It is time for people to think about how to rebuild the global financial system. Do not rely on the old experts, who build the old system based on financial engineering, greed, free market and dishonesty. They have led to the collapse of the system and loss of life savings of many ordinary people.
When Lehman Brother collapsed, it had debt of 30 times of equity. The debt is funded largely by short term credit, which has to be rolled over every 30 or 90 days. Many hedge funds have similar funding structure. When the credit could not be refinanced, they had to sell shares and bonds at any price, leading to the collapse of the markets.
The size of the unrglated credit default swaps (CDS) is USD 50 trillion, more than twice of the global stockmarkets!
The new financial system should, in my view, be build on the following pillars:
1. Stronger regulation
2. Regulated companies, e.g. financial institutions and listed companies, should have debt of not more than 1 time of equity, and it should be funded by bonds of at least 5 year duration.
3. Deriviatives should be regulated and traded on exchanges
4. Complex financial products, build by financial engineers, should be banned
The experts will argue that the "risk based capital" approach can help to prevent the collapse. I agree with this approach, but it has to be considerably simplifed.
We will have a simpler financial world, but a safer and fairer world. There will be less multi-million dollar jobs for financial experts, who milk the old, now collapsed, financial system.
- ► 2013 (303)
- ► 2012 (1270)
- ► 2011 (1873)
- ► 2010 (2369)
- ► 2009 (1655)
10/05 - 10/12
- Distributor: UOB Kay Hian
- Social responsibility to Singaporeans
- Speaker's Corner - 11 Oct 2008
- File an affidavit to support your claim
- Rebuilding the Global Financial System
- High cost of life insurance at older ages
- Class action against Lehman Brothers in USA
- Is MAS at fault?
- Unhappy with bank's complaint handling process (3)...
- Hong Kong - selling of structured products
- MAS publishes timeline for Minibond resolution pro...
- Climate of fear and intimidation
- Risky to trade on leverage
- Feedback on complaint handling process
- Difficulty with travel insurance claim
- Lehman Bond Probe Widens
- ST Index approaching 1900
- Petition has been lodged
- How the market really works
- Hong kong: Curb on banks' investment sales aired
- Complaint to MAS against a financial institition
- SCMP - DBS offers full compensationto mini-bond ho...
- Fiduciary duty
- HKMA vs MAS
- Global Financial Crisis - subprime loans
- Get information from my blog
- Book on financial planning
- Unhappy with bank's complaint handling process (2)...
- Bank agree to buy back risky investments
- No personal investment in credit linked securities...
- Media interviews on Petition
- Call for investors to take the next step
- Unhappy with bank's complaint handling process
- Financial institution fined for mis-selling
- Oversight of the complaint handling process
- Misleading advertisements
- Hong Kong: Minibond investors demand full refund
- Restrict the issue of credit cards
- Petition to Singapore Government - 983 signatures
- HKMA investigates complaints of alleged mis-sellin...
- South China Morning Post: 2003 case sets precedent...
- New type of foreign talent
- Poor payout on Anticipated Endowment policy
- Is bond fund risky?
- Legal fees - action against distributor
- Credit default swaps - who benefits?
- Coordinated interest rate cuts
- Reduced bonus under Income policies
- Dividend under STI ETF
- Credit default swap
- Full particulars of investors of credit linked sec...
- Hong kong - minibond buyback proposal
- File a police report
- Securities Investors Association of Singapore (SIA...
- Consumer Association
- Collective Action against specific distributors
- Unable to give individual advice or attend to indi...
- Monetary Authority of Singapore - Consumer Complai...
- ST Index is still falling
- Lodge your complaint with the Distributor
- Write to Monetary Authority of Singapore
- Meet the Member of Parliament
- My blog passes 500,000 visitors on 6 Oct 2008
- Petition to Singapore Government - Credit Linked S...
- Expensive to battle in court
- Consumer banking sells the structured products
- Loss of retirement savings
- Speaker's Corner, Saturday 11 October, 5 - 7 pm
- Section 199 of the Securities and Futures Act
- Section 27 of the Financial Advisers Act
- Request for help from Relationship Managers
- Petition on Credit Linked Securities, Singapore
- Capital protected product
- Service to the people
- CNBC short video on Minibond
- Is it wise to cash out on the structured product n...
- A highly risky structured product
- Selling of life insurance through multi-level
- Engaging a lawyer
- Elderly get hit the most!
- ▼ 10/05 - 10/12 (80)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)