Preventing supernormal profits

Ho Geok Choo wanted to know why the govt did not set up an independent body to regulate electricity tariffs after the 21% hike. Iswaran's reply is that too much regulations mean that there will be regulatory risk. And 'If there's more regulatory risk, you must expect that electricity generating companies here will expect a higher rate of return than what they currently have.' And because we don't have independent regulatory body, 'Singapore Power...does not earned a "supernormal rate of return".' SP only earned $1 billion in profit last year. With independent regulatory body, they could probably earn $2 billion or more and the tariff hike could be more than 21%. Whew, Singaporeans are so lucky.

Milking to the max

When selling the flats during the first launch of the Pinnacles was already making a decent profit for the HDB, the additional $200k added to the second launch, when all the costs have been accounted called must be pure additional profit. And this profit is made from our citizens. And they called this subsidy. Then we keep wondering why our people did not have enough savings for retirement. The answer is simple. They were at the wrong end of the formula, 'Milking to the max'.

Australia continues to ban short selling

Australia must have seen the danger of short selling and is continuing its ban. And the Australian market is much bigger than ours. The US, probably the biggest market in the world, has now and then banned short selling. And we stubbornly or cleverly continue to allow short selling in our market. It must be good for us. I hope one day someone will have to account for this. And no one can claim ignorant of the damages short selling is causing to the investors and the market.

Thieves and Thugs

The thieves and thugs of today are not called Ah Seng or Ah Long. They don't have tattoos all over their bodies. They don't carry guns or knives. Very likely they come armed with a string of degrees from Harvard or Yale or some Ivy League Universities. And they are well connected and protected. Actually they are all very nice people. Dressed in designer suits and can be seen in all the high places. And for sure, they don't kill. They don't cheat people of a few dollars or a few cents. They only talked about millions and billions. They don't rob. They just reward themselves for their talents. Their rightful claims.

Myth 192 - The myth of top brand and reputation

Lehman Bros has more than 150 years of track record. A highly rated investment banks staffed by some of the best brains money can buy. And they were all paid damn well, many, not ten or twenty, were driving Ferraris and owning several multi million dollar castles in the US and in retreats across the globe. Working in Lehman Bros is like having it made. And their products were A rated and sold across the world. The more they were sold, the more credibility they earned and the stronger is the brand name. No one expects Lehman Bros to collapse. No one expects its products to be flawed. The only organization here that can match the reputation of Lehman Bros is Singapore Inc. Though it does not have the long track record, it is staffed by the best men and women, proven to be the best, thorough, hardworking, transparent, incorruptible etc etc. In other words, the brand and reputation alone will bring confidence that it will not fail. Whatever it does, its services and products are unquestionable. Today, not only Lehman Bros has fallen, Merrill Lynch, Goldman Sach, Morgan Stanley, Barclay, UBS, Citibank and a lot more big names with big reputations have fallen to the wayside. In terms of reputation, brand, expertise and capitalization, none of our local institutions is in their league. Some big local institutions are also going to be dragged down, despite their big reputations. Can we live and trust on brand names and reputations alone? When the people change, the ideas change, the values and products change, the brand, the mission change and the reputation must also change. When good people have left, when bad ideas and values replaced the good of the past, the goods and services will not be the same again. Sometimes the changes are incremental and small and are difficult to detect. But change is taking place. You want proof, call Lehman. One can choose to continue to believe that nothing has changed. Refused or cannot see the changes. Everything is fine. One can also be frighten, be very frighten, when one is perceptive enough to see the rot within. To each his own belief. But surely there will be many Lehmans to come along.

You want to be rich?

You want to have big house, big pay, world class transportation? Sure, who will say no to such offers? Saying yes is a natural response. But be careful, be very careful. Read the fine prints. This was exactly what happened to the retirees who converted their FDs to minibonds. You want higher interest? How can anyone resist such an offer. But they did not hear the whole story. There is a price for everything. There are consequences. You want growth, pay your price. More foreign workers to compete for facilities and fresh air. They need all the living space as much as we do. Growth also means higher cost for everything and many more. Don't just simply accept a statement at face value.

Time to change beneficiary in CPF

In the past it is normal to name our spouses as the beneficiaries to our CPF savings. With all the new changes to how we can withdraw our CPF savings and how we cannot withdraw them, naming our spouses as the beneficiary is becoming irrelevant. Quite a number of CPF holders will die together with their spouses, if the projection is correct, in their late eighties. What this means is that our spouses will not inherit our savings. Also, a huge sum of our savings will not be used even after we pass away. It is thus necessary to name our children or maybe grandchildren as our beneficiary. Our children may be too old by then.