Wednesday, December 30, 2009
Impact of December holidays
My blog had an average of 2,000 visitors a day in earlier months. It dropped to 1,500 in December. It has now recovered to 2,000. This is the impact of the school holidays in December. 25% of Singaporeans travel outside of Singapore.
Blind trust - there must be a reason?
Many practices are outmoded after some time, for example, immigration requirements, security checks, audit checks, registration in hotels. Some of these practices were introduced several decades ago and were needed then. But, the world has since changed.
Nobody wants to take the responsibility to review and update these outmoded practices. The burden of these practices usually fall on the shoulders of the customers or ordinary people who have no choice but to comply with the rules.
Some people will defend these practices as follows: "There must be a reason to continue these practices. It must be serving a purpose". Has it occurred to these people that the most likely reason is that nobody cares. If the long suffering people do not speak up, who really bothers?
Some people said that there is no point in speaking up in Singapore as our views are likely to be ignored. While this is true, and is a sad state of affairs, I encourage people to continue to speak up. One day, the voices will be heard.
Most importantly, we have to avoid giving excuses on behalf of the people who are supposed to review the outmoded practices. If the reasons are still valid, let them come out and explain the reasons on their own. This will encourage accountability.
Tan Kin Lian
Nobody wants to take the responsibility to review and update these outmoded practices. The burden of these practices usually fall on the shoulders of the customers or ordinary people who have no choice but to comply with the rules.
Some people will defend these practices as follows: "There must be a reason to continue these practices. It must be serving a purpose". Has it occurred to these people that the most likely reason is that nobody cares. If the long suffering people do not speak up, who really bothers?
Some people said that there is no point in speaking up in Singapore as our views are likely to be ignored. While this is true, and is a sad state of affairs, I encourage people to continue to speak up. One day, the voices will be heard.
Most importantly, we have to avoid giving excuses on behalf of the people who are supposed to review the outmoded practices. If the reasons are still valid, let them come out and explain the reasons on their own. This will encourage accountability.
Tan Kin Lian
Pushing the buck around
An investor, who was misled into investing a large sum of money in land banking plots made a complaint to his Member of Parliament. He provided documentation to support his complaint. The MP wrote to Monetary Authority of Singapore who referred the investor to the Commercial Affairs Department. He met with an officer of CAD who told him that they have received several similar complaints and were investigating the matter. Nothing was heard from CAD for the past two months.
The investor asked me what to do. He said that one party is pushing the buck to another party and nobody is interested to take charge of this matter. I wondered why the CAD did not wish to contact the complainant and get more facts. The complainants are kept in the dark. This seemed to be a habit in Singapore.
I asked the complainant to take the matter up with his elected MP again. I hope that the MP will follow up on this matter, rather than let sad state of affairs continue.
Tan Kin Lian
The investor asked me what to do. He said that one party is pushing the buck to another party and nobody is interested to take charge of this matter. I wondered why the CAD did not wish to contact the complainant and get more facts. The complainants are kept in the dark. This seemed to be a habit in Singapore.
I asked the complainant to take the matter up with his elected MP again. I hope that the MP will follow up on this matter, rather than let sad state of affairs continue.
Tan Kin Lian
Nuisance
From: Wikipedia
Nuisance is a common law tort. It means that which causes offence, annoyance, trouble or injury. A nuisance can be either public (also "common") or private. A public nuisance was defined by English scholar Sir J. F. Stephen as,
"an act not warranted by law, or an omission to discharge a legal duty, which act or omission obstructs or causes inconvenience or damage to the public in the exercise of rights common to all His Majesty's subjects".
"Private nuisance" is the interference with the right of specific people. Nuisance is one of the oldest causes of action known to the common law, with cases framed in nuisance going back almost to the beginning of recorded case law. Nuisance signifies that the "right of quiet enjoyment" is being disrupted to such a degree that a tort is being committed.
Nuisance is a common law tort. It means that which causes offence, annoyance, trouble or injury. A nuisance can be either public (also "common") or private. A public nuisance was defined by English scholar Sir J. F. Stephen as,
"an act not warranted by law, or an omission to discharge a legal duty, which act or omission obstructs or causes inconvenience or damage to the public in the exercise of rights common to all His Majesty's subjects".
"Private nuisance" is the interference with the right of specific people. Nuisance is one of the oldest causes of action known to the common law, with cases framed in nuisance going back almost to the beginning of recorded case law. Nuisance signifies that the "right of quiet enjoyment" is being disrupted to such a degree that a tort is being committed.
Morgan Stanley sued over failed $1.2 billion CDO
http://sg.news.yahoo.com/rtrs/20091230/tbs-business-us-morganstanley-lawsuit-7318940.html
Reuters - Wednesday, December 30. By Jonathan Stempel
NEW YORK - Morgan Stanley has been sued by a Virgin Islands pension fund that accused the Wall Street bank of defrauding investors by marketing $1.2 billion of risky mortgage-related notes that it expected to fail.
The lawsuit filed December 24 in Manhattan federal court said Morgan Stanley collaborated with credit rating agencies Moody's Investors Service and Standard & Poor's to obtain "triple-A" ratings for notes marketed in 2007 as part of a collateralized debt obligation known as Libertas.
According to the complaint, the CDO was backed by low-quality assets, including securities issued by subprime lenders New Century Financial Corp, which quickly went bankrupt, and Option One Mortgage Corp, then owned by H&R Block Inc.
The complaint alleged Morgan Stanley knew the CDO's assets were far riskier than the ratings suggested, but was "highly motivated to defraud investors" with pristine ratings because it was simultaneously "shorting" almost all the assets. This was a bet that their value would fall, which they did in 2008. "Morgan Stanley was betting the entire investment it was promoting would fail," according to the complaint, which was made available on Tuesday. "The firm achieved its objective." Alyson Barnes, a Morgan Stanley spokeswoman, declined to comment. S&P spokesman Frank Briamonte had no immediate comment. Moody's did not immediately return a call seeking comment. Moody's, a unit of Moody's Corp, and S&P, a unit of McGraw-Hill Cos , were not named as defendants.
Many banks face lawsuits from investors who say they were misled into investing in securities they believed were safe but which were in fact tied to risky subprime mortgages.
Morgan Stanley is also a defendant in a closely watched case in the same Manhattan court that concerns whether rating agencies deserve free speech protection for their opinions.
The December 24 complaint said Morgan Stanley knew securities in the Libertas CDO were suffering a dramatic rise in delinquencies, but provided a misleading "risk factor" in a prospectus that rising delinquencies "may" hurt values in the $1 trillion residential mortgage-backed securities market. It called this representation "analogous to Captain Smith's telling passengers of the Titanic that some ships have 'recently sunk' in the Atlantic and therefore 'our ship may sink,' without mentioning the facts that his ship struck an iceberg, had a hole in it, and was filling with water."
The lawsuit seeks class-action status, and also seeks compensatory and punitive damages, among other remedies. It was filed by Coughlin Stoia Geller Rudman & Robbins LLP, a law firm specializing in securities class-action lawsuits. Morgan Stanley shares were up 22 cents at $29.51 in afternoon trading on the New York Stock Exchange.
The case is Employees' Retirement System of the Government of the Virgin Islands v. Morgan Stanley & Co et al, U.S. District Court, Southern District of New York, No. 09-10532.
Reuters - Wednesday, December 30. By Jonathan Stempel
NEW YORK - Morgan Stanley
The lawsuit filed December 24 in Manhattan federal court said Morgan Stanley collaborated with credit rating agencies Moody's Investors Service and Standard & Poor's to obtain "triple-A" ratings for notes marketed in 2007 as part of a collateralized debt obligation known as Libertas.
According to the complaint, the CDO was backed by low-quality assets, including securities issued by subprime lenders New Century Financial Corp, which quickly went bankrupt, and Option One Mortgage Corp, then owned by H&R Block Inc
The complaint alleged Morgan Stanley knew the CDO's assets were far riskier than the ratings suggested, but was "highly motivated to defraud investors" with pristine ratings because it was simultaneously "shorting" almost all the assets. This was a bet that their value would fall, which they did in 2008. "Morgan Stanley was betting the entire investment it was promoting would fail," according to the complaint, which was made available on Tuesday. "The firm achieved its objective." Alyson Barnes, a Morgan Stanley spokeswoman, declined to comment. S&P spokesman Frank Briamonte had no immediate comment. Moody's did not immediately return a call seeking comment. Moody's, a unit of Moody's Corp
Many banks face lawsuits from investors who say they were misled into investing in securities they believed were safe but which were in fact tied to risky subprime mortgages.
Morgan Stanley is also a defendant in a closely watched case in the same Manhattan court that concerns whether rating agencies deserve free speech protection for their opinions.
The December 24 complaint said Morgan Stanley knew securities in the Libertas CDO were suffering a dramatic rise in delinquencies, but provided a misleading "risk factor" in a prospectus that rising delinquencies "may" hurt values in the $1 trillion residential mortgage-backed securities market. It called this representation "analogous to Captain Smith's telling passengers of the Titanic that some ships have 'recently sunk' in the Atlantic and therefore 'our ship may sink,' without mentioning the facts that his ship struck an iceberg, had a hole in it, and was filling with water."
The lawsuit seeks class-action status, and also seeks compensatory and punitive damages, among other remedies. It was filed by Coughlin Stoia Geller Rudman & Robbins LLP, a law firm specializing in securities class-action lawsuits. Morgan Stanley shares were up 22 cents at $29.51 in afternoon trading on the New York Stock Exchange.
The case is Employees' Retirement System of the Government of the Virgin Islands v. Morgan Stanley & Co et al, U.S. District Court, Southern District of New York, No. 09-10532.
Top priorities for the next decade
My office is at an industrial park. During lunch, I observed the customers at the canteen. They mostly work in the factories and earn a modest income to feed a family. They have children and financial commitments. They work hard and have useful skills.
They probably do not have much time to plan or worry about the future. Their biggest risk is the loss of the job. If their employer's business does not succeed, they will be retrenched and have to look for another job. For many people, it would be difficult to find another job that would replace their modest earnings. There is probably nothing that they can do, but to hope for the best.
The next risk is setting aside sufficient savings for their retirement needs. It is already difficult for them to have adequate savings set aside from their modest earnings, given the high cost of living. But, many of them do save for the future. The danger is that the may be cheated from getting a decent return. The financial institutions have developed many "innovative" products that have high charges, usually non-transparent, and give a poor return for the customers.
Some of these products are risky or are downright scams. But the ordinary workers are not in a position to recognize these unfair products. We should not expect these ordinary workers to be financial experts. It is the job of the regulators and the political leaders who have the responsibility to look after the welfare of the people who elected them.
The top priorities for the next decade is to give the security of a job that pay a modest but fair income to ordinary workers and the means for them to set aside savings that can give them a fair return for the future.
Tan Kin Lian
They probably do not have much time to plan or worry about the future. Their biggest risk is the loss of the job. If their employer's business does not succeed, they will be retrenched and have to look for another job. For many people, it would be difficult to find another job that would replace their modest earnings. There is probably nothing that they can do, but to hope for the best.
The next risk is setting aside sufficient savings for their retirement needs. It is already difficult for them to have adequate savings set aside from their modest earnings, given the high cost of living. But, many of them do save for the future. The danger is that the may be cheated from getting a decent return. The financial institutions have developed many "innovative" products that have high charges, usually non-transparent, and give a poor return for the customers.
Some of these products are risky or are downright scams. But the ordinary workers are not in a position to recognize these unfair products. We should not expect these ordinary workers to be financial experts. It is the job of the regulators and the political leaders who have the responsibility to look after the welfare of the people who elected them.
The top priorities for the next decade is to give the security of a job that pay a modest but fair income to ordinary workers and the means for them to set aside savings that can give them a fair return for the future.
Tan Kin Lian
Investment return, adjusted for inflation
It is important to take account of inflation in looking at investment return. This is explained in this article. You should aim to get a real return of 2%, after deducting inflation, tax and expenses. Many investors get a negative return due to investing in the wrong asset class, e.g. safe investments with guaranteed return, and high expenses.
Financial institutions bet against their clients
This article suggests that financial institutions made profits where their clients suffered large losses.
Y2K scam
I decided to do some research to see if other people pointed out the Y2K scam. I found this website. Enjoy reading.
Don't worry. The next decade will bring new scams. Life will continue to be exciting and creative. You can also count on some talented people being able to create scams, which is easier than creating real wealth and happiness,
Don't worry. The next decade will bring new scams. Life will continue to be exciting and creative. You can also count on some talented people being able to create scams, which is easier than creating real wealth and happiness,
Approaching a new decade
In two days time, we will enter a new decade. Many people have forgotten what was the big issue at the end of the last decade. It was the so called Y2K bug that never occurred. During the last two years of that decade, management consultants went round to spread the panic that if the Y2K bug was not fixed, computer systems around the world would collapse. This would happen not only to commercial systems but to military systems as well.
Several hundred millions, perhaps more, were paid in consultancy fees to fix the perceived Y2K problem. It frightened top management of big organisations, financial regulators and political leaders. It was a boom time for management and I.T. consultants who had the expertise to fix this imaginary problem. It reminded me of the fairy tale by Hans Christian Anderson told to children, about the emperor's imaginary new clothes.
I was one of very few who dared to argued that nothing would possibly happen and that the Y2K panic was exaggerated. I reasoned with I.T. experts and top accountants, but they argued back more strongly about the potential disasters that could happen. I concluded that they were extremely stupid or dishonest. As they were talented people, I concluded that it must be dishonesty, as they had pocketed large profits from providing the consultancy to fix the problem.
There were hundreds of millions of computers, big or small, around the world that needed to be fixed. Not all of them could be fixed in time and to the specification required by the consultants. It would be reasonable to expect several millions of them, which were not properly fixed, to fail with disastrous consequences. None of the failures occurred. All the computers continued to work fine on the turn of the century.
Companies that spent tens of millions to fix the Y2K problem gave a collective sigh of relief and congratulated their people for averting the disaster. Those who realised that they were conned by the scam of the century were too embarrassed to bring up the issue. This matter was best forgotten, which was what happened quickly.
The following decade brought about its own scams, in the form of the technology bubble, corporate scandals, housing bubble, financial innovation, derivatives, CDOs, CDS and the like. They made super wealth to the "talented" people but the rest of the world that much poorer.
What scams will the next decade bring?
Tan Kin Lian
Several hundred millions, perhaps more, were paid in consultancy fees to fix the perceived Y2K problem. It frightened top management of big organisations, financial regulators and political leaders. It was a boom time for management and I.T. consultants who had the expertise to fix this imaginary problem. It reminded me of the fairy tale by Hans Christian Anderson told to children, about the emperor's imaginary new clothes.
I was one of very few who dared to argued that nothing would possibly happen and that the Y2K panic was exaggerated. I reasoned with I.T. experts and top accountants, but they argued back more strongly about the potential disasters that could happen. I concluded that they were extremely stupid or dishonest. As they were talented people, I concluded that it must be dishonesty, as they had pocketed large profits from providing the consultancy to fix the problem.
There were hundreds of millions of computers, big or small, around the world that needed to be fixed. Not all of them could be fixed in time and to the specification required by the consultants. It would be reasonable to expect several millions of them, which were not properly fixed, to fail with disastrous consequences. None of the failures occurred. All the computers continued to work fine on the turn of the century.
Companies that spent tens of millions to fix the Y2K problem gave a collective sigh of relief and congratulated their people for averting the disaster. Those who realised that they were conned by the scam of the century were too embarrassed to bring up the issue. This matter was best forgotten, which was what happened quickly.
The following decade brought about its own scams, in the form of the technology bubble, corporate scandals, housing bubble, financial innovation, derivatives, CDOs, CDS and the like. They made super wealth to the "talented" people but the rest of the world that much poorer.
What scams will the next decade bring?
Tan Kin Lian
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