Monday, June 16, 2008
It's been long
It's been a long time since i updated my blog as I was away to China for 1 month and apparently blogspot is censored in the country. I'll be writing again very soon.:)
Saturday, May 10, 2008
A Poem: An Ode to Bernanke
This poem is so funny that I just have to reproduce in my blog:
An Ode to Bernanke
Ben Bernanke is our crazy Fed chairman, you see
He’s convinced that the U.S. has a full forest of money trees.
So he creates fancy dollar bills out of thin air,
Trying to save the economy from its destructive flair
The first thing he wants is to keep homeowners from defaulting
So he gives a multi-billion dollar bail out to the criminals who were assaulting.
But that wouldn’t be enough to save the economy from a bearish turn
So is it any wonder he had JP Morgan bail out Bear Stearns?
But the one thing he doesn’t realize is that his tricks won’t solve a thing.
He’s just trying to keep the economy together on just one string.
So as he prints money with no regard for inflation,
He’s convinced by doing this he’s going to save the nation.
One dollar, two dollars, ten dollars to buy a bottle of coke.
And as soon as you walk into a supermarket, the prices will make you want to choke.
So what will Ben do when he finds his plan didn’t work?
Will he be forever regarded as an economic jerk?
Will the annals of history reflect on him well?
Not in my mind – and that’s the history I’ll tell.
Friday, May 2, 2008
"Mr Buffet has to answer to his shareholders every year, GIC doesn't have to"
MM Lee said that in an interview by the local newspapers when consulted on whether GIC (and Temasek anyway) can afford to be more transparent. Citing 'strategic considerations' and for fear of 'dependency on pay outs' from the Government, MM Lee said it's best not to be too transparent. To be fair, Buffett is my idol, as to many millions or even billions of other people as well. And there may be a certain bias. But I do have many more questions to ask regarding GIC.
While I can understand the part on 'strategic considerations', I wonder whether it justifies the issue on transparency. While certain hedge funds and venture capitalists or private equity firms are indeed not transparent to the external world, they are fully answerable to their stakeholders. So who are the stakeholders of GIC funds amounting to more than US$300bn? You. Me. Every Singaporean. Then why aren't they answerable to us?
On the part of 'dependency' as people expects more payout: Who cultivate this dependency? While I am not complaining the government giving out cash transfers almost close to every General Elections, isn't it not the same action that is breeding more expectations from the citizens on more handouts? Admitting that it is not an easy issue to solve given the contradictory position on Singapore being a non-welfare state (to pull it from our government's lines: S'pore Inc cannot afford to offer welfare--which economically speaking is quite correct), it is a difficult yet the Government's job to ensure a balance in widening the social safety net and people's expectations. Why then are we paying them so much?
MM Lee went on to say that in comparison with the famed Berkshire Hathaway, GIC is looking at a longer term for investments. This is said so to justify the investments in the US/European banks that has registered paper losses amounting to millions of dollars for Singapore and therefore GIC will evaluate their investments in 5-10 year periods while Warren Buffett takes a shorter term view as he has to answer to his shareholders every year. This seems to insinuate GIC is far more far-sighted than Berkshire.
That statement, is fundamentally flawed. Everyone knows that Warren Buffet takes a very long term view. He likes to buy companies but rarely likes to sell. He looks for companies that can provide cashflow and more earnings indefinitely. In fact, he has held on to Coca-cola stocks longer than most people. And he does incur losses in certain areas sometimes, very much like any investor on Earth, which is clearly stated in the annual financial statements. Just that the gains are usually more than the losses. With a company racking in more than US$100bn in revenue and 1 year return of 23.297% (in USD), it would be interesting to see if GIC can even match up to that standard. To give you a perspective on how big (or how rich) Berkshire is, Berkshire's market capitalization is slightly more than US$200bn, which is almost equivalent to Singapore's GDP (PPP at 2007) .
While GIC pays millions to their board of directors (take it as the management fee--a cost my dear bloggers! for managing Singapore's funds), Warren Buffet opt to get only US$100,000 a year. Are the management in GIC liable for losses? Are their salary pegged to performance? What is the benchmark that GIC is using to evaluate performances of their management (Why would I want to pay a trader more than a million a year if he can only rack in 5% yoy return which barely covers our inflation rate)? Such information is not given to us.
In short, it is totally irresponsible to use that statement to cover up the mysterious GIC and an insult to the Oracle of Omaha.
While I can understand the part on 'strategic considerations', I wonder whether it justifies the issue on transparency. While certain hedge funds and venture capitalists or private equity firms are indeed not transparent to the external world, they are fully answerable to their stakeholders. So who are the stakeholders of GIC funds amounting to more than US$300bn? You. Me. Every Singaporean. Then why aren't they answerable to us?
On the part of 'dependency' as people expects more payout: Who cultivate this dependency? While I am not complaining the government giving out cash transfers almost close to every General Elections, isn't it not the same action that is breeding more expectations from the citizens on more handouts? Admitting that it is not an easy issue to solve given the contradictory position on Singapore being a non-welfare state (to pull it from our government's lines: S'pore Inc cannot afford to offer welfare--which economically speaking is quite correct), it is a difficult yet the Government's job to ensure a balance in widening the social safety net and people's expectations. Why then are we paying them so much?
MM Lee went on to say that in comparison with the famed Berkshire Hathaway, GIC is looking at a longer term for investments. This is said so to justify the investments in the US/European banks that has registered paper losses amounting to millions of dollars for Singapore and therefore GIC will evaluate their investments in 5-10 year periods while Warren Buffett takes a shorter term view as he has to answer to his shareholders every year. This seems to insinuate GIC is far more far-sighted than Berkshire.
That statement, is fundamentally flawed. Everyone knows that Warren Buffet takes a very long term view. He likes to buy companies but rarely likes to sell. He looks for companies that can provide cashflow and more earnings indefinitely. In fact, he has held on to Coca-cola stocks longer than most people. And he does incur losses in certain areas sometimes, very much like any investor on Earth, which is clearly stated in the annual financial statements. Just that the gains are usually more than the losses. With a company racking in more than US$100bn in revenue and 1 year return of 23.297% (in USD), it would be interesting to see if GIC can even match up to that standard. To give you a perspective on how big (or how rich) Berkshire is, Berkshire's market capitalization is slightly more than US$200bn, which is almost equivalent to Singapore's GDP (PPP at 2007) .
While GIC pays millions to their board of directors (take it as the management fee--a cost my dear bloggers! for managing Singapore's funds), Warren Buffet opt to get only US$100,000 a year. Are the management in GIC liable for losses? Are their salary pegged to performance? What is the benchmark that GIC is using to evaluate performances of their management (Why would I want to pay a trader more than a million a year if he can only rack in 5% yoy return which barely covers our inflation rate)? Such information is not given to us.
In short, it is totally irresponsible to use that statement to cover up the mysterious GIC and an insult to the Oracle of Omaha.
Thursday, April 24, 2008
PAP-The Singapore Graduate School of Taiji-ing
As many of you should have heard about the Mas Selamat Escape Incident and the explanations given by Minister Wong Kan Seng and PM Lee.
So the top guy should not be held responsible for things that go wrong at the bottom. Given that every minister does their jobs through another person (come on, you don't really think that policies are crafted by ministers do you? They have an army of scholars/economists/policy planners doing the work for them. And their job is to peruse, ask questions, and approve), they are virtually immune from any wrong doings.
"Oh this policy A is wrong?...hmm, the ministry will review it. The economy is dynamic you see..."
"Ah, some terrorist bombed Ang Mo Kio MRT station! Why aren't the public more observing? Singaporeans, a complacent lot."
Then, the ministers claimed credit for anything good.
"Thanks to our very capable government, we manage to minimize the impact from the financial crisis." (Hey with more than US$500 bn in reserves, there are more than one way to mitigate economic downturn.)
"Our government is far sighted in planning for the future of our citizens. Therefore the extension of the CPF is absolutely necessary." -- What good planning. It makes good economical sense which I agree absolutely. Then you realize their far-sightedness is only based on theory but complacent on current establishments such as silly things on not checking that there's no grills in the toilet of the Detention Camp that Mas Selamat escaped from.
It's always easy to blame the government for anything. But at least be accountable. And responsible. When is the last time ISU did an audit of their operations and all important dentention camps?
To the government:
Since we are paying you millions of dollars a year, I think it's rather fair for us to expect what was being paid out. When you pay $5000 for a watch, you at least expect a Rolex, not a Swatch. You said you guys are an extraordinary lot of people. So at least match up the price. We aren't demanding a lot ya know. To use a financial analogy, I think you are over-valued. And maybe we should start selling ya in the next GE.
Thorough explanations? I can't sense the sincerity in apology. Well trained they are in the Singapore Graduate School of Tai-ji-ing.
So the top guy should not be held responsible for things that go wrong at the bottom. Given that every minister does their jobs through another person (come on, you don't really think that policies are crafted by ministers do you? They have an army of scholars/economists/policy planners doing the work for them. And their job is to peruse, ask questions, and approve), they are virtually immune from any wrong doings.
"Oh this policy A is wrong?...hmm, the ministry will review it. The economy is dynamic you see..."
"Ah, some terrorist bombed Ang Mo Kio MRT station! Why aren't the public more observing? Singaporeans, a complacent lot."
Then, the ministers claimed credit for anything good.
"Thanks to our very capable government, we manage to minimize the impact from the financial crisis." (Hey with more than US$500 bn in reserves, there are more than one way to mitigate economic downturn.)
"Our government is far sighted in planning for the future of our citizens. Therefore the extension of the CPF is absolutely necessary." -- What good planning. It makes good economical sense which I agree absolutely. Then you realize their far-sightedness is only based on theory but complacent on current establishments such as silly things on not checking that there's no grills in the toilet of the Detention Camp that Mas Selamat escaped from.
It's always easy to blame the government for anything. But at least be accountable. And responsible. When is the last time ISU did an audit of their operations and all important dentention camps?
To the government:
Since we are paying you millions of dollars a year, I think it's rather fair for us to expect what was being paid out. When you pay $5000 for a watch, you at least expect a Rolex, not a Swatch. You said you guys are an extraordinary lot of people. So at least match up the price. We aren't demanding a lot ya know. To use a financial analogy, I think you are over-valued. And maybe we should start selling ya in the next GE.
Thorough explanations? I can't sense the sincerity in apology. Well trained they are in the Singapore Graduate School of Tai-ji-ing.
Sunday, April 6, 2008
Higher fees to watch EPL/Champions League in Singapore
I haven't been posting, coz time is rather tight. But still, this fine Sunday afternoon prompt an inner side of me to post some stuff, just as an escape from the stress of life (laugh).
The Sunday Times Headlines screams "Football fans bear brunt of pay-TV battle' (actually, the headline SHOW ME THE MONEY on Ronald Susilo who might take legal action against his ex-fiancee Li Jiawei attracts my attention more. Haha).
While it is generally true that a more competitive market generally contributes to more consumer welfare, we have to analyze deeper than the simple competitive market model. While having another competitor offering similar products generally shift out the supply curve, the thing is, having another bidder actually increases the demand for the same supplier of the product -- the EPL and Champions League content. In the end, they end up paying more to win the bids of the content and in the end pass on the higher costs on consumers due to inelastic demand curve (and supposedly elastic supply). Plus the bundling pricing strategy captures a higher producer surplus (since most people who pay the bundle only wants to watch football more than the rest but has to pay 'extra' for the other contents).
The ultimate winners are the football clubs and football players (and the distributor of football contents) since they command high monopolistic power. It' s no wonder football stars are earning so much money.
The Sunday Times Headlines screams "Football fans bear brunt of pay-TV battle' (actually, the headline SHOW ME THE MONEY on Ronald Susilo who might take legal action against his ex-fiancee Li Jiawei attracts my attention more. Haha).
While it is generally true that a more competitive market generally contributes to more consumer welfare, we have to analyze deeper than the simple competitive market model. While having another competitor offering similar products generally shift out the supply curve, the thing is, having another bidder actually increases the demand for the same supplier of the product -- the EPL and Champions League content. In the end, they end up paying more to win the bids of the content and in the end pass on the higher costs on consumers due to inelastic demand curve (and supposedly elastic supply). Plus the bundling pricing strategy captures a higher producer surplus (since most people who pay the bundle only wants to watch football more than the rest but has to pay 'extra' for the other contents).
The ultimate winners are the football clubs and football players (and the distributor of football contents) since they command high monopolistic power. It' s no wonder football stars are earning so much money.
Saturday, January 26, 2008
Protectionism
200 over years ago....or less...anyway, here's how the story goes:
US ship commander: "You Japanese, I demand that you open trades with us. You have much to gain and I have much to gain. It's a win-win situation. Being protectionist is no good, and I have my economists to prove you wrong."
Japanese shougun: No, you white monkey! I know your intention. You want to invade our national security and colonize us as what the other white monkeys have done to other asian countries!"
US ship commander: "You fool! It is unwise to go against our big modern cannons and guns. Surrender!"
Japanese shougun:"Nonoooooo...!"
And the rest, is history. Similar occurrences includes the British-China Opium war. Japan became a semi-colonized country, modernized itself, and began a series of horrific imperialistic expansionist war in Asia. Turning back the clock to year end 2007/ start 2008.
Asian/Middle East investors:"Dear americans and europeans, I see that you have much trouble in your sub-prime issue lately. Let us offer our friendly help to you poor white monkeys."
Americans/European battled bankers:"Oh yes please i beg you, help us!"
Other Americans (like, say Hillary Clinton?)/Europeans:"No! These sovereign funds are only out to purchase our nice bank stocks on the cheap! It's an infringement on our national security! Boycott these asian/middle eastern investors!"
Asian/Middle East investors:"Oh no no. We are most kind. We won't interfere in anything. We are just passive investors who wants to invest in a good stock."
Other Americans (like, say Hilary Clinton?)/Europeans:"Boycott! Reject! Protectionism rules!"
Americans/European battled bankers:"Noooooooo...!" (and they fight out with their own countrymen.)
It's funny how things turn out. Even some american/european economists wants to retain their banks' sovereignty by saying no to outside investments. Well, if the west do not welcome investments, there's always China and India to turn to. I'm sure the Chinese and Indian politicians won't mind it at all. Although protectionism is never a good thing (since it will just generate more dead-weight loss and decrease social benefits), people play on their emotion (and thus nationalism) more than anything else.
Take the recent roller coaster ride of the stock market. Anyone knows it's irrational. And yet, hordes of people sell when prices are dropping (and buy when the market was so bullish a couple of months ago. In other words, stock prices aren't cheap then). Ok, maybe those that went into 'margin call mode' doesn't really have much choice but to sell their remaining stock, but then, it's their bets. Whatever happen to the basic investment principle of 'buy low sell high'? It's more of 'buy high sell low' if you ask me.
US ship commander: "You Japanese, I demand that you open trades with us. You have much to gain and I have much to gain. It's a win-win situation. Being protectionist is no good, and I have my economists to prove you wrong."
Japanese shougun: No, you white monkey! I know your intention. You want to invade our national security and colonize us as what the other white monkeys have done to other asian countries!"
US ship commander: "You fool! It is unwise to go against our big modern cannons and guns. Surrender!"
Japanese shougun:"Nonoooooo...!"
And the rest, is history. Similar occurrences includes the British-China Opium war. Japan became a semi-colonized country, modernized itself, and began a series of horrific imperialistic expansionist war in Asia. Turning back the clock to year end 2007/ start 2008.
Asian/Middle East investors:"Dear americans and europeans, I see that you have much trouble in your sub-prime issue lately. Let us offer our friendly help to you poor white monkeys."
Americans/European battled bankers:"Oh yes please i beg you, help us!"
Other Americans (like, say Hillary Clinton?)/Europeans:"No! These sovereign funds are only out to purchase our nice bank stocks on the cheap! It's an infringement on our national security! Boycott these asian/middle eastern investors!"
Asian/Middle East investors:"Oh no no. We are most kind. We won't interfere in anything. We are just passive investors who wants to invest in a good stock."
Other Americans (like, say Hilary Clinton?)/Europeans:"Boycott! Reject! Protectionism rules!"
Americans/European battled bankers:"Noooooooo...!" (and they fight out with their own countrymen.)
It's funny how things turn out. Even some american/european economists wants to retain their banks' sovereignty by saying no to outside investments. Well, if the west do not welcome investments, there's always China and India to turn to. I'm sure the Chinese and Indian politicians won't mind it at all. Although protectionism is never a good thing (since it will just generate more dead-weight loss and decrease social benefits), people play on their emotion (and thus nationalism) more than anything else.
Take the recent roller coaster ride of the stock market. Anyone knows it's irrational. And yet, hordes of people sell when prices are dropping (and buy when the market was so bullish a couple of months ago. In other words, stock prices aren't cheap then). Ok, maybe those that went into 'margin call mode' doesn't really have much choice but to sell their remaining stock, but then, it's their bets. Whatever happen to the basic investment principle of 'buy low sell high'? It's more of 'buy high sell low' if you ask me.
Tuesday, January 15, 2008
Middle East and Asian funds Zooming into cheaper US Bank Stocks
Mega US Banks, once proud and arrogant and rich and powerful are now bowing towards the Middle Eastern and Asian countries for crucial helpline in saving their reckless dump into the sub-prime mortgage crisis. For a record of the helplines thrown in, adapted from bloomberg:
http://bloomberg.com/apps/news?pid=20601087&sid=anjGWhqi0PSE&refer=home
Firm Infusion Investor Stake
Citigroup $6.8 Government of Singapore 3.7%
Investment Corp.
7.7 Kuwait Investment Authority; not
Alwaleed bin Talal; Capital specified
Research; Capital World;
Sandy Weill; public investors.
7.5 Abu Dhabi Investment
Authority 4.9%
Merrill Lynch 6.6 Korean Investment Corp.; not
Kuwait Investment Authority; specified
Mizuho Financial Group
4.4* Temasek Holdings 9.4%**
(Singapore)
1.2 Davis Selected Advisors
(U.S.) 2.6%**
UBS 9.7 Government of Singapore
Investment Corp. 10%
1.8 Unidentified Middle Eastern
Investor 2%
Morgan Stanley 5 China Investment Corp. 9.9%
Barclays 3 China Development Bank 3.1%
2 Temasek Holdings 2.1%
Canadian Imperial 2.7 Li Ka-Shing; Manulife not
Financial; others specified
Bear Stearns 1 Citic Securities Co. 6%***
(China)
_____
TOTAL $59.4
* Temasek has an option to invest an additional $600 million.
** Estimate based on purchase price of $48 a share.
*** Citic has an option to increase its stake by as much as
3.3 percent.
It's amazing how Singapore's GIC and Temasek were involved in capital infusion into 5 out of the 7 mentioned banks, and the amount of money pumped into the banks easily surpass any other funds. This gives one an indication of how rich the Singapore government is handling.
The mortgage crisis has provided ample opportunities for funds around the world to buy into the cheap otherwise expensive US bank stocks that will be hard to come by. And the Singapore government is certainly not going to miss these opportunities. The large infusion of capital into the United States will help to alleviate some pressure off the declining US dollar. In a way, this will and can avert the scenario of further weakening of the greenback, which would spell trouble for countries holding large reserves of US dollar denominated deposits, currency and other investment vehicles.
Although no negative figure, the US economy had shown signs of slowing. How long can the Fed continue to bail out the economy through interest rate cuts before the economy tumbles into recession?
The mortgage crisis has provided ample opportunities for funds around the world to buy into the cheap otherwise expensive US bank stocks that will be hard to come by. And the Singapore government is certainly not going to miss these opportunities. The large infusion of capital into the United States will help to alleviate some pressure off the declining US dollar. In a way, this will and can avert the scenario of further weakening of the greenback, which would spell trouble for countries holding large reserves of US dollar denominated deposits, currency and other investment vehicles.
Although no negative figure, the US economy had shown signs of slowing. How long can the Fed continue to bail out the economy through interest rate cuts before the economy tumbles into recession?
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