This report said that MAS recorded a net loss of $10.9 billion due to the strong Singapore dollar. We need to study if this is only part of the truth or the whole truth. How much of the loss is attributable to the strong Singapore dollar? How much of the loss is caused by excessive speculation or trading (if any)? .
It is important for the President to ask these questions, get the answers from MAS and be able to interpret these answers. This will improve accountability and engender trust in our institutions. In an earlier statement, I said that our reserves should be invested prudently, to achieve a reasonable return over the long term and avoid speculation.
It is important for the President to ask these questions, get the answers from MAS and be able to interpret these answers. This will improve accountability and engender trust in our institutions. In an earlier statement, I said that our reserves should be invested prudently, to achieve a reasonable return over the long term and avoid speculation.
11 comments:
Thought my eyes are playing tricks on me.
Ma ma mie, a loss of $10.9 billion!
And it was reported by the mainstream papers and this incompetent Regulator with such nonchalance. Now we know why Govt has to transfer out Heng Swee Kiat, the former MD of MAS, and to compensate this incompetent man, Govt took all precautions to ease him into Parliament through the backdoor, and ensure all the dirt would be made known to the public ONLY after the GE. Sneaky move. Now Heng could be spared the embarrasment to face up to his incompetent tenor at MAS.
No good with managing Public Finance, think it's better he sticks with Education.
Any Tom, Dick or Harry could conveniently point fingers at the currency game.
A lousy Regulator is a lousy Regulator, no need to hide behind convenient excuses. MAS is being played out by Foreign Advisors on the Board, all those Goldman Sachs,etc., who are actually asset gamblers.
Nowadays when Govt Agencies lose the country's money, they lose big.
Shame on them.
MAS recorded a net loss of $10.9 billion due to the strong Singapore dollar. We need to study if this is only part of the truth or the whole truth. How much of the loss is attributable to the strong Singapore dollar? How much of the loss is caused by excessive speculation or trading (if any)? .
It is important for the President to ask these questions, get the answers from MAS and be able to interpret these answers. Losing trust in our institutions. ??? ??? ???
Many of our government departments and statutory boards are being persuaded by highly paid investment advisers to invest in risky instruments that they shouldn't. One example in recent years is town councils involved in structured products.
Another example not so obviously noticed are electricity tariff hikes, usually passed off as increases in fuel prices. If you read the announcements properly, including the fine lines and figures, and if you know where to look and how to read, much of the portion of tariff hikes have been due to futures speculation.
They'd call it hedging but no, they can't fool everyone. Hedging is locking in an acceptable price for a specified period. That is, during that period, during which the risk of price increase is transferred to the counterparty. That means, costs and bills should stay the same regardless of price increase, but the benefits of any price decrease won't be enjoyed.
I've read electricity tariff increase announcements like new tariff based on oil price of US$150 per barrel whereas the market price rosed from US$100 to US$120. In the fine lines and figures, it was explained that SP was locked into futures contract at US$150.
That's speculation, not hedging. Why would someone enter contract at US$150 when market price was US$100? To me it looks simply speculating that oil price would rise above US$150 and they could pocket the profits from the rise. As the rise failed to materialise, they took the losses and passed on to consumers as tariff hikes.
I'm not saying that they always lose money in such speculative endeavours. They do win at times, but when they win, do we see electricity tariffs coming down? No, we'd see rounds of wage and bonus increases for themselves.
In any case, public utilities and services shouldn't be involved in such speculation for performance enhancement. Funds and reserves in custody should be conservatively invested for reasonable returns.
This is why i said that holding us denominated assets so strongly is a disaster. Be prepared to see such report every year until the value of the us assets reach pennies for the dollar. The US and UK will have to engage in weakening their currencies at least for the next 5 -10 years so as to reduce their debt load(with some occasional strengthening every time their is a deflation scare but long term is down). A simple way to prevent this foreign exchange losses is to buy gold. China, Russia,India and many countries do this to diversify away from US or UK assets. One could also buy strong currencies like the canada loonie and AUS.I think that the economist at MAS are either stupid or they have some agenda to not know this.
Rex comments as follows,
The MAS report is extremely diabolical in the use of language. The MD of MAS, Mr Ravi Menon, chooses to use jargon "translation loss", meaning currency exchange losses.
then it uses this term in a very ambiguous statement shrouded in mystery:
Quote:
"But in most years the investment returns more than offset the translation losses, so we show a profit. Only on two occasions in the last 40 years has this not happened. And I think this is largely because of the size of the translation losses, which in turn reflects the strength of the Singapore dollar."
Read above many times. There are two variables one is the exchange loss, and the other is the investment returns(or loss). The MD just says "i think" the translation losses was high. There is nothing to show that it wasn't a catastrophic failure of the investment returns compared to previous years. The MD focus on tranlsation loss without giving objective analysis. This is very unprofessional.
10.9 billion dollars is a lot of money, we deserve to know more!!
The President has a job to do, a very important job!!
rex
I agree. This is exactly how the EP ought to function -proactively.
Right now, we don't hear Nathan reacting in the appropriate way to such shocking news because its all in the familee!
It would be a long overdue great breath of fresh air when TKL becomes our EP.
I agree and like the approach and thinking of Tan Kin Lian in making know the real cause for the loss and voiced the citizens concern for their CPF monies being used by the Government of the day not in a prudent manner. We are encouraged to support the Government of the day to solve the issues to the best of interest of Singapore regardless of politic party membership. Thank you Tan Kin Lian for your honest view in this mater.
CPF original goal is for retirement . Period. Time to reverse back to this original idea for CPF and stop using it as payment for HDB flat, loan to children for higher education, what all these schemes reflects poor governance of the government of the day.
Agree with Its ME of 24th July 0725hrs.
CPF original goal of being a retirement fund has long been upsured by that "noble" asset enhancement/ being rooted wayang.
If you were to factor in the % that both employer/ employee contribute along the years with the % of tax you pay, not forgeting the GST of recent years, there is not much difference between us and the other HIGH Income Tax countries that DO take care of most of the Medical/ Child Care/ State Pension for all their citizens.
Only big difference is that at the end of our productive years, do not ask for any "hand-outss". CPF balance not enough for retirement, your problem. No ?
Concluding, our diam diam President Nathan, as usual, acting dumb dumb again.
Not even the sound of a mouse squeak from him.
@ Vincent Sear: “That's speculation, not hedging. Why would someone enter contract at US$150 when market price was US$100? To me it looks simply speculating that oil price would rise above US$150 and they could pocket the profits from the rise. As the rise failed to materialise, they took the losses and passed on to consumers as tariff hikes.”
This reminds me of the government’s sugar price “hedging” to control runaway prices in the 1970s when sugar was a government monopoly. By entering into a long term futures contract, we ended up paying very much higher than other consuming countries for several years even after prices have collapsed.
Post a Comment