering men of the past, for self preservation, self righteousness and the destruction of others as their enemies. Be with us and like us or you shall be killed or destroyed. But many choose to lie that such doctrines are non existence. They are just like the blind monkeys.

And it is exactly the presence of such doctrines that made religious conflicts unavoidable and peaceful co existence difficult. Those who succumbed to political pressure to co exist are violating the very true teachings of their religions that preached mutual exclusivity. Don’t tell me that I am lying. The truth is ugly. Until the ugly truth is acknowledged and done away with, man is just deceiving themselves that there is no evil.

It is not the internet or cyberspace that is at fault. And what have been posted in cyberspace against various religions is unstoppable. Those who want to view them to seek justification and assurance that their evil ways is the right way will seek them with or without regulations. And the vicious and dangerous will find their way, and cyberspace is not to be blamed. Without cyberspace, there are many printed material available and many walking interpreters and authorities of religious books will be there to spread the good news.

The education and emancipation of the mind from the medieval thoughts of old when killing on religious ground is righteous, is God’s will or God’s command, is the only solution. Free the people from the clutches of the primitive past. Update their thoughts and values to that of modern and more civilized world. It is so sad that modern civilizations are still entrapped by the small minds of ancient illiterates and ignoramus and to live by their evil words.

Who are we bluffing? The internet is now the new devil?

Before Uncle Sam starts a new war…

This is the title of an article by Bill Keller, a New York Times columnist, appearing in the Today paper. Though he admitted, in his view, that America was wrong in the wars in Iraq and Afghanistan, his approach is that it is America’s right to start wars under whatever assumptions or false assumptions. Starting wars to the Americans is like having a basketball game. They called it military ventures, regime change or whatever, but not killings, murders or genocide. And he quoted with a bit or regret, the cost of the wars to the Americans, US$3 trillion at least, and the thousands of Americans killed or disabled and the stress on the American soldiers. Not a hint of regrets or sadness on the destruction of countries and the hundreds of thousands of foreign civilian casualties. The foreign deaths maimed don’t matter. They are not Americans or not even humans.

And what were the reasons for the Americans to start wars to kill innocent people? The first justification, 911, was a good reason if they knew who did it, and a righteous shoot. But what other reasons? An obligation to defend an ally, right or wrong. Fighting for economic reasons. This one is very dangerous like accusing countries for blocking sea routes when nothing of sort actually happened. Start wars in the name of American values, promoting American doctrine, freedom and way of life which are alien and have nothing to do with the invaded countries.

Helping rebels to topple govts. This one is just as dangerous as every country will have a small group of dissidents and rebels that opposed the legitimate govt. The ‘freedom agenda,’ overthrowing of dictators, or opposing countries that are hostile or unfriendly to America. The latter can mean anything. A country that refuses to trade or support American agenda can be hostile to American interests. Actually anything under the sky can be a good reason for the Empire to start a war and invade the country. And the Empire is accusing other countries of being aggressive, expansionist and trouble maker, cannot be trusted, irresponsible, and even having their own technology for rocketry and military weapons are reasons to be attacked.

And America can do that, talk like an asshole, a big gangster, because it carries the big stick and can hit at the small countries knowing that they are unable to hit back. The safest thing that small countries can do to avoid being attacked or invaded is to develop the nuclear capability. But this is risky as any attempt to do so would lead to a pre emptive strike by the most responsible and friendly nation on earth. Ha ha ha.

But what else can the smaller countries do? Send hit squad to kill Americans in all corners of the globe as long as they are Americans and conduct a brutal borderless war on all Americans any where, any time? The only way to deal with the Empire is the ability to hit back, to strike back where it hurts. Appeasement and weak defense capability will be seen as weaknesses and inviting for more attacks. The Empire will be trigger happy knowing that it can hit anyone who cannot hit back.