Banker Harm Kar Chan says….

Dear value client,

I thank you for putting $1m in fixed deposit in my bank under your name for the last 50 years. I am glad to inform you that your money has grown over the years from the interests earned. The good news is that at your blissful age of 65, you are a millionaire and you should be smiling at the statements that I will be sending to you monthly, to make you feel safe that the money is still there and in your name.

The bad news, oops, sorry, I mean another good news, since you are happily retired and nobody would want to employ you, you would not have any more income from your employment. The bank is very concern with your financial well being as you grow older without an income. Our expert statisticians said you are likely to live beyond 80 years. And our expert statisticians have it all worked out that you would need so much money to live through your entire life, and what you have in your fixed deposit is just enough, ‘gum gum ho’.

We have implemented a ‘Help Our Customers’ scheme so that you can receive a monthly stipend from the bank, and you don’t have to worry about having no money for your retirement. You will have enough to get by.

By the way, this new scheme by the bank to help you live a good life without worries is compulsory. Your fixed deposit money is still your money but with this new scheme you will be entitled to a handsome monthly sum of $1,500 for the rest of your life.

We will like to assure you that your money is still your money and you will receive a monthly statement as proof of ownership. No one is going to say the money is not your money. You don’t to worry about that. But because we have been paying interest to your money, we have the right to devise any scheme that we think is good to you. We are very caring especially with your money.

Good bye. Please do not call us. Our decision is final. Please do not ask why you cannot take back all your money that is kept with the bank. I also dunno how to explain why you cannot have your money back.

Your kind and caring and honest banker

Mr Harm Kar Chan

7 digit pay is good or no good?

‘The high salaries of UK executives are "corrosive" to the economy, the High Pay Commission has argued.
 
The High Pay Commission was set up by pressure group Compass, with backing from the Joseph Rowntree Charitable Trust, to investigate boardroom pay.’
Vince Cable, Business Secretary, ‘said the vast disparities in pay were not good for society, and he would consider the proposals seriously…It's not right that we have the situation that's been happening over the last decade where we have vast extreme awards paid on completely unrelated to the performance of companies.
 
And that's not good for the consumers, it's not good for people who own the companies, it's not good for the people who work for them, and that's really got to be addressed.’
 
The counter argument by advocates of 7 digit pay like Richard Evans, president of PepsiCo in the UK and Irish Republic, would say, "If we want great people to come and work in the UK, given it's a global talent pool, we've got to be prepared to pay the amount of money that those executives can get elsewhere in the world."
 
Is this a problem? I think it is a matter of perception. If one agrees that collecting more taxes is good, then there should be no problem with paying more to the top talents. How can they not pay the top talents the market rate and risk losing them to the private sectors? Or is it the other way round, how to afford not to collect more taxes if govt officials are to be paid 7 digit pay? Would there be top talents being paid 8 digit pay?
 
Is the British govt justified to be concerned with 7 digit pay? Would they risk losing all their talents to countries like Singapore that are willing to pay 7 digit or even 8 digit pay, inclusive of bonuses and stock options? Or is that the reason why the top talents in UK are descending onto this island where paying 7 or 8 digit pay is normal, natural, to reward top talents for doing real and deserving work unlike what the British Secretary was saying, ‘paid on completely unrelated to the performance of companies?’
 
Maybe the British should send a team to study our system of 7 digit pay where the incumbents are chosen from a pool of top talents, local and foreign, and paid accordingly, every cent worth it as they really performed as top talents. Not a cent is wasted. And it is definitely good for the consumers, good for people who own the companies, and good for the people who work for them. Look at how well Singapore is run and how good it is for the people and good for the people earning 7 digit pay. No one is complaining and everyone is happy, accepting that the big income gap is normal and a good thing to have. Where got problem?
 
And yes, if we don’t pay them well they will be poached by other organizations and Singapore and its citizens will be in deep trouble. We have a meritocratic system and those who are paid 7 digits are deserving of their pay. It is a good system and working very well here. Is it sustainable? Where is the money coming from to pay 7 digit pay? I don’t see any problem as everything is just fine, working just fine.

Unfair Competition – Are the banks guilty?

The SGX has commented that the banks are doing big business in trading equities for their clients and are contributing a significant volume of the daily market trades. The remisiers’ share of market trading volume has gone tumbling down and is becoming irrelevant when new and internet savvy young investors turned to online trading. In absolute value, the share of online trading is still very low and sometimes one wonders whether it is a profitable business to start with. Maybe the hope is in the future.
 
In the case of the banks, their gains in market share is mainly at the expense of the remisiers when high net worth clients were enticed or induced to become treasury clients and enjoying way below market commission rates. While the commission rates for trading in the stock market was freed and remisiers are allowed to offer any rate they are comfortable with, the norm is between 0.3% to 0.5% and with big clients enjoying 0.25%. Some banks have been quoted to go below the 0.2% mark with some offering a ridiculous rate of 0.1% to their high net worth clients to gain and retain their business.
 
Many remisiers or even brokerages are finding the cut throat commission rates offered by banks and financial institutions detrimental to the unsustainability of their business. Anything below 0.25% is no longer a viable business. Those operating less than 0.2% or 0.1% are like scrapping the ‘skin of the teeth’ and very difficult to make a decent living even if the volume is big.
 
The big question is whether banks are guilty of unfair practices by undercutting the remisiers by offering unsustainable commission rates to gain market share. Stock broking is not the banks main business, more a side show and can be treated as a loss leader to keep the clients with the banks for other businesses. This is a luxury that remisiers are unable to provide or to compete with. Stockbroking is the main business of remisiers and when the commission rate is too low, it is no longer a sustainable business. Many are leaving the industry as the monthly commission can be less than $1,000, less than a cleaner. Remisiers are becoming low income earners and still have to cope with stringent regulations and qualifications, examinations and risk taking.
 
Are the banks taking away the businesses of remisiers by unfair trading? Is under pricing by the banks fair or unfair competition? What does the law say or what would the Competition Commission of Singapore be saying?

The law on Unfair Competition says:
‘Any fraudulent, deceptive, or dishonest trade practice that is prohibited by statute, regulation, or the Common Law.’
 
So, if the banks offer their clients openly, honestly, no law to prohibit offering 0.1% of 0.15%, so no unfair competition. A little elaboration says such a law serves 5 purposes, to protect the economic, intellectual, and creative investments made by businesses in distinguishing themselves and their products. This one is not relevant here.
 
Second, to protect and preserve the goodwill that businesses have established with consumers. So if a bank offers crazy commission rates to win a client from a competitor who have built a lot of goodwill and relationship, will this be an unfair practice?
 
Third, the law seeks to deter businesses from appropriating the goodwill of their competitors. The argument is the same as the second point.
The fourth and fifth points are not relevant to what the banks are doing to snatch clients from remisiers so I will leave them out.
 
Unfair Competition laws abide to a few principles, the freedom to pursue a livelihood, operate a business, in a free enterprise system and accepting that there will be competition. But the law also prohibits a business from unfairly profiting at a competitor's expense, from exerting undue influence and other unethical means.
 
There is a Clayton Act that regulates the use of predatory pricing, ie the use of below-market prices to inflict pecuniary injury on competitors. I think this Clayton Act is perhaps the most relevant to the unfair practices adopted by the banks, by virtue of their muscles and wide range of businesses to take advantage of the remisiers to offer under the belt commission rates. Does this make sense? Is this fair or unfair
 
Do the banks violate any unfair competition laws? I am not even going to discuss about ethical practices as ethics have long been thrown out of the window by the big banks. Look at all the billion dollar penalties against banks found guilty of money laundering and fraudulent practices? Banks are in the gambling businesses when they started to promote toxic notes, derivatives and trading against their clients. What is a little unfair practices to snatch high net worth clients from little and helpless remisiers?
 
Nothing unethical, nothing illegal, what unfair competition? If there are, the Competition Commission of Singapore would have gone after them already. They must have found nothing wrong with the practices of the banks just like the clever rogue retailers in Sim Lim, People’s Park and Lucky Plaza. They are so clever, they know the law and how to work outside the law.
 
When rogues are in charge of banks, when banks are making their big money from speculations, money laundering, selling derivatives and toxic notes, what else can be wrong? Unfair Competition is child’s play.

A degree course for politician wannabes – Lesson 4

This lesson is about the mindset change. When one aspires to be a national leader, one has to have the confidence to lead. Put the boy scouts and girl guides days behind you. You are now an adult, a politician, a leader of the people, someone the people will look up to, will come to you with their problems, expecting you to solve their problems, to speak up for them in Parliament.

A national leader is a person with leadership qualities, of course there are many fakes and pretenders, with ideas and visions, confidence to state his case, for the people. And there are plenty of opportunities to do so in public and in Parliament. Do not go to Parliament just to ask questions like a student trying to impress the teacher or a way to score some points. Do not ask questions and then eat or swallow whatever dumb answers, and no answers, from the ministers. Insist on a good reply to your questions.

Speak up in Parliament for the people. I can’t stress enough of this point. You may belong to a political party, but your most important duty is to the people that elected you to Parliament. There will be times when there are conflicts of interest between the party and the people. Be very clear that it is the people that you must answer to. The party cannot bring you to Parliament except to offer you support in your election campaign. It is the people that mark a tick or cross on the ballot to send you to Parliament. Do not betray the people who send you to Parliament.

And before I forgot, when you speak up in Parliament, you are speaking for the people. You do not have to ask a minister whether you can speak or what you can speak in Parliament. You do not ask a minister to approve your paper. You do not act like a student, submitting your paper to the teacher and expecting a good grade if the teacher agrees with what you are going to say in Parliament.

You speak your mind, whether the ministers or other MPs agree or disagree with your views when your views are for the good of the people or what the people wanted you to say in Parliament. You are a national leader the moment you are elected. Behave like one, no more boys and girls seeking approval and a pat on the back from other politicians or ministers.

Grow up.

Training – foolishly speaking

Everyone is superficially speaking or foolishly speaking about training as the panacea for all the ills of unemployment. Training, training and acquiring new skills, skillfuture training, or whatever training, are the solutions to the woes of PME unemployment. Really? There is always something new to train for and to learn from. So telling someone to go for training cannot be wrong. Asking an old dog to learn new tricks also cannot be wrong.

There are things like frivolous training, unnecessary training, wasteful training, mismatch training, training for the sake of training and training all for nothing. Whenever a PME loses his job, the answer, send him for training. Training for what, to do what? Does anyone want to know why the PME lost his job? Obsolescence or something else?

Why send a PME who was working effectively as a logistic manager, a marketing manager or whatever manager for more training, in unrelated field, in redundant trades, to downgrade, to be a nurse, a waiter, or a cook or a cleaner? Is the path of being replaced and terminated be one of downgrading or the end of everything?

What was the reason for him or her to lose the job? Could not perform or simply being replaced by a younger person, a cheaper person, a relative or a cousin of the one in power? Who is ultimately responsible for the demeaning and destruction of our talented PME workforce? Who allows this irresponsible trend to continue unabated, taking no action and allowing it to become a permanent feature in our employment scene? Who allows the PMEs to lose their means of earning a decent living and to live with some dignity? Someone must answer for this. It did not happen without the concurrence and approval of someone.

Were the skills of the replaced PMEs still relevant? Could a little upgrading training be sufficient to remain in the job? Or actually no training was needed. He was just being replaced though he could still do the job. Why couldn’t he remain in the same profession with the skills and experience acquired over tens of years? Is the profession no longer needed in the economy? To retrain an experienced professional in another low grade trade is a waste of his talent/experience unless that profession is no longer needed?

How many professions are no longer needed in the economy? Why simply ask a PME to be trained to do something else when his job was simply taken over by a younger person who might not even be able to do better than the incumbent? And worst, a foreigner that came from nowhere to take his jobs at the expense of our very own citizens. Is the Govt very happy with this situation, abandoning its own local talents to bring in people from God knows where that the Govt has not an ounce of responsibility to provide them with a job? Why is the Govt providing 500,000 good jobs to foreigner and allowing our PMEs to become taxi drivers or be redundant and waste away, and breaking up their families or affective the lives of his families?

What is this nonsense about training for new skills when the old skills are still relevant and needed in the industry? Why retrain a professional to a lowly paid manual job when he can still be employed in the same job if the leg open wide wide policy is not foolishly applied to bring in all the animals from all over the world to replace our still able and willing to work PMEs?

What is all this silly talk about training and acquiring new skills? Would one ask a doctor or engineer or a lawyer or a teacher to be retrained as a cleaner or a waiter because a cheaper doctor, engineer, lawyer or teacher can replace him?

What is happening? Every PME cannot find a job in his previous profession and has to become taxi driver or security guard? This is mismanagement of talent at the worst. Totally irresponsible and unforgiveable.