Sunday, November 22, 2009
Excellent train service in UK
I like the train service in the UK. There is something that Singapore can learn. Read here.
Oligopoly
Source: Wikipedia
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). The word is derived from the Greek oligoi 'few' and poleein 'to sell'. Because there are few sellers, each oligopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Strategic planning by oligopolists needs to take into account the likely responses of the other market participants. This causes oligopolistic markets and industries to be a high risk for collusion.
Firms often collude in an attempt to stabilize unstable markets, so as to reduce the risks inherent in these markets for investment and product development. There are legal restrictions on such collusion in most countries. There does not have to be a formal agreement for collusion to take place (although for the act to be illegal there must be actual communication between companies) - for example, in some industries, there may be an acknowledged market leader which informally sets prices to which other producers respond, known as price leadership.
In other situations, competition between sellers in an oligopoly can be fierce, with relatively low prices and high production. This could lead to an efficient outcome approaching perfect competition. The competition in an oligopoly can be greater than when there are more firms in an industry if, for example, the firms were only regionally based and did not compete directly with each other.
Question: Is banking in Singapore similar to an oligopoly?
New York Times to Goldman Sachs
The New York Times editorial slams Goldman Sachs for its role in creating the global financial crisis. What a brave newspaper who is willing to speak the facts honestly.
Low interest rate
Interest rate has been low for the past few years. It will continue to be low for a long time, partly due to supply and demand. There is low demand for loans due to the global economic downturn. There is too much money due to stimulus spending of governments.
But there is another factor. The banks are keeping large spread for themselves. They charge a high interest rate on their loans, especially to small businesses, but offers a low interest rate to their savings. They make a large profit.
In a competitive market, the banks should be competing among themselves to pay higher interest rate to get savings to give out as loans. Their access to cheap government money reduces the need for paying competitive interest rate. There are just a few banks and there could be some "tacit understanding" among the banks that they do not need to compete for savings in this environment. This is an oligopolistic situation.
For interest rate to raise, we need a new arrangement for businesses to get loans at cheaper rates, and for savers to get a higher interest rate. This is a challenge for the governments and economists to rebuild a more competitive environment for the financial sector. The old "free market" did not work well.
Tan Kin Lian
But there is another factor. The banks are keeping large spread for themselves. They charge a high interest rate on their loans, especially to small businesses, but offers a low interest rate to their savings. They make a large profit.
In a competitive market, the banks should be competing among themselves to pay higher interest rate to get savings to give out as loans. Their access to cheap government money reduces the need for paying competitive interest rate. There are just a few banks and there could be some "tacit understanding" among the banks that they do not need to compete for savings in this environment. This is an oligopolistic situation.
For interest rate to raise, we need a new arrangement for businesses to get loans at cheaper rates, and for savers to get a higher interest rate. This is a challenge for the governments and economists to rebuild a more competitive environment for the financial sector. The old "free market" did not work well.
Tan Kin Lian
Bailout of AIG
Read this report. The counter parties should have been forced to take a haircut, rather than get paid in full.
Full employment and welfare state
Winston Churchill was the Prime Minister of Great Britain during the Second World War. His outstanding leadership was the key factor in winning the war for Great Britain, against a stronger Germany. He was called "the savior of our nation".
Towards the end of the war, an election was called in Great Britain. Churchill was the leader of the Conservative Party. The Labour Party campaigned on a platform of full employment and a welfare state, and won the general election. Churchill lost, in spite of the gratitude of the people for his leadership. The people were looking towards the future and wanted a government that could deliver full employment and welfare.
Towards the end of the war, an election was called in Great Britain. Churchill was the leader of the Conservative Party. The Labour Party campaigned on a platform of full employment and a welfare state, and won the general election. Churchill lost, in spite of the gratitude of the people for his leadership. The people were looking towards the future and wanted a government that could deliver full employment and welfare.
Charity and the retrenched
Mr Tan,
What exactly is the legal definition of "Charity"? I am somewhat confused by the "We Are One" campaign which is enjoying an unprecendented TV coverage, to solicit public donations.
Why are retrenched people who can't find jobs, being lumped with the traditional Charity recipients, as in, chronic sick, aged, infirm, homeless, destitute. Is this legal? Surely a lot of retrenched people get at lease some retrenchment benefits whilst those really in dire need e.g. kidney patients, poor sickly aged people, are actually more deserving of :charity: money?
Why are "those affected by the economic downturn" now being sanctioned by the government as charity recipients?
Who isn't affected by the economic downturn, it is a question of the "degree". How do you qualify to get this charity money? Who is the judge? this is very important. Everyone would like to say he is affected terribly by the economic downturn!
I went to "weareone" website to find outmore. The FAQ just tells you how to donate, not telling how the money is administered, who qualifies to get it, how, when, who, zilch!
The website, as in the tV clips, said that the donation is for those "affected by the economic downturn". this is a very vague statement for me to part with my donation money, which could also be given to a kidney patient in financial trouble.
I am quite traditional, i still think that if retrenched people cannot find work and is in financial trouble, it is the Government's duty to generate jobs, or have a system to cushion the impact.
Is it a shift in the policy to pass the burden of supporting jobless people to the rest of the people with jobs, and the government will wash half its hands off the burden of generating jobs, by putting the jobless on charity? I wonder if the small boy on tv who felt proud of contributing the lego bricks, does he know wht he is doing?
In summary, I don't feel comfortable at all constantly being bombarded by the media in the last few weeks, and not getting any wiser going to their website.
What does everyone here think? Tell me, am I being selfish, oversensitive and unreasonable?
REX
What exactly is the legal definition of "Charity"? I am somewhat confused by the "We Are One" campaign which is enjoying an unprecendented TV coverage, to solicit public donations.
Why are retrenched people who can't find jobs, being lumped with the traditional Charity recipients, as in, chronic sick, aged, infirm, homeless, destitute. Is this legal? Surely a lot of retrenched people get at lease some retrenchment benefits whilst those really in dire need e.g. kidney patients, poor sickly aged people, are actually more deserving of :charity: money?
Why are "those affected by the economic downturn" now being sanctioned by the government as charity recipients?
Who isn't affected by the economic downturn, it is a question of the "degree". How do you qualify to get this charity money? Who is the judge? this is very important. Everyone would like to say he is affected terribly by the economic downturn!
I went to "weareone" website to find outmore. The FAQ just tells you how to donate, not telling how the money is administered, who qualifies to get it, how, when, who, zilch!
The website, as in the tV clips, said that the donation is for those "affected by the economic downturn". this is a very vague statement for me to part with my donation money, which could also be given to a kidney patient in financial trouble.
I am quite traditional, i still think that if retrenched people cannot find work and is in financial trouble, it is the Government's duty to generate jobs, or have a system to cushion the impact.
Is it a shift in the policy to pass the burden of supporting jobless people to the rest of the people with jobs, and the government will wash half its hands off the burden of generating jobs, by putting the jobless on charity? I wonder if the small boy on tv who felt proud of contributing the lego bricks, does he know wht he is doing?
In summary, I don't feel comfortable at all constantly being bombarded by the media in the last few weeks, and not getting any wiser going to their website.
What does everyone here think? Tell me, am I being selfish, oversensitive and unreasonable?
REX
Subscribe to:
Posts (Atom)