Economics Business Music Politics Altruism

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.

Privileged Communications. Doctors v Lawyers.

Photo Credit : Internet

I have always wondered why thousand dollar a plate charity benefit dinners are always held in the best hotels in town. Food so gastronomic that it is normally served with silver spoons that most of these guests are born with. Dressing wise, it is the standard tuxedo for men but for the fairer sex, it is a horrendous issue of God knows why? I am lucky not being a woman. Needless to say, those that would benefit from such proceeds will most probably not get to eat at or dressed in such fashion in the near future. To me, why not cut these cost and donate everything to charity instead. This is sort of like wolves in sheep clothing aka hard core meritocracy dressed in charitable egalitarianism.

The social norm is to have alternating seating arrangements for couples. By the way, if you do not have a partner, you would normally have to go find one of acceptable social standing to accompany you. The intern in the public relations company responsible for this event made a mistake of arranging the wives of a doctor and lawyer to be seated beside each other with their husband to buffer. Their disdain for each other via stiff and acidic upper lip sarcasm was common knowledge in high society. What do you expect leaving arrangements to interns unsupervised! Their doctor and lawyer husbands were made aware of it during the pre dinner cocktail. Both agreed that it would serve their purpose and those in the table for the two gentlemen to be seated beside each other to minimize their feuding wives spoiling the occasion. The lawyer told the public relation staff to make the change and she was very apologetic to him for the fiasco.

After the cocktail, the guests were gracefully directed to their tables and seats personally. Both wives were surprised that they were in the table and threw a dirty look at their fellow spouse but the lawyer was quick to save the day by giving the excuse that he has some matters to discuss with the doctor and has arranged for both of them to be seated beside each other and it was their shout. The situation went extremely well with their wives finding like minded guests seated beside them and there was no sign that a tsunami was within sight between their wives. However, signs of an erupting volcano were showing at the table between the doctor and lawyer to everyone.

Photo Credit: Internet

Between the starter and soup, both gentlemen were engaged in a very plastic social butterfly conversation on which profession is more privileged. Women gossips about people but greater men discuss ideologies. Apparently both gentlemen were highly regarded in their profession and the comparison went on various planes. Just before the main course was served, they exchanged verbal torrent on which profession is older and therefore more respectable. A tolerant and introverted district judge that happened to be seated across the same table spoke louder than normal "prostitution as the oldest profession does not make it more respectable" to everyone surprise. The increasing loudness of their verbal exchange was annoying him. It startled everyone in the table but the judge looked around the table with a stoic and unapologetic manner and ask if anyone disagree speak up or forever hold their peace.

Seizing the opportunity, the lawyer asked the judge if he would referee on which profession is more privileged or honorable. The judge replied that on the count of honor, his answer was neither and it was for this reason he is addressed as honorable in formal occasions.

Photo Credit : Internet

As for which profession is more privileged when in comes to information as he understand it, it is most probably neither as well. He qualified that it could be a biased opinion being a lawyer before becoming a judge. Doctors are last within the narrow pecking order as it is not difficult for judges to over ride doctor patient confidentiality and demand their testimonial. For lawyers, it is almost next to impossible to direct a lawyer to testify on privileged communication between him and his client but there are exceptions in some countries although in a very narrow manner.

Photo Credit : Internet

Lastly, the judge opined in his personal capacity that the most robust privileged communication is mostly probably spousal in a defining and conclusive manner and carried on working on his main course. In between the marbled cuts, he asked if there are any objections for the two couples to change seats so that everyone in the table can have a peaceful meal and everyone in the table clapped gently in unison and the change was made gracefully without further incidents.

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.

Shostakovich Cello Concerto No. 1 Opus 107-A long wait

Good things are worth the wait cannot be more true than in the case of Shostakovich Cello Concerto No. 1 composed in 1959 and dedicated to Rostropovich. Rostropovich had been yearning for Shostakovich to write him a cello concerto but had to harbor it secretly on advisement of Shostakovich's first wife Nina. When asked by Rostropovich how to ask Shostakovich to write him a cello concerto, her advice was not to mention or even hint anything about it. It must have been a long wait as Nina passed away in 1954 and the composition was only realized in 1959; at least a good 5 years. Many did not realize that it was such a long wait until we put the time-line together. When the composition arrived, Rostropovich received it with such enthusiasm by committing it to memory in a matter of 4 days.

Shostakovich was teacher to Rostropovich I believe for orchestration in the 1940s and he certainly held a deep respect for his teacher. When interviewed by The Strad in their May 1959 issue by M.B.Stanfield, his account of the Shostakovich and Prokofiev cello concertos as "They are supreme masterpieces and one cannot expect all music to come up to their standard" says it all.

Both Shostakovich and Rostropovich share a common trait in having a heavy dose of Russian politics intertwined into their musical career. Shostakovich did it mainly through his composition and Rostropovich his stellar cello performance. Shostakovich had many brushes with Stalin having been publicly denounced by Stalin and thereafter living in paranoia fear of death as people who cross path with Stalin have a habit of disappearing from the face of the earth. Although he outlived Stalin who died in 1953, the mental torture has left a debilitating mark on his psychological landscape as evident in many mysterious and unexplainable passages in his compositions. It was mentioned in passing that the fear of death might have been a greater torture than death itself.

As for Rostropovich, it could have been a soul born in the wrong country so to speak as he was very much a libertarian at heart living in communist Russia. In-spite of this, he had great love for motherland Russia choosing to return once his revoked Russian citizenship was restored and was laid to rest in Russia. Some of his landmark political highlights including performing in London in 1968 on the day when Russian tanks rolled into Poland. There was widespread protest at the concert but Rostropovich continued playing Polish composer Dvorak piece with tears in his eyes. The second significant event this time of his choosing was an impromptu basking in front of the Berlin wall in 1989 when the wall came down.

As with most Shostakovich composition, there is little explanation or narration giving the performer and audience almost total free play in interpreting the music with little or no point of reference save for the historical canvas against which it was written in. My main aim in the review of this cello concerto is to provide that backdrop so that you can enjoy the music more deeply in whichever way you heart bring you as there are enough exposition on the music itself.

Briefly, the piece has the signature Shostakovich motif DSCH written all over the piece. Mainstream opinion that it is only a translation of his name could be too simplistic for this four note motif. I think this queasy four note motif that pervades most of his work has a very deep meaning of a man that has gone through much psychological torture and the equation to his name could be a mere coincidence.

This four movement piece also has a unique feature of having the third movement almost exclusively a cadenza. The possible raison detre is to hall mark the piece as a virtuoso to allow Rostropovich latitude to display his prowess. In reviewing the piece with Shostakovich, Rostropovich has told him not to worry about the outer limits of the cello and just let his soul lead the way. This also explain why this piece is one of the more technically challenging piece amongst the limited cello concerto repertoire.

In the last movement, there lies a distorted version of Suliko song which is a favorite of the now dead Stalin. Perhaps it is meant as a mockery of Stalin than a respectful acknowledgement. Unfortunately, he has brought it to the grave without mentioning anything about it.

Lastly Shostakovich has mentioned personally that he drew much inspiration of this piece from Prokofiev Sinfonia Concertante but perhaps my limited understanding of Prokofiev music has me finding it hard to see the relationship between the two. Maybe my love for Shostakovich music as this juncture has to do with the circumstances I am embroiled in.

Some of the recordings I have listened to while writing this article are as follows and it is not in any particular order of preference or merit.

1. Mstislav Rostropovich, Seiji Ozawa, London Symphony Orchestra
2. Mstislav Rostropovich, Gennady Rozhdestvensky, USSR State Symphony Orchestra

3. Mstislav Rostropovich, Eugene Ormandy, Philadelphia Orchestra
4. Yo-Yo Ma, Eugene Ormandy, Philadelphia Orchestra
5. Heinrich Schiff, Maxim Shostakovich, Bavarian Radio Symphony Orchestra
6. Jiri Barta, Maxim Shostakovich, Prague Symphony Orchestra
7. Alexander Ivashkin, Valeri Polyansky, Moscow Symphony Orchestra

8. Frans Helmerson, Valeri Polyansky, Moscow Symphony Orchestra

9. Mischa Maisky, Tilson Thomas, London Symphony Orchestra

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.

Cheaper Stock Brokerage?

Of late, the competition in stock brokerage has intensified drastically with non-clearing members offering brokerage rates unheard of previously. As with all cheap things, there is always a catch to it. If you are thinking of fattening your trading profits or reducing your trading losses, do read the fine print carefully. The list of clearing members in the case of Singapore is available at www.sgx.com The differential between trading with clearing and non-clearing members are mainly as follows:

For trades with clearing members, stocks would be placed in a custodial company or custodial division of the stock exchange that would also have a common modus operandi with companies providing share registrar service. Trades though non-clearing members are normally held in a separate custodial company normally owned by the non-clearing member as well. Some do use the custodial services not owned or operated by them.
Voting rights at annual or extraordinary general meetings are non-existent for the smaller retail traders as the custodial company is listed as the owner of the shares. If you are a big player, arrangements can be made for the custodial company to proxy it back to you. If you are in the habit of collecting nicely printed annual reports for your coffee table, there will be none in this case. The situation is similar to trading using CPF and SRS funds.
The custodial fees charged by the custodial company are standard and transparent and same for all clearing member. The custodial fees and fees structure varies widely and this is where the savings on brokerage fees can get wiped out. The fee structure for custodial fee can be broadly classed into transaction fees for buy and/or sell and a custodian charge levied based on a mix of quantity and value of share as well as the custodian period.
Switching between clearing members is seamless because of a common custodial operator so the clearing members fight tooth and nail for customers especially institutional and private clients. Switching from a non-clearing member either to a clearing or another non-clearing member can be a nightmare as any existing open positions would have to be unwound in one way or another and this is most probably not where anyone wants to be in. The switching cost can be very high and the process tedious. Once the non-clearing members have you, they have you for good ad infinitum because of this switching nightmare.
The security of the custody is normally more secured because the common custodial service has a more protective legal framework to guard owners interest in case of liquidation, bankruptcies or dissolution. For non-clearing member, the protection element varies. After Lehman Brothers, no one is too big to fail.
Most non-clearing members tend to be larger and international geographically and might hold non-clearing or clearing memberships in markets outside of Singapore. Very useful for trading across markets.
These non-clearing member also tend to have more products especially forex based products that can lower your forex transaction cost by offering more competitive forex rates on spot or forward hedging options as well positions in multiple currencies on demand or fixed tenure. Only applies to the more sophisticated traders.

Before making any brokerage decisions, you cannot be too careful especially with non-clearing members and only trading on the local market not that I have anything against them.

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.

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?

Lesser Evil-USD or Euro?

There aren't many international currencies to hide under current torrent of financial storm. In mind, USD and Euro is most probably the most liquid. Yen is predominantly still a bilateral currency used mainly in trade with Japan. RMB is not deliverable now although there are synthetic products by CME for RMB non-deliverable futures settled in USD. There are signs that the Chinese government is seriously examining the pro and cons as well as timeline and method to unleash RMB having been caught with one of the largest cachet of sovereign bonds issued by USA and Euro zone countries that seems to be in trouble. Of course we cannot exclude the shinning king of the hill Gold as an alternative but with many caveats.

My choice is simply and clearly the Euro instead of USD.

Now the complex reasons:

1. Euro is a good choice in the long or even medium term if Euro zone does not implode by itself.
2. Although USD is solvent as the Fed can monetize the debt by printing more USD to pay their sovereign bonds. Joke being that they promised to pay you at a future date stated on the bond in USD and definitely will.
3. Euro is structurally more secure on the monetizing front as ECB has a rigid golden constitution to prevent it from doing so. It seems that ECB has broken her silver constitution of not being allowed to buy sovereign bonds of its member states but has done so for 5 (PIIGS) countries on the open market.
4. Euro zone seems to be in a big mess and the most powerful man or oops lady i.e. Chancellor of German has kept almost silent and nonchalant about it. While I understand the need to turn domestic as her election is due in 2012 but surely this might be too early and careful. Sexist joke that she can hide under her own skirt for cover since she is a lady. Please laugh for my dry sense of humor.
5. Of the five problematic countries PIIGS, only Greece is real trouble if we were to take a second and more careful look of the situation. The rest Italy, Spain, Ireland and Portugal are most probably only knee deep if we keep speculators playing the credit default swap market betting on their failure and therefore might be self full-filling. A good numbers of the speculators are investment bankers in their seville row suits and my view of them is so low threatening that their extinction will not spell the extinction of mankind.
6. Another major stumbling block is the domino effect on the sovereign default is on the major banks that hold a large portion of these sovereign bonds and their failure will therefore spread like wild fire from wall street to main street. The major banks are mostly too poorly funded for what they are doing. We should revive Glass-Stegall to separate investment banks from commercial banks. I think it was a big mistake in the 2008 crisis to allow them to merge like ML brought under BofA. Commercial and investment bank can then have different funding ratios. Looked how Soc Gen stoc was hammered down by about 20% in a single day few weeks ago.

As a Singaporean, wonder if my fellow country men has noticed that SGD has weaken against USD in the last 3 weeks from about 1.19 to 1.29? Reasons like making our exports more competitive etc are tossed in state control media but might reflect the depth of market that hot funds occupy in our market. Perhaps money is going into USD for short term cover if arguement above is correct.

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.