The current financial system has collapsed. This system was built on the following:
> private capital to fund the banks
> short term deposits
> greed of bankers, taking excessive risk
The central banks have to bail out the system by putting in taxpayers' money to recapitalised the banks. The outcome - governments will be the majority owner of most of the large banks. I think that this is a good outcome (contrary to what most other people think).
I believe that the new financial system should be built on the following pillars:
> public ownership of the large financial institutions
> a limited range of low cost, fair financial products (forget about the innovative complex products designed to cheat the public)
> government guarantee for long term bonds or deposits (better still, issued by the government)
> a bigger role for government, more government control
This was the financial system a few decades ago. Let us go back to the safe old days.
The financial product should be categorized based on risk factor, Very low risk, Low risk, medium risk, high risk and very high risk. This risk factor have to be put in the brochure in bold and red.
ReplyDeleteThe current system is a zero sum system. The investment world has become a huge casino.There is no real wealth.
ReplyDeleteI can't agree with you more, Mr Tan!! Used to be banks were more conservative than you as the customer. Now they send you pre-approved credit cards, have young upstarts "advise" you and pressure you into high risk investments and a hundred other sins besides.
ReplyDeleteIf they put these words 'YOU WILL BE BANKRUPT , POK KAI , LOOSE EVERYTHING YOU OWN EVEN THAT GOLD DENTURE THAT SITS SO PRETTY IN YOUR MOUTH in the event of CREDIT EVENT which mearnt SHOULD ANY OF THE BANKS GET FOLDED UP , NOT 7, NOT 8 , JUST 1 OUT OF THE 8' in BOLD RED LETTERS get folded up
ReplyDeleteWould anyone still buy it and will the banks still get favourable response ??
Free market sometimes have its downsides ( sigh )
I remember the days when my father works hard and he keeps his money in FD with the bank knowing his whole life work would be safe. Now you keep the money at the bank and your life savings can be wiped off as the government only guarantee the first 20k and you have a credit risk. sigh...
ReplyDeleteI prefer a government bank. Putting money in CPF is not the same and rules changed and your money can get lock in.
Mr Tan
ReplyDeleteWhat we need is for banks to act like they are an ethical doctor who will advise you what's good for your health, the full facts (pros and cons) before you opt for a suregery or course of medication.
Instead we have banks who simply push products to you regardless of whether they are suitable for your needs. They downplay or simply ignore the ESSENTIAL facts and just highlight all the upside only.
Banks have become predatory in nature, viewing their customers as meat on the hoof to be feasted upon.
boom & bust cycles has existed for over 100 years..
ReplyDeleterhe root cause is :
- the central banks and banks ability to print money out of thin air and control the price of credit (ie interest rates)
- fractional reserve banking..
the above 2 needs to be relooked or we wont slove the problem