Saturday, March 29, 2008

NTUC : Stores for the poor!

You might think that NTUC Fairprice is a store setup for all Singaporeans but apparently some Singaporeans are now so poor they cannot afford to go to NTUC. NTUC is now setting up stores specially for the poor (see report below).

I've known that for some time as the A-B-C thrift shop near my place is thriving because people are feeling the squeeze due to inflation. For $1, you can get a pack of 48 batteries from China:I found out that they leak and might damage the appliance - but I didn't throw them away, I added a layer of masking tape contain the leak. I'm not poor, I'm a cheapskate. I'm sure the poor people who buy cheap stuff like these batteries know what to do. Other cheap things you can get from thrift shops are parallel imports of branded items that are made in Thailand - these include shampoos, toothpaste etc. I heard about this but don't know if it is true, the Thais have a ban on the import of such products and these companies have to set up shop in Thailand to manufacture their products if they want to sell them in Thailand. I'm alright with the toothpaste from the thrift shop, as long as it is something I don't have to swallow, I'm okay with it.
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Many Singaporeans are rich enough not to have to buy from thrift shops. You're not poor - you don't have to risk buying cheap stuff that don't last. It is difficult to understand what it is like to be poor ....here's a real story for you from a page in my life:

More than 30 years ago, I stayed in a kampung (a village). It was quite common to do so and I didn't really consider myself poor - my dad spoke some English and had a steady job and we could afford all the necessities and some creature comforts like a TV. The kids staying opposite us weren't so lucky - the dad had a low paying job and found it difficult to make ends meet. The parents quarreled often over money (or rather the lack of money) - it was a struggle to clothe and feed the children. One of problems with the family was they had too many children - 5 kids. ...at that time our govt had disincentives for parents having more children and that made their situation worse. One day when I got home from school, I found one of the neighbors children crying outside the house. I asked him what happened and he told me he was punished physically for dragging his feet while walking. Dragging his feet? You see the family was so poor they punished the kids for dragging their feet because it caused the shoes to wear out faster. That was the kind of poverty we had 30+ years ago when we were a developing country. People actually struggle to pay for necessities. Over the next 2 decades, poverty actually decreased as wages rose relative to the cost of necessities. However, 10 years ago, it started rising sharply again.....and last week's announcement by NTUC to set up shores for the poor means that the number of low income families has risen to the point that NTUC now sees a business opportunity to cater this growing segment of our society. NTUC Fairprice is living up to its reputation that it serves that every Singaporean, just that the poor have to be served at a different outlet.

In a affluent nation with a sovereign fund that can inject and lose several billions injecting money into trouble western banks, there is really no need for such "shops for the poor" and thrift shops because we have all the resources to alleviate the problem of poverty by paying fair wages - a person working full time should be able to raise his family and at least afford the necessities.... but wages aren't rising as fast as bus fares, electricity prices, rice etc. A good govt isn't one constrained by practices of governments elsewhere that their own remuneration is somehow related to the well being of their citizens. Ours is a good govt if not the best in the world, they are able to break out constraints and address the injustice of their own painful sacrifice to be in govt by raising their own salaries in a hurry while they retrain the low income earners to accept the new harsh reality of their situation. There is no hurry to hold back the increase in electricity tariffs, no hurry to give out food stamps before someone starved to death, no hurry for welfare before another citizen gets onto the MRT tracks and no hurry for health care for those who can't afford it. The PAP govt is known to work with much haste when it needs to protect its reputation - Mas Selamat shows that no effort and resource will be spared when competence of the govt is called into question. Poverty is however a silent problem that shows up quietly in various numbers such as the GINI index and income distribution...and the poor people who know our illegal assembly laws well and they have no voice or power to change anything. If the problem is managed away quietly, it will exist but remain hidden behind the grand achievements of our great govt. In the coming months there is plenty to celebrate - the F1 will be here in Singapore, the casinos (oops IRs) will open and youth Olympics will held in Singapore. This country is about staying together and moving ahead. ...in moving ahead, we leave nobody behind, so make sure you're not a nobody who can't afford the price increases our govt has planned for you...

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[Link]

NTUC may set up stores with cheaper items for the low-income
By Wong Mun Wai, Channel NewsAsia Posted: 24 March 2008 2051 hrs

SINGAPORE: NTUC FairPrice may set up new stores or have special corners at its current stores to stock cheaper items for the low-income group.

At the launch of the NTUC FairPrice Foundation on Monday, the co-operative said this could be one response to rising food prices, and it is still studying how feasible this will be.

NTUC FairPrice Foundation chairman Ng Ser Miang said: "Because of (the) rising food prices, we are looking at whether there is some effective way where we can set up another format that would serve the low-income group. Or we will take a different strategy of (assigning)... one section in our current format that will serve (them)."

Details have yet to be confirmed, but new stores or facilities could be set up as soon as next year.

"Depending on how fast we can sort of (make) a decision on the right mix of products and the right type of stores we should be going into," Mr Ng said.

The supermarket chain is pledging S$50 million over the next ten years to its foundation.

To mark the launch of NTUC FairPrice Foundation, it is giving S$1 million to four beneficiaries - the Community Chest, the Eldercare Trust, the Food from the Heart and the NTUC Childcare Bright Horizons Trust Fund.

The NTUC FairPrice Foundation said in future, it will issue grants to organisations only if they have three strategic thrusts - to help the poor and needy, to help in nation building and community bonding, and to advance the welfare of workers. - CNA/ac

Thursday, March 27, 2008

Badawi : I underestimated the power of blogs...

"...certainly lost the Internet war.....it was a serious misjudgment to rely solely on government-controlled newspapers and television to get out its campaign message."
- Malaysian PM Badawi at an investor conference.

http://www.voanews.com/english/2008-03-25-voa17.cfm

I guess Badawi finally realised that in the Internet Age propaganda is useless because people have alternative sources of information such as blogs and forums. The Malaysian govt is now trying to reach out to bloggers : link. I'm afraid it is too little too late, the country is now changed forever and the Internet played a significant role shaping the minds of Malaysians to bring about this transformation.
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Our esteemed govt has in the past expressed concern that Singaporeans are being exposed to inaccurate and unfiltered information on the Internet. Unlike the Straits Times which is highly objective, many blogs are out to discredit our outstanding govt. Some like Mr. Brown's notorious blog even resort to satire to poke fun at our govt - I can't imagine what our our govt has done to deserve such ridicule. I consider satirical blogs like Mr. Brown's highly irresponsible as it trivialises the enormous effort by our govt to care for us. Amplifying the few honest mistakes (Mas Selamat, GST, Shin Corp, ....etc etc) will undermine the confidence the people have in our govt. While the Straits Times and the Chinese equivalent is the most widely read material on the island, an increasing number of people are turning to the Internet for information. I think the govt is honestly worried that these people are not getting the best information. Who are the writers of these unedited blogs? ....Our newspapers are written by people the best qualifications - such as Chua Mui Hoong who previously worked for the ISD and the editor of the Straits Times Han Fook Kwang a former govt scholar wrote the book "LKY, the man and his ideas" are prime examples of objective journalists who can give us the best information - healthy stuff for our minds. Who is Mr. Brown?...Mr. Brown is not even Mr. Brown, he is Lee Kin Mun, a free lance writer comedian without the proper qualifications to disseminate information to Singaporeans.
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The PAP govt has banned political podcasting and videocasting during elections...but the Internet is designed such that such bans are useless - anyone can put out a podcast or video anonymously without being caught. They also tried to get bloggers who "persistently propagate, promote or circulate political issues relating to Singapore" to register with the MDA...unfortunately no body bothered with that.

Our govt can do what the Malaysian govt is trying to do now reach out to bloggers. We can start giving away National Day awards to bloggers who contribute the most to our national agenda. Our ministers should meet up with bloggers regularly to build a bridge for a two-way dialogue between the government and people. There should be rewards and awards for bloggers who show the best appreciation for their policies.

Looking around in the blogsphere I'm very sad to say that except for my blog, there are very few (almost none) that truly appreciate what our govt has done for us. Our govt may not be able to please everyone but it seems to have displeased every single political blogger (except myself). I say to everyone, lets keep our minds open when we evaluate what the PAP govt is doing for us, there is always a good side to everything they do and if you're not sure how it is good for you, all you need to do is open up the Straits Times ....and all the goodness will enter your mind.

Wednesday, March 26, 2008

Illegal Assembly Laws in Singapore...

I guess you know by now that it is illegal to gather in groups of more than 4 people in Singapore without a permit. I'm sure those teenagers screaming their heads off outside the airport and holding big signs to greet their favourite stars have permits. Policemen turn up for crowd control not to arrest them. If the same people turn up somewhere in Singapore and holding signs to say "Free Burma" or "Save the trees" , they will be quickly arrested. Why is it okay to turn up and gather to greet your fav pop star and not okay to turn up to make a statement that is accepted in every democratic country. The answer is simple - one is a dangerous activity and the other is not. It is perfectly harmless for you to adore your fav stars and sports personality because it is done for fun.....expressing your opinion strongly and openly is no laughing matter in Singapore, it is highly dangerous. Why is it dangerous?
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To understand why it is considered dangerous, we have to understand our political system. Our system is based on a hierarchical rule when the opinion of people higher up the hierarchy carries more weight than the person below. So the opinions of ordinary carries almost no weight and that of the opposition carries negative weight. Our role as citizens is to obey and agree. ...a good citizen is an obedient citizen. In Singapore Inc. our leaders are like bosses in a corporation, PM Lee is the CEO, the ministers are the directors and the ordinary ctizens are the workers. The opposition are disgruntled workers who instigate others so they have to be stopped at all cost. Gathering to express your opinion openly is a form of insubordination - your opinion doesn't matter anyway so why bother to turn up. This explains why nobody turns up when various protests are organised even when they are sympathetic to the cause.

Almost everyone is feeling the pinch from inflation and if you visit a coffeeshop, you can hear many people whining about the high cost of living. However, when they organised that "Tak Buleh Tahan" protest only 30 people out of 4 million turn up. Ordinary Singaporeans know their position in this society, they know there is no point speaking up because their voices meaning nothing - if inflation eroded their income, it is better to spend their time to hunt for better bargains that to speak up against it.

Sunday, March 23, 2008

Pork Barrel Politics In Malaysia....

Here's a a Malaysia opposition member talking about pork barrel politics in Malaysia. How it undermines the integrity of the electoral system there and how taxpayers' money is wasted to help the ruling party unfairly maintain the grip on power against the interest of the people. It was one of the many reasons why the Malaysian electorate turned against the ruling party.

I'm glad such things simply don't happen in Singapore with a govt that is proud of its world class governance. The govt works for the good of all Singaporeans regardless of how they vote because everyone pays taxes.

"Jalan Besar Town Council unveils $517m estate upgrading plan" - June 2006

In the video, the candidate explains that the citizens should be outraged that Malaysian govt announces big spending programmes just before elections to swing the votes while underperforming the rest of the time.

"Sembawang Town Council to spend $570m on renewal plan" - June 2006

I think the Malaysian people are now too smart to be swayed by such announcements because they know that it comes from their pocket and the money is better spent on the needy who are really suffering - using taxpayer's money to win votes has become unacceptable there.

"East Coast Town to undergo S$500m renewal programme" - June 2006

Selective spending programmes undermines the political process and divides the country cannot be good for the nation.

"HDB upgrading programme speeds up with 64 precincts chosen for 2006"- June 2006

"Hougang and Potong Pasir residents will lose out on upgrading if they do not vote for the People's Action Party"- SM Goh, June 2006

I guess the Malaysian people are alot more enlightened today. They know that money misallocated will have to come from their pockets either as higher taxes or fees.

"GST to be raised to 7%: PM Lee" - November 2006

As a Singaporean, while we may not have or need inspirational leaders, I'm proud to say that we have at least leaders of the highest integrity who strongly believe in being fair and just. Justice is a word every school going child says as part of the pledge and it means alot to Singaporeans. The Malaysia govt has alot to learn from us in terms of governance. They should eliminate the money poltics that divide their country, undermines the democratic process and ultimately hurt the citizens of the country. Malaysians have spoken with their vote, they are tired of the pork barreling politics - it takes some courage but they have done it....

Saturday, March 22, 2008

Yes, we should all just enjoy the good life!!!

"....let us enjoy this trouble free life...." - Paul Antony Fernandez.
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"Sir, what about those who cannot afford this trouble free life"- Lucky Tan.

That letter in the StraitsTimes forum which they selected over a thousand others carries a profound message for all Singaporeans. If your life is good (trouble free) why bother to do anything for your fellow citizens? Bus fare increase? As long as you can afford why bother with the people who can't. Why bother about the poor who can't make ends meet when you can afford to eat the best buffett in town. Some people believe societies are cohesive because people are willing to stand up for each other - it is the white guy marching for the rights of the blacks, the middle class that demand better deal for the poor that strengthen society. However, we in Singapore don't have this type of society - Singaporeans standing up for other Singaporeans openly is frowned upon......actually Singaporeans standing up for any cause that is related to justice, equality or democracy is viewed negatively. We can't protest the killing of monks in Myanmar, the killing of monks (again?) in Tibet, the war in Iraq etc. If you feel strongly about something the acceptable way of expressing yourself is to write a letter to the Straits Times Forum, however, there is a limited space and they cannot guarantee they will publish it because there are always great letters like the one written by Mr. Fernandez.

"Advice to Chee: Don't waste taxpayers money". I would like to assure Mr. Fernandez that tax payer's money is never wasted when the SPF turn up to arrest someone like Dr. Chee. It is a good reminder to all Singaporeans of our govt's position on public assemby and citizen's rights. Arresting people who turned up one Saturday to express the frustration of every Singaporean (especially the poor) on inflation says alot about the govt. Good citizens don't challenge a great world class govt to be better - their role as citizens is to agree, contribute and, in the words of Mr. Fernandez, "be grateful and appreciative" of what this great govt has done.

Why do citizens of every other developed country have the right to protest and we don't? Because they don't have a govt as great as ours! Just look at how much they pay their ministers, that is all they deserve relative to a great govt like ours. It is already hard enough to select and persuade such good men to stand for election and serve the public, the least we can do is to put down trouble makers out to make their job even harder. Can you imagine our mild mannered Minister of Transport, having to answer to angry Singaporeans who fail to comprehend his explanation that the fare hikes serve to maintain the quality of service of our transport system and the ERP hikes is intended to relieve congestion? With the interests of Singaporeans well served by men and women of the highest integrity, there is no need to protest what we see as wrong - because it is likely that we are wrong. The Iraq war was not wrong - Singapore sent its navy there to support the Americans, the junta in Myanmar is not wrong we are willing to have business ties with them and want them as part of the solution, arresting Chee is not wrong .....it serves as a reminder to the rest of us on how we should conduct ourselves as good citizens of Singapore.

"....they should form a coalition and learn to work in tandem with the ruling party..make life here ...more peaceful for all."

- Mr. Fernandez.

Mr. Fernandez not only established how good citizens should behave, he has the best advice for the opposition. The opposition should stop opposing and learn to work in tandem with the govt. That is a great idea - on that Saturday, Chee should have been carrying a placard says, "Price hikes are not the fault of the govt. Please accept them and stop blaming the PAP". It would definitely make Singaporeans happier to know that everything has already been done by the govt to help them - they should be satisfied. Now you see why Mr. Fernandez lives a trouble free life - he doesn't have to trouble himself with what the govt does as he sees that it is always good. Chee and the rest of the opposition should learn from Mr. Fernandez, spend more time shopping at Harvey Norman and not trouble themselves with the part of society that cannot turn on their lights at night because they can't afford the electricity.


Friday, March 21, 2008

Mas Selamat : 21 days and counting!!!

I blamed the opposition for Mas Selamat's escape. The Opposition is also taking up precious resources by organising the "Tak Buleh Tahan" protest. I blame them for the inability of our police to capture Mas Selamat, instead of using every man to guard every forest in Singapore, they have to waste time monitoring the activities of Chee so that he can be arrested if he causes trouble.
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Based on YouTube videos it takes about 10 policeman to take care of his sister alone. If these people were deployed to guard Mas Selamat, he wouldn't have been able to escape. Although we know now that Chee is highly dangerous, perhaps we should also allocate a little more resources to guard terrorists like Selamat. While I know the consequences of allowing Chee and his people to escape arrest for assembling and speaking in public will be devastating for Singapore, we should have assigned a few more people to guard Selamat because he was handed to us by the Indonesian government. Just look at the large number of policemen assigned to take care of Chee in the video, he is a threat to our society. Although he does not intend to harm us physically, he is hurting our minds by telling us the govt is to be blamed for our inflation woes. He has hurt us in the past by calling us serfs (slaves) because we don't have freedom...by calling us repressed people because we don't have a real democracy...by calling us sheep because we have been fed filtered information from media. Mas Selamat may be a terrorist but he hasn't hurt us as badly as Chee. That is why the police has to turn up in large numbers whenever Chee and his people get together.









Some people may argue that the police won't have to waste resources if such small protests are made legal like in other countries (S. Korea, Taiwan, Thailand, Hong Kong etc...). But we can't do that, the people in those countries have stopped appreciating the good work and grand accomplishments of their leaders just look at how much their politicians are paid.

Here is an enlightened letter from a Straits Times reader. He wants to advise Chee to change his ways. The PAP govt is a kind gentle govt that cares for the people and work for the interest of the citizens. It may look draconian to arrest people for assemblying illegal but that too is for their own good because these people should be shopping at Harvey Norman instead of wasting their time protesting.


"I and many others are grateful to the Government and appreciative of what it has done....let us continue living a trouble free life under the current government...."

- Paul Antony Fernandez.


"Thanks for your advice Mr. Fernandez. I feel alot more comfortable if everyone is like you but some people like Chee will never learn. Yes, let us all continue to enjoy this trouble free life and ignore troublemakers like Chee. Even with Mas Selamat running loose, life is okay in Singapore"

-Lucky Tan


Back to the issue of Mas Selamat. Where is he now? Members of the public have been told to report any missing clothing, food and lost vehicles. There is a 5 hour traffic jam at the Causeway because every vehicle has to be thoroughly checked in case he decided to smuggle himself out in the boot of your family car. Every MRT station, bus and train has his posters. Our police is monitoring every forest and watching all the former JI members for clues. Everything that can be done is being done to catch this limping terrorist. But where is Mas Selamat now?....For all we know, he could have collected a few thrash bags use them as floats and swam to Indonesia in the middle of the night. If he did that, maybe the Indonesians can catch him for us like they did the last time and hand him over.......

Thursday, March 20, 2008

Good Bye Crisis Hello Recession....

Gold has fallen by $80 to $920 and US$/Yen has gone up from 97 yen to 100 yen.

Gold is often used as a flight to safety. During times of financial crisis the price of gold shoots up because people are not sure if their paper money will be worth anyting in the event of a collapse. The fall in gold price signals that the fear in the financial markets has subsided. The rise of the US$ also signal that some confidence returning to the US economy.

In my previous post on the "Asian Crisis vs Subprime" crisis, I stated that Bernanke has to do something pretty drastic early to halt the loss of confidence. I wrote that Bernanke will take something out of his old playbook to halt falling markets using an element of surprise and I wrote that it is better to allow some moral hazard to prevent the crisis from spreading and turning into an uncontrollable contagion. Ben has done all that. History will judge him based on how the US economy progresses but I think he has done his best and has taken alot of risk to pull the financial markets away from disaster. If the world ever get out of this one without severe economic pain, we have Ben to thank.

The other strange thing that occurred after Bear Stearns went down is the sudden collapse of the commodities bubble and a correction in oil prices. This bubble has been partially responsible some of the inflation we have been seeing and the fall in commodity prices will help to moderate inflation. Also, the money coming out of commodities appear to be headed somewhere, given the US treasuries are very high, I think the money will go into stocks and we might see a rally (which may be short-lived due to the recession) coming our way.

I believe that inflation will soon be contained and we will not see the 1970s type of inflation hitting us. In the past there was a correlation between inflation and employment. Businesses were more eager to hire if they can raise prices. Take the example of the prata man at the coffee shop, after he raised his prices, he might want to hire a helper with the extra profits. Milton Friedman wrote an insightful paper that said that the relationship between employment and inflation cannot be sustained because workers will begin to realise they are being ripped off by higher prices and will begin to demand for higher wages. Higher wages will mean lower employment. Friedman was proven right in the 70s when high inflation and high unemployment existed at the same time. I believe that inflation will now be contained because none of us can go to the boss to ask for a raise. In the 70s, many workers were unionised and could demand higher wages.....that power is gone. Being unable to ask for higher wages, workers now cope with inflation by consuming less and switching to alternatives....this will put a cap on how much prices can rise. After that 20cents increase in the price of my prata-with-egg, prices have held steady. The price of bread increased in the beginning of the year and stopped. The US CPI showed no price increase from Jan to Feb. If they increase taxi fares again, the taxi companies will put themselves out of business because workers won't be getting the pay hikes to pay for the increase.

What is going to happen now is the US economy will sinking into recession due to falling property prices and a consumer slowdown. Some parts of its credit markets have malfunctioned and the effectiveness of the rate cuts is lower than desired. The global economy remains relatively strong as seen from Singapore's exports - it was still growing with the rest of the world compensating the lower demand in the US. Wall Street's biggest bear Peter Schiff believes that all it takes for the rest of the world to carry on is to learn to borrow and consume like the Americans. There is nothing the Americans are doing that we can't do in Asia - we just have to save less and spend more and that will save the world economy!!!

I'm of the minority view that worst of the crisis is behind us. To spook the financial markets further would require a collapse bigger than Bear Stearns. This is akin to riding a roller coast we went through the biggest 360 degree, everybody is afraid but the cannot be made more frighten. Most investors are waiting for the next shoe to drop.......after waiting for a while they might realise that the next shoe isn't dropping. It is just my gut feel that the financial system will survive this mess and things will start to stabilise from now on. The next problem to grapple with will be the recession. Recessions come and go ...and each of us have to live through a few of these. As for crisis, I hope this is the last one in my lifetime. ...I don't think my heart can take too many financial crisis.

In case I'm wrong about this crisis, the instructions on what to do to survive is found in Peter Schiff's latest book - Crash Proof: How to Profit From the Coming Economic Collapse. I understood alot about the current crisis from Peter Schiff's writings and interviews. From this point onwards my views and his diverge - his view is there is nothing anyone can do to avert an economic collapse. Peter Schiff is an intelligent guy, I can understand what he says but just can't get myself to be as pessimistic as he is.

Wednesday, March 19, 2008

Don't Worry lah...Our Govt can handle Chee....

I know some of you are very concerned about the disorder outside Parliament House last Saturday. Don't worry our govt has enough resources to capture Mas Selamat and handle Chee at the same time. They probably have a special department to handle Chee. There is no secret about what Chee is up to - he is trying to change they system through activism. Activism means undertaking various activities to put pressure on our govt to change the laws - examples of such laws are speaking in public without permit, illegal assembly etc. Typically, pressure is applied by deliberately breaking the law and getting arrested. The whole idea is to highlight to Singaporeans that these laws exists and are somewhat 'unjust' and 'undemocratic'. See the problem with this approach is Singaporeans already know these laws exist and have accepted them. Singaporeans are obedient people, all you need to do to keep them constrained is to draw a yellow line and ask them to stand behind it - they will do so without asking why. It is alot safer to stand behind the yellow line then to cross over and see what happens.

Luckily, while there is some sympathy for Chee on the Internet and alot of talk, when it comes to action, he can only gather 30 people out of a population of 4M after 10 years of activism. That is why the police department that handles Chee hasn't expanded for many years and the officers there are lamenting their career prospects- you can see some of their grumpy faces on YouTube. Most Singaporeans are politically apathetic amd don't even care about mainstream politics and activism lies in the other edge of politics. Being law abiding, they are more amused with the activities of Chee than outraged with the "unjust" laws. If there is a yellow line, just stand behind it. It is most unnatural to find Singaporeans who are willing to cross the yellow line.

You find people crossing yellow lines in large numbers when they can't afford the sales at Harvey Norman, when they can't watch TV in their own homes to amuse themselves, when their financial woes become too difficult and it is better to take the risk than to die of hunger. You see this in Indonesia when the economy fell apart and in Thailand, S. Korea during the Asian Crisis. The other way to get alot of people to cross the yellow line is to poison them with unflitered and unmanaged information. I really don't see this happening as long as Straits Times is around to ensure that we get high quality accurate information.

The greater danger for Singapore is with an oppositon that disguise itself. The ones that use issues that appeal to masses but has a hidden agenda to change the system once they get into power. If you look at the YouTube videos of the the Malaysian elections, it was about inflation, education, etc but once they get into power they want to eliminate NEP and implement the Freedom of Information Act. This is the type of opposition Singaporeans should guard themselves against. The real threats are smiling, open and understanding opposition who look so friendly, they can be your buddy if not for the warning labels on their T-shirts. If they manage to lay low and not give the police reason to arrest them, they may be able to recruit and indoctrinate more people. Despite all its power, the PAP govt cannot arrest someone unless they break the law or provide sufficient reason to activate the ISA...otherwise it will lose credibility and undermine its own authority. In Singapore, most people don't like to join an organisation in whose activity gives the police an excuse to arrest and jail them.
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There is some danger that our new generation is different from our old generation and rejects the social contract that their parents have implicitly signed. After talking to many young people, I want to assure you that is not the case. After one generation, it is still about getting the best paying jobs to buy that car and pay for that HDB flat. There is alot of chatter on the Internet but once you ask people to show up at an event, you will get less than 50 people.
So far handling Chee is easy. If he starts turning up with more than, say 50 people, there are many laws they can use to put him away for a long time. Chee can probably cause real trouble if he can gather 10,000 people like HINDRAF in Malaysia but after 10 years it is only 30 people so it will take several centuries to get there.
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What keeps our govt awake at night is the great unknown when the next elections come. Despite all the good information disseminated by the Straits Times, the extra incentive to choose wisely to get that new fountain or playground, there is still risk because free will is involved. When the person stands in front of the ballot box, he asks himself if he is better off than he was 4 years ago....has he been able to get a bigger HDB flat? ...Did his pay increase sufficiently to overcome the ERP hikes? The real danger is when that person starts to believe that supporting the PAP is not the way to better his life and gives the alternative a chance. That is when something like what happened in Malaysia is possible....and the country is never the same again.

Tuesday, March 18, 2008

More Scary Stuff about the Economy....

What happened to the Golden Years?

Fed set to cut rates again in effort to stem crisis
AFP - 2 hours 11 minutes ago
WASHINGTON (AFP) - - The Federal Reserve is likely to follow its emergency weekend move to help ease credit gridlock with a large rate cut Tuesday in a bid to stem a mushrooming financial crisis, analysts say.

The intensifying market turbulence has led economists to anticipate a hefty cut in the federal funds interest rate, possibly as much as a full percentage point, as the central bank steps up its battle against a global credit crunch.

Joseph LaVorgna, senior economist at Deutsche Bank, said he expects a a cut of a full percentage point in the federal funds rate from 3.0 percent to 2.0 percent.
"A deeper and longer recession seems more likely now than a brief, mild one," he said, saying this could mean the rate may be slashed to as low as 1.0 percent by the end of June.
Others say the Fed must act to avert a broader economic meltdown.
"We are in the midst of the most pervasive financial crisis in a generation, which has destroyed untold sums of wealth in housing and financial assets and has driven the US economy into recession," said Sherry Cooper, chief economist at BMO Capital Markets.

Cooper said Fed members "will continue to act aggressively until they see sustained stabilization. Let's hope they are successful."

Yet analysts are debating how much the US central bank can do to alleviate the crisis underlined by a spectacular meltdown at Bear Stearns, a Wall Street investment giant that was felled by the subprime real estate meltdown.

Rushing to head off a global panic after the Bear Stearns episode, the Federal Reserve moved to keep cash flowing in the financial system with a cut in its discount rate and a pledge of aid to the brokerage system Sunday.

A quarter-point cut to 3.25 percent was made to the primary credit rate, which is the rate offered at the Fed's discount window for loans to institutions "in sound condition."
The Fed also said it would make liquidity available starting Monday to "primary dealers," which include brokerages that were not previously eligible for direct loans from the central bank. The Fed board also extended the maximum time of discount window loans to 90 days from 30 days.
The moves came just ahead of a regularly scheduled Fed meeting Tuesday where the panel headed by chairman Ben Bernanke is widely expected to cut its base rate further in an effort to get credit flowing.

"These actions demonstrate the extreme lengths, if there was ever any doubt, that the (Fed) Board of Governors are willing to go to" to keep markets functioning, said Bob Eisenbeis, economist at Cumberland Advisors.
The Fed has already slashed its federal funds rate by 225 basis points from 5.25 percent last September, in an effort to ease housing and credit market stress. But that has not been enough to avert worries about a breakdown in the system.
Still, most see a further cut as inevitable at Tuesday's Federal Open Market Committee meeting.
"It really doesn't matter whether the Fed goes a half-point point, one point or even more since this is not simply an interest rate issue. It is the liquidity crisis," said Joel Naroff of Naroff Economic Advisors.

"The Fed is in full crisis mode, finally, and while history will determine how well or poorly Mr. Bernanke performed, right now he is doing all he can."

The Fed has been forced into a series of extraordinary actions like Sunday's between its regular meetings amid troubles in various parts of the financial system.
Still, some analysts said it was not clear how much the Fed can do to prop up sagging confidence.
"The Fed has pulled nearly every non-conventional rabbit out of the hat to provide liquidity," said Merrill Lynch economist David Rosenberg.

"The next steps may be to try and prevent a contagion, or a domino impact, and the Fed has responded to this prospect by opening the discount window to the dealer community."
But Rosenberg added that the Fed, which has pumped an estimated one trillion dollars into the banking system, has no magic bullet.
"What we are learning first-hand is that the Fed can't solve all of the world's problems," he said
"The Fed cannot recapitalize the banking sector, nor can it renew investor confidence in the quality of opaque financial sector balance sheets."
Economist Brian Wesbury at First Trust Portfolios calls the Fed's aggressive rate cuts "a mistake."
"Interest rate cuts since August have been counterproductive," he said. "They have created an incentive for businesses and consumers to postpone activity. Why do something today if rates will be lower next week or month?"

Monday, March 17, 2008

Fear as thick as butter .....

Pervasive, terrifying fear in the financial markets. The US$ fell 3 yen within 45 mins after the Federal Reserve announced that it will inject more money into the financial markets. Traders interpreted this as the Fed trying stop something more sinister from happening and that there are banks and brokerages about to collapse like Bear Stearns.

When I got home, I checked the price of Citibank stock it had fallen from $21 to $18. I've been checking and checking the numbers from Citibank for sometime - even if it takes a hit from the SIVs assets and Level 3 assets, it should be able to survive this crisis. I've been waiting for months to buy this stock....although I prefer to buy it at $15, I'm not too sure that it will ever get there - $18.30 will be my entry point for Citibank....lets see how much this stock is worth 6 months from now.


"Be fearful when others are greed and greedy when others are fearful" -Buffett.

Sunday, March 16, 2008

SDP turns militant!!!

"Chee's sister tried to bite a female police officer.... Police said ...yesterday's incident saw an escalation of defiance ....the group staged typical militant protest methods....attack by Chee Siok Chin is also unprecedented.....", The New Paper 16 March 2008

I applaud the heroic efforts of the Singapore Police in putting down this group of militant trouble makers. They have to take precious time off from their search for Mas Selamat to handle this group of dangerous trouble makers. In Singapore, we cannot accept this type of disorderly behaviour from our anyone especially our own citizens who know better than to do this. If they are unhappy about price increases, they can write to the feedback unit, Straits Times or meet their MP to express their unhappiness. I'm sure their views are taken into account when decisions are made. There is no need to resort to such illegal, loud and visible expressions of dissatisfaction. The govt has already given very rational explanation of why those price hikes were inevitable and done for our own good. I'm happy that this group of trouble makers have been arrested and the police can now concentrate on the important task of hunting down Mas Selamat.
Just a reminder to everyone, the hunt for Mas Selamat is in its 3rd week. Mas Selamat has probably lost some weight, grown a beard and looks unkempt (refer to the picture above from the New Paper) because he did not bring a shaver and a comb with him when he escaped. If you find him, please do not try to catch him yourself but alert the police instead.

Saturday, March 15, 2008

Bear Stearns : Brought Down by Fear.

I watched the interview of Bears Stearns CEO on TV . He had to appear because there were persistent rumours that the company had enormous subprime losses and was on the verge of some kind of catastrophe. He said the company was sound and had plenty of liquidity. 48 hours later, they had to be rescued by the Federal Reserve. The SEC has been monitoring this company for several weeks and issued statement a few days ago that the company has substantial liquidity to meet its needs. ....how did the company fail?

What brought Bears Stearns wasn't subprime losses, but clients who withdrew money thinking that there are bigger problems looming. There was panic and plenty of short selling that hammered it stock down by more than 50%. The CEO tried to explain that that the company wasn't insolvent and its fundamentals were still intact. ...but nobody wanted to listen. (the stock did recover after hours when the panic subsided).

This is a classic "run on the bank" - fear causes an otherwise sound business to collapse. The Fed is now put to the test. It has to calm the markets before panic start popping up everywhere and the problem becomes intractable. It has alot of work to do this weekend which appears to be pivotable to fix the Bears Stearn problem fast. This crisis will get worst or start improving next week when investors think the worse is over. Despite the rollercoaster ride, investors are not one bit braver now - they are as fearful as ever. Having been through the Asian crisis, sometimes all it takes is plenty of fear to bring an economy down.

The US$ is now S$1.37 and 99 Yen....traders appear to be "running on America". This resembles the Asian crisis. A debt problem transform into a currency problem which is then transform into panic. Bush also appeared yesterday to try to calm markets - he ended up giving reasons why he will veto a bunch of bills by Congress to try to solve the foreclosure mess because they were based on the wrong "principles" (or ideology?). He also said the US economy is resilient....I think it was resiliently piling up debt under his administration.



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Bear Stearns' No. 1 foe: Fear itself
NEW YORK (Fortune) -- Bear Stearns isn't out of the woods yet.
The struggling brokerage firm spent Friday trying to assure fearful investors that it isn't on the brink of insolvency. CEO Alan Schwartz and finance chief Sam Molinaro used a midday conference call to emphasize that Bear Stearns' financial situation isn't as dire as rumors suggest. They said the firm sees Friday's 28-day financing agreement with JPMorgan Chase (JPM, Fortune 500) as buying time to "get more facts out into the marketplace."
But Wall Street wasn't buying it. Bear Stearns (BSC, Fortune 500) shares, after plummeting as much as 50% to an 11-year low on the announcement of the Fed-backed JPMorgan financing deal, held steady at much-reduced levels throughout Friday's conference call. The shares were down 38% at 1 p.m. EDT after the call wrapped up.
Schwartz and Molinaro insisted on Friday's call that there have been "no material changes" in Bear Stearns' financial strength in recent days, and that the firm expects its first-quarter results to be within the range of analysts' estimates when Bear Stearns posts its numbers Monday afternoon.
But Molinaro also admitted that Bear Stearns was in dire straits Thursday night, after some firms that trade with it - fearful about rumors of a liquidity squeeze at Bear Stearns - "no longer wanted to provide financing."
That comment shows that Bear Stearns is dealing with a classic run-on-the-bank. The firm's short-term creditors refused to lend the firm any more money via the extension of overnight loans, and simultaneously demanded repayment of outstanding debt. The one-two punch overwhelmed Bear's cash position, forcing it to seek help. Had the Fed not stepped in, it appears doubtful Bear could have operated today.
The stunning developments cut Bear Stearns' stock value as low as $26.85. The shares opened the week at $69.75 and traded as high as $159 last year.
With no counterparties willing to lend Bear short-term credit - the lifeblood of a securities firm - the firm's ability to function independently appears to be over. The firm hinted at the need to find a more lasting solution on the call when Schwartz said he viewed the JPMorgan financing as "a bridge to permanent strategic alternatives." Rumors have Bear Stearns talking with firms, including JPMorgan and China's Citic, which bought a big stake in the firm last year. But the stock market action Friday suggests few investors believe a deal is near.
In short, the Fed is allowing J.P. Morgan - a commercial bank - to act as a conduit for pumping cash into Bear Stearns. The bank is being permitted to give Bear Stearns collateral at the Fed's emergency-lending discount window to secure 28-day financing, which in turn is lent back to Bear Stearns in order to finance its business.
The Fed's role in the deal suggests federal officials fear a systemic collapse of the U.S. financial system were Bear Stearns to fail. The fear stems from Bear central role in a multitrillion-dollar web of interconnecting derivative contracts.
Rumors that Bear Stearns was on the verge of collapse started buzzing around Wall Street trading desks on Monday. Schwartz - who took over as CEO in early January from longtime chief Jimmy Cayne - appeared on CNBC Wednesday afternoon to reassure the markets that the firm was stable. Schwartz was right in one respect: The firm had about $17 billion in short-term capital available as of Nov. 30 and had a net cash position of $8.2 billion - more than it had previously.
Schwartz's problem was that none of Bear Stearns' counterparties cared about its ability to pay off debts in the long term. With the value of debt securities in a nosedive, lenders care only about recovering on the loans they have out now. And starting late last week, they began to call in those loans.
This played directly upon Bear's biggest weakness relative to many of its competitors: It is the smallest of the investment banks and doesn't have a consumer banking or retail investor business to draw upon. Almost daily, Bear Stearns has to renew a large percentage of its $102 billion worth of open repurchase agreements - or short term loans from Wall Street dealers - or make up the difference out of its cash position.
It's unclear what exactly started Bear Stearns' nightmare this week. Veteran repurchase agreement traders told Fortune.com that a major European bank last week refused to accept Bear Stearns as a counterparty to a large swap trade. By late Monday and early Tuesday, traders at hedge funds told Fortune that they were being charged a premium by the swaps desks at Deutsche Bank (DB), UBS (UBS) and Citigroup (C, Fortune 500) to execute trades with Bear Stearns as the counterparty or which involved its credit.
The bottom fell out on Thursday, Bear Stearns CFO Molinaro told investors. The demands for cash came from counterparties as well as hedge fund clients who wanted to close out their prime brokerage accounts. The market voted with its feet and wallets.
Bear Stearns' biggest challenge now is panicked investors, who see the firm's debt as extremely risky. The swaps market, for instance, was pricing Bear Stearns' five-year credit default swaps, which are contracts that function as insurance against the risk of default of the firm's debt, 730 on Thursday. This means that an investor who wants to insure against the default of Bear Stearns debt pays an annual premium of $730,000 per $10 million face value.
In contrast, at the height of another recent high-profile liquidity crisis, Countrywide Financial's (CFC, Fortune 500) credit-default swaps traded in the low 600s prior to its purchase by Bank of America (BAC, Fortune 500).
If the panic doesn't subside soon, Bear Stearns may the least of the Fed's problems.
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Thursday, March 13, 2008

See what the Opposition is doing in Singapore!!!


It takes someone like Mas Selamat to bring our nation together. Yes, he (his poster) is everywhere and everyone in Singapore knows his name. A school kid might not know who our education minister is but he will know Mas Selamat for sure. He is someone every Singaporean is looking for. We are making great progress, it has been 3 weeks and the entire nation is still very focussed on this task. Everyone knows the importance of catching this limping terrorist.....everyone except the members of our Opposition, to be more precise members of the SDP.

They are going to conduct a rally against price hikes known as "Tak Boleh Tahan" outside the parliament house on 15 Mar 2008 at 2pm. I've often warned you about the harm the opposition brings to this country and they are at it again. With the escape of Mas Selamat, the entire country has forgotten about the transport fare hike, increase in utilities rate, GST hike, taxi fare hike, ERP hike etc. .We are busy looking for Selamat and have accepted that those hikes are for our own good. Now these SDP chaps want to rekindle these old issues at a time when we all should be looking for Mas Selamat. I'm sure they will distort the facts to say the govt has unnecessarily burdened Singaporeans with price increases at a time when it was having a massive budget surplus when Singaporeans were already struggling with inflation in food and energy. I warn you not to be seduced by those simplistic one dimensional arguments that members of our opposition often put up. We all know the govt has our interest in its heart - the bus fare increase to ensure good quality of service, the ERP hike is to prevent congestion, and the taxi fare hike is to ensure that taxis are available when we need them. We should all be fearful of the day when there are no more price hikes because it will be a day when our beloved govt has its power to hike prices for our good stolen away by the opposition. Beware of the opposition in Singapore!!!....

Wednesday, March 12, 2008

See what the Opposition is doing to Malaysia!

"I was finance minister for 8 years. Although I'm in Opposition I will never do something to harm the economy"- Anwar
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Opposition members all other the world are more or less the same, they are out to cause trouble.
A number of states in Malaysia that have fallen into Opposition hands now want to implement an FOIA (Freedom of Information Act) which allows ordinary citizens to obtain any kind of information so long as it does not compromise national security. If such an act is good, the world class Singapore Govt would have implemented it already, no need to wait for the Opposition to do it. The Singapore govt doesn't implement the FOIA because it does not want to burden ordinary citizens with the extra information. The PAP will decide and filter the information so that only good quality information reaches the people. If necessary the PAP will do the necessary pre-processing to ensure that the information does not upset us. Take the employment report released by the MoM. It does not give the unemployment figurs for Singaporeans anymore instead it releases "employment level" and "unemployment among residents". As a Singaporeans, I know the unemployment rate of Americans, Malaysians, Indians but I don't know the unemployment rate among my fellow Singaporeans. Isn't that great? If we have a FOIA, a reporter can just go to the MoM and ask for the figures for publication...how is the PAP govt going to secure our happiness if they cannot control the information we receive?
The Malaysian Opposition is taking a step backwards by implementing the FOIA.
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"We warn the BN not to pursue a regressive policy of punishment for voters of the Opposition by freezing development" - Anwar
Oh come on!!! There is nothing regressive about punishing Oppositon voters by taking away funds for development. This idea of linking votes to development or upgrading is definitely a progressive one. The PAP only started doing in it 1990s. The PAP is a govt of the highest integrity and works for the good of the people. It is for their own good not to vote for the opposition and linking votes to upgrading will help them to do what is good for themselves. I would call that progress.
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The opposition is now pressuring the Malaysian govt to stop cutting subsidy for fuel and necessities. I guess without those cuts, the Malaysian govt won't be accumulating enough reserves to buy stakes in American banks and regional telcos. Singaporeans on the other hand get to own a piece of Citibank and UBS and this is something we can be proud of. Our govt is now implementing means testing so that it can give you less subsidy when you're sick. We, Singaporeans (including those who are sick) , can look forward to many more billion$ spent on financially challenged banks.

Monday, March 10, 2008

Malaysia : With change comes risk.....

Malaysia will never be the same again.

Changes will come fast....and furious. The new govt in Selegor wants to eliminate the OSA (Official Secrets Act) and implement the Freedom of Information Act (FOIA). : [Link].

The poll results have rattled investors : [Link].

Some early analysis of why Badawi lost : [Link].

Malaysians have decided to take a risk and go for change. They are tired of the race based politics, the lack of transparency, curruption, the arrogance of the govt, crime, inflation, inequality, lack of freedom and democracy, govt waste and ineffficiency. Malaysians seem to have alot of things they are unhappy about and the dissatisfaction has been festering beneath a calm surface for some time.
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I saw a few interviews with Malaysians on TV and they are generally optimistic that the change will turn out well. The country was almost stagnant when it came to political progress and there was no motivation on the part of BN to make them because they felt no pressure from the populace thinking they can win elections by preserving the status quo.

Sunday, March 09, 2008

The hand behind the Opposition Victories in Malaysia!

Who else? ....They made sure he couldn't run by organising the elections one month before he becomes eligible. He sent his daughter to run and she defeated the incumbent BN candidate "reserving" a seat for him.

Anwar...? Who is he?...IMO, I think the moment that best sums up his character was what he said in a CNN interview several years back when he was asked if he felt resentment towards Mahathir for sending him to jail for so many years. His response was ..."it was all politics". Anwar is all politics and he is damn good at it. ...damn good at winning too. PAS was able to win big because Anwar persuaded them to alter their image and drop their demands for an Islamic state. He worked behind the scene to unite the fractious opposition parties to do well in the elections.

When Anwar was in UMNO, he rose quickly to be DPM. The problem was Anwar knew that the status quo had to be changed, the crony politics, the corrupt practices, and there was growing resentment in 1997 and when the Asian crisis struck, Anwar saw it as an opportunity to make major changes - the same type of changes that transformed South Korea for the past 10 years. Unfortunately, UMNO was not quite ready for change and Dr. M saw the risk to his power and acted promptly to take care of him...

It has been a short time since his release from jail and the massive victories of the Malaysian opposition. I've no doubt he will form a viable alternative to the BN by the next General Elections and that will result in a 2 party system in Malaysia. If the BN still cannot make the changes the people demand, it will risk being overthrown.

The Malaysian economy has been booming in the past few years. They have the F1, casinos, and huge shopping malls opening in the cities every other month. The problem was the wealth wasn't distributed equally - even among the bumis there was dissatisfaction that most haven't benefited from the New Economic Policy. The govt is authoritarian and depended on a compliant media to spin information in its favour. The use of the ISA, anti-sedition laws and defamation lawsuits to repress members of the opposition is perceive negatively by the people as undemocratic. The people, especially the young, yearn for more democracy, a bigger voice in govt and real freedom rejecting the social contract of the past 40 years. Now that the people have expressed their demand in the way they voted, the Malaysian govt has little choice but to reform its political process, free up the media and adopt the best democratic practices....or risk losing the next elections.

The message is very clear - as long as people get to vote, all they need to do to get the changes they want is to vote wisely.



There is no doubt the internet played a huge role is the success of the Malaysian opposition's campaign. In 2004 the BN won 91% of the seats, just 4 years later they are denied a two thirds majority in parliament. With the Internet, the main stream media spin is useless the people will eventually find the truth.

Latest : BN suffers losses....

The BN ruling coalition in Malaysia has suffered its biggest election upset in 4 decades. It has lost its two thirds majority in parliament and the states of Penang, Kelantan, Kedah, Kelantan and Perak.

"The coalition's election losses underscore not only anger over racial inequities but frustration among all Malaysians over rising prices, corruption and crime. While the National Front was expected to keep its parliamentary majority, the opposition was expected to gain seats" - AP report
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The MIC (Malaysian Indian Congress) has announced that it is quitting from the coalition after the defeat of its chief Samy Vellu. There is mounting resentment against its race based policies and MIC was seen as supporting these policies as part of the BN coalition.
Blogger Jeff Ooi of the opposition DAP has won a Penang seat in the elections.....it is believed that one of the reasons BN lost so much ground despite the support of the Malaysian media is the use of cyberspace by the opposition to air its alternative views.
Time for me to go to sleep, you will get plenty of updates in the Straits Times on the Malaysian elections.

Saturday, March 08, 2008

Malaysian Opposition DAP Wins Penang!!!

On Saturday morning I typed a post with the title "Will DAP win Penang?". I left in on my blog for a few hours but after reading that the DAP can only able to win 10 seats (out of 40) in the worst case scenario in the Newpaper, I decided to remove my posting as I thought it would be too far fetched and my instincts were wrong and chances were just too slim. ...it is like Worker's Party winning in Bedok....oh that would have been a disaster. I woke up this morning and found out they actually won. Here's why I thought the DAP had a good chance of winning - my post on Saturday morning:

A few months ago I went to Penang for a holiday. I was there 12 years before that trip and what struck me as the taxi took me from the airport to my hotel the airport to my hotel along Ferringhi Beach was the place hasn't changed in 12 years. The moment I entered the cab at the airport the driver complained that they wanted to move the airport to Butterworth and he was unhappy that the govt wasn't doing enough for the state. I thought the guy was just a disgruntled taxi driver like those we have in have in Singapore ....the ones driving taxis that are not blue in color. However, one of the nights, I went to eat at an Italian Restaurant. Business wasn't very good and the owner came over to my table and chatted with me. He told me that he felt that Penang is going downhill because most of the young unable to find good employment there have been leaving for Kuala Lumpur. I could sense there is some unhappiness and it has been festering for quite some time.
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Since the last elections, resentment has been building up and there is a real possibility it will fall in the hands of the opposition DAP. The Penang Govt must have thought its was doing a good job and became complacent. It was clear there was a loss of support only when large crowds turned out for the DAP rallies during the elections. Now it too late for them to do anything, the people are demanding change and they are willing to vote for change.
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Badawi's position as PM is now weakened. They expected to win Penang easily but you cannot expect the people you neglected to support you by just coming around during the elections. They might have support you over the years but at some point when the frustration level rises to a point where election promises are seen as empty. Over time people will realise your actions do not match your words and their interests is not a priority with the govt. Frustration eventually turns to courage to go for a change - to take a risk or live through another 5 years of waiting for change that never comes. The people of Penang took a long time to realise that their voices will not be heard as long as they are too afraid to vote for someone else. The lesson for the Malaysian govt is this - you may think that you can treat the people the same way and they will keep voting the same way because the media supports you and convinces the people that you are the best and the only viable choice. ...it takes some time but people will realise the island of Penang will not sink because they voted for someone else.

Asian Crisis vs Subprime Crisis ...

It looks like a simple question to answer : How long and how serious is the US recession? But if you have been watching CNBC, you will realise that the views on where the US economy is headed are diverse. You can find economists who believe the US will avoid a recession and economists who think that this is the worst recession since the Great Depression. After hearing many contradictory views from economists with Phds, you start to think of them as highly paid fortune tellers.....

Two crisis 10 years apart on opposite sides of the Pacific Ocean. While you sitting comfortably in your HDB flat whining about those price increases, several million Americans are on the verge of losing their homes and many are losing their jobs. Their currency is getting walloped and banks are in trouble. About 10 years ago, Asians faced a similar situation during the Asian crisis. I went through it and it was a terrifying but unforgetable experience.

The Asian crisis started with the collapse of the Thai Baht and turned into a worldwide meltdown. It is extremely difficult to figure how a crisis will spread and when it will stop. A large part of it depends on confidence of investors and the actions of central banks to stem the crisis. Also key are the action of hedge funds who will sieze any opportunity to make money from your misery. Asian currencies shorted by hedge funds and the falling currencies caused a loss in confidence which eventually led to a collapse of the stock markets in Asia. During the last stages of the Asian Crisis, hedge funds decided to pound down the Hong Kong markets. Money was systematically made by pressuring the HK$ peg and shorting the Hang Seng Index. They did that by putting pressure on the Hong Kong dollar peg against the US$, that caused the interest rates in Hong Kong to rise and the Hong Kong stock market to tank. The Hong Kong government decided to burn the speculators in by buying into their own stock market with their massive reserves. The Malaysia govt decided to implement currency controls and peg the ringgit against the US$. It was surprise interference in the free market that ended the crisis.
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A few years ago Bernanke gave a speech saying the best way to halt a rapid market decline is to surprise the market. Bernanke has done it twice, once in Aug 2007 and then in Jan 2008. Each time buying him some time to fix the credit crunch. The Fed and US Treasury have actually acted quite swiftly during this crisis - rapid rate cuts, creation of TAF (Term Auction Facility) to pump liquidity, $150B stimulus package, and yesterday night expansion of the TAF to pump even more liquidity into the banks. The problem with the subprime crisis is it is spreading faster than what they are doing. The subprime crisis initially resulted in a surge in the LIBOR rates (interbank rate) as banks refused to lend to each other. With the TAF, the Fed was able to get the LIBOR rates down but the crisis started spreading to other areas. Yesterday night Thornburg Mortgage a finance company holding mostly Alt-A and AAA mortgage backed securities defaulted on its debt because it was unable to meet its margin calls. The problem is the market for even the better quality paper has disappeared and banks strained by their own balance sheet demanded more collateral from Thornburg when the Alt-A MBS started trading 70cents to $1. Most market observers agreed that Thornburg is a company that "shouldn't collapse" but the credit crunch has resulted in mispricings (?) and dislocations. Other places where the credit crunch has showed up in very safe municipal bonds which are now offering very good yields vs US treasuries.

The Fed really has a tough job going ahead - it has to fight this credit crunch at the same time the US economy is slowing and inflation worsening. The Fed has decided it is not going to win on all fronts and decided the abandon the fight against inflation first. The slowdown and credit crunch can probably be fixed with the same tools. So how is all this going to unfold? ....

1. Are we at the beginning, middle or end of this mess? I like to think we at the end of this mess but my gut feel tells me we are probably only half way through. There were many false hopes during the Asian crisis every time you think it was going to end another unforeseen problem pops up. In his Financial Times article "12 Steps to Financial Disaster" Prof Roubini outlines perhaps the worst case scenario. We are now only in step 3 or the 12 steps.

2. Is Asia decoupled from this mess? Of course we will be affected the question is how badly. Stock markets are directly affected, our exports to US will slow. The silver lining is even if the US goes into a moderate recession, India & China will continue to grow because of infrastructure spending and domestic demand. There are parts of the world like the middle east is relatively unaffected because they export very little to the rest of the world except oil and oil money fuel their economies. Our MM believes we will escape this recession:

"This economic downturn will mark the first time that when America sneezes, Asia doesn't catch a cold. Yes, Asia will be affected, but not as severely. Because China and India will not experience a recession, Japan, South Korea, Taiwan and the Asean countries will avoid it. Hence, Asian stock markets will rise from their lows of the selloff to reflect the real strength of their economies" - Lee Kuan Yew {article}

Yes sir, we are still in our Golden Years. Although I haven't seen that "strength" that MM Lee is talking about, it is going to come soon.

I spoke to some American friends recently while those in the financial sector feel totally pessimistic while those in the IT industry (Silicon Valley people) remain unaffected. I also noticed the Nasdaq is starting to fall less than the DOW - perhaps it is saying something about the tech sector. We won't know yet but keep an eye on it. The electronics sector has been in a long slumber it is either going into a coma or waking up - the downside isn't much anyway.

Investor confidence has alot to do with how this whole mess will unfold. The Asian crisis was exacerbated by a (total) loss of confidence and I think the Federal reserve undersands that if confidence is lost due to a stock market collapse or the collapse of a major bank, the US economy will have to walk the whole "12 steps of Roubini". ....we in Asia will also have to take cover and prepare for an economic winter. Right now there is time to stem the contagion. The lesson in Asian Crisis is that if more is done in the beginning the less pain we will have to go through to reach the end. It is better for the Fed & US Treasury not to be too optimistic and do as much as possible now even bailing out financial institutions and risking moral hazard to get out of this one. The people who started this subprime mess have already stepped down with their multimillion remuneration - they will not be learning the painful lessons of their greed if they go for a "no bail out" approach. My message for all of you is hope for the best and prepare for the worst - this one can get ugly.

Friday, March 07, 2008

Stanford Review : Ben Stein Interview ....

http://www.stanfordreview.org/Archive/Volume_XL/Issue_3/Features/features3.shtml

Interesting Extract:

The Standard Review: Recently, Singapore, South Korea, and Kuwait bought a $21 billion stake in Citigroup and Merrill Lynch. What is your opinion on sovereign wealth funds and their impact on the U.S. economy?
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Ben Stein: Well, I think if these guys (sovereign wealth funds) are wise investors, it’s fair, but they should be aware that Wall Street generally goes to foreigners when it can’t sell a deal at home. They (Wall Street) would rather sell a deal at home. So, that’s something that foreigners should be aware of: if it’s a really good deal, they (American firms) would probably sell at home.

Thursday, March 06, 2008

US$ - are the doomsayers right.?

Today the 1 US$ = S$1.389

Did you go to the NATAS travel fair last week? Tours to US are becoming popular - at $1.389 some Singaporeans plan to go there for a shopping spree. I hope Singaporean tourists don't go round saying, "Cheap, cheap, cheap" like they do when they go to Johor. Otherwise, we will be called "birds" by the Americans.

The US dollar is sinking...fast. If you remember your history, the decline of the Roman Empire started when the Romans debased their currency. It wasn't defeat at war that brought about its demise but a deterioration of its economy. The Romans after amassing large amounts of resources from conquered lands decided to enjoy life. But when the money ran out, they decided to just make more of it.

While America doesn't go about building an empire by conquering foreign lands, it has been consuming far more than it produces resulting in a huge deficit. Foreign govts would return the US$ by buying US treasuries turning US into the biggest debtor nation in the world. This sort of kept the US$ from plummeting. However, foreign govts are now wary of keeping too much US$ assets as the US economy weakens and the US$ falls. Are we seeing a vicious cycle here?

There was even a presidential candidate Congressman Ron Paul whose platform was to strengthen the US dollar and dismantle the Federal Reserve. Several years ago he sounded more like a conspiracy theorist then a senator but the recent fall in the dollar and array of problems facing the US economy did lend some credibility to his "theories". Will we see the day when the US$1 goes for S$1?....I don't think it is too far fetched.

Tuesday, March 04, 2008

Means Testing Details Out!!!

"Prime Minister Lee Hsien Loong has suggested that hospitals implement means testing to help the lower income group", ChannelNewsAsia, 29 Oct 2007

"Yes I know, the GST hike also helps the poor", Lucky Tan

Details about means testing is out. Very interesting. With the income gap rising and the poor experiencing stagnant wages while the cost of medical care goes up, you might think that the poor will need higher level of subsidy than they currently receive. Means testing is to help the poor but the poor still get the same subsidy under means testing while everyone else ends up paying more. I think it helps the poor feel better knowing that everyone else pays more.

Why is the cost of medical care rising?
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The cost of medical care is rising much faster than per capita income growth. Much of it due to the govt initiatives to turn Singapore into a medical hub for the rich in the region - the Indonesian millionaires, Myanmar junta leaders, Saudi oil sheiks etc. PM Lee's own sister explained that the booming private hospital sector has caused doctors to leave the public hospitals - the pay difference is huge and doctors are only human. This causes cost of medical care to spiral up. Singapore served 410,000 foreign patients last year and PM Lee explained that no one not even Myanmar junta leaders is turned away as long as they have money because:

"Somebody who is sick, he wants to come to Singapore, he needs treatment and you're telling me that I shouldn't treat him because he is not a good man? It goes against the Hippocratic oath of doctors"- PM Lee on why Burmese Junta leaders are treated in Singapore.


Means Testing - the means to pay for what?

Means testing is done at the time of admission when the final bill is unknown. How do they know if the family has the means to pay for the final bill? Given that hospital bills are large sometimes amounting to 6 digits for serious illnesses, how can they ascertain if you have the means to pay.

Insurance leaves many holes

A large number of children born with congenital health problems are left out. People who cannot afford insurance or have pre-existing conditions are left out.


Means Testing at a time of Inflation

Since the cost of everything else has gone up, you thought maybe means testing should be held back so that people (even those in the middle class) can be spared from rising costs when they are seriously ill. No such luck. Despite the $6B surplus from last year's budget, means testing cannot wait. Yes, our govt is very compassionate, they can't wait to help the poor.


Monday, March 03, 2008

Psychology of the Markets...

As a survivor of the Asian Crisis, I have a tendency to believe that any scenario no matter how extreme is a chance of happening. I don't think I'll be able to stomach anything that remotely resemble what happened during the crisis and have reduced my risk exposure considerably in Nov/Dec last year. While something that bad is unlikely, it is a case of preparing for the worst and hoping for the best so that I won't be cleaning table at 80 to prolong my life. The market these days are like a like a movie except you don't know whether you're are watching a Disney movie where the characters get into alot of trouble and find a way to get out OR a Friday-the-13th horror movie where everyone gets killed.

So far the movie has just started but the signs point to the start of a horror movie . Poor ISM numbers, bad inflation numbers, poor unemployment numbers, and an overstretched consumer shows everything in USA economy has turned bad in one quarter. This is like the first part of a horror movie where the audience is given clues that there is a murderous monster lurking around. Then we are introduced to our protagonist, a certain Dr. Ben - first behind the curve suspicious but not convinced ....a few dead bodies later, he looks alot more energetic welding his weapon ready to strike the elusive murderous monster......

I really don't know how this movie will turn out but for the sake of the $20B worth of our tax payer's money invested in potential murder victims, I hope Dr. Ben turn out to be a real hero at the end of the movie.

It is found that many of the most shocking horror movies are made during bear markets and terrible recessions and upbeat happy movies are produced during bull markets.





This year's winner of the Best Picture Oscar award is "No Country for Old Men" a movie with an inconclusive abrupt ending - maybe it is saying something about how this year will end.
When Peter Shiller (of irrational exuberance fame) was asked what he thought will happen to the economy given the housing mess, he said he doesn't know and alot depends on how people behave. Shiller should know he did his Phd in behaviorial economics.

The precipitous fall in the DOW last Friday of 317pts lead me again to relook at the valuations of various companies listed on the SGX. P/E ratios of single digits are common place after the recent falls. While the situation looks far from ideal when has any buying opportunity on the stock market ever "looked good". Be it Black Monday, one day after 911 - the situation is always horrifying enough for people to expect the worse ahead and things to become bleaker. A horror that becomes more horrible.

While I'm no fortune teller and my head tells me things are as uncertain as ever and I may yet turn into the next murder victim in this horror movie, I remember a fat old man from Omaha who is pretty good at investing and he said this:

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” - Buffet.
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I asked myself if others are fearful today (about stocks not that Mas Selemat chap) and the answer is YES. Today I feel a bit greedy and I'm buying the following:
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1. REITs. I never liked them. In fact I hated them when they yielded 5% and investors snapped them up like hot cakes. Now they have fallen and yields have risen to above 10%, nobody seems to want them. I took a quick look and many are lock on to long term leases many in commercial property - if you're familiar with the situation you will know that there is an office shortage regardless of recession in Singapore for the next few years.
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2. Stocks with P/E ratios of rough 5 and dividend yield of 5% or greater. Diversify among these.
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I'm lazy. I keep things simple. No complicated charts, in depth analysis. Note that I'm not putting everything in and there is a real danger things will get worse in the comng months. ....that is what everyone seems to be thinking....there is real and intense fear.

Sunday, March 02, 2008

National Manhunt : Where is Mas Selamat?

"The face that launched 5.5 million cellphone alerts" - Sunday Times



After the 5.5 million MMS, he is now EVERWHERE. On the bus I was taking, his face was pasted on the exit door staring right at me. Scary isn't it?

Terrorist Mas Selamat was detained under the ISA (Internal Security Act) without trial for our safety. Coincidentally, "Selamat" means "safety" in Malay. Under the ISA, Selamat was held in Whitley Road Detention Centre the same detention center that held those highly dangerous political detainees e.g. the Marxist Conspirators, Said Zahari fortunately none of these political detainees escaped to endanger our beloved govt. If we had sent him for trial, he would have been held in Changi Prison where the toilets have no windows.

Although our terrorists are almost as despicable, ruthless and dangerous as our political detainees, I feel that they still deserve to be put on trial so that they can go to a proper jail with barb wire, multiple high walls and armed guards on watch towers who will be able to spot a limping man. We should reserve the ISA only for the worst elements of our society, the political deviants who threaten our society with confusion.

The big question now on everyone's mind is "Where is Mas Selamat?"...He was in all our nightmares yesterday night but where is he physically?

Here's my take on his whereabouts:

1. It was reported that he was seen climbing up a nearby hill. I figured that if he had this all planned, he would have someone meet him with an escape vehicle by the road. The reason why he took the trouble to climb the forested hill is there are many potential hideouts there.

2. The Sunday Times reported that his family received no help when he was detained. His children can't afford the fees to go to religious school and stayed at home. Apparently, he doesn't have much support which reinforce the theory that the escape is a lone spontaneous act.

I believe he is hiding somewhere close to the detention center maybe in the forest or some warehouse. He probably drinking water from public toilets and picking up leftover food or wild fruits to survive. .....To find him, they need to monitor public toilets in the area and places where he can find food.

If this is not a lone act but a well coordinated jail break, we have alot to worry about. If they can plan something like this, they can plan something even more insidious. I hope the catch him fast, hiding alone in a cave or under a bridge.

UPDATE:

I have an important message for those who blame our esteemed Minister Wong Kan Seng for this incident. I put the blame squarely on the members of the Opposition. Here's why:

WKS as minister cannot possibly know the detention center that well - you expect minister to inspect every toilet there? You expect the minister to train every guard? He has already apologised and taken responsibility. However, the members of the Opposition are the ones I blame for this mess.

A number Opposition members have been detained under the ISA and know this detention center inside out. They probably are familiar with the toilet used by Mas Selamat and the security flaws in the detention center - the redoctrination that purges them of harmful thoughts can temporarily increase the urge to escape. Knowing that the govt was detaining terrorist there, why didn't they point out the possible ways of escape to the govt? ...I don't think the Opposition has any valid reasons for denying responsibility for the escape, many have been detained there over the years and they spend more time there than almost anyone else.