Looking ahead, my 2009 to Come

An obligatory last day post of 2008, for review and stock taking. However never a regressive person I’m, I will look for new grounds to cover and paths to navigate. I do not fear the unknown but only worry being stagnant and redundant.

So the new year brings new resolutions, despite the bleak economic outlook.

Investments wise irregardless of not doing well in my financial portfolio , I will continue investing in creative capital. Because it is the future currency in the coming knowledge economy.(unless the world follows china and becomes commie, then dah government owns you and your intellectual property)

Making critical choices.

Career wise,  after graduation I would prob be stuck working in the same industry for the next 5-10 years till the next business cycle. I’ll have to decide either to pursue my professional registration or not.

Relationship wise , I want to take time to start on the right foot. When work starts, it is difficult to juggle a reasonable work-life balance especially in the building line with deadlines aplenty. Making decisions are tough,nonetheless critical choices have to made.

‘C’ this post refers to you, despite trying my darn best to understand you and from your writings, the feeling is non-congruent with I get in our communications. I don’t seem to get across. No point throwing my good time after bad, and I shall mention this again , it’s all about give and take.

‘J’ with you I think I’m out of my league, not sure you’ll be able to tolerate my humour haha. If I do ever get you to laugh

And on the same note, I came across this hilarious story as told from a female perspective.

A man wanted to get married. He was having trouble choosing among three
likely candidates. He gives each woman a present of $5,000 and watches
to see what they do with the money.

The first does a total make-over. She goes to a fancy beauty salon,
gets her hair done, new make-up and buys several new outfits,
then dresses up very nicely for the man. She
tells him that she has done this to be more attractive for him because
she loves him so much. The man was impressed.

The second goes shopping to buy the man gifts. She gets him a new set of golf clubs,
some new gizmos for his computer, and some expensive clothes. As she
presents these gifts, she tells him that she has spent all the money on
him because she loves him so much. Again, the man is impressed.

The third invests the money in the stock market. She earns several times
the $5,000. She gives him back his $5,000 and reinvests the remainder
in a joint account. She tells him that she wants to save for their
future because she loves him so much.
Obviously, the man was impressed.

The man thought for a long time about what each woman had done with the
money he'd given her. Then, he married the one with the biggest boobs.
Men are like that, you know.

Knowing men are from mars like myself, I tend to agree as well. However I would choose a bride with the biggest asset, (not necessary boobs) A bigger ‘heart’ is more important

I’m Yours

The lyrics are fabulous!

But I won’t hesitate no more, no more
It cannot wait, I’m yours

Well open up your mind and see like me
Open up your plans and damn you’re free
Look into your heart and you’ll find love love love love

Listen to the music of the moment people, dance and sing
We’re just one big family
And it’s our God-forsaken right to be loved loved loved loved loved

So I won’t hesitate no more, no more
It cannot wait, I’m sure
There’s no need to complicate, our time is short
This is our fate, I’m yours

Also this month’s economist ran an interesting article on Human evolution and Music.

“

Like real cheesecake, music sates an appetite that nature cannot. Human
appetites for food evolved at a time when the sugar and fat which are
the main ingredients of cheesecake were scarce. In the past, no one
would ever have found enough of either of these energy-rich foods to
become obese, so a strong desire to eat them evolved, together with
little limit beyond a full stomach to stop people eating too much. So
it is with music. A brain devoted to turning sound into meaning is
tickled by an oversupply of tone, melody and rhythm. Singing is
auditory masturbation to satisfy this craving. Playing musical
instruments is auditory pornography. Both sate an appetite that is
there beyond its strict biological need.

“

RMI: Financial Globalization causes and consequences

Last lecture of the series. Basically a final summary lecture of the causes and remedies for the global financial crisis.

Impacts on individual Asian countries was discussed, which was very informative. Will shall share them as follows.

• Asian region’s financial institutions have relatively small exposure to toxic assets
• Asia’s major trading partners other than US continue to do well
• Asian economies have large FOREX reserves
• The 1998 financial crisis forced governments in this region to introduce regulation, risk management and checks and balances in financial instruments.
• Domestic trade within region is 50% of total trade
• Asia will weather the storm

SINGAPORE

1. Little change in value of Sing Dollar versus US Dollar
2. GDP may shrink by 1%
3. Tourism down by 6%
4. IRR project viability in focus

JAPAN

1. Japanese banks have relatively small exposure to toxic assets in relation to equity
2. Export earnings to US and Europe hit
3. SONY, PANASONIC, NISSAN and HONDA announce profit warnings
4. Carry Trade in Yen unravels

KOREA

1. Korean banks have relatively small exposure to toxic assets in relation to equity
2. Economy dependent on export to US and Europe
3. There is a liquidity crunch for availability of US$ to service forex deposits and foreign debt
4. KOSPI down by 40%
5. Korean won has depreciated by 50% versus USD-1998 level
6. Real estate prices are down
7. 11 $ bn package announced to stimulate domestic industry
8. 30 $ bn credit swap arranged with US federal reserve

CHINA

1. Chinese banks have relatively small exposure to toxic assets in relation to equity
2. Stock market has been badly affected
3. Export earnings to US and Europe hit and factories closed down
4. Industrial growth will grow at < 10% down from 17%
5. Unemployment will swell along with possible social unrest.
6. Policy changes will be made to boost domestic consumption especially in rural areas.
7. Worldwide demand for raw materials will come down.
8. GDP growth may go down to 8% from 11.9%

INDIA

1. No information on Indian banks exposure to toxic assets – likely to be minimal.
2. Stock market has been badly affected.
3. Software export earnings to US and Europe hit and layoffs expected.
4. Industrial growth will not change much as it is driven by domestic demand.
5. Flight of investment capital to safe destinations and Rupee depreciating against USD
6. Real estate bubble set to burst.
7. Policy changes will be made to boost domestic consumption especially in rural areas.
8. GDP growth will go down to 7- 7.5% from 8.9% last year

Asian Countries Loan-Deposit Ratio

For Korea is significantly high

Other Notes:

• Bank debt restructuring by resetting loans if the capital lost in the asset side cannot be balanced by injected liquidity (either gov or private)
• With low interest rate, USD might be the next currecy for carry trade. Perhaps like Japan , American will experience the lost decade.
• Comparing India and China’s economy which I’ve blogged about earlier

Merry Christmas

A diamond shines no brighter
than that lovely Christmas star.
It shines in all its brilliance;
Its seen from near or afar.

A symbol of the Christ-child
as He lay upon the hay,
It tells to all the waiting world
a King was born that day.

Give us strength and hope and courage
to do our best by far
And never falter in our faith
as we watch that Christmas star

How Kind are you? 1 to 10

I was asked this question by a silly girl, how do I rate myself from 1 to 10.

The paradox is firstly ,others may call you kind for the things you’ve done for them, but dun you think it is hypocritical to say you yourself am kind? Secondly really how does one objectively quantify something as subjective as kindness. Fortunately it is not an impossible task and the key lies in statistics, numbers are one’s best friends. Take a statistically significant random sample of population as ask them to complete the singapore kindness survey.

Plot all the scores in a chart, divide the distribution by 10 equal percentiles

Attempt the quiz yourself , and volia you will know which rating or percentile of kindness based on your result. Curious of my score? Well I belong to the category “I’m trying hard to be good person, and a friend to myself”  group Haha I can readily think of 10 reasons why I’m not unkind. does that mean I’m kind?

1. I can make people laugh
2. I can make people happy
3. I can make people smile
4. I can cheer people up
5. I can brighten people’s day
6. I can be a good friend
7. I can be approachable
8. I can be crappy
9. I can make a good joke
10. I can make your day

Yes read between the lines! This only happens in uniquely singapore where we need a week of kindness movement and a month of courtesy campaign

Fundamental drivers of development

Here is a summarised table of how the world will change within the next 10 years, in particular context of mobile technology.

Technology	Socioeconomic and political	Business and industry	Users, values, attitudes
Processing power will increase exponentially (Moore’s law)	Globalization will increase	Industries mature over time	Values change at the pace of generations
Fiber and memory capacity will increase exponentially	Democratization will increase	Companies strive towards monopoly	Individualism will increase
Capacity in air will increase but slower than in fiber	Aging population (Industrial world)	Attractive markets attract new entrants	Importance of family and friends will increase
Battery capacity will increase very slowly	Shift towards knowledge industry (OECD countries and NICs)	Scale and learning economics (improving price/performance)	Value of free time and experiences will increase
Miniaturization of components will increase	Market economy prevails (but counter movements will continue)	Complexity diseconomics	Need for mobility and communication will increase
Digitalization will increase	Fight against terrorism and crime, in particular cybercrime, will continue	Value chains will increase in complexity (value networks)	Increased technology adoption in everyday life
Standardization will increase	Social differences will increase	Wireless infrastructure cost will fall more slowly than for electronics (Zander’s law)	Different user groups have different values and needs
Internet development dominating	Increasing amount of information and choices	Value of network increases with number of nodes (Metcalfe’s law)	Environmentalism and health concerns will increase
Large and complex systems become increasingly difficult to control centrally	Air bandwidth is affected by political decisions	Value of information and knowledge will increase	Explosion in social group formation in very large networks (Reed’s law)

Proverbs 22:9

“A generous man will himself be blessed,for he shares his food with the poor.”  Pr22:9 NIV

I seldom write about religion but this one is funnily true….

A holy man was having a conversation with God one day and said, ‘God, I would like to know what Heaven and Hell are like.’
God led the holy man to two doors.
He opened one of the doors and the holy man looked in.
In the middle of the room was a large round table. In the middle of the table was a large pot of stew, which smelled delicious and made the holy man’s mouth water.
The people sitting around the table were thin and sickly. They appeared to be famished.
They were holding spoons with very long handles, that were strapped to their arms and each found it impossible to reach into the pot of stew and take a spoonful.
But because the handle was longer than their arms, they could not get the spoons back into their mouths.
The holy man shuddered at the sight of their misery and suffering.
God said, ‘You have seen Hell.’
They went to the next room and opened the door. It was exactly the same as the first one.
There was the large round table with the large pot of stew which made the holy man’s mouth water.
The people were equipped with the same long-handled spoons, but here the people were well nourished and plump, laughing and talking. The holy man said, ‘I don’t understand.’
It is simple,’ said God. ‘It requires but one skill.
You see they have learned to feed each other, while the greedy think only of themselves.’

Chartered Financial Analyst

I’ve been deliberating whether take the CFA certification for sometime, it’s really painfully boring to plough through 5 volumes of financial french. Foremost I’m convincing myself I have to understand financial analysis despite knowing nuts about accounting except for calculating tax deductibles for the annual income tax assessments due. The following reasons why it is important to me.

1. Damn bloody gahment that singaporeans voted for is pro-business(banks & esp MNCs with FDIs) rather being pro-singaporeans. Learning from the mini-bomb fiasco it’s caveat emptor for the rest of us.
2. For my future family planning, I’m glad my dad did that for me and I will pay it forward for my children. ( It’s rather difficult now because I dont have a SO to start with)
3. Possible alternative for a mid-career change into the finance related line (real-estate development )
4. A additional skill which might be necessary  when I attain senior management levels in my career.

Why I’m not going to do this for,

• Cause all kiasu singaporeans taking CFA as well
• Certification Paper chase
• Bragging rights to put on the name card
• Being a Pro Bono tuition teacher for my sister

For the former reasons mentioned 1 & 2 I can get by just mugging a copy of the past exams and study guide. If I wanted to achieve 3 or 4 I will have to invest time and money for the exam certification. The deadline for the CFA registrations is around mid-feb,I’m stuck in a quandary and I detest asking for any holy divine intervention. Or I could use the money to do some badly procrastinated travelling instead.

RMI: Why did subprime mortgages cause a global crisis

Off the top of my head:

The sub-prime crisis really was not the root cause that gave the global financial markets diarrhea, it was the financial engineering ( read obfuscation ) that poisoned the US banks and killed the eldest brother ( lehman ).Sub-prime loans were used as collateral for CDOs which were then rehashed into synthethic CDOs packaged as securities for CLNs and CDS, doubling the risk exponentially.These products were then sold all over the world to banks and investors looking for high yield. What the sub-prime crisis did was to trigger the repricing of the risks for such financial innovations (securitisation of loans) by banks and investors, because the risks were initially underestimated by the credit rating agencies. This process started the de-leveraging and unwinding of various structured products sold by the banks. Causing the banks to liquidate their assets in order to shore up their tier-1 capital requirement to meet the risk level of their holdings. When everyone sells at the same time will make the market tank. At one point , the interbank interest rate shot up because banks didnt trust one another.

New concepts learnt:

• Securitisation : Turning illiquid assets into marketable assets
  

  Rating	Tranche	Returns	Risk
  AAA “Senior”	6 Million	$10,000	0.167%
  BBB “Mezzanine”	3 Million	$90,000	3%
  DD “Junior”	1 Million	$400,000	40%
  	10 Million	$500,000	5%

• Intermedation VS Dis-intermedation of Banks
• Originate-to-hold model VS Originate-to-distribute
• De-coupling of asian economy does not work, even thou sg export to US is only 30%, indirect exposure to US thru the China market which buys machines from singapore to manufacture goods for US consumption. US slows , everyone in the world slows because US is the largest consumer in the world as well the the biggest debtor. Living on borrowed money
• Low interest rate environment due to trade surplus of US trading partners who accumulate foreign exchange which are then used to buy US bonds.
• Moving riskier assets to SPV utilised by banks to lower capital requirement. Banks loaned money to SPV to take this high risk assets off the balance sheet. Capital requirements for commercial loans are lower compared to the former.

Lessons learnt from crisis

• Sub-prime mortgage lenders
  • Poor underwriting and fraudulent practices “liar’s loans”
  • Worsened by “originate-to-distribute” model
• Investment Bankers /  Structurers
  • Compensation schemes encouraged disproportionate risk-taking
  • shortcoming in risk management eg poor assessment oand management of
    1. market/ funding liquidity
    2. reputational risks associated with off-balance sheet vehicles (conduits & SIVs)
    3. tail risks
• Credit Rating Agencies (CRA)
  • Poor evaluation of complex instruments such as mortgage backed securities and CDO
  • inadequate assessment and modeling of dependence structure reflected by sudden sharp rating downgrades
  • conflict of interest. to provide advisory service in structuring a security issue and to rate the security issue. Serve investors or investment bankers
• Investors
  • lured by higher yields and not pushing hard for greater disclosure
  • limited understanding of complex instruments
  • over-reliance on CRA ratings

2 types of impact on Asia : Financial and trade
Reits might be the next to go belly up due to borrowing limit tagged to their portfolio. With higher scrutiny, REITS might find it difficult to refinance their loans.

Hello Salute!

Just for laughs, quite a popular viral music few years back when some guy self-made an MTV using a webcam.