Tan Kin Lian's Blog: 10,000 SACRIFICIAL LAMBS

Tuesday, November 04, 2008

10,000 SACRIFICIAL LAMBS

Sent to me by RW

Is it worth sacrificing 10,000 loyal and trusting customers in order to remain in the good books of greedy Wall Street "investment" banks ?

Instead of fighting for the rights of 10,000 individuals with limited resources, why are we still defending the "mighty" investment banks shamefully bailed out with Billions, actually, Trillions of taxpayer funds all over the world, and yet, some commentators are saying these 10,000 victims should receive nothing ( except for a few "wayang" vulnerable cases ) ?

Is trying to compete to be THE financial hub, when the financial industry is in ruins, causing untold pain on individuals and pension funds, perpetrated by these discredited "investment" banks, holding back the authorities from acting, when in the US, law enforcement agencies have compelled these "investment" banks to COMPLETELY return all money to victims ?

Would moral hazard be NOT an issue anymore as no one in the right mind will touch any financial product ever again ?

Recipe for a toxic financial product ?

Buy cheap sub-prime mortagages. Chop them up. Toss in junk bonds. Blend together for 10 minutes. Chop the mess into smaller, digestable lots. Mix with some respectable names. Ask the Ratings Agencies to dress them up with AAA+ grade. Give them "high" sounding names, like mini-"Bonds" ( Lehman ), "Pinnacles" ( Morgan Stanley ), "High" Notes ( DBS ), "Jubilee" ( Merill Lynch ), etc from "trusted" institutions.

Why have US Law Enforcement Agencies ( FBI, SEC, US Attorneys for Manhattan, Brooklyn and New York State Attorney General , etc ) successfully prosecuted and are presently prosecuting Wall Street investment banks and their ex-top executives, and compel the COMPLETE return of all victims' money ?

RW

http://www.nytimes.com/2008/02/02/business/02legal.html?scp=1&sq=Massachusetts%20+%20Merrill%20Lynch&st=cse
By ERIC DASHPublished: August 21, 2008

Three major investment banks — Merrill Lynch, Goldman Sachs and Deutsche Bank — will soon buy back at least $12.5 billion in auction-rate securities and pay $162.5 million in fines as part of separate settlements reached Thursday with state regulators.

In earlier settlements, Citigroup, JPMorgan Chase, Morgan Stanley, UBS and Wachovia agreed to buy back $35 billion of the securities and pay more than $360 million in fines. Several other firms, including Bank of America, are negotiating deals.

22 comments:

Unknown said...: If the 10,000 investors are not properly compensated, the whole PUBLIC TRUST to the ruling party, MAS, and DBS will go down the drain.; November 04, 2008 9:39 AM
Everlearning said...: Very soon, these banks (Citigroup, UBS, etc...) will come out with some kind of dubious fiancial products to push through at our local banks. Beware!!!

Do not fall into their traps because the savings interest rate has lowered. Rather to keep the principal intact than to lose your savings to all these wolves in sheep-clothings.

There is quick action when Sands in trouble from the authorities. There is slow action when the men in the street is in trouble with the banks from the authorities.

Don't be in the slumber state. Protect your loved ones from the snares of the state. When we trade off moral values, we invite vices to our own destruction.; November 04, 2008 10:24 AM
Anonymous said...: ten thousand is about 0.2% of population. probably less than 3% of voting population

when extended to their family, is probably less than 8% of voters

no big deal lah. they will do their sums and 'manage' the people; November 04, 2008 10:36 AM
Anonymous said...: Dear Mr Tan,
Will Morgan stanley buy back pinnicles notes also?

Ong; November 04, 2008 11:19 AM
Concerned said...: Those FIs who orginiated and arranged those structured products that has caused so much grief here to so many investors should be banned from our shores permanently.; November 04, 2008 11:26 AM
Raymond T said...: I would agree the case is stronger if the financial markets hadn't claimed so many victims from stocks to unit trusts.; November 04, 2008 11:31 AM
Anonymous said...: Hi adego,

10,000 is 0.2% of population and about 3% of voting population. AGREED.
when extended to their family, is probably less than 8% of voters. AGREED.

BUT do think that the 10,000 victims are the victims only for: DBS HN5, ML Jubilee 3 & Lehman Brothers Minibond all series.

DBS alone, there are HN Series and one CLS.

There are many more note holders of other similar structured products and the 'Pinnacle CLS Series' by Morgan Stanley is one comparable or even larger in size to Lehman Brs Minibond series.

If the DBS HN series & 'Pinnacle CLS Series' go bust, the voting population to the subject will easily go up to > 20%.

More, in the next 3 years, if many other structured products fail....

Seems that Mat Selemat debacle of COMPLACENCY has surfaced and will soon get its extended effect.

GAHMENT - trust the authority to regulate.
REGULATORS - trust the FIs to operate with stakeholders' interest at heart.
FIs - trust that the BIG giant issuer will not fail.
FAs/RMs - trust their respective FIs are behind them.
INVESTORS - trust gahman, trust regulator, trust FIs, trust big giant issuer (for those risk takers only) & trust their money will grow with so many GOODIES.

Learning lessons from Mat Selmat case comes too late.

There is probably class action sue for another good lessons for everyone to learn.

TRUST is about to lose! Will the TRUST be reinstated? If YES, how will it be executed? and in XXX years. 3 Years good enough?

Hoepful NO impact on the votes somes three years later.

A victim in Pinnacle CLS!; November 04, 2008 11:47 AM
siewkhim said...: By the time of the next election all this issues would be forgotten and forgiven, they will continue to be in power because more than 90% voters have trusted their brand for the past many many years.

If you cannot fight them, join them; November 04, 2008 11:55 AM
Anonymous said...: They are NOT interested in you 10,000.

Because you are goods SOLD.; November 04, 2008 12:23 PM
Anonymous said...: Please do not response anymore to the idiot, mentally deranged Adego who is trying to just get fun from the blog. I am not surprise that ADEGO is SIEWKHIM !!! One name is already smelly, now the second one start to smell bad also. Just ignore what he said, skipped over the comments by him to get peace of mind.

HS; November 04, 2008 12:23 PM
Anonymous said...: When election is near, the govt will just throw in some goodies here and there and all these "pain" will be forgotten. It has always been like this and will always be like that. Singaporeans are easy to pacify.; November 04, 2008 12:30 PM
Anonymous said...: yes, they will always be more business oriented rather than people oriented.; November 04, 2008 3:02 PM
Anonymous said...: Talking abt control and power.

Impermanence is a fact of life.

无常是宇宙的真理。

No one person or no single party, or no single leader will be able to hold on to power forever and ever without any changes.

We can look back at history.

Even if we can do that, the fact is all of us will die..

30 years later at least half of the people online or not online now will die.

50 yrs later at least half of them .

Hundred years later all of us, now online or not online will most probably die liao..

Is power so important?; November 04, 2008 4:03 PM
Anonymous said...: 'Is Power so important?'

Obviously nope.

Persuading investors to sign over here IS.; November 04, 2008 5:14 PM
Anonymous said...: next thing could happen is, the gahment will zoom into the minibonders and pinnacletts and High-noters.

they will probably do their sum again, and revamp the GRC segregation. they are very good in plannings, unless 60% of sgporeans hate them...; November 04, 2008 6:11 PM
Anonymous said...: RW,
Referring to this paragraph,'
Instead of fighting for the rights of 10,000 individuals with limited resources, why are we still defending the "mighty" investment banks shamefully bailed out with Billions, actually, Trillions of taxpayer funds all over the world, and yet, some commentators are saying these 10,000 victims should receive nothing...'

Look here, do u know what is contract law? The product has been structured this way, when credit event(check their definition) occurs, this is going to happen, this asset will be sold to meet ...obligations and so on. that's it! there is no provision for investors (based on the contract), and that's the way the product is structured.

to compensate investors, where u get the money? it's from the shareholders' charity fund (very likely).

nobody is defending the bankrupt bank, I mean Lehman. The fed and paulson also given them up. don't mix and match to force yr point, sounds silly, like an educated moron.; November 04, 2008 7:54 PM
zhummmeng said...: ADego,
you are barking up the wrong tree again. The issue is NOT the product but the way the product was sold to the victims. The contention is, was there a breach of the law resulting in the mis-selling and misrepresentation and nothing to do with contract or law of contract. BTW, are you a contract lawyer, because you seemed to be .
Since these people were mis-sold and misrepresented , it was tantamount to being cheated. Cheating is criminal, right? There fore full compensation plus loss of opportunity cost is fair .
As to the question where to get the money to compensate, the answer is from the share holders' piggy bank or sell off some of their assets or pawn the share holders' underwears.Then get a CPA to do an extreme make over for the account so that the share price will not be affected otherwise they 'll lose more.; November 04, 2008 11:32 PM
adego said...: zm, do u know life insurance is a contract?

now the minibond has CDS, which is a bond insurance, it is also a contract. minibond holder is the insurer(indirectly), they have to take counter-party risk to compensate the 'insured', when any ref entity runs into credit event.

RW was trying to suggest gahment or FI pays the investor money, instead of GIC investing into the US bank. u know it is not going to happen. should that happen, it will be a bigger chaos. - i.e. lawlessness

why bigger chaos?
anyone who lost money can demand FI and gahment to compensate them.
there will be lots of chau kah pple joining in. it will be no end, the system will collapse.

GIC's money is a different pot of money for investment purposes, how to use them to pay investors? It's tax payer's money afterall.

then how to recover the losses?
maybe can send army to the wall street, and 'snatch' the money back from whoever is the 'insured' of the CDS in minibond.

minibond - this kind of structured product is a form of contract. the minibond holders will receive 'premiums' (5%p.a. dividends), which is stated in the contract, and should credit event occurs, we shall have the stories of ah pek and ah mah crying...

yes, the minibond contract is very 'unfair', but it's 'willing parties' entered into it, with the 'inducement' of 5%p.a. yield.

now that they have entered into the contract, they have to honour it and 'discharge their obligations' - that means kaput for investors' money in this case.

yes, there are some mis-sellings, but there are many who knows the risk, and try to be chau kwan to demand compensation. we shall wait for the outcome of investigation.

understand now? u need to have some depth to understand what I am writing.; November 05, 2008 1:04 AM
Anonymous said...: adego,

Retail investors (as described) concern:
The FACT is that 'mis-sellings' = 100% vs 'many who knows the risk' = 0%.

Why do I say so? Kick the ground. Yr homework has to cover the ground. Go HLPk & c for yourself the FACT - 100% vs 0%. CLS is definitely not for them.

Unless otherwise the 'willing parties' are GIC, Temasek Hldg, FIs & Town Councils.

Btw, I do see your points.
So one must open eyes bigger.
Btw, the damage has been done & the CHEAT is better be cleaned up in the next three years,
Rgds!; November 05, 2008 11:38 AM
Anonymous said...: I would say the "10,000 sacrificial lambs" have been sacrificed for a worthwhile cause.

It is because of you that all banks will think twice before selling any products to the general public.

It is because of you that there is now greater awareness about structured products which even experts like Mr Tan was not aware of all the potential risks of the products after studying extensively . He did however, did his part in warning people not to buy them because he did not understand the products.

It is because of you that Singaporeans will now be more aware of the products that they buy from financial institutions.

And lastly, it is because of you that hopefully and finally Singaporeans will decide to wake up and take financial planning as their own responsibility to avoid being cheated in the future.

Singaporeans are always like that. It is only when something happens that people are bothered to find out about what they have bought. If you have noticed, it is only after the whole fiasco that all the experts came out to dissect the product and all those who bought it finally understand the product that they have buy. If nothing has happened, everyone would still be ignorantly holding on to such a risky product with no experts warning them of the potential pitfall of all these products.

There is an old chinese saying 人固有一死，或重于泰山，或轻于鸿毛。I am sure the sacrifice will be for the better good of the entire nation and revamp the entire financial planning history for the better good of all Singpaoreans.; November 05, 2008 9:10 PM
Anonymous said...: adego,
you like shooting anyhow. go shoot somewhere else if you need to shoot.
Trying to show off your knowledge .; November 06, 2008 9:26 AM
Anonymous said...: adego,

You sound like Siew Khim !! but instead of hiding behind a girl's name like him, you hide behind the name 'adego' which sounds like a rabies infected wild dog ! No wonder everything you write is nonsense !

We dare you to show up at Hong Lim Park on Sat. and debate with us !!; November 09, 2008 11:47 PM

Tuesday, November 04, 2008

10,000 SACRIFICIAL LAMBS

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