[redbean]

More feel good factors needed

Read in the ST, Vivian Balakrishnan said, 'If someone needs help and isn't getting it, tell me.' And another headline, CEOs' shrinking pay, telling the story that CEOs of Singapore listed companies are collecting lesser pay, ie, less than $5million. In the Vivian case, the people should feel better that the minister cares and will extend a helping hand to those who are in need of help.

In the second headline, there is a report on the comparative salaries of some of the top honchos. Lim Cee Onn, Keppel Corp, $10m - $10.25m, Tang Kin Fei, Sembcorp Industries - $8.85m, Kwek Leng Beng, City Dev, $7.75m - $8m, Hsieh Fu Hua, SGX, $7.18m, Wee Ee Cheong, UOB, $5.5m - $5.75m, Tan Kwi Kin, Sembcorp Marine, $5.12m. Down the ladder were those getting around $3m - $4m, were David Conner, OCBC, Wong Ngit Liong, Venture Corp, Chua Sock Koong, Singtel, Chew Choon Seng, SIA, Kuok Khoon Hong, Wilmar and Cheng Wai Keung, Wing Tai.

What is interesting is that those that are part owners or majority owners of their respective companies appear to be more stingy in paying themselves huge salaries. I thought they should reward themselves more, after all they are the majority owners and built the companies themselves, with their own monies. Kwek Leng Beng is only the third highest paid and Wee Ee Cheong is the fifth. Then Wong Ngit Liong, Kuok Khoon Hong, Cheng Wai Keung paid themselves a miserly $3m - $4m. The worst paid majority owners is Olivia Lum who paid herself only $250k - $500k. And this amount is even lesser than most employees in the public sector. Very unbecoming.

One notable absentee is Liew Mun Leong who was rewarded with a $10m bonus on top of his salaries. Shouldn't he be number One?

My conclusion is that it is more rewarding to be just an employee and not an employee cum major shareholders.
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what i posted is just my personal view. feel free to disagree.

[redbean]

Small minds and big businesses

The land of Sintu was controlled by Godfather Ah Beng. It was not a big place but lying at the crossroad of the international drug trafficking route, it was where all the action took place. From human smuggling, vice, prostitution, gambling and drugs. And Godfather Ah Beng ran it as freely as he could by just collecting the dues for his retirement. And he spent his time partying with wine, women and song.

As a result he was indisposed and left the running of his business to his son. His main source of income was prostitution. His son was not the only beneficiary. His mistress also owned a third of the business while his godson another third. The three ran the three cash cows separately under different entities and managements. It was a very closed cartel business and everything was within their control.

As time passed, each tried to outdo the other to prove to Ah Beng that he/she could do better. The cartel protected them from new competition and they exploited the arrangement to the fullest. The prostitutes were like slaves to the three organisations, generating incomes to fatten them, which was all good and well.

Then smart alec thinking appeared. They tried to compete with each other 'discreetly'. Three monkeys running the same business and trying to con each other by being discreet. Son brought in foreign prostitutes that were cheaper and better. His business prospers. Not to be outdone, mistress and godson did the same and their shares of the business was back to square one.

When one offered free gifts or extra services the others followed in double quick time. When one cut the price, the others also cut prices.

The consumers were the happiest when the three monkeys fought among themselves, 'discreetly'. The people that suffered the most were the prostitutes. They were the ones servicing the customers and getting paid lesser and lesser while working harder and harder. Even the foreign prostitutes had to compete with foreign prostitutes from cheaper sources.

As far as the three monkeys were concerned, cutting prices was the only way to go. They could think of no other better ways. And they forgot that their business was a near monopoly.

While they kept squeezing the prostitutes, they were not stingy to themselves. They still reaped big profits and bonuses. Ah Beng too was undisturbed. Whenever he needed more money to splash around, he just raised his protection money and the three monkeys would pay willingly.

One day the three monkeys found out that the business was not lucrative any more as the prostitutes too were abandoning the trade. So they sought permission from the Godfather and sold their businesses to live happily ever after from the wealth they accumulated over the years of exploiting the prostitutes.
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what i posted is just my personal view. feel free to disagree.

[redbean]

Bring back the law to hang horse thieves

The financial crisis is stabilising and things appear to be settling down. The banks and financial institutions are nursing their wounds after trillions of dollars have been thrown in to save them. But the thieves, conmen and fraudsters are still intact, still in the game, stealing from these organisations. The banks can afford to fail and go bust. But nothing will happen to these thieves and their collaborators.

How so? They are so talented that whatever that they are stealing from the organisations are legal and contractual, approved by the Board of Directors who in turn are paid handsomely by them. Brilliant. Whatever that will happen to the organisations under their watches, the thieves, conmen and fraudsters will remain free, respectable, above the law, and very rich.

The APEC meeting is in town and one of the first recommendation coming out is on how to save and protect banks and financial institutions from going down. The wise men and women have proposed a long list of do's and don'ts, to tighten control and procedures etc etc. Someone even suggest that banks should buy more insurance to cover their positions. They forgot that insurers can also go bust. And who is to insure the insurers.

But the most important element they forgot to safeguard is the thieves, conmen and fraudsters. These thugs are allowed to continue to do what they were doing, to enrich themselves by robbing the banks and institutions in their control.

The wise men and women in town seem to have forgotten that there is nothing wrong with the banks and financial institutions but the people managing them and robbing them.

My simple layman recommendation is to reintroduce the law against horse thieves. Hang them and confiscate all their ill gotten wealth and return them to the organisations they brought down. That is the only insurance against these thieves. They must be held accountable and be made to face the ultimate punishment. Nothing else will work. The thieves, conmen and fraudsters are working within and inside the system.

Where is the resolve to clean up the system? Or are the thieves, conmen and fraudsters still at work and having a say in all these recommendations, to cover everything except them?
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what i posted is just my personal view. feel free to disagree.

[redbean]

I have kept this thread alive since March 2007. I have written to a couple of organisations on the issues of corporate governance and directorship. Few days back, Ho Kwon Ping wrote a long article about what was going on in the Board of companies. Today we are hearing the MAS talking about setting up a body to look into raising the standard of corporate governance.

Is this an exercise that is more in form or substance? What had happened in the past few years had seen many investors losing their piles in the stock market with dubious companies and dealings and fraudulent accounting. And where does the fault lie? It is, in a way, something like corporate America. The practice of 'I scratch your back you scratch mine' is only a small fraction of a system going out of control. It all boils down to lack accountability and lack of clout. From the board of directors, top management, auditors, financial analysts and banking advisors, everyone is being paid a fee to monitor and be watchdogs to corporate faults. Some participated in the frauds, some just simply resigned when something smelly popped up. No one is responsible for anything or hardly anyone was taken to task for the failures or frauds.

What is needed is not only a revamp of the whole corporate governance formula, but a need to pin responsibilities on the shoulders of those carry it and being paid for it.

The SGX has come out with draconian rules and fines for simple and often innocent mistakes made by equally blur investors or careless remisiers. Such an approach should be adopted in corporate governance and corporate frauds when the consequences are much grave. Make everyone who is paid to do a job be accountable. Heavy fines is a way. Resigning and washing their hands cannot be allowed. Accepting the payment must come with accepting the punishment for a job not properly done. Rip Van Winkles cannot go on sleeping and get away with it. People who don't have the time to be execute their management, advisory or watchdog's role should not take on the job.

Would something like this happen with the setting up of a new corporate governance council?
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what i posted is just my personal view. feel free to disagree.

[redbean]

The most coveted position in corporate Singapore

No, not the Presidency! No, not the SM or MM. The most coveted and prized possession in the market is Directorship to the Board of Directors of public companies. Many are known to grab as many as they could or available. The number is never enough.

Some may have work and other commitments up to their noses, have no time for family and mistresses, but will still find time to accept the appointments of directorship. The benefits of being a director are obvious, money, status and rubbing shoulders with corporate Singapore.

Is there any downside to such a lucrative appointment? So far don’t seem to have any, though legally there are responsibilities, heavy responsibilities. For any neglect or negligent in exercising the power of directorship against frauds and wrongdoings would mean the company losing money, and shareholders too.

But have no fear. When things are not looking good, quickly submit a resignation letter and go for a holiday. Then start to scout for more new directorships. And if one is highly talented, there is no shortage of offers. The more talented one is the better the offers.

And yes, please do not apply. Appointments are by invitations only.
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what i posted is just my personal view. feel free to disagree.

[redbean]

How to make drivers more professionals

We have too many accidents on the road. And these are demanding too much time from the Traffic Police, the Public Works Dept, the insurers and the workshop mechanics. This is bad. All these people need not have to be put to work by all the careless mistakes of drivers. If drivers don't make mistakes and get into accidents, the whole place will be so peaceful and blissful. No work to do.

Now, what is the best way to stop drivers from making silly mistakes and get themselves into accidents, and creating works for other people to do? The SMRT found that people had this problem of walking into the railway tracks. So they erected barriers to prevent people from doing it by accident. More barriers will be up. The problem is that unless all the tracks are cordoned or walled up like Changi Prison or military camps, the people who intend to walk into the tracks will still walk into the tracks.

A better solution is to hurt them where it hurts most, fine. Fine them until they are broke! In the case of careless drivers or unprofessional drivers, fine them $5,000 for the first accident. Then $10,000 for the next accident, and the amount keeps going up by $5,000 until they stop getting into accidents. When the fines are high enough, you can bet that none of them will dare make mistakes or get into accidents. Then our roads will be accident free. But we must also be prepared for drivers having heart attacks in the driver's seats the moment they get into an accident. For the fear of paying a few tens of thousands of dollars in fine would be too much for their hearts to take.

There are other things to prepare for. If humans don't make mistakes, then they will become inhumans. Only inhumans or higher beings don't make mistakes. And without mistakes, then there is no need to employ all the traffic cops, no need for insurers, no need for Public Works to repair the damages, and no jobs for the mechanics. Heavens, then all these professionals will have nothing to do! No, they will create more things to do for themselves, by training the non professional drivers to be more professionals.

Maybe they will think of how to train themselves to be more professionals too. In paradise, the higher beings need no further training. They are either immortals or demigods. They only train the mortals. All the faults and problems are caused by the unprofessional mortals.

The above post is copied from Asian Correspondent
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what i posted is just my personal view. feel free to disagree.

[redbean]

Saudi Prince blasted at the crooks of western banks

They cried foul and blame Dubai World for their exposure in over extending loans to the company. Now they are blaming everyone except themselves for not doing their homework and taking extraordinary risks, ie, gambling with other people's money hoping for quick profits, which means big bonus payouts if the bet is right. It is right that the Prince Alwaleed bin Talal put the blame back squarely on their shoulders. The western banking system has become so corrupt that none of them want to admit it. All the financial institutions are taking high risk investments for short term profits, and throwing all caution to the wind. They gamble big time. And if they win, they proclaim to the world how clever they were. When they lose big time, they blame everyone. And better still, they demand more payment as they have become indispensable to make right what they have done wrong. The institutions they messed up needed them more badly to recover the losses. And they may even claim that it could be worst if not of their super talents.

This is the cancer that is eating up all the western model banks and financial institutions. They have found a perfect formula to loot the organisations at the expense of the small shareholders. It is no man's land. They write their own pay checks and take enormous risk and put the organisations money to unacceptable risk. Not risking their own money. And come to the worst, like the financial crisis, get the tax payers to pay up.

Dubai World loan failure is just a smaller scale of the debacle in the US. Stay glue to your seats. Corporate America has not learnt its lessons and this devious game is still in full play. There will be more to come unless all these greedy crooks are put behind bars.
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what i posted is just my personal view. feel free to disagree.

[redbean]

The stockbroking industry is getting a morphine jab and the remisiers are excited and celebrating their new status as professionals. They have not been seen as professionals in the past, more like order takers or toll collectors. Now there is this remaking exercise to turn them into professionals. I do not know what that means? Professional traders!

Some remisiers are bracing themselves up and walking with an air of confidence that soon they would be able to take on the fund managers or house traders in their own game, with a little bit of training of course.

Now, who are these fund managers or house traders who are so professional and formidable? Very likely they have been specially trained to trade in derivatives and a few instruments by the experts in the fields. They will also be aided by sophisticate software and hardware to do the job. There will likely be a team of analysts watching their left and right, their front and their arse, to make sure that things will go right for them. But their most fearful arsenal of weapons is actually their near unlimited fund vis a vis the small traders and remisiers. They could bulldozed their way through by the brute force of money. And they are specialists just doing that, no other distractions. They are focused.

What are the remisiers made of? Some may be equally smart as the fund managers and house traders. Some may have huge resources to compete on brute strength. But many are small time traders with limited resources. And they also have several hundred clients to attend to. Their clients will call them at all hours asking for information, what is this company doing, how much dividend, when is the payout, when is the cut off date, what is the new name of this stock, what is the code on teletext, how to key in payment at the ATM, etc etc etc. And some will just call to kill time.

How could the remisiers find time to trade with professionals who are trained literally to kill? It is like asking the taxi drivers to race against the F1 drivers and their mean machines in the racing circuit.

I must say that I am impressed with the confidence of the new and professional remisiers in the making. To be real, I am wondering whether they could survive to enter Round Two. Or would they be there to fatten the fund managers and house traders?

The above article is copied from Asian Correspondent
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what i posted is just my personal view. feel free to disagree.

[redbean]

It must be the faults of the small boys

Below are two articles, one from R Sivanithy of The Straits Times and a reply from a veteran investor, Narayana Narayana.



Get stockbrokers in on governance - BT Hock Lock Siew December 3 2009

By R SIVANITHY

WHY is it that when scandal rocks the stock market - as it has this year with the high-profile problems at various China companies listed on the Singapore Exchange (SGX) - nobody looks at the role that the stockbroking community might have played in safeguarding investors' interests?

After all, is it not true that stockbrokers owe the public a fiduciary duty, a duty that requires the exercising of the highest possible standard of care, in law or equity, when acting in the public's interest?

Instead, most of the criticism for corporate failures is directed at SGX, company directors, external auditors and sometimes ratings agencies, as if these were the only ones who should be held accountable. For sure, these parties have to be held partially accountable - but they are not the only ones.

Brokers have such close, first-hand contact with the corporate sector as well as the investing public that they are arguably much better positioned than anyone else to fulfil a gatekeeping role.

You could even go so far as to say that brokers should form the first line of defence between an often gullible investing public on one side and a possibly dodgy business community on the other.

Yet when a company fails - not just one from China - brokers who may have previously written glowingly about that company to their clients are completely overlooked when the finger-pointing starts.

Consider, for example, that SGX's main regulatory concern apart from enforcement of its Listing Manual rules is the detection of suspicious trading activity via its day-to-day surveillance of trading patterns.

It does sometimes query companies on items contained in the latter's accounts but, by and large, quality control is left to others to determine since the Exchange does not have the requisite resources.

As a result, SGX doesn't concern itself too much with the merits of a stock as an investment - which is the preferred approach in a disclosure-based, caveat emptor regime.

Consider also that external auditors visit their clients' premises usually only twice a year - to perform an interim audit, and then a final one.

On both occasions, audit staff operate under tight time and budgetary constraints, which means that the accounts are only selectively checked in order to give a certain minimum degree of statistical confidence as to their accuracy. Because of this and because it is almost impossible for auditors to detect wrongdoing if there is collusion between key functions, any fraud can pass undetected.

As for independent directors, regular readers would be familiar with their deficiencies: insufficient training, inadequate accounting knowledge and, in many cases, no real independence from top management.

Brokers, on the other hand, spend plenty of time with the managements of the companies they track. They attend analyst briefings, roadshows, luncheon presentations and overseas site visits.

Through constant contact with chief executives and chief financial officers, they are able to form valuable opinions about the integrity and dependability of these company officers.

Furthermore, when new companies list, brokers benefit from placement fees, underwriting commissions and increased brokerage from trading. They also make money as distribution agents for investment products, as they did for the many failed structured products issued by US investment banks in 2007.

Their 'buy' and 'sell' recommendations can exert profound effects on share prices and, for the majority of retail investors, a dealer or remisier in a broking house is often their first and only port of call when investing in equities and equity-linked products.



Why is it then that, if broking houses and their staff play such a pivotal role in the investment chain, nobody ever thinks of how such a vital function can be better utilised to protect the public's interest?

When asking this question, two common responses were received: 'It's just too difficult' and 'that's not what you traditionally expect from the profession'. Then what is? That the profession remains a community of simple order executors, middlemen with little or no input in enhancing governance or protecting public interest?

In other jurisdictions, there is a growing awareness that brokers can be made to play a bigger role in enhancing governance.

In Australia, the UK and the US, for example, the authorities now want to ensure responsible handling of rumours by making brokers sift through the thousands of rumours that float through the market and filter out those that are frivolous and without basis.

In its September discussion paper on the subject, the Australian authorities have proposed that only those rumours which brokers believe to have some basis can be passed on to clients.

Meanwhile, it is also proposed that brokers be prohibited from originating rumours while simultaneously maintaining a rumour log to show what steps they took to discern a rumour's basis before passing it on. (See Hock Lock Siew, BT, Sept 25 - 'Should rumours be regulated?')

So far, there has been no discussion in Singapore on how stockbrokers can be made to play an enhanced role in strengthening governance. It's an odd 'blind spot' that should be addressed. 'Difficult' should not be equated with 'impossible'.

*******************



The Mailbag Editor,

The Business Times,

Singapore.

8th December 2009.

Sir,

While appreciating the thrust of your December 3 2009 Hock Lock Siew article "Get stockbrokers in on governance" I fear your Senior Journalist Mr. R. Sivanithy may have missed out on a few salient reasons why that often much-maligned fraternity prefers to stay uninvolved beyond its core business of acting as an intermediary between buyers and sellers.

It would be instructive, and perhaps interesting as well, to delve into history to look for the reasons leading to their present malaise.

Historically, the first sharebroking firm in Singapore was Fraser & Co., set up in 1873 by John Fraser, who was caricatured as a many-tentacled octopus. Until the immediate post-WWII years, its partners were exclusively 'angmoh', and its position as the foremost broking firm in Singapore/Malaya was never seriously challenged till the mid-1960s. In Singapore, competition came with the setting-up of other stockbroking firms, including a couple of small Chinese-owned firms, but it was only around 1936 or 1937 that the stockbrokers got organised under an umbrella titled 'Malayan Share-brokers Association'. The upcountry members were based at Penang, Ipoh and Kuala Lumpur with two or three in each place, and the majority of many more in Singapore. It was a loosely-knit federation, and apparently all that was then necessary to set up as a sharebroker was to pay the annual fee of $50. The chairman tended to be one of the 'whites', which was not really surprising in those colonial times. By and large, there did not seem to have been any complaints against the committees elected from time to time to run the stockbroking industry.

The introduction of the Securities Industry Act in 1973 made it compulsory for all Remisiers and Dealers to be licensed, and one rather nebulous condition in the licence read "That the licensee shall not advise or disseminate any information to induce purchase of sale of securities for the purpose of raising or depressing the price of such securities".

However a fair amount of laissez faire still existed, and the broking community generally continued to operate without any great problems until the Pan-Electric crisis threw a spanner into the works in November 1985.

This was attributed to a severe lack of internal self-discipline in the broking community, and the feeling that stricter control was necessary at the helm, leading to the abolition of the previous 'old boy club' network, and replacement with government- appointed administrators and supervisors, who went about their duties strictly according to the letter of the law.

This could well have been the turning-point in the history of the local stockbroking industry.

The new licences that followed deleted the clause quoted earlier, replacing it with another, but given the strict supervision that followed in the aftermath of Pan-Elec, and with surprise checks by the Exchange's Inspectorate and the imposition of draconian penalties for even minor infractions, it is not surprising that the entire broking community shrank from doing any more than matching trades as instructed by clients.

It is now ten years since I left the trade, but I think that the culture or mindset of sticking rigorously to one's last, still endures till today.

In those days, stockbroking firms, no matter how tiny, were all but compelled to set up costly 'Research Units' for the supposed benefit of their clients, most of whom would be trading on their own fundamental ideas which consisted basically of 'what are the 'counters du jour'' (high turnover and therefore 'hot'), and/or 'market up or down today'?.

In fact, in all my years of experience, these have been the main parameters which appeal/matter to punters, who are not greatly interested in the fundamentals that (should) go with prudent investing.

Mr. Sivanithy asks rhetorically, "is it not true that stockbrokers owe the public a fiduciary duty, a duty that requires the exercising of the highest possible standard of care, in law or equity, when acting in the public's interest?"

Most brokers would be 'LOL' at the platitude inherent in it, as if they were in any way responsible, or had any say, in the listing and public quotation of penny stocks of unknown/dubious quality from unfamiliar territories, dished up for public consumption, which punters avidly pounce upon enticed by the twin lures that they are 'affordable' and 'how much can I lose'? Most brokers I know would be inclined to advise their clients to stay away from such potential minefields, but unfortunately there is an ingrained mindset among the investing public that the approval for public listing and quotation on the exchange board lends a fair degree, or at least a thin veneer, of respectability to those counters.

Mr. Sivanithy is at pains to point out (and agree) that "SGX, company directors, external auditors and sometimes ratings agencies are held accountable (even if only partially) for corporate failures" but adds that "they are not the only ones" and ropes in the hapless stockbrokers, who have nothing at all to do with the action, and in fact have no clout or say in the matter.

This appears, to me at least, grossly unfair. as Mr. Sivanithy finds mitigating factors aplenty for everybody else except stockbrokers.

E.g.:"SGX doesn't concern itself too much with the merits of a stock as an investment - which is the preferred approach in a disclosure-based, caveat emptor regime".

Doesn't seem to be much of a change from the cynical comment (reported long years back) of a SES spokesman re IPO offerings, "if they (the promoters} can find a merchant banker to take up their case, and the public are willing to subscribe for the shares, we will grant listing".

If, as Mr. Sivanithy pinpoints, the issue is with 'the high-profile problems at various China companies listed on the Singapore Exchange (SGX)' isn't the most logical and simplest solution be to vet aspiring 'sinkehs' with a finer toothcomb before approving their listing, in the greater interests of local investors? In horse-racing, animals that are found to be in any way unfit are withdrawn at the start to ensure that the public are given a fair run for their money.

As for the supposedly watchdog external auditors the excuse is that "they visit their clients' premises usually only twice a year ..."

And 'independent directors': "regular readers would be familiar with their deficiencies: insufficient training, inadequate accounting knowledge and, in many cases, no real independence from top management". (so why are they there at all???)

All the above are rewarded, and handsomely too, for whatever is their participation.

But no, Mr. Sivanithy finds and chooses the ultimate fall guy in stockbrokers.

He asks, again rhetorically, "Then what is expected from the profession - that it remains a community of simple order executors, middlemen with little or no input in enhancing governance or protecting public interest?"

Unfortunately, that is what they have been reduced to today. There are any number of other appointed personages and bodies whose duty is precisely that - to protect the public interest.

In the circumstances, stockbrokers could therefore well retort, and with some justification, "Am I my brother's keeper?"

I do not in any way hold a watching brief for the broking community, but I do hope some of them will take the trouble to refute what appears in this Hock Lock Siew column.

Yours etc.,

Narayana Narayana



My view, anyone with a little intelligence will know where the fault lies, and definitely nothing to do with the stockbrokers and their agents. The best people to be appointed as independent directors should be the small investors. SIAS should make a case to MAS to have investors who are its members appointed as independent directors under a set of rules formulated by SIAS to ensure independence and impartiality. The current practice of companies appointing their own independent directors and expecting them to be independent is a joke, unless the appointed independent directors are godlike.

The article is copied from Asian Correspondent.
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what i posted is just my personal view. feel free to disagree.

[redbean]

New York SEC going after rating agencies

Enforcement officers are now probing into the roles of rating agencies in the financial meltdown. Would it help or come to anything when the bankers are still laughing all their ways to the banks? After causing the world wide financial crisis where trillions of dollars were poured into the international financial systems, the bankers and fund managers are rewarding themselves with billions as if nothing had happened. Only one scapegoat in the name of Madeoff was sentenced to jail. Probably it was his name that made him more guilty than others.

The rating agencies cannot be blamed for the fiasco. They were just doing their jobs and it is too tedious and difficult to find out the frauds or flaws of financial data provided by the financial institutions. Needless to say the financial institutions are blameless. They were there just to market their products and if stupid people want to buy them it is their faults. And the auditors could not do much either. They only did random checks and is impossible to discover any frauds. Neither will the half baked independent directors who are probably incompetent, not good enough as watchdogs for wrong doings.

The people that should be responsible for the frauds should be the brokers and agents selling the products. These are the front line people, the first line of defense to protect the investors from frauds. They should be clever enough to advise their clients not to buy junk stocks or toxic products. The Lehman Banks cannot be blamed too.

Now, why is the New York SEC going after the rating agencies and with Senator Ted Kaufman saying, 'We must identify, prosecute and send to prison the participants in those markets who broke the law.' Actually they should hang all the regulators in New York for allowing the fiasco to develop into an international financial failure. But who is to watch the watchdogs?

The article is copied from Asian Correspondent.
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what i posted is just my personal view. feel free to disagree.

[redbean]

The Pinnacle is a testament

LKY visited the 50 storey Pinnacle at Duxton in a key handing over ceremony. It was indeed a pride of Singapore's housing achievement in over 50 years. From cheap and basic 1 and 2 rm flats to the Pinnacle, built to equal the private condominiums in quality and price. It is 'a strong testament to our tenacity and capabilities as a people'. The Pinnacles stood there, high and mighty for all to see, on what we can do in this little paradise.

Is it the first and last pinnacle? It could have been a great PR exercise for the govt to see such a beautiful structure rising above the neighbourhood in the heart of the city and as living quarters for the heartlanders. This monument of progress in housing development has in fact received the most bitter and angry reactions from the people, in particular the young who are looking for their first home. When it was first launched in 2004, the 4 rm flats cost an average of $335k and 5 rm an average of $395k. In the second launch in 2009, the prices were $486k and $590k respectively. This peeved off many would be buyers for having to pay an average of $200k more than the earlier buyers. And not that the cost has gone up but because of a change in pricing policy to one that is marked to market, ie pay the market price.

Would the govt listen to the grouses and the angry voices, or would it still think that this is the right policy and the way to go forward? The prices will continue to go up if the economy remains good. What if the economy turns down? It is no small feat for young people to pay such a huge sum of money for their first flat even if they are earning good money. A slump in the economy could find them jobless and scratching their bottoms to pay for the mortgages of 30 years. This pricing policy will be a big issue in the next general election and the people would likely be made to support this policy or to reject it. And they will fingerpointing at the Pinnacle.

The prices will go up in good times as if Singaporeans are all so rich. Would the pay go up in tandem? Let this not be the first and last pinnacle and let there be more to come, and be really affordable, and not be a stone mill on the necks of the young people.

The article is copied from Asian Correspondent.
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what i posted is just my personal view. feel free to disagree.

[redbean]

Was it another confession?

Mah Bow Tan said "he was 'caught off guard' by how the HDB resale market trended north in a recession year" during an interview with Mediacorp as reported in the Tdoay paper. He added, "nobody, no matter how prescient, no matter how clever, would have been able to predict that this was what was going to happen."

I fully agree. I don't have a crystal ball with me to gaze everyday. I don't have any data or reports on the increase in population. I don't have any data on the supply and availability of flats. Neither do I know the demand pattern or the prices or flats in market. I don't even know the market prices or how govt policies could affect demand and supply and prices of flats. I don't have a team of super talent to tell me what is happening. But that is me. I am just an ordinary citizen, a layman who is not in the loop of information flow and decision making.

Should the people demand and expect the super talents, the best paid administrators and policy makers to say 'I don't know, I didn't see it coming?'

But one thing the minister knows for sure, the prices will keep going up. And that is because 'the current system is far superior to one that keeps housing cheap through a non market based system.' How did he know? Ah, it is the govt's policy, the way the system is set up and administer, that will dictate that prices must go up and not come down. No need to be prescient or clever to know this.

And what is the alternative or the only alternative available? A fixed price system whereby home owners would have to return the flats to the HDB and get back the price they paid for it. This is like the current govt is the best govt and the alternative is that all our women folks will become maids and the economy will collapse if another party comes to power.

Ok, no need to predict property prices, just go ahead and grab the next property quickly. Don't rush but if you don't buy now the next property will be more pricey. I wish I can be so confident of what tomorrow shall be. Oh, I forgot, there are conditions attached. Property owners who want to ensure that their property prices will just go up and not down better know what to do.
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what i posted is just my personal view. feel free to disagree.

[redbean]

An admission, a confession and a mistake

Yesterday I asked the question whether Mah Bow Tan was making a confession. In normal cases, when a confession is made, it is an admission of a mistake or some wrongs done, and a forgiveness is being asked. On the other hand an admission of a mistake is a personal act, a statement of one having done wrong. It does not lead to an asking for forgiveness but people can choose to forgive and forget.

Lately we have seen 3 ministers coming out in the open to make comments about their decisions. In the case of LKY, it was a simple plain admission of a mistake. He made it clear, without any doubt, that his second language policies were derived from wrong assumptions of intelligence and language skills. And he was adamant to correct that

Khaw Boon Wan's statement did not use the term mistake but made it very clear that it was a mistake for not acting fast enough in building hospitals in the north and the west of the island. He too recognised the error and took prompt actions to rectify them.

What about Mah Bow Tan's statement? The surge in HDB resale prices caught him by surprise! It was kinda like an accident, or an act of god, very similar to the once in 50 years flood in Bukit Timah. And even the cleverest man would not be able to see what was coming, like a lighning strike. When it is an accident or an act of god, there is no mistake and there is no need for any admission or confession. He did exactly what was necessary, just to explain what happened was beyond anyone's control.

The good thing is that even if it was an accident or an act of god, remedial actions can still be taken and he is making sure that all necessary actions are taken to prevent high prices of public housing. But he is also very sure that the prices will go up but affordable. And he will place the supply and demand equation under the microscope to make sure that there is enough of supply but also ensuring that the prices will still go up to protect the value of flat owners.

So, for the record, to date, only two admissions of mistakes. The third one does not count as there was no error in judgement in the first place, just an act of god.

The article is copied from Asian Correspondent.
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what i posted is just my personal view. feel free to disagree.

[redbean]

The perfect con job

'Hedge Funds Eye Syria
January 12, 2010
Syria, hoping to emerge from decades of diplomatic and economic isolation, is looking to hedge funds for help.

The country, which has not hosted a U.S. ambassador in nearly five years, hosted a group of major international investors, among them hedge funds. The week-long trip to Syria and neighboring Lebanon took place late last year and was organized by Traxis Partners founder Barton Biggs, according to The Wall Street Journal. Also among the hedge fund contingent was $11 billion Maverick Capital.

“This was not a group of naïve investors, and [I] have to say it opened all our eyes,” Maverick partner Steven Galbraith told the Journal of a group that included Citigroup, Morgan Stanley, Temasek Holdings and the Abu Dhabi Investment Authority. The group met with Syrian President Bashar Assad, and “he blew them away,” Biggs said.'

The above is part of an article posted in FINalternatives. My immediate reaction to this piece of news is that a perfect con job is being set up according to the text book. A few experts gathered in a hush hush meeting to share a golden opportunity to make big bucks. Everyone believes that everyone is an expert and nothing can go wrong and they put in all their money into the proposal. Yes, the proposal fell through and they lost every penny they put in.

Quietly one of the parties who also lost money will go to the recipient of all the money and collect his share of the loot, plus his capital without anyone knowing what was happening. The other few experts who lost their pants would put it to bad luck or bad decision or blame it on something else.

Now who is conning who? Or who is the real con man?

The article is copied from Asian Correspondent.
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what i posted is just my personal view. feel free to disagree.

[redbean]

Making a mountain out of a mole hill

For almost a week, everywhere I turn, every page of the old and new media i flip, there is this horrendous news about GIC losing its $925m investment in Manhattan's Stuyvesant Town and Peter Cooper Village in the US. What is so big deal when compare to the billions lost during the subprime and financial crisis? And the good news is that most of the losses have been recovered. So will the losses from this deal. They will be made back in a matter of time. These are long term investment strategies.

The people must understand that investing big time must come with big risk. it is part and parcel of the game. And we still have many billions to invest. Don't worry lah.

But one thing, don't be like the American financial institutions who have started to want to pay themselves crazy just because they are starting to make profits again, and conveniently forgotten about the amount they had lost. Just make sure that the losses are made back before the next big payout can start to roll.

The article is copied from Asian Correspondent.
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what i posted is just my personal view. feel free to disagree.