Wednesday, December 31, 2008

Never brought to mind

The year is coming to a close. In the immortal words of Queen Elizabeth II, this has been an Annus Horibilis. No, this is not a dirty word, at least not in the "common" way it is understood (tsk tsk, what are all of us thinking of on the last day of 2008?)

It started out promisingly enough, coming off a year (2007) that saw record profits for businesses and stratospheric growth of wealth by individuals in en-bloc'ing their private properties - typically their houses. For those who don't know what that means, it is a collective sale of an entire block property such as a condominium, for hundreds of millions of dollars, the proceeds of which is then allocated to the owners according to their share values in the property. A friend of mine received over a million dollars for his townhouse, which was part of a bigger cluster development. No wonder that erstwhile neighbours became mortal enemies when such en-bloc sales were blocked because they couldn't garner the 80% minimum 'ok's' to proceed with the sales. A few lawsuits are still pending in the courts over these disagreements, and people have even complained through the press above the oppressiveness of Sales Committees who just cannot stop thinking about selling their houses.

The year is ending with much less optimism though, amazingly, there are people who still want to go ahead with their en-bloc projects. One wonders if these people have lost so heavily in the stock market, or business, or whatever bombs they had bought into that cash has suddenly taken a critical dimension in the grand scheme of things.

The year is ending with bitter memories for many over the Lehman Brothers debacle, where older people would have lost their entire retirement savings had not DBS done some refunding on compassionate grounds. Of course goodwill and reputation also meant a lot to the bank. Well, never mind, if you are short of cash, there are ways to raise money, such as the rights offering on 22nd December 2008, a third of which was taken up by Temasek Holdings. In these times, you really need Temasek to come in because there aren't much free money sitting around as it used to. And whatever money that many imagined they had have just gone up in smoke, either in the stock market, or in Bernard Madoff, whose estimated US$50 billion loss was the largest any individual had managed to lose - on behalf of his clients, i.e. That's why I have never believed in pyramids where money is concerned, however respectable they are always dressed up to look.

And people are beginning to be out-of-pocket where jobs are concerned. Again, DBS started the ball rolling by putting 900 people out of work. It got an obligatory tongue-lashing from Mr Lim Swee Say, the Trade Union chief, over this action, but it is not likely that retrenchments will stop at DBS Bank, in spite of what the Union leaders say. When the business dries up, when the money stops flowing anymore, you've got to close shop - its a fact of life. What the government can do is pump money into the economy to sustain it, but this can only be a short term measure. Hopefully, the economy will recover at the end of 2009, as some high government officials have dared to predict, but the majority opinion seem to be that this depressing state of affairs is going to last much longer.

And it is sad that the year is ending with news of abandonment of foreign workers by Singapore contractors, who suddenly find that they have no more jobs for people whom they have brought into the country. What's worse, these workers have reportedly not been paid for some time now and some are starving and are no worse off than beggars.

And to end it all, the symbolic Wheel of Fortune, the Singapore Flyer broke down on the 23rd December 2008, trapping 175 people on board at the time. Truly tonight, the last day of 2008, when thousands of people throng the various new year's eve parties on the island, they'd be singing Auld Lang Syne with a new gusto, and especially agree on the question:

Should all acquaintance be forgot and never brought to mind...

Goodnight and goodbye, 2008.

Image: Author: elemenoperica

Tuesday, December 23, 2008

Don't be blunt

I agree with Minister Lim Boon Heng (Today, 23rd Dec 2008 - page 1). Not that I am a staunch PAP supporter or that I am anti-opposition or that I am a union member. If anything, I am more apathetic politically, so my view this time around, as in many of the past cases I have commented on, is purely based on reason, and perhaps a bit of self-interest. Well, ok, that's a lot of self-interest.

I agree that the Central Provident Fund (CPF) should not be cut in these recessionary times because, as Mr Lim has rightly pointed out, it is a blunt instrument. It will cut the real wages of workers whose organisations are making money in these depressed times just as much as for those organisations which are bleeding red, or at best are just floating above water right now. Now why should workers, salarymen, in profitable companies, be asked to give more of the profit generated through their effort to their employers? So that these employers can buy another couple of houses at depressed prices, and/or mop up shares of blue-chip companies at a bargain, all to their own benefit? If the workers' Unions even contemplate this, they should be run out of the Union house. And since the CPF contribution rates are uniform across the board, then workers in those companies doing badly should also not be touched.

Let's not have a situation where the employers, the bosses, have their cake and eat it too. They can cut the bonuses, other variable wage components and even reduce wages, as suggested by the Union leaders, but not the CPF. We salarymen depend on the money in the CPF account to pay for the roof over our heads We have no choice. Imagine every HDB dweller dumping their houses because they cannot make the mortgage payments. We'll have a crisis worst than the recession on our hands, a situation perhaps akin to the sub-prime mortgage problem in the US. We also need the CPF savings for our retirement years. The government has been harping on the possibility that Singaporeans, in spite of their CPF, may not have enough to retire with. So don't pare it down, don't reduce the quantum of contributions from the employers. Otherwise, reasons for the Retirement Accounts and whatnots that are cooked up from time to time by the government (in good times) will look so hollow.

Singaporeans may be an obedient and disciplined workforce, but we are not stupid. While we do not want to go to the extremes that some American Unions have gone, we need to look out for ourselves too.

Image: Author: Dani Simmonds

Saturday, December 20, 2008

Public Gambling

Mr Khaw Boon Wan comes across as an honest man. Really. Read what he says in interviews and listen to him in Parliament. You cannot fault the man for being drop-death honest with you. He doesn't fudge the issues. Instead, he tells it like it is. He speaks to the common folks, not at them, not over them, not from above. So you cannot but like the man for his forthrightness and ability to empathise with you.

He has come out to admit that the mis-investment of sinking funds should rightly be a concern to the man in the street, for after all, these mis-invested money are the people's money, they belong to the townsfolk. (See Straits Times, 19 Dec 2008). But he reasons that since these same investments made money in the past, and the current losses represents a small portion of these gains, it shows that these funds are, on balance, in good hands. He further makes the point that the statement of accounts of these town councils can be inspected any time, no questions asked. I think he is being level-headed and reasonable again. But the problem with this is that it isn't very useful examining the books 'after the fact', is it?

But surely the thing that saved the TC's bacon this time was past investment gains. Let us do a thought experiment, for the heck of it. If a TC had $10million in sinking funds, and invests 10% of it in risky structured deposits (i.e. $100,000) - the law says they can't go beyond 30%. Again, assuming that the annual yield of that investment is 10%. The investment will have yielded $100,000 x 10% = $10,000 in a year. Let's assume the good times lasted 3 years and assuming the same rate of return, the TC ends up with $30,000 profit (let's not do the compounding thing and we shall ignore inflation). Suppose in the 4th year, a financial tsunami hits, and the fund loses $29,000 in absolute terms. That still gives the fund a positive $1,000 over 4 years. Is that good management of funds or not? Of course, you'd have to consider the opportunity cost of the next best option, which is a Fixed Deposit. Over 4 years, the yield, at 2% per annum, will be $2,000 x 4 years, or $8,000. Clearly, in this scenario, it would have been better if the money had been invested in FDs. Of course, you will argue that this scenario is contrived to 'win' the argument, but so is the 'luck' that the TCs counted on over the past to accumulate enough surplus to still come out quite decent in its overall investment returns in spite of the $16million loss. Nevertheless, could my contrived scenario be possible?

If so, in both cases, the balance sheets still yield a positive bottom line, but you and I know that they have lost big time with the structured investment. Mr Khaw's argument begins to get into trouble with a scenario somewere in-between. Is he not then gambling with numbers, like all those queues we witness in front of 4-D booths almost everyday?

It is ok if the money belongs to you, or a private business, but if it is the people's money, which Mr Khaw very rightly admits to be the case, then this risk is not obviously acceptable.

The TCs were just lucky this time around. I know of people, and you will too, whose investments have almost been wiped out, or at least reduced so drastically that it would be a pain greater than going to hell, to liquidate now. And I am not referring only to the, I mean.

Image: Author: Lisa Solonynko

Monday, December 15, 2008


Last Friday night, I met up with some ex-colleagues whom I have not seen in a while. We were part of a small outfit then, all of us young and unmarried. So I suppose, without the husbands and wives and children, we got to strike up close bonds as only young people do. 

Now we are much older. The oldest child we have among us is already in Junior College - all of 17 years old. So it was natural that part of the conversation over dinner turned to children and their education. Pre-school education was raised - words like Kumon and what-nots came up in the free-flowing conversation. Apparently, many of my ex-colleagues have sent their toddlers to these specialist schools to, I suppose, gain a leg-up in life. All this while I kept silent, because I never ever believed in these schools. I sent my son to a PAP kindergarten for two years, and that was it. Tried to get him interested in Piano, but he wanted out after a few lessons. So that was it too, until he was enrolled into a neighbourhood school just 7-10 minutes walk away from where I lived. He passed his PSLE with straight As (although A+ would have been more impressive), got into another neighbourhood Secondary School, now biding time till his 'O' levels. 

Such is the life of every Singapore boy and girl. We have to pass through 2 major exams in our young lives, exams which many parents treat as a matter of life and death. So I could empathise with a parent who wrote in to Today's (15 December 2008) forum page lamenting the lengths to which Singapore parents would subject their children to regimentation memorisation, regurgitation, creativitisation, etc. from as early as 2 years old. I often wonder if there is anything wrong with us parents. We bring a child into the world, and just as soon as they are ready to walk, we rob them of their childhood by subjecting them to an endless regimen of training in the hope that they will turn into an Einstein or, at least, some'thing' they could brag in parties and gatherings.

I often also wonder whether, somewhere along the line, education in Singapore has taken a wrong turning, for the worse. I do not know, but 20-30 years hence, when our children themselves becomes parents, they would reverse these practices because they know it didn't so much benefit them as it did their parents. I would be disappointed if this state of affair is perpetuated by them and those that come after them. Then we would know that the turning has been too sharp.

Monday, December 01, 2008

Arowana Health

Singapore has one of the best Hospitals in this region. It is one of the favourits of medical tourists, who are willing to pay the high price of good treatment that our hospitals are known for. On the other hand, locals feels that hospital charges are too high, but the government stance is that the true cost of medical treatment should be reflected so that our scarce resources are economically, i.e. rationally, allocated. The government does offer subsidies to different classes of wards in its 'restructured' government hospitals such as Singapore General Hospital and Changi General Hospital.

I was in Changi General yesterday evening to visit a friend who, unfortunately, had suffered from a massive stroke and was, to all intents and purposes, being kept alive with a few tubes through his nostril and mouth. It is sad when this happens to an 80+ year old man. You just feel helpless over the whole thing and the issue of AMD (Advanced Medical Directive) flashed through my mind. As I left the 'C' class ward, I couldn't help noticing a fish tank beside the receptionist/nurse station. Colourful fish always add to the 'live' amidst the suffering and dying, balancing somewhat the specter of doom. But in this particular tank, there was only one fish - a fish that was about 2/3 the length of the tank. I don't know much about fish, but I have seen some expensive fish before, and that fish looked like an Arowana. I remarked half-jokingly to my companion that I now understand why hospital treatments in Singapore are so expensive. It wasn't only the high-tech facilities, it wasn't just the doctors (although I understand the ward doctors get paid a pittance), and it wasn't the medicine only. Its the fish too, stupid.

Now why does a 'C' class ward in a government restructured hospital see fit to keep an Arowana in its ward's fish tank? Surely not for the kitchen, nor the patients, and certainly not for the nurses and the doctors. Arowanas stay quite still in water near the surface, almost like it is dead. In a hospital, such a lifeless-looking fish added to the gloom. But it did look expensive to me, but my companion, who knew a thing or two about fish, told me that this species of Arowana is not the expensive type.

Nevertheless, the thought still lingered in my mind: why is a 'C' class ward in a government restructured hospital keeping an Arowana in its ward's fish tank? Does it believe, as the Chinese do, that the fish will bring wealth , fortune and prosperity to the ward and the hospital? This will be a first in Singapore. Or is there something new for me to learn here?

See also: Arowana Club