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StarHub Upgrade Thesis Punctured by Regulators (10th May 2014)

Analyst Sachin Mittal of DBS Vickers Securities authored a similarly titled report on 24 April 2014 which is catchy with a tinge of wicked humor in straight laced Singapore which might impact the public persona of IDA our government regulator.

It seems that IDA has been rightly or wrongly perceived as being “pro business” or rather “pro Telco” judging from the tone of the noise from social media but the landscape seems to be changing. Just before this article went out, IDA has imposed a record fine of S$6 million on another Telco Singtel for an extended outage last year.

The corner stone of this report emanated from a confused public outcry by existing customers of StarHub over an additional S$2.14 fixed monthly charge for the privilege of using the new and faster LTE network. On the surface, it seems reasonable as it is only a fixed monthly charge with no change in the unit rates.

Consumers perceived ( perception can be more deadly than the truth at times) the additional charge as unfair because they have been using it for free all this while. LTE was introduced into Singapore in 2013 with limited geographical coverage and only became available more extensively in recent months.

It is common practice for Telco as well as other industry players to introduce their new products or services for free or reduced rates to attract customers to latch onto the new service. Another key reason stems from a need to test drive their various process to make it road worthy. Some of which might include BSS supporting billing $$$ which is very key as well as OSS for enrolling customers. All these are not a walk in the park and the back office of Telco can have complexity beyond a lay person’s imagination. Lastly, some regulators do not allow Telco to charge until the service is fit for use.

StarHub was up in arms that customers have been briefed at point of sale that this service is free for a limited time period only and Starhub reserves the right to impose additional charges at a future date. In a surprising move, IDA commented that she is satisfied that StarHub has language in the terms and conditions signed by customers and secondly had informed customers well ahead of time on this additional charge. However, there is room for improvement at the point of sale and IDA announced that will work with Telco to improve and tighten these procedures at point of sale.

Another sticky point could be the opt in by default meaning that customers who do not opt out will automatically deemed to have agreed to subscribe to the LTE service at additional change. Starhub might argue that customers have already opted in for LTE when they sign-up. Why would anyone refuse a free service?

This pronouncement is landmark for IDA probably because she might has most probably come to term that if each and every customer were to read the entire terms and conditions thoroughly at point of sale, it would result in an untenable cost of transaction both for the Telco and customers.

Allowing free market forces to govern the market will not do as it is not anywhere near a perfect competition and a label of oligopoly seems more appropriate. As such, joint measures by both IDA and Competition Commission of Singapore (CCS) must be titrated to achieve better balance of power for the lone consumers. Some means of overcoming such situations efficiently and effectively might include making:

certain classes of terms and conditions illegal, void, voidable etc. Such protection should only be extended to retail consumers and not enterprise customers on the basis that an unequally yoked contract is less likely with enterprise customers. The question on whether to extend it to SME is debatable. Such legislatures are already in place in the Sale of Goods Act and what might be needed is a more focused legislature to cover situations unique to Telco.

termination either for convenience or otherwise by either party should have their penalties sand boxed preferably by guidelines from IDA. There have been horror stories from consumers in the past being imposed hefty termination changes that seems legal but hardly equitable. Fixed term contracts are constituted as the language suggest. If Telco makes material changes and/or pricing, it should at least not be applicable to existing fixed term contract consumers. The contracts should tie both parties on an equitable ground till the end of contract. If Telco wants to terminate the contract for convenience, it should pay similar or higher penalty to the consumer at similar rates. Terms and conditions such as Telco reserve the right to vary or change the contract should be the first to be outlawed. Otherwise, why even call it a contract.

variation of pricing during contractual period should be tightly governed by a set of independent, robust, measurable and attributable metrics. To be fair to the Telco, perhaps they should be allowed to vary prices via independent yardsticks like published consumer price index (CPI) or price of electricity. Telco would challenge that the cost of operations have little to do with such yardsticks but it is perhaps the best available yardstick although it sucks just like what examinations are to students

limit the use of automatic opt in by Telcos as this can be abused by carriers leveraging on the fact that most consumers might not have read or understood such notices or Telcos making the opt out process so onerous that consumers dispense with it.

robust and tight tariff filing framework a must to ensure that Telco adhere to fair commercial practices. This is more prevalent in broadband carriers ( lesser extent in mobile operators ) that are perpetually offering discounted prices that are mostly if not always lower than what existing customers are paying. I am not proposing a onerous ‘most favored customer’ like language but an appropriate and transparent tariff filing framework to provide similar cover for existing consumers. Not that tariff filing is a cure all as experience has shown that tariff filing also have loop holes like chaining up prisoners is no guarantee that escape is impossible but makes it less inviting.

IDA has contributed much to Singapore's progress especially in the technology arena. The next leap would most probably need CCS as co-pilot to manage an open market with increasing participation of top global carriers that expects a much more level playing field.

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

Tributes to Margaret Thatcher

Photo Credit : Wikipedia

How often do you have an opponent arranging a more honourable final send off? This was exactly what Tony Blair from Labour Party did to honour the late Margaret Thatcher of Conservative Party with a military funeral procession which is one level short of a state funeral. The Economist also noted that she was most probably the two most notable prime ministers in UK with Winston Churchill being the other. Churchill was remembered for Normandy that ended World War II. Thatcher most probably out ranked him with a smaller but more controversial Falklands Wars and creating an economic school of thought known as Thatcherism. President Ronald Regan is the other head of state that managed to postulate an economic school of thought called Reganomics.

Her ascent to 10 Downing Street was significant for 2 reasons. Firstly, she had to unseat the then leader of the Conservative Party Edward Heath who was bitter about this to the end before she lead the Conservative Party to victory in 1979 General Election. Secondly, her downfall was started by her own party colleague Michael Heseltine. Her premiership spanned from 1979 to 1980 making her the longest occupant of 10 Downing Street in 20^th century.

Thatcherism was a bitter pill for UK with the Labour Party deeply rooted Keynesian welfarism over a period of 44 hours. She was very convicted that UK needed to be weaned off Keynesian welfare state mindset. Many believed that Thatcherism was primarily an off-shoot of Chicago School of Economics championed by Milton Friedman who won a Nobel Prize. There were strong evidence to suggest that it was influenced much closer to home by Friedrich von Hayek from Institute of Economic Affairs (IEA) who went on to share the Nobel Prize for his work on theory of money. Thatcher was widely reported to have many meetings with von Hayek than with Friedman perhaps due to geographical reasons. Neither von Hayek nor Friedman was officially appointed as her economic advisor. The trade unions and the Labour Party though defeated were her largest headache in steering UK to Thatcherism and perhaps won her the “Iron Lady” infamy. There was also joke that Thatcherism equals her domestic home economics.

The Falklands war in 1982 was a gamble that won Thatcher domestic support and was a key reason for her re-election 1983. With the bi-polar distribution of influence between US and USSR then, this war had the potential to escalate further up-stream between US and USSR. Good diplomatic posturing and the UN helped to keep the war between the two countries largely isolated. France had sold Exocet missiles to Argentina way before the war and officially went on record that they would stop selling and supporting the these to ease the historically difficult cultural Anglo French relations. UK for once proofed that military wise, it was not tail coating US and can stand on its own two feet. In hindsight, the wisdom of this war though short and causalities below a thousand each with Argentina suffering larger loses is questionable

Looking at the state of the Euro, perhaps UK should be thankful that Thatcher either had great foresight or simple common sense in limiting UK participation without the Euro. Given the current situation with the Euro, UK is spared some of collateral damage from the problems facing countries using the Euro.

As Margaret Thatcher is put to rest in peace, some has rightfully remarked that UK without Thatcher is like Cuba without the Sun.

Peter Lye aka lkypeter
Safe HarborPlease 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. Copyrights of all contents in this blog belongs to Peter Lye unless stated otherwise.

Abe 2 Able?

Prime Minister of Japan Abe has made a rare come back in the same seat that he occupied previously. The question on everybody’s mind is the difference and similarity between Abe then and now. Having just started his tenure, he has made some surprising changes in a short space of time. Not only were they made domestically but also on internationally. This is quite surprising firstly because he belongs to the more conservative LDP party. Secondly, in Japanese political culture, behind the façade of a democracy imposed on them after world war two, Japan has been a monarchy for hundreds of years.

His recent visit to the Yasakuni Shinto Shrine that worships some of the worst second world war heroes/criminals trial by the international court of justice in The Hague. This has created much controversy on domestic and international front although he said that his visit is on a private basis and not as PM of Japan. On the international front, this visit tantamount to a certain extend that Japan isn’t totally repentant about the atrocities it has done during the second world war. It sort of endorses or justify that the war was not totally the fault of Japan. The Germans have surrendered totally and there is no monument to worship Hitler of the Third Reich as heroes. It could also be an overture to the international community that Japan is sovereign to do what it likes within reasonable global sand box.

On the domestic front, the visit is still highly regarded as a heroic act as a man of guts knowing full well the international implications. Secondly, it endorses his personal religious practice of Shintoism. This would likely win him more popular ground support but not all Japanese are like minded about it. Japan is still practicing revisionary history books about their second world war criminality or the lack of it much to the consternation of the international community especially China. Germany has come to terms and condemn their actions openly in their history books to remind future generations never to repeat it.

As if this is not enough to create controversy, he wanted the history text book to change references of ‘sex slave’ to ‘comfort women’ . There seems to be little differential between the two but the interpretation in Japanese is vast. The former implies that the women were forced into sex slavery against their own will. The latter seems to imply that it is not much different between the comfort women and present day prostitute. After all prostitution is the oldest trade by some quarters of society.

There has been long standing sovereignty dispute of old over what China calls Diayu Island and Senkaku by the Japanese. Abe decided to up the ante by first having the island bought over from private ownership to state land and instructing its self defence force to safe guard their claim strongly and there had been a recent near miss between Japanese and Chinese fighter jets over the island with no weaponry exchange. These islands are mere land is in vast sea between Japan and China and have very little economic value unlike some of those in the South China Sea with minerals or oil or much sea or airspace implications.

These two issues have placed the newly elected Chinese XiPing in a tight corner as he cannot be too conferential or lax. So far, he has left the people of China to do the job for him by encouraging or putting minimal steps in stopping the riots against Japanese interest in China. China is totally able to quash the riots like it did in Tiananmen Square but XiPing is letting it go to appease the masses. Heads he wins tail you lose.

On the international front, this has also created a problem for USA who has viewed the Asia Pacific arena as being trilateral between China and its other communist allies as one. On the religion front with Malaysia and Indonesia especially after 911 and Japan with the rest of the countries as the third camp especially The Philippines, South Korea and Japan where USA has defence bases in. Suddenly the alliance has become more complex over night. China has been spending double digit percentage of their GDP on defence and now there is loud outcry for Japan to up its single digit self defence budget to match. After world war two Japan has enshrined into their constitution that they will not go to war and their defence force for self protection. To a certain extent, I would say this part of the constitution could have been placed on them under duress. The culture of violence is very in grained in them evidenced by their comics and computer games for adults. North Korea is on close watch but not on the radar as the largest threat is their ability to launch ICBMs tipped with nuclear head into USA; selfish to a certain extend.

On the economic front, Abe seems determined to get the economy out of the lost decade. He has ‘told’ not ‘advise’ the central bank to achieve a 2% inflation after the long deflation. In recent past, currency traders were also stunted by the dollar yen overnight exchange rate hitting a 4 year low and zig sawing between technical rebounds. This is caused by the Japanese central bank soaking up liquidity by buying back their bonds. Exchange rate is crucial in making Japanese exports competitive and this has ignited a small trade war with USA. The newly elected president Obama has not taken any action or met Abe face to face yet and is likely to leave it to the new incoming vice president. Democrats being less libertarian is likely to have their central bank intervene soon. Normally central banks do not like being told by the government as they view themselves as being independent. Perhaps he is sounding the my way or no way to the rest who intend to stand in his way.

It seems that he has done little to deserved a memorial place in history during his first term and his current agenda is to be a historical change agent for better or for worse so help us God. Japan and Japanese are walkovers although she was decimated after world war two. Unknowing to the world, second world war has not ended but has change facade from a combative to an economic front.

Why Government Services Fails Sometimes? A Singaporean Perspective-March 2012

Why Government Services Fails Sometimes? A Singaporean Perspective-March 2012

There has been enough negative press about the state of services provided by our government, governmental agencies or government related companies. It ranges from train, bus services and road congestion in the transportation sector to cost of public housing both in the new and re-sale market in the property segment. Cost of tertiary education and basis of allocation of these highly competitive seats as well as entry criteria into primary schools have also invited comments of all shape and size. Even the environment ministry was not spared for the increase incidence of flooding as well as cost of rental of hawker stalls contributing to escalating cost of hawker food which is quite a staple for most Singaporean.

After thinking hard about the surficial causes instead of the root causes being a practical person with limited resources of an arm chair hobbyist commentator, citizenry is not totally innocent for all these as they have only elected the current government into office in the 2011 general elections including the recent presidential elections where the president was elected to add injury to the whole matter. Did the nation’s consensus and consciousness failed terribly in voting in a stupid and incompetent government and if so, we must live with the consequences until the next election and perhaps beyond as some policies of the current government will outlast their term of office. I can almost hear war drums of the vast majority descending upon me that the election was only fair within the sandbox drawn by the long suffering oops I mean long serving incumbent party and personas of People’s Action Party (PAP) which has been the ruling party since time immemorial since Singapore gain independence. Policies such as electoral boundary, group representation which can distort the electoral results in conveying the will of the citizenry but let’s grow up as no election rules will result in simple majority prevails. However, if we were to use the percentage of parliamentary electoral seats against the percentage of individual votes, the gap seems fairly wide. Perhaps some study should be made about this in Singapore and published as an academic paper from the birth of our nation to the last election in 2011 and see how the empirical information paints the situation.

Causes of Failure

There are very good reasons why government services fail sometimes we must recognise some of these premises before we can be part of the solution for the greater good of society. Being a capitalist at heart and one the believes in minimal government, I have seen fairly concerned and critical about the growth of government, this discourse seems out of place as there is a large element in defence of the government. I have not changed my surname nor DNA.

Firstly is the issue of transparency. Except for a few areas like defence relating to external and homeland security, diplomatic relations and perhaps justified covert operations if any. We sometimes forget about the tremendous constraints, cost associated with making transparency in its various shades of hues from opaque, frosted, tinted to switchable variety On one end of the continuum, where and what I decide to have lunch, is a totally private matter. I do not need to publish my rationale for doing so and whether there were interested party involved in the decision. In all likelihood, there might be an interested party like going down to a café owned by my aunt. On the other end of the continuum, in government decision making, there is a presumption it is rationale, free of conflict of interest and if there are, it is properly declared, and can withstand the naked scrutiny of oversight bodies or the public. Transparency is not binary in practice and it ranges from privacy of private individuals which the government must protect in some areas to private companies for which it need only transparency to a small pool of private shareholders to public listed companies accountable to larger audience of shareholders for which anyone can become a shareholder by paying the requisite market price. When private companies go public, they normally suffer the shocking underwear syndrome and see them retching from their mouths that they now need to declare what type and colour of underwear. For the more liberal male captains of these companies that might harbour or like to wear swanky G strings meant for the fairer sex. Metaphorically speaking.

Universal access is the second plague that I sometimes nickname it the 7Eleven solution. A private business have great latitude in deciding what product and services, when, where and who it decides to do business with. For government services, there is a presumption of universal access for all within bounds of stated level of service like operating hours, grade of service etc. For example, we expect police service to be available to us anytime we need and at the force level that mirrors and exceeds the threat we face on hand. However, when we engage the services of a private security company, the expectation is only for the stated hours and for so many people armed in a certain manner. The private security company could plan their resources based on expected volume of business with some expectation that utilization will not be 100% as demand might not be a linear or so closely correlated to the supply. If demand exceeds supply, the private company can call a stock out situation and not provide the service. Of course there would be many stock out cost to be considered in addition to the short term lost in profit opportunity like longer term customer satisfaction and of repeat customers. However, for the police service, if it fails to respond to any call for service, it risks a major public affairs situation as well as potential political collateral damage to incumbent elected officials. To be fair, the police can only plan their resources based on past records as well as future projections. The journalistic maxim of 1 life too many can result in an over staffed and resourced government services.

One of the commonly cited rationales that some services like certain segment of public transport cannot be privatized because of the need to provide universal access in terms of hours of operations and route to cover unprofitable hours and routes to provide universal access. My challenge is to re-examine the operations of the 7Eleven franchisor/ franchisee model whereby shops are kept open 24 hours a days all year round including new year holidays. This business model has been so successful that its operations is almost global and have even attracted copycat franchisor operating similar models in some countries. Perhaps the Singapore Land Transport Authority (LTA) that is both regulator and licensor of transportation services both private and public should re-consider their current practice of licensing public transport to a handful of companies to operate rail and bus to consider the public suggestion of allowing a larger pool of private small bus operators to be a part of the public transportation services like in Hong Kong which has quite similar population density and size as Singapore. Big buses and rail transportation is not likely to be a good answer to off peak hours as well as less densely populated areas and could actually represent a larger carbon footprint than private cars. Work on the licensing and oversight practical to small private operators and this could well be part of the solution to our current transportation woes than multi-billion dollar funding for more buses, bus lanes and bus stops.

The third item comprehensive planning to me is one of the greater joke. While failing to plan is planning to fail but planning like crystal ball gazing is comprehensive to the extent that is takes into consideration currently known variables and certain reasonable assumptions. Legislators and judges act as if current wisdom as embodied in the constitution/statutes and case law respectively are evergreen. I used to work in healthcare once and know of the need for the health ministry to license clinics and hospitals to ensure that they comply with certain requirements to ensure that they can provide their services safely and this is a very good idea. If a qualified doctor decides to operate a doctor on wheels service providing care to patients only on a house call basis without a physical address, I wonder how his so called clinic can be licensed. It makes sense in land scarce Singapore where rental cost is high and is passed onto patients indirectly. Here I go again getting LTA in the picture as it might be illegal to use a vehicle as a clinic as it is only meant for transportation purposes.

Smart Government

The basis for deciding whether a particular goods or service should be the exclusive enclave of the government or best left to the private sector is a very academic one and I would not want to repeat the wisdom of many before me here. There should be an oversight committee tasked and empowered by the people for the people to make recommendations to parliament. This is to ensure that in areas where the government should be playing a role and is not doing so be brought to task. It would also be empowered to investigate governmental involvement in the economy through various government owned subsidiaries, joint ventures or related companies. If the government needs to invest excess funds in the economy of Singapore, there should be a proper blind trust that does this for the government free of executive over lord or interferences.

Peter Lye aka lkypeter
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. Copyrights of all contents in this blog belongs to Peter Lye unless stated otherwise.

Effects of Government on Macro Economic Performance-Singapore Experience

Human nature prevails that where credit is due, the queue to claim it can be mile long and on the same note, when blames needs to be apportioned, all and sundry will stay miles away from the situation. This small and young nation of Singapore commonly known as the little red dot was once near annihilation due to a multitude of factors like racial/religious divide, poor economy, low rate of literacy with absolutely no natural resources to live on the land. This era of the 1960s bore witness to the bitter struggle for independence that was also opportunistically made use by the communist to agitate the populace against their old colonial masters flying the altruistic flag of our struggle for freedom but with a more sinister underlying aim of converting the country into a communist state. Racial and religious issues especially racial issues were polarized to stir the pot of multi-racial harmonious co-existence and tolerance into a struggle for a monolithic society. All these are behind us save for the historians whose records of these events through their individual looking glass on what and why of the past. History was never meant to be an objective study although foundational principles are there to shed light along our path towards the truth.

The then chief minister and the current minister mentor Lee Kuan Yew and his contemporaries many of which has left the cabinet and this life due to old age have pre-sided over a period of renaissance of Singapore economy with many years of double digit growth and structural transformation of the economy from a industrial/manufacturing to a knowledge and service orientated economy as Singapore survive one after another economic downturn with relatively small and quick healing battle scar of economic recession.

This period also witnessed the baton of premiership handed over from Lee Kuan Yew to Goh Chok Tong to our present prime minister Lee Hsien Loong who is the eldest son of Lee Kuan Yew. The issue of cabinet remuneration and sustainable leadership quality was maturely brought up in the open as a discussion point for the public to opined on. The basic argument being that we cannot expect a quality leadership to bring Singapore into the next leap on an altruistic only basis and a comparatively pittance financial reward. A novel model was brought to bear that benchmarked the political leaders and top civil servants salaries against the top n earners of the captains of various industries like lawyers, doctors, engineers etc. The application of the model had the effect of pushing up the salaries of the these leaders fairly substantially. The basis of which was that it would be a model that will serve us well in good and bad times as the cabinet salaries would decline if the top salaries were to decline in an economic downturn and provides for a certain level of social equity as well.

My basic belief being that poorly remunerated political leaders and top civil servants might lead be linked to poor economic performance but high remuneration is not a pre-condition for good economic performance and might not guarntee good economic performance in most cases.

First of all, we shall try to proxy good economic performance against a basket of indicators and this is not perfect or the best but would suffice for this discourse. The proxies are:

-GDP or GNP

-GDP or GNP compounded growth

-Measurement of government participation in economy - Fiscal Budget/GDP or GNP
-Years in power of head of state
-% of popular votes to ruling party
-% of seats controlled by ruling party
-Gini index
-UN Human Development Index

Our closest neighbour Malaysia has a parallel in having an iconic leader helm the top post for many terms. Mahatair Mohamed in the case of Malaysia and Lee Kuan Yew in the case of Singapore. Fortunately or unfortunately, both countries does not have a ruling to limit the number of terms the prime minister can stay in office like in USA where it is limited to 2 terms. We shall measure USA differently on this proxy in terms of number of presidents that managed to serve their maximum two term. It is indeed a good record as Bush, Clinton, Ragean all did two two terms. It was only in recent past that Malaysia saw some movement after Mahatair stepped down. In both countries, it is not invisible that both iconic leaders continue to enjoy some influence over the political landscape even though they are no longer prime ministers.

Peter Lye aka lkypeter
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. Copyrights of all contents in this blog belongs to Peter Lye unless stated otherwise.

MF Global Debacle-Singapore Moral Chapter

What is the difference between gaming and proprietary trading? The most obvious is on how you place your bets. In gaming, it is primarily based on instinct. There are some theorems that by card counting in the game of black jack, you are almost guaranteed in placing a winning bet but let's leave this controversial practice aside for the time being as casino operators have proven that they are guaranteed to be winners the world over.

In proprietary trading, it is usually based on a whole lot of analysis on the predictable and visible The little left that is not predictable and blind corners, human instinct and experience complete the process and a bet is made. Perhaps this is why a gaming license is needed to operate a legitimate casino but for proprietary trading, the amount of control that the monetary regulators ( MAS is the case of Singapore is both the central bank as well as banking regulator ) depends largely on your funding source. If funded by sophisticated investors with no retailing to the general public, MAS does little to control proprietary trading as well as protecting their investors in the name of free market. MF Global melt down is now common knowledge but little is mentioned that they also have a Singapore branch. Before I forget, the local press did mention that SGX has frozen their operations here for exchange traded products to reduce SGX counter-party risk. How about their positions in non-exchange traded derivatives and the like and their local investors and counter-parties? SGX stands for Singapore Exchange and also operates as security and exchange regulator of the stock market. A bit like NYSE and SEC all rolled in one in USA for efficiency and not to possible defray conflict of interest.

Singapore has been showcased the world over as a miracle economy that managed to achieve spectacular growth in the face of adversity starting with a tiny island state with no natural endowment of mother nature except for her people and geographical location along the major maritime trade lanes of East and West. The one and only ruling party since her independence is the well known Peoples' Action Party ( PAP ) and till date, they still hold more than 2/3 of the seats in parliament enabling them to change constitution, laws and policies almost unilaterally. To add injury, being a parliamentary system, there is the party whip to keep their own members of parliament in line. PAP's success both in winning the mandate of the populace at every election as well as making and keeping Singapore successful is based on a pragmatic moralistic meritocracy strongly espoused by the founder of PAP Lee Kuan Yew and I suppose accounts partly for their choice of all white 'uniform'.

Hong Kong is big in proprietary trading but has no legalized gaming and the same goes for major financial centers like New York, Chicago, London, Tokyo and Frankfurt. Cities known for big league legalized gaming like Macao, Los Angeles, Atlantic City and Monte-Car-lo have limited proprietary trading. If we combine casino gaming or what Singapore government white washed label as 'Integrated Resort' and proprietary trading in the financial center into the same gaming sector, this might place the city of Singapore uniquely in the gaming capital of the world. Well done PAP.

Privatizing Profits/Socializing Losses-Economic Spring

Holidaying in one of Thailand's tiny beach island in La Laanta resort that offers both beaches with pristine water and modern day creature comforts like air-conditioning and internet to attend my brother's twin city wedding has awaken some deeply recessed thoughts on capitalism,socialism,communalism and communism. These topics have disturbed my intellect endlessly with no absolute truism or compromised resolution.

Deeply stalked by the apparent lesser of two evils between capitalism and communism as well as the humanity of socialism and communalism. I have long threw communism out as an essentially non-viable state of being. I believe the empirical evidence on the break down of communism in USSR and eastern european countries have fortified my beliefs. Thinking I could rest my case and out comes the rise of China's economy makes me want to be more guarded in wanting to throw the bath water of communism together with the baby. Communism is not only entirely non-viable but has powered strong economic growth in China. Confusion confronted me and shifted my grey matter into higher gear.

On the other end of the spectrum lies capitalism and I have always assumed that since much of the world and USA success at being the largest economic and military power must show the relevancy of capitalism. This was until the capitalists wanted to have the whole nine yards of privatizing the profits of capitalism into their own self interest but when matters head southward, the capitalists wanted to socialize their losses on the premise of too big to fail trump card. This has not happened not only on wall street like the banks and insurance companies and main street represented by the big three auto companies of GM, Chrysler and Ford but also the sovereigns like Greece. Cerebrally, I pause to fathom that this is liken to heads I win and tails you loose. This is tantamount to cheating in my humble sense of justice.

The banks and insurance threatened the sovereigns that their failure might lead to ca-strophic and almost non-recovery of the world economy. When the economy seems to have recovered with a rally in wall street, the executives and rain makers started paying themselves what some might term as obscenely large pay packets. The 'occupy wall street' fever has spread to many countries and I believe rightly so on the basis of justice which should sometimes rise above arcade written laws.

Some of the main street executives travelled in their private corporate jets to Washington to beg for money. I do reverb some of the congressmen for chewing these executives about new theorem of begging. When the Euro became a common currency more than a decade ago, I was elated that finally, there is a disciplined currency with good foundations and principles against the fiat issue of USD that in a single announcement made the convertibility of USD into gold vaporize into thin matter. Next came slowly but surely a USD currency printing press based economy. The joke or reality is that their sovereign bonds promise to pay the bearer at a future date in USD full stop. I do not think that China which is currently the largest holder of USA sovereign bonds is likely to be bullied into seating pretty without any counter-measures.

Greece government came next as a nation that has not exercised fiscal discipline and spiraling their national debt into an un-manageable state and threatening to either default or exercise some form of reset including resurrecting their old Drachma or a substantial hair cut of about 50% which could possibly start a nuclear like fission in destroying the economy of the world. To make matter worse, their citizenry has already taken to widespread protest as a preemptive move to warn their government, ECB, ESFS, IMF and possibly the world that they will not swallow the likely prescriptive bitter medicine of fiscal discipline as pre-conditions for bailing them out. My question is why these bodies are taking Greece more seriously as they have forced such bitter measures into some governments especially those in the 3rd world in the past without as much as betting an eye-lid. Perhaps IMF has failed like the league of nations and ought to re-constitute and have a clean re-birth like the United Nations.

Do you think there ought to be an 'Economic Spring' along the same lines as 'Arab Spring' to inject a good dose of justice into the world economy?

SGX Prediction for 8 Aug 2011

I predict that SGX index will take a hit and might even test the 2900 point intraday for the following reasons even though DOW recovered on Friday on the back of better than expected employment figures:

1. A portion of the sell-off on SGX last Friday could be due to foreign funds selling index linked stocks due either to profit taking or to increase their liquidity for margin calls on funds that are more highly leveraged.

2. SGD weaken against USD last Friday on both the spot and forward market partly because foreign funds that have convert back to their home currency. I am not sure if MAS has intervened to support SGD.

3. SGX is closed on Tuesday 9 August due to national day celebrations.

4. To add additional time window risk, there is a FOMC meeting also on Tuesday 9 August in USA.

Just my common sense and I can be wrong.

Oslo Carnage-Singaporean Perspective

93 lives vaporized in a matter of about 90 minutes in Oslo on 22 July 2011 because 32 year old Anders Behring Breivik wanted to ensure that the authorities gave his beliefs the necessary attention. This event would change the Norwegian way of life like what 911 did to USA. Instead of taking his own life, he allowed himself to fall into the hands of the law and face the prospect of 20-30 years behind bars if convicted and accorded the full force of the law as Norway has no death penalty. Perhaps he wanted his day in court to promote his far-right ideology as by default, court proceedings are open to public and journalist. However, from his indictment proceedings which is unprecedentedly a closed one, his newsprint hours in court might not be that full. It was a surprising move as closed proceedings are the norm mostly in cases involving minors or of a sexual nature. Even the 911 court proceedings were open in US.

His actions are definitely pre-mediated over a period of 9 years but it most probably would not qualify for first degree murder as the victims are sort of random in nature. As of now, they prosecutors have not actually decided on what to nail Breivik and court has allowed a special 8 weeks of solitary confinement where only his lawyer is allowed access to give the prosecution more latitude in the conduct of the investigation and finally arriving at a charge. Perhaps extraordinary events call for extraordinary measures. On a lighter note on this very grave issue, perhaps it is a sort of reverse class action.

This event set me thinking on what can Singapore and Singaporean learn and take precautionary measures beyond policing and intelligence spheres but also on public, political, economic arenas and also rethink the meaning of justice beyond the restrictive meanings of those in the lawyering and judiciary profession. Perhaps also the parliament where our laws are made.

Punitive Measures
As a maturing society, we ought to come to terms that no amount of effort is enough to totally prevent such risks. On the same note, much can be done by our government and society acting in concerted effort to minimize the risks. To throw caution to the wind and do nothing just because it is an impossibility would amount to gross negligence.

The maximum punishment that laws in various countries differs widely but it can be classed as 3 broad categories. Death sentence by which ever means, time limited life sentence which can vary from 20-30 years and life sentence till death with no time limit. Various comparative especially between death sentence and life sentence and its impact on serious crime rates has not been totally conclusive that death sentence reduces serious crime rates. This is not a pro-life debate and one thing we can conclude that death sentence appears to be a cheaper alternative for the government in terms of managing such criminals. There is some co-relation that most first world nations consider the death sentence as cruel and so do away with it but in many states in USA, the death sentence is still the order of the day for serious crimes. It is rather conclusive that in almost all countries, the law is sufficient or perhaps too punitive in some cases.

Besides the law,the co-joining factors relates to policing and judiciary process. Being mostly libertarian at heart, I think that we need to titrate the level of policing to a sufficient level to have an acceptable level of public safety and law and order and not be driven to the extreme of being a police state with little or no freedom for the citizenry. This is a complex issue that the government in consultation with the citizenry must decide not only on the level of policing but also the matter and form as well.

Judiciary process is a very loaded item and I would be very careful else I run foul of the law. Basically, the two main categories are a judge based or jury consisting of the citizenry. There is no conclusive evidence of one over the other. I stand very economized here.

In terms of punitive measures, I am of the opinion that we overall fairly sufficient altogether there have been some controversies on both end of the spectrum. We had to contend with and grow up as a nation with regards to the escape whilst under Singapore custody of a key potential terrorist element Mas Selamat arrested by the police of our neighboring country Malaysia succeeding man hunting down Mas Selamat and extraditing him back to Singapore. On the other hand, we have also been criticized by NGOs like Amnesty International for Internal Security Act which allows for detention without trial. I recognized that this act is a caricature left behind by the British that used to be our colonial masters. I also see reasons for not dropping or changing this Act as Singapore was facing substantial struggle from communists or communalists elements both internally as well as externally like the Communist Party of Malaya and fast breeding of communism in our corridor like Vietnam, Cambodia and Burma with their larger over lords of Russian and China. This dispensation is most probably passe with communism running out of style as well as being reformed greatly like in China. Let not in our haste for popularism throw the baby out with the bath water by eliminating the Internal Security Act altogether but can explore changes to it to fit the political climate. USA enacted the Patriot Act and created a Homeland Security Bureau in reaction to 911 and perhaps having the backbone of an Act of similar nature, we can revise the Act instead.

As in all things, we must sought for balanced and well considered position rather than a knee jerk and more extremists measures. No doubt time is of the essence but we can always have temporary legislation subject to further review with a given time frame perhaps. The Patriot Act in USA is not without detractors internally as well as fear of turning the country into a police state or fear of misuse by those in powers for their own ends.

Social Glue-GINI index and Social mobility
There are research evidence co-relating high GINI with either terrorist activity, revolt and war. I see social mobility as part being a big part to address high GINI index overtime. It is my worry here as a Singaporean that our GINI index has been increasing even with a growing GDP. I am all for a meritocratic value system but it must be tampered with a humane heart and safety net for the those at the bottom of society as well as those that falls through the strict rules of the safety net. I know that the current PAP government is very resolute in not encouraging a lethargic socialist populace by holding back on expanding the social safety net. I am very concerned in this arena as a widening rich poor gap coupled with fairly porous immigrant labour laws which is a major part of the ingredients capitulating into the Oslo carnage.

Back on social mobility, history has shown that it is easy for a meritocratic society to transform into a class stratified society. The rich and powerful overtime will be tempted to change the rules of the game to preserve their place in society. Our now retired but still influential statesman Lee Kuan Yew recently was quoted by the press that he will feel sorry for Singapore if we were to have a two party government granted he has various merits for a one party system. History has proven in Animal Farm speak that absolute power corrupts absolutely. This is a very common tendency based on the strength of self interest as stated by Adam Smith. Many have mis-quoted or misunderstood his self interest for selfishness and if we look deeper, there is a big differential between self interest which is lawful, moral and normal to selfishness which can disintegrate a society into the vestiges of hell surely though it might not be immediately.

We have to be true to ourselves that in the same breathe that we speak of meritocracy, we cannot deny the fact that blood the flows in us is thicker than water. This is why I was very concerned when the PAP government decided to scrap Estate Duty totally as estate duty is there as one of the tools to guard against poverty trap. In addition, we ought to watch out and arrest the spread of nepotism as we push towards an equal opportunity society as it is a very human tendency to do so. The spread of the tax burden is also a very key policy instrument and I am in favor of an across the board consumption like our GST as a good and efficient tax practice as it is easier to administer, has fewer tax loopholes as well as encouraging savings for future versus consumption. GST also tend to have a negative effect of shifting the tax burden towards the poor as generally, the poor will save less than the rich as a percentage of their income. To add injury, we have also lowered corporate tax as well as skewed the personal income tax in favor of the rich by reducing the tax rate for those on the higher tax brackets. The rationale explained by the government for the corporate tax to for us to stay competitive with neighboring economies like Hong Kong and the tweaking of the personal income tax to discourage 'tax planning' activities. Perhaps we ought to re-examine the corporate tax, personal income tax, estate duty and GST holistically together.

I am certainly no anglophile but I endorse their making equal opportunity, transparency and equitable society as non-negotiable. England was as feudal state as one can be and remains one of the last few larger economies to continue constitutional monarchy. It took England about 200 years to transition itself from an executive monarchy to constitutional monarchy in a fairly peaceful manner although there has been bloodshed compared to the number of people that died in the communist revolution that overthrew the executive Tsar monarchy in one swoop.

This is not an opportunistic endeavor to use the stage of Oslo carnage to further my personal views but looking at the Oslo Carnage through Singapore looking glass.

Cheers,,,,, Pete

My Fellow American