Olam too big to fail?

Olam is raising $1.25b in a bonds and warrants issue exercise to strengthen its liquidity position. Temasek Holdings, its major shareholder, has pledged to pick up all remaining bonds and warrants that are not taken up in a show of confidence or a show of faith. Muddy Waters is still holding on to its position that Olam is over stretched and is a risky bet. Several analysts and brokerage have also issued sell recommendations and MayBank has revised Olam’s value downwards to $1.42 from $1.75.

This Olam saga is becoming the biggest betting game for the moment with investors and analysts making guesses both ways. What is the real picture of Olam’s financial health is going to be of great interest as a bad call or a bad turn could make many investors win or lose big time.

Temasek is betting big this time round and it could mean many things. Is it a case of Olam being too big to fail and Temasek has no choice, being too deeply into Olam it has to boost up some support to protect its position? Or has Temasek done its homework thoroughly and betting a winning horse? Only time will tell as the parties on both sides of the bet are equally convinced of their positions.

Even with the financial data on the table, it is not easy to know the true picture of Olam’s financial standing or its viability as a business concern. It could end up a big win for Temasek or holding on to a big lemon. Is anyone wiser? This is supposed to be business analysis and not buying a gambling chip in the casino, but it seems that it is the case at the moment.

China must behave like a super power

China’s self restraint is becoming a joke to the little countries in Asean and they think they can make groundless claims against its territories, arrest Chinese fishing boats and fishermen and China cannot do anything about it. In the view of Asean countries, China is just a paper tiger. Just shout at China, call it a bully and China will quietly back off.

China needs to act like a big power like the Americans, the Israelis or the Japanese. It must be more willing to flex its muscles to hammer the little trouble makers coveting its territories. At the worst, it must act like the Indians as a regional power. In the Indian Ocean, no countries would dare to trifle with the Indians. It will lash out with whatever it got to any adventurers.

The Indians are moving into the South China Sea. It has declared that it is ready to protect its oil interests in South China, an open affront to China’s dispute with Vietnam. The Indian Navy Chief Admiral D K Joshi said that India is prepared to act, if necessary, to protect its maritime and economic interests in the region. This is as good as telling China that it will go to war with China. And no one is saying India is escalating tension in the South China Sea. That is how a big power should act and behave to keep the little countries out of its way.

At the moment, if China would to say such a thing, the little countries will scream that China is acting aggressively and the US will join in. China must get use to act like the Indians and soon the little countries will learn to accept it. And China must be prepared to slam them if they misbehave in order for them to behave well.

When asked if India is prepared for it (war with China), the Admiral said, ‘The short answer is yes.’ So what is China going to do about it now that India is stating its claim in the South China Sea?

China can respond by being meek and diplomatic and pretend it did not hear anything. China can react by sailing into the Indian Ocean and declare the same that it is there to protect its interests and is prepared for it.

Would China chicken out and be called an aggressor still, an aggressive power at the same time? Or would China just do it, behave like a super power and wield the stick to keep the hyenas away? Like it or not, it will always be called an aggressive power no matter how submissive it tries to be. It is time to kick asses. If China refuses to do so, it will invite more aggressive manoeuvres from the little countries with the Americans behind them. And India is joining the fray as the point man. More trouble and provocations will come China’s way.

Singapore can become that Greater Society

This is the title of an article in Today written by a young doctor. His message is clear. Taxation must be progressive and not regressive. He did not say it, but GST is a regressive taxation where the tax burden falls heavily on the lowest rung of the economic ladder. Do not be deceived by whatever clever talks that GST is good for the poor. It is not. And abolishing of estate duties to allow the super rich to keep their wealth intact is anything but progressive.

Though the young doctor, Tan Wu Meng, commented about many issues, the main crux of his article can be summarized in the following quotes, ‘When all is reduced to price(money), we lose track of the priceless. When a mentality of winner takes all takes root, it takes away something from our society.’ The brackets are mine.

Some may comment that the young doctor’s view is full of youthful idealism. Some may call him stupid as the real world is all about how much to grab, and corruption can be eradicated by paying upfront, legally. These are the hard truths that young people cannot understand. They are not greedy yet.

I would like to disagree, and I believe that life must be filled with youthful idealism to achieve that greater goal of a better people and a Greater Society. The fact that Tan Wu Meng said that Singapore can become that Greater Society is as good as saying we are not there. He also made several pertinent points that I would like to reproduce here to give credit to him.

‘Inequality becomes particularly corrosive to society when people no longer see a path upwards; when those on top do not give a helping hand – or worst, having climbed to the next level, pull the ladder up after themselves and pretend the ladder was never needed in the first place. The meritocratic system begins to fray when great success breeds a sense of great entitlement, rather than the calling of great responsibility to others….A nation’s defence is incomplete unless each citizen feels he has a stake in the future, that he is part of something greater, that he is fighting for more than just another person’s possessions.’

I could not have said it better. This is part of the bigger stirring that is going on. Those who can think are not happy with a situation that looks perfect on the surface, but the truth is further than you think. This young doctor is saying it in a less than subtle way and representative of the polite elite who wanted change but not pushing their points too hard, not wanting to ruffle feathers.

Would his message get through? Would this be picked up in the Natcon as a vital issue to be addressed?

PAP and all the good policies

Why was PAP the party and still in power after 46 years? Obviously it has done many things right, not all. The Sinkies are not dead fish that cannot tell the difference between good and bad policies. Let me just name a few without being exhaustive. Among the best known PAP policies must be asset enhancement, high pay for ministers to fight corruption, high public housing prices(oops, affordable), high fees for good value of services, high influx of foreigners for high growth, high population density, high COEs/car prices, high medical fees(this is related to value for money), high CPF savings, high minimum sums, just to name a few.

And the magical thing about all these policies is that they all work excellently. The country has prospered and the happy are rich beyond anyone’s imagination for a piece of rock without natural resources except people talent, local and foreigners.

But why are there so many grievances and growing? I think it is all a matter of perception. The people did not understand how good these policies are to them and how they have benefitted from them. In a way the people are really daft for not knowing what a good life is, 人在福中不知福。

Maybe there is a real reason for the unhappiness, perceived or otherwise. The policies are damn great and damn effective at one time. I think, this is my personal opinion, the reason for things looking bad, is that they forgot to put on the cap. Having fun is ok, but never forget to put the cap on.

Imagine when there is no cap for minister’s salary, by 2030 it could be $30m each. HDB 3rm flat could be $2m each, COEs could be $1m each, population could be 20m and growing, because got no cap, CPF minimum sums could be $2m each, CPF withdrawal date can be eternity(of course I am just exaggerating) and everything will be similarly risen in cost or price. That I think is the problem why the people are starting to fear for the future. But the people definitely cannot see the salary of a cleaner be $10k per month or a fresh graduate getting a starting pay of $30k, an average worker will be paid $50k a month. And of course by then everyone will be dreaming of becoming billionaires. Becoming millionaires is passé, irrelevant. It is all possible when there is no cap. In short, it is all a problem of going ahead to enjoy the good life without a cap.

Don’t you think so? The policies are all working extremely well.

Bedok/Punggol Branch Chairman – Do not harden hearts

The speech by Bedok Reservoir-Punggol Branch Chairman Victor Lye as reported in the media is most interesting. What he said were important. What he did not say were even more enlightening. I will adopt a ‘read between the lines’ approach to understand the gist of his speech.

The title as reported, A need to ensure PAP does not ‘harden hearts’ is as good as confirming that hearts have been hardened. He referred to the Hougang voters as a case in point. How and what did the PAP do to harden the hearts of the Hougang kias is interesting though no one is talking about it. This is the first admission of this fact.

His recommendation to win back Aljunied is to go with the flow, knowing that it is the national desire for alternative voices in Parliament. How is he going to do it? ‘In Aljunied, we must be prepared to argue for policies that are different from the Govt, even if they are somewhat similar to the Oppositions’. This is simply genius. The Aljunied voters will get an opposition in Parliament no matter who they voted. And this opposition will speak against the PAP policies, right or wrong, because the people want an opposition to do just that.

He also addressed the issue of transport and housing which he said was a perception that these policies were aimed at maximising profits. Really, if it is just a perception then it should not be a problem. Just communicate and explain and the perception will change and the problems will go away.

His other recommendation on transport is that Singaporeans should be put ‘at the heart of the policy while achieving operating efficiency’. Read between the lines, Singaporeans were not put at the heart of the policy while achieving operating efficiency. Is that the case?

His concluding statement for winning back Aljunied, ‘we need to make clear that we have candidates with the right party values’. What are these values? I am sure, very sure, that George Yeo had all these values. But he still lost. Now I am not sure who the PAP is going to put up that is better than George Yeo, that have understood PAP values better, to win back Aljunied.

Anyway, it was an amazing speech with a lot of revelations. It is good that the media reported the speech almost in full. Good speech, and good understanding of the problems or perceptions of the problems PAP is facing.