Several top economists have commented that the financial sector has grown to be too big. They do not create any value, in terms of actual production of goods and services to improve the quality of life. They are a drain on the productive economy and take away the best brains in recent years. They create bubbles and led to the collapse of the financial system.
I agree with these views. You can watch a video of the speeches given by these top economists in the academic section of Temasek Review.
Saturday, December 26, 2009
Paul Volcker on Financial Innovation
Speaking to a group of senior finance executives, as reported in The Wall Street Journal on Monday, Mr. Volcker made his point even more forcefully. There is no benefit to running our financial system in its current fashion, with high risks (for society) and high returns (for top bankers). Most of financial innovation, in his view, is not just worthless to society – it is downright dangerous to our broader economic health.
Friday, December 25, 2009
Temasek review reported on my views about MM Lee's remarks
"Read this article in Temasek Review. I have posted a comment as follows:
Dear Editor of Temasek Review
You article does fairly report my view and the comments in my blog, but your headline is too strong and inappropriate. It is not in my character to condemn anyone, big or small. I only wish to express my own views. I hope that your readers will not be too distracted by this inappropriate headline.
Tan Kin Lian
Dear Editor of Temasek Review
You article does fairly report my view and the comments in my blog, but your headline is too strong and inappropriate. It is not in my character to condemn anyone, big or small. I only wish to express my own views. I hope that your readers will not be too distracted by this inappropriate headline.
Tan Kin Lian
Glass Stegall Act
Last week, lawmakers including Senator John McCain proposed reinstating Glass-Steagall, which was struck in 1999 by the Gramm-Leach-Bliley Act.
The repeal led to a rise in conglomerates including Citigroup that were allowed to branch into insurance and proprietary trading.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaqerszXOPMU
Paul Volcker, a legendary former chairman of the Federal Reserve Board, was blunt: We need to break up our biggest banks and return to the basic split of activities that existed under the Glass-Steagall Act of 1933
http://economix.blogs.nytimes.com/2009/12/17/paul-volcker-finds-a-hammer
The repeal led to a rise in conglomerates including Citigroup that were allowed to branch into insurance and proprietary trading.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaqerszXOPMU
Paul Volcker, a legendary former chairman of the Federal Reserve Board, was blunt: We need to break up our biggest banks and return to the basic split of activities that existed under the Glass-Steagall Act of 1933
http://economix.blogs.nytimes.com/2009/12/17/paul-volcker-finds-a-hammer
High retail price
Some people are surprised that the retail price (e.g. of my books or torchlights) are so much higher than the wholesale price (e.g for sale to hotels) or for direct purchase from my office.
They are not aware about the high cost of distribution of these products. I have to pay to the distributor nearly 60% of the retail price. They have to give a large portion of this margin to the retail store. The goods are given on consignment. If they are not sold, they are returned to me. I have to bear the cost of production or purchase, delivery charge, GST and also take the risk of the obsolete, unsold products.
Many retailers also find it hard to survive. They have to pay high rental for their stores and wages for their sales employees. They do not get sufficient business and margin to cover their operating costs.
Many small businesses find it difficult to survive in this type of environment. In my case, I am not making any profit due to the high cost of doing business, but doing it partly for fun. (If you want a lower price for my torchlights, come to my office at get it for $5.50 if you buy more than 5 pieces).
My friend saw a rechargeable torchlight, with similar features, on sale at the airport store at $27.50.. So the price of $8 at the retail store is cheap, by comparision.
They are not aware about the high cost of distribution of these products. I have to pay to the distributor nearly 60% of the retail price. They have to give a large portion of this margin to the retail store. The goods are given on consignment. If they are not sold, they are returned to me. I have to bear the cost of production or purchase, delivery charge, GST and also take the risk of the obsolete, unsold products.
Many retailers also find it hard to survive. They have to pay high rental for their stores and wages for their sales employees. They do not get sufficient business and margin to cover their operating costs.
Many small businesses find it difficult to survive in this type of environment. In my case, I am not making any profit due to the high cost of doing business, but doing it partly for fun. (If you want a lower price for my torchlights, come to my office at get it for $5.50 if you buy more than 5 pieces).
My friend saw a rechargeable torchlight, with similar features, on sale at the airport store at $27.50.. So the price of $8 at the retail store is cheap, by comparision.
Advice on making insurance claims
Thee are three types of insurance claims that can cause you a big surprise and out-of-pocket payment. They are:
a) health care
b) personal accident or travel
c) motor repair
d) home repair or reinstatement
Here is a common example. You have been paying premiums for an expensive health insurance policy for many years. You went into hospital thinking that the entire bill is covered. When you submit your claim for reimbursement, you are told of the items that are not covered, the caps, exclusions, deductibles and other items. Your claim can be less than half of the amount that you spent.
Your claim for personal accident or travel is also subject to exclusions, limits and deductibles. A similar situation can occur with a motor repair bill. You are told about the Excess, exclusion or other limits.
The hospital and motor repair bills can occur every few years, so many people have been taken aback by their poor claim experience.
A similar situation, but less frequently, can occur if you have to make a claim for damage to your property caused by some of the perils,such as fire, flood, theft and other disasters. When you submit your claim, you will be told about the items that cannot be claimed.
Here is my advice. Before you go for medical treatment, before you repair your car or home, before you spend money thinking that they can be claimed - check with the insurance company. Let them tell you about what is covered, and what is not covered. You can then decide on what to do about the treatment or repair.
Do not be shy to ask for an estimate of the treatment or repair bill, and send it to your insurance company for them to check against the insurance cover. The insurance company may be able to assist you to find a doctor or repairer that can do the work within the amount covered by the insurance policy.
Tan Kin Lian
a) health care
b) personal accident or travel
c) motor repair
d) home repair or reinstatement
Your claim for personal accident or travel is also subject to exclusions, limits and deductibles. A similar situation can occur with a motor repair bill. You are told about the Excess, exclusion or other limits.
The hospital and motor repair bills can occur every few years, so many people have been taken aback by their poor claim experience.
A similar situation, but less frequently, can occur if you have to make a claim for damage to your property caused by some of the perils,such as fire, flood, theft and other disasters. When you submit your claim, you will be told about the items that cannot be claimed.
Here is my advice. Before you go for medical treatment, before you repair your car or home, before you spend money thinking that they can be claimed - check with the insurance company. Let them tell you about what is covered, and what is not covered. You can then decide on what to do about the treatment or repair.
Do not be shy to ask for an estimate of the treatment or repair bill, and send it to your insurance company for them to check against the insurance cover. The insurance company may be able to assist you to find a doctor or repairer that can do the work within the amount covered by the insurance policy.
Tan Kin Lian
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