Wednesday, August 19, 2009

U.S. Supreme Court to Hear Case on Executive Pay

The Supreme Court will hear the case this fall, as anger over huge bonuses paid to the executives of failing companies continues to grow...
Last summer, Richard A. Posner, a federal appeals court judge, issued a surprising and prescient dissent... “Executive compensation in large publicly traded firms often is excessive,” he added, “because of the feeble incentives of boards of directors to police compensation.” ..
Here is how Warren Buffett analyzed the situation in his 2003 letter to shareholders: “Year after year, at literally thousands of funds, directors had routinely rehired the incumbent management company,however pathetic its performance had been. Just as routinely, the directors had mindlessly approved fees that in many cases far exceeded those that could have been negotiated.”..

Tuesday, August 18, 2009

So What Is A Health Insurance Coop Anyway?

Read this article.

Funny Slogans

Read here.

Maintenance of my blog

Someone offered to make a donation towards the maintenance of my blog. I replied that this is not necessary.

But, if he (or others) wishes to help, he can buy my books that are sold here (click on Internet Shop). He can also buy copies to give to their friends.

Reuters.com - Schwab sued by NY's Cuomo over auction-rate debt

NOTE: This case is similar to the credit linked notes sold in Singapore. The New York Attorney General sued the financial institution for mis-representing the financial product to the retail investors. The Singapore authority should do the same. Tan Kin Lian

By Jonathan Stempel

NEW YORK (Reuters) - Charles Schwab Corp was sued by New York Attorney General Andrew Cuomo, who accused the discount brokerage of fraudulently misleading investors about the safety of auction-rate securities.

The civil lawsuit filed Monday in New York State Supreme Court in Manhattan was expected, after Cuomo's office announced its intent to sue Schwab on July 20.

It represents an escalation of Cuomo's efforts to punish brokerages and force them to repurchase the debt at face value from investors who were misled into believing the securities were as solid as cash.

Much of the debt became illiquid in February 2008 when dealers stopped supporting the $330 billion market. Cuomo has already gotten more than a dozen other banks and brokerages to buy back more than $61 billion of the debt.

"This may be a strategic move to get Schwab to agree to a more pro-investor settlement," said James Cox, a law professor at Duke University in Durham, North Carolina. "Schwab has built a foundation as the broker for the middle-class and would not want its reputation harmed by letting the lawsuit fester."

Thousands of customers of San Francisco-based Schwab held about $787.9 million of auction-rate securities as of February 13, 2008, Cuomo's office estimated.

Schwab said the lawsuit lacks merit.

"The New York Attorney General's lawsuit casts blame for a bad situation in the wrong direction," spokeswoman Sarah Bulgatz said. She said Cuomo should instead punish underwriters that deceived brokers on the safety of auction-rate debt.

"GREAT" ALTERNATIVE TO CASH, BROKER SAYS

According to the complaint, which cited recordings of brokers' conversations with clients, one broker labeled auction-rate securities "great alternatives to cash, frankly."

Another called an investor who was planning to buy a home and had been keeping cash in a money market fund. Expressing a "humble opinion," the broker told the investor that auction-rate debt would be a "very safe" place for that money.

"Schwab owed its customers a duty to properly understand and make accurate representations," Cuomo said. "Anyone in the industry who misrepresented the risks of investing in auction-rate securities will be held accountable."

Two brokerages that, like San Francisco-based Schwab, only sold the securities, Fidelity Investments and TD Ameritrade Holding Corp, have settled with Cuomo's office.

Underwriters that settled with Cuomo include Bank of America Corp, Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase & Co and Royal Bank of Canada, among others.

Cuomo charged Schwab with four counts of fraud, including action under the state's Martin Act, which gives Cuomo wide powers to fight financial fraud.

He wants Schwab to buy back auction-rate debt from clients at face value and pay penalties, among other remedies.

"The Martin Act is an extraordinarily broadly written statute," Cox said. "It essentially gives Cuomo carte blanche."

FRAUD ALLEGED

According to the complaint, Schwab sold customers "a product it did not fully understand and could not properly explain," despite "advertisements promising expertise."

The company also knew, or was reckless or negligent in not knowing, of the market's problems in the summer of 2007, when auctions began to fail, the complaint said.

In a July 24 letter to Cuomo, released Monday, Schwab said it did not actively market or induce the sale of auction-rate debt, and never made any commitment to support that market.

Cuomo's demand that Schwab "act as an insurer against an unprecedented market collapse that it did not cause and could not predict is legally unsound," wrote Faith Gay, a partner at the law firm Quinn Emanuel Urquhart Oliver & Hedges LLP.

In afternoon trading, Schwab shares were down 82 cents, or 4.5 percent, at $17.44 on the Nasdaq.

The case is Cuomo v. Charles Schwab & Co, Supreme Court of the State of New York, County of New York.

(Reporting by Jonathan Stempel; Editing by Phil Berlowitz and Gerald E. McCormick)

Monday, August 17, 2009

How different countries deliver health care

Read this article about the UK, Canada and Swiss models.

Quote
At this point, all that stands in the way of universal health care in America are the greed of the medical-industrial complex, the lies of the right-wing propaganda machine, and the gullibility of voters who believe those lies.
Unquote

It is easy to be cheated

Here is a reminder about the link on the right panel, which gives you a list of articles on how you can be cheated, and how to avoid being cheated.

Lack of product knowledge

Here is a letter entitled "Appalled at the lack of product knowledge at NTUC Income" published in the Straits Times Online Forum and the comments to this letter.

Quote
There is an enormous gap between what the CEO says in his note to client and the reality of his organization. The apparent post-Tan Kin Lian slippery slope down is steep and inevitable when the top no longer walk the talk, otherwise how do you explain the rot?
End of Quote

Distribution of bonus

Read this letter in the Straits Times entitled, "Policyholders in the dark about how bonus are distributed". A reader has copied two items from my blog written a few months ago and posted in the online forum. I hope that these items now receive more attention.

Quoted from my blog:

Survey results - National Service (2)

This is a popular survey. 97 replies were received within 18 hours. Here are the updated results.
Join this survey, if you are a male citizen who have completed full time National Service.

Sunday, August 16, 2009

Benefits for citizens and permanent residents

BT Kojak has prepared this table to summarise the benefits for citizens and permanent residents, as taken from the ICA website. The benefits for citizens are not much better than permanent residents, but carries the heavy obligation of National Service. I hope that this imbalance be redressed, so that it does not become a burden to be a citizen.

Names of 10 financial institutions

I have arranged to make the placards showing the names of the 10 financial institutions that sold the credit-linked note and were found by MAS to have failed in compliance with the regulations.

These placards are to help the investors to congregate together and get to know the other investors.

Can someone help me to find the names of the 10 FIs and post them here. You can get them from the MAS report.

Indonesian President gives 13th month bonus to teachers

Read this wonderful gesture from a President does earns only US130,000 a year.

Survey results - National Service

This survey is popular. It attracted 48 replies within 6 hours. Here are the preliminary results.

Join this survey, if you are a male citizen who have completed full time National Service.

Organising the Petition and Gathering - my personal perspective

The past few weeks, since the launch of the Petition, had been difficult for me. I had to face these challenges:

a) Sceptics. These are people who sneered at the effort and declared that there would be no support for the Petition and that the Government would not listen anyway.

b) Enemies. These are people who attacked me through anonymous comments in my blogs and elsewhere. They dislike me for various reasons or may be acting on the instructions of the financial institution or the authority.

c) Fear-mongers. These are people who created unfounded fear and warned me to be careful, giving their advice on how to avoid getting into trouble with the Government.

d) Lack of support from the media. Although I approached about 10 journalists three times, none of them covered the Petition. There was total silence. My emails remain unanswered.

My task was made more difficult by the unwillingness of the investors to step forward to speak. They did not want to be seen as trouble makers or be known that they had lost a lot of money. The installation of the cameras at Hong Lim was another deterrent. A Tan, who is helping me in FISCA, keeps complaining that if the investors are not willing to step forward, why should Tan Kin Lian take the brunt of the personal attacks and sacrifice? He compared the docile attitude of the Singapore investors, with the bravery of the Hong Kong investors.

I considered asking some opposition politicians to speak, but decided against it. I did not want to politicise this issue and make it more difficult for the investors to get the hearing of the Prime Minister.

But Providence is on my side. Two significant events occurred after the launch of the Petition. First, there was the Hong Kong settlement, which was surprising fair and favourable to the investors. It set a benchmark for Singapore to be compared. Second, Great Eastern Life decided to give full compensation to the policyholders who were mis-guided into investing in the Great Link Choice, which is similar to the structured notes.

To my surprise, the Petition collected more than the initial target of 300 signatures. With more signatures on 22 August, I hope that it will surpass the new target of 1,000 signatures.

To the credit of the Government, I did not receive any direct threat or harrassment for my efforts.

We are now counting down to the Gathering on 22 August, which is only 6 days away. I am encouraged by several investors, who thanked me for my efforts, even though they knew that it will be an uphill task. They felt that it was necessary to organise the Petition and Gathering to register the anger of the people who were treated unjustly and were let down by the leaders.

But, who knows? Providence may be on our side one more time. I am always hopeful and positive.

We are now counting down to the Gathering on 22 August, 5 p.m. at Hong Lim Park. See you there.

Tan Kin Lian

NYTimes.com: New Worries About Children With Cellphones

Read this article.

The Quick Buck Just Got Quicker

How greedy can corporate executives be? The corruption and greed shows had bad the free market, capitalist system can be. Read this report.

This type of situation makes socialist principles much more attractive to the ordinary people. It is time for the leaders in Singapore to reflect on its adoration of the capitalist system.

Survey: Will you fight for Singapore?

This survey is for male citizens who have completed full time National Service.

Saturday, August 15, 2009

Results of the JUTA Award (1)

Here are the results, based on 24 replies to the JUTA Award, to recognise an organisation or person who "jumps up and take action" to put things right.

I have excluded over 30 responses from the same IP address, giving the same answer in favour of one organisation. This hacker managed to bypass the security feature in the survey software to prevent repeat entries.

The survey is still open. Vote here.



Legacy

Who said this, "Every tyrant will eventually destroy his own legacy" ?

An equal opportunity

God creates Earth with abundant land, forest, oceans, animals, plants and fishes. He gives every person an equal opportunity to make a living as a farmer, hunter, fisherman or craftsman. He is not a capitalist and does levy a charge or rental for using the natural resources.

In a modern society, every person should be given an equal opportunity to have meaningful work for a fair wage, without being exploited by people who take the lion share of the rewards.

Socialism

A reader commented that Tan Kin Lian is a socialist. I am more inclined to be a social democrat, along the lines of our national pledge to "build a democratic society based on equality and justice".

I have also run a cooperative enterprise for 30 years based on the principles of cooperation. I wish to share this explanation of socialism, which I found in Wikipedia.

Socialism refers to various theories of economic organization advocating state, public or common worker (through cooperatives) ownership and administration of the means of production and distribution of goods, and a society characterized by equal access to resources for all individuals with an egalitarian method of compensation.

Modern socialism originated in the late 18th-century intellectual and working class political movement that criticized the effects of industrialization and private ownership on society, however, socialism itself is not a political system; it is instead an economic system distinct from capitalism. Karl Marx and Friedrich Engels used the terms "socialism" and "communism" interchangeably, and posited that it would be achieved via class struggle and a proletarian revolution.

Vladimir Lenin, perhaps influenced by Marx's ideas of "lower" and "upper" stages of socialism, later used the word "socialism" as a transitional stage between capitalism and communism.

Early socialist thinkers tended to favor an authentic meritocracy combined with rational social planning, while many modern socialists have a more egalitarian approach.

Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital, creates an unequal society, does not provide equal opportunities for everyone to maximize their potentialities and does not utilize technology and resources to their maximum potential nor in the interests of the public. Therefore socialists advocate the creation of a society that allows for the widespread application of modern technology to rationalize the economy by eliminating the anarchy in production of capitalism, allowing for wealth and power to be distributed more evenly based on the amount of work expended in production, although there is considerable disagreement among socialists over how and to what extent this could be achieved.

Socialism is not a concrete philosophy of fixed doctrine and program; its branches advocate a degree of social interventionism and economic rationalization, usually in the form of economic planning, sometimes opposing each other. Another dividing feature of the socialist movement is the split between reformists and the revolutionaries on how a socialist economy should be established. Some socialists advocate complete nationalization of the means of production, distribution, and exchange; others advocate state control of capital within the framework of a market economy.

Social democrats propose selective nationalization of key national industries in mixed economies, while maintaining private ownership of capital and private business enterprise. Social democrats also promote tax-funded welfare programs and regulation of markets. Many social democrats, particularly in European welfare states, refer to themselves as "socialists", introducing a degree of ambiguity to the understanding of what the term means.


Tan Kin Lian

How not to lose your mind

Will Sudoku help? Read this report.
Are there other games to exercise the mind? Try here.

Healthcare arund the world

This report compares Singapore with US, France and UK.

Friday, August 14, 2009

Bus arrival times

The Land Transport Authority is spending a lot of money to upgrade the bus arrival time shown in 50 bus stops. There is a better way to spend this budget to improve the bus service. My suggestion is listed here.

Strategy - how government approaches a problem

The tribal wisdom of the Dakota Indians, passed on from generation to generation, says that, "When you discover that you are riding a dead horse, the best strategy is to dismount." However, in government more advanced strategies are often employed, such as:

1. Buying a stronger whip.
2. Changing riders.
3. Appointing a committee to study the horse.
4. Arranging to visit other countries to see how other cultures ride dead Horses.
5. Lowering the standards so that dead horses can be included.
6. Reclassifying the dead horse as living impaired.
7. Hiring outside contractors to ride the dead horse.
8. Harnessing several dead horses together to increase speed.
9. Providing additional funding and/or training to increase the dead Horse's performance.
10. Doing a productivity study to see if lighter riders would improve the dead horse's performance.
11. Declaring that as the dead horse does not have to be fed, it is less costly, carries lower overhead and therefore contributes substantially more to the bottom line of the economy than live horses.
12. Rewriting the expected performance requirements for all horses.

And, of course...
13. Promoting the dead horse to a supervisory position.

Contributed by A Tan

Case of the $12,000 kidney stone

Read this article.

Adjudication by FIDREC

Dear Mr Tan,
I will be facing a legal counsel from X (the financial institution) and one of the 5 other listed representatives in my adjudication. Further, the RM who sold me the minibond is named as a witness. As mentioned to FIDReC and MAS, I do not understand why for instance, a robber can be named as a witness instead of the 'Accused'. The arrangement has the effect of X sending three representatives including one legal counsel against me alone.

FIDReC stand since March (I sent in my complaint in Nov 2008) when I was told of adjudication procedures has been that I have to accept this arrangement if the Adjudicator did not reject.

I am wondering if others are facing similar unjust arrangement? Did they share their solutions with you? Appreciate if you can provide some advice. Thank you.


REPLY
Many investors have expressed unhappiness with the FIDREC arrangement and the outcome.

I suggest that you bring up this matter to the Consumer Association (CASE) to ask for consumers to be given a fair hearing. CASE is represented on FIDREC. You can send your letter to Mr. Seah Seng Choon at seahsc@case.org.sg

Petition to PM on credit linked notes (7)

Petition.

Signatures as at 1 August: 650

The signing of the online petition has slowed down during the past weeks. An average of 10 people sign each day.

With the recent decision by Great Eastern Life to buy back their structured products, there is some hope of getting the banks and financial institutions to adopt the same settlement given in Hong Kong.

I urge all investors to put in a renewed effort to get more people to sign the petition and reach the target of 1,000 signatures.

Update as at 9 August: 716 signatures (average of 10 per day)

How to be happy

Read this article.

Whole life and endowment with low rates of commission

Someone asked me why I am against whole life and endowment plans, and why I offered these plans during my tenure as CEO of NTUC Income.

I have covered these issues on several occasions in my blog during the past two years. I shall repeat what I have said earlier.

I do not like life insurance plans that have these features:

a) Pays high rate of commission
b) Pays a low rate of bonus (i.e. less that what has been earned)
c) Gives a poor return

During my tenure as CEO of NTUC Income, the whole life and endowment plans had the following features:

a) Pays a modest rate of commission (i.e. about half of the market rate)
b) Pays a high rate of bonus
c) Gives a fairly attractive return, i.e. more than 5% p.a for policies taken in the earlier yeras.

During the last three years of my tenure, I encouraged the agents to sell term insurance and to sell an investment linked plan with low rates of commission (i.e. 15% for 3 years only).

After I left, the marketing strategy has changed.

Tan Kin Lian


Thursday, August 13, 2009

Interests of policyholders protected: MAS

Published in St Times Forum page

I REFER to last Thursday's letter by Mr Larry Haverkamp, 'Transparency in insurance: Policyholders underpaid'. He suggests that insurers have built up 'orphaned money' by under-declaring bonuses to participating policyholders. This is not the case in Singapore. With the introduction of the Risk-based Capital Framework in August 2004, insurers in Singapore are required to record the total amount of assets held in the participating fund as backing the liabilities to the participating policyholders. This means all assets in the participating fund belong to the participating policyholders. The issue of 'orphaned money' therefore does not arise.

In addition, there are rules governing the distribution of bonuses for participating funds. Under the Insurance Act, when insurers declare bonuses to participating policyholders, they can distribute not more than $1 to shareholders, as compensation for their management of the fund, for every $9 of bonus declared to policyholders. This ensures that insurers have an interest to manage the participating fund properly to achieve reasonable long-term returns for policyholders in accordance with the stated investment objectives of the fund.

These requirements ensure there is no incentive for insurers to intentionally under-declare bonuses in the hope of building up large amounts of 'orphaned money' to benefit their shareholders in future.

The Monetary Authority of Singapore (MAS) informed insurers in July this year that the definition of a participating policy in the First Schedule of the Insurance Act will be amended to provide even greater clarity that the assets of the participating fund belong to participating policyholders.

Angelina Fernandez (Ms)
Director (Communications)
Monetary Authority of Singapore

MY COMMENT
I have sent a reply to the St Times. I will wait a few days to see if they will publish my letter. After that, the letter will be published in this blog.

Vote for the JUTA Award (new survey)

I have created a new survey for you to cast your vote for the JUTA Award (to recognise an organisation or person who "jump up and take action" to put things right). Vote here.

Wednesday, August 12, 2009

Update on Gathering of 22 August (1)

1. Donations
I have received donations of $1,300. This includes a generous donation of $500 from an investor. The total is sufficient to meet the expenses of the Gathering, but not sufficient to take an advertisement on the Petition. Any balance, after deducting expenses, will be donated to FISCA (Financial Services Consumer Association). Further donations are welcomed.

2. Volunteers
5 people have volunteered to help with the ground work on 22 August. I need more volunteers. Please send an e-mail to kinlian@gmail.com. You have to report at 4 pm at the cafe outside the Hong Ling CC on 22 August.

3. Petition
730 people have signed the online Petition. We will collect more signatures at the Gathering to reach the target of 1,000 signatures.

Minimum wage jobs

In many countries, an unemployed person is eligible to receive an unemployment benefit for a certain period, e.g. 12 or 18 months. After that, the person is eligible to receive a welfare payment at a lower level.
The unemployment and welfare benefit provides a certain level of minimum income. If a private sector job pays less, the person can decline and receive the state benefit.
Most countries also have a minimum wage policy. All jobs have to pay at least the minimum wage.
This social system is fair. It ensures that everyone can get a job or a benefit that can provide an income to meet the living expenses.
Unemployment and welfare benefits can be abused. People can be lazy. An alternative is to ensure that every person is allowed to get a job, provided by the state, at a minimum wage level. They have to work to receive this payment. There are many useful public services that the state can provide to the people, such as taking care of children, elderly, environment or safety.
These public services are flexible. If there are more unemployment (due to a recession), more public service jobs can be created. When the economy recovers, these services can be reduced.
If people are employed, they do not have to resort to crime or theft to make a living. They have the dignity. The society is more humane.
Tan Kin Lian

Make an honest living

A 21 year old person asked why my blog is against insurance agents making an honest living?
This person is mistaken. My blog wants to encourage insurance agents to make an honest living. I am against dishonest practices that take advantage of the consumers.
Honest living
a. Recommend a product that is useful and gives value to the customer
b. Earn an appropriate remuneration for your time and effort
c. Be efficient, so as to lower your cost to the consumer
d. Disclose your commission
Dishonest living
a. Exaggerate the positive points
b. Hide the negative points
c. Tell lies
d. Offer a bad or expensive product (which you would not buy yourself)
e. Earn high commission at the expense of the customer
As an insurance agent or financial adviser, you have the choice to make an honest living or a dishonest living. I encourage you to be honest. You will earn the lifelong respect and trust of your customers. You can face your conscience and say, "I am an honest person".
Tan Kin Lian

Public Consultation on Human Rights - 22 Aug 2009

Hi Mr Tan,
I hope this e-mail finds you well. I am writing to you on behalf of a group called MARUAH (www.maruah.org), and specifically Braema Mathi who leads MARUAH.

As you may know, MARUAH is a human rights group that has been dialoguing at the regional and national level with governments and other stakeholders on the ASEAN Human Rights Body under the ASEAN Charter.

The ASEAN Human Rights Body, now termed the ASEAN Inter-Governmental Commission on Human Rights, is here to stay -- you can see the Terms of Reference at http://www.asean.org/DOC-TOR-AHRB.pdf. We feel that a crucial precondition for the AIGCHR to be meaningful (even within the constraints of its TOR) is for all civil society members and other stakeholders to at least know what it is about and how it can impact our work.

Accordingly, MARUAH is organising a public consultation to be held on 22 Aug 2009. We would like to invite you to attend this consultation. The attachments provide more details on this public consultation and also include the registration form. You may also register online at http://spreadsheets.google.com/viewform?formkey=dEZRMHRvQjhpNXROdDZFRmV4d2k5bHc6MA..

Human rights is only going to gain more significance in the Singapore political landscape. We strongly encourage you to be part of this consultation. We intend to offer a one-stop shop for those who need more information, and we will also seek to gather views (without attribution to any particular group or person, to encourage a more open and frank discussion).

We would also greatly appreciate it if you could forward this email (including the attachments) to others who may be interested in this event, and also publicise this event on your site (e.g. by linking to http://maruah.org/2009/08/07/registration-for-consultation-workshop-on-asean-intergovernmental-commission-on-human-rights/).

We really hope to see you there, to be part of the process of shaping the future for the next generation.

Thank you and we look forward to receiving your positive response.

Best regards,
Kum Hong

Tuesday, August 11, 2009

Singapore GDP spike 20%

Read the good news here.

Day in the Life of a Family Doctor

Read this article.

Cost of Financial Planning advice

Some financial planners say that they need to spend 40 hours to gather information and give suitable advice to the customer. They need to charge $500 to $1,000 for this advice. This is expensive.

If doctors spend 40 hours to gather information about a patient and give suitable treatment, it will also cost just as much to see a doctor. But the doctor (i.e. general practitioner) has found a way to reduce the time taken, so that the information gathering and treatment can be done within 15 minutes. The doctor charges around $30 for consultancy. Read this report about what the doctor has to know and practice.

It should be possible for a financial planner to reduce the time that is needed to give advice. Some of the steps are:

a) Give a booklet to the consumer to read on their own, and understand the basics
b) Ask the consumer to provide the details in a form
c) The financial adviser has a preliminary discussion with the consumer
d) The financial adviser takes some time to prepare the analysis
e) The financial adviser presents the recommendation in a separate visit

If this is done using a more efficient approach, the time taken can be reduced to between 2 to 4 hours. This will reduce the cost of financial planning advice by 90%. Maybe a fee of $100 to $200 will be sufficient.

Hassle for Travellers

Do you find it discouraging to travel to another country, with the unnecessary hassle given to you by the authorities in the countries that you visit - immigration, custom, health forms, on top of the security checks? Share your views here.

Norway towns sue Citi over structured note losses

Perhaps it is time for Town Councils in Singapore to sue the distributors, following the example of the towns in Norway. Read this article.

I suggest that residents send this article to their Town Councils involved in the credit-linked notes.

NS for adult new citizens not practical

Published in Straits Times Forum Page

I REFER to last Friday's letter by Mr Michael Ang, 'Make English and modified NS a must'.

National service (NS) is not merely a rite of passage for young male Singaporeans. It was conceived with a specific objective to build up a citizens' army to defend Singapore militarily. This objective remains true today.

It is tempting to argue that foreigners should do NS as a price to pay for Singapore citizenship because many view NS as a liability borne by Singaporeans. However, NS functions as part of a wider framework of the war-fighting doctrine of the Singapore Armed Forces (SAF), as well as Singapore's national development. Manpower requirements, including those for conscription, must be meticulously identified and implemented.

Many foreigners coming to Singapore are in their late 20s or older. They are already economically productive and can immediately contribute to Singapore's economy. It makes little sense to disrupt their activities for two years. Whatever social networks they have developed would also need to be rebuilt.

Having modified NS is feasible only if it fits in with the overall requirements of the SAF and complements its capability. It is a waste of resources if it exists only to make some people 'serve their duty'.

Furthermore, the largest army corps is the infantry and this is where the SAF needs the most people. However, studies in other countries have shown that the specific kind of fitness needed for infantry soldiers, involving a combination of agility, stamina and tolerance of sleep deprivation, starts to degrade from the late 20s onwards. This is why armies across the world have a lower maximum age to join the infantry.

Xiao Fuchun

MY VIEWS
The Singapore Government has not resolved. I brought this issue up 25 years ago to point out the serious disadvantage faced by our male Singaporeans in having serving National Service, and having to compete for jobs with girls and foreigners. Over the years, this problem has became more serious.


Cunfusing cab fare structure

Should taxi fares be standardised? Read a practical suggestion here.

NYTimes.com: Shut Out at Home, Americans Go to China

Read this article about job opportunities in China.

Monday, August 10, 2009

Sense of belonging lacking among youth

44 years of nation building may be futile. Read this article.

I've got mail

Read this article.

Van for Aug 22

I need a volunteer to provide a van for transport on 22 August. Please contact me at kinlian@gmail.com.

My life insurance policies

Dear Kin Lian
I am insured with NTUC. Seriously. I am naive and ignorant, how I should address my concerns (of the poor return) to the management board? Do you still have NTUC policies?

REPLY
I had about 15 life insurance policies during my time with NTUC Income, including policies taken for my children. Many of them have matured. Some were transferred to my children.

I cancelled four whole life policies (on my life) during the past two years, due to the reduction in bonus rate and the increase in management expenses. As I am past 60, I do not need the insurance protection.

I have only a few investment linked policies left. I shall cancel them at the right time.



Insufficient savings? No wonder with poor insurance returns

Published in Forum Page, Straits Times on Aug 10, 2009

I AGREE with the views expressed by Mr Larry Haverkamp in his letter last Thursday, 'Policyholders underpaid?'.

Many life insurance policies taken today require more than 15 years to 'break even'. This is the point where the cash value of the policy is more than the premiums that were paid over the years.

During this period, the insurance company must have earned more than 40 per cent on the premiums that have been invested. As an actuary, I know that the real cost of providing life insurance cover is about one-quarter of the gain. The remaining three-quarters are used to pay the agent's commission and expenses, or retained as orphaned money, as pointed out by Mr Haverkamp.

If the orphaned money is distributed to the policyholder, as suggested by Mr Haverkamp, the return would at least have been slightly better.

In recent years, consumers have been given a poor deal on their long-term savings in life insurance policies. A careful study of the Benefit Illustration will probably bring out this point. But the Benefit Illustration is difficult for consumers to understand and needs to be explained by an insurance adviser, who tends to skim over the negative points.

This is similar to the situation with the prospectuses issued for Minibonds and other credit-linked notes.

If consumers are given a poor return on their long-term savings in life insurance policies and other financial products, and in many cases they actually get a negative return, is it a wonder why many Singaporeans do not have sufficient savings for retirement after many years of hard work, thrift and savings?

I call on life insurance companies and financial institutions to reconsider their roles and responsibilities to provide a fair deal to consumers, as they strive to make profits for their shareholders. I hope the Government will also review this unsatisfactory situation in Singapore.

Tan Kin Lian

Singaporeans are so predictable

Singaporeans are so predictable. Click here to learn why.

Happy 44th birthday, Singapore!

Harrassing the wrong people

On my return from Batam, I had to go through security check at Harbour Front. My bag had to be screened. The mobile phone has to be placed in a separate tray.

On passing through the metal detector, there was a beep. So, I had to be screened. I had to empty the wallet, keys, pen from my pockets. Many questions were asked. I only had two hands, so it was quite difficult to be holding the passport, wallet, keys and other items.

After being passed as "not carrying weapons", I collected my luggage and left. Ten minutes later, I realised that my mobile phone was missing. I had to go back to recover it.

I hope that our security officers realise that a traveller has only two hands, and that they had to take care of many things. It is not necessary to give so much hassle to the travellers, who are returning home.

The security officers are only carrying out their duty, as written by the top leaders. The top leaders (i.e. government minters and civil servants) are given VIP treatment, so they do not have to go through the hassle that lesser mortals had to endure.

I know that it is important to have security measures to ensure that terrorist do not smuggle weapons into Singapore. Are we harrassing the wrong people in the process?

In most other countries, the security officers exercise their discretion and do not follow the rules by the book. If someone (like me) does not look like a terrorist, they do not subject this person to the same detailed check.

But, in Singapore, everything goes by the book and is implemented blindly. It requires our top leaders to experience the inconvenience personally, before they change the rules. And the top leaders are trapped in their ivory towers, surrounded by security guards, and receive ground reports from underlings who only convey what they wish to hear. (Sigh). This is Singapore!

Tan Kin Lian

Investor to share experience on BBC

BBC is doing a series of global reports on the anniversary of the Lehman collapse. They are to do an "authored report", ie someone affected by the collapse in some way, talking about their experiences.

If you are interested to be interviewed by BBC, please send an email to kinlian@gmail.com. You can request the BBC not to use your real name, but to write about your experience.

Apart from talking about how you were misled into the investment, you can also talk about the months of agony earlier with the financial institution, FIDREC and MAS.

Sunday, August 09, 2009

Sale of my books

An unemployed person posted a question - can he sell my books and earn a commission. If you are interested, send an email to kinlian@gmail.com.

It is quite easy to sell my books. I sold 10 copies during my trip to Batam, just by showing people how to solve the shapes in the Shape Quiz book.

Prudential Yield 15/20 (2)

Someone posted a comment that the Prudential 15/20 is similar to the Great Link Choice. Can policyholders of this product give feedback on:

a) The structure of the product
b) Does it guarantee against the failure of a certain number of CDOs
c) What is the current value of the various tranches of this product?

FACTBOX: Jobless benefits vary around the world

With increasing numbers of people put out of work in the recession, here is a look at the unemployment benefits offered in the United States, Britain, France, Germany and Japan. Read this article.

Nominations for the SBW Award

Here are the nominations for the SBW (Sit Back & Watch) Awards:

1st choice (46 replies)
MAS - 27
President Nathan - 5
CASE - 5
PM Lee - 2

1 vote received for Public Transport Council, Goh Chok Tong, Law Society, M of Education, Investors, MD of MAS

2nd choice (26 replies)
PM Lee - 4
MAS - 4
Member of Parliament - 3
Lim Hng Kiang - 3
M of Finance - 2
Goh Chok Tong - 2

1 vote received for NTUC, M of Manpower, Singapore public, Prime Minster Office, CASE, Home Team, Land Transport Authority, People's Action Party

DBS Bank: 'definitely' no note buyback

By George Ng (HK Edition)

HONG KONG: DBS Bank (Hong Kong) Ltd will "definitely" not buy back the Constellation Notes from its clients despite the fact that other banks have agreed to buy back another structured product they sold to investors, the bank's top executive said Friday.

"We have explained very clearly the risks involved when we sold the product to investors ... we have reviewed all complaints (regarding the sales of the product) and have made proper compensation in cases that involved mis-selling," said Chief Executive Officer Amy Yip, fielding media questions at a press briefing for the group's quarterly results.

"There will be no further settlement," she said. "We definitely won't buy back the notes." Yip emphasized that the structure of the Constellation notes is very different from the so-called Lehman Brothers minibonds.

Last month, 16 banks offered to pay at least 60 cents on the dollar to investors for the minibonds guaranteed by Lehman Brothers that lost their value after the US investment bank collapsed.

Linked to the credit of a basket of companies including Lehman, the value of the Constellation notes will be reduced whenever any of the reference institutions suffers from credit events such as bankruptcy or default.

DBS said in a statement in October last year that the possibility of the 4,700 investors losing their entire investment of $241-million in the Constellation notes "is likely to materialize".

Meanwhile, Koh Boon Hui, chairman of DBS Group Holdings Ltd, parent of DBS Bank (Hong Kong) Ltd, told the same press briefing that the group will "definitely" not reduce its headcounts further.

Rather, the bank will do "necessary" recruiting in Hong Kong as business improves with the economy, Yip added.

DBS, Singapore's largest bank and one of Southeast Asia's largest banks, cut 900 jobs late last year after the global financial crisis hit the world, with half of the headcount reductions coming from its Hong Kong unit.

The DBS group yesterday reported a net profit of 552 million Singapore dollars (S$) in the second quarter, up 21 percent from the first quarter as revenue growth boosted earnings before bad-debt allowances to a record S$1.6 billion.

On a year-on-year basis, net profit fell 17 percent from S$668 million as improved operating performance was offset by higher bad-debt allowances, the group said.
DBS set aside S$466 million for bad debts, almost eight times more than a year earlier, with non-performing loan ratio rising to 2.8 percent from 1.4 percent a year ago.

Meanwhile, the bank's Hong Kong unit, DBS Bank (Hong Kong) Ltd, reported a net profit of HK$532 million for the second quarter, down 21 percent from a year ago as non-interest income dropped 20 percent to S$632 million while bad-debt provisions surged 61 percent to S$373 million.

Compared with the first quarter, net profit was up 12 percent as net interest income improved by 5 percent to $1.19 billion while bad-debt provisions declined by 17 percent.

The non-performing loan ratio of the Hong Kong unit rose sharply from 1.7 percent in December to 2.6 percent in March and then retreated to 2.4 percent in June.

http://www.chinadaily.com.cn/hkedition/2009-08/08/content_8544177.htm


The embodiment of democracy in our National flag and its reality

Read this article in the Kent Ridge Common blog.
Happ 44th birthday, Singapore.

HK investors protest DBS

HONG KONG - ABOUT 100 Hong Kong investors burned by complex financial products linked to failed US investment bank Lehman Brothers protested on Sunday, demanding securities regulators help them negotiate a settlement.

Tens of thousands of retail investors in this Chinese-ruled financial hub were hit by Lehman's collapse in September.

Hong Kong securities regulators announced a settlement deal last month for one group of investors who purchased certain Lehman-linked products through local banks, but the agreement did not cover products sold by Singaporean bank DBS Group Holdings.

Sunday's protesters were demanding securities regulators step in to strike a deal for DBS clients. The demonstrators bought so-called 'Constellation' notes from DBS - financial products that are linked to the credit ratings of a group of financial institutions, including Lehman.

About 6,900 Hong Kongers bought HK$2.3 billion (S$427 million) worth of the failed investments, according to K.C. Lok, an organiser of the disgruntled investors.

'DBS lacks a conscience', 'DBS is a swindler', the protesters chanted at a park in Hong Kong's downtown Central financial district.

Lok, who bought just over HK$100,000 in the Constellation notes, accused DBS of misleading its customers into believing the financial products were conservative investments.

'Many of the investors shifted their money from timed deposits,' Mr Lok said.

DBS Hong Kong spokeswoman Glendy Chu said on Sunday that the bank had explained the risks of the products and offered compensation to investors in cases where there was evidence of questionable sales practices.

The deal announced last month would see 16 local banks returning 60 or 70 per cent of the principal to thousands of investors in a payout that amounts to HK$6.3 billion. -- AP
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_414677.html

Nongsa, Batam is now a safe place

I visited Nongsa, the most populated town of Batam, over the weekend. I was there more than 15 years ago. That time, I felt uneasy moving around the place.

I was surprised to find the town to be quite well developed now. I felt rather safe moving visiting various places in the town. There was no feeling that bad characters were hanging around.

I asked my guide, a Singaporean who visits his family in Batam every weekend, if Nongsa is now a safe place. He said that Nongsa is now safe, and the crime rate is now low. Pickpocketing is now rare. If any pickpocket is caught, the local people would punish the culprits as they gave a bad name to Batam and scare Singaporeans from visiting the island. The crime gangs has now move to Johore Bahru to operate there - which explains its current bad reputation.

It is enjoyable to visit Nongsa, Batam.

Saturday, August 08, 2009

Survey: Sit Back and Watch (SBW) Award

I wish to give the SBW Award to the organisation or person in Singapore who sits back and watch, when it is their duty to step forward and uphold justice. Who do you nominate? Survey.

Off-loading the risky credit default swaps

I share this hypothesis. Does it look close to reality?

During the years prior to 2005, investment banks were making huge profits by issuing credit default swaps to guarantee the bonds issued by borrowers. They sold these swaps to other investors and made a good margin.

In the later years, as the economic situation becomes difficult and defaults on mortgages rises, the investment banks were saddled with swaps that they were not able to off-load to ther investors.

Some clever but dishonest banker conceived the idea of designing a structured product to hide these swaps and sell them to retail investors. They looked for countries that are wishes to be a financial hub and have a history of being pro-business and weak in consumer protection. Singapore and Hong Kong were selected.

This was the beginning of the crisis of the credit-linked notes.

Tan Kin Lian


Friday, August 07, 2009

Lehman Brothers Victim alliance in Hong Kong

The Lehman Brothers Victim alliance in Hong Kong web site has a news section that shows related Chinese and English news http://www.lbv.org.hk/content/pages/newsclip.php.

Happy National Day

To the citizens, permanent residents and friends of Singapore, Happy National Day - in advance for 9 August 2009.

Suing the Wrong Party

The situation in Singapore is very sad. The investors have to take an expensive and uncertain class action to sue the distributors of the credit-linked notes. Although the distributors were, in my opinion, negligent in selling the notes to the investors, they earned only a modest commission (maybe 3%) from the transaction.

A better solution is for the distributors to collaborate with the investors to sue the issuers of the credit linked notes. The issuers were the party that benefited most through the creation of these notes. They were also responsible for writing the prospectus in a manner to hide the true nature of the structured product, hence misleading not only the investors but the distributors as well.

The distributors had a fiduciary duty to their customers. It is only right that they should do all they can to help their customers. In this regard, the action of Great Eastern Life should be applauded. The other financial institutions should emulate this good example to do what is fair and right for their customers.

If the distributors, being financial institutions, buy over the credit linked notes for 50% of the invested sum (plus 50% of the ultimate proceeds), they will have the financial and legal means to sue the issuers to recover any damages that were caused by their action. The distributors can also decide on the best action to recover and protect the value of the underlying assets. In contrast, there is no way that the individual investors can take any of these actions.

Another possible action is for the government authority to take the appropriate action on behalf of the consumers. This was done in many countries, most notably in New York State and other parts of USA. Hong Kong is also adopting a similar approach, although done at a somewhat late stage.

I hope that the financial institutions and the government authority can take this action now. Better late than never.

Tan Kin Lian





Platform number in MRT stations


Do you have trouble identifying the right platform at our MRT stations? Read here for some suggestions to improve the sign. Share your own suggestions.

TRANSPARENCY IN INSURANCE: Policyholders underpaid?

Aug 6, 2009
TRANSPARENCY IN INSURANCE
Policyholders underpaid?

THE report last Friday, 'Insurance funds need more transparency', is a good start. But there is more.

We have invested more than $60,000 per household in whole life and endowment policies.

The money goes into a huge policyholders' fund at each life insurance company. We know little about the fund or how the money is invested.

It is very different from buying a unit trust, where you get a certain number of units in proportion to your ownership in the fund. These units amount to the fund's net asset value or NAV. It is updated and published daily.

Policyholder funds have the same concept but use the term 'asset share' instead of NAV.

Another difference is insurance companies do not disclose the asset share. This makes it easy for insurers to underpay policyholders without them knowing it. Insurers acknowledge this happens with early surrender policies, but do not say if it also happens with policies held to maturity.

As the rightful owners are policyholders who have left the fund - and supposedly cannot be found - it is called 'orphaned money' or money without a home.

Underpayments to policyholders accumulate over the years, and are now huge. Aviva in Britain made a distribution of $2.7 billion last year. In that case, policyholders got 70 per cent of the money and Aviva kept 30 per cent. The company claimed that legally, it could have kept it all.

That is one way insurers benefit from orphaned money. Another is earning a risk-free 10 per cent on the income it generates.

A third way is to provide a buffer to absorb losses in case of a market downturn. It means the fund avoids dipping into tier 1 capital, which is largely stockholders' money.

Officially, the rationale for holding orphaned money is different: It provides a buffer for policyholders to avoid bonus cuts in downturns. Not correct. Insurers typically cut bonuses in downturns - like now - while the orphaned money keeps growing.

Singapore insurers disclose nothing about orphaned money. We do not know how much there is or where insurers keep it. Does it remain in the policyholders' fund or has it been transferred to stockholders?

Larry Haverkamp

Thursday, August 06, 2009

Two Canadians' views about Singapore

Mr. Eric Brooks letter, asking Singaporeans to be grateful for the quality of life, was published in the Straits Times.

Mr. Wing Lee Cheong. a Singaporean who became a Canadian citizen, wrote a reply to the Straits Times, asking Mr. Brooke to be grateful to Canada. His letter is not likely to be published in the Straits Times. It can be read here.

Call to investors

I have written a few blog postings in RED, calling on the financial institutions to offer the Hong Kong settlement.
If you agree with them, you can send the blog posting to the financial institution that sold the credit linked note to you. You can also send it to your Member of Parliament or other channels, asking them to take up your matter.
If more investors do this, it may create an impact.

Volunteers for 22 August Gathering

I need volunteers to help with the following duties for the Gathering on 22 August:
a) Hold up the placards
b) Collect signatures for the Petition - you will be provided with a hard backing board and signature forms
c) Distribute flyers
d) Sell my books - 50% of proceeds will go towards the expenses
If you are able to help, please send an email to kinlian@gmail.com.

Great Eastern Life is maganimous

When Great Eastern Life sold the Great Link Choice, the product was explained quite transparently. I recalled reading some description of the product in the newspapers. It was clear that on reaching a certain number of credit events, the value of the investment would drop sharply and after passing a threshold, it would be worthless.

The mistake was in allowing this type of "gambling" product to be sold to the general public. There is no way that any investor will be able to assess the risk of losing all their money. They had to rely on the advise of the financial adviser (i.e. insurance agent) and the credit rating agency. The Monetary Authority of Singapore should not have allowed the general public to gamble away all of their money for a small increase in interest rate.
Great Eastern Life made the mistake of selling this product, but several other insurance companies also sold similar products. NTUC Income, which was managed by me during this period, avoided this type of product, resulting in a decline in our market share.
Most policyholders who bought the product were probably told that there is a risk, but were probably assured (wrongly) that the risk is very small. It would be fair for the policyholders to take partial responsibility and bear a portion of the loss. Some policyholders might not have been told of the risk, or might have been misrepresented about the risk, but this is a separate matter.
It is magnanimous (highly generous) of Great Eastern Life to offer a full buyback of this investment product. I congratulate them for this goodwill gesture, which is costly to their shareholders. I hope that all policyholders who got back their money understand that they have been generously treated.
Great Eastern Life has to write off a loss of $250 million. It could be more, if the credit market continue to deteriorate. It could be less, if the credit market improves in the future. No one knows what the future will hold.
I like to wish all the best to Great Eastern Life and hope that they will be rewarded for their generosity, through an improvement in the credit market. In the best possible case, they may fully recover the $250 million that was set aside. At that time, I hope that the policyholders will not ask for the interest to be paid to them (as it would be an unfair expectation).
Whatever the outcome, Great Eastern Life would probably be rewarded by the goodwill gained from the compensated policyholders, their families and friends and the general public in Singapore.
I call on the other insurance companies who have sold similar products to offer a buyback arrangement. It does not have to be as generous as Great Eastern Life, but it should share the loss (or gain) equally between the policyholders and the insurance companies. This would be a fair settlement.
Tan Kin Lian

Conduct in this blog

Someone asked if I accept criticism of my views in this blog. The answer is "yes", but I expect the following conduct:
a) The person must state his/her real name and connection to this issue
b) The remark must be fair and respectful.
I do not accept criticism from any anonymous person. It is cowardly and unfair. They often denegrate into personal attacks.
I have also blocked attacks against other people or groups. I allow some to go through, especially if they express grievance of people who felt that they have suffered injustice (such as the episode on the credit linked notes).
I observe the following conduct in posting my views:
a) I do not criticise any person or pass judgement on them
b) I use my real name; people know my background
c) I write on issues that I agree with (being positive) and disagree with (giving an alternative view)
d) I show repect to the views of other people
I hope that other commenters in this blog will observe a similar conduct.
Tan Kin Lian



Wednesday, August 05, 2009

TODAY:Don't bet on FIs To follow GE's lead

5 August 2009

THE decision by Great Eastern Life to return the entire premium paid, less annual payouts, to those who bought its GreatLink Choice policies was nothing short of a public relations coup. The “goodwill gesture” has brought relief to some 18,000 people who bought these investment-linked insurance products. This virtually no-strings-attached gesture could cost GE Life in the ball park of $250 million. Money well spent, I say.

I’m sure that many among the nearly 10,000 investors here, who bought $665 million worth of toxic structured products including the Lehman Brothers Minibonds and the DBS High Notes 5, are hoping the 10 financial institutions (FIs) here involved in selling — or should I say, mis-selling — these products, might take a leaf out of the GE Life public relations manual and do the same — compensate all of them fully.

Don’t bet on it. I would be glad to be proven wrong, but the writing on the wall warns of more disappointment — for three reasons.

Let me remind you what the Trade and Industry Minister Lim Hng Kiang told Parliament a fortnight ago about the investigation by the Monetary Authority of Singapore (MAS). He said the “investigation findings do not support an across-the-board general settlement for all investors, irrespective of their individual circumstances”. For those familiar with Monopoly, that is virtually a “get-out-of-jail card” for the FIs.

Mr Lim noted “the nature and extent of failings identified and their potential impact on the sales process and customers differed for each institution and for each customer”. And while not all would accept the case-by-case approach, he said “this way we serve the interests of all parties, and also serve the wider public interest of growing Singapore’s reputation as a credible and reliable international financial centre”.

There is little pressure on FIs to settle in full. After all, an investigation by their regulator does not support an across-the-board settlement. As of May 31, the FIs have paid out $107.7 million in full or partial settlements to some 3,900 of the nearly 10,000 structured product investors.

The second reason offered: It’s an “apples and oranges” type of comparison. Well, that’s what the FIs will tell you. The product sold by GE Life was an “investment-linked insurance product”, whereas the now toxic structured product was an “investment product”. The GreatLink Choice policies were investment-linked products with underlying investments in CDO (collateralised debt obligations) instruments. The products were designed with built-in loss protection levels and wide diversification across various industries and geographical regions.

For the general investing public, and particularly for those who have lost money, the “apples and oranges” comparison is not so much about the type of products they were sold but about how the institutions that sold them the products have responded. Both products were adversely hit by the financial meltdown. GE Life has opted to bite the bullet and pay up. The FIs appear to be doing their best to ante up as little as they can.

The third reason that has been suggested: The FIs and GE Life are “very different entities” and their governance is different.

Being an insurer, actuaries at GE Life must have done a cost-benefit analysis and decided that in the long run the benefits of the repayment exercise would extend well beyond their policyholders, to the average man in the street, and also go a long way in restoring trust and confidence in the company, one of the largest local insurers. And I must agree. It is not easy to put a dollar value to public trust and confidence.

So what sort of cost-benefit analysis did the FIs do? With claims lodged, and lawsuits looming, they are going to see management time wasted, legal dollars spent and reputational cost incurred. I guess this must all add up to less than the $500 million the 10 FIs have not refunded.

Timing the stockmarket

Dear Mr. Tan,
I have invested in blue chips, including (names deleted). These stocks are high dividend yield stocks. I bought them during the Sep 2008; just before the crash of Lehman Bro's.

With the recent recovery in the stock market, my portfolio has finally break-even in value. I am wondering should I sell all my positions now to "play safe" or should I stay put and do nothing; collect the dividend.

I don't think the current recovery in the stock market is sustainable. Please advise...

REPLY
I am not able to advice on timing decisions. If you sell the stocks, remember that the money earns you less than 1% p.a. in the bank. In my case, I am holding on to my equity investments, although they are still lower than my cost.

US Health debate: cost and benefits

Read this article. Some of the issues apply to Singapore.

Moderation of my blog

I adopt the following approach towards moderating my blog:

a) I allow people to express honest views, even if they disagree with my views
b) I allow more than 95% of comments to be published
c) I block comments that are malicious, defamatory or personal attacks

Those who wish to make personal attacks can do it in other blogs. You will not be granted the "freedom" to do it here. If they disagree with my moderation policy, they do not have to visit my blog.

New ez-Link card

A new ez-Link card is being introduced. What is the purpose of changing to this new card? Read about my experience here.

Higher motor premiums

Are you paying higher motor premiums? Here are some tips on how to reduce your cost of transport. Read here.

Pricetag to raise a child - US$ 221,190

The heavy price tag to raise a child is a major factor in the declining birth rate in developed countries, including Singapore. It is also the result of the "free market" policies adopted by these governments, that has allowed the cost to be exorbitant. Read this article:

If governments wish to see a higher birth rate, it has to recognise that the cost of raising a child (up to three in a family) should be borne by society, and not by the individual parents. Policies have to be adopted to reduce the cost burden, such as subsidised medical care for pregnancy and childbirth and access to free or subsidised education up to tertiary level.

If parents are relieved of this heavy cost, they are more inclined to take the other burden of parenting. This requires higher taxation, but it is fair. Those who choose to remain single can help to pay the parents to raise the children for the future of the nation. We have to think beyond self interest to the interest of the nation.

Tan Kin Lian

Early redemption of mortgage loan

Dear Mr. Tan,
I recently sold my property after holding it for 5 years. The mortgage loan was 85% of the property value. It took 10 weeks from the exercise of the option (by the buyer) and the completion of the sale.

According to my lawyer, the bank wanted to charge the following:

a) Early redemption penalty of 1.5% (which I am aware of and will accept)
b) Interest in lieu of short notice, as I have to give 3 months notice (which I am disputing)

I dispute the payment of the additional two weeks of interest on the following grounds:

a) This clause was not highlighted to me during contract signing
b) The 10 weeks to compete the sale of property is a typical time frame in the industry. Why should I extend my closing date in favour of the banks?
c) Why does a bank need 3 months to basically tabulate outstanding loan amount and receive money?
d) Why should I be charged interests on a Loan that doesn’t exist.

The bank has obviously insisted that the 3 months notice was scripted in the TC of the loan agreement. The principle behind this charge is seriously flawed. If this is a common bank practice across Singapore. I would like to question the validity and need for such a clause in a mortgage agreement.


REPLY
Here are the steps that you can take:
1. Write a letter of complaint to the media, e.g. Straits Times.
2. Write a complaint to FIDREC, www.fidrec.com.sg
3. Write a complaint to MAS, so that they are aware about how the banks are behaving.

I encourage consumers to fight against unfair terms, even though they have been placed into the complicated legal documents that they were asked to sign. I wish you all the best.

Tuesday, August 04, 2009

SCMP:Watchdog accused over Lehman probe decision

4 August 2009

Lawmakers criticised the financial regulator for suspending an investigation over the selling of non-minibond products after banks agreed a HK$6.3 billion deal to repay Lehman Brothers minibonds buyers.

Securities and Futures Commission chief executive Martin Wheatley said the commission had not only ended its top-down inquiry into minibonds, but also suspended investigation of other products from the 16 banks under the agreement.

He was speaking at a hearing of the subcommittee on the debacle surrounding the sale of Lehman Brothers financial products.

Democrat James To Kun-sun told the five-hour meeting: "It's about the minibonds agreement with the banks, but you {hellip} voluntarily suspended your statutory duty to investigate the systematic failure [over the selling] of non-minibonds products."

Another democrat, Kam Nai-wai, asked Mr Wheatley if he thought the interests of other buyers who bought Constellation Notes, a derivative similar to minibonds also issued by Lehman Brothers, or equity-linked notes had been sacrificed.

Lehman Brothers minibonds holders will receive letters before Monday from the banks who will repay them at least 60 per cent of the value of their initial investment.

Mr Wheatley said the investigation into non-minibonds products, involving about 500 cases, had been suspended because the latest deal required the banks to immediately implement improved complaints-handling procedures to resolve all complaints they received.

He said the investigation of three other banks, which were not included in the payout deal because they sold Lehman-related products apart from minibonds, continued. Investors should first turn to banks if they had complaints, and then the Hong Kong Monetary Authority.

Subcommittee chairman Raymond Ho Chung-tai said it would ask the commission to submit an original copy of the agreement, investigation findings of the 16 minibond-selling banks, as well as e-mail exchanges the commission had with the Monetary Authority and financial officials before it reached the deal.

Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives, and are marketed as a proxy investment in well-known companies. Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt last September.

he Standard:SFC to tackle equity-linked notes fiasco after settling minibonds saga\

4 August 2009

The Securities and Futures Commission has vowed to speed up its investigation into sales of Lehman Brothers equity-linked notes after settling the minibond controversy.

But the watchdog's chief executive could not provide a timetable because it is negotiating with banks that sold the notes.

Martin Wheatley told lawmakers yesterday he could not say if the ELN issue would follow the minibond model, but ``a settlement is always the best outcome.''

The SFC and 16 distributing banks agreed on July 23 on a settlement proposal to pay back 60 to 70 percent of the original investments of thousands of minibond holders. But ELN investors _ and those labeled as ``professional investors'' and ``experienced investors'' _ were excluded. Banks have agreed to repay minibond investors up to HK$6.3 billion with the SFC ending its ``top-to-bottom'' investigation.

Wheatley said the SFC would let minibond holders decide if they will accept the offer, and would not resume its efforts even if half of the investors reject the deal.

``Investors could complain to the Hong Kong Monetary Authority or even go to court,'' he said.

``If there have been multiple purchases of complex financial products, then it's more difficult for them to argue that they could not have understood the complex nature of a structured product.''

SCMP:Flawed system

A few days ago I was in a hospital in Tsuen Wan waiting to have some X-rays taken when I read a notice, the gist of which was, that if someone claiming CSSA benefits was found to be doing so without being entitled to them that they could be liable to serve 10 years in prison. I was astounded, as only a day or so earlier I had read that all the bankers involved in the selling of the worthless minibonds had been let off scot free.

Banks and their agents can knowingly promote and sell worthless bonds to thousands of unwitting investors and receive nothing by way of punishment other than a warning not to do it again. But a family desperate just to survive - not to make money, just survive - could result in a family member going to prison for 10 years.

There must be something terribly wrong with the justice system for this to be so.

Internet shop - selling TKL books

There is a new interface for the Internet Shop, selling TKL books. It explains how to order the books. Try it here.

PROMOTION. I wish to give a promotion discount of 15% on purchase of my books until National Day, 9 August 2009. To qualify for this discount, you have to enter the promotion code BLOG.

The available items are (prices are before discount):
TKL Intelligence Quiz vol 1 and 2 $7.90
TKL Sudoku Vol 1 (challenging puzzles) : $7.90
TKL Shape Quiz: $7.90

Dementia: keep it at bay

Exercise your mind could hold off demeina, as explained in this Article.

Try my quizzes and puzzles, which are designed to exercise your mind. Check out here.

Monday, August 03, 2009

GreatLink Choice insurance products valued between 19.2 and 29.8 cents

By S.Ramesh, Channel NewsAsia Posted: 03 August 2009 2151 hrs

SINGAPORE: Great Eastern Life's customers who have bought its GreatLink Choice investment-linked insurance products have started receiving letters to exercise the redemption offer made by the insurer.

Last Friday, Great Eastern announced that it would buy back S$594 million worth of GreatLink Choice products from 18,000 policyholders.

In the letter, the insurance company's managing director Mr Tan Hak Leh said the financial crisis has had an especially adverse impact on the market value of GreatLink Choice 3, 4 and 5 products.

The prices of these tranches as at June 30 this year were between S$0.192 and S$0.298 and they have a credit rating of CCC- (minus) from Standards and Poor's. Each unit was sold at S$1.

Great Eastern added that in view of the challenging market conditions, it has decided to make a one-time redemption offer to all GreatLink Choice customers who had bought tranches 3, 4 and 5 of the structured product.

Customers have until August 28 to decide if they want to redeem the policy. Great Eastern said customers will receive their money within two weeks after the close of the offer.

The company added that the redemption price is 90.2 cents per unit, compared to the latest GreatLink Choice 3 price of 29.8 cents per unit.
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/446602/1/.html

Great Eastern's managing director, Tan Hak Leh, hopes the one time redemption offer will give customers peace of mind during these challenging times. - CNA/vm

Cheaper taxis

Do you like to take a taxi at half of the current price? This may be possible within the next few years. Find out how.

Survey: Favourite Singaporean expressions

Many Singaporeans use the following expression often, "be careful". It reflect a character trait - caution. This character trait make many Singaporeans scared to decide. They prefer to let other people decide for them. Do you agree?

Take part in this survey.

SCMP:Buy-back package must be extended, investors demand

3 August 2009

The buy-back package for Lehman Brothers minibonds should be extended to cover equity-linked notes (ELNs), 300 investors demanded yesterday when they met lawmakers.

The investors, mostly middle-aged, argued that as with minibonds, banks had used misleading promotional methods to sell ELNs and they were lured into buying the high-risk financial instruments, thinking there were no risks.

ELNs are investment products linked to the performance of some stocks. For most banks, the minimum investment was HK$500,000.

Investors were promised 10 to 30 per cent interest in the first month, and 4 to 20 per cent thereafter, depending on the performance of stocks. They should have been able to redeem the principal by the end of the investment period, which was usually a year.

Lawmaker Regina Ip Lau Suk-yee said the government and banks did not plan to buy back ELNs as most were bought by experienced investors who should have known the risk.

But the investors said they were just regular customers who had bought the products over the counter.

Retiree Ms Wong lost HK$500,000 after Lehman Brothers went bankrupt.

"They said the product was tailor-made for me. I trusted the bank, so I did not check the contract in detail," she said.

She had received about eight interest installments in the past two years, at an average of 12 per cent. But she said the product was now worthless. "If the bank staff had mentioned to me any one of the items in fine print, or that the product was risky, I would not have bought it."

In an earlier announcement, 16 banks promised to pay back at least HK$6.3 billion to 29,000 people who bought Lehman Brothers minibonds.

A government spokesman said the Monetary Authority and the Securities and Futures Commission should now focus on handling complaints about non-minibond structural products, such as ELNs. "The regulators will not tolerate any mis-selling conduct."

Fewer than 40 per cent of local investors are interested in buying Hong Kong government bonds or other bonds, an opinion poll by the Hong Kong Institute of Investors and the Investor Interest Concern Group found.

The findings came from a survey of 866 investors, conducted between June 6 and July 25. Of these, 38 per cent said they were interested in buying Hong Kong government bonds, with 62 per cent saying they were not.

NYTimes: Troubled Banks, Hugh Bonuses

The federal pay czar, Kenneth Feinberg, would be right to reject requests for big bonuses at banks feeding from the public trough.....

Mr. Feinberg must object to gargantuan payouts from banks that would be bankrupt
if not for taxpayers’ money. He should not be deterred by banks’ arguments that they will lose superstars and compromise profitability if they can’t pay lavishly.
The superstars caused the problem with financial wizardry they did not fully understand...

Most broadly, Mr. Feinberg must devise a structure to dissuade bankers from blowing up the economy again. In principle, one would like to see firms pay executives as they saw fit. But banks are different. They gamble with ordinary people’s money. They have proved they can do it extremely destructively.

Bankers’ remuneration was among the main factors behind this destructive behavior, encouraging them to take on dubious bets that provided big short-term returns at the expense of their institutions’ and the economy’s future stability...

http://www.nytimes.com/2009/08/03/opinion/03mon3.html

NYTimes: Rewarding Bad Actors ( Who Make Us Poorer )

Americans are angry at Wall Street, and rightly so....

But crashing the economy and fleecing the taxpayer aren’t Wall Street’s only sins. Even before the crisis and the bailouts, many financial-industry high-fliers made fortunes through activities that were worthless if not destructive from a social point of view.

And they’re still at it. Consider two recent news stories....

Just to be clear: financial speculation can serve a useful purpose.... But speculation based on information not available to the public at large is a very different matter....

.... we’ve become a society in which the big bucks go to bad actors, a society that lavishly rewards those who make us poorer.

http://www.nytimes.com/2009/08/03/opinion/03krugman.html
http://en.wikipedia.org/wiki/Paul_Krugman

European CityMobile and CyCab

There is an exciting project involving an automated (i.e. driverless taxi) to provide local transport. Read my blog here.

I have been writing on this matter for a few months, but I learned yesterday that the people in Europe had been working on the same idea much earlier.

Prudential Yield 15/20

Someone posted a comment that the Prudential 15/20 is similar to the Great Link Choice. Can policyholders of this product give feedback on:

a) The structure of the product
b) Does it guarantee against the failure of a certain number of CDOs
c) What is the current value of the various tranches of this product?

Sunday, August 02, 2009

NYT: Auction rate securities

The debacle hit individual investors especially hard.

When state regulators investigated the circumstances surrounding auction-rate failures, they found that some of the firms selling the securities had turned their aggressive sales pitches on small investors even when astute institutional buyers had already seen trouble and stopped buying.

Regulators have since forced many brokerage firms that underwrote or sold the securities to buy back their clients’ holdings.

Eight large and small firms have already settled, or agreed to settle, auction-rate cases with the Securities and Exchange Commission.

http://www.nytimes.com/2009/08/02/business/02gret.html?ref=business

Saturday, August 01, 2009

Re-build the trust in the integrity and reputation of Singapore

I call on the banks and stockborking firms who are involved in selling the credit-linked notes in Singapore and Hong Kong to offer the same compensation to investors in Singapore that they offer to those in Hong Kong. The compensation is 60% to 70% of the invested sum, and any excess, if the proceeds on maturity exceed the amount of the compensation.

Do act early, to protect your repuation. Equally importantly, your action will rebuild the trust in the integrity and reputation of the the financial system in Singapore in providing honest dealing and fair treatment of customers. This will enhance the role of Singapore as a trusted financial hub of the region.

Tan Kin Lian


Major US financial regulation initiatives

Read this report in Reuters.

I am impressed with the fast and appropriate action taken by the Obama Administration in addressing the failure of the financial market in USA. I believe that the measures are necessary and will be helpful in creating a fairer and better financial system.

This is an example of what can be achieved under a free, democratic system that draws on the best brains from all sides and respect the views and contributions of many people.

TKL Sudoku - Challenging Puzzles

I have printed a book of 128 challenging Sudoku puzzles. It contains tips on how to solve Sudoku puzzles, explains how the puzzles are generated and also gives a history of Sudoku. The book is available for $7.90 from www.easyapps.sg/ishop. Other books on the intelligence (Einstein) quiz and shape quiz (T puzzles) are also available. Watch this video.

Please help to promote these books to your friends or buy them as gifts for your family or friends.

http://www.google.com/search?q=cheyenne+shape+quiz&rls=com.microsoft:en-sg:IE-SearchBox&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7ADBR

SCMP:Mainland investors claim HK$500m loss on 'misleading' accumulator bets

1 August 2009

A group of mainlanders who said they had lost up to HK$500 million in accumulator investments complained to the Hong Kong banking regulator yesterday about banks in the city allegedly misleading them.

"We were misled by Hong Kong banks into purchasing stock accumulators. We were not warned about the risk of the products," the convenor of the Alliance of Hong Kong Private Banking Victims' - who said he preferred to be known as Jacky Jin Liang - said. With legislator Chan Kam-lam, Mr Jin and six other mainlanders met Hong Kong Monetary Authority executive director Raymond Li Ling-cheung yesterday.

Mr Jin said the alliance's 12 members bought the high-risk accumulator stock derivatives from five banks - HSBC, Hang Seng Bank, Citibank, DBS Bank and ABN Amro Private Banking. They had suffered losses of between HK$400 million and HK$500 million.

He said some were told that the products were "shares with discounted prices" rather than high-risk products. "And some of us believed the stock market would plunge but [the banks] still asked us to buy accumulators that led to severe losses."

Mr Chan said the authority had promised to investigate the alliance's complaint. The lawmaker said the HKMA promised to look into the cases in the coming three months.

An accumulator is a term-limited contract that allows investors to buy shares or foreign currency regularly at a fixed price below the market price when the contract begins. If the value of shares or currency rise, they can make a substantial profit. If the value falls to below the purchase price, there is no limit to potential losses.

At least two of the group made police reports to the Commercial Crime Bureau yesterday.

One, lawyer James Lai Jian-ping, said ABN Amro Private Banking had sent a staff member to Beijing two years ago to ask him to open a Hong Kong account. He said he was then "cheated" 15 times into investing more than HK$100 million.

DBS Bank (HK) and ABN Amro Private Banking said they had stringent sales procedures conforming to regulatory requirements. The Hong Kong Association of Banks and Citibank said they did not have enough information to comment.

Separately, legislator Kam Nai-wai said 18 Lehman Brothers "professional" minibond investors also met Mr Li. They wanted to be covered by the latest repurchase agreement but were told they were not eligible. They would be asked if they wanted the authority to continue investigations into their cases.

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