Recruit Ong

Nobody Understands Debt

2012-01-10T17:07:00.000+08:00

By PAUL KRUGMAN
Published: January 1, 2012

Deficit-worriers portray a future in which we (the US) are impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

Now, the fact that federal debt isn’t at all like a mortgage on America’s future doesn’t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don’t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an over-indebted family might suggest.

And that’s why nations with stable, responsible governments — that is, governments that are willing to impose modestly higher taxes when the situation warrants it — have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe.

The economic pie

2011-12-25T19:47:00.003+08:00

Andy Xie, says inequality is a price worth paying if it motivates people to make the economic pie bigger... but I would add "only if the pie gets to be shared by all".

The Occupy Wall Street movement drew attention to what organizers said was a huge gap between the 99 percent of the nation's citizens whose lives are out of synch with the 1 percent wealthiest Americans.

The top 1 percent control about one-fifth of the nation's income and two-fifths of the wealth. The top 10 percent take in about half of all income and have accumulated 80 percent of the wealth. Meanwhile, about 80 percent of Americans merely get by and have very little wealth available as a cushion for when personal finances turn down.

The gap between the rich and the rest, which has roughly doubled over the past two decades in the United States, is an inevitable result of competition. Of course, competition motivates people, and inequality is often a price worth paying if it motivates people to make the pie bigger. All could be better off with a bigger pie, even if inequality worsened. Limiting competition improves equality but decreases incentives for people to work. A society needs to make a tradeoff between the two.

Inequality worsens in an environment of limited competition, as inefficiency and social friction rise. Examples of this phenomenon include the Philippines, where few families rule through monopolistic practices. The country has become poorer relative to others over the past two decades, while inefficiencies are supported by Filipinos who work abroad and send money home.

Many Latin American countries fall into this category, too, and the United States is heading that way.

Oligarchy, American Style

2011-11-09T13:34:00.001+08:00

By Paul Krugman
Published: November 3, 2011

Inequality is back in the news, largely thanks to Occupy Wall Street, but with an assist from the Congressional Budget Office. And you know what that means: It’s time to roll out the obfuscators!

Anyone who has tracked this issue over time knows what I mean. Whenever growing income disparities threaten to come into focus, a reliable set of defenders tries to bring back the blur. Think tanks put out reports claiming that inequality isn’t really rising, or that it doesn’t matter. Pundits try to put a more benign face on the phenomenon, claiming that it’s not really the wealthy few versus the rest, it’s the educated versus the less educated.

So what you need to know is that all of these claims are basically attempts to obscure the stark reality: We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only.

The budget office laid out some of that stark reality in a recent report, which documented a sharp decline in the share of total income going to lower- and middle-income Americans. We still like to think of ourselves as a middle-class country. But with the bottom 80 percent of households now receiving less than half of total income, that’s a vision increasingly at odds with reality.

In response, the usual suspects have rolled out some familiar arguments: the data are flawed (they aren’t); the rich are an ever-changing group (not so); and so on. The most popular argument right now seems, however, to be the claim that we may not be a middle-class society, but we’re still an upper-middle-class society, in which a broad class of highly educated workers, who have the skills to compete in the modern world, is doing very well.

It’s a nice story, and a lot less disturbing than the picture of a nation in which a much smaller group of rich people is becoming increasingly dominant. But it’s not true.

Workers with college degrees have indeed, on average, done better than workers without, and the gap has generally widened over time. But highly educated Americans have by no means been immune to income stagnation and growing economic insecurity. Wage gains for most college-educated workers have been unimpressive (and nonexistent since 2000), while even the well-educated can no longer count on getting jobs with good benefits. In particular, these days workers with a college degree but no further degrees are less likely to get workplace health coverage than workers with only a high school degree were in 1979.

So who is getting the big gains? A very small, wealthy minority.

The budget office report tells us that essentially all of the upward redistribution of income away from the bottom 80 percent has gone to the highest-income 1 percent of Americans. That is, the protesters who portray themselves as representing the interests of the 99 percent have it basically right, and the pundits solemnly assuring them that it’s really about education, not the gains of a small elite, have it completely wrong.

If anything, the protesters are setting the cutoff too low. The recent budget office report doesn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, found that almost two-thirds of the rising share of the top percentile in income actually went to the top 0.1 percent — the richest thousandth of Americans, who saw their real incomes rise more than 400 percent over the period from 1979 to 2005.

Who’s in that top 0.1 percent? Are they heroic entrepreneurs creating jobs? No, for the most part, they’re corporate executives. Recent research shows that around 60 percent of the top 0.1 percent either are executives in nonfinancial companies or make their money in finance, i.e., Wall Street broadly defined. Add in lawyers and people in real estate, and we’re talking about more than 70 percent of the lucky one-thousandth.

But why does this growing concentration of income and wealth in a few hands matter? Part of the answer is that rising inequality has meant a nation in which most families don’t share fully in economic growth. Another part of the answer is that once you realize just how much richer the rich have become, the argument that higher taxes on high incomes should be part of any long-run budget deal becomes a lot more compelling.

The larger answer, however, is that extreme concentration of income is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?

Some pundits are still trying to dismiss concerns about rising inequality as somehow foolish. But the truth is that the whole nature of our society is at stake.

China's Next Prize: Global Financial Crown

2011-09-23T18:52:00.000+08:00

By Andy Xie 09.07.2011

But the first step toward coronation, and boosting the world economy, should be an international equities board

Labor surplus globalization helped China's economy expand more than 20-fold in nominal dollar terms over a period of just two decades, building what's now the world's second-largest economy and largest international trading nation.

Globalizing China's current capital surplus would make it even bigger. Not only could China take the crown as the largest economy on the planet, but it may become the world's biggest financial center as well.

Each of these developments would be in the best interests of China and the rest of the world. So how can we globalize surplus capital? The first step should be to internationalize China's savings through equities by following through with plans to launch an international board on the Shanghai stock market.

An international equities board would have a significant, positive impact on the global economy. Through board mechanisms, China's surplus savings would be invested in multinational companies, thus contributing to the global economy by inspiring multinationals to expand.

China currently has a highly developed manufacturing sector but a backward financial sector dominated by state ownership and caged by a closed capital account and fixed currency exchange rates. Moreover, China lacks certain conditions necessary to qualify as a global financial center, including the rule of law, strong private property protection and transparency.

Opening an international board, though, would offer a jump-start for the changes needed to improve China's financial environment and lay a foundation for building a global financial center.

For starters, China should lay down rules so that the global top 500 companies can list on the international board. It should be a transparent process that does not include tight controls or force companies to individually lobby the government.

To date, China has missed opportunities to accept significant responsibility for the healthy functioning of the global economy. Its foreign assets of some US$ 4 trillion are overwhelmingly parked in government bonds. These lopsided allocations have created huge distortions in relative prices for bonds and stocks – a distortion that's had a destabilizing effect on the global economy.

An international board could encourage rebalancing. And now that the world economy is double-dipping, the time is ripe. A remedy to this lopsided predicament is needed – as soon as possible.

Surplus to Surplus

Globalizing China's surplus labor was the single most important factor in China's modern-day economic development. Two decades ago, the surplus depressed domestic labor costs to less than 5 percent of developed economy labor prices, even though China's labor quality was several times higher than relative wages suggested.

Since then, opening China to foreign-direct investment and building a supportive infrastructure led to rapid industrialization and export growth.

But in recent years, the labor surplus has clearly disappeared. Indeed, a shortage of blue-collar workers is plaguing many industries in China. Wages for basic labor are rising at double-digit rates. In some industries, such as mining, wages have doubled over the past three years.

Wage levels, however, are still just one-tenth of those found in developed economies. Costs have yet to become a barrier to China's ongoing industrialization, and manufacturing is making the right moves by upgrading in response to the labor shortage. China is now preparing to compete against Germany and Japan.

As China's labor surplus gradually integrated into the global economy, the country migrated from a capital shortage to a surplus situation. The trade surplus grew to today's level of between US$ 200 and US$ 400 per capita – a range that's relatively low by East Asian standards.

The trade surplus per capita could rise by five times or more. But because China has a vast population, a big jump in per capita would create an aggregate surplus that's huge relative to the global economy.

For example, China's trade surplus would be US$ 1.4 trillion to reach US$ 1,000 per capita, which is a modest amount by East Asian standards. If China upgrades its industries successfully in response to rising labor costs, as Japan did in the 1970s and South Korea and Taiwan did in the 1990s, its trade surplus could rise to US$ 1 trillion, and the per capita jump to US$ 715.

China's enormous surplus could eventually exceed all the funds raised on all stock markets worldwide. How that money is spent, logically, would have a huge impact on the global economy.

From Trade to Finance

A country becomes a world financial center after succeeding as a trade center. London won status as a global financial center because Britain overtook other countries to become the largest trader of goods and services. New York rose as a financial center after the United States replaced Britain as the top international trade player.

China is solidifying its position as the world's largest trading nation. By 2020, it could dwarf all others, becoming twice as big as the second-largest country. So could China become the world's financial center? Yes. Should it? I think the answer is, again, yes.

In terms of industrial energy consumption, China is already the biggest industrial economy in the world. The dollar value isn't there yet because Chinese goods are still inexpensive. China could raise prices to absorb rising labor costs in this decade and still grow exports at more than 10 percent per annum. By 2020, China could become twice as big as Germany in international trade.

Nevertheless, China must do something to build its status as an international financial hub. Inaction would hurt its own economy as well as the rest of the world's.

In the past, financial services set up shop after traders were in place because most financing was related to trade. Most financial firm profits were derived from trade, too.

One can see the connection in Pingyao, the little town in Shanxi Province that's small and poor but once dominated China's financing in the 19th century. At that time, Pingyao served as a link between makers of Chinese goods and buyers in the rising Russian Empire. Pingyao bordered both worlds and could arbitrage price differences, creating a national financial center until seaborne trade eclipsed land routes, and Shanghai became China's financial hub.

The United States didn't plot to supplant Britain as the international financial center. It happened because the United States replaced Britain first as the biggest industrial power and trading nation. Wall Street's importance is a consequence of American industrial success.

The most important economic development in the 21st century will be China's rise as the largest industrial nation. I have anticipated this for a long time. This is a consequence of globalization and China's cultural characteristics. The government has adopted supportive policies, i.e., not standing in the way. And no other country is on the horizon to challenge China's industrialization.

Some may argue that things have changed since Pingyao's glory days. The IT revolution has made the physical place for asset trading irrelevant. But Germany's plight is a reminder that when profit sources and financial centers are disconnected, bad things happen.

Germany amassed the world's biggest trade surplus over the past decade, but its financial system has been woefully underdeveloped. So it has had to rely on London bankers to recycle money into other countries. Naturally, London bankers can screw Germany; they're even paid to do so.

A decade or two from now, as a result of this mismatch, Germany may become a poor country. People may look back and pin Germany's downfall to the country's hyper-competitive manufacturing combined with an inadequate financial sector.

No Substitute

China has avoided Germany's fate so far by pouring its surplus capital into government bonds, especially U.S. Treasuries. This strategy has worked: Major economy government bonds have held up in value, even though their economies are in shambles.

But government bonds cannot sustain value if underlying economies are in constant crisis. At some point in these situations, either government debt levels become too high or tax revenues are too low. Central banks are then forced to bail out governments by printing money. China would get its money back in this scenario, but only after currency depreciation.

Unless China changes its strategy, it cannot avoid Germany's fate. China's net foreign assets have risen twice as fast as its trade surplus, mainly due to capital inflow, especially from overseas Chinese, to avoid the dollar's depreciation.

The Chinese government is essentially taking on currency risks for the entire, overseas Chinese community. If China loses its foreign exchange reserves, the central government may go bankrupt and the country's financial foundation will vanish.

In addition to risking assets, China's foreign reserves strategy is distorting the global economy. The sharp price divergence for stocks and bonds is mostly due to the fact that money is concentrating in institutions that only buy government bonds, including those in China. Oil exporting countries have even more money than China in the bond market.

Putting all that money into bonds keeps stock prices low and discourages company investment and hiring, thus destabilizing the global economy. A country that saves a lot of money must instead allocate that money effectively and efficiently to help the global economy, not just governments.

Over the past decade, though, China has been one of several countries that amassed savings but did a bad job allocating surplus capital. And over the next decade, China's money pile may grow until it dwarfs all others. If China fails to allocate this wealth effectively, the world will blame China for its ills.

Stop Sauntering

To successfully allocate this surplus capital, then, China must become the world's biggest financial center. The money must be deployed efficiently, i.e. put toward things that improve rather than impede global growth. Otherwise a backlash would impede China's development, and everyone would suffer.

An alternative to a trade surplus would be to create a massive asset bubble that exaggerates domestic demand. Japan did that in the 1980s. China is doing quite a bit now. Without a domestic asset bubble, I think, China's trade surplus would be twice its current size.

Running a bubble, though, merely delays the inevitable and leads to financial crisis. China's total property value, including work-in-progress and land reserves, is already five times GDP. The bubble is about 100 percent above the sustainable level but could double if the government allows.

When the bubble is big enough, the country will start running trade deficits rather than surpluses. But if the bubble bursts and China's currency is devalued, property values would fall to 2.5 times GDP or less and create a huge trade surplus equal to more than 10 percent GDP.

The world won't tolerate such an outcome. Countries would react with protectionist policies that shut down the global economy for everyone.

Neither will the global economy wait for China to saunter along at its own financial services development pace. Surplus capital must be injected into the global economy, and soon.

The only way out is to develop a global financial center that allocates China's surplus capital effectively and efficiently to boost global economic growth, thus safeguarding its ability to earn surpluses.

Another argument for a new board is that multinationals must expand in emerging economies such as China because their home countries don't have surplus capital. It makes sense for them to raise money in places where that money will be invested.

Many argue that an international board would hurt the A-share market. This is petty reasoning. A-share market values are low because it's concerned about growth at home and abroad. The international board would help the global economy, which would be good for China's economy. Besides, the A-share market could rally as multinational business confidence improves.

Liquidity is not a problem in China. And appropriate policy adjustments can help maintain liquidity levels that support stock investing on domestic markets.

To boost stock demand, the Chinese government could introduce new sources of funds for equities. A 401K-like retirement plan, for example, could boost A-share demand greatly, possibly by more than 100 billion yuan per annum, sufficiently offsetting fund-raisings on the international board. Raising stock investment ratios for insurance companies would provide another source of domestic equity demand.

In the end, China must internationalize its surplus capital for the global economy and its own to function normally. The alternatives are asset bubbles and financial crises. Continuing to lock up surplus money could encourage protectionism and destroy the global economy.

Xie: Great summer slowdown

2011-07-23T11:35:00.000+08:00

Global Economy on a Slow Summer Burn
By Andy Xie

excerpts:

It appears euro zone countries have managed to keep Greece afloat for the time being by providing cash assistance and getting bondholders, mainly West Europe banks, to accept a "voluntary" rollover. This deal merely kicks the can down the road. When the next wave of Greek bonds comes due, we'll see the drama repeated. Rolling over debt doesn't make the debt good, and even a rookie analyst can see that Greece can't pay its debt.

The economy in Greece is only 2 percent of the European Union's. Its national debt is 340 billion euros, less than 2 percent of total EU credit outstanding. So, in theory, a Greek bankruptcy would be no worse than that for a major corporation – painful but manageable. Besides, bankruptcy is inevitable unless someone else pays a national debt level equal to around 80,000 euros for each of Greece's 4.4 million citizens.

Why are European governments trying so hard to delay the Greek bankruptcy? Because the nation's finances are linked to the wider banking system, with two-thirds of the money owed to western banks and other foreign investors. Hence, France and Germany in particular are trying to delay it.

But the delay is just an accounting gimmick. Investors have obviously lost money, and it's sad to see European governments engage in this self-deception. Greek bonds are already pricing in bankruptcy by trading at massive discounts to par. If banks with bonds mark to market, they'd have to recapitalize immediately.

Three big rating agencies are challenging European practices by noting that the debt rollover is de facto bankruptcy. Their opinion matters because the European Central Bank can't hold bankrupt government bonds as collateral. U.S. banks pledged worthless subprime paper to the Federal Reserve to secure loans during the 2008 crisis, and now European banks are doing the same to the ECB.

Obama on a back foot.

President Obama made a big mistake when he listened to economists who advised big stimulus to get the economy and employment going again after the 2008 crisis. It would have been better to let the economy land where it would, and then recover on more solid ground in time for the 2012 election.

That's what Ronald Reagan experienced when he was president in the 1980s. Then-Fed Chairman Paul Volker raised interest rates aggressively to tame inflation and the economy crashed. But recovery came by the time Reagan was seeking re-election in 1984. He won. By then, the economy had cleaned out most of the dirt that accumulated during the high-interest rate period.

In hopes of winning the election, Obama may add to his previous mistake by piling more stimulus, providing a temporary fix but setting the stage for another crash later.

Another byproduct of Obama's mistaken policy is a new round of declines for property prices. Based on historical data, U.S. housing prices should have been cut in half after the 2008 crisis, but the government stimulus and the Fed's QE 2 gave property owners hope for recovery. So they hesitated, and the market recovered a bit last year, only to deflate hopes again. That led to the current wave of defaults, triggering another price decline.

Overheard this...

2011-07-12T10:13:00.002+08:00

.
"Capitalism without bankruptcy is like Christianity without hell"

hahaha
.

Election contest update

2011-02-25T19:46:00.028+08:00

Updated Constituency list, voter number (estimated), and probable contestants.

Single Seat Ward (12, Total voters: 309,964)

Bukit Panjang (33,035)
PAP = Teo Ho Pin
SDP

Hong Kah North (27,691)
PAP = Amy Khor
RP

Hougang (24,532)
PAP = Desmond Choo Pey Ching
WP

Joo Chiat (22,027)
PAP = Charles Chong
WP

Mountbatten (23,712)
PAP = Lim Biow Chuan
NSP = Jeannette Chong-Aruldoss

Pioneer (25,732)
PAP = Cedric Foo Chee Keng
RP = Kenneth Jeyaratnam

Potong Pasir (17,306)
PAP = Sitoh Yih Pin
SPP = Lina Loh (Chiam's wife)

Punggol East (33,261)
PAP = Michael Palmer
WP

Radin Mas (31,001)
PAP = Sam Tan Chin Siong
RP = Alec Tok

Sengkang West (26,869)
PAP = Lam Pin Min
WP

Whampoa (21,615)
PAP = Heng Chee How
WP

Yuhua (23,183)
PAP = Grace Fu

4-Member GRC (2, Total voters: 179,057)

Holland-Bukit Timah (91,559)
PAP = Vivian Balakrishnan, Christopher De Souza
SDP = John Tan, Dr Vincent Wijeysingha, Michael Fernandez

Moulmein-Kallang (87,498)
PAP = Lui Tuck Yew
WP

5-Member GRC (11, Total voters: 1,512,303)

Aljunied (143,024)
PAP = George Yeo
WP

Bishan-Toa Payoh (122,416)
PAP = Wong Kan Seng
SPP

Chua Chu Kang (158,552)
PAP
RP

East Coast (120,207)
PAP = Lim Swee Say, Maliki Osman,
WP

Jurong (125,214)
PAP
NSP

Marine Parade (154,340)
PAP = Goh Chok Tong
DPP

Nee Soon (148,168)
PAP = K Shanmugam, Muhammad Faishal Ibrahim
WP

Sembawang (142,351)
PAP = Khaw Boon Wan

Tampines (137,437)
PAP = Mah Bow Tan
NSP

Tanjong Pagar (139,638)
PAP = Lee Kuan Yew
DPP

West Coast (120,956)
PAP
RP

6-Member GRC (2, Total voters: 347,767)

Ang Mo Kio (178,933)
PAP = Lee Hsien Loong

Pasir Ris-Punggol (168,834)
PAP = Teo Chee Hean
SDA

Total voters: 2,349,091

Source

Xie on Australia and Japan

2011-01-20T10:30:00.002+08:00

From Between a Crutch and Walking Stick: Why the dollar has got to go as the world's reserve currency – and how the euro will replace it.

Australia

Some (developed economies) are behaving like nothing has happened. Australia stands out in that regard. Its household debt has surged by 20 percent since the Crisis hit and recently surpassed 100 percent of GDP. Its household debt to disposable income ratio, at 156 percent, is the highest among major economies in the world. Australia has had 4.5 percent of GDP in annual current account deficit for two decades, i.e., its household debt is funded by foreign capital inflow. Its property market is still booming. When you see rapidly rising household debt, a big current account deficit, and a booming property market, it is a credit-cum-property bubble for sure.

Australia's bubble has survived the 2008 crisis because commodity prices came on the back of the Fed's zero interest rate policy and China's massive credit growth. The Australian bubble is very likely to burst when commodity prices fall sharply. Either a substantial economic slowdown in China or spiking U.S. interest rates would trigger it.

Australia is an exception. The booming commodity market is giving it the choice not to adjust. Some economies must adjust and fast, because they depend on foreign capital for financing. Iceland, Greece, and Ireland are small economies that depend on foreign capital to fund their fiscal deficits, i.e., they run large current account deficits and don't have sufficient domestic savings to fund their government deficits.

Japan

Japan is another economy that hasn't decreased its leverage; the belt tightening in the private sector has been offset by the government's deficit spending. Japan's debt level is truly frightening. But, it has been that way for two decades. The reason for its stability is due to its high domestic savings rate. Japan has been consistently running large current account surplus, i.e., sending its savings surplus abroad, for decades. Japanese people have extremely high home bias in deploying their savings. Japan's government can borrow at extremely low interest rate. Hence, it has no incentive to change its behavior.

Only a sustained current deficit would change Japan's dynamics. An aging and declining population is slowly bringing down Japan's savings rate. But Japan's investment need is declining too. Hence, it is still running a significant current account surplus. The situation will change in a decade or so. Japan is unlikely to change without an external constraint. I suspect that Japan will look the same a decade from now.

Amy Chua is a Wimp

2011-01-18T10:15:00.001+08:00

By DAVID BROOKS
January 17, 2011

Sometime early last week, a large slice of educated America decided that Amy Chua is a menace to society. Chua, as you probably know, is the Yale professor who has written a bracing critique of what she considers the weak, cuddling American parenting style.

Chua didn’t let her own girls go out on play dates or sleepovers. She didn’t let them watch TV or play video games or take part in garbage activities like crafts. Once, one of her daughters came in second to a Korean kid in a math competition, so Chua made the girl do 2,000 math problems a night until she regained her supremacy. Once, her daughters gave her birthday cards of insufficient quality. Chua rejected them and demanded new cards. Once, she threatened to burn all of one of her daughter’s stuffed animals unless she played a piece of music perfectly.

As a result, Chua’s daughters get straight As and have won a series of musical competitions.

In her book, “Battle Hymn of the Tiger Mother,” Chua delivers a broadside against American parenting even as she mocks herself for her own extreme “Chinese” style. She says American parents lack authority and produce entitled children who aren’t forced to live up to their abilities.

The furious denunciations began flooding my in-box a week ago. Chua plays into America’s fear of national decline. Here’s a Chinese parent working really hard (and, by the way, there are a billion more of her) and her kids are going to crush ours. Furthermore (and this Chua doesn’t appreciate), she is not really rebelling against American-style parenting; she is the logical extension of the prevailing elite practices. She does everything over-pressuring upper-middle-class parents are doing. She’s just hard core.

Her critics echoed the familiar themes. Her kids can’t possibly be happy or truly creative. They’ll grow up skilled and compliant but without the audacity to be great. She’s destroying their love for music. There’s a reason Asian-American women between the ages of 15 and 24 have such high suicide rates.

I have the opposite problem with Chua. I believe she’s coddling her children. She’s protecting them from the most intellectually demanding activities because she doesn’t understand what’s cognitively difficult and what isn’t.

Practicing a piece of music for four hours requires focused attention, but it is nowhere near as cognitively demanding as a sleepover with 14-year-old girls. Managing status rivalries, negotiating group dynamics, understanding social norms, navigating the distinction between self and group — these and other social tests impose cognitive demands that blow away any intense tutoring session or a class at Yale.

Yet mastering these arduous skills is at the very essence of achievement. Most people work in groups. We do this because groups are much more efficient at solving problems than individuals (swimmers are often motivated to have their best times as part of relay teams, not in individual events). Moreover, the performance of a group does not correlate well with the average I.Q. of the group or even with the I.Q.’s of the smartest members.

Researchers at the Massachusetts Institute of Technology and Carnegie Mellon have found that groups have a high collective intelligence when members of a group are good at reading each others’ emotions — when they take turns speaking, when the inputs from each member are managed fluidly, when they detect each others’ inclinations and strengths.

Participating in a well-functioning group is really hard. It requires the ability to trust people outside your kinship circle, read intonations and moods, understand how the psychological pieces each person brings to the room can and cannot fit together.

This skill set is not taught formally, but it is imparted through arduous experiences. These are exactly the kinds of difficult experiences Chua shelters her children from by making them rush home to hit the homework table.

Chua would do better to see the classroom as a cognitive break from the truly arduous tests of childhood. Where do they learn how to manage people? Where do they learn to construct and manipulate metaphors? Where do they learn to perceive details of a scene the way a hunter reads a landscape? Where do they learn how to detect their own shortcomings? Where do they learn how to put themselves in others’ minds and anticipate others’ reactions?

These and a million other skills are imparted by the informal maturity process and are not developed if formal learning monopolizes a child’s time.

So I’m not against the way Chua pushes her daughters. And I loved her book as a courageous and thought-provoking read. It’s also more supple than her critics let on. I just wish she wasn’t so soft and indulgent. I wish she recognized that in some important ways the school cafeteria is more intellectually demanding than the library. And I hope her daughters grow up to write their own books, and maybe learn the skills to better anticipate how theirs will be received.

The War on Logic

2011-01-18T10:00:00.003+08:00

By PAUL KRUGMAN
January 16, 2011

My wife and I were thinking of going out for an inexpensive dinner tonight. But John Boehner, the speaker of the House, says that no matter how cheap the meal may seem, it will cost thousands of dollars once you take our monthly mortgage payments into account.

Wait a minute, you may say. How can our mortgage payments be a cost of going out to eat, when we’ll have to make the same payments even if we stay home? But Mr. Boehner is adamant: our mortgage is part of the cost of our meal, and to say otherwise is just a budget gimmick.

O.K., the speaker hasn’t actually weighed in on our plans for the evening. But he and his G.O.P. colleagues have lately been making exactly the nonsensical argument I’ve just described — not about tonight’s dinner, but about health care reform. And the nonsense wasn’t a slip of the tongue; it’s the official party position, laid out in charts and figures.

We are, I believe, witnessing something new in American politics. Last year, looking at claims that we can cut taxes, avoid cuts to any popular program and still balance the budget, I observed that Republicans seemed to have lost interest in the war on terror and shifted focus to the war on arithmetic. But now the G.O.P. has moved on to an even bigger project: the war on logic.

So, about that nonsense: this week the House is expected to pass H.R. 2, the Repealing the Job-Killing Health Care Law Act — its actual name. But Republicans have a small problem: they claim to care about budget deficits, yet the Congressional Budget Office says that repealing last year’s health reform would increase the deficit. So what, other than dismissing the nonpartisan budget office’s verdict as “their opinion” — as Mr. Boehner has — can the G.O.P. do?

The answer is contained in an analysis — or maybe that should be “analysis” — released by the speaker’s office, which purports to show that health care reform actually increases the deficit. Why? That’s where the war on logic comes in.

First of all, says the analysis, the true cost of reform includes the cost of the “doc fix.” What’s that?

Well, in 1997 Congress enacted a formula to determine Medicare payments to physicians. The formula was, however, flawed; it would lead to payments so low that doctors would stop accepting Medicare patients. Instead of changing the formula, however, Congress has consistently enacted one-year fixes. And Republicans claim that the estimated cost of future fixes, $208 billion over the next 10 years, should be considered a cost of health care reform.

But the same spending would still be necessary if we were to undo reform. So the G.O.P. argument here is exactly like claiming that my mortgage payments, which I’ll have to make no matter what we do tonight, are a cost of going out for dinner.

There’s more like that: the G.O.P. also claims that $115 billion of other health care spending should be charged to health reform, even though the budget office has tried to explain that most of this spending would have taken place even without reform.

To be sure, the Republican analysis doesn’t rely entirely on spurious attributions of cost — it also relies on using three-card monte tricks to make money disappear. Health reform, says the budget office, will increase Social Security revenues and reduce Medicare costs. But the G.O.P. analysis says that these sums don’t count, because some people have said that these savings would also extend the life of these programs’ trust funds, so counting these savings as deficit reduction would be “double-counting,” because — well, actually it doesn’t make any sense, but it sounds impressive.

So, is the Republican leadership unable to see through childish logical fallacies? No.

The key to understanding the G.O.P. analysis of health reform is that the party’s leaders are not, in fact, opposed to reform because they believe it will increase the deficit. Nor are they opposed because they seriously believe that it will be “job-killing” (which it won’t be). They’re against reform because it would cover the uninsured — and that’s something they just don’t want to do.

And it’s not about the money. As I tried to explain in my last column, the modern G.O.P. has been taken over by an ideology in which the suffering of the unfortunate isn’t a proper concern of government, and alleviating that suffering at taxpayer expense is immoral, never mind how little it costs.

Given that their minds were made up from the beginning, top Republicans weren’t interested in and didn’t need any real policy analysis — in fact, they’re basically contemptuous of such analysis, something that shines through in their health care report. All they ever needed or wanted were some numbers and charts to wave at the press, fooling some people into believing that we’re having some kind of rational discussion. We aren’t.

The first of the gang to die

2010-11-13T10:56:00.003+08:00

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Dedicated to all the gangs out there!
Especially the biggest one of them all in white hahaha...

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Those who choose not to empathise enable real monsters

2010-11-06T11:51:00.001+08:00

JK Rowling is the creator of the famous Harry Potter fantasy series. She delivered this very humbling Commencement address at the Harvard graduation in June 2008. Although her speech is titled 'The Benefits of Failure, and The Importance of Imagination', it is really about something else and more...

President Faust, members of the Harvard Corporation and the Board of Overseers, members of the faculty, proud parents, and, above all, graduates.

The first thing I would like to say is ‘thank you.’ Not only has Harvard given me an extraordinary honour, but the weeks of fear and nausea I have endured at the thought of giving this commencement address have made me lose weight. A win-win situation! Now all I have to do is take deep breaths, squint at the red banners and convince myself that I am at the world’s largest Gryffindor reunion.

Delivering a commencement address is a great responsibility; or so I thought until I cast my mind back to my own graduation. The commencement speaker that day was the distinguished British philosopher Baroness Mary Warnock. Reflecting on her speech has helped me enormously in writing this one, because it turns out that I can’t remember a single word she said. This liberating discovery enables me to proceed without any fear that I might inadvertently influence you to abandon promising careers in business, the law or politics for the giddy delights of becoming a gay wizard.

You see? If all you remember in years to come is the ‘gay wizard’ joke, I’ve come out ahead of Baroness Mary Warnock. Achievable goals: the first step to self improvement.

Actually, I have wracked my mind and heart for what I ought to say to you today. I have asked myself what I wish I had known at my own graduation, and what important lessons I have learned in the 21 years that have expired between that day and this.

I have come up with two answers. On this wonderful day when we are gathered together to celebrate your academic success, I have decided to talk to you about the benefits of failure. And as you stand on the threshold of what is sometimes called ‘real life’, I want to extol the crucial importance of imagination.

These may seem quixotic or paradoxical choices, but please bear with me.

Looking back at the 21-year-old that I was at graduation, is a slightly uncomfortable experience for the 42-year-old that she has become. Half my lifetime ago, I was striking an uneasy balance between the ambition I had for myself, and what those closest to me expected of me.

I was convinced that the only thing I wanted to do, ever, was to write novels. However, my parents, both of whom came from impoverished backgrounds and neither of whom had been to college, took the view that my overactive imagination was an amusing personal quirk that would never pay a mortgage, or secure a pension. I know that the irony strikes with the force of a cartoon anvil, now.

So they hoped that I would take a vocational degree; I wanted to study English Literature. A compromise was reached that in retrospect satisfied nobody, and I went up to study Modern Languages. Hardly had my parents’ car rounded the corner at the end of the road than I ditched German and scuttled off down the Classics corridor.

I cannot remember telling my parents that I was studying Classics; they might well have found out for the first time on graduation day. Of all the subjects on this planet, I think they would have been hard put to name one less useful than Greek mythology when it came to securing the keys to an executive bathroom.

I would like to make it clear, in parenthesis, that I do not blame my parents for their point of view. There is an expiry date on blaming your parents for steering you in the wrong direction; the moment you are old enough to take the wheel, responsibility lies with you. What is more, I cannot criticise my parents for hoping that I would never experience poverty. They had been poor themselves, and I have since been poor, and I quite agree with them that it is not an ennobling experience. Poverty entails fear, and stress, and sometimes depression; it means a thousand petty humiliations and hardships. Climbing out of poverty by your own efforts, that is indeed something on which to pride yourself, but poverty itself is romanticised only by fools.

What I feared most for myself at your age was not poverty, but failure.

At your age, in spite of a distinct lack of motivation at university, where I had spent far too long in the coffee bar writing stories, and far too little time at lectures, I had a knack for passing examinations, and that, for years, had been the measure of success in my life and that of my peers.

I am not dull enough to suppose that because you are young, gifted and well-educated, you have never known hardship or heartbreak. Talent and intelligence never yet inoculated anyone against the caprice of the Fates, and I do not for a moment suppose that everyone here has enjoyed an existence of unruffled privilege and contentment.

However, the fact that you are graduating from Harvard suggests that you are not very well-acquainted with failure. You might be driven by a fear of failure quite as much as a desire for success. Indeed, your conception of failure might not be too far from the average person’s idea of success, so high have you already flown.

Ultimately, we all have to decide for ourselves what constitutes failure, but the world is quite eager to give you a set of criteria if you let it. So I think it fair to say that by any conventional measure, a mere seven years after my graduation day, I had failed on an epic scale. An exceptionally short-lived marriage had imploded, and I was jobless, a lone parent, and as poor as it is possible to be in modern Britain, without being homeless. The fears that my parents had had for me, and that I had had for myself, had both come to pass, and by every usual standard, I was the biggest failure I knew.

Now, I am not going to stand here and tell you that failure is fun. That period of my life was a dark one, and I had no idea that there was going to be what the press has since represented as a kind of fairy tale resolution. I had no idea then how far the tunnel extended, and for a long time, any light at the end of it was a hope rather than a reality.

So why do I talk about the benefits of failure? Simply because failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energy into finishing the only work that mattered to me. Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged. I was set free, because my greatest fear had been realised, and I was still alive, and I still had a daughter whom I adored, and I had an old typewriter and a big idea. And so rock bottom became the solid foundation on which I rebuilt my life.

You might never fail on the scale I did, but some failure in life is inevitable. It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all – in which case, you fail by default.

Failure gave me an inner security that I had never attained by passing examinations. Failure taught me things about myself that I could have learned no other way. I discovered that I had a strong will, and more discipline than I had suspected; I also found out that I had friends whose value was truly above the price of rubies.

The knowledge that you have emerged wiser and stronger from setbacks means that you are, ever after, secure in your ability to survive. You will never truly know yourself, or the strength of your relationships, until both have been tested by adversity. Such knowledge is a true gift, for all that it is painfully won, and it has been worth more than any qualification I ever earned.

So given a Time Turner, I would tell my 21-year-old self that personal happiness lies in knowing that life is not a check-list of acquisition or achievement. Your qualifications, your CV, are not your life, though you will meet many people of my age and older who confuse the two. Life is difficult, and complicated, and beyond anyone’s total control, and the humility to know that will enable you to survive its vicissitudes.

Now you might think that I chose my second theme, the importance of imagination, because of the part it played in rebuilding my life, but that is not wholly so. Though I personally will defend the value of bedtime stories to my last gasp, I have learned to value imagination in a much broader sense. Imagination is not only the uniquely human capacity to envision that which is not, and therefore the fount of all invention and innovation. In its arguably most transformative and revelatory capacity, it is the power that enables us to empathise with humans whose experiences we have never shared.

One of the greatest formative experiences of my life preceded Harry Potter, though it informed much of what I subsequently wrote in those books. This revelation came in the form of one of my earliest day jobs. Though I was sloping off to write stories during my lunch hours, I paid the rent in my early 20s by working at the African research department at Amnesty International’s headquarters in London.

There in my little office I read hastily scribbled letters smuggled out of totalitarian regimes by men and women who were risking imprisonment to inform the outside world of what was happening to them. I saw photographs of those who had disappeared without trace, sent to Amnesty by their desperate families and friends. I read the testimony of torture victims and saw pictures of their injuries. I opened handwritten, eye-witness accounts of summary trials and executions, of kidnappings and rapes.

Many of my co-workers were ex-political prisoners, people who had been displaced from their homes, or fled into exile, because they had the temerity to speak against their governments. Visitors to our offices included those who had come to give information, or to try and find out what had happened to those they had left behind.

I shall never forget the African torture victim, a young man no older than I was at the time, who had become mentally ill after all he had endured in his homeland. He trembled uncontrollably as he spoke into a video camera about the brutality inflicted upon him. He was a foot taller than I was, and seemed as fragile as a child. I was given the job of escorting him back to the Underground Station afterwards, and this man whose life had been shattered by cruelty took my hand with exquisite courtesy, and wished me future happiness.

And as long as I live I shall remember walking along an empty corridor and suddenly hearing, from behind a closed door, a scream of pain and horror such as I have never heard since. The door opened, and the researcher poked out her head and told me to run and make a hot drink for the young man sitting with her. She had just had to give him the news that in retaliation for his own outspokenness against his country’s regime, his mother had been seized and executed.

Every day of my working week in my early 20s I was reminded how incredibly fortunate I was, to live in a country with a democratically elected government, where legal representation and a public trial were the rights of everyone.

Every day, I saw more evidence about the evils humankind will inflict on their fellow humans, to gain or maintain power. I began to have nightmares, literal nightmares, about some of the things I saw, heard, and read.

And yet I also learned more about human goodness at Amnesty International than I had ever known before.

Amnesty mobilises thousands of people who have never been tortured or imprisoned for their beliefs to act on behalf of those who have. The power of human empathy, leading to collective action, saves lives, and frees prisoners. Ordinary people, whose personal well-being and security are assured, join together in huge numbers to save people they do not know, and will never meet. My small participation in that process was one of the most humbling and inspiring experiences of my life.

Unlike any other creature on this planet, humans can learn and understand, without having experienced. They can think themselves into other people’s places.

Of course, this is a power, like my brand of fictional magic, that is morally neutral. One might use such an ability to manipulate, or control, just as much as to understand or sympathise.

And many prefer not to exercise their imaginations at all. They choose to remain comfortably within the bounds of their own experience, never troubling to wonder how it would feel to have been born other than they are. They can refuse to hear screams or to peer inside cages; they can close their minds and hearts to any suffering that does not touch them personally; they can refuse to know.

I might be tempted to envy people who can live that way, except that I do not think they have any fewer nightmares than I do. Choosing to live in narrow spaces leads to a form of mental agoraphobia, and that brings its own terrors. I think the wilfully unimaginative see more monsters. They are often more afraid.

What is more, those who choose not to empathise enable real monsters. For without ever committing an act of outright evil ourselves, we collude with it, through our own apathy.

One of the many things I learned at the end of that Classics corridor down which I ventured at the age of 18, in search of something I could not then define, was this, written by the Greek author Plutarch: What we achieve inwardly will change outer reality.

That is an astonishing statement and yet proven a thousand times every day of our lives. It expresses, in part, our inescapable connection with the outside world, the fact that we touch other people’s lives simply by existing.

But how much more are you, Harvard graduates of 2008, likely to touch other people’s lives? Your intelligence, your capacity for hard work, the education you have earned and received, give you unique status, and unique responsibilities. Even your nationality sets you apart. The great majority of you belong to the world’s only remaining superpower. The way you vote, the way you live, the way you protest, the pressure you bring to bear on your government, has an impact way beyond your borders. That is your privilege, and your burden.

If you choose to use your status and influence to raise your voice on behalf of those who have no voice; if you choose to identify not only with the powerful, but with the powerless; if you retain the ability to imagine yourself into the lives of those who do not have your advantages, then it will not only be your proud families who celebrate your existence, but thousands and millions of people whose reality you have helped change. We do not need magic to change the world, we carry all the power we need inside ourselves already: we have the power to imagine better.

I am nearly finished. I have one last hope for you, which is something that I already had at 21. The friends with whom I sat on graduation day have been my friends for life. They are my children’s godparents, the people to whom I’ve been able to turn in times of trouble, people who have been kind enough not to sue me when I took their names for Death Eaters. At our graduation we were bound by enormous affection, by our shared experience of a time that could never come again, and, of course, by the knowledge that we held certain photographic evidence that would be exceptionally valuable if any of us ran for Prime Minister.

So today, I wish you nothing better than similar friendships. And tomorrow, I hope that even if you remember not a single word of mine, you remember those of Seneca, another of those old Romans I met when I fled down the Classics corridor, in retreat from career ladders, in search of ancient wisdom:
As is a tale, so is life: not how long it is, but how good it is, is what matters.

I wish you all very good lives. Thank you very much.

When is 'Your Turn'?

2010-10-06T10:40:00.001+08:00

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Tonight's gonna be a good night

2010-09-28T23:48:00.000+08:00

Xie: Inflation, not deflation!

2010-08-20T19:37:00.000+08:00

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"The global economy seems to be bifurcating into the ice-cold developed economies and red-hot developing economies. Will the bifurcation persist? If the two sides converge, which side will dominate?

Let me write the conclusions first: Inflation, not deflation, will dominate the global economy. The deflation scare causes the central banks in the developed economies to sustain a loose monetary policy. It will fuel inflation in emerging economies. Through trade, currency markets, and ultimately inflation expectations, inflation will hit developed economies.

Globalization has severely restricted the effectiveness of economic stimulus. Trade plus FDI are half of the global GDP. Trade is visible in terms of stimulus leakage. But, where investment occurs in response to demand growth is far more important. Multinationals can invest anywhere in response to demand. It cuts the linkage between demand stimulus and investment response. The latter is crucial to employment growth, which is necessary for sustaining demand growth beyond stimulus. Essentially, demand is local, but supply is global. This is why the old assumptions on stimulus are no longer reliable.

The above analysis always applies to a small, open economy. A typical macroeconomics textbook will study the extreme cases of a small, open economy and a large, closed economy. In the former, the leakage is so powerful that stimulus is futile. The latter has no leakage and has maximum stimulus effectiveness. The economies in the real world are in between. A large economy like the U.S.'s is always assumed to resemble a closed economy, while a small trade-oriented economy like Singapore's is close to a completely open economy."

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Only You 周星馳

2010-07-09T14:27:00.003+08:00

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LOLOL

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Krugman: Early stages of the next Depression

2010-06-28T23:11:00.000+08:00

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The Third Depression
By PAUL KRUGMAN
Published: June 27, 2010

Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.
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China's labour squeezing business model - how long can it last?

2010-06-09T00:39:00.003+08:00

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Dismantling Factories in a Dreamweaver Nation
by Andy Xie

A new generation is challenging China's labor-squeezing business model and an older generation that apparently doesn't get it

A decade ago, I took a group of fund managers to an assembly line at an electronics manufacturing contractor in China. We saw rows and rows of young women hunkered down, concentrating on putting together tiny parts. They had few toilet breaks, and during rest periods they had to sit at their benches.

"They're all 18," the line manager told me. "We need nimble fingers. In a few years, we will replace them with another batch of 18-year-olds."

I wrote a story after that visit. I didn't judge the situation but stated that a compliant labor force willing to be pushed to the extreme was the fuel for China's economic miracle. The engine was the mutually beneficial relationship between western companies with technologies, brands and distribution channels, and China-based manufacturing outsourcing companies that specialized in taking advantage of China's vast, cheap labor force. These included Taiwanese companies, which have been by far the most successful in the original equipment manufacturer (OEM) business.

The fund managers with me on the visit wanted to determine sustainability and profitability before deciding whether to buy the company's shares. They thought an endless supply of labor would ensure the model's profitability, and they were bullish about the company. What's happened in the years since has proven them right.

But will they be right indefinitely? To answer that question, we can glance back to the days of silent film star Charlie Chaplin. In his movies, Chaplin parodied the inhumane nature of the modern factory system, especially monotonous human movement on assembly lines. What he portrayed vanished a long time ago in developed countries, driven out by rising labor costs. Factory owners invested in automation, such as robots that now dominate modern auto assembly plants.

When multinational companies outsourced production to China, though, their business became less capital intensive. They took advantage of low labor costs and abundant supply. Some businesses, such as battery makers, started substituting machines with people. But no one could have predicted how far the outsourcing model, particularly in the electronics sector, would go while companies scaled up and maximized economies of scale by using cheap labor.

Scaling Higher

Economies of scale are typically associated with capital intensive industries. When a business requires a lump-sum fixed investment, it requires a certain scale to make the investment pay. Outsourcing businesses in China are labor intensive but have scaled up massively. Some businesses employ hundreds of thousands, often at a single location. So where do they get the economies of scale?

I know of two factors that can be scaled up in such businesses: customer relations, and what I call labor squeeze.

Good relations with big buyers such as Apple and HP are not easily obtained. Years of interaction are needed to build necessary trust. Suppliers that prove better than others are retained, while the rest are dumped. As time goes by, the number of suppliers shrinks and the survivors expand.

Thus, economies of scale are improved through good management of customer relations. Apple, for example, demands total secrecy in the production of its products. This goal cannot be met if it uses many suppliers, so when it signs with a trustworthy supplier a virtuous cycle is created.

An even more important factor is labor management. What I observed during my visit 10 years ago was actually the key to economies of scale. To put it bluntly, the key competence of a successful OEM in China is to squeeze labor to the maximum extent possible. That skill is developed within an organization. When a company employs hundreds of thousands from all over China, it needs a massive machine that involves recruiting, housing, training, and worker management on the factory floor.

For example, the factory I visited derives its economies of scale from 1) knowing where to find all the 18-year-old girls, 2) convincing them to stay in factory dormitories, 3) training them to put the parts together, and 4) ensuring that no one takes too many toilet breaks. This is all part of a huge system that can derive considerable economies of scale by processing hundreds of thousands of workers.

Labor management as a core competitive advantage in East Asia began in Japan. After the Meiji Reforms, Japan wanted to industrialize quickly but faced the challenge of turning agricultural labor into industrial labor. It looked to the military for a role model. The military faced a similar challenge: It had to turn farm boys into soldiers. The answer was maximum pressure and total regimentation. Factory uniforms, morning exercises, company loyalty indoctrination, etc., thus became unique characteristics of Japanese factories.

This model becomes less relevant as the transition from rural to urban labor force winds down and labor costs rise. Nowadays, Japanese factories have few workers and lots of robots on factory floors.

The Japanese military factory management system spread to other parts of East Asia, especially Taiwan. It was a Japanese colony for a half-century and receptive to Japanese management skills. When the yen's value rose in the 1970s, Taiwan got its first opportunity to take away Japanese market share by adopting the Japanese factory management system.

And when the Taiwanese took their businesses to the mainland, they found a place for applying their skill with 50 times as many people. Because they combine the Japanese system and knowledge of China's labor force, they are better than Japanese in managing factories in China.

The magnitude of scaling up by Taiwanese businesses is beyond what the Japanese could have imagined. Indeed, no other businesses have done what Taiwanese businessmen have with hundreds of thousands of workers in labor intensive operations.

This Taiwanese success drove an economic restructuring in the United States. It allowed multinational companies to focus on research and development, branding and distribution. Today, a U.S. brand company can dream up a product and order it from a Taiwanese company with factories in China as easily as ordering a pizza from Pizza Hut. Without Taiwanese factories in China, it is hard to believe that Wal-Mart and Apple, the era's quintessential creatures, could have become as successful as they are.

This sustainability of this profitable relationship between U.S. brand and distribution companies and Taiwanese factories is based on a Chinese labor force that continues to be plentiful and willing to accept working conditions.

How Much Longer?

In early 1990s, when I was working in Latin America, I became bullish on China's future. I saw Chinese workers would go much farther than elsewhere to earn a little money for two reasons: a cultural acceptance of "eating bitterness" in life; and familial obligations.

The girls at the factory I visited were earning US$ 100 a month, which was not a bad wage. That money could be used to pay for a younger brother's tuition, a mother's medical bill and, if circumstance permitted, building a house for the whole family. Each worker was willing to sacrifice herself for the family; she was not living for herself. Essentially, she accepted hardship.

These factors have changed. Today's young adults are less willing to eat bitterness. They are the first generation to grow up during prosperity, without worrying about food and shelter. Many were pampered by parents sensitive to the one-child policy. They are more like counterparts in other countries, which is good for China's international relations.

Moreover, rural families are not desperate as they were a decade ago. Siblings are few, and the government pays much more for rural education. Health insurance is decreasing the numbers of families facing financial crises due to sickness. Most rural families have built houses. And familial obligations for today's rural youth are not as urgent as in the past.

Meanwhile, inflation has severely eroded income value. Today's rural youth aspire to live in big cities, yet property prices in cities have grown twice as fast as wages. Dreams of owning a house in a comfortable city are becoming more distant.

Recent events at Foxconn and Honda factories are symbols of this new China. The labor force isn't as plentiful or compliant as before, and the ways that governments and businesses are handling the situations expose their ignorance of a new reality. They still think these are isolated incidents and, through pressure and bribery (such as a little wage increase for all and then firing rebel leaders) can bring the situation back to normal.

They think this way because of a generation gap, and the unusual relationship between local governments and businesses in China. The economy has raced three times faster than western economies did a century ago, and the generation gap seems three times larger as well. Today's young adults and their parents may as well be from different centuries. But government and business leaders are all from the parental generation, handling labor crises from this old perspective.

The governing class judges everything on short-term, marginal economic improvement rather than according to dreams and long-term goals. Today's young people are more concerned about what will happen to them in the future. They want to settle down in big cities and have interesting, well-paying jobs – just like their counterparts in other countries. This vast generation gap in perception is the force behind social tension over China's property bubble as well as factory working conditions.

The current factory system is unable to realize the dreams of today's young people. China's factories are often in isolated locations and self-contained. Youths who leave villages for these jobs find themselves more isolated than at home, with little hope of integration into urban communities. Indeed, they are neither in city or village. It's the most isolated life possible.

The compensation system makes their lives extremely difficult as well. Base pay is low, and only with massive overtime can they expect close to 2,000 yuan a month. They have no time for self improvement or integrating into modern urban life. In a few years, they will lose their youth and jobs, but they still will not have the ability or financial resources to live in cities.

Business leaders and government officials, of course, are asking why these workers aren't willing to accept these conditions, like the workers of a decade ago. They grew up in poverty and rule the country with a view that marginal economic improvement is the purpose of life. They don't appreciate, however, that times have changed: The previous generation focused on economic benefits for relatives in villages, not their own futures.

The unusual relationship between factory owners and local governments makes it difficult to resolve or prevent labor problems. Most coastal factories have workers from interior provinces. The governments have few ties to workers, but they are very connected to factory owners through tax revenues and other benefits. Local governments, therefore, side with the businesses when dealing with workers.

To improve the situation, the central government should limit these major, isolated factory sites. In the future, they should be located close to cities. As in other countries, workers should be encouraged to rent housing rather than live in factory dormitories. They should have a chance to integrate into urban life.

For example, future factories should locate close to provincial capitals such as Changsha, Chengdu, Hefei and Nanchang, which until now have been supplying workers for coastal regions. As a general rule, these cities should discourage factory dormitories but instead build public transportation systems to link factories and residential areas.

For many, these sorts of solutions to China's labor challenges may be apparent. But government and business leaders may not understand them at all. They are blinded by the urge to continue operating within the confines of the old model while protecting businesses from potential buyers in the West. So, when dealing with crises such as those at Foxconn and Honda, they try temporary fixes.

I'm afraid similar yet greater problems will eventually surface. Ultimately, market force will bring down the current system. Workers don't have to show up for factory jobs. They can join the urban service sector instead, where wages may be a bit lower but lifestyles are much better, and have a chance to integrate into urban life.

Rising labor costs will ultimately force factories closer to labor sources, and working conditions will turn more humane. The biggest losers will be coastal governments that side with the factories to protect their revenues. If they refuse to change, they will lose the factories and all those nimble fingers.

Moving backwards 20 years!

2010-05-18T23:17:00.003+08:00

I was chatting with two friends, A and B, on the msn. The topic strayed towards the ever declining service standards in Spore...

A: actually it all comes down to the service
A: how they present themselves
B: i know the local staff got problem with the PRC workers
B: that day i saw one ask a prc staff to go photostat something, the fella go come back say cannot find, all kind of excuses
B: these PRC really fucked up, chao keng to the max
A: that is the side effect of singapore importing all the prc
A: we are moving backwards 20 years in terms of service
B: they r just fucking lazy
A: these days very obvious in retail and F&B
B: my place now some cleaning staff from china... same, always hide somewhere talk on their mobile
A: singapore service is totally fuck up
B: the malays are better
A: u compare with HK
A: HK u remember in the 80's has a bad name in service but they have caught up in the last 10 years
B: my friends say HK is ahead of SG many yrs ago liao
A: today Hk service is FUCKING EXCELLENT
B: chee bye PAP (haha i LOL at this)
A: thailand is also better than us
A: but what really surprised me was taiwan
A: when i went taipei a few years ago, their service also much better than us
A: and the locals are more orderly,
B: taiwan all the while is better lah
A: in every other asian country, the locals bother to stand one side when on the escalator
A: singapore is the only fucking country where local hog and block the escalator

what can i say except.... Thank you PAP! hahaha!
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Increase the Weight-age, not reduce!

2010-05-13T11:58:00.006+08:00

A response i posted in Yawning bread's blog on the Mother Tongue issue.

have u heard japanese speak english? have u heard our foreign talent scholarship holders from china etc speak english? hahaha!
yet u hv these ppl having no problem getting admission into local uni. is fluency a big criteria? (ok i admit uni admission is more the fucked up garment's FT policy, still the point on fluency stands.)

so why when it comes to Sgians this obsession with fluency?

the key is literacy.
and really u can dig up all the pseudo-psycho-neuro-empirical justifications possible and there will still be no conclusion and end to this. Becos the fact is MOST people have no problem mastering or passing two languages. (i mean it is unlikely to claim someone is a strong student etc if he/she cannot even pass 2nd lang after putting in effort lol)

the education system at primary school level certainly needs to be looked at, but IMO it is the REVERSE that should be done. INCREASE weightage on 1st and 2nd language weightage, reduce weightage on maths, science, etc! Increase weightage will drive greater emphasis on the soft subjects like languages, this is crucial becos it is the soft subjects that are the primary foundations for the eventual development and prowess in hard subjects like science and maths later on. And these foundations need to be strengthened at the pri school level and not later.

Also posted another reply in TKL's blog... hahaha.

i am surprised that the PAP gabrament has allowed the 2nd Lang issue to degenerate to such a state.

the MOE is also showing a profound lack of basic understanding what primary sch education should be all about. Too many yes-men who cannot think critically?

Pri sch level is when u build foundations, foundations that are the building blocks to hard subjects like sciences and maths later on. And the most basic foundations of all are language skills. Strong lang skills (soft subjects) make the subsequent learning of hard subjects like science and maths much easier in sec sch level and beyond. That is what education has always been about.

So instead of reducing weightage in 2nd Lang etc. I say INCREASE the weightage of the two languages at pri sch level! This move will straight away divert more real resources into the teaching and learning of language skills instead of token lip service by the PM and the clueless edu minister.

NNB so simple also don't know, these million dollar ministers realli jiak sai!

Without You

2010-04-03T20:15:00.001+08:00

Biggest BS story ever told

2010-03-28T19:07:00.000+08:00

Hahaha!

Preserving the status quo

2010-02-23T11:03:00.001+08:00

I am refering to the Budget Speech 2010.

There is nothing in it that brings real benefits to majority Sporeans.

No minimum wage.
No foreign worker quota.

End of day how will Sporean workers benefit? especially since there is no genuine unions to fight for Sporean workers' rights. And the raised foreign worker levy does not address the fact that businesses and employers have the wonderful "flexibility" to pass the cost onwards by further depressing wages, LOL.

With the help of the 154th running dog media, the public will get the sense that PAP garment is doing something, when really there is nothing of substance at all.

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Temasick... it's not funny though

2010-02-18T10:04:00.000+08:00

Feb 18, 2010
Adviser to Temasek chief
Role is a more active one than was first thought; he will help in 'leadership development and talent management'

THE former chief executive officer of the Singapore Exchange (SGX), Mr Hsieh Fu Hua, has been appointed as 'special adviser' to Temasek Holdings' CEO Ho Ching.

This follows news of his appointment to the Temasek board earlier this month.The announcement yesterday shows that Mr Hsieh, a non-executive director, will be taking on a more active role at the Singapore investment agency than was first thought.

Temasek said yesterday that his remit would involve supporting management 'in leadership development and talent management'.

What's the point??
"Someone" should just fucking resign for good.
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Xie: Trapped in a Property Bubble

2010-01-19T20:24:00.002+08:00

By Andy Xie 01.10.2010 18:32
When China's real estate bubble finally bursts while exports become less competitive, the consequences could be severe.

The next 10 years will be more challenging than the past decade. Indeed, unless economic policies are adjusted, China's inflated real estate market could suddenly shrivel while the decade is still young.

China's market share gains in global trade and foreign direct investment due to low costs and rising global demand drove the nation's success. But China is no longer the lowest of the low-cost producers, and it's unlikely to gain market share. Moreover, global demand isn't likely to rise as fast as before; expect economic development at one-third previous speeds.

The biggest risk to China's economy is the desire to maintain past economic growth rates by maximizing investments in property -- an unproductive asset. It supports short-term growth by sacrificing long-term growth as capital's average productivity declines over time.

Local government performance in China is measured according to GDP and fiscal revenue. Property development can achieve high numbers for both quickly. This is why property's share in China's capital allocation is rapidly rising as prices appreciate and volumes increase. This is a politically driven bubble -- and it's already massive. Unless the trend is reversed by reforming incentives for local governments, China's property bubble could mushroom in two years from what's now a dangerous level. The burst could happen in 2012, endangering social and political stability.

The first decade of the 21st century began when an IT bubble burst. It was laced with 9-11 and SARS, and ended with a global financial crisis. It was a horrible decade. Now, much of the world has stagnated or regressed. Western prosperity mid-decade turned out to be a mirage manufactured on Wall Street.

The West didn't accept the need for adjusting living standards as emerging economies caught up, which led to a delayed bubble that made the problem bigger. Now the West, particularly the United States and Britain, faces a terrible decade ahead.

Amid the horror, China has risen like no other. Its GDP in dollars has quadrupled while exports quintupled. Adjusting for dilution due to dollar's external depreciation and internal inflation, from outside looking in, China's economic strength has still more than doubled in real value. It is an unprecedented accomplishment for such a massive country. And the primary drivers of success were gains in global trade and investment market share.

Low base, reform and luck could explain China's success. When the Asian Financial Crisis hit more than a decade ago, China chose not to devalue to maintain competitiveness but lowered state sector costs. When the global economy normalized, China became more competitive. Joining the World Trade Organization was an insurance policy that maximized low-cost benefits, and China's global market share tripled. Internally, China built infrastructure for growth without inflation that could erode competitiveness. The policy mix was perfect.

Neither competitiveness nor winning share in a shrinking market can guarantee growth. But by increasing consumer debt, the United States sustained demand while losing in areas of global investment and income. The credit bubble maintained global demand while China's market share gained rapidly. It was a lucky break for China, but now it's run out. The 2008 financial crisis means the United States is likely to cut debt-financed consumption with half as much growth over the next decade, while Europe and Japan are likely to have zero growth.

Meanwhile, China over the past five years has seen rising prices for production factors such as labor, raw materials, land, environmental control and taxes. These prices had been stable previously. Now, wage costs for export factories have roughly doubled in yuan terms, as have raw material prices. Before the Asian Financial Crisis, China's wage costs were half of Southeast Asia's. Now they are twice as high. Bangladesh's wage costs are even lower. It's likely China will lose market share to these low-cost competitors.

Two of three factors for the past decade's success are gone, so China needs to depend more on improved efficiency for growth. But instead, the recent trend seems to be going the other way. Rising costs and weak demand are making manufacturing less profitable. Hence, capital investment is weak, as reflected in weak equipment import data.

Most local governments seem to embrace property development as a growth savior. But shifting surplus capital into property is likely to lower future growth by decreasing average capital efficiency. This deters consumption development by increasing property expenditure expectations, and threatens financial stability by increasing loan levels, using overvalued land as collateral.

Other Asian economies such as Japan, South Korea and Taiwan failed to shed export dependency and develop domestic growth. Periodic spikes in consumption are usually due to asset inflation. Once a country loses export market share on rising costs, it stagnates because property bubbles during high growth periods deter consumption while overwhelming the middle class with housing expenses. China may be following the same path: Despite a decade of talking about promoting consumption, that share of GDP has been declining year in, year out.

Japan stagnated roughly at per capita income of US$ 40,000 over the past two decades. Hong Kong, South Korea, Singapore and Taiwan have stagnated at about US$ 20,000 for the past decade. Stagnation at such high income levels doesn't seem bad. However, China's size means its exports face challenges at much lower per capita income levels. Unless China changes its growth model, it could stagnate at a much lower level.

The overwhelming desire for getting rich quick dominates every nook, fissure and strata of Chinese society. Such desires cannot be fulfilled; the terrible logic of economics is that money must circulate. Creating bubbles can temporarily blind people to this logic, as overvalued assets substitute for money to fill psychological needs. This is why, whenever conditions permit, China seems to have asset bubbles.

Bubbles exaggerate reality but are not formed out of thin air. Cheap money and strong growth are the usual ingredients for bubble-making. Both existed over the past five years. But now, China depends entirely on cheap money to support overvalued assets. Cheap money came from past exports and was warehoused in banks. Cash also came from hot money inflows due to the yuan's peg to the dollar and weak Fed dollar policy.

Neither money source is sustainable. The dollar has bottomed. The Fed will begin raising interest rates in 2010. The combination of China's strong loan and weak export growth is reducing bank liquidity, but inflation soon may force China to tighten anyway. The cheap money may not last long.

China's exports are recovering from a low base – a trend that may last through 2010. But one should not confuse low base recovery with a revival of past trends.

The high export growth era is over for three reasons. China's market share in global trade is twice as big as its GDP share. The odds are low that China could continue to expand its market share. Second, the tide won't rise as fast as before. The Greenspan era saw a credit bubble supercharge western consumption, but the bubble has burst. Odds are that future trade growth will be half or less as in the past. Finally, a western employment crisis will lead to protectionism targeting China. Other developing countries may gain market share at China's expense.

One possible way to prolong the bubble is to appreciate the currency, as Japan did after the Plaza Accord, to contain inflation and attract hot money. Such a strategy will not work in China. Japan's businesses were already at the cutting edge in production technologies and had pricing power during currency appreciation. They could raise export prices to partly offset currency appreciation. Chinese companies don't have such advantages but rely on low costs to compete.

After export-led growth peaks, consumption is the alternative to sustaining growth at a lower rate. This transition would require a wholesale change in the political economy. The key is to increase middle class disposable income and lower consumption costs. No East Asian economy has made this transition.

China has been trying to promote consumption for a decade. However, consumption's share of GDP has declined annually. The reason is the policy environment has been squeezing China's nascent middle class through high property and auto prices along with high income tax rates. China's disproportionate dependency on exports and withering consumption components are results of national policies, not the peculiar characteristics of Chinese households.

A large, vibrant middle class is the foundation of a stable, modern society. China's policies rightfully care for the lower class. Yet the semi-market economy offers a few spectacular gains from arbitrage and speculation. Society is drifting toward a small, super-rich minority along with a small -- possibly less than 20 percent of the population – yet heavily burdened middle class, and a vast, low-income majority. Such an income structure cannot support a balanced economy, forcing export dependence.

China's rapid economic growth has spawned millions of white-collar jobs: managers, engineers, accountants and bankers. Such jobs should provide middle class income for buying property, cars and vacations. However, property prices have increased more rapidly than middle class income, increasing fear of the future.

China's property market is creating winners and losers based on timing. All other factors – including education and experience -- have been marginalized as the economy rewards speculators. And as more play the game, the speculator ranks rise and fewer people work, perhaps contributing to a labor shortage.

In the previous decade, the West refused to acknowledge its competitiveness problem and created a bubble to hide it. I am afraid China could try the same in the next decade, and the consequences could be serious. Fear of consequences could lead many to argue for sustaining the bubble, but that worsens the problem.

During a bubble period, most people think nothing will bring it down. But bubbles always burst, and the longer one is prolonged, the more severe the consequences. Oversupply or rising interest rates will bring down China's property bubble. The former brought down the U.S. bubble, and later Hong Kong's.

China's banks always seem ready to roll over credit lines for developers during market downturns. Hence, supplies tend to dry up during market downturns, preventing price adjustments. Such manipulation has created a speculative psychology that theorizes the government would never let prices fall. When speculators think prices won't fall, speculative demand lasts as long as banks have the liquidity.

The liquidity environment, however, is likely to turn against the bubble soon. The killer is inflation driven by a surge in money printing. The average lag between currency creation and inflation is 18 months in the United States. China's lag could be two years since the government uses subsidies to suppress inflation. By 2012, China could experience 1990s-like inflation. And that's when the property bubble will probably burst.

Hello 2010

2010-01-01T10:50:00.003+08:00

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The beginning of a new decade!

Goodbye 2009 Hello 2010!

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Central Banks, Arsonists and Playing with Fire

2009-10-29T16:28:00.003+08:00

Andy Xie: Money supply growth has sparked an asset market boom that supports the economy, not the other way around. Don't get burned.

Oct 28

(Caijing Magazine) Is money demand efficient? The answer could help decide what's best for monetary policy. Moreover, as financial institutions have demanded more money to support their leverage, money demand efficiency has become equivalent to financial system efficiency.

I think the answer is no. Monetary authorities and central banks have a responsibility to take this reality into account. Their best approach would be to limit the deviation of monetary growth from nominal GDP growth. In particular, sustained deviation should be corrected -- even if the underlying economy suffers in the short term.

This is a serious academic topic these days. Some of the world's most prominent economists hold different views. Why discuss it here? First, it's important to everyone. After all, retail investors dominate China's asset markets, and most base their investments or speculation decisions on expectations that the government will not let asset prices fall. The credibility of this expectation depends on whether money available for government spending is limited. A discussion on monetary expansion's limits can help Chinese investors assess the risks of their investment decisions.

Second, money supplies worldwide are rising much faster than nominal GDP growth rates. That is, monetary growth is being used to support leverage, mostly in the financial sector. Of course, the reason is central banks have responded to the financial crisis by cutting interest rates and sometimes force-feeding banks with liquidity in hopes more lending will boost the economy. But instead, money has flowed into and led to buoyancy in asset markets (stocks and bonds in developed economies, and almost everything in emerging economies).

Buoyant asset prices have stabilized the global economy. Most analysts say buoyant asset markets reflect correct expectations of a buoyant global economy. I don't think this is true. As we saw in the past decade, the latest asset market boom is supporting the economy, not the other way around. In other words, it's a bubble.

Even though the global economy is staging a modest recovery, mainly on inventory restocking and fiscal stimuli, the overall economic situation is still difficult. Unemployment rates in OECD countries are at record highs. Global trade is still at one-fifth its peak level. The small- and medium-sized economies that employ most of the world's people are struggling. We see a contrast – unprecedented in modern times -- between the asset market boom and real economic difficulties.

The gap is creating social tension around the world. While workers and businesses struggle, asset players are reaping substantial paper profits again. As the central bank's monetary policy is behind the asset boom, we should ask whether the policy is achieving its goal by helping the real economy, or whether it is just helping speculators and hoping they have something left over for the real economy.

The financial crisis exposed gross inefficiencies in the massive amounts of money financial institutions received from central banks. Supplying so much money to the same people who caused the crisis -- and with the same incentives -- does not feel right. The argument in favor of this policy is that, when the house is on fire, you have to do whatever to extinguish the fire and find the culprit later. The problem is that, in this case, the arsonists have been asked to put out the fire. How can we be sure they won't start another fire?

Most argue that the answer is not to limit the money supply but to reform the financial system. In this way, future demand for money would be efficient. But so far, no corrective reforms have been implemented in response to the financial crisis. Why? Because the global financial system became so big over the past decade that it has co-opted central banks, legislators and entire governments. Any reforms that do come will not address the main factors leading to the current crisis.

Even the best reforms will never resolve a problem based on the fact that financial professionals generally risk other people's money: They get big rewards when bets go right and don't have to pay when bets go wrong. The problem with this incentive system suggests the global financial system is structurally biased toward taking on more risk than what would be taken in an efficient market.

The only way to counter this is for central banks to limit money supplies. Asset inflation over the past 10 years and the catastrophe incurred when it burst lend credibility to this argument.

Stagflation in the 1970s spurred economists to study why monetary stimulus, over time, loses its punch. Demand is stimulated, but that leads to inflation. And it's led to development of the rational expectation theory to explain the average Joe's response to monetary policy. Its conclusion, although obvious to the uneducated, is that policymakers cannot fool people again and again. For that observation, many have won Nobel prizes. Milton Friedman advocated money supply growth targets as a guiding principle for central banking. Such an approach would put central banking on autopilot with a target of money growth and leave the market to decide interest rates.

The rational expectation theory was extended further to explain investor behavior. This led to the efficient market theory, which posits that, under some conditions, rational investors will lead to efficient asset prices that correctly anticipate the future. Academic jargon for efficient asset price says that it includes all useful information about the future. That laid the foundation for tearing down the regulatory structure built from the lessons of the Great Depression.

Stagflation of the 1970s led to central banking to focus narrowly on short-term inflation. The efficient market theory prompted central banks to completely accommodate financial institutions that demanded money for leverage funding. This combination of policy steps laid the foundation for the big bubble in the past decade. As globalization kept inflation low, Wall Street could source an unlimited amount of liquidity from central banks for bubble making.

Even though globalization has maxed out, and the global economy has now entered an inflation age, the bursting of the last bubble is a negative demand shock that's keeping inflation low for the time being. This has created another window for bubble-making. A last-train psychology means this bubble is growing quickly, totally oblivious of economic fundamentals. In addition to the usual misinformation from market makers who want to sucker people, government officials, financial professionals and the media are also saying what speculators want to hear. This is yet another episode of an inefficient market adventure.

Institutional investors dominate financial markets in western countries, while retail or individual investors are the main players in the east. Neither group is thinking or behaving rationally. Most institutional investors are benchmarked against market indexes quarterly, and with cash-holding limits. These constraints obviously have disadvantaged them and made it extremely hard to outperform the indexes. This is why most institutional investors are closet indexers. Extra management costs guarantee that most institutional investors under-perform market indexes and don't add to market efficiency.

Absolute performance funds or hedge funds are the biggest development in financial market in the past 10 years. But they have been amplifying market volatility rather than improving efficiency. The hedge fund industry has made managers rich, not investors, because managers are remunerated with a cut on the upside, and don't pay up for the downside. So they are structurally incentivized to long volatility while playing something like the coin-flip game "heads I win, tails you lose."

Regardless how one tries to improve the incentive structure for institutional investors, nothing could overcome the incentive distortions tied to the practice of managing other people's money. Institutionalization, once hailed as a great step forward in improving market efficiency, has proven to diminish efficiency. Developing countries that face highly volatile markets have been looking to institutionalization as a way to calm them. They should think twice. Institutionalization may decrease short-term volatility but make up for this advantage with a big crash.

Retail or individual investors routinely mistake volatility for trend. Their herd behavior creates self-fulfilling trends that are mainly temporary. From time to time, such herd behavior lasts a long time and leads to big bubbles, which in turn lead to major misallocations of resources.

To minimize chances of future financial crises, one could reform the financial system to make it less crisis-prone, or target both asset and CPI inflation when setting monetary policy. When the crisis began a year ago, policymakers around the world swore to reform the system while ridding it of corruption and excess leverage. After governments bailed out financial institutions with trillions of dollars, the impetus for reform waned. Reform bills in the U.S. Congress have been watered down so much that they would not prevent another major crisis.

Capital requirements and transparency are key elements to address in any effective financial reform. And unless reforms target problems in the derivatives market, they will not be effective. Over-the-counter derivatives carry hundreds of trillions of dollars in notional value, thriving in an opaque environment. Derivatives in theory help buyers decrease risk, but in practice they are merely tools for taking on more risk, hiding leverage through complex structuring. Market-makers can earn high profits by fooling buyers and regulators, overcharging while putting up little capital to warehouse such high-risk products. If the market is made transparent and capital requirements are reasonable, this business would shrink.

Every party ends sooner or later, and I see two scenarios for the next bust. First, every trader is borrowing dollars to buy something else. Most traders on Wall Street are Americans, British or Australians. They know the United States well. The Fed is keeping interest rates at zero, and the U.S. government is supporting a weak dollar to boost U.S. exports. You don't need to be a genius to know that the U.S. government is helping you borrow dollars for speculating in something else.

But these traders don't know much about other countries, particularly emerging economies. They go there once or twice a year, chaperoned by U.S. investment banks eager to sell something. They want to think everything other than the U.S. dollar will appreciate; Wall Street banks tell them so. Since there are so many of these traders, their predictions are self-fulfilling in the short-term. For example, since the Australian dollar has appreciated by 35 percent from the bottom, they now feel very smart while sitting on massive paper profits.

When a trade like this one becomes too crowded, a small shock is enough to trigger a hurricane. There must be massive leverage in many positions, but one just never knows where. When something happens, all these traders will run like mad for the exit, and that could lead to another crisis.

Surging oil prices could be another party crasher. This could trigger a surge in inflation expectation and crash the bond market. The resulting high bond yields might force central banks to raise interest rates to cool inflation fear. Another major downturn in asset prices would reignite fear over the balance sheets of major global financial institutions, resulting in more chaos.

Twice in recent years, oil prices surged into triple-digit territory, wreaking havoc on financial markets and the global economy. In 2006, surging oil prices toppled the U.S. property market, debunking the story that property prices never fall -- a premise upon which subprime lending was based. Oil prices fell sharply amid the subprime crisis period while the market feared collapse in demand. The Fed came to the rescue and, in summer 2007, began cutting interest rates aggressively in the name of combating the recessionary impact of the subprime crisis. Oil prices surged afterward on optimism that the Fed would rescue the economy and oil demand. It worked to offset the Fed's stimulus, accelerated the economic decline, and pulled the rug out from under the derivatives bubble. The ensuing fear of falling demand again caused oil prices to collapse.

Oil is a perfect ingredient for a bubble: Oil supplies cannot respond to a price surge quickly. It takes a long time to expand production capacity, and oil demand cannot decrease quickly due to lifestyle stickiness and production modes. Low-price sensitivities on both demand and supply sides make it an ideal product for bubble-making. When liquidity is cheap and easily obtained, oil speculators can pop up anywhere.

Oil speculators are no longer restricted to secretive hedge funds. Average Joes can buy exchange traded funds (ETFs) that let them own oil or anything else. Why not? Central banks have made clear their intentions to keep money supplies as high as possible, debasing the value of paper money to help debtors. It seems no good deed is unpunished in this world. If you speculate big, governments will offer a bailout when your bets go wrong and cut interest rates and guarantee your debts, allowing bigger bets. People who live within their means and save some for a rainy day see dreams shattered. Central banks can't wait to break their nest eggs.

It is better to be a speculator in this world. The powers that be are with you. Maybe everyone should be a hedge fund; ETFs give you this opportunity. As the masses are incentivized to avoid paper money while buying hard assets, the price of oil could surge to triple-digit territory again. Oil bubbles are easy to come and quick to go because the oxygen needed for its existence disappears after it kills other bubbles.

A word of caution for all would-be speculators: You'll want to run for your life as soon as the bond market takes a big fall. And the case for a double dip in 2010 is already strong. Inventory restocking and fiscal stimuli are behind the current economic recovery, and when these run out of steam next year, the odds are quite low that western consumers will take over. High unemployment rates will keep incomes too weak to support spending. And consumers are unlikely to borrow and spend again.

Many analysts argue that, as long as unemployment rates are high, more stimuli should be applied. As I have argued before, a supply-demand mismatch rather than demand weakness per se is the main reason for high unemployment. More stimuli would only trigger inflation and financial instability.

Stagflation in the 1970s discredited a generation of central bankers. They thought they could trade a bit more inflation for a lot more economic growth. Today's crisis will discredit a generation of central bankers who ignore asset inflation by sometimes trading asset inflation for a bit of economic growth. Those who play with fire often get burned, even when the arsonists don't.

Xie: For Economic Stimuli, a Revolving Exit Door

2009-10-17T23:14:00.002+08:00

Can interest rate adjustments, currency devaluation and zigzag policymaking help unwind economic stimuli? It depends.

(Caijing Magazine) Australia recently raised its policy interest rate 25 bps, becoming the first major economy to do so since the financial crisis a year ago prompted all major economies to rapidly cut interest rates to historical lows.

Financial markets had been chattering about economic stimuli exits for about a month before Canberra's move. The consensus was that central banks would keep rates extremely low through 2010, and possibly beyond, on grounds that the economic recovery is still shaky.

Central banks also have been discussing the subject. Their messages are, first, that they know how to exit and will exit before inflation becomes a problem and, second, that they don't see the need to exit anytime soon. They try to assure bond inventors not to worry about their holdings, despite low bond yields, while trying to persuade stock investors they need not worry about high stock prices, as liquidity will remain strong for the foreseeable future. So far, central banks have made both groups happy. But Australia's action is likely to raise concern among financial investors who hold expensive stocks and bonds.

Each economy will exit at its own pace, according to local conditions. First, the United States and Britain, where property bubbles have burst and could not be revived through low interest rates, will increase rates next year at a pace in line with the speed of inflation expectation. Their goal is to keep real interest rates as low as possible to support financial institutions still sitting on mountains of bad assets. They don't want to stop inflation, but want to limit the pace of its increase. Through low real interest rates, their economies could decrease debt leverage. I think the Fed would raise interest rate by 100 bps in 2010, 150 bps in 2011, and 200 bps in 2012. The United States could be stuck with an inflation rate of 4 to 5 percent by 2012 – and for years to come.

Second, China's stimulus program will zigzag mainly through its lending policy. China's currency will be pegged to the U.S. dollar for the foreseeable future, which determines the end point for China's monetary policy. Its inflation and interest rates will likely be similar to those in the United States.

Third, due to their strong currencies, countries in the euro zone and Japan will have higher real interest rates, lower nominal interest rates, and lower real economic growth rates. They will raise interest rates more slowly than the United States, and will have lower inflation rates as well.

My central point is that the global economy is cruising toward mild stagflation with a 2 percent growth rate and 4 percent inflation rate. This scenario is the best that the central banks can hope to achieve; it combines an acceptable combination of financial stability, growth and inflation. But this equilibrium is balanced on a pinhead. It requires central banks to constantly manage expectations. The world could easily fall into hyperinflation or deflation if one major central bank makes a significant mistake.

In modern economics, monetary stimulus is considered an effective tool to soften the economic cycle. While there are many theories about why monetary policy works, the dirty little secret is that it works by inflating asset markets. By inflating risk asset valuation, it leads to more demand for debt that turns into demand growth. In other words, monetary policy works by creating asset bubbles.

It is difficult to reverse this kind of stimulus. A complete reversal requires that household, business and government sectors decrease debts to pre-stimulus levels. This is why national ratios of indebtedness-debt to GDP have been rising over the past three decades while central bankers smoothed economic cycles through monetary policy. It led to a massive debt bubble that burst, leading to the ongoing slump.

The current stimulus round is different in terms of its effects. Despite low interest rates, household and business sectors in developed economies have not been increasing indebtedness; falling property and stock prices have diminished their equity capital for supporting debt. The public sectors have rapidly ramped up debt to support failing financial institutions and increase government spending to cushion the economic downturn. Neither is easy to unwind.

By some estimates, US$ 9 trillion has been spent to shore up failing financial institutions. A big chunk of that money was borrowed against illiquid and problematic assets on bank balance sheets. As the debt market refused to accept that collateral, governments and central banks stepped in. Today, it is impossible for banks to liquidate such assets without huge paper losses. Hence, if central banks call the loans, they are likely to go bankrupt.

Of course, central banks can suck in money from elsewhere to substitute money that's tied up in non-performing loans. They are unlikely to do so, however, as it would depress a good part of the economy in order to support the bad. And that could easily lead to another recession.

The bottom line is that, regardless what central banks say and do, the world will be awash in a lot more money after the crisis than before -- money that will lead to inflation. Even though all central banks talk about being tough on inflation now, they are unlikely to act tough. After a debt bubble bursts, there are two effective options for deleveraging: bankruptcy or inflation. Government actions over the past year show they cannot accept the first option. The second is likely.

Hyperinflation was used in Germany in the 1920s and Russia in late 1990s to wipe slates clean. The technique was essentially mass default by debtors. But robbing savers en masse has serious political consequences. Existing governments, at least, will fall. Most governments would rather find another way out. Mild stagflation is probably the best one can hope for after a debt bubble. A benefit is that stagflation can spread the pain over many years. A downside is that the pain lingers.

If a central bank can keep real interest rates at zero, and real growth rates at 2.5 percent, leverage could be decreased 22 percent in a decade. If real interest rates can be kept at minus 1 percent, leverage could drop 30 percent in a decade. The cost is probably a 5 percent inflation rate. It works, but slowly.

If stagflation is the goal, why might central banks such as the Fed talk tough about inflation now? The purpose is to persuade bondholders to accept low bond yields. The Fed is effectively influencing mortgage interest rates by buying Fannie Mae bonds. This is the most important aspect of the Fed's stimulus policy. It effectively limits Treasury yields, too. The Fed would be in no position to buy if all Treasury holders decide to sell, and high Treasury yields would push down the property market once again.

The Fed hopes to fool bondholders or lock them in by quickly devaluing the dollar. Foreign bondholders have already realized losses. The dollar index is down 37 percent from its 2002 peak. A significant portion of this devaluation is a down payment for future inflation.

I think Britain is pursuing devaluation for the same reason. Among all major economies, Britain's is the most dependent on global finance. It benefited greatly during the global financial boom that began in the mid-1990s. The British currency and property values appreciated dramatically, pricing out other economic activities. But now that the global financial bubble has burst, its economic pillar is gone. Other economic activities cannot be brought back to Britain without major cost cuts. But it can't cut taxes to improve competitiveness, as fiscal revenues depend on the financial sector and already face a major shortfall. Another option is to let property prices fall, as they have in Japan. But that choice might sink Britain's entire banking sector. Hence, devaluing the pound is probably the only available option for stabilizing the British economy.

Some may argue that Britain is not expensive anymore. The problem is that being less expensive is not good enough. Prices have to be low enough to attract non-financial economic activities despite a rising tax burden. The pound's value must be very low to achieve that goal. Five years ago, I predicted the pound and euro would reach parity. It seems the day is finally here. But I'm not sure parity would be enough; the pound may have to be cheaper.

Of course, the euro zone is a mess, too. With high unemployment rates, a stagnant economy and imploding property markets in southern Europe, shouldn't the euro's value decline, too? Yes, it should. But it won't. The European Central Bank was structured solely to maintain price stability. With so many governments and one central bank, ECB is unlikely to change anytime soon. Hence, it won't respond to a strong euro quickly. A strong euro and low inflation could form a self-generating spiral, as we see in Japan. Even as interest rates in other economies rise, the euro zone's real interest rate could be higher still, supporting a strong euro.

At some point, euro zone monetary policy may change. It would require governments in the zone's major economies come together and change the ECB. That may come in three years, but not now. The trigger could be one country threatening to exit the euro. Italy and Spain come to mind.

Meanwhile, Japan is an enigma. It has been locked in a vicious cycle of economic decline with a strong yen and deflation. Most Japanese people have a strong yen psychology. Politicians and central bank leaders reflect this popular sentiment, which is based on an aging population. Wealth is concentrated among voting pensioners for whom a strong yen and deflation theoretically improve their purchasing power. But I think various theories that explain Japan's behavior are not good enough. The best explanation is that Japan is run by incompetents, and some are downright stupid. They have locked Japan in an icebox and refuse to come out.

Japan is a giant debt bubble. Its zero interest rate, supported by a strong yen and deflation, has turned the debt bubble into an iceberg. You don't have to worry -- until it melts. Unfortunately, when the temperature reaches a critical point, the iceberg will melt suddenly, all at once. That turning point will come when Japan begins to run a significant current account deficit. The day may be near.

For Japan to avoid calamity, it should deal with deflation and skyrocketing government debt now. The only way forward is for the central bank to monetize Japanese Government Bonds. That would lead to yen devaluation and inflation. Pensioners will complain, but it's better than a complete meltdown later.

Japan's new ruling party DPJ has no vision like that. It doesn't have the guts to go against popular preference for a strong yen. Without a growing economy, though, the DPJ has little to play with. The whole country has sworn to debt, led by a government with a massive fiscal deficit. The DPJ may only reallocate some spending, which would make no difference for the economy. It seems Japan will remain in the icebox until the day of reckoning.

These snapshots of Britain, the euro zone and Japan suggest everyone needs a weak currency. Those that don't have one simply don't know yet. They'll come around eventually. One outcome could be rotating devaluations and high inflation for the global economy.

Developing countries with healthy banks have a different problem on their hands. By responding to falling imports with stimuli, they inflated their property markets. China, India, South Korea and Hong Kong have inflated property bubbles in spite of slower economic growth rates. The contradictions between a property bubble and a weak economy can lead to zigzags in policymaking.

As China is one-third of the emerging economy bloc -- and exerts a great deal of influence over commodity prices that other emerging economies depend upon -- its monetary policy has a big impact on global financial markets. Its monetary stimulus in the first half of 2009 went disproportionately into property, stock and commodity markets. As profitability for the businesses that serve the real economy remain weak, little monetary stimulus went into private sector capital formation.

The state sector ramped up investment somewhat for policy, not profit, concerns. Thus, China is experiencing a relatively weak real economy and red hot asset markets. Government policy is being pushed by both concerns. Cooling the asset bubble would cool the economy further. Not to cool the bubble could lead to a catastrophe later. Monetary policy zigzags, shifting according to concerns that arise, has the up hand.

It seems limiting credit growth is the current policy focus. But if the economy shows further signs of weakness in the fourth quarter 2009 and first quarter 2010, the policy may revert to loose bank lending again. The zigzagging will stop when China's loan deposit ratio is high enough, i.e. when increased lending increases interest rates. As the yuan is pegged to the dollar, China's monetary policy would become much less flexible after excess liquidity in the banking system is gone.

I think Australia is raising interest rates ahead of others for a unique set of concerns. Australia has been experiencing property and household debt bubbles similar to those in the United States and Britain. Its bubbles are probably larger than America's. But because its commodity exports have performed well, its economy has fared better than others. Hence, its property market has seen less of an adjustment. A relatively good economy could embolden Australia's household sector to borrow more and continue the game. This is why it needs to increase interest rates -- to prevent the bubble from re-inflating. The United States and Britain don't have this problem; their household sectors are convinced that the game is finished and they must change.

A review of unique factors and institutional biases around the world shows that exiting a stimulus would be quite different in different economies. The United States and Britain, the euro zone and Japan, and China and India are three blocs that face varying challenges and will handle stimuli exits in different ways.

Most analysts think a benchmark for exiting a stimulus is robust economic recovery. That's not so. Loose monetary policy cannot bring back a strong economy due to the supply-demand mismatch formed during the bubble. Re-matching takes time, and no stimulus can bring a quick solution.

The main purpose of monetary policy ahead is facilitating the deleveraging process, either through negative real interest rates and-or income growth. Preventing runaway inflation expectation is a key constraint on monetary policy. One key variable to watch is the price of oil, with its major impact on inflation expectation. If oil prices take off again, the Fed could be pushed to raise interest rates sooner and higher than expected.

Xie: Why One Bubble Burst Deserves Another

2009-10-01T21:03:00.001+08:00

As always, its all in the timing...

Andy Xie: Why One Bubble Burst Deserves Another
09-28 Caijing

The financial crisis taught crucial lessons about the dangers of bubbles, loose regulation and debt. It's a pity we didn't learn.

Lehman Brothers collapsed one year ago. The U.S. government refused a bailout and warned other financial institutions to be careful. The government felt other institutions had already severed their dealings with Lehman's investment network, and that a collapse could be walled in.

Little did the government realize that the whole financial system was one giant Lehman. The securities firm borrowed short-term money to punt in risky and illiquid assets. The debt market supported the financial sector, believing the government would bail out everyone in a crisis. But when Lehman was allowed to collapse, the market's faith was shaken.

The debt market refused to roll over financing for financial institutions. Of course, financial institutions couldn't unload assets to pay off debts. The whole financial system started teetering. Eventually, governments and central banks were forced to bail out everyone with direct lending or guarantees.

The Lehman collapse strategy backfired. Governments were forced to make implicit guarantees explicit. Ever since, no one has dared argue about letting a major financial institution go bankrupt. The debt market is supporting financial institutions again only because they are confident in government guarantees. The government lost in the Lehman saga, and Wall Street won.

So Lehman died in vain. Today, governments and central banks are celebrating their victorious stabilizing of the global financial system. To achieve the same, they could have saved Lehman with US$ 50 billion. Instead, they have spent trillions of dollars -- probably more than US$ 10 trillion when we get the final tally -- to reach the same objective. Meanwhile, a broader goal to reform the financial system has seen absolutely no progress.

First, let's look at the most basic objective of deleveraging the financial sector. Top executives on Wall Street talk about having cut leverage by half. That is actually due to an expanding equity capital base rather than shrinking assets. According to the Federal Reserve, total debt for the financial sector was US$ 16.5 trillion in the second quarter 2009 -- about the same as the US$ 16.6 trillion reported one year earlier. After the Lehman collapse, financial sector leverage increased due to Fed support. It has come down as the Fed pulled back some support, creating the perception of deleveraging. The basic conclusion is that financial sector debt is the same as it was a year ago, and the reduction in leverage is due to equity base expansion, partly due to government funding.

Second, financial institutions are operating as before. Institutions led in reporting profit gains in the first half 2009 during a period of global economic contraction. When corporate earnings expand in a shrinking economy, redistribution plays a role. Most of these strong earnings came from trading income, which is really all about getting in and out of financial markets at the right time. With assets backed up by US$ 16.5 trillion in debt, a 1 percent asset appreciation would lead to US$ 16.5 billion in profits. Considering how much financial markets rose in the first half, strong profits were easy to imagine.

Trading gains are a form of income redistribution. In the best scenario, smart traders buy assets ahead of others because they see a stronger economy ahead. Such redistribution comes from giving a bigger share of the future growth to those who are willing to take risk ahead of others. Past experience, however, demonstrates that most trading profits involve redistributions from many to a few in zero-sum bubbles. The trick is to get the credulous masses to join the bubble game at high prices. When the bubble bursts, even though asset prices may be the same as they were at the beginning, most people lose money to the few. What's occurring now is another bubble that is again redistributing income from the masses to the few.

Third, financial supervision has not changed. After the Lehman crash, most governments were talking about strengthening financial regulations and regulatory agencies, and possibly establishing an international regulatory body. The developments in the past year have actually made financial supervision worse. To support financial institutions, the U.S. government suspended mark-to-market accounting rules for assets on the books of financial institutions, which has allowed them to report profits.

Revamping the financial system has been reduced to political moves over regulating banker salaries. If this could be done, incentives for financial institutions to manufacture bubbles would be removed. But it can't be done. Financial professionals can be based anywhere in the world, and there will always be some countries willing to host them. Because of such competitive concerns, a global consensus on regulating pay for financial professionals is unlikely.

I think the ultimate objective for financial reforms is to make leverage transparent. There are many reasons that a bubble forms. Debt leverage, however, is always at the center of a property bubble -- the most damaging kind. Leverage within a financial system's assets-to-equity capital ratio is a driving force for an asset bubble. Complex accounting rules and varying treatment of different financial institutions make it difficult to measure leverage. The international standard for a bank's capital is 8 percent, which allows 12 times leverage. How off-balance sheet assets are treated can make a huge difference. A lot of big banks had 30 times leverage at the beginning of the crisis due to off-balance assets.

Other institutions such as finance companies are harder to regulate. Some industrial companies such as General Electric and General Motors took advantage of loopholes and created finance companies that are essentially banks. Hedge funds, mutual funds, private equity firms, etc., are even more lightly regulated. When they purchase securitized debt securities and engage in lending, they are like banks.

One interesting phenomenon is how money market funds wreaked havoc after Lehman crashed. These funds are supposed to be ultra safe for buying triple-A, short-term, liquid debt instruments. The problem was their demand for liquidity. Self-manufactured liquidity provided a false sense of security despite the risks of underlying securities, such as short-term paper issued by investment banks. When that false sense of security was jolted by the Lehman collapse, all rushed to exit at the same time. Without government support, they wouldn't have been able to get their money back.

The problem with financial regulation is not the banking system per se, but the shadow banking system. It provides leverage with much less capital than the banking system. When leverage in the economy is rising, asset prices rise, too. Rising asset prices boost collateral value and, hence, more borrowing. A surge in earnings among financial institutions usually accompanies such a spiral of rising leverage and rising asset prices.

It is extremely difficult for an established regulatory regime to stop such a spiral. Usually new financial institutions or products come on the scene, and then a new leverage game begins. It would be impossible for an existing regime to be comprehensive enough to anticipate future institutions and products. Governments may need to install principle-based, not just rule-based, regulatory agencies that could take action to control new financial creations.

The U.S. government is proposing a consumer protection agency for financial products. Such an agency could at least respond to new financial products sold to consumers and, therefore, could be an effective mechanism for stopping some future bubbles. The proposal has met vehement opposition from the financial industry. It may not get through.

What can we speak for after spending trillions of dollars? Not much. Few major players went to jail. The U.S. government sent many more to prison in the 1980s after the junk bond bubble burst. This bubble is 10 times bigger. Yet, apart from the most obvious criminals such as Bernie Madoff and Allen Stanford, who ran multibillion-dollar Ponzi schemes, none of the big shots have landed behind bars. Indeed, a lot of the big shots who brought down the world are still out there running things. The lesson from the Lehman collapse seems to be, "Take whatever you can and, when it crashes, you get to keep it." How governments and central banks have dealt with this bubble will encourage more people to join bubble making in the future.

Since governments have failed to take advantage of the crisis and build a better financial system, it will become very difficult to push it forward now. The sense of urgency is gone. One may argue that, since markets are stable now, there is no need for radical reforms. This is exactly the wrong conclusion. Trillions of dollars have been spent to buy today's stability. If the money isn't spent in vain, serious reforms should take place to decrease the possibility of a catastrophe like this in the future.

The big change that happened is a rapid increase in the U.S. household savings rate. It happened much more quickly than I expected and has the potential to change the global economy. The economic explanation is negative wealth effect. U.S. household net wealth declined 20 percent, or nearly 100 percent of GDP. The rule of the thumb is that it would lead to a 5 percent reduction in spending. The U.S. household savings rate has increased more than that -- and continues to rise. It could rise above 10 percent next year. Because of rising savings, the U.S. trade deficit has already halved from the peak. It could halve again next year. This is why I have turned positive on the dollar.

Financial markets are still maximum bearish on the dollar. Liquidity is being channeled out of dollar into all other assets. This is why there is such a high correlation between the dollar and other assets. I think this is the most crowded trade in the world. When the dollar reverses, the short squeeze could cause a global crisis.

Because no meaningful financial reforms have occurred, bubble-making rapidly came back in fashion. The drivers are faith in an ever-depreciating dollar and, later, inflation. Stocks, commodities, and even property values in some cities have skyrocketed this year. It is happening amid a synchronous global recession.

Of course, bulls would argue the market recovery is forecasting a strong global economy ahead. I seriously doubt it. With savings and unemployment rising, the OECD bloc is unlikely to stage a strong recovery from the recession. This view is not the market's consensus, which assumes all stimuli will lead to a strong and sustained recovery. As I have argued before, supply and demand become misaligned during a big bubble. When it bursts, the economy must restructure supply and demand before the economy can be fully employed. Government stimulus can't solve the problem. Realignment will take time.

Because policymakers mistakenly think stimulus spending can bring back growth, they are pushing too hard. The eventual consequences are inflation and bubbles along the way. These bubbles will be short-lived. The current boom market is a good example. At the beginning of the year, I predicted such a bubble from March to September. I still hold to this belief. China's stock market peaked in August and the U.S. market is peaking in September. The reason for the shortness of the bubble is its limited impact on real demand.

How long a bubble lasts depends on the size of its multiplier effect on the economy. A large multiplier effect leads to an economic boom that boosts asset returns. Market watchers can make a plausible case that high asset prices reflect a revaluation rather than a bubble. Strong fundamentals and rising asset prices could sustain each other for a period. The dotcom bubble began in 1996 and lasted five years. The global property bubble began in 2002 and lasted five years, too.

A technology bubble can be extended by cutting costs and boosting profits. A property bubble stimulates demand in many parts of demand and can boost corporate earnings, benefiting financial institutions, retailers, construction companies and material suppliers. This large multiplier effect is why a property bubble usually lasts many years.

Only a multiplier effect from the current bubble is stopping financial institutions from going under. However, weighed down by trillions of dollars in non-performing assets, they cannot lend with abandon again, which makes it impossible to revive property bubbles. Besides, American households won't join the "borrow-and-spend" game again. Essentially, the main short-term impact of the current bubble is preventing the financial system from collapsing. It won't lead to substantial demand creation.

Many investors today think a bubble is inevitable and, when it bursts, another can be created quickly to keep on going with life as usual. What has occurred over the past six months seems to validate this viewpoint. History, however, is not kind to this view. Serial bubble making leads to a bigger economic crisis later. What occurred in the United States in the 1930s and Japan over the past two decades are good examples in that regard. If a new bubble were always available for bailouts, we'd have the ultimate free lunch. But there is no free lunch.

Our serial bubble making began 10 years ago with the Asian Financial Crisis. It led to loose monetary policy in developed economies, especially in the United States, and undervalued exchange rates in developing economies. The inflationary force from this loose monetary policy was kept down by excess capacity or capacity creation in developing economies. The environment for tolerating such a loose monetary environment ends when inflation surges in emerging economies first and developed economies second.

When inflation becomes a political problem and policymakers are forced to respond, money supplies will be cut. After that, no more bubbles.

2009-09-19T15:21:00.001+08:00

I watched Andy Xie being interviewed this morning on CCTV and dug out this recent article.

Andy Xie: What We Can Learn as Japan's Economy Sinks
09-16

Japan hasn't sustained growth bounces for decades, nor will it under the DPJ government. Therein lie lessons for other economies.

(Caijing Magazine) Japan has had a political earthquake. The Liberal Democratic Party (LDP) that ruled Japan since the end of the World War II lost most of its seats in the latest election, while the Democratic Party of Japan (DPJ) won 308 of 480 lower house seats, complementing its majority in the upper house.

Now, DPJ is in a strong position to undertake structural reforms. Indeed, a big political change brings hope in any country that's stagnated for as long as Japan. However, DPJ is unlikely to turn around Japan's economy anytime soon. LDP, in the name of Keynesian stimulus, spent all its money over the past decade on wasteful investments, leaving DPJ with no resources for reform. I'm afraid DPJ has an impossible situation on its hands.

Anyone who doesn't believe in the harm of a financial bubble but does believe in Keynesian stimulus magic should visit Japan. A likely dip for the Anglo-Saxon economies next year will underscore these truths. The same goes for anyone who thinks China's latest real estate bubble, asset borrowing and shadow banking system are worthwhile substitutes for real economic growth.

The world including China can learn a lot by looking at what's happened to Japan, and what's in store for DPJ. Since Japan's stock market bubble burst in 1989 and the land market popped in 1992, the LDP government has run up debt equal to nearly 200 percent GDP in hopes of reviving the economy. And its economy has stagnated.

The burst of the global credit bubble in 2008 brought down Japan's export machine. That was its only hope. Now, of all OECD economies, Japan's looks most like a depression. Its nominal GDP declined 8 percent in the first quarter 2009 from the year before. Although its economy rebounded a bit in the second quarter, nominal GDP for 2009 is still expected to decline substantially and will likely be lower than in 1993.

Many analysts blame Japan's problems on corporate inefficiency. This is partly true. Japan has had a hyper-competitive export sector. Domestic, demand-oriented industries are inefficient due to labor market practices. More importantly, sectors that became massively levered during the bubble years have been walking like zombies for two decades, weighing down the economy's overall efficiency. Japan's inefficiencies are largely a consequence of its decision to prop these industries.

U.S. return on asset (ROA) was twice as high as that in Japan. But, in hindsight, higher ROA in the United States was mostly a bubble phenomenon. Much of U.S. corporate profitability was due to financial engineering. In one aspect, the export performance of Japan's corporate sector has done very well -- much better than its U.S. counterpart. Japan's exports doubled in yen terms between 1993 and 2008, and the sector's share of GDP nearly doubled to 16 percent from 9 percent, even though the yen remained strong during the period. The performance of Japan's export sector shows its inefficiencies elsewhere were largely due to shortcomings in the system.

Japan's stagnation has been linked to government handling of debt overhang in the corporate sector -- mainly in the real estate, construction, and retail sectors, and left over from the bubble era. In the 1980s, especially after the Plaza Accord, Japan's corporate sector accumulated a massive amount of debt for financial speculation. Total corporate debt more than doubled to about 900 trillion yen, or 200 percent of GDP, from 1984-'92. After land and stock prices collapsed, the net value of the corporate sector's financial assets switched from about 30 percent of GDP to a minus 50 percent of GDP. If the change in land holding value is included, the corporate sector's net worth may have fallen by 200 percent of GDP. As corporate profits are about 10 percent of GDP in a developed economy, Japan's corporate sector would need two decades to earn its way back.

The Japanese government did choose to let the corporate sector earn its way back, first by preventing bankruptcies and second by stimulating demand. To achieve the first goal, the government kept interest rates near zero and Japanese banks did not pursue mark-to-market accounting in assessing borrower solvency. With a big chunk of the corporate sector zombie-like, the economy, of course, was always facing downward pressure. The government had to run large fiscal deficits to prop up the economy. After the bubble, Japan's economic equilibrium stagnated and the fiscal deficit swelled.

This strategy was flawed in three aspects. First, even as the corporate sector earns profits to pay down debt, the government's debt is rising. At best, it is shifting corporate debt to government debt. In reality, government debt has been rising faster than private sector debt has been falling.

Second, economic efficiencies don't increase in such equilibrium. Existing resources in the zombie sector are essentially unproductive. Bankruptcies improve efficiency by shifting resources from failing to succeeding companies. When rules are changed to stop bankruptcies, efficiency is sacrificed. Worse, incremental resources are sucked up to pay fiscal deficits used to prop up zombie industries. Japan is thus trapped in equilibrium of low productivity.

Third, a long period of stagnation could worsen irreversible social change. A falling birth rate, for example, is one consequence that is wreaking havoc on the Japanese economy. Japan's post-bubble policy was to let property prices decline gradually. Hence, living costs also declined gradually. On the other hand, the economy stopped growing, which caused income expectations to quickly adjust downward. The combination of high property prices and low income growth rapidly pushed down Japan's birth rate. As a consequence, Japan's population is declining two decades after the bubble. The rising burden of caring for the old will lower Japan's ability to pay for anything else.

After two decades, Japan hasn't achieved its main policy goal by letting its corporate sector work down debt. Total, non-financial corporate debt is about the same as it was two decades ago. At 180 percent of GDP, Japan's corporate indebtedness remains one of the highest in the world. Japan's household sector has indeed de-levered. Its debt at 69 percent of GDP is one of the lowest among developed economies. But government debt has increased massively over the past two decades. Its current debt level at 194 percent is the highest in the world. Only super-low interest rates are hiding the debt burden.

DPJ has been handed a poisoned chalice. It won't have the resources needed for a serious restructuring of the economy. Its twin goals are to increase support for the household sector and shift decision-making power to politicians from bureaucrats. The government's debt burden makes it impossible for any meaningful increase in supporting the household sector. LDP wasted all the money. DPJ has no room to finance either new social programs or economic restructuring. To show progress, DPJ is likely to stage a high-profile confrontation with the bureaucracy – a step that may be good for politics but won't do much to improve the economy.

Total indebtedness of Japan's non-financial sector is 443 percent -- probably the highest in the world, and far higher than the 240 percent in the United States. A difference is that the United States owes a big chunk of its debt to foreigners, while all of Japan's is carried by its own citizens.

Most analysts think high government debt is bearable as long as a country has enough domestic savings to fund it – a situation Japan has enjoyed. But the future may be different. Japan's declining labor force is decreasing its export ability. At some point, it may begin to run trade and current account deficits. When that happens, Japan's interest rate may rise substantially, which would cause a fiscal crisis. Such a crisis may occur under the DPJ's rule. It could be blamed for a crisis that LDP had been building for two decades.

We can learn much from Japan's experience. The global economy -- mainly the Anglo-Saxon economy -- is facing the consequences of a massive credit bubble. The remedies most governments have embraced are to keep interest rates low and fiscal deficits high. These are the same policies Japan pursued after its bubble burst nearly two decades ago. How today's bubble economies are treating bankruptcies and bad debt is shockingly similar to what was seen in Japan. The United States and others have suspended mark-to-market accounting rules to let banks stay afloat despite large amounts of toxic assets. It's the same "let them earn their way back" strategy that Japan pursued. The strategy fails to work because it keeps an economy weak, limiting the earning power of financial institutions.

As the global economy is again showing signs of growth in the third quarter, most governments are celebrating the effectiveness of their policies. Yet Japan's experience forces us to pause: Its economy experienced many such growth bounces over the past two decades, but was unable to sustain any of them. The problem was Japan only used stimulus, not restructuring, to cope with the bursting of its bubble. After the demise of any big bubble, serious structural problems that hamper economic growth remain. Stimulus can only provide short-term support that makes structural reform possible. When policymakers celebrate the short-term impact of stimulus and forget structural reforms, economies slump again. I think the Anglo-Saxon economies will dip again next year.

China can learn a lot from Japan's experience as well. Its bubble formed when companies began focusing on financial investments rather than core business. In the 1980s, Japan's corporate sector tapped the corporate bond market and raised massive amounts of capital for asset purchases.

Recently, Chinese enterprises borrowed money and pumped it into asset markets. They essentially provided leverage for asset markets. When leverage was rising, asset inflation occurred, letting companies book profits that were many times greater than operating profits from core businesses. That gave them greater incentive to pursue asset appreciation rather than operating profitability. The corporate sector became a shadow banking system for financing asset speculation.

Thus, China's corporate sector is now behaving in a way similar to what was seen in Japan two decades ago. China's businesses increasingly focus on asset investment rather than core business. When an asset bubble boosts corporate profits, it seems benign at first. Nobody sees the harm. However, when businesses earn profits from the investments in each other rather than their corporate businesses, their operating profitability deteriorates because they don't invest in their core businesses anymore. Accounting profitability is just a bubble.

As I traveled across China recently, it was rare to hear about a business whose officials are enthusiastic about their core business. But everyone seems excited about financial activities. The lending boom in the first half of 2009 seems to have been channeled mostly into asset markets by the corporate sector.

In particular, property seems to have become a main profit source for most big businesses. China's corporate borrowing one way or another goes into the land market. And property development has become the most important source of profit for China's corporate sector. If a manufacturing business is buoyant, odds are it is profiting from property development. The banking sector reports high profitability due to direct or indirect loans for property development. Property development profit is actually from land appreciation. If property development profitability is measured according to land price at sale time, the development itself would not be profitable.

A bubble rises when there is excess money supply. Is the current, excessive monetary growth due to demand or supply? We can argue that point forever. When the former chairman of the U.S. Federal Reserve, Alan Greenspan, said a central bank couldn't stop a bubble, he meant money demand would rise regardless of interest rates. I disagree. If a central bank targets monetary growth in line with nominal GDP growth, a big bubble can't happen. Aside from central bank failure, then, the most important microeconomic element in a bubble is the shadow banking system.

Regulators limit what banks can do by imposing capital requirements. The international standard is 8 percent of total assets, but banks can use accounting tricks to minimize their requirements. But a big accounting loophole can lead to disaster. For example, the loose restrictions on off-balance holdings were major factors in the global credit bubble. Most regulators are now tightening accounting rules for capital requirements.

Shadow banking is a less noticed but more important factor in creating bubbles. Most analysts compare it to the hedge fund industry, which provided leverage for financial speculators with little capital. The shadow banking system is much more because industrial firms engaging in financial activities are more important. Entities such as GE Capital and GMAC provided massive leverage to asset markets with little capital. A shadow banking system is essential to a big bubble.

China's corporate sector increasingly looks like a shadow banking system. It raises funds from banks, through commercial bills or the corporate bond market, and then channels the funds into the land market. The resulting land inflation underwrites corporate profitability and improves their creditworthiness in the short term.

The same thing happened in Japan.

To control China's expanding real estate bubble, the country's regulators must limit monetary growth to nominal GDP growth. Faster monetary growth accommodates and supports the bubble. To understand consequences of ignoring this reality, we need only look at Japan today.

An asset bubble is forming in Spore right now - property. I doubt the PAP gahment has as much foresight as Xie.
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The real S'pore Pledge under the PAP

2009-08-06T21:33:00.000+08:00

The truth always hurts...

We, the citizens of Singapore
pledge ourselves to serve the foreign people,
regardless of their backwardness, race, language or religion,
to build a foreigner-dominated society,
leveraging on 66.6% Singaporean stupidity,
so as to achieve happiness, prosperity and
progress for the famiLee, their cronies and their foreign fake talents.

However to feel less bitter, just lap up all the 155th media and newspapers for this weekend hahaha.
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When people enter the market in droves, it is usually peaking

2009-06-19T23:36:00.000+08:00

From Andy Xie, and why he expects a second dip in world economy in 2010...

(warning: long read lol)

Andy Xie: Tight Spot for Fed, Blind Spot for Investors

Market chatter over green shoots and rising prices has fueled a bear market rally that won't last, despite policymaker 'noise.'

A combination of growth optimism and inflation fear has catapulted asset markets in the past few weeks. These two concerns should drive markets in different directions: Inflation fear, for example, should limit room for stimulus and prompt stock markets to retreat. But the investment camps expressing these opposite concerns go separate ways, each pumping up what seems believable. As a result, stock and commodity markets are mirroring the behavior seen during the giddy days of 2007.

Regardless of what investors or speculators say to justify their punting, the real driving force is the return of animal spirit. After living in fear for more than a year, they just couldn't sit around any longer. So they decided to inch back. The resulting market appreciation emboldened more people. All sorts of theories began to surface to justify the market trend. Now that the rising trend has been around for three months globally and seven months in China, even the most timid have been unable to resist. They're jumping in, in droves.

When the least informed and most credulous get into the market, the market is usually peaking. A rising economy and growing income produces more funds to fuel the market. But the global economy is now stuck with years of slow growth. Strong economic growth won't follow the current stock market surge. This is a bear market rally. People who jump in now will lose big.

Over the past three weeks, the dollar dove while oil and treasury yields surged. These price movements exhibited typical symptoms of inflation fear, which is complicating policymaking around the world. The United States, in particular, could be bottled in. The federal government's fiscal stimulus and liquidity pumping by the Federal Reserve are twin instruments for propping up the bursting U.S. economy. The fiscal deficit could top US$ 2 trillion (15 percent of GDP) in 2009. That would increase by one-third the total stock of federal government debt outstanding. Such a massive amount of federal debt paper needs a buoyant Treasury to absorb. If the Treasury market is a bear market, absorption becomes a huge problem.

U.S. Treasury Secretary Timothy Geithner recently visited China to, among other things, persuade China to buy more Treasuries. According to a Brookings Institution estimate, China holds US$ 1.7 trillion in U.S. Treasuries and GSE paper (about 15 percent of the total stock). If China stops buying, it could plunge the Treasury market into deep bear territory. If China does not buy, the Treasury market will get worse. But China can't prop up the market by buying.

In the past few years, purchases by central banks around the world have dominated demand for Treasuries. Central banks have been buying because their currencies are linked to the dollar. Hence, such demand is not price sensitive. The demand level is proportionate to the U.S. current account deficit, which determines the amount of dollars held by foreign central banks. The bigger the U.S. current account deficit, the greater the demand for Treasuries. This is why the Treasury yield was trending down during the bulging U.S. current account deficit period 2001-'08.

This dynamic in the Treasury market was changed by the bursting of the U.S. credit-cum-property bubble. It is decreasing U.S. consumption and the U.S. current account deficit. The 2009 deficit is probably under US$ 400 billion, halved from the peak. That means non-U.S. central banks have much less money to buy, while the supply is surging. It means central banks no longer determine Treasury pricing. American institutions and families are now marginal buyers. This switch in who determines price is shifting Treasury yields significantly higher.

The 10-year Treasury yield historically averages about 6 percent, with about 3.5 percent inflation and a real yield of 2.5 percent. This reflects the preferences of marginal buyers in the United States. Foreign central banks have pushed down the yield requirement substantially over the past seven years. If marginal buyers become American again, as I believe, Treasury yields will surge even higher from current levels. Future inflation will average more than 3.5 percent, I believe. Some policy thinkers in the United States believe the Fed should target inflation between 5 and 6 percent. The Treasury yield could rise to between 7.5 and 8.5 percent from the current 3.5 percent.

A massive supply of Treasuries would only worsen the market. The Federal Reserve has been trying to prop the Treasury market by buying more than US$ 300 billion – a purchase that's backfired. Treasury investors are terrified by the inflation implication of the Fed action. It is equivalent to monetizing national debt. As the federal deficit will remain sky-high for years to come, the monetization could become much larger, which might lead to hyperinflation. This is why the Treasury yield has surged in the past three weeks.

One possible response is to finance the U.S. budget deficit with short-term financing. As the Fed controls short-term interest rates, such a strategy could avoid the pain of high interest rates. But this strategy could crash the dollar.

The dollar index-DXY has fallen 10 percent from the March level, even though the U.S. trade deficit has declined substantially. It reflects the market's expectations that the Fed's monetary policy will lead to inflation and a dollar crash. The cause of dollar weakness is the outflow of U.S. money, in my view. It is the primary cause of a surge in emerging markets and commodities. Most U.S. analysts think the dollar's weakness is due to foreigners buying less of it. This is probably incorrect.

The dollar's weakness can limit Fed policy options. It heightens inflation risks; a weak dollar imports inflation and, more importantly, increases inflation expectations, which can be self-fulfilling in today's environment. The Fed has released and committed US$ 12 trillion (83 percent of GDP) for bailing out the financial system. This massive overhang in money supply could cause hyperinflation if not withdrawn in time. So far, the market is still giving the Fed the benefit of the doubt, believing it will indeed withdraw the money. Dollar weakness reflects the market's wavering confidence in the Fed. If the wavering continues, it could lead to a dollar collapse and make inflation self-fulfilling.

The Fed may have to change its stance, even using token gestures, to assure the market it won't release too much money. For example, signaling rate hikes would soothe the market. But the economy is still in terrible shape; unemployment may surpass 10 percent this year. Any suggestion of hiking interest rates would dampen growth expectations. The Fed is caught between a rock and a hard place.

Oil prices have doubled since a March low, even though global demand continues to decline. The driving forces again are expectations of inflation and a weaker dollar. As U.S.-based funds flee, some of the money has flowed into oil ETFs. This initially impacted futures prices, creating a huge gap between cash and futures prices. The gap increased inventory demand as investors tried to profit from the gap. Rising inventory demand caused spot prices to reach parity with futures prices. Rising oil prices, though, lead to inflation and depress growth. It is a stagflation factor. If the Fed doesn't rein in weak dollar expectations, stagflation will arrive sooner than I previously expected.

Stagflation in the 1970s spawned the development of rational expectation theory in economics. Monetary stimulus works by fooling people into believing in money's value while the central bank cheapens it. This perception gap stimulates the economy by fooling people into demanding more money than they should. Rational expectation theory clarified the underpinning for Keynesian liquidity theory. However, as they say, people can't be fooled three times. Central banks that tried to use stimuli to solve structural problems in the '70s saw their stimuli didn't work. People saw through what they tried again and again, and began behaving accordingly, which translated monetary stimulus straight into inflation without stimulating economic growth.

Rational expectation theory discredited Keynesian theory and laid the foundation for Paul Volker's tough love policy, which jagged up interest rates and triggered a recession. The recession convinced people that the central bank was serious about cooling inflation, so they adjusted their behavior accordingly. Inflation expectations fell sharply afterward. The credibility that Volker brought to the Fed was exploited by Alan Greenspan, who kept pumping money to solve economic problems. As I have argued before, special factors made Greenspan's approach effective at the same. Its byproduct was asset bubbles. As the environment has changed, rational expectation theory will again exert force on the impact of monetary policy.

Movements in Treasury yields, oil and the dollar underscore the return of rational expectation. Policymakers have to take actions to dent the speed of its returning. Otherwise, the stimulus will lose traction everywhere, and the global economy will slump. I expect at least gestures from U.S. policymakers to assuage market concerns about rampant fiscal and monetary expansion. The noise would be to emphasize the "temporary" nature of the stimulus. The market will probably be fooled again. It will fully wake up only in 2010. The United States has no way out but to print money. As a rational country, it will do what it has to, regardless of its rhetoric. This is why I expect a second dip for the global economy in 2010.

While inflation expectations are causing some in the investor community to act, the rest are betting on strong economic recovery. Massive amounts of money have flowed into emerging markets, making it look like a runaway train. Many bystanders can't take it any longer and are jumping in. Markets, after trending up for three months, are gapping up. Unfortunately for the last-minute bulls, current market movements suggest peaking. If you buy now, you have a 90 percent chance of losing money when you try to get out.

Contrary to all the market noise, there are no signs of a significant economic recovery. So-called green shoots in the global economy are mostly due to inventory cycles. Stimuli might juice up growth a bit in the second half 2009. Nothing, however, suggests a lasting recovery. Markets are trading on imagination.

The return of funds flowing into property is even more ridiculous. A property burst usually lasts for more than three years. The current burst is larger than usual. The property market is likely to remain in bear territory for much longer. The bulls are talking about inflation as the bullish factor for property. Unfortunately, property prices have risen already and need to come down even as CPI rises. Then the two can reach parity.

While rational expectation is returning to part of the investment community, most investors are still trapped by institutional weakness, which makes them behave irrationally. The Greenspan era has nurtured a vast financial sector. All the people in this business need something to do. Since they invest other people's money, they are biased toward bullish sentiment. Otherwise, if they say it's all bad, their investors will take back the money, and they will lose their jobs. Governments know that, and create noise to give them excuses to be bullish.

This institutional weakness has been a catastrophe for people who trust investment professionals. In the past two decades, equity investors have done worse than those who held U.S. market bonds, and who lost big in Japan and emerging markets in general. It is astonishing that a value-destroying industry has lasted so long. The greater irony is that salaries in this industry have been two to three times above what's paid in other sector. The key to its survival is volatility. As markets collapse and surge, possibilities for getting rich quickly are created. Unfortunately, most people don't get out when markets are high, as they are now. They only take a ride.

Indeed, most people who invest in the stock market get poorer. Look at Japan, Korea and Taiwan: Even though their per capita incomes have risen enormously over the past three decades, investors in these stock markets lost money. Economic growth is a necessary but not sufficient condition for investors to make money in the stock market. Most countries, unfortunately, don't possess the conditions for stock markets to reflect economic growth. The key is good corporate governance. It requires rule of law and good morality. Neither is apparent in most markets.

It's a widely accepted notion that long term stock investors make money. Actually, this is not true. Most companies don't last for more than 20 years. How can long term investment make money for you? The bankruptcy of General Motors should remind people that this notion is ridiculous. General Motors was a symbol of the U.S. economy, a century-old company that succumbed to bankruptcy. In the long run, all companies go bankrupt.

Property on the surface is better than the stock market. It is something physical that investors can touch. However, it doesn't hold much value in the long run either. Look at Japan: Its property prices are lower than they were three decades ago. U.S. property prices will likely bottom below levels of 20 years ago, after adjusting for inflation.

China's property market holds even less value in the long run. Chinese properties are sitting on land leased for 70 years for residential properties and 50 years for commercial properties. Their residual values are zero at the end. The hope for perpetual appreciation is a joke. If you accept zero value at the end of 70 years, the property value should only be the use value during those 70 years. The use value is fully reflected in rental yield. The current rental yield is half the mortgage interest rate. How could properties not be overvalued? The bulls want buyers to ignore rental yield and focus on appreciation. But appreciation in the long run isn't possible. Depreciation is, as the end value is zero.

The world is setting up for a big crash, again. Since the last bubble burst, governments around the world have not been focusing on reforms. They are trying to pump a new bubble to solve existing problems. Before inflation appears, this strategy works. As inflation expectation rises, its effectiveness is threatened. When inflation appears in 2010, another crash will come.

If you are a speculator and confident you can get out before it crashes, this is your market. If you think this market is for real, you are making a mistake and should get out as soon as possible. If you lost money during your last three market entries, stay away from this one – as far as you can.

oh shit! I betta sell my one lot in Capitaland soon... -_-"

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Stubborn minded people are dangerous

2009-05-27T11:58:00.003+08:00

I notice something common between LHL and this woman. They like to start their message using straw man logic.

May 27, 2009
Religion still has its place
By Jeremy Au Yong, Political Correspondent

(Left, daughter of self-claimed Feminist Mentor) Nominated MP Thio Li-ann. -- ST FILE PHOTO

RELIGION and politics should not mix, but that does not mean religion has no place in public life.

Nominated MP Thio Li-ann argued at length in Parliament on Tuesday that secularism, as practised in Singapore, did not exclude religion.

Referring to Deputy Prime Minister Wong Kan Seng's recent reiteration that religion and politics must not be mixed, she said that while this was sound, 'there are difficulties of definition as no bright line demarcates 'religion' from 'politics'.

She added: ' 'Secularism' is a protean, chameleon-like term. What it means depends on the context and who is using it; it can be a virtue or a vice. It is timely to eschew glibness and examine the Singapore model of secularism with precision.'

In the first place no one is excluding religion, or saying religion has no place in public life.

2ndly, she is trying hard to link or blur public life with politics. Bcos if religion has a place in public life, then it should in politics too, since both are legitimate going by her argument.

But she is mistaken. For e.g. it may be my belief that eating sharks fin is a terrible thing and sharks fin eaters are stupid and irresponsible fuckers. This is private and this belief remains within me. My actions in public is also personal, i do not eat sharks fin. I do not vocalise my belief in public or go around getting other people to share this belief. Maybe there are some other people who also believe in the same thing. And the public calls us Sharkists or other stupid names. But that is about it. We don't start to go around invading Chinese restaurants and take over their menu decision.

So that is the difference between public life and politics. Politics affect everyone, not just yourself.

By way of elaboration, she pointed out that during the parliamentary debate a few years ago on whether or not to have casinos in Singapore, many MPs prefaced their speeches by stating their faiths.

'Everyone has values, whether shaped by religious or secular ideologies; all may participate in public discourse to forge an ethical social consensus. This is democratic and cherishes viewpoint diversity,' she said. 'While religion is personal, it is not exclusively private and has a social dimension which is not to be trivialised.'

Prefacing speeches by stating one's faith is perfectly ok to me. But to base their political decisions on faith or values grounded in faith is another thing. The latter will no longer be secular liao. Besides, the casino debate, if i recall correctly, ended up being one of weighing economic benefits against social ills.

Also, this is more of a case where we have PAP MPs who are simply going along with their political boss, appease their constituents or members of certain faiths. It is a no-brainer.

Rather naive for an NMP like Thio not to understand this but instead tries to subtlely reinterpret the facts.

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Andy Xie makes sense

2009-05-15T20:48:00.000+08:00

Who is Andy Xie? hehehe

If China loses faith the dollar will collapse

By Andy Xie

Published: May 4 2009 19:28

Emerging economies such as China and Russia are calling for alternatives to the dollar as a reserve currency. The trigger is the Federal Reserve’s liberal policy of expanding the money supply to prop up America’s banking system and its over-indebted households. Because the magnitude of the bad assets within the banking system and the excess leverage of its households are potentially huge, the Fed may be forced into printing dollars massively, which would eventually trigger high inflation or even hyper-inflation and cause great damage to countries that hold dollar assets in their foreign exchange reserves.

The chatter over alternatives to the dollar mainly reflects the unhappiness with US monetary policy among the emerging economies that have amassed nearly $10,000bn (€7,552bn, £6,721bn) in foreign exchange reserves, mostly in dollar assets. Any other country with America’s problems would need the Paris Club of creditor nations to negotiate with its lenders on its monetary and fiscal policies to protect their interests. But the US situation is unique: it borrows in its own currency, and the dollar is the world’s dominant reserve currency. The US can disregard its creditors’ concerns for the time being without worrying about a dollar collapse.

The faith of the Chinese in America’s power and responsibility, and the petrodollar holdings of the gulf countries that depend on US military protection, are the twin props for the dollar’s global status. Ethnic Chinese, including those in the mainland, Hong Kong, Taiwan and overseas, may account for half of the foreign holdings of dollar assets. You have to check the asset allocations of wealthy ethnic Chinese to understand the dollar’s unique status.

The Chinese love affair with the dollar began in the 1940s when it held its value while the Chinese currency depreciated massively. Memory is long when it comes to currency credibility. The Chinese renminbi remains a closed currency and is not yet a credible vehicle for wealth storage. Also, wealthy ethnic Chinese tend to send their children to the US for education. They treat the dollar as their primary currency.

The US could repair its balance sheet through asset sales and fiscal transfers instead of just printing money. The $2,000bn fiscal deficit, for example, could have gone to over-indebted households for paying down debts rather than on dubious spending to prop up the economy. When property and stock prices decline sufficiently, foreign demand, especially from ethnic Chinese, will come in volume. The country’s vast and unexplored natural resource holdings could be auctioned off. Americans may view these ideas as unthinkable. It is hard to imagine that a superpower needs to sell the family silver to stay solvent. Hence, printing money seems a less painful way out.

The global environment is extremely negative for savers. The prices of property and shares, though having declined substantially, are not good value yet and may decline further. Interest rates are near zero. The Fed is printing money, which will eventually inflate away the value of dollar holdings. Other currencies are not safe havens either. As the Fed expands the money supply, it puts pressure on other currencies to appreciate. This will force other central banks to expand their own money supplies to depress their currencies. Hence, major currencies may take turns devaluing. The end result is inflation and negative real interest rates everywhere. Central banks are punishing savers to redeem the sins of debtors and speculators. Unfortunately, ethnic Chinese are the biggest savers.

Diluting Chinese savings to bail out America’s failing banks and bankrupt households, though highly beneficial to the US national interest in the short term, will destroy the dollar’s global status. Ethnic Chinese demand for the dollar has been waning already. China’s bulging foreign exchange reserves reflect the lack of private demand for dollars, which was driven by the renminbi’s appreciation. Though this was speculative in nature, it shows the renminbi’s rising credibility and its potential to replace the dollar as the main vehicle of wealth storage for ethnic Chinese.

America’s policy is pushing China towards developing an alternative financial system. For the past two decades China’s entry into the global economy rested on making cheap labour available to multi-nationals and pegging the renminbi to the dollar. The dollar peg allowed China to leverage the US financial system for its international needs, while domestic finance remained state-controlled to redistribute prosperity from the coast to interior provinces. This dual approach has worked remarkably well. China could have its cake and eat it too. Of course, the global credit bubble was what allowed China’s dual approach to be effective; its inefficiency was masked by bubble-generated global demand.

China is aware that it must become independent from the dollar at some point. Its recent decision to turn Shanghai into a financial centre by 2020 reflects China’s anxiety over relying on the dollar system. The year 2020 seems remote, and the US will not pay attention to something so distant. However, if global stagflation takes hold, as I expect it to, it will force China to accelerate its reforms to float its currency and create a single, independent and market-based financial system. When that happens, the dollar will collapse.

The writer is an independent economist based in Shanghai and former chief economist for Asia Pacific at Morgan Stanley

The name of the Rose

2009-04-29T12:34:00.001+08:00

The AWARE saga is coming to a head. It seems to me the new Exco wishes to be martyrs. If the gahmen intervenes, it will play into their hands and their religious backers behind them. To these religious fanatics, if you are not with them, you must be against them.

Their tactic is to stop AWARE, and if they fail they will taint AWARE, tar it, bankrupt it, and drag it down with them.

It is like a napkin. Once a napkin is soiled it can never be the same as before no matter how you try to clean it. In this sense AWARE has been effectively neutered, and that is their purpose.

Whatever the outcome of this saga, the minority fundamentalists have won and society and moderates at large will be the losers.

And so far i see the PAP leaders once again lacking the political will to do the right thing...although I hope i will be proven wrong.

Suddenly I am reminded of this movie watched many years ago.

It is set during the times of The Inquisition, a dark period in Europe of religious fanaticism and oppression.

Mysterious deaths at a mountain monastery is fanning fear and hysteria. The monks attribute demonology as the explanation and proclaim the world is in its last days before the second coming of Christ. A Francescan monk, William of Baskerville (Sean Connery), does not think so and through logic and reasoning proceeds to solve the mystery.

In a pivotal moment, William discovers the real evil responsible - an old monk, Jorge de Burgos, who has been poisoning other monks for reading a forbidden book, a book of comedy and laughter...

Jorge de Burgos: Laughter is a devilish whim which deforms, the lineaments of the face and makes men look like monkeys.

William of Baskerville: Monkeys do not laugh. Laughter is particular to men.

Jorge de Burgos: As is sin. Christ never laughed.

William of Baskerville: Can we be so sure?

Jorge de Burgos: There is nothing in the Scriptures to say that he did.

William of Baskerville: And there's nothing in the Scriptures to say that he did not...

The not-so-hidden message

2009-04-04T10:13:00.000+08:00

What do you think is the real message behind this piece of news?

April 4, 2009
Politics? Not for me

Though Mr Terence Foo studied political science, he is not interested in joining politics as he is 'happy with the way things are'. -- PHOTO

AS A young undergraduate-to-be, Mr Terence Foo chose to study at the University of Michigan as it 'has the best political science programme'.

He later decided, however, to do it as an elective and majored in economics because he is, as he puts it wryly, a 'typical Singaporean, afraid of not being able to find a job with a political science degree'.

Now 38, it is this same pragmatism that leads him to firmly cross out entering politics as a possibility.

'I've never been interested, it's never crossed my mind,' he says categorically.

'A lot of it has to do with contentment. I'm happy with the way things are, there's no reason to be an activist.

'I've benefited from the system, I don't feel that there is anything worth changing.'

Any competitive business that wish to keep improving, they find out what their customers think about them. In fact, they pay more attention to what their critics have to say. Becos there is no point listening to those who only sing your praises. You cannot improve this way, instead you will end up stagnating... sinking into complacency.

So if PAP is keen to improve and recruit someone like this Terence into politics, then it has obviously got its priorities all wrong.

Of cos this may just be one of those propaganda-"credible news" that the State Times does regularly. As election is not far away, it is time to remind Sporeans: "Be contented. The system is at its best. There is nothing to change."

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Lessons from Europe

2009-03-28T13:33:00.005+08:00

Aided by Safety Nets, Europe Resists Stimulus Push
By NICHOLAS KULISH
Published: March 26, 2009

VIENENBURG, Germany — Last month Frank Koppe gathered together all 50 of his employees at Koppe-Apparatebau for coffee, cake and the kind of bad news that has lately become all too familiar. He told them the small company’s business, designing and manufacturing custom equipment for industrial plants, had been sliced nearly in half.

But rather than resorting to layoffs, Mr. Koppe asked half his employees to come in every other week. The government would make up roughly two-thirds of their lost wages out of a fund filled in good times through payroll deductions and company contributions.

The program — known as “Kurzarbeit,” which translates as “short work” — and others like it lie at the heart of a heated debate that has erupted on the eve of next week’s Group of 20 meeting of industrialized and developing nations and the European Union, creating a rift between the Obama administration and European governments. The United States is pressing for a coordinated package of stimulus plans by member countries to encourage economic growth, something that Prime Minister Mirek Topolanek of the Czech Republic, which holds the European Union presidency, has called “a way to hell.”

But virtually all European governments, led by budget-conscious Germany, are resisting the American pitch, saying the focus should be on stricter regulation of financial markets.

The Europeans say they have no need for further stimulus right now because their social safety nets, derided in good times by free market disciples as sclerotic impediments to growth, are automatically providing the spending programs that the United States Congress has to legislate.

Europe’s extensive job protections and unemployment benefits are “bad in the upswing, because firms don’t dare to hire people, because then they are glued to them,” said Hans-Werner Sinn, president of the Ifo Institute for Economic Research in Munich. “In the downswing, it’s good if the people are glued to the companies. They keep their jobs. They keep their income. They keep consuming.”

The German Federal Labor Office projects that it will spend some $2.85 billion this year for more than a quarter of a million people who end up on Kurzarbeit. In comparison, the agency doled out around $270 million last year, as the financial crisis first began to bite, and roughly $135 million in both 2006 and 2007.

That is a relatively small amount of money compared with the $787 billion stimulus package passed by Congress, but the Kurzarbeit program’s defenders in the German government say it is carefully calibrated to keep people on the payrolls, where shared burdens mean an efficient deployment of resources.

The big numbers at the top of stimulus bills — promises of future highways, for instance — are not the same as money going into consumers’ pockets right now, and from there into cash registers, economists here say.

“While the magnitude of stimulus has been much less in Europe’s case, the stimulus has been getting much better traction in Europe than in the U.S. so far,” said Julian Callow, chief Europe economist at Barclays Capital in London. He cited a German incentive program that gave consumers around $3,400 to trade in old cars for new ones and that had led to 22 percent more auto registrations in February compared with the previous year.

“Europe can still do significantly more and needs to do it, but the needs for the U.S. have been much more pressing,” Mr. Callow said.

Germany already has generous unemployment benefits compared with the United States. And many German companies give workers the flexibility to save overtime hours, carrying over the pay for a rainy day. In the United States, despite scattered reports of unpaid furloughs and wage cuts, companies still rely heavily on layoffs to control labor costs.

As of July 1, Germany’s roughly 20 million pensioners are receiving an additional 2.4 percent in the former West Germany and 3.4 percent in the former East, the highest increases since 1994 and 1997, respectively.

Germany’s chancellor, Angela Merkel, believes the Americans have underestimated the economic impact of the country’s two stimulus packages, worth a total of about $110 billion. Indeed, in terms of immediate stimulus, according to calculations by the International Monetary Fund last month, Germany has committed to stimulus spending this year equal to 1.5 percent of the country’s gross domestic product, compared with 0.7 percent in France and 2 percent in the United States. According to a report from Bruegel, a research center in Brussels, while Germany churns out 19 percent of the European Union’s economic activity, it accounts for 37 percent of the group’s stimulus spending.

American critics, like Adam S. Posen, the deputy director of the Peterson Institute for International Economics in Washington, say that Germany needs to do more. “As a hugely export dependent economy, they have the most to gain from others’ fiscal efforts,” he said, “and the most at risk if the global trade contracts further — worse if they are accused of free-riding on leakage from others’ programs.”

Mr. Posen and others argue that while Germany may be doing more stimulus spending than others in Europe, it is counseling other European countries — many of which share the euro as their common currency — not to spend their way out of recession either, but to count on their safety nets to do much of the job.

“They’re the ones who basically browbeat other countries into not spending,” he said, “who give intellectual and political backbone to other countries’ conservative leanings not to stimulate.”

Without knowing it, Mr. Koppe’s 25 employees are playing their small part in keeping the German economy afloat. But nearly 70,000 employees of the automaker Daimler have been placed on short-hour status. On the bright side, it means they are able to play with their children, tend to their gardens or — with further government incentives — receive the kind of advanced training that will make them even more skilled when orders pick up again.

Harder times all but certainly lie ahead for Germany. Commerzbank said Monday that it expected the German economy to contract by a shocking 6 to 7 percent in 2009, roughly double earlier projections and the worst decline of the postwar era. Critics of the German government’s cautious approach to stimulus fear that because Germany is feeling the brunt of the worldwide recession last, its policymakers are underestimating its force.

Indeed, to travel between the United States and Germany is to find two countries experiencing the economic slowdown completely differently. The severity of the downturn does not appear to have sunk in yet in for Germans. There was no real estate bubble here, and few people have a substantial portion of their savings or retirement accounts invested in the stock market. The unemployment rate has risen more than a percentage point, to 8.5 percent in February from 7.1 percent last November. But, significantly, the latest figure is still lower than it was just a year ago.

“In contrast to America, our social systems are not on the decline right now,” Mrs. Merkel said Sunday night in a widely watched interview on a television talk show. “Pensions are not cut, unemployment insurance is not reduced. On the contrary, we can register stable and, in some sectors, also rising expenditures, and this makes me hope that our social market economy will enable us to cope with this complicated situation.”

Michael Hartmann, 49, a welder here at Koppe and one of the workers on shortened hours, said he and his wife were trying to save, buying cheaper groceries and driving less to save on gasoline, but doing nothing as severe as they would if he were laid off. “Of course I’m concerned about the reduced wages, but it’s better than getting fired,” Mr. Hartmann said.

In the meantime, he is learning a complicated welding technique at a nearby vocational school, which he hopes will make him more attractive to his current employer, or others looking for skilled workers. (NY Times link)

Social safety nets help cushion the wild market upheavals especially in an export-oriented economy like Spore's.
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Conservative hypocrisy

2009-03-20T22:25:00.000+08:00

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Life is easy if you’re a conservative. Even if conservatives fail completely while in power, they can turn around and say, "See — that proves our point. Government doesn’t work!"

- Paul Krugman

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The Biggest Market Failure in human history...

2009-03-04T09:16:00.001+08:00

no, is not the sub-prime crisis
no, is not de-regulation or over-regulation
no, is not the Fed's printing of fiat money
no, is got nothing to do with basic human greed

The biggest market failure the world has ever seen is Climate Change.

Simply put, it is the failure of current economic models to include and price externalities.

In the end the costs of inaction in dealing with global warming, will far far exceed the cost of dealing with global warming today.

And the world over, Spore included, governments & their policy makers are still drunk on the traditional economic model of inputs consumption. GDP numbers above everything else, totally ignoring sustainability. How stupid can they be.

Krugman ...

2009-03-02T10:24:00.000+08:00

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Revenge of the Glut
By Paul Krugman
Published: March 1, 2009

Remember the good old days, when we used to talk about the “subprime crisis” — and some even thought that this crisis could be “contained”? Oh, the nostalgia!

Today we know that subprime lending was only a small fraction of the problem. Even bad home loans in general were only part of what went wrong. We’re living in a world of troubled borrowers, ranging from shopping mall developers to European “miracle” economies. And new kinds of debt trouble just keep emerging.

How did this global debt crisis happen? Why is it so widespread? The answer, I’d suggest, can be found in a speech Ben Bernanke, the Federal Reserve chairman, gave four years ago. At the time, Mr. Bernanke was trying to be reassuring. But what he said then nonetheless foreshadowed the bust to come.

The speech, titled “The Global Saving Glut and the U.S. Current Account Deficit,” offered a novel explanation for the rapid rise of the U.S. trade deficit in the early 21st century. The causes, argued Mr. Bernanke, lay not in America but in Asia.

In the mid-1990s, he pointed out, the emerging economies of Asia had been major importers of capital, borrowing abroad to finance their development. But after the Asian financial crisis of 1997-98 (which seemed like a big deal at the time but looks trivial compared with what’s happening now), these countries began protecting themselves by amassing huge war chests of foreign assets, in effect exporting capital to the rest of the world.

The result was a world awash in cheap money, looking for somewhere to go.

Most of that money went to the United States — hence our giant trade deficit, because a trade deficit is the flip side of capital inflows. But as Mr. Bernanke correctly pointed out, money surged into other nations as well. In particular, a number of smaller European economies experienced capital inflows that, while much smaller in dollar terms than the flows into the United States, were much larger compared with the size of their economies.

Still, much of the global saving glut did end up in America. Why?

Mr. Bernanke cited “the depth and sophistication of the country’s financial markets (which, among other things, have allowed households easy access to housing wealth).” Depth, yes. But sophistication? Well, you could say that American bankers, empowered by a quarter-century of deregulatory zeal, led the world in finding sophisticated ways to enrich themselves by hiding risk and fooling investors.

And wide-open, loosely regulated financial systems characterized many of the other recipients of large capital inflows. This may explain the almost eerie correlation between conservative praise two or three years ago and economic disaster today. “Reforms have made Iceland a Nordic tiger,” declared a paper from the Cato Institute. “How Ireland Became the Celtic Tiger” was the title of one Heritage Foundation article; “The Estonian Economic Miracle” was the title of another. All three nations are in deep crisis now.

For a while, the inrush of capital created the illusion of wealth in these countries, just as it did for American homeowners: asset prices were rising, currencies were strong, and everything looked fine. But bubbles always burst sooner or later, and yesterday’s miracle economies have become today’s basket cases, nations whose assets have evaporated but whose debts remain all too real. And these debts are an especially heavy burden because most of the loans were denominated in other countries’ currencies.

Nor is the damage confined to the original borrowers. In America, the housing bubble mainly took place along the coasts, but when the bubble burst, demand for manufactured goods, especially cars, collapsed — and that has taken a terrible toll on the industrial heartland. Similarly, Europe’s bubbles were mainly around the continent’s periphery, yet industrial production in Germany — which never had a financial bubble but is Europe’s manufacturing core — is falling rapidly, thanks to a plunge in exports.

If you want to know where the global crisis came from, then, think of it this way: we’re looking at the revenge of the glut.

And the saving glut is still out there. In fact, it’s bigger than ever, now that suddenly impoverished consumers have rediscovered the virtues of thrift and the worldwide property boom, which provided an outlet for all those excess savings, has turned into a worldwide bust.

One way to look at the international situation right now is that we’re suffering from a global paradox of thrift: around the world, desired saving exceeds the amount businesses are willing to invest. And the result is a global slump that leaves everyone worse off.

So that’s how we got into this mess. And we’re still looking for the way out.

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PAP gahmen will hold elections ASAP...

2009-02-23T09:15:00.001+08:00

...instead of later.

A lot smokescreens are being thrown lately, from PAP MPs to the 148th media. This is becos when it comes to politics, the entire gahmen machinery works towards one party's agenda and interest.

The economic woes are unprecedented, and will get worse. Logically PAP will want an unchallenged mandate for another 5 yrs ASAP.

So despite the public denials and pronouncements, all signs point to an election that will be held ASAP, earliest during the March school holidays.

The opposition should gear up NOW.

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Friday nite...

2009-02-20T22:32:00.002+08:00

Deep Psychosis (Daniel Kandis Cure Mix) - Luke Warner & Mat Lock

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PAP just doesn't get it

2009-02-05T09:55:00.002+08:00

This time is Lui, again...

Feb 5, 2009
Online attacks from netizens
Minister rues poor conduct
Opportunity lost for online community to regulate itself, says Lui

WHEN MP Seng Han Thong was set on fire by a Yio Chu Kang resident last month, he drew many online attacks that were vicious.

Some were 'downright outrageous', said Senior Minister of State (Information, Communications and the Arts) Lui Tuck Yew in Parliament yesterday.

He was referring to postings that included statements saying Mr Seng deserved to be assaulted and a list of 10 things he should 'be thankful for' in spite of being attacked.

But instead of silencing these attackers, the online community largely bit their tongue.

The tepid response of netizens to the nasty comments disappointed Rear-Admiral (NS) Lui, who said it was 'quite apparent the Internet is not an effective self-regulated regime as some may have touted it to be'.

RADM Lui was replying to Ms Penny Low (Pasir Ris-Punggol GRC), who had asked for his views on netizens' response to the physical attack on Mr Seng, MP for Yio Chu Kang.

He said: 'I do not think the community itself has done enough to rebut some of these unhelpful comments delivered by fellow netizens.

'It is a squandered opportunity for a higher degree of self-regulation.It would have been an example of the genesis, of the first steps, towards a more responsible, greater, self-regulatory regime.

'But many of those responses were not rebutted or answered, and I think it is not healthy for some of this to remain on the Net unchallenged, unquestioned and unanswered.'

RADM Lui also urged netizens to do more to define acceptable online conduct.

So what really is the issue here?

The fact that some PAP MPs are so disliked and therefore not many netizens can empathise? Or perhaps the PAP has become so unpopular these days with young, better educated, and savvy Sporeans that anything unfortunate that happens to the PAP and its members is taken as positive news and something to cheer about? hahahaha the tuth hurts sia!

Of cos the Rear Admirer Lui, being a backdoor MP and parachuted into office as minister, does not or seems unable to understand this. Instead he whines and complains, threatens more regulation to something he knows very well that is near impossible to regulate.

Then again maybe he does not know, which would hardly be surprising hahahaha...

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Red herring

2009-02-01T20:08:00.001+08:00

Here is what you do to create a distraction. You create an imaginary issue so that the real issue is obscured.

Feb 1, 2009
Not breaking piggy bank

THE Government is not 'breaking the piggy bank' even as it is dips into its past reserves - for the first time - to help fund a record $20.5 billion spending plan, said Senior Minister Goh Chok Tong on Sunday.

'To break the piggy bank is to allow all the notes and coins to spill out, with no controls over how much is spent. We are not doing that,' he told his Marine Parade constituents at a Chinese New Year celebration lunch.

While Mr Goh said the Government had to take this unprecedented step of seeking the President's approval to use a small portion of Singapore's past reserves to tackle its worst-ever recession, he emphasised that 'our reserves must continue to be protected.'

'We must continue to exercise great discipline and not dip into our reserves at the first sign of difficulties. We should tap it only as a last resort and when there are compelling reasons,' he said.

SM Goh said he he favours putting up three 'No' signs when drawing on the reserves.

First, no use of the reserves to support social assistance programmes.

As a general principle, the Government must continue to fund such programmes out of revenues raised in the current term of government, not past reserves, said Mr Goh.

Second, no draw for permanent programmes. Such programmes like Workfare and ComCare, no matter how meritorious, should be funded by current revenues and reserves.

Third, no draw except under dire circumstances when one-off extraordinary measures are required to ward off catastrophe or prevent irreparable damage to the economy.

Taking pains to drive home the point, he reiterated: 'When this economic recession is over, we must continue our policy of growing our reserves by living within our means and running a modest budget surplus. As the present situation shows, our reserves are the best insurance for our own and our children's future.

'Use them wisely and sparingly. Never break the piggy bank.'

The President has given his in-principle approval to a Government's request to draw $4.9 billion from reserves accumulated before its current term of office.

The money is to fund two measures aimed at saving jobs and keeping businesses afloat in this downturn.

It is doing so even though it has built up sufficient savings during its current term, which began in 2006, in order to have 'full flexibility' to respond to the current economic crisis, Finance Minister Tharman Shanmugaratnam said in his Budget statement on Jan 22.

Also, the two 'extraordinary' measures the draw will pay for are temporary and will not be built into longer-term government programmes, and should therefore be separately funded, he said.

The two measures are the Jobs Credit scheme which subsidises employers' wage bills to the tune of some $4.5 billion, and the Special Risk-Sharing Initiative which will help viable mid-sized companies get access to credit.

Mr Tharman had said that Singapore's past reserves were 'substantial' and 'well in excess of our liabilities'.

The Government has never disclosed the full extent of these reserves. Past estimates by analysts have ranged from $300 billion to $600 billion.

This is the second time the Government had gone to President Nathan. In October last year, it sought his approval for a $150 billion guarantee on all bank deposits here to be backed by past reserves.

During the Asian financial crisis in 1998, for instance, when the economy grew by just 1.5 per cent, Mr Goh, then-Prime Minister, had dismissed suggestions that the reserves be drawn on.

He said then: 'Once foolishly spent, they will be most difficult to build up again. As your trustee responsible for these reserves, I am honour-bound to protect them. We must not fritter them away, whatever the pressures we face.'

In his Sunday speech at the Marine Parade constituency lunch, SM Goh said after Mr Tharman's budget speech, a former Ambassador to Singapore recently teased him that Singapore was finally 'breaking the piggy bank!'

'I promptly corrected him. To break the piggy bank is to allow all the notes and coins to spill out, with no controls over how much is spent. We are not doing that,' he said.

'In this instance, before approaching the President, the Minister for Finance had first to convince the Prime Minister. They then had to convince the Cabinet. After that, the Government had to convince the President to use his second key to unlock the safe.

yadda yadda... The rest of it is here...

The question is:
Are people really concerned whether the piggybank will be broken? (incidentally S$5 billion withdrawn, as compared to US$24 billion thrown into rescuing western banks hahaha)
Or how the miserly S$5 billion is really benefitting workers or businesses?

hehehe...

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Socialism for the rich

2009-01-30T10:50:00.003+08:00

Jan 30, 2009
Budget is pro-worker

THE $20.5 billion Resilience Package unveiled last week in the Budget is more pro-worker than employees may realise, said labour chief Lim Swee Say yesterday.

He gave two reasons to support his point.

One, the Jobs Credit scheme to subsidise part of the wage bill of employers, makes Singaporeans more cost-competitive than foreign workers.

But more importantly, it avoids the need to cut employers' contribution to the Central Provident Fund (CPF). This second point, in particular, makes the package 'even more pro-worker than pro-business', he said.

Mr Lim was disputing the view held by some that the measures announced in the new Budget did a lot for businesses, but not enough for workers.

'This is a gross misunderstanding of the Resilience Package,' he told about 500 union leaders and NTUC staff at the labour movement's annual Workplan Seminar to set out its priorities and goals.

In his 90-minute speech, Mr Lim stressed that while it is a steep uphill task to save jobs in this recession, the labour movement 'die die, must try'.

'Never forget, to the worker who is unemployed, the unemployment rate is 100 per cent,' he said as he set out three key targets for the National Trades Union Congress. These are: keep a lid on layoffs so that the number does not breach the 29,000 level of the 1998 Asian financial crisis; ensure unemployment stays below the 5.2 per cent high reached in the 2003 Sars crisis; and work for a recovery that is faster than the global economy's.

Mr Lim acknowledged that the odds are stacked against achieving the layoff targets. Retrenchment in unionised companies is picking up, he noted, from 1,600 in the fourth quarter of last year to possibly at least some 3,000 this quarter.

'If this trend were to continue, I'd say the 29,000 record in 1998 could easily be surpassed within this year,' he said.

But he noted that the Republic has one powerful weapon in the battle against its worst post-war recession. He calls it 'The Singapore Advantage', which is the unity among the tripartite partners: NTUC, employers and the Government.

It is rare elsewhere, he said, referring to the US car industry and Hong Kong: 'We did not point fingers like the case of the US...We did not go on strike like the Hong Kong airport workers.'

Armed with this weapon, Mr Lim urged the tripartite partners to commit themselves to making Singapore the most pro-business economy in the world, the most pro-worker nation, the most united tripartism model and a place with the most caring labour movement.

He explained to union leaders that they can be pro-business by agreeing to a wage cut should the company's situation warrant it and management take the lead with a deeper cut.

'We must be prepared to mobilise the ground as long as the management is prepared to take the lead,' he said.

The approach would lead multinational companies to favour Singapore, he indicated. Following the new Budget measures, Japanese companies are re-submitting their proposals to their headquarters who are looking at downsizing operations in Japan, China or Singapore, he said.

In praising the Jobs Credit scheme, Mr Lim said that until last week, the biggest fear among unionists was a reduction in employers' CPF contribution.

Such a cut would hurt workers who are paying housing loans and saving for retirement. So, the Government's move to use past reserves to finance the $4.5 billion scheme was a big relief, he added.

The temporary wage subsidy - 12 per cent of each month's wages but only for the first $2,500 - is equivalent to a 9 percentage point CPF cut.

'If not for Jobs Credit, many workers will not enjoy the full 14.5 per cent contribution from the employer,' he said.

The president of the Food, Drinks and Allied Workers' Union, Mr Abdul Subhan Shamsul Hussein, told The Straits Times that Mr Lim's explanation clarified for him how the scheme was advantageous to workers.

He confessed that he and some of his union members had felt the Resilience Package was too pro-business as there were not as many direct cash giveaways as they had hoped.

Singapore Inc under the PAP has never been pro-worker. So you believe this sia suay guy? Hahahaa

"五千年历史有屁用"... scamming a living from those living in the past

2008-12-17T10:16:00.001+08:00

LKY believes that cultural affiliation will make a difference when it comes to doing business with the Chinese.

Dec 17, 2008
S'pore needs to co-opt 50 Chinese steeped in the culture each year
By Li Xueying, Political Correspondent

As a former China national, Ms Tan knows how to woo clients from her old homeland.

PRIVATE banker Leiny Tan was born in Wuhan city, grew up in Guangdong province and got her university degree in the United States.

But she eventually decided to make Singapore her home after arriving here as a student in 1991.

Now a citizen, the 40-year-old is in charge of the China market for US banking giant Citigroup, responsible for managing the finances of super-rich Chinese nationals based here and in China.

As a former China national, Ms Tan knows how to woo clients from her old homeland. 'Knowing the language is an advantage as we need to be very clear and precise,' she told The Straits Times. 'Understanding the culture is another advantage - the Chinese are very private about their families, but if I ask them the right questions, for instance about their children, they're happy to open up.'

Minister Mentor Lee Kuan Yew wants to see 50 Chinese nationals-turned-Singaporeans like Ms Tan every year, 'co-opted' to help Singapore engage China.

Speaking at a dialogue yesterday, Mr Lee said students from China may come here to master English. But if they come after secondary school, the depth of their Chinese 'can never be shaken'.

'So maybe we can co-opt 50 of them, and then we can bring them back to China to do business on our behalf.'

In 50 years, Mr Lee envisaged East Asia and China 'will be where the action is'. And Singapore needs some 300 talented people a year with the cultural background to connect with those in China.

'Our problem going forward is that our best and brightest do not want to spend their lives concentrating on China,' said Mr Lee. 'They want to go to America, they want to... see greener pastures in the English-educated world.'

So to engage China, Singapore now depends on its older generation who went through Chinese-stream education, and are familiar with Chinese allegories like Romance of the Three Kingdoms, he said.

Younger Singaporeans are conversant in Mandarin, but are lost once the conversation leaves familiar subjects.

Said Mr Lee: 'You (the Chinese) can sit down with the Taiwanese businessmen and while the whole night away drinking because you can talk about so many common things you share in history and culture...But with a Singaporean, it's hard facts, hard facts, and there isn't this cultural background.'

Mr Lee made the point in his reply to a question on how Singapore and China can work together looking forward. 'We are both learning more about each other,' he said. Citing the Suzhou Industrial Park built 14 years ago, he said the initial years were 'truly troublesome'.

Singapore 'must always remember' the experience of one of its officials working on the project, he said.

'One day, the Chinese said to him: 'How old is your country? You want to teach me how to do this? My country is 5,000 years old'. So he decided that you cannot tell them do this, do that. All you can do is (to say), I suggest to you, you examine this and if you think it's a good idea, you pick it up.'

So, Mr Lee anticipates fewer problems with the Tianjin eco-city Singapore is now helping to develop. 'We understand their style and they also understand us.'

My old man is chinese educated. He is one of those stubborn pro-China types who have their hearts in China even though he is born and raised here. And until a decade ago has never set foot on China.

Starting from the late 90s, he began to make holiday trips to China. Every other year or so he and my mom will travel to different parts of China, to visit the China they have read so much about from their early Chinese textbooks and education, the majestic sights, the cultural splendor. And when they return they will speak non-stop and fondly of the middle kngdom.

This went on for years until 2005 when these trips stopped. He has not visited China since, and the former fervour for all things China and Chinese has also died down and completely diminished around the dinner table.

Eventually I asked how come, and he grunted with disgust, "五千年历史有屁用?只懂的捧着历史吃饭!"

That about explains and sums up the 180 degree U turn in attitude toward the "motherland" hahaha.

My father, like most from his generation, voted for the PAP. I remember he used to berate me during dinner when i question the way LKY and PAP goes about suing opposition politicians.

Well not anymore. The past few years have seen another 180 degree U turn in my parents' view on politics. These days my old man is more ept to swear loudly at the TV whenever politicians in white appear, hahaha!

I guess even a stubborn old man like my father will one day stop living in the past and see the reality for what it is. Apparently not for some others, especially a non-Chinese educated ba ba, hehehe.

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Tan Kin Lian's political "ambitions"?

2008-11-23T19:34:00.002+08:00

By now everyone knows who Tan Kin Lian is ...

Nov 23, 2008
Tan Kin Lian eyes presidency
Ex-NTUC Income's chief will run if he has 100,000 people willing to support him
By Nur Dianah Suhaimi

HE HAS become a familiar face addressing the crowds of investors at Speakers' Corner.

Standing before Singaporeans and asking for their votes at an election could well be next on the agenda for Mr Tan Kin Lian.

The 60-year-old former chief executive officer of NTUC Income told The Sunday Times he is considering standing as Singapore's next elected president or contesting in the next general election as an independent candidate.

He made no bones about his political ambitions in an interview with the paper.

But first, this king of petitions wants to see at least 100,000 signatures and names of Singaporeans who are willing to give him their support.

'I will only do it if enough people want me to lead. If Singaporeans want change, they must have a stake in it and show their commitment by putting down their names. I cannot do this without strong support,' he said.

Such a petition should be put together by those who are keen to see him become a leader, and not by himself, he added.

.....

And as for his political ambitions, they are not for himself, but for Singapore, he claimed.

'I don't need to be president. I have enough money and I lead a simple life. I travel by bus and MRT even though I can afford a car. So what's the point? I don't need this kind of trouble,' said the father of three.

He bought a Toyota Camry for his wife four years ago and now shares it with her.

His wife, a housewife, fearing a political backlash, is also against the idea of him running for elected president and has even called him 'mad' for harbouring such an interest.

While he has to respect his wife's wishes, it is his dream that Singapore has leaders who represent the people and their aspirations.

'They don't have to be very highly educated. They just need to be the voice of the people.'

Which ward does he plan to contest in at the next general elections as an independent candidate, I asked.

Get the 100,000 signatures first, he replied.

'I need to know that people want the change. If not, then there is no point.'

The signatures of support will also help him convince his wife that he has enough backing to embark on a political career.

Said Mr Tan: 'Actually I prefer to take it easy. I've been working for 40 years. But if enough people want me to lead, then I will.'

If there are 100,000 SGians coming forward asking you to be their leader, how to say no? If 100,000 asked me to be their leader and for a good cause (and not say be terrorist leader or those will die kind lah hahaha!), I will also step up! I dare say anyone will step up. So like this count as ambition?

Sembawang GRC is the largest ward with about 185,000 people. So 100,000 people on your side is already a clear comfortable election win. You will have a clear mandate anywhere in SG.

The ST saying Tan has political ambition is misleading. In giving himself this hard-to-meet condition of 100,000 supporters, Tan shows his ambition is one of reluctance. He will be damn lucky to get half that number or 20,000. And even then he will win a landslide in any single ward contest.

So do you still think Tan has political ambition, as the ST puts it? If not, what then is the ST up to? Hmm...

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Is Chartered Semicon a "good" firm? Hahaha

2008-11-19T10:11:00.000+08:00

Notice how the PAP gahment likes to talk using feel-good and loaded words. Very vague, very unspecific one.

Nov 19, 2008
Govt won't let good firms fail
By Robin Chan

THE Government will soon enhance schemes to help cash-strapped businesses secure bank loans, Finance Minister Tharman Shanmugaratnam said in Parliament yesterday.

This is to avoid a scenario where good businesses are forced to close down owing to a lack of access to credit, he said.

Mr Tharman said the new measures will enhance existing loan schemes, and will mostly involve the Government sharing the risk of the loans with the banks.

Prime Minister Lee Hsien Loong had said on Sunday that with a protracted economic slowdown looming, some measures to help businesses and workers would be announced this week.

What do you mean by good firms? If they are good, why do they need help from gahment?

Let the best and fittest survive, isn't that what free market is all about?

The gahment through Temasek has been pumping into loss-making Chartered Semicon for years. Is Chartered Semicon a good company? Hahahaha!

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Krugman

2008-10-19T10:28:00.000+08:00

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The global financial crisis has revived my interest in economics hehe, and this guy who just won a nobel prize in economics makes a lot sense leh...

Let’s Get Fiscal

By PAUL KRUGMAN
Published: October 16, 2008

The Dow is surging! No, it’s plunging! No, it’s surging! No, it’s ...

Nevermind. While the manic-depressive stock market is dominating the headlines, the more important story is the grim news coming in about the real economy. It’s now clear that rescuing the banks is just the beginning: the nonfinancial economy is also in desperate need of help.

And to provide that help, we’re going to have to put some prejudices aside. It’s politically fashionable to rant against government spending and demand fiscal responsibility. But right now, increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold.

Before I get there, let’s talk about the economic situation.

Just this week, we learned that retail sales have fallen off a cliff, and so has industrial production. Unemployment claims are at steep-recession levels, and the Philadelphia Fed’s manufacturing index is falling at the fastest pace in almost 20 years. All signs point to an economic slump that will be nasty, brutish — and long.

How nasty? The unemployment rate is already above 6 percent (and broader measures of underemployment are in double digits). It’s now virtually certain that the unemployment rate will go above 7 percent, and quite possibly above 8 percent, making this the worst recession in a quarter-century.

And how long? It could be very long indeed.

Think about what happened in the last recession, which followed the bursting of the late-1990s technology bubble. On the surface, the policy response to that recession looks like a success story. Although there were widespread fears that the United States would experience a Japanese-style “lost decade,” that didn’t happen: the Federal Reserve was able to engineer a recovery from that recession by cutting interest rates.

But the truth is that we were looking Japanese for quite a while: the Fed had a hard time getting traction. Despite repeated interest rate cuts, which eventually brought the federal funds rate down to just 1 percent, the unemployment rate just kept on rising; it was more than two years before the job picture started to improve. And when a convincing recovery finally did come, it was only because Alan Greenspan had managed to replace the technology bubble with a housing bubble.

Now the housing bubble has burst in turn, leaving the financial landscape strewn with wreckage. Even if the ongoing efforts to rescue the banking system and unfreeze the credit markets work — and while it’s early days yet, the initial results have been disappointing — it’s hard to see housing making a comeback any time soon. And if there’s another bubble waiting to happen, it’s not obvious. So the Fed will find it even harder to get traction this time.

In other words, there’s not much Ben Bernanke can do for the economy. He can and should cut interest rates even more — but nobody expects this to do more than provide a slight economic boost.

On the other hand, there’s a lot the federal government can do for the economy. It can provide extended benefits to the unemployed, which will both help distressed families cope and put money in the hands of people likely to spend it. It can provide emergency aid to state and local governments, so that they aren’t forced into steep spending cuts that both degrade public services and destroy jobs. It can buy up mortgages (but not at face value, as John McCain has proposed) and restructure the terms to help families stay in their homes.

And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.

Will the next administration do what’s needed to deal with the economic slump? Not if Mr. McCain pulls off an upset. What we need right now is more government spending — but when Mr. McCain was asked in one of the debates how he would deal with the economic crisis, he answered: “Well, the first thing we have to do is get spending under control.”

If Barack Obama becomes president, he won’t have the same knee-jerk opposition to spending. But he will face a chorus of inside-the-Beltway types telling him that he has to be responsible, that the big deficits the government will run next year if it does the right thing are unacceptable.

He should ignore that chorus. The responsible thing, right now, is to give the economy the help it needs. Now is not the time to worry about the deficit.

'Do the right thing'... but beware divide and conquer tactics...

2008-10-18T11:24:00.000+08:00

After weeks of dragging their feet, MAS has decided to act, but......

Oct 18, 2008
Do the right thing
MAS says priority will be given to lowly-educated retirees who lost money in its probe into mis-selling.

By Ignatius Low & Francis Chan

LOWLY-EDUCATED retiree investors who put their savings in structured products linked to the collapsed Lehman Brothers have been singled out by the Government for special attention.

The Monetary Authority of Singapore (MAS) wants banks and financial institutions to give this group top priority when investigating complaints of mis-selling.

Instead of giving retirees priority, why not equally to all? Is it because retirees are mostly older and may not live as long as "non-retiree" investors? All investors should be accorded the same treatment. No one group should be accorded preferential treatment. The collective action by the victims forced MAS to act. By giving some priority over others, is someone hoping to split the group and then deal with them one by one? Hmmm........

Second incident, somewhat alike, the ongoing foreign worker dormitory at Serangoon Garden.

Serangoon Garden residents who don't want to 'guai guai' go along with gahment's decision to build a dormitory there have been making a lot of noise. So far Sporeans I have spoken to support the actions of these residents. Becos they too dislike the idea of having a worker dormitory so close to their homes and community. And crucially the unchecked import of such workers to alarming numbers in recent years.

But going by reports, articles and letters to the 148th, it seems like some Sporeans are very critical of Serangoon Garden residents and their actions. Words ranging from snobbish, xenophobic, racist, elitish etc were used to label the 'enemy'. Totally irrational and seems like a smear campaign to tarnish the 'enemy'.

To me it is very clear the 148th and their editors blindly support all gahment decisions or policies, and will chut all necessary patterns to wage a media war on whoever they perceive as 'enemy'. In such a war, anyone who is not pro-Gahment is the enemy, even if supporting the Gahment means being anti-Spore and anti-Sporeans!

Kangaroos felt scandalised...

2008-10-15T09:06:00.000+08:00

Oct 15, 2008
A-G takes trio to court for 'scandalising judiciary'
'Kangaroo in judge's robe' T-shirt at centre of case
By Goh Chin Lian

According to the AGC, the three men had 'scandalised the Singapore Judiciary by publicly wearing identical white T-shirts, imprinted with a palm-sized picture of a kangaroo dressed in a judge's gown, within and in the vicinity of the New Supreme Court Building'.

By this, they meant to imply the Court was a kangaroo court, it added.

A kangaroo court is generally understood as being a court characterised by unauthorised or irregular procedures, or sham and unfair legal proceedings, noted the AGC. It also said Tan made his 'This is a kangaroo court' remark as MM Lee walked past him outside Court 4B.

Tan was also responsible, it added, for the appearance of an article, 'Police question activists over kangaroo T-shirts', and a photo of the trio in the T-shirts on the SDP website on July 27.

'The article and the photograph...were meant to give wider publicity to their allegation that the Court was a kangaroo court,' said the AGC.

It accused them of engaging in a 'deliberate and calculated course of action to impugn the reputation of and undermine public confidence in the Singapore Judiciary, and to lower its authority in the administration of justice in Singapore'.

Lawyers interviewed said it was the first time they had heard of a contempt of court case involving the wearing of T-shirts.

"Who you calling a kangaroo?" *uurp*

Fly the flag and 21 gun slaute to JBJ

2008-10-02T14:25:00.001+08:00

If you would like to show your support for all that Mr. Jeyaretnam stood for, how about putting this flag on your blog too, just as both the picture maker and video producer have suggested? You can also include this paragraph, so that your readers, upon reading, can do their part too, on their blogs. Many of us, for one reason or another, have not shown direct support for JBJ in real life when he was alive, com'on, let us be brave enough to at least take a stand, and show our virtual support, OK?

A true patriot has passed away

2008-09-30T09:41:00.002+08:00

Veteran opposition politican J. B. Jeyaretnam, passed away early this morning. JBJ, 82, died at about 1.30 am from a heart attack at his son's home in Singapore.

A sad day for Singapore becos she has lost a true patriot and a true Singaporean.

I salute you Mr JBJ.

You will always be remembered for your courage and tenacity. For standing up to tyranny and those who sought to crush you through dirty means and misuse of justice.

Singaporeans like myself will always remember you! Your efforts to bring democratic change to Singapore will not be in vain.

A fond farewell from this recruit to you, Mr JBJ.

No prescription is needed...

2008-09-23T23:49:00.000+08:00

because it is alreay too late. The rot and poison has sunk in too deep. Any medication will only worsen the patient's suffering long before any improvement.

The only way for change will come is for him to leave the scene and "move on" hehehe.

Sep 23, 2008
No presciption needed: MM
By Li Xueying

IN GOVERNING Singapore, Minister Mentor Lee Kuan Yew sees no need to follow anyone's prescription on democracy.

Instead, his focus is on what works.

Speaking last Sunday on the CNN programme Global Public Square, Mr Lee said his goal is to keep Singapore a first-world oasis in a third-world situation.

...

But he also noted the criticisms that Mr Lee had exercised too tight a control over the country, leading to 'too domineering and coercive a state'.

Mr Lee, Singapore's first Prime Minister from 1959 to 1990, replied that Singaporeans can choose which government they want to have through the vote.

'Nobody has ever alleged any chicanery - no bribery, no coercion, no nothing. We have never won less than... two-thirds of the vote,' he said.

Oh really???

The broken record keeps spinning the same old tune and raionale. Like a koyok street peddler who sells dated medicine laced with dunno what ingredients inside... laced with maybe even melamine! But only there is no AVA to regulate and check his products. (oops AVA also lousy example.. hehehe)

Only last year i remember him talking about the nation entering a Golden Period. See? So much for his alleged wisdom hahaha.
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Playing with numbers

2008-08-26T10:23:00.000+08:00

In page A4 of the States Times, the article on inflation puts a positive spin on rising inflation rate. It says...

Some relief expected as July price rises ease to 6.5% after 26-year high

But on page B5, coverage of parliament news in the article 'Feisty exchange over aid for poorest households' at the bottom of the article it says...

The exchange took place as the Trade and Industry Ministry released figures that showed rising prices in the first half of this year had hit the bottom 20% per cent of Singaporeans the hardest. They faced an inflation rate of 7.4 per cent in the first half of this year, as compared to 6.9 per cent for the middle 60 percent and top 20 percent of households by income.

So in other words the bottom 20% of household by income suffered 7.4% inflation while the rest suffered 6.9%. So how is the earlier 6.5% derived?

But this is the States Times, very credible one according to the PAP. So who am I to doubt the numbers haha..

(Btw the 26-year high inflation number is 7.5% according to Bloomberg. So a drop from 7.5% to 7.4% must be credited to the unique and extraordinary competence of the PAP garment lah hehe..)

Also on page B5, news on upcoming public transport fare ~~hikes~~ changes.

The distance-based system will cut transport bills for four in 10 commuters who make transfers on their journeys now.

While MPs welcome this, they remain concerned that commuters who take direct services might end up paying more.

Isn't this a case of robbing Peter to pay Paul? The other 6 pays more, and end result you can bet yet more revenue for the transport operators. Once again what the pap garment has shown itself to be very good at is to keep the money within a pool, like the compulsory annuities like that. The garment itself does not come out a single cent, yet end up skimming a little for itself hahaha! sibei lan jiao sia!

Bus and train ridership are up like never before, but fares have been increasing every year whereas service standards have declined. Already twice this month i encountered two train disruptions on the East-West Line. One of which all the commuters had to vacate the train and wait for the next service. At all times of the day now, even 11pm on weekday nights, the trains are packed like sardines, and everyone i speak to tells me the situation is getting worse. Sometimes it is so packed until the aircon like not working, hot and stuffy... maybe the aircon really not working! The transport operators are making profits like never before, and they have the cheek to raise fares? KNNBCCB!

i started off writing this post in a cheery mood.. but now lim peh hot liao.. KNN!

SG lawyers pwned! LOL

2008-08-05T10:18:00.002+08:00

The legal profession gets a little Uniquely Singapore treatment.

Aug 4, 2008
Why Law Society should not join political debate

IN HER column last Friday, 'Move politics beyond a spectator sport', Ms Chua Mui Hoong argues that in the game of politics, the Government should just be the groundsman who maintains the sports field, and allows others free access to play the game.

That is not how the government works in any country. In a democracy, when voters elect a political party to form the government, they are choosing the leadership team and its policies to take the country forward. Naturally, citizens are still free to participate in political debate, and to organise themselves into interest groups or parties to do so. But when views differ on important issues, the ultimate test of which should prevail has to be who can win the support of citizens for his point of view. This means political parties have to contest elections, put the issue to voters, and settle the matter through the ballot.

Ms Chua advocates empowering the Law Society to comment publicly on legislation, whether or not referred to it by the Government. Laws, however, are the tools to achieve social, political or economic objectives, and these objectives themselves are not the prerogative of lawyers, but should be decided in the political arena. Lawyers who want to join this debate, or promote their political views, are free to get together and form associations to push for these views, just like other citizens.

But to argue for the Law Society to join the political debate, as Ms Chua does, is to misunderstand its nature and role. The society is a statutory body created by Parliament for a specific purpose, namely to oversee the governance and discipline of the legal profession. There is no reason to give it a special status beyond this to play a political role, especially when no other professional body has such a right.

The council of the Law Society is elected by lawyers to oversee the profession. On political issues, the views of the Law Society, as expressed through its council, will not necessarily reflect the views of the profession as a whole. If the Law Society could participate in politics, we would in effect be licensing its council members to push their personal political agendas, using the resources, status and cover of the Law Society. This is in the interests of neither the legal profession nor Singapore.

S. Radha
Press Secretary to the Minister for Law

Ooooh... nothing like a little subtle reminder to make those lawyers tremble and know their places hahaha! And most Sg lawyers will not have the courage to speak the truth to PAP gahmen.

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Nothing to say just STFU lah..

2008-07-31T23:27:00.000+08:00

This guy is another total Cannot-Make-It in my book. Only know how to echo other ministers...

July 31, 2008
Pushing up wages to offset inflation risky move, warns NTUC chief
By Lee Siew Hua

PUSHING wages up to fully offset inflation is a risky move, as workers will end up paying ever-higher prices.

Labour chief Lim Swee Say highlighted this vicious circle on Thursday in a message for National Day, calling on workers to moderate wage expectations.

'Instead of pushing wages up to fully offset inflation, we must continue to link built-in wage increase to productivity gain and help our people through various non-wage measures', he said.

This will prevent a 'price-wage spiral'.

His message came as the second-quarter jobs figures released by the Ministry of Manpower on Thursday showed job creation moderated to 70,600 from April to June and the unemployment rate creeping up to 2.3 per cent.

KNN warn simi lanjiao? So why dont u something about the inflation then?!

Let's see, now unemployment is rising liao.. so wat is the gahment doing about it? Bite some more bullets? Let see you bite the bullet instead... knn...

And he doesn't give any specific what those non-wage measures are... how convenient.
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2008-07-28T01:06:00.001+08:00

After LKY's recent self-pawn acts (court room & IBA flip flops), it is time for some damage control. And who better to carry out this public relations task than the very experienced GCT.

July 26, 2008
Our goal: Strong govt, responsible opposition
SM Goh says politics here must evolve but not in a way leading to division or chaos
By Jeremy Au Yong

SINGAPORE'S political system must change to keep pace with an evolving society, said Senior Minister Goh Chok Tong on Saturday night.

While conceding that the 'status quo cannot last forever', he noted that certain things must not change.

'Whatever the refinements we may make to our political system down the road, some core principles must remain the same,' he said.

'One, any changes must be fair to all parties and give them an equal chance to contest and win; two, they must not lead to democratic chaos and politics of division; and three, they must not put Singapore's unity and harmony, growth and prosperity and long-term interests at risk.'

He was speaking at the National Day dinner in the opposition-held Hougang ward, returning there for the first time since the 2006 General Election.

'Ideally, our political system should facilitate the emergence of a strong, effective government after every election and a responsible, constructive opposition,' he added.

'But...there is no guarantee because it depends on whether good, honest and competent people come forward to stand for elections and the wisdom of the electorate when they cast their ballot.'

IMO Sg politics will only evolve after a certain octogenarian leaves the scene.

Goh makes a lot of general remarks. But they sound hollow to me. His 'goal' is whose goal? PAP's? He also talks about the "wisdom of the electorate", which really is just another way of saying what this man said about mad voters hehehe..

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Stuck at lower needs?

2008-07-24T10:53:00.001+08:00

According to Maslow's hierarchy of needs, a theory on human motivation, people move up to higher needs once their lower needs are met. Lower needs refer to satisfying basic human and survival instincts like shelter, safety, hunger, and sex. Higher needs are esteem, self-actualisation, respect for and by others and so on.

According to this establishment figure, staying at the top requires people who are still hungry...

July 24, 2008
Key to staying No. 1 - young people who are hungry

IT IS a uniquely-worded warning against complacency, and former Economic Development Board (EDB) chief Philip Yeo reiterated it yesterday: Don't sit down and fan yourselves.

At the Pioneers Series dialogue, a quote that he had used previously was read out to him, much to the amusement of the audience.

'When you become No.1 you say you have arrived,' the former top civil servant had once said.

'Once you arrive, everybody laughs, everybody sits down and fans themselves.

'When people are fanning themselves, congratulating themselves, praising themselves - 'Oh, we have arrived', 'How good we are' - that's when you get the 'arrive and fall' of nations.'

Mr Yeo elaborated on that comment yesterday, a pun on the phrase 'rise and fall of nations'.

'We are here today, but we may not be here tomorrow. When I travel around, I always take a look at what's happening in India, in Vietnam...

'We did it, they can do it. We're No.1 today, yes. We've been No.1 for 10 years in a row, yes. But don't forget they are now close, the gap is narrowing.'

This is very standard and dated establishment talk. The goal to be No. 1. But i think people these days have moved on & are instead thinking deeper about what it means to be No. 1. Does being at the top benefit them and meet their needs? Are theirs lower or higher needs?

What about the price to pay for being No. 1? What if the benefits of being No.1 are not fairly distributed and only benefits a small elite group?

As to how Singapore can keep up, Mr Yeo turned to the word 'hunger', a term he used many times throughout the session.

He said: 'Our people must realise that being No.1 is very temporal.

'We better keep on honing that...Make sure that our young people are hungry. If our young people are not hungry enough, bring in hungrier ones from overseas. Make them feel hungry, increase the hungriness index.'

So his solution to complacency is to find/import people who are hungry? Wah lao this really make me laugh hahaha! I cannot believe his thinking is so simplistic and narrow. Sure you can always import "hungry" foreigners from less developed countries. But what happens after you have fed their hunger? Wont that be the same? And why discriminate against old people?? Old people cannot be hungry meh?

So you treat people like production units? Use and chuck? This really says a lot of his mentality and perspective on people development (more like lack of) sia.. very old economy leh ~ hehehe

Undeniably SG as a society has reached a level of affluence. We have become quite well fed for sure. But so too have many others before us. Have these other affluent societies become less hungry? Japan, South Korea, many western nations. How come they can continue to innovate, grow, and surpass despite being well fed? Obviously the "hunger" we are talking about is not those of lower needs but higher ones.

When it comes to higher needs, I say the SG society is suffering from malnutrition. As a result people are moving to more open societies to feed their higher needs. Any coincidence these societies tend to be more open ones that have a healthy respect for human rights, freedom, tolerance for dissent, and healthy political competition?

Hmm... i think Yeo Yo man don't understand any of it leh... Is he still stuck at lower needs? For example Sg's ministers are the best paid in the world, so they cannot possibly be hungry right? And they are old too! So by Yeo's logic shouldn't these ministers be replaced by others who are young and more hungry? LOL

P.S. Anyway Yo yo likes to threaten and sue bloggers one, i wonder what needs of his will that fulfill? Hahahaha!
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No $$$ no talk!

2008-07-21T23:09:00.000+08:00

Toilet break hero is now worth $1 million!

July 21, 2008
Two S'porean businessmen offer $1m bounty for Mas Selamat's capture

A $1 MILLION cash bounty has been offered for information that will lead to Jemaah Islamiah (JI) fugitive Mas Selamat Kastari's arrest.

Two businessmen have approached the Home Affairs Ministry to put up the reward, Deputy Prime Minister Wong Kan Seng told Parliament on Monday.

The businessmen have asked to remain anonymous because they do not want their families or business interests in the region to be a target.

Mr Wong reiterated that while Police do not offer cash rewards, they will not object if private firms or individuals wish to do so.

This is not the first time a bounty for Mas Selamat has been offered.

The United States has offered rewards in the millions for the capture of top terrorists with links to Al-Qaeda. These include JI bombmaker Noordin Top.

Yaloh better stay anonymous, wait Mas's buddies overseas buay song how? I wonder why the two businessman so generous? Maybe like that they will get into gahment's good books and win gahment tenders? hehehe...

In a separate statement, the Ministry of Home Affairs said it has agreed to the request of the two private individuals to manage the $1 million reward.

'As a policy, the Home Team security agencies, including the Singapore Police Force and Central Narcotics Bureau, do not itself offer cash rewards or bounties for information on fugitives and unsolved crimes, or for assistance by the public', the ministry explained.

The policy, however, does not preclude private corporations or individuals from doing so if they are acting on their own volition to assist in the procurement of information pertinent to the police.

Is this policy inflexible? Are you so capable and confident of your abilities that you dun need any help or pay for assistance? If ministers are expected to be paid millions in order to stay corruption-free and contribute to public service, then i dun see why ordinary Sgians have to volunteer assistance FOC.

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9 years & 18 strokes for a victimless crime

2008-07-07T21:12:00.001+08:00

The story of Cpl Dave Teo is a very sad one. It is clear he needs help.

July 7, 2008
NSman Dave Teo's behavioural problems stem from disturbed upbringing

National Serviceman Dave Teo Ming was often caned by his mother when he was a young schoolboy and his father was in and out of jail for various offences.

His mother would beat him sometimes for no discernible reason or whenever she lost money on gambling.

And the beatings were no "normal beating'.

'The cane anyhow whack, whack until I got bruises,' he said in a psychiatric report submitted by the Institute of Mental Health, which was tendered in the High Court on Monday, when he was sentenced to nine years and two months, with 18 strokes of the cane for unlawful possession of a rifle, bullets and a knife.

The report presented a picture of his disturbed upbringing, scarred by constant beatings, rejection by his own mother who left him in the care of his paternal grandparents when he was in Primary one or two, after she walked out on him with his younger sister.

Teo's grandparents and aunt confirmed the beatings and remembered how traumatised Teo was as a child. They reported that his mother would even throw chairs at him.

After she left the family, the grandparents became the main caregivers to Teo and his brother who was two years younger.

Although he was not beaten as much, his paternal uncle, who lived with him, would punch and slap him if he misbehaved during his teens.

When he was 14, his younger brother was killed in a road accident.

This caused Teo 'to spiral downwards with disciplinary problems', said the IMH report. 'He was filled with anger and 'hated everybody''.

He became depressed and isolated himself from the family.

The behavioural problems and brushes with law continued, and he had to drop out of school at Secondary 3.

Possessive boyfriend

Teo started dating Ms Crystal Liew when he was 16. She was then 14. The relationship graduated to a sexual one when she turned 16.

By his own admission, Teo was a highly possessive boyfriend.

When she went out with her friends, he would feel extremely jealous and become abusive of her. He would call her up and demanded that she went home immediately.

There were times that he would hurl vulgarities at her and he also admitted that he had hit her several times, according to the IMH report.

In early 2007, Teo was posted for a short stint to Taiwan as part of his national service.

The couple continued to quarrel over the phone and in April last year, they broke up.

That was the final act and Teo snapped.

'He had nightmares about dying or being killed and in his waking hours, thought of suicide,' said the psychiatric report.

His sleep became disturbed, he lost weight over the next few months and he became withdrawn. His concentration became poor and 'his libido also dropped'.

In camp, he became easily irritated, and vented his anger by kicking the cupboard and being rude to his superiors.

He also began to hear voices of people who were not there.

Stalked ex-girlfriend

When he returned to Singapore from Taiwan, he started stalking Ms Liew, hanging out at her condominium and outside her school.

He even went absent without leave from camp to spend his nights at a stairwell at her condo. He was eventually caught and sent to the SAF detention barracks.

After he stopped contacts with Ms Liew, he went further downhill. He no longer cared about his appearance, became reclusive and started drinking to overcome his insomnia.

'He became self-destructive and recalls exercising till the point of exhaustion and then denying himself water,' said the report.

Dave stole a rifle along with 8 bullets and went AWOL. The law says unlawful possession of weapons, the prosecution asked for a deterrent sentence and got it - 9 years jail and 18 strokes of the rotan. This is the "help" he gets, and the judge has this to say...

July 7, 2008
'My heart hurts for you': Judge to NSman

JUSTICE Tay Yong Kwang explained to Awol National Serviceman Dave Teo Min why he would have to impose a deterrent sentence before jailing him for a total of nine years and two months, with 18 strokes of the cane, for having a rifle, eight bullets and a knife.

In a display of compassion, the High Court judge on Monday told the 20-year-old, who had earlier pleaded guilty to the three charges: 'My heart hurts for you that so young a man will have to spend some of the best years of his life in prison and have to undergo so many strokes of the cane, but I trust that you understand that a deterrent sentence is unavoidable in the circumstances.'

Justice Tay said Teo had committed a very grave offence by taking a rifle and ammunition out of camp for his 'own purposes' - 'especially so in this age of increased security concerns everywhere'.

Why is a deterrent sentence unavoidable? Where is the victim here? Is Mas Selemat more dangerous or a confused NSF? How about a "deterrent sentence" too for those responsible for Mas Selemat's escape? After all Mas is still at large and has the potential to cause some really serious damage and harm.

He told the NSman who sparked a 20-hour manhunt on Sept 2, 2007, when he walked out of Mandai Hill camp with an SAR-21 rifle and eight rounds of bullets, and was finally tracked down to a toilet in a shopping mall the following day: 'Dave, you have had a very hard life.'

'I hope that this unfortunate and traumatic wrong turn in your life will make you much more mature and a whole lot wiser and that you will spend the next few years reconstructing your young life.'

Dave has already spent a year in jail. How does throwing him into jail for another 9 years help reconstruct his life? Do we compound an UNFORTUNATE turn in his life with a further "unfortunate" 9 years in jail? Doesn't make sense leh... So unfortunate hor??

'I hope that you will pursue your studies, listen to good advice from counsellors and learn many skills while in prison and that, upon your release, you will have a life full of meaning and purpose to honour the memory of your grandmother and your beloved younger brother.'

'It has been written, 'To everything there is a season.' There was a time when you loved, there came a time when you hated. There was a time when you felt you wanted to kill, now is the time for you to heal.'

'There was a time you were broken down, now is the time to build yourself up. There was a time when you were at war in your being, now is the time to restore peace within.'

'In spite of your difficult childhood and in spite of what you have done, do not ever give up on yourself.'

The judge talks a lot hor? I think he wants to because he knows the sentence is overly harsh and unjust. Are his hands tied? Is he really talking to make himself feel better for compounding Dave Teo's sufferings?

And what is the purpose of a deterrent sentence other than to send out a symbolic message? And is such a message even effective when applied to young men who momentarily lost their head or caught in a moment of passion? Becos the real problem isn't Dave Teo, but it is how the rifle and bullets were so easily taken out of camp. Humans have passion, another troubled upbringing, another confused soul, then what? Another deterrent sentence? 20 yrs then?

The punishment here does not fit the crime or the harm caused. The only victim here is Dave Teo, and maybe SAF's fragile ego and some elites' faces. But this is SG, and for unfortunate people like Dave Teo who falls through the crack, the system punishes them instead of helping them.

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Non-PAP supporters are mad!

2008-06-28T14:56:00.000+08:00

The recent outburst from LKY is quite amazing. He warned that a freak result could happen if voters became bored and decided to give the “vociferous opposition” a chance — out of “light-heartedness, fickleness or sheer madness”.

WTF sia! First he call Chee Soon Juan a psychopath, now anyone who does not vote PAP is doing it our of sheer madness!

I am reminded of my recent chat with a non-opposition supporter recently... the mentality is the same, if you are not with us, you must be against us. These non-opposition supporters are almost like terrorists! They exhibit such extremism, intolerance, anger and hate. Who needs Mas Selamat when Spore is already filled with these fanatics? Hahahaha

Death of a slave

2008-06-17T01:15:00.002+08:00

My heart goes out to Recruit Cheah and his loved ones. Just 5 days into NS enlistment he is dead.

Meanwhile the SAF busy themselves with investigations and causes of death. The outcome will always be the same. Rules were followed, no one is at fault, blah blah blah. "Let's move on!" Soon like many before him Recruit Cheah will be forgotten. He did not even get as much as a page mention in the papers, so unlike the officer trainee who died in Brunei.

Slaves are expendable. They cannot blame anyone except themselves because they are born into it.

The SAF may give the OCT a grand send-off. But i reserve my solemn salute only for Recruit Cheah and the many lowly ranks like him. At their most vulnerable moment, the system failed them and their loved ones.

听说有一种鸟是没有脚的，从一出生它就一直在飞，自由自在，飞累了就睡在云上。

这种鸟一生中只下地一次，那就是它死的时候。

其实这只是个骗人的故事。这种鸟其实哪里也没有去过, 因为一开始它就已经死了。

Rest now my fellow recruit. Peace and freedom is yours.

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Unlike reputation, character cannot be bought

2008-05-29T08:00:00.000+08:00

This case has been one fraught with acrimony and controversy. Many legal points have been raised, some of which I have understood, others completely bewildered me. But all the points raised centred around one subject: Whether there was malice when we published that NKF article.

Let me deal with this point. It is clear as daylight that the plaintiffs sued not because their reputations were tarnished but that it was a way to stop our campaigning over the issue during the elections.

Instead of letting the public decide, they have dragged the courts in and insisted that the courts adjudicate in a matter where it should not. In the process, they put the courts in an untenable and unenviable position. This is a tragedy that history will not kindly look upon.

But a court case is what we have and court cases are about seeking the truth and allowing that truth to surface.

As I pointed out, the question centres around whether there was malice on our part. I cannot deny that I get angry and even bitter with Mr Lee Kuan Yew over the things that he has said and done to me and others.

But through the years, I have seen the bigger picture and developed a sense of calm and equanimity that comes with knowing my role in society.

And because I feel at ease, I don't hate Mr Lee Kuan Yew and Mr Lee Hsien Loong. I don't wish them ill in anyway despite all that they have done and continue to do to me and my family.

I harbour no hatred towards Mr Lee Kuan Yew and Mr Lee Hsien Loong, much less any malice.

To hate my opponents would drag me down to their level of rancour and deceit which has no place in what we're trying to achieve for Singapore. More so I find it too draining and distracting to harbour those emotions.

My Christian faith guides me and it is a faith that compels me to fight for justice and to treat my fellow men and women with compassion.

Mr Lee tempts and taunts me to get out of bankruptcy and get back into the stream of political life that he sits as lord and master. Believe me, in such an environment it is a temptation that can be overpowering.

That I said to Mr Lee Kuan Yew during the cross-examination is exactly where I stand. I feel sorry for him but I don't hate him.

But I also told him that ultimately it isn't about him. Neither is it about his son, and it most certainly is not about me. It is about this country and the people who live in it.

It is about what is just. It is about compassion and how we treat our fellow men. It is about freedom and human dignity.

A society stripped bare of these virtues is a society unable to embrace humanity. But what is society without humanity is a thought too frightening to entertain.

Mr Lee Kuan Yew kept on repeating how he built up this country and how much he has stored in the reserves. That is the tragedy of the man. For all his intelligence, he does not possess the wisdom of life.

Because unlike reputation, character cannot be bought. A true statesmen will not need to fight for his reputation, for that will shine through even after he takes his final bow and leaves the stage of life. His name will linger on and be writ large fondly in the hearts of many for generations to come.

Many lies have been spread about truly great leaders. And yet these lies have never been able to snuff out the greatness in these individuals. On the contrary, their legacy grows in size and intensity.

Mr Lee Kuan Yew fights all his demons within himself to try to shore up his reputation. In the process, however, he destroys the very legacy that he so desperately desires to establish.

Then he pulled out the citation from Transparency International Malaysia and tried to use it as an endorsement of his integrity it, frankly, surprised me because it showed me how empty Mr Lee's life has become.

Such an intelligent man and yet so utterly devoid of wisdom. Can he not understand that no paper, no award, no citation can ever hope to still the voices of those who see the truth behind the propaganda?

I take no joy in pointing out to him how TIM is not an established, well-grounded institution on which one can take pride in being awarded a citation especially on the subject on integrity. In fact, I felt bad to point that out because it seemed that it was all the MM was clinging to.

Mr Lee must understand that integrity cannot, and does not, come from the grandiloquence of one's speech, it must shine forth from the righteousness of one's heart. If that light of righteousness is dim, no amount of persuasion will change reality.

Can he not grasp the fact that no amount of wealth and power can hold back the silent voices forever? When he is no longer with us in this world, no amount of suppression can hold back the vehemence of his critics.

I hope he takes the little time that he has left to ponder what I have said and to turn from his ways. It is not too late.

Over the last couple of days in court I have observed, as have many here, how those around him treat him with such servitude that made my hair stand on end. For whatever reason, they go out of their way to show him their subservience.

They are doing him a disservice by not telling him that he needs to amend his ways if he so desires to uphold his integrity. Maybe he has chosen to surround himself with these yes-people. Either way Mr Lee is moving in life's wrong direction.

Which brings me to the damages. I stand by everything I have written in the article in The New Democrat about the NKF as it relates to the running of this country because it is the truth and Mr Lee and the rulers of this country must always hear the truth no matter how inconvenient that may be.

I know what I say at now will not make a difference in terms of damages because I know it will not make a difference.

I willingly assume the position in this life because if this is the path that God has chosen for me then I cannot run away.

I can leave this country or I can capitulate and join what others have done in politics under the PAP. I will do neither. For to me my own integrity is at stake and that cannot be paid for in dollars.

Mr Lee may try to tempt me out of bankruptcy but it will not work. I may remain a bankrupt for the rest of my life as a result of my obstinacy.

It is not a position one aspires to but it is a cause I find worthy of battle and a call, though sometimes I may resist, I will ultimately trust and obey.

So, Your Honour, we have come to the stage where all of us will be held to account for what we do today. It is said that as we make our bed, so shall we lie in it.

That we do today will live on in history forever. I do not envy your position. I ask that you forgive me if I have offended you in a personal way. I had no intention of doing that. In another place and time, we would be perhaps be good friends.

But I have to take issue with your position as a Judge and what you have done as well as the decisions you have made in this courtroom. To that extent I will fight you with every fibre of my being for the sake of justice.

We all have decisions to make in life. I have made mine and I am at ease with it. You have yours to make. I wish you wisdom and honesty.

Thank you.

CHEE SOON JUAN

28th May 2008

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Taiwan wants to become like Spore?? LOL

2008-05-28T08:41:00.001+08:00

The Lees are suing Dr Chee and SDP.

May 28, 2008
Chee takes issue with NGO endorsements listed by MM
SDP chief dismisses NGO reports cited by MM with good views of Singapore, listing instead those that rate the country poorly

SINGAPORE Democratic Party (SDP) chief Chee Soon Juan yesterday questioned the types of non-governmental organisations (NGOs) whose ratings and reports Singapore paid attention to.

Minister Mentor Lee Kuan Yew had listed a few, including Political and Economic Risk Consultancy (Perc); IMD, the Swiss business school which produces the World Competitiveness Yearbook; and Transparency International, which awarded him a Global Integrity Medal in 2000.

But Dr Chee dismissed the medal as a 'ridiculous piece of paper', and rattled off his own list of NGOs which did not rate Singapore highly.

His beef: Singapore and its leaders choose to listen only to NGOs which give the country a good rating, and base their integrity and leadership skills on such reports.

'Are you including the International Commission of Jurists? Are you including Human Rights Watch? Are you including Amnesty International? Are you including the International Federation for Free Exchange? Are you including the South-east Asian Press Alliance? Are you including Liberal International?' he asked.

'Let us not pick and choose what endorsements you get, because over all, if you're trying to show me your standing in the world is that high, you wouldn't be clutching at straws and producing something from Tunku (Abdul) Aziz,' he charged.

Dr Chee was referring to the president of Transparency International's Kuala Lumpur branch, which gave MM Lee the integrity medal in 2000.

Dr Chee alleged that its chairman, Mr Peter Eigen, whom he met, told him he did not authorise its Malaysia branch to give MM Lee the award.

Reading from the citation for the award earlier, Senior Counsel Davinder Singh had noted: 'In endorsing this award, the chairman of Transparency International, Mr Peter Eigen, says: 'The role of Lee Kuan Yew in fighting corruption in Singapore is well known and is considered an important model for fighting against corruption.''

Dr Chee was cross-examining MM Lee on Day 2 of the hearing to decide on defamation damages owed by the SDP, himself and his sister Chee Siok Chin.

At issue was the use of NGO reports as a testimony of MM Lee's integrity, which Dr Chee attacked.

MM Lee explained that Singapore paid attention to NGO reports which investors use as a reference when deciding which countries to put their money in.

'There are liberal organisations which disagree with the way Singapore runs its social systems, but we believe we know better, otherwise we wouldn't be here,' said MM Lee.

To this, Dr Chee interjected that MM Lee was being 'a little presumptuous' to think that Singapore would not be what it is without him and his government.

Dr Chee asserted that places such as Hong Kong, Taiwan and Korea thrive without MM Lee's system of governance.

In response, MM Lee cited how the President of Taiwan, Mr Ma Ying-jeou, after a visit here earlier, said he wanted Taiwan to become like Singapore, corruption-free.

China premier Wen Jiabao, added MM Lee, also told Hong Kong chief executive Donald Tsang to 'go to Singapore and see what they are doing'.

'There are various parts of this Government which do not comply with Western practices, including the law of libel, but it is a system that has worked,' said MM Lee.

Truth is countries like Taiwan and China wants to become like Spore only in certain areas, such as administrative expertise. They are certainly not endorsing LKY's political system. LKY conveniently ignored and twisted this fact.

Actually the whole exchange reminds me of an incident several years ago in NUS. Then LKY has gotten into a verbal tangle with a student, Jaime Han. Han has called LKY a despot (bravo!!!) and said that LKY loves to furnish one-sided examples to suit his argument while ignoring those critical of him. As LKY started to get worked up and get personal with Han, Han quite correctly excused himself and chose not to indulge Lee further leaving LKY seething. I managed to view the NUS video recording of the incident. I applaud Han for calling a spade a spade and the scowl on LKY's face is simply priceless hahaha!

As expected the 154th media has been extremely busy the past two days. When it comes to political coverage the 154th media is quite simply trash and completely biased. TODAY's coverage by some dick paulo pinoy is even worse. But thanks to the internet, I urge SGians to visit http://yoursdp.org/ to read the other side of the coverage and make up their own minds on what really goes on in court. The truth is probably somewhere in between and less flattering on LKY and his far from independent judiciary.

Why do they hate us so?

2008-04-30T21:14:00.000+08:00

Today i chatted on msn with a charbor. SGian, late 20s, working single, NTU grad. The Mas Selemat affair being the hottest topic in town naturally we talked a bit about it. Somehow the topic went into politics...

ME: do u know People's Association? the PA?
Her: yah
ME: PA is in charge of community centres. WKS and LHL are the chairman and general secretary of the PA
ME: Resident's Committee and CRC are also under the PA
Her: so?
ME: where does the budget for PA comes from? from the govt?
Her: partly
ME: do u know that if an opposition MP wants to hold an event at the community centre he will be rejected
ME: whereas PAP MPs and non-MPs even hold events at the community centres
ME: so u can see party politics at play here. State resources are channelled to a party and used for that party's purpose. Yet an elected MP cannot use this resource simply bcos the MP is an opposition one
ME: during GE for example u see the PAP rallies, organised by the respective RCs.
ME: this is using state resources to advance a party's interests... salah lor
Her: it's politics lor
Her: opposition shouldn't make this sort of thing an issue
ME: it is gutter politics
Her: nothing is fair esp if u r in politics
ME: we will never rise above it if we condone such vindictive behaviour in our politicians
Her: it's the same everywhere
ME: just because everyone smokes does it mean we shld too?
Her: well if it's a smoking room then yes
Her: and being in politics there's no level field
Her: obama has more cash so he can do more ads than clinton
Her: that's an adv
Her: pap is the ruling govt
Her: and pa is state owned so of course there's no fairness
ME: there is no level playing field in the sense that yes u may hv more resources, backers, supporters etc. But the min u enact laws, institutionalise unjust barriers, u r going down the slippery slope
ME: a slope that will come back to bite u one day
ME: compete fairly, why so scared
Her: becoz they r ruthless remember
ME: PAP is not a small party at all, why so scared of the opposition? if the opposition are as bad as the PAP made them out to be, ppl will know how to vote, example u will vote for PAP wat
Her: i hate to hear opposition make these sort of claims
Her: to me it's like crying out loud they r being bullied and weak
Her: i'd rather hear them talk about issue!
Her: it's just whining
ME: i think i m not wrong to say that ur big issue got to do with economics and $
ME: civil rights isnt so important to u right?
Her: civil rights is ??? being bullied unfairly treated? invasion of privacy?
ME: bcos if u r able to let these "small" issues go and continue to b perpetuated, there is no end where it will stop, as long as there is $
Her: not true
Her: if these r normal folks and they r victimised then of course it's wrong
ME: how do u reconcile the fact that such "small" injustices can continue while expecting the opposition to present to u reforms and policies
Her: these r people trying to compete and first of all they r not victimised, they have a disadv
Her: and if they keep complaining i think it's silly
ME: so to complain about being victimised is silly??
Her: why not
ME: like that no need CASE liao lol
ME: the logic makes no sense
ME: how can u justify your money, my money, Sgians' money be used on one political party to further their own agenda? if u dun mind, u can just donate to PAP itself. the govt's money is not PAP's money u see
Her: they r still given the chance to hold rally right?
ME: that is not the point. The point is the PA, a branch of the govt, shld not be engaged in partisan politics
Her: but govt is pap
Her: that's the reality
ME: PAP forms the cabinet, the govt does not belong to the PAP
ME: big diff hor
ME: and this is why govt resources are being abused by the PAP to do PAP's biddings
Her: yes it's wrong, but do the opposition want to make this an issue?
ME: wat u r saying is since PAP forms the govt now they can do watever they please
Her: so that's the case and if the thing is not a big issue, what does it matter?
ME: do u feel this is right? wat do think of a govt that uses state resources in this manner?
Her: it works against opposition but not the people
ME: to say that it doesnt matter and say that it is acceptable is 2 diff thing
Her: i told u politics got no level playing field
ME: so u are telling me u accept this unfairness?
ME: it is acceptable to u?
Her: there's no need to whine about
Her: yes acceptable to me
Her: if i were an opposition
ME: in other words u accept blatant discrimination, in the name of politics
ME: u accept double standards
Her: yes becoz it's poliitcs
Her: and it's dirty
ME: it should not be, it is dirty if u make it so
Her: if one day there's a stronger credible opposition who doesn't whine, l'll look up to him/her (when such an oppo appear, wat will she expect next? that they can fly? LOL.. of cos i didnt say that)
ME: it is like saying it is ok, where is the moral principle??
ME: shocking
Her: u r so idealistic
Her: naive
ME: .................. (really speechless liao..)

A while later the topic went into oppression of opposition members in SG. She tried to justify the use of the ISA on opposition politicians in the past (in the 60s and 70s)...

Her: an oppression of an extreme oppostion who may give dangerous ideas can be amount to self defence by existing govt (wah.. use self-defense argument & paint oppo as extreme)
ME: well u hv to prove that the opposition is indeed extreme or dangerous
ME: r the opposition really dangerous? lets look at the ISA detainees
Her: yes taliban is an oppositon party too
Her: they r dangerous!
ME: do u know under the ISA, there is no open trial.
Her: can u deny the fact that groups like taliban are not dangerous? (omg! Sg oppo is taliban to her!)
ME: so all the political detainees were NEVER charged in court, no evidence were ever tabled against them to support allegations of them being dangerous elements
Her: so they can be given free speech on equal ground?
ME: so u see there is no prove that the opposition is dangerous. your argument again cannot stand
Her: u sound like u r the intellectual smart aleck
ME: i happen to be able to counter ur points thats all, i certainly dun wan to make ppl think i know a lot.. fact is i not smart, i cant even get into local uni lol
ME: "an oppression of an extreme oppostion who may give dangerous ideas can be amount to self defence by existing govt" - this is wat u wrote. I hv shown that this is groundless in Sg's context
Her: u think u know it all, what makes u think that the opposition is safe for sure? (siao liao.. attack-the-person tactic coming)
Her: i cannot be sure they r dangerous
Her: but how can u be sure they r safe?
ME: we deal with facts and logic. If u feel someone is dangerous, u got to show proof & evidence
Her: u deal with facts? i htink u deal with bias more
ME: this is the problem with the ISA. They cannot show facts n evidence, what it means that it can be used as a political weapon for dictators to preserve power and prevent competition
Her: look that's in the past
Her: like i said lky has to deal with this bad karma
Her: but it shouldn't give people like u a huge sympathy points over the opposition
ME: if u feel i m biased i cant help it, but the facts r facts, ppl will come to their own conclusions eventually
Her: but u can't deny the fact u have a huge sympathy points over the opposition
ME: how do u reach that conclusion? i merely presented facts that do not make the PAP look good
ME: in fact i tell u i pity LKY
ME: he could hv left a brilliant legacy, but as they say power corrupts
Her: from the way u support chee
ME: chee? i will speak up for anyone i feel has been unjustly victimised, not jus chee
Her: u actually support him?
ME: support in wat sense? if he comes and contest in my ward, i will vote for him over PAP any time
ME: if the WP or any opposition party comes to my ward, they will get my vote too
Her: see, why?
Her: just becoz they r victimised?
Her: so any tom dick harry on the opposite is worht ur vote?
Her: where's ur stand on being a singaporean then?
ME: because i do not condone the systematic unjust oppression of opposition politicians in my country
Her: to me u r slinging mud that's all
ME: mud slinging is wat the 148th media does best. Any wonder why they r ranked that way in press freedom? lol
Her: congrats u joined their ranks then
ME: to me it sounds like ppl who vote for oppo offends u .. how come?
ME: u can go vote for PAP, i wont be offended
ME: its your choice, i respect that
Her: people who vote any tom dick harry on the opposite offends me
Her: becoz they r not logical
Her: and never put the country's interest first
ME: do u think the country's interests is all about asset appreciation?
Her: it's definitely more than ur oppostion suppression
Her: its' about prospering and living in peace
ME: this is a very common phenomena i observed on the internet
ME: ppl who r sympathetic to the opposition are more forgiving, whereas ppl who are pro-pap are very unforgiving
Her: huh forgiving?
ME: they get angry even
ME: see? i can respect ur decision to vote for a party u want. But u seem unable to respect my decision to vote for the party i want.. that smacks of authoritarianism to me
Her: u know that's how people like bush can get into poliitics and be a leader
Her: becoz of pp like u!
ME: lol in the US i would be a democrat LOL the policies i support r liberal in nature
Her: doesn't matter what his stands on policies are
Her: just as long as he presents a different case...
Her: but here in sg
Her: ur support for a govt is one that's anti-pap (wah got wrong meh? must be pro-PAP one ah?? jialat sia..)
ME: this has been an interesting chat.. it will help in my analysis of how SGians view politics hehe

Wah piang! Do you think she is in love with me? Hahahaha!

She claimed that she is not pro-PAP or a PAP member leh, but from the anger and hate, i seriously hv my doubts sia... And this is not healthy at all for SG. Decades of political brainwashing and "national education" by the 148th media has resulted in hate mongering towards opposition politicians. It is dividing SGians instead of building an inclusive community regardless of one's political views and opinions. Sad siah ...

LHL's lame attempt shot to pieces

2008-04-12T14:38:00.002+08:00

The 148th carried this piece of news yesterday...

The recent protests against the Olympic torch relay and the display of contempt for China have angered the Chinese public and will have consequences well beyond the Olympics Games, Prime Minister Lee Hsien Loong warned on Friday.

He said the people of China, especially the young, are viewing the protests as an affront to their country during what should be 'China's coming-out party, to celebrate its progress' and opening up to the world.

The clown simply cannot shut his mouth for his own good. Quite obviously China's 'coming out and progress' is only in certain areas, and in other areas have not progressed. Clearly this is what the protests during the Olympic torch relay are about. Come to think of it SG is also similar to China.. we have made economic progress, but in some areas we have made no progress or even regressed! Maybe LHL is thinking ahead of the Youth Olympics. Bcos defending a dictatorial regime like China is not much different from defending his own govt hahaha!

Today the ST carried a response from a LSE don, Prof Conor Gearty, regarding LHL's comment. (I am sure ST edited what the don said, but still what was printed make some solid rebuttal.)

Human rights is not the enemy in the face-off between pro-Tibet demonstrators and China's government but part of the solution.

The Rausing director for the LSE Centre for the Study of Human Rights gave a speech on how human rights - built on three core ideas of human dignity, equality and representative government - protect the public interest.

Near the end of the speech, Prof Gearty responded to PM Lee Hsien Loong's criticism of the protests that have disrupted the Beijing Olympics torch relay.

Declaring himself proud of the chaos, Prof Gearty said: "Protest is part of the guarantee of human rights... Protest is how we revive and re-imagine the idea of dignity and amnesty. Protest is a new way of revealing basic truths."

Prof Gearty also responded to the argument that China would never bow to public pressure on an issue like Tibet. "The implication is that if you leave China alone, they'll be fine," he said. But neither a situation where nothing happens and China does nothing, nor a situation where something happens and China still does nothing, is satisfactory, he said.

Instead he argued for a solution based on the language of human rights.

"Human rights has a language available to provide a solution, a language of minority rights, a language of national and cultural identity." he said.

"So human rights is not an enemy, but human rights, as often is the case, is part of the solution."

Prof Gearty goes right to the point and demolish LHL's attempt to beat around the bush and obscure the real issue about the protests.

He is also clever, bcos he may well be describing SG instead of China.

LHL uses China to hint and defend PAP's own "progress". Likewise Prof Gearty uses China to criticise and indirectly humtum LHL and the PAP hehehe ~

.

Kiasu and kiasi leaders

2008-04-07T22:09:00.000+08:00

... complacent too!

April 7, 2008
May hearing on Feer libel suit

A TWO-DAY hearing will be held next month to decide if the defamation suits taken by the Prime Minister and Minister Mentor against the Far Eastern Economic Review (Feer) magazine will go to trial.

Lawyers for PM Lee Hsien Loong and MM Lee Kuan Yew had applied for a summary judgment last August, arguing for the High Court to rule on the case without it going to trial.

The court can do so if it is satisfied that the arguments presented by Feer are baseless.

But Feer's lawyers are opposing the move as they want a trial.

On Monday, at a closed-door High Court hearing, they sought more time to respond to the two leaders' applications.

Justice Woo Bih Li has given Feer until tomorrow to present their arguments.

Want to sue people yet don't dare to go trial and face people in court? Like this where got any credibility left? Talk big only but comes to action all hide hide behind the court like cowards hahahaha!

What cabinet change?

2008-03-31T09:21:00.002+08:00

I find the ST report not reader-friendly, and frankly i doubt if people will care. For my own info i done up something simple below so that i can see the whole thing at a glance.

I put them in 2 main columns, the left column are full ministers while the right columns are minister of state. Those names that are in colour means they have double portfolios. E.g. Raymond limp is minister of transport but he is also 2nd minister in Foreign Affairs.

3 ministries have no minister of state - Health, Manpower, and Environment. Whether those guys are that efficient that they don't need any help i dunno (or it could mean the other ministries are bloated hehehe). But i think this 3 ministries should play bigger roles as we are at the brink of an energy, climate crisis and peak population jam. The ministers in charge are also light weight with no worthy results to their credentials. Khaw was praised by GCT last night. But Khaw is responsible for rising healthcare costs and soon means testing will come in.

The other most glaring "ministry" is the PMO. Little Lee has 2 full ministers and one minister of state under him. Of cos on top of him there is the MM and SM, also without stated porfolios. Seriously looks like some kind of retirement home for cmi ministers and minister of state hahaha! But is not so funny when i think of the millions they are drawing in salaries.. WTF!

MITA is another dinosaur ministry. That one-eye Lee is still there even though he said after last election he will retire. Now he has Lui Tuck Yew, the 'i never watch porno' ex-Navy chief, with him. I think the media sector is just going to get more and more un-free and controlled under these kukus. After the Malaysian Election tsunami i'm sure the PAP will also want to find ways to fix the internet before Spore's own next election.

Sadly the Mas Selemat man, Mr WKS, is still around. But he has a new assistant, Shanmugam. Shanmugam is a lawyer, he will help WKS to answer questions and prevent self-pawn. He might even sue you if you tell him "sorrie also must explain" hahaha!

Right at the bottom, Jayakumar is said to be on the way out. He is now a "coordinating" minister without a ministry. But seriously he wont go one lor and will just hang around a while more and continue to draw his millions salary. Knn might as well dump him with the jiak liao bees in PMO! But that will be kind of obvious LOL.

So in total we have 20 ministers and 11 ministers of state. Wah lan eh!!! So many for fuck!? Play musical chair ah? Knn a kampong standard team need so many players one meh? Even Chelsea or Man Utd dun have such a big squad! SGians seriously short changed sia...

We made the 2003 arrest?

2008-03-27T11:51:00.000+08:00

One month after the famous "Toilet Break", there is still no sign of the limping tellolis, and the poodles are nowhere close to even sniffing his trail.

Being able to escape is already unimaginable. But failing to capture him after one long month of unprecedented island wide security dragnet is simply unforgivable!

Today something in the front page of ST caught my eye. It is a blurb from the man responsible for the worst security blunder in our nation's history.

"The best available information from our own sources and from our foreign security and intelligence partners suggests that Mas Selemat is still hiding in Singapore. These partners are the same entities which helped us arrest him when he was hiding abroad in 2003."

- Deputy PM Wong Kan Seng

I think Mr Wong has to be corrected here.

Mas Selemat was caught by the Indonesians, and then handed over to us. We did not catch or arrest him in 2003. The Indonesians did, not us. We certainly did not fly over to Indonesia to catch him. To somehow twist the sentence to make it sound like we made the 2003 arrest is completely misleading.. and rather shameless.

Indeed the Indonesians have just said that if this time Mas Selemat is caught, he will not be handed over to S'pore. Of course Mr Wong did not respond to that statement, and our compliant media did not ask him. LOL ~

The missing van

2008-03-04T22:31:00.000+08:00

It's been a week and the JI dude is still at large. And the much vaunted security forces and their foreign talents (Gurkhas) have nothing to show for their unprecedented effort.

There was a report of a stolen vehicle, a SingPost van stolen on the day of the escape several hours before Mas Selemat's breakout on 27 Feb at 4:05pm (heck! is the breakout time even accurate?). The report said that the police were not ruling it out as a possible lead in the Mas Selamat investigation.

I posted in Yawningbread's blog...

I think now the gahmen needs to search for 2 things:

1. Mas Selemat
2. the missing SingPost van

Are the two events related?
If they are not how come until now they cannot locate the van?

The longer they cannot locate van, the more likelihood the 2 are connected.

Even if the 2 incidents are not related. If up till now they cannot even locate a missing van, what are the chances of locating a supposedly highly-trained fugitive on the run??

We know the authorities have already failed miserably on their detention competence. But now the missing van can be used as a benchmark to assess their search and locate competence. And that is already setting the benchmark very low liao hahaha!

Dangerous man in S'pore

2008-03-02T09:50:00.002+08:00

I was reading Mr Wang's blog where he urges all bloggers out there to post on their blogs the now famous face of JI terrorist Mas Selamat Kastari.

While i think that is a good idea, but by now the whole of S'pore and probably most of the rest of the world will already know how Mas looks like. The telcos even spammed S'poreans' mobile phones in the process, and the 148th media (as usual) made a big "positive" deal and spin out of it.

So I am not going to post Mas's face on my blog. Instead i will post the face of the real superstar of this national comedy. He is none other than....

Ta dah! There you go!

In my opinion this shorty is more dangerous than Mas. Becos he is the one who has already done damage to S'pore and S'poreans, while Mas is still planning his. From bullying SDP to harassing peaceful protesters, he has done it all. And now S'pore's reputation is tarnished yet again under his watch. The chance of him resigning? I think i have better chance striking one million toto than that happening hahaha!

Por lumpar letter of the month!

2008-01-24T17:13:00.000+08:00

Even though January still has a week to go before it is over, I think the letter below will most likely win the BEST and most por lumpar letter of the month award! Not to mention upstairs probably a little kuku too ~

Jan 24, 2008
Thanks to our leaders' great foresight, our Sovereign Wealth Funds have financial clout to shock and awe the world

FOR the past two months, 'shock and awe' swept through the entire global financial market by our small country's two Sovereign Wealth Funds (SWF).

The financial world was 'shocked' when a small country less than 1,000 sq km in size injected US$10 billion into Union Bank of Switzerland. 'Awe' came when similar injections were made for Merrill Lynch and Citigroup; no less than US$20 billion were committed in less than two months. It seems that there is no limit to the strength of our SWFs. The Strait Times subsequently published many articles relating to these funds and their activities.

It was a coincidence that 'National Treasure', a film about a group of treasure hunters looking for the mythical Lost City of Gold, was screened in cinemas at the same time when our SWFs made their investment. Wikipedia showed that Singapore's GIC and Temasek Holdings hold two positions among the top seven global SWFs (worth more than US$100 billion each).

If Wikipedia's estimates of more than US$400 billion combined assets are correct, it means each kilometre square of Singapore land is worth at least US$0.5 billion, making us the richest country in the world by SWF standards. There is nothing mythical about Singapore and we are definitely not lost, so is Singapore the modern day City of Gold?

Most will be too shocked to look beyond these figures, but many world leaders know Singapore is the only non-oil producing country on that list. Our pioneer leaders have fiercely guarded these foreign reserves since our independence. Opposition parties have many times called for the use of these funds and, for the past 40 years, there were many times that these funds had come in handy; the oil crisis in the 70s, the recession in the mid-80s, the financial crisis and economic slump after 1997. Every time when there was a crisis, Singapore's leaders did not succumb to temptation of using the fund - they bit the bullet and pushed for internal changes. Every time Singapore became stronger, these funds grew.

Fortunately for us, we voted for the correct party to govern our country all these years and after many painful transformations, Singapore now has one of the most robust economies in the world and also is one of the richest nations in the world. Is National Treasure all about money? No, it is our pioneer leaders who had the foresight and determination to build wealth for the nation and make it stronger.

Syu Ying Kwok

oh what a laugh!!!
yes looks like we have a winner ~~ LOL

World class??

2008-01-21T23:53:00.000+08:00

This video says it all!

Lui tio kan! LOL

2008-01-19T07:56:00.000+08:00

One of the most cannot-make-it ministers in SG (IMO hehe) recently defended a school principal. The principal had harshly told her Sec 5 students that they might as well apply for ITE becos they can't make it to Poly or something like that. Seems like parents and students are not taking the principal's remarks too well and so dear Rear Admirer (pun intended) Lui who is MOE minister stepped in.

Apparently Lui told the press that the people should pay attention to the principal's message and not her tone. So i started thinking, what if some one go tell Lui off? Will he be able to pay attention to the message and not the tone? Can he practice what he preach? For example i think he cannot make it as a minister bcos someone like him who spends his whole career in the assfucked SAF has zero private sector experience and only got into politics "through the backdoor". What's my message?

Anyway some one shoot him liao, will he get the message? LOL

Jan 19, 2008
Principal's tone to Sec 5 students plainly wrong

I REFER to the article, 'Principal's ITE advice 'had to be delivered'' (ST, Jan 17).

I cannot believe Minister of State for Education Lui Tuck Yew expects students, parents and the concerned public to 'separate the 'tone' from the 'substance' of the message'. He states the obvious that students 'need to be told that if you don't work hard, you won't make it'. He has missed the issue completely.

No one is suggesting hiding the fact that 40 per cent of Sec 5 students will not do well enough in their O levels to qualify for the polytechnic. We all agree that this message 'had to be delivered'.

The issue at hand is all about the tone. The tone of the principal in question reflects her true intention when communicating this message to her students. Did she intend to encourage her students to work hard? Judging from the effect she had on the majority of the students, it is extremely difficult to believe that she 'meant well'. Her students were discouraged and went away with battered self-confidence. Parents had to do 'damage control'.

By downplaying on the 'tone', Rear-Admiral (NS) Lui adds salt to the wound. While he shared that educators can 'calibrate', 'soften' and 'improve' on the message delivery, he fell short of acknowledging that this principal's tone was plainly and simply wrong because the effect it had on her students was far from nurturing.

Perhaps the principal indeed 'meant well' but somehow her tone was misinterpreted. Being able to communicate effectively so that both the message and intention are clearly understood is paramount for educators.

Lastly, Rear-Admiral (NS) Lui shared that he had 'interacted with enough educators' to know that they 'are far more ambitious for their students than they are for their career advancement'. This is a sweeping statement. No one will commit career suicide by appearing otherwise when interacting with their boss.

I would suggest to the minister to conduct an independent anonymous survey among teachers to check ground sentiments as to whether the school ranking system is working against the Ministry of Education's mission of nurturing our youth.

It has happened in the past when schools had students drop difficult subjects, in an apparent attempt to improve their rankings.

Lawrenz Sim Chee Choon

Elite girl! LOL

2007-12-30T23:54:00.000+08:00

Wah! Insanepoly has an elite girl t-shirt!!

nice leh... steady lah!
But the "un" caring part like cannot see properly...

MOM spins broken record

2007-12-25T08:46:00.000+08:00

I pay attention to letters and replies from the gahment. Becos the way they write is how they spin and bluff people. Take this example a reply from MOM to SGian's unhappiness over infusion foreign workers (notice the word 'talent' is seldom used ever since the PM's national day rally speech)...

Dec 25, 2007
Flexible labour policy has helped S'poreans

I REFER to the letters about foreign workers in Singapore and the competition they could pose to older local workers for jobs.

As Singapore has limited manpower, foreign workers supplement our workforce when there is a shortage in numbers or skills. Businesses cannot expand and will even move elsewhere if they cannot get the workers they need here. Singaporeans in these companies would lose their jobs. Rather than taking jobs away from locals, our flexible labour policy has instead helped our economy grow and benefited Singaporeans directly.

More Singaporeans, including older workers and women, are employed than ever before. The employment rate for those aged 25 to 64 is at a record 76.5 per cent as of June. As a result, wages have gone up. Singaporeans have also been taking up better jobs - nine out of 10 jobs gained by residents from 1997 to 2007 were those of Professionals, Managers, Executives and Technicians (PMETs). The overall unemployment rate of 1.7 per cent in September is the lowest in almost a decade. We are effectively at full employment.

Despite abundant job opportunities, Singaporeans should still enhance their employability through upgrading their skills and productivity. We would like the letter writers who have difficulty finding employment to contact the Singapore Workforce Development Agency (WDA) at 6883-5885, so that we can assist them in training and job placement.

Jean Tan (Ms)
Director, Corporate Communications
for Permanent Secretary
Ministry of Manpower

In a single line the MOM person misled readers over how many jobs really go to SGians. Residents include SGians and non-Sgians leh, want to bluff who? And they created this wtf category PMET where technicians are lumped together with professionals and mangers?! WTF! Like that win liao lo!

MOM is spinning the same old broken record. And from the writing, i don't think the writer is half convinced of the what-the-fuck she wrote.

And oh today is X'mas and i believe in Santa Claus.. ♫

Reservist dulan with SAF

2007-11-12T09:52:00.000+08:00

The injustice and institutionalised disadvantage marches on...

Nov 12, 2007
Why so long to decide on ICT deferment, SAF?

I AM a national serviceman with HQ 26 Singapore Infantry Brigade and I had applied for deferment from my in-camp training (ICT) scheduled from today to Nov23.

My application was submitted on Oct 2 and I should have received a reply within 14 working days.

However, on Oct 22, I received an e-mail to tell me my application was still being processed. After that, I received two calls from the National Servicemen Services Centre (NSSC) to tell me my deferment was still being processed.

I was not the only one. None of the other deferment applications in my unit had received a response.

Last Friday, I called the NSSC and learnt that my application had been rejected and my status updated that very day - more than a month after I had applied and only one working day before the start of my ICT.

According to the NSSC, the approving authority for deferment had transferred from the unit operations officer to the commanding officer and that could have caused the delay.

To me, it is disingenuous to use transfer of authority as an excuse to sit on applications until the last minute. Applications submitted in a timely manner should be given a timely response.

For the record, my deferment application was for overseas work reasons and a timely response was needed to make contingency plans. I hope the Singapore Armed Forces understands that in the Singapore economy of today, many companies and jobs are regional in nature and require travel at short notice.

Steven Chan Kee-Lin

Too bad Mr Chan. You have to do your part because the govt loves foreigners more than S'poreans.

NS for you, jobs for foreigners!

This Professor has cow logic

2007-10-23T09:01:00.000+08:00

KNN police no need to be accountable for their actions one wor ...

Tuesday, October 23, 2007
Prof Ho explains T-shirt incidents

THE police may have over-reacted in their bid to keep law and order here when Singaporeans and Myanmar expatriates tried to show support for the beleaguered people of Myanmar, acknowledged Senior Minister of State for Home Affairs and Law Ho Peng Kee.

Two recent incidents — where police told people to take off T-shirts bearing messages such as "Stop the bloodshed in Myanmar" — occurred at a time when "emotions were running high" among the Myanmar community here.

"I agree that the police were perhaps being overly-cautious, but let me give the assurance that its officers did not intend to embarrass or offend the persons wearing the T-shirts," Associate Professor Ho said in reply to MPs' questions.

He added that the dynamics of group behaviour are "often not entirely rational and can be stirred by emotive slogans and exploited by others for their own cause".

Nominated MP Eunice Olsen asked if student activities to highlight the situation in Myanmar constituted a security threat. The three local universities had teamed up to hold a series of activities early this month, including a vigil at the Singapore Management University that was videotaped by security officers.

To her concern that such surveillance would dampen Singaporean youth's keenness to spontaneously express their views on global affairs, Assoc Prof Ho said the intent was "not to intimidate the students".

Police forces all over the world, including London, conduct similar videotaping activities to aid investigations, in the event that wrongdoing arises.

"It's not something extraordinary. No ill intentions are meant … and the basic message is that if you're innocent and you're not out to break the law, there should be no fear," he said. — jasmine yin

So in the mean time the police can intrude, shove a camera in your face, harass, tail you, and continue to offend you! And if you are fearful it must mean your intentions are ill, you are not innocent, and you are out to break the law! You must not question the police's intent, you must question your own!

Repeal section 377A

2007-10-11T12:20:00.000+08:00

http://www.repeal377a.com/

And I quote from yawningbread...

"...the biggest joke of all is when I hear some of us cry out for the government to let up, loosen up.... give us a sign that the coast is clear, and that we can speak up. In other words, to wait for the government to give us the 'OK'. It won't happen. This government is not going to let go of its worst instincts. They would rather drag Singapore down than trim their own span of control -- in that way, they are no different from the junta in Burma, just slicker economic managers. The only people who can save Singapore are Singaporeans themselves. We begin by seizing back our right to ask tough questions and speak our minds. Overcoming our own fears. Standing up for what we believe in."

http://www.yawningbread.org/arch_2007/yax-794.htm

Free Burma - support!

2007-10-03T19:29:00.000+08:00

http://www2.free-burma.org/index.php

knn sad and angry man!! chao cheebye these fuck up generals hope they motherfucking faster die and families die in air crash!! knnbccb 王八蛋 cheebye 杂种 kia all hang kar chan!!! then those fucking useless poodles harassing ppl outside myanmar embassy all are cheebye kias and running dogs!!! hope u all let dog fuck knn 不得好死!!!

Why Apple is tops

2007-09-06T23:52:00.000+08:00

Link

To all iPhone customers:

I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of iPhone by $200 two months after it went on sale. After reading every one of these emails, I have some observations and conclusions.

First, I am sure that we are making the correct decision to lower the price of the 8GB iPhone from $599 to $399, and that now is the right time to do it. iPhone is a breakthrough product, and we have the chance to 'go for it' this holiday season. iPhone is so far ahead of the competition, and now it will be affordable by even more customers. It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone 'tent'. We strongly believe the $399 price will help us do just that this holiday season.

Second, being in technology for 30+ years I can attest to the fact that the technology road is bumpy. There is always change and improvement, and there is always someone who bought a product before a particular cut off date and misses the new price or the new operating system or the new whatever. This is life in the technology lane. If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon. The good news is that if you buy products from companies that support them well, like Apple tries to do, you will receive years of useful and satisfying service from them even as newer models are introduced.

Third, even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these.

Therefore, we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store. Details are still being worked out and will be posted on Apple's website next week. Stay tuned.

We want to do the right thing for our valued iPhone customers. We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple.

Steve Jobs
Apple CEO

Simply great PR. Not only does Steve Jobs listen to his customers, he apologises (when there is no need to) and backs it up with solid action. Compared to a certain anime distribution company that only knows how to threaten and sue their potential customers, Apple shows why they will continue to gain new fans and keep their customers even though their products are pricey! A company who listens to its customers is worth supporting, now I am tempted to try them hehe..

CPF annuity proposal a ploy

2007-08-26T11:25:00.000+08:00

Media release: CPF annuity proposal a ploy, not solution
24 Aug 07

The latest move by the PAP Government to force Singaporeans to buy annuities is yet another despicable attempt to withhold the people’s hard-earned CPF savings.

Already the Minimum Sum Scheme allows the Government to retain the citizens' retirement funds. Now the PAP wants to compel Singaporeans to buy annuity, making it even harder for them to survive their retirement years.

The annuity proposal is not a solution. It is a ploy. A ploy thought up by the PAP Government to strengthen its hold on CPF funds – funds that it then uses for its business ventures which are not transparent or accountable.

Worse, the ministers then use these businesses to tout their commercial prowess and demand that they be paid million-dollar salaries.

Let us be absolutely clear: The fact that Singaporeans do not and will not have enough funds to retire on is not because they are bad managers of their money and therefore need yet more Government intervention and supervision.

The fact that study after study shows Singaporeans having the highest savings rate in the world and yet retire as paupers point to one and only one conclusion: That their plight is a result of willful mismanagement of this Government.

The problem of insufficient retirement funds stems from the glaring fact that HDB flats are vacuuming up CPF savings.

For the overwhelming majority of the people who cannot afford private property, the HDB is the only means of housing. With the prices of the flats at current levels Singaporeans have had no choice but to use their retirement savings to pay for the monthly leases.

Worse, like most other public matters in this country, the cost of building the flats are kept secret. Then when the PAP wants to upgrade the flats and use them as threats during elections, they make the people dip more into their CPF to pay for the refurbishment.

Is it a surprise then that Singaporeans have little to live on when they retire?

This is a recurring nightmare for Singaporeans. The people are forced to bear the brunt of “solutions” to problems created by the PAP Government, problems that are wholly avoidable if not for the greed and short-sightedness of this Government.

The Stop-At-Two policy is another example where for years the Government introduced draconian measures to curtail the reproductive rate of the population only to discover that Singaporeans were not replacing themselves adequately. The “solution”? The Foreign Talent Policy.

The measure has flooded society with foreign workers and forced locals to compete with them for unconscionably low wages.

Such Government-say-people-do-with-no-questions-asked nonsense must stop. And the only way to stop it is for Singaporeans to exercise their freedoms of speech and assembly to send an unmistakable message to the PAP that they refuse to be fleeced and milked any longer.

Singaporeans must remember that democracy makes good economic sense, that is, without our political rights, there can be no economic rights.

Chee Soon Juan
Secretary-General
Singapore Democratic Party

Initial thoughts on Compulsory Annuities

2007-08-22T12:31:00.000+08:00

I dun intend to go into details. Instead I just want to look at the larger picture.

The details are not well presented. Most layman and man on the street will be overwhelmed by the details, will tend to skip them and not understand the resulting implications.
Sellers of annuities and insurance are doing what they do to make money.
The gahmen is micro managing and tweaking the little things, giving itself more work to do in the process ~~and more pay?~~.
It is still our money being creatively manipulated, shaved off, and packaged and shoved back to us in nice sounding words.
The gahmen is not coming out a single cent to help those above age 65 or 85.
The gahmen is conducting more social engineering. It is more and more nanny state instead of less. Watever happened to vivian bala-kick-a-nun's "we are a mature society"?

Overall nothing has changed, the pie has not grown bigger but instead has diminished. They are making withdrawal of your own CPF money harder.

Going through so much trouble tweaking CPF, 1% more here, another % less there... it will be easier to just implement a pension scheme of $250 per month to take care of all Sgians above age 85, Sgians who have contributed in the nation building process and in their twilight yrs need subsistence or help. But no, to this gahmen giving a single cent from public funds is like shaving a pound of their own flesh! And guess what? While peasants struggle to understand the latest CPF changes, the ministers continue to receive pensions once after the age of 55 until they die!

CPF is no longer your savings. It has become a tool to extend the gahmen's hold on Sgians. National ~~Slavery~~ Service has never ended, it has simply taken another form.

I helped a blind man today

2007-08-12T19:35:00.000+08:00

This evening on the bus home I dozed off listening to mp3 player. Then I was awakened by some noise. There was a blind man who was alone. He seemed to be asking for help and just talking out loud. No one answered him. The seat in front of him was an Indian foreign worker, and two Chinese women looking like mother and daughter were in the seat behind. The bus moved on and after awhile the blind man kept quiet.

Two bus stops later the blind man started up again in English. He wanted to know whether the bus has reached his destination. But again no one answered him. Passengers looked at him and kept quiet. They just stared and eye power only.

The bus is about half full. Half of the passengers were foreign Indians because it passed by Little India. Other than the mother and daughter, the rest are a mix of Sgians young and old and some Filipino maids.

* * * * * * *

What is so difficult to answer the blind man? Is it very hard to go find out what the trouble is? Why ignore him? Or worse look out of the window and pretend like cannot hear like that. If some one like me, dozing at the back of the bus with mp3 music blasting in my ears, can be awakened by the blind man, I wonder how the rest cannot hear a thing.

I wonder how long had the blind man been ignored before I went up to help. And how long more he has to go before someone finds out what his distress is.

This is the second time I saw something like this. The first time was a few months ago on another bus I helped a visually impaired person to locate his destination bus stop. That time I happened to be seated behind the person so I helped him out without delay.

I dunno... I just find society getting colder and colder with each passing year. All the heart warming caring tales on the Straits Times is just unreal to me. From what I can see everyone is just looking out for themselves. People rushing here and there. "If you are slow, please faster make way, dun block my 财路!" is the order of the day.

I am not bashing the foreign Indians. Becos on MRTs I have seen them giving up seats to elderly people but not the locals.

* * * * * * *

Anyway I later helped the blind man to alight from the bus stop and cross an overhead bridge. At the other side I helped him up another bus and informed the driver to look out for the blind man so that he will not miss his stop. I feel pretty good about myself actually hehe!

Is this man homophobic?

2007-08-01T11:35:00.000+08:00

Justicius Law Corporation
Director NICHOLAS LAZARUS

Main areas of expertise include corporate and tax litigation, domestic and international arbitration, cross-border joint ventures and mergers and acquisitions. He has advised Singapore corporations in connection with business ventures in the Philippines. Nicholas read law in the National University of Singapore and is admitted to practice in Singapore. He is also a graduate of the Association of Chartered Certified Accountants. He is an adjunct law lecturer in both Nanyang Polytechnic and Temasek Polytechnic.

Oh btw he also happens to be a member of the Young PAP, and he has been saying some strange and illogical things on the internet.

Naturally this prompted many responses from bloggers. Here are just some of them...

http://lbandit.lah.cc/2007/08/01/homophobic-young-pap/
http://shianux.jiyuuu.org/2007/07/31/a-disgrace-to-ypap/
http://nedstark.wordpress.com/2007/07/31/of-the-ypap-blog/
http://minorepiphany.blogspot.com/2007/08/young-pap-nicholas-lazarus-rails-on.html
http://blog.simplyjean.com/2007/07/31/nicholas-lazarus-and-his-h-phobic-views/
http://aaron-ng.info/blog/i-love-young-pap-blog.html