SGX - There is no elephant in the room

Since the announcement of the consultation paper and some proposals by MAS and SGX, there were a few familiar quips by the stakeholders. We do not want the SGX to be turned into a casino. Now who is talking? Is there an elephant in the classroom? They could not see it, didn’t recognise that the big mass is an elephant and pretending that not to see the elephant?

How fake or how stupid can things be when no one seems to notice the elephant in the classroom? And an article in the ST on Saturday had this title, ‘Few quibbles over collateral proposal for contra trades’. The introduction of collateral for contra trades is perhaps the biggest thing in the consultation paper and is going to be done for the purpose of reducing exposure and risks of broking houses and remisiers and to strengthen the trading system.

One thing for sure is to hasten the demise of a dying stock market when this measure is implemented. The 5% collateral for all outstanding positions would be a callous sledgehammer smashing down on any tiny nail heads protruding. There would be many procedural problems that would make this recommendation impractical. But top most is that it is not dealing with the real problem but creating new problems. Some refinement is needed and remisier Alvin Yong came up with a logical and practical proposal, to apply the collateral only to trades above the value of $50k. It is the big contra positions that would hurt the remisiers and the brokerages, not the small positions of the small traders. And given the limited size of active traders, such an across the board ruling will simply keep the small traders from trading when their participation is badly needed in a stockmarket with no players except computers.

If MAS and SGX want to bring the stock market to a pre mature and early demise, this is the way to go. Impose the collateral indiscriminately and the last few remaining small traders will say goodbye to punting in the market. Yes they are gambling, but in a small way and with manageable and tolerable risk. It is the big churnings of computer tradings and big time speculators that are raising the risk level in the industry. They should be the targeted group for this 5% collateral. They pose huge credit risk, not the small investors and punters. They are the really gamblers, with the help of a system that is designed for them to gamble.

Is there an elephant in the room? Anyone wants to look at the elephant or choosing to look the other way and spray their little water pistols wildly at shadows? It does not need much intelligence to notice the elephant in the room.

PS. Goh Eng Yeow also wrote a piece in today’s ST explaining why forcing small traders to put up collaterals is skirting the real problem caused by big positions. Come on, who are MAS and SGX kidding, to want small traders to put up collaterals even for trades of $1000 or $10,000 exposure? Would it solve the gigantic loss problem or would it kill the market when small retail traders just stay away, like the removal of teletext on TV?

Chuan Jin’s credibility in question

The weekend walkabout and community dialogue by Chuan Jin at Pasir Ris was very badly received if the media reports and comments in social media are real. The issue of foreigners working here was the main point raised by the public and Chuan Jin’s reply fell flat in his face. If he is going to continue in this manner his credibility as a minister, and the govt he represents will not go far.
 
Chuan Jin’s points could be seen in three areas. He was harping on the need to limit the number of foreign workers and this infuriated the people. Everyone is calling him deaf or refusing to listen and understand the people. No one is complaining that much about foreign workers as the jobs they were doing were not wanted by the citizens. Going after the foreign workers is a seen as an intended diversion by the MOM, skirting away from the real issues of foreign PMEs.
 
The comments were furious, that PMEs were not even mentioned in the conversation when it was the major bugbear of the people, fake talents and non talents stealing our high paying jobs from our PMEs. The MOM or the govt can try not talk about this problem but the people are not daft and would not want to be daft anymore. They are dragging Chuan Jin by ear to look at the problem they are angry about. Don’t run away from the real problem in question.
 
And the uttering of the word ‘local’ kept coming out only to confirm that the govt is still steering the same course and nothing has changed. As long as PRs or locals are employed, the citizen’s plight is not something they want to talk about or to know. The govt only thinks locals, and the citizens would not take that as an answer.
 
We are citizens, not locals. The local/PRs are not citizens. Is this simple enough to understand? Of course the govt does know what locals and citizens meant. Of course Chuan Jin knew what he was talking but it was a case of not wanting to engage the people in the real issue. The MOM or the govt will continue talking about locals, about jobs affecting foreign workers. The citizens will be talking about citizens and about PME jobs.
 
How far and how long can this divide be maintained without affecting the credibility and trust of the govt in the eyes of the people? The people would not take this diversion and not wanting to engage them lying down.
 
My advice to Chuan Jin is to face the problem squarely and stop running away from it. It will not work anymore today. The govt must take the people seriously. Ignoring the people and their problems will cost dearly in votes. It will be reflected in the next GE and can be very costly for sure.

Usman Harun – What is the drumming all about?

Everyone is talking tough and acting tough. Even in the social media, many are thumping their chests and acting like fighting cocks. We are the strongest fighting force in the region with all the latest and most expensive American hardware that on paper make us look very good. We are able to take on anyone, big country as well. We fear not, fear no one. This is the kind of silly talks that has engulfed the empty vessels in social media. These empty heads think war is a computer game. We have the software and the hardware, so we can show off, like the Americans. We can start wars and thump anyone who doesn’t agree with us or who doesn’t respect our feelings.

The difference is that the Americans are an Empire and we are just a dot. A rat standing on the head of a tiger and bossing around with bigger animals must remember not to fall down from the tiger’s head. It will be trampled to minced meat and devoured. The Americans also have this capability of taking the war to other countries and fight wars out of American soil. They could hit others and not be hit. The only time when they wet their pants was during the Twin Tower incident. George Bush was running for cover inside America when the enemy took the fight into the American heartland.

Does anyone remember and notice what really happened during Confrontation? Indonesian paratroopers landed in Johore and Singapore, also in East Malaysia. Though everyone claimed that there was no declaration of war, these were acts of war. Why was it that Malaysia did not responded by attacking Indonesia? The British were still with us and still a superior military force. They too did not start a war with the Indonesians. They were only reacting and thinking of fighting the paratroopers and marines infiltrated into our soil. It was just defensive measures, no offensive operations. Singapore also did not send any military forces to attack the Indonesians after the MacDonald House bombing. Maybe we were militarily weak. But we have the British still obligated to protect us. Their forces were still in the island.

The thing is that no one would want a war. Do we want a war? We have the superior weapons of war. Do we want to play with war?

When China was unable to detonate its atom bomb, its top scientist who could detonate the bomb did not want to get involved in making a weapon of mass destruction. He finally was persuaded by the missile and rocketry expert Qian Xue Sen to work on the bomb. The reasoning, to have the atom bomb and not using it was not the same as not having the bomb. The moral of the story was to have the atom to avoid being attacked, not to attack another country or go to war with the bomb.

Singapore may be armed to the teeth, but it must not to be eager to go to war. The powerful weapons we possessed are there to avoid wars. All the cocky and arrogant talks were provocative, unnecessary and unhelpful. Our potential enemies know what we have and what we are capable of. That is good enough to keep them from adventurism, to want to have a war with us. Our capability and military strength must not be excuse for adventurism and foolish thoughts and talks.

Our superior strategy is to be in a position of strength to avoid war. We have been very successful in this and as long as war is prevented. Our strategy depends not only on our superior weapons but on a rational, thinking and wise enemy. When the enemy becomes irrational, emotional and agitated, we have lost. When war starts, we have failed. The death toll and destruction of a war would not be 3 dead and 33 wounded. It would be thousands of times more serious and destructive. Our first strike strategy is only a strategy and is not our special privilege. Do you ever think that our enemy can also have a first strike strategy and when they hit first we are as good as gone?

Don’t always think that we are a few steps ahead of our enemies, that only we can think and plan. Our enemies also can think and can plan and know our every move. Arrogance and unestimating the enemies are the first step to defeat.

Stop the drumming please. And stop walking around and crowing like a silly cock.

Kopi level - Green

The golden year era is history

In the 80s and 90s, the mood of the citizens was jubilant and full of optimism. Everyone was thinking of upgrading from smaller flats to bigger flats, to private properties. And you don’t need a degree or even a diploma to do that. The homes for the average workers were 4 rm and 5 rm flats and many could afford better.
 
Playing golf and buying golf and country club memberships were a happy past time. It was a time to play and to have fun, for very ordinary Sinkies. Today it is no longer the same. The courses are dirt cheap but not many takers. With the govt taking back some of the land and a new pegged to market price of the land, many would not be able to be golf club members anymore.
 
The flat owners are buying smaller and smaller public flats despite their tertiary qualifications. And now they are begging the govt to bring down the prices by shortening the lease from 99 years to 60 years, and to 30 years. Lowering of expectations. This is an island of rich millionaires begging for handouts and assistance from the govt.
 
The oldies that have bought landed properties are in the process to downgrade, to sell and cash out to have some cash for their retirement. Not bad for these oldies. Would this be the same for the young of today when they turned oldies?
 
During the golden years the young had no problem getting a good job. The PMEs were gainfully employed and with very good income. Now both groups are not so fortunate. The PMEs are badly hurt and many are unemployed, unemployable or jobless. So do the young.
 
Car ownership is now a fleeting dream to many average Sinkies when it was a norm to own a car that cost $10k or $20k and no ERP to pay. Now the new normal is to take public transport and some returning to leg power not out of choice but necessity when affordability is a real problem.
 
And there was a time when everyone wanted to be admitted to A class wards in govt hospitals. Today they wanted to go to C or B2 wards for fear of being bankrupt by the medical bills. And the hospitals have to come out with a mean thing to prevent the patients from downgrading to lower class wards. They would like patients to stay at more expensive wards. Strangely today hospitals are trying their best to discharge patients as early as they could to make way for new patients. Must be business so good that they cannot cope.
 
Bye bye golden years. When shall we meet again? Oh, don’t be mistaken, the golden years are still here, for the foreigners and the super rich. To many Sinkies it is all about down grading and lowering expectations. Some are having their last fling by selling their once proud homes. And many of the young who would be inheriting a little fortune or good property from their parents would not be able to repeat what their parents had done and would also be going through their last lap of luxury before downgrading like some of the oldies.

China should forgive Japan like it has forgiven the Manchus?

In an article in the ST on 14 Feb, ‘China can take a leaf out of Manchu issue by ST journalist Jason Ou, the writer implied that there is no difference between the Manchus and the Japanese in their atrocities committed against the Chinese people. And China is not letting it go and continuously berating against the Japanese and even went ballistic when Shinzo Abe visited the Yasukuni Shrine to show respect to the war criminals that invaded China and murdering so many Chinese.

Jason Ou claimed that Chinese leaders needed the Japanese bogeyman for their legitimacy and to remain in power. Really, after 60 years of communist rule and a people rising from the ashes of extreme poverty to be the next superpower, economically and militarily to challenge the American’s position as the Number One super power, China needs a perennial threat like Japan to stay in power? Does he know that China could even risk the charges of betraying its communist root in adopting capitalist economic models of development with no threats to the party’s creditability? Does he know that apart from a small minority, it happens in all countries, the Chinese people have never been prouder and more confident of themselves as a people and nation? It is all about a nation and people become rich and prosperous than the quibbling over ideologies and petty and unproductive issues.

His second point that China could not relent in the face of repeated Japanese provocation and revisionism to erase their brutal past and claiming that Diaoyu Islands belong to Japan is valid. This is one of the major differences between forgiving the Manchus and not the Japanese.

The Manchus were brutal in the suppression of Han resistance after conquering China. The fact that they ruled China for more than 300 years gave them a chance to integrate their tribe into the Chinese civilisation. The Manchus were assimilated culturally into the main stream Chinese culture. Their land became a part of China and they became Chinese.

Perhaps if Japan had been successful in conquering China and ruled China for as long as the Manchus, and be assimilated as part of a bigger Chinese culture, things could be different. The fact that Japan remained a distinct culture, race and nation, it could not be seen as one of them by the Chinese. And the insistence of claiming a piece of Chinese territory as theirs only adds to the distrust and animosity between the two nations. Japan is not a part of China but a different state with hostile intent, historical aggression and still hanging on to a piece of Chinese territory.

Could China forgive the Japanese like they have forgiven the Manchus? The very least the Japanese must do is to return the islands of Diaoyu to China if a lasting relationship of peace and stability in the region is to evolve. The ball is in the Japanese court. The red herring of a powerful and confident China needing to create a Japanese enemy for the vested interest of its leaders is bull. Japan is a different animal altogether and a very unrepentant and obnoxious country.

Kopi level - Yellow

Affordable homes in Malaysia

Malaysia has the good fortune of a super efficient govt in Singapore to clear the path for growth and development. It can simply emulate our highly successful economic models in developing its country. In today’s ST, Malaysia is also introducing ‘affordable’ public housing for its low income citizens and using very familiar terms like housing subsidies, rising prices of properties, and even the formula for people who are qualified for such housing, first time home buyers.

Malaysia has set aside RM300 million to build at least 10,000 low cost housing and will subsidise RM30,000 to the home buyers. And the computation works this way. If the cost of building a flat is RM70,000 the govt will subsidise RM30,000. The buyer only needs to pay RM40,000. The subsidy quantum is fixed from the start. So if the construction cost is RM50,000, the buyer needs only pay RM20,000 or higher if it goes the other way. And to qualify, the buyer must have a monthly income of less than RM3,000.

The scheme is quire similar to what Singapore is doing but still not as good in several areas. Firstly, RM3,000 pm income is too high. In Singapore, a monthly income of $1,000 which is equivalent to RM2,600 is enough to buy a public housing flat. And the subsidy is not based on the actual cost of building the flat. Singapore’s formula is based on market subsidy which is greater in value. I think this has been modified and should be based on building cost or something like. It is a bit difficult to figure out as construction cost is a state secret and no one is supposed to talk about it. The only thing the people can do is to guess.

Malaysia is doing very well in taking care of its local’s housing needs. One point I am not sure but can only presume that their public housing is also based on a 99 year lease. Can anyone confirm on this?

And Malaysia will become better if it continues to copy more of our successful formula. They can also change their public medical subsidy scheme to be like Singapore’s, with the 3 Ms and now Medishield Life. Then it will be just perfect.

GE in the air

When the buffet train is here, you can expect something else will follow suit. We are having parties for anything conceiveable. 50 year Anniversary, celebrations with other countries for good inter state relations, and a lot of goodies being thrown at the people like it is Christmas in Spring. We even have minimum wage for cleaners, and now raising CPF for the oldies.

For those who thought the Medishield Life was a goodie, now we have Pioneering Package. Now what’s next? More national bonuses from a good GDP in the budget?

On the negative side pressure is mounting on the worker’s Party. Internet Brigades are getting more vocal, even sounding silly, but persistently appeared to be slammed. And some perceived that there is a drumming up of nationalism in the naming of the naval ship by Indonesia with the risk of being backfired if it gets out of control and causing a real crisis.

Would the effort lead to a change in the people voting for more of the same, for stability, for more govt, more obsessions in control by the state? Would the Pioneer Generation Package take away the sting from the feared Medishield Life? The oldies may get some reprieve with the PKP, but those missing it are getting uneasy and feeling the pressure of what would come when Medishield Life is implemented.

 
We are looking like a very rich country with plenty of money to make the people very happy, and can afford to party everyday. Life is good, time for more celebration. We have a good, effective and pro people govt that is doing a damn very good job and the people are elated. Let’s bring the GE forward for more good years.