Tuesday, September 30, 2008

JBJ - Portrait of courage and sacrifice...

When I was in secondary school, I took up a suggestion from my English teacher to visit the parliament to see our politicians in action. All you needed to go in and watch the proceedings was to show your IC. In those days there was no "Today in Parliament" on TV and there was so little interest in politics among Singaporeans, the only people in the viewing gallery were reporters. I remember that day very well because it was the first time I saw JBJ "in action". He moved a motion to seek fairer compensation for Singaporeans under the Land Acquisition Act. He argued that it was unfair for the govt to take land from ordinary Singaporeans and pay a pittance when it can afford to pay the current market price for land. A minister stood up to say that all this is for the greater good of Singaporeans, by paying 1970s prices for acquired land, the govt is able to save millions in development costs. Of course, even as a secondary school kid, I found it strange that the govt is talking about the "greater good" when it sells land for the building of HDB flats at market price - something has to be wrong with the logic of taking land from Singaporeans at a deep discount for public development and selling land to Singaporeans for HDB flats close to the market price. JBJ was there to point all that out - he was fighting for justice and fighting for ordinary Singaporeans and he was fearless and unrelenting.

The last time I saw JBJ in person was about 2 decades later when he was selling his book "The hatchet man of Singapore" on the street. He had been made a bankrupt, jailed and lost everything but not his spirit and dignity he was still fighting for Singaporeans - fearless as ever. In June 2008, JBJ at the age of 82 formed the Reform Party. Even in his eighties, he never gave up the fight.

JBJ fought for everything our society needs today - human rights, justice, freedom, equality and democracy and the men who did not want to give us all that fought back. They used everything in their power to fix him but it was they who were afraid not him. They feared the loss of power, change and they feared the empowerment of people they controlled. JBJ was fearless because he was right as defended he ideals of our society - what our flag symbolised and the values in our pledge - from men who did not believe them. He fought with the integrity and passion throughout his life motivated by what is right and his dream of making our society better for all. When he broke the PAP's monopoly on power in 1981, he brought hope to many for a more democratic society. However, the response of those in power was to use politically motivated charges to bring him down and disbar him from future elections. They brought him down and along with that the hopes of many Singaporeans for a better society. JBJ may not have been able to take us where we were suppose to go, but his heroic efforts won the hearts and minds of many - he never gave up and we should never give up.

At a time when our nation is made to pay million dollar salaries for our ministers who claimed they have made a "painful sacrifice", JBJ gave everything he had to serve the people of Singapore. His fight for human rights, justice, democracy and freedom of speech is as relevant today as it was in 1981. JBJ may not be with us today but his spirit will continue to live on and inspire those who continue the fight.
"Come, walk with me, let us walk together, hand in hand...for peace, justice, truth ... fearing no one except God", JBJ, Jul 2008

Sunday, September 28, 2008

Structured Products, Minister Pay and the Pursuit of GDP Growth....

``The market does not exist to serve the interests of financial intermediaries. It exists to serve the public.'' - Joseph Yam, CEO HKMA
``You need regulators to take a view. You need a health warning.'' - Joseph Yam
"The HKMA pledged this week to support more than 10,000 individuals who say they suffered losses on investments in credit-linked securities arranged by Lehman" - Bloomberg.
A few weeks ago a colleague of mine got a call from a RM (relationship manager) urging him to purchase an equity linked product. He was queuing up to move some money into his fixed deposit when he was intercepted and marketed to....being ultra-cautious he said "no" first but told the RM he needed some time to consider. When the RM called, he asked for a description of the product which he showed to me and another colleague. After 30 minutes we all started laughing because the product was so hilariously complex, the two of us with Masters degrees couldn't figure out the expected payback. We wanted to look for the feller with a Phd to help with the analysis but he was overseas. My colleague called the RM and basically asked her 'to go fly a kite'. What seemed so funny at that time is not so funny now because it turned out that these products were sold to thousands of retirees......
"...entry level relationship managers earn a basic monthly salary of between $2400 to $3000 - in a good month, they can make $8000 to $9000 in commissions" - Sunday Times Pg 10.
"Who comes first.... the customer or the commission?" - Lucky Tan.
The MAS allowed the marketing of structured products some time 2006 and between July 2006 and end-2007, FIDEC received 531 complaints. Little was done about the marketing of structured products. Perhaps deregulation is part of our leaders aspirations turn Singapore into a financial hub. GDP growth, afterall is what our leaders consider their ultimate performance indicator. Nobody in authority saw anything wrong with 20-something RMs selling products they could hardly understand to old ladies who could never understand what they were buying. Several public spirited Singaporeans, like Dr. Money and Tan Kin Lian who warned investors of the pitfalls of structured products : [Link] - it was an accident waiting to happen. But a handful of Singaporeans cannot overcome the marketing budgets of banks and their armies of RMs.
MAS first response to the blowup of DBS High Note 5 and Lehman Minibonds was to advise customers to go back to the banks with their queries. As the outrage and disquiet began to spread, the MAS struck a deal with the banks to have them appoint their own "independent" investigators. You can be sure the banks have already hired the best lawyers by now and asking the customers to hand over their complaints to the bank so they can build a defense for misselling totally undermines any chance of a legal redress. Contrast that to the response of the HKMA - the 1st thing the HKMA did was to meet the investors to find out how best to protect their interests....the next thing the Hong Kong authorities did was to start their own investigation into misselling by banks.
Our govt ambition to grow quickly as a financial hub led to deregulation which eventually led to this financial disaster for many Singaporeans. The authorities pre-occupied with growth of the industry saw nothing wrong with the marketing of structured products to the public. There were many things wrong these products but the banks were making very high margins from them and those RMs marketing were earning commissions in excess of their pay. There is a price to be paid when bad products are sold to public. Be it tainted milk, subprime loans, ...it is the job of the regulator to prevent such products from getting to the market and punish those who tried put profits ahead of their fiduciary duty then try to hide behind the law and lawyers for failing to act responsibly. There are many precedents for this - e.g. the NY Attoney General who recently forced the banks to buy back auction rate securities due to mis-selling.
'Once you have growth, all problems can be managed." - MM Lee.
"Hmmm...what happens if growth itself is causing the problem..." - Lucky Tan
Not too long ago, during the debate on ministers' pay, our esteemed MM Lee said that their pay increase is justified because of the size of our GDP. There is little doubt that the single most important performance indicator for our govt is economic growth..... all else is secondary. We will grow our GDP even as the income gap balloons, we will turn ourselves into a medical hub even as the cost of medical care for Singaporeans escalates and resources are strained, we will import as many foreign workers as it takes to grow even though we cannot find suitable places to house them. It is this pursuit of growth that pushed our regulators to allow banks to grow their profits by selling structured products to people who don't need them. What good does this do for our society except allow a handful of youngsters working as RMs to get an remuneration they don't deserve and for rich bankers to get richer at the expense of ordinary Singaporeans? The kind of growth we pursued in recent years is akin to body builders injected with steriods, we have ignored all the side-effects of growth, the downside of building casinos, the social ills we will sustain for the extra GDP growth.

What happened in financial markets last week..?

Here's an excellent discussion from Princeton University on what happened last week.
Not that we don't know......still hearing from the best economists in the world is interesting.

Saturday, September 27, 2008

Some thoughts on the US financial crisis....

You might have experienced all three - drunk Dutch Lady Milk, invested in structured products and bought stocks that have been murdered in recent months due the US subprime crisis. I think I might have ingested some melamine when I ate a stick of YouCan ice cream a month a go, my highflying stocks? I think they must have hard landed somewhere ....I tell myself it is for the long term - although I did unload some towards the end last year I decided there were a number I should keep for the long term. The only thing I didn't do is invest in those structured products - they were so obviously bad.

The current US financial crisis was within my radar for sometime - I read George Soros' "Crisis of Capitalism", Ravi Batra's "Greenspan's Fraud" and have been keeping up with the thoughts of short seller Peter Schiff. I thought the crisis might have ended with Bears Stearns but it actually got worse. The Lehman collapse caused the credit market to totally freeze up - the CDS (credit default swap) is the latest shoe to drop. The pessimists have been spot on. The next few shoes may be consumer credit (credit cards, car loans) as unemployment rises, loans to businesses, US$ etc. But I'm here not to go too much into the detailed mechanics of how this crisis will get worse or better.

Last week I was listening to BBC and there was a interesting segment on the financial crisis. A British economist went on the air to present some interesting statistics on income distribution. I don't remember his name but he said he found out that the income inequality today is only matched in history by the period just before the Great Depression. He went on to hypothesize that the crisis will be over and the global economy will recover only when a sustainable income distribution is put in place.....similar to the New Deal(s) of the 1930s. I found this very interesting because I read something from Ravi Batra 2 years ago that predicted a crisis of the same magnitude as the one we are seeing. I knew he was onto something but the problems with predictions is you don't when exactly things will start happening. Ravi Batra's findings goes something like this:

  • In the past 2 decades, wages have been lagging productivity.
  • To consume all the goods produced, there has to be an expansion of credit. Household debt in US has indeed risen to all time highs.
  • By keeping wages low, corporations have reported huge increase in profits. Corporate profits as a % of GDP is at historical record levels.
  • This profit growth is unsustainable because it requires workers who are also the consumers to take up more debt.
Basically, workers are paid too little to consume all the goods they produce....they ended up borrowing more and more as corporations make record profits. The crisis moment was delayed only because financial institutions made even more irresponsible loans such as subprime "liar" loans, and issued more and more credit cards to keep this system going. These lenders are now imploding from defaults.

In Singapore it is interesting because the govt advocate that wage increases be kept smaller than productivity gains. The logic is to keep the Singapore work force competitive globally. We have also eliminated most of the workers' benefits such as retrenchment benefits, medical, etc to stay competitive. While Singapore banks have expanded consumer credit with the proliferation of unsecured personal loans and credit cards, they have not been as irresponsible as their American counterparts. Still I was quite shocked when I found out that NTUC was offering unsecured loans known as the Fair Price Plus Loan. These loans are necessary only because workers don't make enough to make ends meet and they are so stretched they have little savings to buffer against emergencies. In the name of competitiveness, we have also imported hundreds of thousands of foreign workers depressing the wages of our low income workers. If they don't borrow, the only way is for them to cut down on consumption. Eat less, use less electricity, live in rented flatetc. When he really cannot make it, his electricity is cut off and a meter is installed so that he can use electricity only when he has money in his cash card so that the govt owned monopoloy Singapore Power does not have to risk non-payment that will eat into its profits.
There is little doubt that the current crisis and the unavoidable recession that follow will cause the most pain to the lower middle and low income members of our society. My point is their plight is not caused by the own lack of ability to earn more but by a system that our govt has chosen and bought into to achieve a high rate of economic growth. This govt is allegic to higher corporate tax as it is to welfare for the poor. The system is not equitable, it is not just...things have to change.

Friday, September 26, 2008

F1.....or F9?

Well, the F1 is here. ......money is coming. The newspaper reported that the social escort business will be one of the beneficiaries of the F1. ...including one "starlet" who will be paid $40K for a 6 hour booking. Everyone in Singapore is wondering who that starlet is. If you know, please drop a hint. F1, Singapore Flyer, casinos (oops IRs), structured deposits, biotech what do they have in common?

For a tourist industry promoting a "uniquely Singapore" experience, we seem to have been copying everything from every where. The London Eye has been wildly successful so have to have one. Unfortunately, business has not been too good at the Singapore Flyer. Don't worry we still have the IRs (aka casinos). This is an idea we thought was great because Las Vegas and Macau were doing so well. But they are not doing too well these days - the number of visitors have fallen sharply in the past few months - it is unclear what will become of our IRs once they are completed. What I'm getting at is this - our planners, whoever they are, have this habit of jumping onto whichever bandwagon is proven successful at that point in time. They like big ideas that have made a lot of money somewhere else - jump onto them only to find the industry in decline. ....why didn't they think of building the Flyer before the Londoners had theirs? Why didn't we think of hosting the F1 before the Malaysian one became such a huge success.

There is however something very unique about our F1. We are uniquely unsuitable to host such an event!!! Not only do we lack the space for a track, we have to re-route traffic from our already congested roads to host the F1. We also have relatively few F1 fans so this thing is not done for the passion of the sport. But my main concern is not the traffic jams or that starlet making too much money. Just like risky structured products which our regulators allowed our banks to market so they can make more profits, the F1 race track we formed from our roads appear to be fraught with danger.

The sharp turns, night racing conditions and the possibility of rain makes this easily one of the most dangerous F1 races. Since the number of accidents in F1 has declined, everyone seems to be alright with the risk - yes there will be bright lights to overcome the darkness, drivers are skillful to navigate the turns etc but the main reason that makes people accept the risk is the amount of money behind this race.

I really hope nothings happens and this race turns out to be a big success.... and by next year I would have figured out what this sport is about and learn to enjoy it.

Thursday, September 25, 2008

Latest Twist - MAS to banks : Appoint your own investigators!!!

From today's Today Pg B2:

"...... companies that sold the DBS High Notes 5, Lehman Minibonds and Merrill Lynch Jubilee Series 3 LinkEarner Notes will name independent parties, as a result of a deal hammered out by MAS and the bank...".

Why must a regulator like MAS "hammer out a deal" to get banks to name a third party to oversee its the "complaints handling process"? MAS has not even met aggrieved investors who are mostly retired ordinary Singaporeans to see what is needed for them to seek redress but it has already met the banks to negotiate this deal in which the banks will choose their own third party to handle the complaints. Investors who originally trusted these banks that sold them those products are now expected to trust the banks to appoint "independent" third parties? Did we not pay our govt enough to meet ordinary Singaporean investors collectively to help them resolve this? Where is the leadership??!!

Among the first thing the HK govt did was to meet the investors to hear them out. The next thing they did was to initiate an investigation into mis-selling: [Link]. Singaporeans you did not pay your govt enough to do all this for you!!!

“Having conducted several meetings with Minibond investors in the last few days to hear their grievances, we have decided to conduct formal investigation into allegations of mis-selling by certain licensed intermediaries,” says Martin Wheatley, chief executive officer at the SFC.

Now the MAS will take action based on documentation from the banks aided by these third parties appointed by banks instead of conducting its own investigation. This will entirely undermine any case that investors can put up because they have to now give their evidence to the bank first for processing. What is the MAS doing??? Where is the leadership in all this?

"We are conservative investors not risk takers. It is my mother's hardearned cash, and she is 78, why would she want to place her money in risky investments....if a robber comes to rob your house, the police will pursue and try to recover your stuff. Surely, the same idea should apply in this scenario " - Ms Koh, whose mother sunk $200K into Minibonds, Today, Pg B1
Perhaps we don't pay our leaders enough to feel the outrage as the lifesavings of old ladies are lost. Why is the MAS hammering deals and meeting with banks that have acted so irresponsibly and greedily in this whole episode? Ordinary Singaporeans are not worth meeting? Shouldn't MAS be organising any collective action to recover their lifesavings instead of Tan Kin Lian. We are told that we have world class govt, leaders without whom this nation will sink. ...leaders who will stand along side the people in their time of need and crisis. So where is the leadership???...Where?

BREAKING NEWS : HK initiates mis-selling probe!!!

LATEST LATEST : MAS has asked banks to appoint independent parties to oversee complaints [LINK]. Err....if they are appointed by the banks, how can they be independent???

Hong Kong has started investigations into mis-selling allegations.[Link][Link]

Hong Kong authorities have met investors, set up direct hotlines, and law makers have met investors to organise a collective action which the best way to recover investors' money because you don't expect banks to volunteer compensation.

"MAS has also asked FIs to keep us informed of customers' queries and complaints "
"Why is MAS listening to the bank and not the people. Why don't MAS let customers inform them of their complaints directly?" - Lucky Tan
"What really frustrates me is the subdued response from MAS. As the financial watchdog, I think it has been extremely reactive and it has so far distanced itself from blame"-Mr Peter Lim, a Minibonds investor
MAS in its statement advises investors to go back to the FI (financial institutions) as individuals with their queries. The latest statement says it is "in close contacts with FIs" and have asked the FIs to keep them informed of complaints. I see...this is how our system works. When anything goes wrong, MAS will link up with the banks and listen to them. Hmm....if you're a bank, what would you be telling MAS? Now I see why we pay our ministers and civil servants so much. If anything goes wrong and Singaporeans need help, they are there to teach Singaporeans to be self-reliant. At the end of the day, no matter how this matter is resolved, Singaporeans will remember the response of their authorities vs those in Hong Kong. Remember when the pay of high ranking civil servants and ministers was hiked, we were told that it was for their performance....and this is typically how they perform in times when Singaporeans need them.

Wednesday, September 24, 2008

93.8 Live on Lehman Minibonds and DBS HN5

Add Minibond and HN5 to your page

93.8 Live did a short segment on the Lehman Minibonds and DBS HN5. The show included an interview with Tan Kin Lian. (click on the start button to hear).

"They are very dangerous and high risk products" - Tan Kin Lian

For those of you who still have doubts that there was misrepresention involved in the sale of these products consider this : the Lehman Minibonds were not even bonds. It was a synthetic derivative created by Lehman to insure against the default of debt of a number of reference entities. The "return" that investors receive was paid out by Lehman as an insurance premium against the default of the reference entities. It is certainly not a "safe investment" and investors unknowingly got involved in derivatives.

Their best chance now for recovery of their money is collective action. It is a waste of time going to the bank individually and have them explain why most of your money is lost. Most investors understand by now that most of the money is gone with the fall of Lehman. The main issue is misrepresentation and misselling. While the authorities in Hong Kong are directly involved in the collective action of investors, Singaporeans have to get this thing done themselves as the authorities are expected to distance themselves. Tan Kin Lian and the Lion Investor are trying to get investors organised to seek redress.

LATEST on DBS High Notes: And things start to move......

Battlelines are getting drawn. Banks have begun to engage lawyers to prepare for lawsuits.
Banks sold $500M worth of these products to Singaporeans. Whatever happens I hope this is the nail in the coffin for structured products. It is a wonder why they are ever allowed in the first place - selling products that can never be understood by investors can only end in disaster. What is the purpose of these products except to generate more profits for banks. They serve no purpose and make investors take big risks they cannot possibly fathom for a disproportionately small return.

"Investors may find it more difficult to get legal recourse as they would have signed iron- clad contracts"

"Are we going to let contracts protect these greedy banks who acted against the interests of their customers?" - Lucky Tan

In the recent case involving misrepresentation by several American financial institutions for marketing auction rate securities to investors, the New York Attorney took action against these institutions and forced them to buy back these securities from investors. There are many ways to punish financial institutions for wrong doing. The HKMA is willing to go as far as suspending the license of banks who have been found guilty. No contract can protect a bank from punishment for selling high risk securities to old ladies who cannot possibly understand what they are buying and who were clearly misled to think that these products are safe.
Move to help Lehman 'victims' gathers pace
MAS asks banks to see what can be done for Minibond, High Notes investors

(SINGAPORE) Efforts are underway to see if anything can be done to help angry investors, who claim that they were misled into buying the now worthless Lehman structured products.

Picking up the pieces: MAS says it is 'in close contact with financial institutions that sold or issued structured products linked to Lehman, and has asked them to expedite their assessments of how investors will be affected'
The Monetary Authority of Singapore (MAS) is believed also to be involved in heavy-duty discussions with the financial institutions (FI) that were involved in selling the Minibonds and High Notes arranged by Lehman Brothers, which went bankrupt last week.
'MAS is in close contact with the FIs that sold or issued structured products which are linked to Lehman Brothers, and has asked them to expedite their assessments of how investors will be affected,' an MAS spokeswoman said last night.
As a regulator, MAS can punish FIs if there is evidence of a breach in regulations though it cannot force them to pay compensation.
Meanwhile, banks worried about their liability have begun consulting lawyers. A number of law firms including Wong Partnership, Drew & Napier and KhattarWong are acting for the nine banks, brokers and Hong Leong Finance, which had sold the structured products.
Over half-a-billion dollars worth of these products were sold over the last two years. But investors may find it more difficult to get legal recourse as they would have signed iron- clad contracts.In Hong Kong, a lawmaker is leading the charge on behalf of investors there who too have lost HK$12.7 billion (S$2.3 billion) in Lehman Minibonds. Albert Ho, chairman of the Democratic Party and a lawyer, told the media that investors will meet Hong Kong's Consumer Council tomorrow to see if they can get legal and financial assistance to try and recoup their losses.
Meanwhile, in Singapore, Tan Kin Lian, former NTUC Income chief executive, is trying to arrange a meeting with aggrieved investors to discuss taking collective action.
'I've not decided what to do for them yet,' he said last night.
There are several aspects to consider. 'It'll be pretty messy because the products were bought from different people. How to pull it off?' said Martin Lee, who had bought $10,000 worth of Minibonds.
'Banks are going to say 'look at the contracts',' said Subhas Anandan, president of the Association of Criminal Lawyers of Singapore. 'If a lot of investors came forward and there is some sort of pattern - despite the contract - it may help,' said Mr Anandan.
Lawyers say investors can band together and collect fees from everyone to take representative action - similar to the Raffles Town Club case, where 5,000 members each paid $300 to sue for compensation.
But that involves a lot of work, said Alan Lee, who spent more than four years getting members together to fight the Raffles Town Club case.
MAS has said investors can bring their complaints to the Financial Industry Disputes Resolution Centre. From 2005 to 2007, out of 130 cases which were adjudicated, 25 monetary awards were in favour of consumers.
Some banks told BT they are working hard to help investors.
DBS spokeswoman Karen Ngui said the bank 'has devoted additional resources to deal with customer concerns and we are treating this matter with the priority and importance it deserves'

DBS "High Note 5" Investors feel cheated.....

"Ms A, said she had informed MAS of her plight but 'they do not seem to have acted at all'. 'My question for them is, should they have even allowed the product to be sold? And what are they going to do about it now?" [LINK]

Regulator ....please regulate.

Isn't time to investigate? Thousands have lost their lifesavings and they feel cheated because the products have been possibly mis-sold to them by so called relationship managers. If that is the case, rules have been broken and it is time for the authorities to act. Are the authorities waiting to see if they can get by doing nothing? Very world class of them.....

Right now in Hong Kong, lawmakers are getting ready to sue the banks for misselling the Lehman minibonds to retirees. There seem to be a big difference how the people in Hong Kong organise to protect themselves in times of trouble. Everyone in Hong Kong is mobilised to see what can be done to help the investors who were sold these products - these include the Consumer council, HKMA, and political leaders.

"What really frustrates me is the subdued response from MAS. As the financial watchdog, I think it has been extremely reactive and it has so far distanced itself from blame"-Mr Peter Lim, a Minibonds investor

In Singapore, the govt doesn't help you - you have to help yourself. My suggestion is to file a police report if you feel that there is mis-selling and mis-representation. I don't see how the authorities can sit around with several hundred of such complaints are made.

If you're holding the Lehman minibonds, a group of investors are meeting to see what can be done. I got this from Tan Kin Lian's blog:

Message from Jan Chan: Mr. Tan, please help us to pass this message through your blog. We are a group of Lehman Minibonds investors who are organizing a meeting tomorrow to discuss collective action and to sign a petition for submission to the authorities to voice our grievances.

Interested parties are encouraged to join us. Date/Time : Wed., 24/9/08 at 7pmVenue : outside Hans Cafe (#01-01) at the Central Public Library, 100 Victoria Street.

Jan Chan How to get to Central Public Library :Nearest MRT: Bugis MRT Station or City Hall MRT StationBus stop (North Bridge Road ): SBS 145, 197, 32, 51, 63, 7, 80 175 and SMRT 851, 61Bus stop (Victoria St -Allson Hotel) : SBS 2, 7, 12, 32, 33, 51, 63, 80, 175 and SMRT 61Bus stop (Victoria St -Bras Basah Complex) : SBS 2, 12, 33, 130, 133, SMRT 960, NR7Bus stop (Victoria St -St. Joseph's Church): SBS 130, 133, 145, 197, C3, SMRT 851, 960, NR7Bus stop (Middle Rd - Nam Peng Building) : SBS 56, SMRT 980

Date/Time : Wed., 24/9/08 at 7pmVenue : outside Hans Cafe (#01-01) at the Central Public Library.

You can trying seeing your MP. See if he is willing to work for you.

Funny isn't it? Why are all these volunteers like Tan Kin Lian the ones trying to organise something? Shouldn't a minister or even an MP who needs to win your support for the next election be the one to organise the citizens to serve their best interests?...


DBS 'High Notes 5' Investors:They pumped in life savings and now feel cheated
By Gracia Chiang

Madam Evon Chin literally choked when she heard last Tuesday that her $75,000 investment in a DBS Bank product was in jeopardy.
The payroll executive and her husband had invested the sum in High Notes 5, which was exposed to Lehman Brothers, the United States investment bank that went bust.
'I was eating my lunch when my husband called. I started choking on my food. My face was so red, my colleague had to thump my back,' said Madam Chin, 40.
Her husband had told her their investment - from savings over the last 10 years - might now be wiped out. Worried, she took two days of urgent leave, determined to seek an explanation from the bank.
Like many other investors, she failed to understand how Lehman's collapse could wipe out their entire investment.
She had thought their risk exposure was diversified since the product had a basket of eight reference entities. 'We felt swindled. We were told this was a low-risk investment,' she said.
DBS said last Wednesday that Lehman's collapse triggered a 'credit event' that had a significant impact on High Notes 5.
The product is structured on a first-to-default basis which means that if any of the eight reference entities goes bankrupt, a credit event will be triggered and clients might not get their entire principal amount.
Said Madam Chin: 'I've never lost so much, not even when I was investing in shares. This will be a serious blow to our nest egg. Will I really have enough to see my children through their education?'
They had intended the money to be used for the education of their two sons, aged six and one. 'Now I can forget about my wish to have a third kid. This is really the saddest thing.'
The couple expect to have to tighten their belts. 'I'm going to switch my children's milk powder to a cheaper one. There will be no more eating out.'
She might also have to give up seeing a traditional Chinese doctor for her eczema. She used to pay for the sessions with the monthly interest from the investment.
Other investors like retiree Tham Wai Wah, 60, also felt 'cheated'. She had trusted the relationship manager who had explained to her last year that the High Notes 5 product was 'very safe'.
She said that with only an O-level education, she could not fully understand the prospectus. 'I told them I'm a conservative investor and that this was my CPF money.'
She put in $125,000, part of her Central Provident Fund (CPF) savings she withdrew upon retirement after working for 30 years as a clerk. Her husband is also retired.
She said: 'This is our fall-back, our cushion for old age. How can I accept that now I might have zero returns? What if I have any major illness in the next 20 years?'
She is thankful that she still has $130,000 in savings. She is prepared to sell her five-room flat in Punggol and downgrade to a smaller one if money runs out. 'I thought we could go on holidays with this money,' she said.
Senior merchandiser Carene Tan, 44, is worried that she might not have enough money for her children's university education.
She had invested $25,000, which she intended to use to send her 15-year-old son abroad for further studies. Her other son is 12.
'I was so upset. It's not going to affect my livelihood now because I still have a job, but it's like having to work half a year for free.'
Madam Chin is now more cautious: 'I'll never touch any investment instrument anymore.'

Tuesday, September 23, 2008

In HK, Govt seeks to help Lehman Minibond holders....

"What really frustrates me is the subdued response from MAS. As the financial watchdog, I think it has been extremely reactive and it has so far distanced itself from blame"
Mr Peter Lim, a Minibonds investor

"MAS has also asked FIs (Financial Institutions) to keep us informed of customers' queries and complaints they have received and the responses provided " - MAS Lastest statement.

"Why can't MAS receive the complaints directly from customers about the FIs then act on it....just like what the HKMA is doing? Does MAS expect to be fed with accurate information from the banks?!" - Lucky Tan

In Singapore, the MAS has issued a statement asking Singaporeans to go look for help from banks who sold them these products. The HKMA have been in close contact with the representatives of Lehman Brothers, the bond distributors and trustees to find ways to protect HK investors' interest. MAS has issued a statement to Singaporeans to handle this themselves. I guess MAS has better and more important things to do than help Singaporeans who have lost their lifesavings.

The HKMA has also organised a meeting for investors to hear them out. In Singapore, there is really no need for this. Our govt is world class and puts the interest of Singaporeans above everything else. MAS doesn't need to listen to the grievances of ordinary Singaporeans to do its job well. ...and it has done its job well by sending Singaporeans back to banks who sold them the products in the first place and it trust that the banks will handle each case fairly.

The way MAS handles this will say a lot about where the interest of the PAP govt lies. PAP is People's Action Party, they act for the ordinary people of Singapore and for this they are paid millions.
September 21, 2008
Gov't seeks to help Lehman minibond investors : {LINK}
The Securities & Futures Commission and the Hong Kong Monetary Authority have been in close contact with the representatives of Lehman Brothers - the Lehman Minibonds' distributors and trustees - to find ways to protect investors' interest.

The two bodies have also met with the minibond holders to understand their concern, and both will act on individual malpractice complaints.

The collateral assets backing the minibonds are now in the custody of the trustees, who are actively exploring options in relation to the assets' treatment.

The trustees also agreed to provide the latest information to investors as soon as possible.

Distributors for the minibonds have been looking at ways to improve the communications channel with investors.

The HKMA has arranged a meeting tomorrow to facilitate communication among investors, representatives of banks that sold Lehman-related products and the trustees who are holding the collateral for the investments.

The authority understands the trustee for several of the affected products will issue a notice tomorrow clarifying its role and the actions it is taking.

Hotlines to be set up
It has also required banks to establish public hotlines to answer questions on Lehman Brothers-related investment products they sold. Details will be announced and updated on the authority's website.

The authority will established a hotline shortly to receive complaints related to the banks' sale of Lehman Brothers' products.

Lehman Minibond Saga : HKMA threatens to suspend banks' license...MAS..

"That would include a public reprimand, a fine, or both, or suspension of license,"

"The government is very sympathetic to the plight of retail investors. We have been in close contact with the related trustees and distributors since last week," Tsang HKMA.

'What really frustrates me is the subdued response from MAS. As the financial watchdog, I think it has been extremely reactive and it has so far distanced itself from blame'

-Mr Peter Lim, a Minibonds investor

MAS? MAS has decided to do nothing and asked investors to sort it out themselves with the bank : [Link]. See how calm MAS is in its response to the situation compared to the HKMA. Afterall, there is hardly any "sound" made by Singapore investors compared with Hong Kongers who organised a weekend protest. Now you know why protests are banned in Singapore - protests pushes authorities to take immediate and strong action....rather than reacting calmly and gradually to a situation. MAS asking individual investors to go to the bank to met a customer relationship officer to explain why is his life savings is now lost and that the bank has done no wrong etc after that he is suppose to accept the bank's explanation and go home satisfied?

Tan Kin Lian is organising a forum to gather everyone to find a way to move forward on this issue :[Link]. Please attend if you or your parents/relative have lost money in the minibonds or the more exotic DBS High Notes - spread the word. I'll probably be there.

I've been looking at the DBS High Notes 5 for a few days. It is really baffling. It was marketed as a safe product ....but the principal is completely wiped out if one of 8 reference entities go bust over within a period of 5 yrs. It is the risk of a bond multiplied by 8 times and liquidity is lost for 5 years. If this is safe, then crossing the road with your eyes closed is also safe.

Watch MAS' response to the unfolding saga of losses from these structured products. It will tell a lot about how this govt operate, where its interest lies, and whether it is a govt for the people. You will begin to find out how world class it is when it comes to regulating the banks and protecting the interests of the people.

Monday, September 22, 2008

Hundreds in HK protests losses in Lehman Minibonds!

"The government should step in. If the government don't pay, the should force the bank to pay," - Marty Chou HK protestor

"In Singapore, we don't need to demand for govt action.

I bet the govt is already squeezing the banks to help Singaporeans" - Lucky Tan

When will the people of HK ever learn? If something goes wrong, you can always leave it to the govt to do the right thing. The same thing that happened in HK also happened in Singapore, but there is no need to organise a protest here in Singapore because MAS is already doing its work demanding answers from the banks who sold these products to retirees. Singaporeans know that they can sit back and everything that can be done for them will be done for them.
These people in HK should learn to trust their regulators and govt. They should be at home watching TV instead of marching under the hot sun demanding the govt do something for them. They should respond to problems the same way Singaporeans respond to problems.
I'm sure MAS is acting right at this very moment - calling in DBS executives and various banks and demanding answers from them for this structured deposit debacle. Although our govt has stakes in banks, they work primarily for the good of the people. We will have our answers soon from our 1st world govt and 1st world civil service. The PAP govt, the People's Action Party, cannot be doing less that what the HK govt is doing for its people.

Hundreds of Lehman investors protest in Hong Kong
The Associated Press
Published: September 21, 2008

HONG KONG: Hundreds of angry Lehman Brothers investors rallied in Hong Kong on Sunday to demand the government help secure their money after the U.S. investment bank collapsed this past week.
The investors, many of them nearing or at retirement age, waved investment papers and chanted slogans outside the territory's government headquarters as they accused regulators of not doing enough to safeguard their interests.
"This is all my money," said Peter Wang, 62, a former furniture store owner who said his entire retirement savings, about 2 million Hong Kong dollars (US$256,000), was tied up in Lehman-backed bonds.
Albert Ho, head of Hong Kong's Democratic Party, which helped organize the rally, criticized the government for not taking more steps to educate investors in Lehman products, including complex bonds tied to the performance of the territory's equities market.
He and other organizers said about 800 people joined the demonstration; police did not offer an estimate.

Billions of dollars in souring debt forced Lehman Brothers Holdings Inc., once the fourth-largest investment bank in the U.S., to file for bankruptcy last Monday amid the world's worst financial crisis in decades.
Responding to growing public ire, Hong Kong regulators contacted Lehman management and met with investors in the bank's bonds over the weekend, the government said in a statement.
Regulators vowed to investigate complaints that local banks which sold Lehman Brothers investment products failed to properly disclose connections to the U.S. company. But they warned investors might recover "substantially less" than the original amount.
A message left with Lehman Brothers in Hong Kong was not immediately returned.
Brian Fong, 45, who works at a private security firm, said he invested about HK$1.3 million (US$167,000) saved over the last 20 years in a Lehman bond purchased through a local bank.
When news of Lehman's bankruptcy broke, he frantically called bank officials for answers. But he said the bank still hasn't said for certain what will become of his investment.
"I feel terrible. I'm afraid I will lose everything," said Fong, adding his wife will have to go back to work instead of caring for their 10-year-old son if they don't recoup their money.
"We never expected this," he said. "I believed it was safe."


Sunday, September 21, 2008

Anecdotal Evidence of a very sharp slowdown.....

19 May 2007 : Anecdotal Evidence of Inflation

The anecdotal evidence always show up before govt data. Anecdotal evidence for inflation showed up many months before it showed up in our CPI figure this year.

Yesterday I went for a movie and a walk around Tampines. Mama Mia , the movie based on the highly successful musical of the same name is outstanding. Critics call it the ultimate "feel good" movie. I agree that the movie is excellent especially for people in my age group who grew up listening to ABBA. The problem is there were less than 30 people in the cinema for that late afternoon Saturday show. Not that there were people watching other shows, there was no queue when I bought my tickets. The Billy Bomber restaurant next door was almost empty at dinner time. The Bee Chuan Heng shop where I usually buy my weekly supply of pork floss and bak kwa was empty. I was the only customer for a full 15 minutes at about 7pm. I've never seen traffic so low on a Saturday. The psychological switch for many people must have been flipped sometime in the past 2 weeks.

"You don't go slowly into recession. You leap into it!" - Greenspan in a CNBC interview

The usual Saturday afternoon crowd is missing. I can't find any reason for it besides people cutting back. People cut back when they don't feel job security - perhaps they see the orders at their companies falling. We will get some confirmation when listed companies report their quarterly results in the coming weeks.

It is almost unbelievable how the quickly "Golden Years" have turned to the "lean years". Investment bankers who were so hot last year with one SMU graduate's starting pay hitting $10K a month reminded me of the height of the dot.com bubble when Java programmers were snapped for $10K a month. I always wonder why they need so many "financial engineers" to create products that people shouldn't buy. It is estimated that Singapore finance companies launched several hundred structured products in the past 2 years. Most of them, you should just take the brochure and dump them into the waste paper basket. This website has a good explanation of why you shouldn't buy these products : Link. They have only one purpose - that is to help banks make as much profits as possible. The recession that started on Wall Street has spread to the real economy. Friends in London tell me that it is more like "depression" right now over there in the financial sector. The financial sector resembles the dot.com (aka dot.con) companies of 2000. They produced products that were not needed purely out of greed for money. The whole "wealth management" industry will have far less wealth to manage. I believe it is a redundant industry.

Going forward the best thing to do is be prepared for it:

  1. Work out your debts obligations - example housing loan. How to meet these payments in the worse case scenario. If your job is not secure, you might want to have this loan restructured to lower the monthly payment and conserve cash. Even if these are fully paid with CPF money, you might want to build up a buffer in your CPF OA especially of your savings level is low. For example if you're paying $1000 a month from CPF, you might want to get it cut to $500. Every month that you work, you build up one month of reserve in your CPF should things go wrong. Should you lose your job, your housing loan can be serviced by the money in your OA.
  2. Many people try to reposition themselves to more secure jobs like in the govt or defence sector before the recession hits.
  3. Avoid new commitments like a car for now.
  4. Cash is king during the firesale. Especially for those looking for property recession offers the best bargain. However, this recession may be quite nasty so wait out, hold out and get the best prices.
  5. Try not to rely on others. Friends and relatives. They may end up needing your help rather than giving you help.
  6. If you're running a business that is making losses, consider cutting your losses. Over the years, a number of my relatives got into deep trouble keeping bad businesses that got worse during a recession by borrowing to keep the business going. You really have to firewall your home to make sure that "no matter what", your home is not lost to the banks. It is especially painful if it is seized and sold during the recession. The comeback is hard.
  7. Should things go really bad, be prepared to ask for help. Don't end up with electricity and water cut off. Friends who had that happen to them tell me it is an extremely depressing and demoralising situation - its the day they really think whether life is worth living. I always wondered why they can't send a social worker to the person who can't pay and talk to them rather than just cutting off their water.....it might be the last straw that break his back.

Always plan for the worst case and hope for the best. My gut feel tells me this one will be more nasty that all the previous recessions I've seen in my lifetime. Be ready for it and you will survive.

Saturday, September 20, 2008

High Notes : MAS Must Act!!!

More UPDATES : $110M of High Notes 5 was sold. If the average amount invested is $50k-$80K, more than a thousand people are affected. Someone is trying to organise a meeting :
http://comment.straitstimes.com/showthread.php?s=8cabb3fc60153845a88443ed33137635&t=13637&page=10 his email is v.recoil@gmail.com

UPDATE 20 Sept 2008 : Tan Kin Lian has urged MAS to hold financial institutions responsible for "mis-selling" activities for such products : Link

Here is a discussion in Tan Kin Lian's blog about DBS High Notes : Link.

'If customers feel that our relationship managers or staff have misrepresented the product, they can come to our branches, call or e-mail us to raise those issues. I assure customers that we already have an independent system in place to investigate such complaints,' - Mr Rajan Raju, head of DBS' consumer banking group
"I think customers have a better chance if they held a protest a Hong Lim Park and bring attention to their plight and get the authorities to act....." - Lucky Tan
My mom is not very well educated but she is a cautious person. All her life she keeps her money in fixed deposit accounts. Sometimes she would do some homework and move her money to the bank that offers the highest interest rate. My mom leads a simple thrifty life so she does not need to take any risk to grow her money. One day while queuing up to deposit her money in a bank, she was "redirected" to a bank officer who tried to market a structured product to her. It was sold to her as something very safe and has higher returns than fixed deposit. My mom remembering my warnings about these products decided to turn it down but she brought the brochure home for me to take a look. I took one whole day to go through it and couldn't figure out the product - it was financially engineered to the point that only the people who crafted it have the data to understand it. It goes something like this : you get 6(?)% of your money after 6 months as return, but your funds are locked up for 5 years and subsequent returns depends on the worst performing of a basket of 20 global blue chip stocks.....principle guaranteed but if you take the money out early, you're at the mercy of the bank's calculations...there are 2 pages of fine print written the kind of legal language that only lawyers can understand. ...and they are trying to sell this to my mom who has only primary school education.

MAS should ban the marketing of these products at the bank branches for the following reasons:

1. The products are impossible to understand in terms of financial outcomes. Only the banks knows what is going on putting the customers at a great disadvantage. Since banks are required to explain the risks to the customers, something that is impossible to do, these products don't meet the basic requirement under the Banking Act that requires "that the banks must disclose and explain clearly on the recommended products".

2. Many of the products have disproportionately high risks relative to the return. For only 5% return, purchasers of the DBS High Note were subjected to the risk of losing all or most of their principal if a "credit event" occurs in one of 8 entities - one of which was Lehman Bros. Who pockets the large risk free profits and passed all the risk to the customers? This product should be banned for the same reason drugs are banned & loan sharking is banned.....it is harmful to the customers.

How many old ladies have to lose their life savings before the PAP govt does something?

The main reason for banks to market these products is profits. If anything is learnt from the subprime crisis is when bad financial products with high profit margins is marketed to people who cannot possibly understand it - the result is disastrous.

The PAP takes care of the interests of the citizens especially the old folks who have contributed so much to this country. Although the PAP govt has stakes in numerous banks including DBS, it have never allowed the greedy pursuit of profits to influence regulation that is needed to protect ordinary Singaporeans. We trust that we have a govt that proactively takes care of the interests of ordinary Singaporeans. We can expect this trust to be demonstrated in the coming days as the govt stand on the side of the people who have lost so much in products marketed by banks. Going through the responses in the internet, at a minimum the citizens are asking for MAS and the govt to investigate whether the banks have complied with existing regulation and whether there is any possibility of misrepresentation to customers. Of course, for a govt with a "socialistic heart", it will twist the arm of the bank to compensate part of the losses out of goodwill. DBS afterall took over POSB once known as the "people's bank".....and the PAP is the People's Action Party which acts on behalf of the ordinary people. I'm sure right now the PAP govt is outraged that ordinary people are hurt and demanding answers from DBS. We will hear from the PAP govt soon on this.

Wednesday, September 17, 2008

Financial SHOCK....and more SHOCKs...

I've been watching this crisis unfolding before us for months. But yesterday it became very real for some Singaporeans when AIG headed to the edge of bankruptcy. Hundreds of Singaporeans panicked and had their insurance policies with AIA cancelled. There was a long queue at AIA Tower but I think the fears of these people may not be justified - the insurance industry in Singapore is highly regulated and the contributions we make to AIA cannot be used to cover the losses of AIG.

In March 08, I wrote that the crisis was only at its mid-point and that worst is ahead. The template for disaster in outline in 12 steps by Professor Roubini who has been ahead of the curve in this crisis. Looking through the 12 steps, we are roughly at step 8. In the next few steps, the crisis will start spreading to everyone as we enter a severe recession. There is reason to believe this will be a deflationary recession rather than stagflation. Before the end of this year, economies will start slowing and inflation will be history. Central banks will start cutting rates in anticipation of the recession.

There is an easy way to recognise a recession 1) Slowdown in demand 2) Fall in production 3) Job losses. A recession is a bit of a vicious cycle because step 3 will lead back to step 1. I now believe that a recession is nearly impossible to avoid. The reason why the US economy has kept growing is due to the stimulus package they implemented earlier this year. That only postponed recession to the end of this year.

This recession is going to last for sometime as the financial architecture of the global economy has sustained some amount of damage. Banks cannot lend unless they are well capitalised and that will take months if not years to fix. Right now credit is shrinking as deleveraging takes place - you can tell by the sharp falls in everything from stock prices to commodities. With the economy slowing down, the losses at the banks will cascade as people who lost their jobs default on various loans with the bank.

I know all of you are worried but we have great leaders to guide us through this crisis. Starting with MM Lee who said that we are in a "Golden Period" in 2007. PM Lee really believed we were heading for a "Golden Period" and should no problems paying more GST (to help the poor). Our elites in Temasek and GIC bought huge chunks of Merrill, Citibank and UBS. You can tell they have foresight because they can see beyond the problems that most of us fear. To train the people to be more resilient when the hard times come, they hiked everything from electricity to HDB flat prices in the past few months. Thanks to this training, when the hard times come, we will be ready to eat less and use less electricity. With great leadership, we should be able to navigate through troubled times. Don't expect our leaders to take any soft options such as subsidies and welfare for the people. No matter how bad things get, they will be there to explain all the sacrifices you have to make to get the economy back on its feet - CPF cuts, retraining, working longer hours, less benefits etc. Once the US economy recovers and things get better, they will explain how their great leadership has taken the country out of difficult times once again. Your sacrifices like CPF cuts and loss of benefits will be made permanent so that you can make a permanent contribution to Singapore Inc's bottomline.

Sunday, September 07, 2008

Foreign Workers try to land in Serangoon Gardens Part 2

"They will rob our elderly folks. They will molest our women. They will sleep with our maids. They will litter. They will get drunk in our parks and make us feel unsafe in our homes"
- Reporter Tan Hui Yee
summarises the concerns in today's
provocative Sunday Times article "Your backyard, my front door".
I agree with the Serangoon Gardens residents. People have the right to choose who their neighbors are and the problems of safety cited by the people of Serangoon Gardens are a real and serious …so is the problem of congestion. Yes, there was little congestion when the buildings were schools filled with students who were taken home by school buses and cars but once the foreign workers move in, there will be congestion, crime will go up and parks will be messed up.

We should now organise petitions to evict foreign workerers in Boon Lay where they are concentrated -surely the residents there face the same dangers and inconvenience as those in Serangoon Garden. There is a dorm in Tampines - lets have it removed as it endangers Singaporeans in that area.
The Serangoon Garden residents have opened my eyes to a new set of values. I grew up poor in a kampung and was surrounded by people who were sometimes poorer than me. I was brought up to tolerate anybody who moved next to me and there were many “types”. One guy set up a shoe factory and housed his Malaysian workers next to my home. Althought they caused me little trouble, I realise now that I don’t have to even tolerate them and risk the unknown. I should have organised a petition to have them located far away from me. …why tolerate people who are poor, potentally dangerous in my eyes and different from myself.
I have grown up with the wrong values that one should be as tolerant as possible for a start to people who are different. The people of Serangoon Gardens are right, one should choose one’s neighbor to protect our property values. Some people are so low there is no need for the presumption of innocence and prejudice is not wrong…when they come, they will steal, rob, endanger the people around them.

"During the colonial days, we used to have parties
and play together with European children. It was
like one happy family and I don't mind them here"
- Jane Lim, Serangoon Garden Resident.
The Sunday Times also reported that there were 5000 expats who moved in the same area in the past few years and they feel welcome in the estate. Nobody there complains about traffic problems cause by expats.
If the MND stops the building of workers dorm in Serangoon Gardens, it has to do the same for those living in HDB flats in Boon Lay, Jurong West and Woodlands and remove the foreign workers there because if the safety concerns are real, it has to be real also for people living in HDB. The desire for people to separate themselves from others and prejudice against people who are different were once manifested in another country - South Africa in the form of apartheid. The whites in S. Africa justified this by saying, they felt unsafe living near black people who will commit crimes against them. I never ever expect to see the same kind of sentiments expressed in Singapore, a nation so proud of its racial harmony.

Poor Singaporeans don't want help!

Yes, that is the spirit. Rely on yourself and not the govt. 

Saturday, September 06, 2008

Foreign Workers try to land in Serangoon Gardens.

Foreign workers, please come here to contribute to our economy, build our skyscrapers & condominiums but don't ever come and live near me especially if I'm middleclass Singaporean living in a private property. ......have you guys been to Boon Lay Interchange recently?
I was there 2 weeks ago and the place was packed with foreign workers. I think there were more foreign workers than there were Singaporeans there that day. When I got to my friend's HDB flat nearby and asked him about the situation, he said, "What to do, these foreign workers are also humans, they need to go out, meet their friends and shop....". He said the workers sometimes gather to drink leaving their empty beer bottles at the void deck but other than that he didn't have really have any major complaints about them.

There are more than 1 million foreign workers in Singapore. They have to live somewhere, they need to shop for stuff and they have to use our public transport. This is not a debate about whether they should be here or not but given that they are already here, what type of host country do we want to be?
Emotions ran high when a unused school in Serangoon Gardens was chosen by a contractor to house his foreign workers. Serangoon Gardens is no ordinary HDB neighborhood where 75% of Singaporeans stay. It is a private estate where richer Singaporeans live and residents there are concerned about safety, congestion and property depreciation:

"Assuming there were 1,400 households, each worth $1 million, in the estate, he said 'even a 1 per cent drop in asset value (because of the workers' presence) would mean a $14-million loss" - Serangoon Gardens Resident
"Why is no one looking for suitable places to house these workers away from all the inconveniences and insecurity that people feel?" - Serangoon Gardens Resident
After reading about these residents' concerns, I became really worried about my own safety. I walk past groups of foreign workers everyday on my way home . They stand right next to me on MRT everyday. My mom and sisters have to walk past places where there are foreign workers although they have been doing it for more than 2 decades without anything happening, we cannot assume nothing will. What about the children and old folks in Boon Lay? I fear for their safety.
Lets all sign a petition like the Serangoon Garden folks to keep foreign workers out of our neighbourhood. If Serangoon Garden residents won't have them, why should the rest of us? Surely, if the MND takes into account of the concerns of the folks in Serangoon Garden and keep the foreign workers out, the same concern about safety, congestion and loss of property value to has to apply to the rest of us who live close to foreign workers dorms or worse still have neighboring flats rented to foreign workers.

Whether we agree or disagree with the govt's foreign worker policy, once the foreign worker comes to Singapore, most of us have accepted that they are humans like us and have the right to live, shop and meet on their off days. I'm so glad that Serangoon Gardens residents have emerged to warn the rest of Singapore otherwise - that the foreign worker living next to us is not what he appears to be, he can turn into a criminal anytime targeting old folks and children. He is the one to blame for road congestion and not the LTA. He should be stopped from overrunning our pristine gardens and parks confined to his quarters on his off day. The rest of the country who have been complacent about the foreign workers that live close to them should now wake up for they have been living in danger.....we want only the labour that these workers provide but they cannot live like us, among us and near us. Yes, if MND grant the wish of residents of Serangoon Gardens to live in an estate free of foreign workers, it should also do the same for the people of Boon Lay and other HDB estates.

I leave you with some soundbites from 938Live which had a discussion on this issue.....

Add Lucky Tan's Podcast to your page

Friday, September 05, 2008

Your power supply is now privatised....

I guess it has been tough on Singapore Power - all those poor Singaporeans who can't pay their utilities bills raking up arrears and squeezing its profits. It is now time to put and end to this. Temasek is selling splitting up our power supply and selling it to 3 different buyers. The official logic is that with 3 players there will be competition and that will "help" Singaporeans to get a good price for their electricity. This is little strange because each of these players control only one third of our electricity supply - what is the incentive to lower tariffs to grab more customers when they have limited capacity? These investors who have paid something like $4B each to buy our generators will certainly want to get the highest return on their investments. Remember these generators were sold to the highest bidders not to people who promised to give Singaporeans the lowest possible tariffs.
For those of you who don't know, there is a "Smart Meter"pilot conducted right now for 1000 households. When the smart meter is installed, you have to purchase credits before you use your electricity at 7-Eleven or online. The meter will allow you to monitor your usage hourly, daily and monthly so you don't "over-use" your electricity. I guess with those investors paying $4B for our power generators eager to recover their investments, I better be watching my electricity usage closely. Thanks to these smart meters, I'll be able to check on my usage hourly.
I'll alway remember what one of our million$ ministers said about why things cannot be inexpensive in Singapore ..... so that Singaporeans don't use what they don't need. That is why the Singapore govt couldn't reduce the petrol tax when petrol prices reached a historic high recently and why ERP has to go up even as the economy slumps. I guess it is the same for electricity now, you really shouldn't use more than what you can afford. For the poor, it will mean candles in the night but can they really afford those candles?

Japan-led consortium to buy Temasek power firm: sources
3 hours ago
SINGAPORE (AFP) — A Japanese-led consortium has won the bid for a Singapore power company being sold by state-linked investment firm Temasek Holdings, sources told Dow Jones Newswires Friday.
Japan's Marubeni Corp heads the consortium and will pay Temasek about 2.5 billion US dollars for Senoko Power, they added.
"Marubeni is the winner," one said. Neither Temasek nor Marubeni spokesmen could be immediately reached for comment by AFP.
Marubeni operates in Japan and globally across a wide range of sectors from food to power.
Senoko is the second of three local power generation firms Temasek is unloading as part of efforts to liberalise the domestic energy market.
Temasek said in March that it had signed a share purchase agreement with SinoSing Power Pte Ltd, a wholly owned subsidiary of China Huaneng Group, to sell Tuas Power Ltd for 4.235 billion Singapore dollars (2.96 billion US).
Temasek's third power generator is Power Seraya.
Last month Temasek reported a record profit of 18.2 billion Singapore dollars for the year to March, and said its portfolio rose in value to 185 billion Singapore dollars.
Temasek has controlling stakes in Singapore Airlines, Neptune Orient Lines and Singapore Telecommunications as well as other major regional firms.
It is one of two Singapore government investment vehicles, along with the Government of Singapore Investment Corporation.
Temasek has invested billions of dollars in troubled US investment bank Merrill Lynch since late last year.

Thursday, September 04, 2008

Obama's wrong values....

I'm very troubled by this speech by Obama - supporting the existence of unions, workers' benefits, minimum wages and pensions. I think MM Lee is right about Obama being inexperienced and it looks like he has a lot to learn from Singapore.

Goodness how are American workers going to compete if Obama ever becomes president. With the emergence of cheap labor from China, he should be encouraging American workers to give up their benefits, accept lower pay and longer working hours. In Singapore we nationalise the unions and privatise all the state own services so they are free to make profits. PM Lee said that businesses will be more willing to hire if we make it easier for them to retrench workers. Over the years, the govt eliminated pension schemes for teachers and public servants but preserved it for the highest elites like ministers and superscale civil servants who make in one year what ordinary Singaporeans make in 2 lifetimes. After our ministers' pay was increased to end their painful sacrifice, workers who cannot cope with the rising inflation were told that wage increases will not be good for them by union chief Lim Swee Say. Now that is the model of leadership that Obama should be learning from. Instead of pandering to the demand of whining workers who keep telling him of their hardship, he should stand firm on capitalistic principles. The markets will take care of the workers and hand them a fair deal - no need to dictate minimun benefits, minimum wages.

Obama has a lot to learn from Singapore on how to compete and maximise GDP growth. He should open the floodgates to Mexican workers to enter the country and then explain to American citizens that it would be too simplistic to say that this will depress the wages of low income workers. He can also explain that foreign workers help to create jobs for Americans. He should remove all subsidies for the poor, sick and old and explain to them that subsidies will make them unhappy. Obama has a lot to learn from our esteemed leaders to make America a better place for Americans.