Economics Business Music Politics Altruism : 2005

Urban Poor in Singapore

I was walking along a street on the eastern side of Singapore on my way home from work. It was the early part of the evening. A lady whom I guess to be about mid 30s walked past me carrying a plastic bag full of empty aluminium drink cans. Soon after, her son of about 5 years old zoomed past me with a very cheerful disposition before he reached a small slope near the bus stop and started to play happily by sliding down the little slope. His face was one of contentment and happiness. His mum chided him to limit his mischief at which he smiled back. Little pleasures and simple pleasures indeed for the little boy.

For his mum, I saw a different facet of life. She headed for the dustbin and started to rampage the dustbin for used aluminium cans I guessed to sell to waste collectors in exchange for a paltry sum of money. Again, this is my guess that she needed the money to feed herself and her dependant.Although I know little of the mum and her son, the very sight has engraved a deep impression on me and sets me thinking about the following questions for which I do not have a ready answer to. It does not matter to me whether I have the answer or not but what matters to me is whether more can or should be done to help these people.

My very first thought is the yardstick by which we measure our society ought to be more holistic. It is common for us to make public our accomplishment of having the world's best this and that as a measure of our progress as a society. I stongly feel that society ought to be measured by what exits at both end of the spectrum of our society. What the elites could or has done as well as how well the bottom 5% of our society scrap a decent living for themselves. I am not proposing a communistic regime here but a social democratic framework that Singapore espoused herself as one. Jesus did say that he will measure us by how we treat the least amongst us.

My next port of call was the equality of opportunity. Lets not kid ourself that we have all the social and economic levellers to ensure equal opportuity for all children who are citizens of Singapore. I am glad that the government has instituted compulsory primary education in Singapore. This would at least provide a more level playing field to ensure that irregardless of the socio-economic background of our parents, we would not be too grossly disadvantaged and be given equal opportunity to primary education as a minimum. As I think deeper, equal opportunity actually means equal access to education on a standard provided by the government. Not equal opportunity really if we think deeper.

In closing, to be fair to Singapore government and also to most other governments, it is a difficult task to manage a society on metocratic basis with proper socio-economic equaliser to break the poverty trap and enhance socio-economic mobility both ways. They have done what they think is best for society without destroying the work ethos of the society that excessive welfarism could bring. I believe that for government, their hands are pretty tied as they have to operate within a frame work of policies and procedures that produces tranparency, fairness and predictability in outcome. However in so doing, the social safety net would inevitably miss people on the fringe of their policies. For these, private charities or charity on a personal level that have a more flexible and discretionary safety net could help. The recent spate of possible mis-management in some of the larger private charities has spawned a call for more transparency, accountability and check & balances to be in place. Let's not go over board and put the private charities into a straight jacket. We must remember their place in society and not throw away the baby together with the bath water.

Peter Lye aka lkypeter
lkypeter@gmail.com Safe Harbor. Please note that information contained in these pages are of a personal nature and does not necessarily reflect that of any companies, organizations or individuals. In addition, some of these opinions are of a forward looking nature. Lastly the facts and opinions contained in these pages might not have been verified for correctness, so please use with caution. Happy Reading. Peter Lye (c) Peter Lye 2014
1st Nov 2005

Winston Churchill and Nancy Astor at Blenheim

Nancy Astor to Winston Churchill "If I were married to you, I would put poision in your coffee." to which Churchill replied "And if I were married to you, I would drink it."

I find this very amusing as it reflects a certain thought line that is uniquely dry and humourous.

Originating from an American captialist with an Anglo Saxon upbrining for Astor against the true British Aristoracy in Churchill shows who is more capable of having the last laugh.

Cheers, Peter Lye

Benito Mussolini

Came across a quotable from Benite Mussolini who was an ally of Hitler but I find the quote ( not the person) interesting.

Take advice from everybody, collaborate with some but be responsible and accountable only to a few.

Cheers, Pete

Singapore's Missing Stoke - An alternative viewpoint - Oct 2004

The Singapore government has prided itself for being efficient, clean, very forward looking and almost infallible. It was only during the tenure of our former PM Goh Chok Tong that he has encouraged a more open dialogue with the electorate.

In the case of population planning, we have started off in the 1960s and 1970s as one of controlling population growth to the current issue of a predicted population decline. Is this a case of administrative over sight or a symptom of the government's Planned Parenthood Department pursuing their mandate blindly without due consideration for the changing environmental landscape that they operate in.

The original mandate was clearly population control in the face of a possible population explosion problem. The stop at two irregardless of the gender was promoted everywhere and policies were put in place to discourage 3rd or subsequent child in the form of dis-incentives ranging from tax rebates, school admission etc. This was wildly successful for a couple of reasons swinging us to the other end of the spectrum. Firstly, credit must be due to the government for the campaign and policies. Secondly, the result could also be due to a stark change in the attitudes of the population towards pro-creation. Thirdly, the cost of raising children has gone up geometrically compared to the overall rise (or fall) in income levels. Fourthly, on the economic front, the job market has taken a very stark change. The high economic growth years of 1980s with almost full employment has taken sharp turn to slower economic growth and rising unemployment which could be partially structural. Job security becomes an issue for many as the market turns from generally from an employee's market to one where employer's is spoilt for choice. Keeping a job and finding one when one become unemployed became a pre-occupation for many. Coupled with a lack of a formidable social safety net in our meteoritic society could have affected the pro-creation choices for some of us as commitment to a child is a long term one of about 20 years.

How do we turn the pro-creation tide? This is by no means a simple task. Firstly, it is a very personal choice that is outside the purview of the government. Secondly, demographically, the time effectiveness is quite long as it takes about 18 years from gestation to economic productivity. Thirdly, with an aging population, the number of couple is also dwindling thereby compounding the issue further.

In my personal opinion, a basic change in the social safety net is necessary and most probably the most effective. I am not advocating a movement towards a social welfare state of affairs. I am in favor of one that is tailored to cover the young and consider it as a form of democraticism that provides our future generation a more equal opportunity in terms of access to education, career choices and their successful outcome in life that can quite independent of their parents' stature in society.

Singapore Elections Time Table - Crystal Ball Gazing October 2004

The handover of the Singapore Premiership from Goh Chok Tong in August this year has been executed with a level of finesse. It affords Goh Chok Tong, the outgoing PM the honor of addressing the nation on the eve of National Day for the last time as PM but left the all important national day rally speech to the new PM Lee Hsien Loong. Most know that the speech on the eve of national day is mainly ceremonial and short whereas the national day rally speech is substantial and water shed where key policies and strategies is shared.

A significant event that just took place is the opening of the electoral register for inspection. If past events were a good predictor of the future, it is likely for us to expect a general election before Sep 2005. On this note, it my guess that a likely window for the general election to happen is perhaps before the presentation of the next fiscal budget due in February and March 2005. The current year budget expires on 31st March 2005. The reasons for this window are manifold. Firstly, the new PM would most probably want to obtain a fresh mandate from the population to strengthen and consolidate his power base. This is even more likely if the new PM is going to announce key changes in the budget for the new fiscal year. This is most probably the likely scenario as the new PM is not known to be a status quo personality and the most predictable constant of the new PM is change. This is also evidenced by the recent cabinet level announced shortly after his appointment. Secondly, he might want to use the election to test the popularity of his new cabinet line-up or perhaps his.

My crystal ball tells me that the events would likely unfold as follows. Firstly, that the election would likely happen during the 6 weeks November/December 2004 school holidays or the one week school break in March 2005. The main reason for doing so is the convenience of using school premises as voting stations. Secondly, it is always prudent to time the election on the back of stellar economic performance as it lends credence to ruling party. On this note, the Singapore economy has been doing well of late with close to double digit growth. With economic cycles running shorter, the ruling party is also mindful to make full use of this window to stage a general election. Thirdly, due to the electoral process and the need to dissolve parliament prior to election, it would be challenging to have the election in March 2005 as there would not be enough time for parliament to approve the new budget. However, if the election were to happen in March 2005, the President could exercise his presidential decree to extend the operating budget for a month if the new budget has not been approved. This would allow the government to operate and avoid a government shutdown.

However, the capital budget might be held back in some ways. This might impact the economy somewhat and lead to a predictable slowdown that would catch up in due course of the same quarter. If elections were to happen during the November/December holidays, it would allow for a normal budget to be debated and approved before it becomes due. However, it is October now and time is running short for the November/December 2004 time table.

Perhaps Singapore would for once be more adventurous and experimental and prove my predictions wrong.

Polarized versus Absolute Power - The Singapore Experience - Feb 2004

Writer of ANIMAL FARM once said that absolute power corrupts absolutely. The elder statesman of Singapore Lee Kuan Yew (LKY) whose political party Peoples Action Party (PAP) ruled the island state with more than 3/4 majority for over 30 years is of the opinion that this island state can only operate if the ruling party has absolute mandate. LKY has managed to persuade the electorate with his reasoning that Singapore is far too small to afford the due process of democracy in a western style democracy and that his brand of democracy works and works damn well in Singapore. Look at where Singapore was way back in 1965 and where Singapore is now. It is not practical to turn back the clock to conduct an experiment to see if a polarized power structure would have us in a better state but let's look forward to see what would be a better form of governance moving forward along the dimensions of social equality, economic progress and stability.

Authority and Power
Thus far we have used the term power but let's do some differentiation between power and authority. Authority is what is legitimately conferred upon a person and it can be operated upon formally and directly and is very positional. Power on the other hand is influence that a person holds informally for reasons other than his formal position. While power and authority has a lot of semblance, it is very different in terms of its source, operatives and principles of engagement. A person with a lot of power without much authority can be as important as his counterpart with more authority. In addition, authority can be controlled to a larger extent than power as the former operates on a more formal level whilst the latter operates on a more personal level. While the topic is one of power as it is more reflective of the ground reality, the changes that we are proposing would most probably operate on the more formal authority and hopefully, wisdom would rule the day on a personal level to affect the distribution of power.

There is no doubt here that elder statesman LKY wields a tremendous amount of power even though he is no longer in the authoritative premiership position held by Goh Chok Tong. On this note, I personally believe that even if LKY is no longer in the PAP, he would still hold considerable power so long as PAP, the vessel of his making, is still in power. In addition to this, he still has the eyes and ears of the electorate. Perhaps, the religious harmony bill should have a parallel with regards to out of office politicians in curtailing their influence on the electorate. The same argument he put forth for the existent of the bill that if you want to be in politics, declare your intentions, face the election, earn your stripe to office and then address the crowd.

Absolute Power
As an anti thesis to the animal farm paradigm, many organizational leadership theorem postulates that without sufficient power, leadership would falter and the organization might be headed towards failure. It is so easy to sell the maxim that weak leadership equal ineffective governance. It all seems that the day belongs to the absolute camp. On the scene in Singapore, LKY has argued somewhere along this line that Singapore is such a small island state that western brand of democracy is not relevant because the margin of error is so small that a mistake can wipe Singapore out. On the need to have a system of check and balance which is one of the key ingredients of democracy, PAP has maintained that the key is to bring in upright leaders of immaculate integrity. Basic premise being to focus on the quality of the input rather then doing then weeding along the way. Is this practical? You draw your own conclusions.

Perfecting the Imperfect
Democracy was borne out of a strong sense of social equality based on the one man one vote system and is one of the many social equalizers. Above that, it is very much like a perfect tool for an imperfect world. Let me explain this further. In an imperfect world where everything and anything is open to abuse, democracy uses consensus decision making in the form of a periodic appointment of the powers to be through the ballot box.

When a vote is caste for an individual, the voter is voting for a basket of values and ideas that he believes the candidates have and will possibly carry for the tenure of the office.

First, it is a vote of a collective manner in that he might not agree fully with everything the candidates represents but collectively, it is the best choice in his mind. Secondly, there is an element of crystal ball gazing into the future as the tenure is normally for a period of 4 to 6 years normally. Is it not practical to vote individually on each and every issue although separate referendum might be carried to seek populace mandate on very fundamental issues.

In addition, where power is distributed fairly even, there is less chances of an anarchy leading to political unrest as people tend to feel more in control and able to influence the process through legitimate means. However, where power is highly concentrated, there is strong temptation from those in power to abuse their position to stem out contrarians viewpoint. This can actually be in very legitimate forms like making changes to constitutions, laws, regulation an rules to weed out their opposition. Although a highly polarized power can also translate into a weak government, the absolute power situation might be a scarier position to be in. Perhaps, we should consider a change to limit the maximum length that a person can be in power for some key positions like the premiership and the presidency. I believe that Singapore has recognized this danger and has put the elected presidency into place with veto power but is this really effective enough as an instrument of check and balance?

Reality Check
Let's take a drive down Singapore's reality lane and see some of the situations that have gathered much controversy in the past. Firstly, it is not uncommon to see a string of legal suits being filed against the opposition after each election. I am totally convinced about the individual merits of each and every case but collectively, they do not paint a very good picture for Singapore. In established democracy, it is often taken as something that comes with the turf of holding public office and such action is normally taken on a very selective basis. There is a strong belief that the free press would create a balanced view as readers would also judge the merits against the writer's reputation and the ability to use the free press to defend one self also helps. Might be better to allow more latitude in the area of press freedom and let the situation correct itself than to seek legal redress although this is a personal right of everyone including politicians in power.
Connected to the first set of events, the independence of the judiciary was called into question not too long ago. The government had to defend this position and set the record straight very firmly as it is a very fundamental and important issue and the government did the right thing in doing so. However, it is my personal belief that there are less chances of this happening if the politicians have chosen to fight the battles on the open press instead of using the court room as the battle field.

Lastly, the creation of the group representation constituency to the electoral laws has also invited strong opinion about the motivation for doing so. While there are strong merits for making this change, it is no doubt that this change would dis-advantage the opposition party. The opposition already has problem enlisting enough candidates individually much less as a group in a populace that has grown so politically indifferent and numb over the years of simple majority party PAP rule. In addition, the re-zoning of electoral boundaries especially in wards with marginal wins has also not been seen favorably.

Although a polarized power structure might not be very efficient and effective compared to the current power structure in Singapore but it most probably provides better checks and balances and a perception of greater social equality in our society. Economic barometer is a very important measure as a hungry man can make little use of his freedom but it is not the only and ultimate measure of well being of a society. As a young nation like Singapore matures, the perception and yardstick will hopefully change too.

Democratic Capitalism as the new Nirvana? - January 2004

It seems that democratic political governance combined with a capitalistic economic order is the perfect combination that is the epitome of what the free world would have us believe as the nirvana. Does such a combination deliver the heaven on earth condition? Before we proceed, we must first define what 'ideal' is in both the political and economic realm. Without such a definition as compass bearing, all outcomes would be relative.

I Love Berlin
The collapse of the Berlin Wall is more than a collapse of a physical wall. It also marked an ideological triumph of democracy as political governance over communism. On the economic front, centrally planned economy has also taken a beating to be replaced by a capitalistic market economy.
This dual transformation on both the political and economic front has been motivated by a lack of freedom to choose and the dismayed outcome as perceived by the masses. On the economic front, centrally planned economic model failed to deliver expected economic imperatives for the masses with many living below or near the poverty line. A hungry stomach, limited personal freedom and practically non-existent choice in political leadership all contribute to vital ingredients for a revolutionary change.

The collapse of the Berlin wall also signifies the start of the end of the cold war between the super powers. Suddenly, the hope of new world order with an unimaginable level of peace and prosperity would engulf our universe. In reality, the world has seen the axis of conflict moving from the political and economic to one that comes with a religious/racial twist. The challenge has also moved from a national scale to one against a covert global force that has no national affinity like the Al-Queda. 911 has also affected the economy badly putting many economies into a tail spin with rising unemployment and disruption of social order as a consequence.

What has possibly gone wrong and how can a period that could herald us into the threshold of a Nirvana turn out this way?

Economic Nirvana
Milton Freeman, a strong crusader of the capitalistic system from University of Chicago once said that while the capitalistic system is not perfect, it is the most ideal system. Freeman is very right in pointing us in the direction but many have failed to see the limitations of the economic system.
Jonathon Sack, a respected Jewish rabbi summed it all up that while the capitalistic system is very efficient in ensuring optimal production of goods and services but not so effectively in the distribution of wealth. In other words, what is demanded would in due time be translated into reality at the optimal price. This is well and good and result in optimal production of goods and services. Being able to be efficient at producing, how then do we decide who gets what? Is the distribution of this wealth an economic or political issue? It is most probably a joint responsibility and can never be taken in isolation.

Political Haven
There has never been a doubt that any country that is left to run on only economic basis would in due course crash out. The economists would like us to believe that they are THE answer to the problem of this world. We recognize that economics play a key role in any society but it does not have the answers to all societal issues.

The politicians generally have a greater allure of altruism and human equity. While the economists do a very good job in making the country rich, the same cannot be said of distributing the spoils. Since politics is defined as the art and science of power distribution in a society, does that mean that we should surrender all allocation of wealth to politicians and leave the generation of wealth to the economists? The answer is a flat no because the two issues of production and distribution are deeply inter-twined like a co joint Siamese twin. Separating them would almost result in certain death for both in most cases. The centerpiece of the democratic system is a deep sense of human equality based upon a one man one vote system. In stark contrast, vote in a company board room is normally not centered upon one man one vote but rather one share one vote. Which then is more equitable? I do not have the answer to this all too difficult question but it sets us thinking about the issue of equality on a personal basis and is a very rough social compass to steer our actions.

Where is Nirvana?
I do not have the answer to this question as it is not a straight forward one. We know for a fact that democratic capitalism is no nirvana although is it most probably the most practical system. With this in mind we would have to be more pragmatic than purist in our application of democratic capitalism in our society.

Technology Recession: It Cuts Both Ways - 7 August 2001

Alan Greenspan was adjusting interest rates upwards for a number of consecutive quarters since 1999 maintaining on the need to keep inflation in check citing that once unleashed, inflation is like a forest fire that is painful to stop because of the expectation spiral. His stand on inflation shifted somewhat towards the later part of 2000 saying that it is possible to have growth without inflation with productivity growth made possible by technological advances as the filler of the gap. In line with this belief, a neutral interest policy ensued. Thereafter, he moved interest rates downward 6 times to arrest the downturn with a view to lower interest rate further to help jump start the economy. I am convinced that this recession is more complex than just keeping money supply and inflation on a tight balance with serious structural cracks caused by the bursting of the technology bubble especially in the technology sector.

A couple of key events that could have contributed to the creation of this bubble are as follows:

3G Madness
3G, a technology that promises a 40 fold increase in bandwidth to our existing mobile phones and unleash a gambit of services that is not possible today because of the bandwidth limitations of current 2G mobile technology. New services includes mobile video conferencing, full web browsing as oppose to current WAP, mobile digital TV and whatever you dare dream of.

All this is great except that the price tag has gone wrong even before the service is launched. Just to give you an idea of the madness, the carriers in European Community with a population of about 300 million people has issued about? 300 billion worth of commercial papers to pay government telecommunication regulators for the rights to the radio frequency spectrum necessary to run 3G. As a matter of herd instinct, the carriers has tried to out bid one another for these radio spectrum believing that it is a race that they can ill afford to lose as many saw 3G as being central to everything happening in the mobile scene of the future. In retrospect, it is easy to see that the carriers have over paid based on an average of $1,000 per capital but the executives at these carriers were under tremendous pressure and the strategic over hang could have clouded their judgments.

The telecommunication regulators did not help the situation by an over emphasis on competitive bidding over the beauty contest mode of dishing out radio spectrum. To help the executives dig their own graves, high street investment bankers were more than ready to help the carriers get the money by underwriting the commercial papers for them and earning big fee in return. In the same light, these high street investment bankers also have analyst to rate these papers. In addition, the equity analysts had also written the equity markets to dizzy heights and one of the proverbial logic of a dollar each for license, equipment and internal cost. The stocks of equipment vendors like Lucent, Nortel, Nokia, Ericsson, Alcatel and et al rose wildly and fell like Niagara fall when the bubble burst. Of course we know that these investment bankers have 'Chinese Walls' to ensure that their analysts provide objective views independent of the interest of the employers.

MAD
I would call it the Mergers and Acquisition Directive (MAD in short). We live in an age of instant everything where nobody has any patience for anything that takes time and this includes research and development and product development. Companies are increasingly turning to shoring up companies with promising potential technology or product as a quick way out. Like the 3G phenomenon, many of these companies were bided to towering heights. Many of the large incumbents leveraged their rising stock prices by paying for most of these acquisitions by issuing new stocks instead of paying for them with cold hard cash. The owners of the target companies were more than happy to accept this form of payment (with some moratorium period) as everything pointed upwards until recently. To make a joke of the situation, it was once related to me that Nortel executives only had 1 day to make a 9 billion dollar acquisition of Bay Networks as Lucent and Alcatel was ready to jump in if they do not. We might as well throw everything there is to know about due diligence and live and die by our guts relearning to do business at the speed of light. I must add that investment bankers are here again collecting big fees for their M&A advisory or the lack of it in the process.

Optical Illusion
One year ago, optics was the darling of Wall Street and the likes of Corning, Nortel Networks, and JDS Uniphase were rising by leaps and bounds. Optical was the mirror image of 3G except it travels through looking glass instead of thin air but either way; they all suffered the same fate. When fiber optic was invented, it was able to carry 34Mbps on a pair of fiber optics or about 450 phone conversations simultaneously. With dense wave multiplexing technology, it is possible to carry about 640Gbps on the same pair of cable translating to 1 million phone conversation or the total number of phone calls in USA during peak hours. Optical evangelists argue that the current driver for larger bandwidth is no longer voice but data with the internet being the killer application. The evangelists are not entirely wrong about the demand for bandwidth created by the internet but miss the estimates by a mile partially because of the dot com fever turn into a dog bomb for many and bandwidth did not increase by the 1,000 fold and what followed was a bandwidth glut leading to a price and market collapse for the carriers world wide.

Playing Host
When the dot com fever started, hosting companies sprung up everywhere like mushrooms to address the needs of dot com to host their applications. Big names like Exodus started an accelerated globally built up of up to 45 hosting centers globally covering almost every conceivable major commercial center and time zone. These hosting companies are now faced with tremendous over capacity with limited take-up of their vast capacity. Many have taken the practical route by offering to host and manage application services for enterprises.

Inventory
Traditional wisdom of depleting inventory as a leading indicator of economic recovery might have limited use here. With the current pace of technology innovation, we are looking at a product life cycle of less than 18 months in most cases and many of these high technology companies are learning quickly that when inventory turns turn sour, they not only have to deal with holding cost but also massive write offs. Companies used to push products from first world markets to third world markets and with the world now a much smaller place due to globalization, the time differential between first world markets and third world markets are now narrowing to the degree that this bag of trick no longer works.

Do not look at inventory levels blindly as a leading indicator of economic up turn.

Besides all these negativities, there are silver linings in the horizon that could point to better time ahead. For one, Microsoft recent launch of Windows XP will hopefully trigger a whole stream of demand. Greater processing power from Intel and the likes, more memory to forestall the falling prices of memory chips, bigger disk capacity for the likes of Seagate. Compaq, IBM, Dell and the likes would also benefit from selling more PCs and servers and an army of consultants to get enterprises migrated to XP. The carriers and networking companies would also benefit from larger bandwidth appetite of XP. Many enterprises are still suffering from computing constipation from the large sum of money they have put into Y2K and the proverbial promise of technology delivering the productivity and differentiation edge.

Whether interest rate cuts alone is enough to get us out of this recession remains to be seen as it would normally take a quarter or two for the cuts to work itself into tangible results. Otherwise, let's get our bandages ready to stop the bleeding from all the cuts (job, price, demand, GDP and etc) that we are experiencing with this recession.

Singapore Recession: Milton vs Keynes - July 2001

BBC news was reeling with an interview on the island state of Singapore entering into a technical recession with the latest flash estimates from the Ministry of Trade and Industry revealing two straight quarters of negative growth. I sat there pondering after listening to the news about what options does Singapore, an island state of some 3 million people with little or no natural resources have. After much deliberation, it kept pointing to having the Singapore governments spend her way out of this recession. I must confess that this came as quite a surprise to me as I am a great fan of Milton Friedman's position that the capitalistic system is the most efficient effective means of economic governance with minimal governmental intervention. What drives me to the dark side in star wars language towards John Maynard Keynes stems from mere pragmatism looking at the situation staring us in the face of reality.

First of all, I considered the monetarist approach of using interest rates to drive a change in money supply and export our way out of a recession. This seems to have worked very well in the 1998 recession when the regional economies in Asia went into a tail spin as a result of a currency crisis. The currency of key Asian economies collapsed causing a big drop in the value of their currency relative to the USD. When the currencies of the Asian economies collapsed, their export became relatively cheaper thereby increasing their export competitiveness. The Asia economies therefore exported their way out of the recession fairly quickly. I must say that the recovery was multi-factorial with banking reforms, market liberalization and governmental reforms contributing to the recovery. During this period, the economies of USA and Europe were doing well and well able to absorb the exports gracefully. The scenario is very different now. USA who is our largest trading partner is in a recession with the Feds making substantial interest rate cuts in the past six months to get her out of it. In order for a monetary policy to work itself through a cut in our interest rate, we would have to reduce our interest rate by a larger quantum than the Feds in USA. This would be difficult as the interest rate in USA prior to the recession is much higher than in Singapore. Couple this with the fact that such interest rate policy instruments does have a limit and diminishing effectiveness as interest rates moves closer to 0%.

Secondly, due to the size of the Singapore economy, we have a very open economy with a substantial external component and limited domestic demand. This could be a good time for us to develop the domestic component of our economy with the government helping to fund it. During this recession, almost all economies in the region are affected with the exception of China who has a big domestic demand helping to keep it growing. We must of course be realistic in our expectation in this aspect as we are comparing a population of 3 million against 1 billion.

Thirdly, the Singapore economy is very service based with service occupying close to two thirds of her economy. To add to the situation, electronics also occupies a large part of our economic landscape second only to petrochemical. From a perspective of perish ability, both services and electronics are highly perishable. Electronics is perishable because of the quick rate of technology innovation and obsolesce cycle. Perishables tend to have limited inventorial capability to buffer against near term cyclical demands resulting in shorter and more severe peak to trough fluctuations.

What if the Singapore government were to spend its way out of this recession? Will it really work and if yes how? I do not have the answer to this question as yet as implementation of such a policy is more of an art than a science and far from simple. It would have to consider not only the current structure of the Singapore economy and which sector needs it most but also ensure prudent usage of public funds and last but not least, the electoral and political dimensions.

If a case if Milton vs. Keynes were to be put before a jury against the current Singapore economic backdrop, I am quite sure that John Maynard Keynes is likely to emerge the winner.

DOT.COMing of Age: A Tale of Three Cities - July 2000

Mention Silicon Valley, New York and Washington and most of us would associate them with the capitals of new world economy, old world economy and seat of the largest government in this world. The relationship between Washington and New York is an established symbiosis drawn along the lines of economic and political dimensions. However Silicon Valley is looked upon the same way the old rich view the nouveau riche especially in the case between New York and Silicon Valley. For Washington, it could be another story of the transistor and Sony. Sony did not invent the transistor but made the most money on it in the same way that the Internet actually began as a government initiative under the guise of US Department of Defense but it was Silicon Valley that popularize Internet and benefited the most out of it.

How the relationship between these three cities will progress will play a pivotal role in deciding how the new economy will progress to become an integral part of the world having made an unprecedented impact on the old world economy. History have it that not all great turning points in this world is sustainable and eventually integrates into main stream like in the case of the Nazi revolution lead by Adolf Hitler. The new economy have done well in undoing old maxims of the old economy and introduce new paradigms in propelling us forward but must now come out of the jungle of guerilla war fare and establish a lasting regime. Politicization of Silicon Valley

Old world economy has long seen the value and need in having friends in Washington and Silicon Valley is fast waking up to this idea. The recent anti trust case against Microsoft is a big case in point. Microsoft who has challenged many old world maxims and rose to become one of the largest capitalized company on Wall Street must now learn the painful lesson that being able to succeed on a number of key competencies does not immune one from failure. Microsoft has in that sense won battles on the technology and economic frontiers and lost the war of staying organically intact as one.

This might be a blessing in disguise for Microsoft. IBM who has fought anti-trust initiatives for decades to stay as one company to have it split up by an outsider in the shape of Lou Gestner who has understood economic reality in splitting up IBM to stay competitive. The Washington lobbying arena has not escaped the attention of Silicon Valley. It could be looked upon as paying for vaccination against being caught with a dreaded disease should untoward changes take place in the law drafting organ and political due process of turning these into laws. In order to gain maximum mileage out of their lobbying effort, Silicon Valley must come to a coherent strategy as an industry with consistent song to sing in Washington. Unlike industries like tobacco and petroleum who quite often lobby as an industry for the common good of all in the industry, little of such is happening in the new world economy. In fact, they sometimes run cross purpose to each other like in the recent case of Oracle lobbying against Microsoft. It is not un-common for competitors to be at each other's throat but the sheer lack of concerted lobbying by this young industry that has yet to find her own stable level in society could threaten the survivability of the industry as a whole if the key players do not act out often enough for the common good of the industry.

Siliconization of Washington
About everything is riding the "E" wave in some shape or form and E-Government is not going to be an exception. Governments have been one of the early adopters of computer usage and have now jumped on the "E" bandwagon in making E-Government a successful reality. We can see the fruits of these initiatives in the change in the manner we transact business with the government. Services such as internal revenue, custom and excise, and health, education and welfare and etc have begun to ride through the NET and become web enabled. Although the percentage of GDP/GNP vested with governments is a function of many factors, we have seen very little decrease in this measure as a possible means of measuring government efficiency. One could always argue that the "E" wave is built not upon efficiency alone but a basket of measures that includes the likes of effectiveness and efficacy.

On another dimension, governments have been leveraging the "E" wave as a growth vehicle for their economy. Save for the original Silicon Valley in California, many subsequent up shoots the world over have seen varying degrees of governmental intervention in ensuring that these up shoots gets a fair chance of standing on its own feet. This paternalism sometimes has a habit of becoming a permanent fixture. A possible case in point could be the Cyber Jaya project in Malaysia where the Malaysian government could have continued in intervening to ensure its success for too long. This is my personal view that might not be shared by all. Milton Freeman could be right in proposing that the best government should stay away from the economy and let the economy take care of itself. Governmental intervention tend to distort the otherwise good working balance when left on its own although John Maynard Keynes might rise from his grave to argue otherwise.

At the birth of the NET, governments the world over have been wrestling with the decision on the merits and pitfalls of making the NET available to the population at large in view of the difficulties in policing the contents. Except for a handful of regimes like North Korea, this decision is now a no brainier even with the censorship nightmare that the governments now face in the controlling contents on the NET. This is because the alternative of not having the NET is no longer a viable alternative as the NET is very much a part of not only the economic, political and social fabric of society, it is also a livelihood for a good many of us. Wall

Street Goes Silicon
Some 12 months ago, almost every CEO is putting together an "E" plan for their shareholder's and investment analysts. To be caught without one is like being caught with your pants and stock prices down because of a perceived lack of how the company is going to gear itself not only to ride the "E" wave but to survive in the new economic order. In this mad rush, many a CEO has put together an "E" plan and executed them to some extent and this could be part of the reason for the flood of funds being funneled into "E" stocks driving their prices sky high. When demand outstrip the supply of "E" stocks to such a great extend, new paradigm in stock valuation like using the "HIT RATE", "BURN RATE", "TECHNOLOGY POTENCY" took shape enabling "E" companies to be valued along these lines instead of the traditional measures like price/earning ratio and etc. A feeding frenzy ensued and many "E" stocks with no profits and at times no revenue are valued at sky high prices all in the name of "E"-Potency of these stocks. What is more worrying is that some of these companies do not even have a viable business model to support the projected revenue/profit stream needed to price these stocks. Alan Greenspan of the Federal Reserve Board has tried hard to stem this tide by increasing interest rate to no avail until recently. The market as a whole has woken up to the reality that "E"-Potency must face the crunch of the traditional stock valuation model and deliver the bacon on the table. This is where we separate the boys from the men and many "E" companies with no viable business model or earnings stream were sold down to bare bones.

While the likes of Bill Gates, Paul Allen, Jeff Bezos and John Chambers of Microsoft, Amazon.com and CISCO have made it big financially, on an altruistic note, some of the people who were instrumental in inventing some of the key technologies that propel the "E" wave have not been enriched financially in the process. Consider Ray Tomlinson that put the "@" in internet email who to this day remained as engineer in Bell Atlantic. Mark McCahill who invented Gopher which is the predecessor of the modern day "WEB" who continues to work in University of Minnesota while Marc Andersen of Netscape fame has taken the idea of the WEB to the commercial space and became rich in the process. What happened was Gopher was improved upon in CERN outside Geneva to become the "WEB" and refined at NCSA at University of Illinois to become the present day "WEB" and Marc Andersen did the final bit in bringing it into the market place. Although not everyone that contributed to the NET has been rewarded financially to the same extent, I am sure that many of these poorer cousins of NET inventors are as happy in knowing that they have made vital contributions to this world. Valley Street Washington.

How these three cities will develop their relationship will be key in shaping our future. On the surface, it would seems that both Washington and Wall Street are the incumbent and it is Silicon Valley that will have to edge itself into the equation but this might not be the case. While Silicon Valley has yet to become a permanent and stable fixture of this world, it has penetrated deep and irreversibly into key areas of both Washington and Wall Street. Silicon Valley is definite a force to watch out for even though it is not everything yet.

Automatic Law Expert - Peter Lye

I was recently enlightened that ignorance of the law is no excuse for
breaking the law. While I can understand the intent behind this precedent is
to ensure that real criminals do not get away by reason of ignorance. If I
were them, I think I would take my chances along the insanity route as
chances might be better ( not that I am a boderline psycho ) there. With
some hollywood skills and a set of good counsel and expert psychiatry
witness, chances might not be that dim. Even if acquittal is not on the
cards, dimished responsibility is a possibility.

Coming back to the point that ignorance of the law is no excuse for breaking
the law, it is amazing that when we cross the age of legal adulthood which I
think is 21 years old in Singapore, we ought to be aware of the entire
volume of the Singapore Statutes as well as key applicable case laws. By the
way, this rule is not unique in Singapore and it seems to be fairly
universal in its application.

The saving grace is that rule of law would be applied with commonsense in
most if not all circumstances. Even when the law does not seems fair in some
cases, you have the judge passing comments that it is the politicians that
make the law and the judge's task is to interpret and apply the law.
Permanent Judges and Temporary Politicians..aka Permanent Secretary and
Temporary Politicians of Yes Minister fame in that politicians have to stay
elected to stay in office. Permanent Secretaries are non-political positions
and not subjected to voting...I would recommend a read of Yes Minister book
as the humour is classic English dryness to it but very witty.
This is just my blabber writing to destress as I enjoy writing about most
things under the sun.

BTW, I am not a lawyer nor have any inclination towards that profession but
I must profess that I have a strong interest in most things intellectual and
law is no exception. Only difference is that my appreciation is from the
perspective of an observer that makes personal comments now and then. It is
a noble profession and has strong altruistics dimensions. I am hardly an
intellectual but like to stay in the company of intellectuals to be able to
glean off their wisdom. Perhaps I should head off to the new Think Cafe at
the Institute of Policy Studies at the National University of Singapore
campus. It is a think tank staffed by the brightest in their field. Saw a
friend in a photo feature of the think cafe who is a food lover. Not sure he
is there for the cafe portion or the think portion. To be fair, he is a very
intelligent guy that loves food. Have to ask him someday which comes first,
intellect or food if he had to choose. No offense intended buddy...just good
clean joke.

My ambition is to retire into the sunset writing jokes, crazy stuff like
this and remain oblivious mostly.

The Currency Trilogy Impact of USA Policy on the world Economy by Peter Lye - May 2005

The Currency Trilogy Impact of USA Policy on the world Economy by Peter Lye - May 2005. In today's world although the US$, Euro

and the ¥ are the top currencies of choice for various reasons but it is the US$ that top the list. Of late, China's RMB is also beginning to feature more prominently on the global stage with the valuation of RMB against her major trading partner coming under scrutiny as her economy begin to grow in size as well as being more participative on the global trading scene. We would leave the issue of RMB in the parking lot not because it is not important but because the RMB is not used as extensively as the 3 currencies in international trade except mostly in trade for which China is a party to.

With the US economy being the largest in the world in term of GDP, she also have a unique position of having more than 50% of her currency circulating outside her shoreline. To compound the issue further, USA also faces the twin issue of a massive budget deficit on the domestic front and a burgeoning trade deficit on the international scene. This twin peak is further compounded by the fact that the rate of savings is far from sufficient to cover the gap created by this twin deficit that can snow ball itself into a major problem not only for USA but also the global economy as well.In a recent commentary on the US$, The Economist has liken one of the way by which USA is handling this problem to issuing checks by printing more US$ for which the USA does not need to pay for. This is especially so after the Nixon administration has abandoned the gold standard on which each US$ is exchangeable for a certain unit of gold.

Warren Buffet through his Berkshire Hathway fund has continued to bet heavily on the prediction that the US$ will slide against the ¥ and ?. Although he has lost substantially by doing so in the past few months, he added that the USA preferred prescription of having China free her fixed peg of the US$ to the RMB and allow the market to determine the RMB value. He highlighted that even if China take this prescription, it is unlikely to solve the big trade deficit between China and USA citing that the ¥ has appreciated more than 3 times and this has not helped to narrow the trade deficit between Japan and USA much. Previous experience with the ¥ points to the fact the devaluing the dollar might cause the trade deficit to widen further because of elasticity of trade in the short to medium term.The dollar is also the reserve currency of choice for many central banks and currency boards thereby creating a vested interest in them to protect the relative value of the dollar. This is not the first time that USA is thriving in debt. In the 18OOs, when the founder of JP Morgan George Peabody was selling US sovereign bonds in London, it landed him in hot soup when US decided to default.I see a dangerous situation developing. US cannot continue the twin deficit without paying for it. Somewhere down the road, the consumeristic party paid for by checks that will not be drawn on will come to an end. We can already see signs of this developing as central banks and currency boards start adjusting their basket of reserve currencies away from the dollar. Reality will start creeping home that there is no free lunch. US with its global influence is unlikely to yield to such pressure and start paying back the twin deficit. We are likely to see a repeat the bretton woods default that would put the global economy into a shock therapy. Why wear the pain alone when you can have the world to share your burden.

Peter Lyelkypeter@gmail.comSafe HarborPlease note that information contained in these pages are of a personal nature and does not necessarily reflect that of any companies, organization or individual. In addition, some of these opinions are of a forward looking nature. Lastly the facts and opinions contained in these pages might not have been verified for correctness, so please use with caution.