Sunday, September 27, 2009

Do I need progressive lenses?

Yes, I wear glasses but my eyesight has kept up better than most with age. I haven't been willing to pay for bif-focals (awful to look at) or progressives (prciey). Now here is a new invention, "TruFocals" that might solve the problem. There is one drawback though even if it works. You cannot select the frame. I shall let the video but its inventor makes its case.

and here is the company website:

Declining birthrates

I was thinking it either reflect our pessimism or our selfishness. I have been told some women do not want to have kids because they were afraid of pain. I feel like telling them at least they no longer risk death like women of the past.

- Posted using BlogPress from my iPhone

Saturday, September 26, 2009

If you feel poorer and less secure in Singapore it is because we have slipped.

Straits Times, Sep 26, 2009

How much is a burger worth?

According to a recent UBS survey, Singaporeans can afford to buy less than what people in many other cities can because prices here have risen more than wages. Sue-Ann Chia and Alvin Foo examine the data and explain this potentially dangerous trend.

IF SINGAPOREANS feel they cannot afford to buy as many things as they could a few years ago, they are not imagining it, according to a survey by Swiss bank UBS.

The proof, so to speak, is in a burger.

The survey shows Singapore workers have to slog longer to earn enough money to bite into a Big Mac. Its price is equivalent to about 36 minutes' worth of work, 14 more than three years ago.

It is, however, just one ingredient in the survey which covered the prices of 122 goods and services.

While a burger index is hardly a scientific study of purchasing power, it does provide some meat to the argument that workers here are getting a tougher deal than those in some other countries.

Singapore's worsened placing on the burger index - a proxy for the cost of goods and services - highlights two possibilities: either that consumption has become more costly, or pay packets have become lighter.

Both are worrying trends which could have crept into the country, serving a double whammy to residents who are feeling the pinch from the downturn.

What accounts for the trend? Is it just a blip or here to stay? More importantly, what are the social and political costs if they persist?

Money not enough

THE UBS survey tracks prices and earnings of 73 cities this year, including Singapore. It started in 1971 with 31 cities, and has since been conducted every three years, with a growing list of cities.

Now, it includes Asian capitals such as Beijing, Kuala Lumpur and New Delhi along with key Western financial centres like London, New York and Zurich.

Price and wage levels are compared across the different cities with a standard basket of 122 goods and services and a set list of 14 professions.

In its latest survey done in March this year, the picture painted of Singapore is not a cheerful sight. It shows that the country is among First World economies in prices but not necessarily in wages.

Singapore is ranked the 24th most expensive city, moving up eight spots from the last survey in 2006. It is more costly than Chicago, Hong Kong and Sydney.

If rent is included, Singapore is even higher, at No. 15.

But there was no similar progress in wage levels. On the contrary, the average hourly gross wage dipped from US$7.30 (S$10.30) in 2006 to US$7.10 this year.

This led to Singapore slipping two notches to 40th position.

Interestingly, Singapore's wage level is just one rung above Moscow's. But in the price chart, Moscow is way down the list, at No. 56 - or 32 places below Singapore.

With pay increases not keeping pace with price hikes, purchasing power is squeezed. Singapore has declined 10 spots to the 50th position, behind cities like Bratislava in Slovakia, Johannesburg in South Africa and Kuala Lumpur in Malaysia.

Are the findings an accurate reflection of Singapore?

Not quite, says MP Seah Kian Peng, who also chairs the Government Parliamentary Committee for Community Development, Youth and Sports.

'The figures may be right, but the conclusion could be wrong,' he notes.

Rather than look at prices and wages in isolation, he says the key considerations should be: Do Singaporeans lead a better life than they did in the past, and are the poor taken care of? (We are learning to live with less, feeling less secure, worrying aloud about future medical costs. We had to make much noise before they begin to look after the poor better but they needed no encouragement to incentivize rich to come here)

'If the answer to both is yes, then moving up or down two notches becomes mere semantics,' he says.

He cites a recent government report which found that the salaries of the bottom 20 per cent of wage earners have risen. Their monthly wages increased from $1,200 in 2006 to $1,310 last year.

Like him, MP and labour leader Halimah Yacob questions the survey's validity.

While she is concerned by the findings of declining purchasing power, she wonders whether the indicators include government aid.

This covers a wide range, from the Workfare Income Supplement for low-wage earners, to rebates and subsidies in healthcare, education and housing. These 'are significant and help people to cope better', she says.

The scepticism of both politicians is shared by some analysts and political watchers, who believe that price comparisons across cities tend to be tenuous.

One key problem, they say, is the survey methodology which may not fully capture different consumption habits. (The other cities and some of them are leading asian ones do not get the same kind handouts like us to do better. The government is planning to make itself a narcotic to its people so that he can boast and remain in power)

Varying prices

TO UBS, the strength of its survey is consistency.

'We measure the same goods across the cities and aggregate these prices in a goods basket that is the same for all the observed cities,' explains Mr Thomas Kaegi, UBS Wealth Management Research's head of macro-economic research for Asia-Pacific.

This enabled its researchers to compare cities on the same indicators.

Using one standard basket of 122 goods and services - from food to Internet connection costs - UBS determined the price levels in various cities.

With that same basket, it analysed the purchasing power of the cities' residents by how much their average incomes - based on 14 professions - can buy from that basket.

Mr Kaegi recognises its weakness - it does not take into account consumer patterns and taste buds that differ across countries.

For instance, veal steak, cheese and frozen pizza are among the 39 food items included in the basket of goods - but these imports from the West are not exactly standard fare for a typical Singaporean.

Diets aside, differences in culture and behaviour are also not captured.

Mr Kaegi observes that many Singaporeans would rather eat out at a hawker centre instead of buying food items and cooking at home, which is what people in Europe generally prefer.

Another example he cites is domestic foreign helpers, who are not included in the reference basket but whose services are widely used here.

'If Europeans were to employ domestic helpers, which they don't, it would make Singapore's price level lower,' he says.

High cost, low wages

DESPITE the survey limitations, there is no denying its broad conclusion that prices in Singapore have risen faster than wages here in the last three years.

The chief culprit appears to be the global recession which robbed workers of wage gains but did little to suppress high prices left by last year's record inflation.

Inflation peaked at a 26-year high of 6.5 per cent last year, owing to soaring food and fuel prices.

Unlike wages, prices have yet to deflate significantly despite the onslaught of the economic crisis late last year, notes DBS economist Irvin Seah.

'Look at general food prices... We saw some slight adjustment, but not as much as the downward adjustment in wages,' he says.

According to Singapore's consumer price index in March - when the UBS survey was conducted - food prices rose 4.6 per cent over the same period last year due to dearer items, from cooked food to fruit and vegetables.

On the other hand, pay packets shrank in the first three months of this year compared with the same period last year, according to Manpower Ministry figures.

Its quarterly labour report showed that real wages - wages minus inflation - had declined by 5.8 per cent.

The timing of the UBS data collection could be another reason for Singapore's poorer showing in the survey ranking. March was when Singapore was bearing the brunt of the global recession.

'Singapore was one of the worst-hit economies during this recession in terms of growth,' notes Mr Seah.

'If you take the reading then, you'll naturally see lower wages and purchasing power relative to other countries which fared better during this recession.'

The low pay of low-skilled workers here also dragged down Singapore's average wage level.

The salary gap is wide when comparing the net incomes of low-skilled workers here and elsewhere, notes economics professor Basant Kapur from the National University of Singapore (NUS).

Drawing a comparison between workers in Singapore and Sydney, the UBS survey figures are telling.

Women sales assistants in Singapore earn an average of US$7,500 a year, less than half the annual income of US$17,700 for those in Sydney.

It is the same fate for bus drivers. In Singapore, they earn US$11,400 a year, while those in Sydney get US$25,000.

In contrast, there is less of a salary gap between higher-skilled workers here and in Sydney.

Department heads in the metal industries earn US$43,100 a year in Singapore, slightly less than the US$52,600 in Sydney. Product managers get US$45,100 a year in Singapore, while those in Sydney receive US$49,800.

The low wages of the lower-skilled in Singapore are due to many factors, says Prof Kapur, including competition from low-wage countries and technological changes which do not favour them.

The influx of foreign workers in recent years, especially in the services sector, has not helped.

'Their availability reduces the incentive for employers to adopt more technologically advanced and productive methods of production that would enable them to offer higher wages,' he notes.

Associate Professor Shandre Thangavelu from the NUS, however, cautions against attributing the wage decline to foreign workers.

Referring to the UBS 2006 and 2009 surveys, he compared the wage levels for different Asian cities.

The wage level index dipped by 13.9 points for Seoul, six points for Taipei, four points for Tokyo, 1.4 points for Kuala Lumpur, and 5.4 points for Singapore.

However, the wage index rose by 6.3 points for Hong Kong and 2.9 points for Bangkok.

'Since other cities in Asia have also experienced similar decline in the wage level... it is difficult to conclude that Singapore's growth model or influx of foreign workers is the cause of the decline,' he notes.

Regardless of the cause, analysts say policymakers ought to even out the imbalance between price and wage costs.

As Assistant Professor Randolph Tan from the Nanyang Technological University puts it: 'Except for labour costs, most things have become more expensive between 2006 and 2009.

'That could imply that in terms of ensuring Singapore's cost competitiveness, we must look beyond wage restraint.'

Middle-class squeeze

IF THESE troubling trends are not reversed, this could lead to growing discontent, especially among the sizeable group of middle-income earners in Singapore.

This same group tends to receive less government aid and rebates, compared to low-income earners who receive more aid to ease their plight.

With lower purchasing power, it would be harder to maintain a middle-class standard of living, notes sociologist Tan Ern Ser from the NUS.

'If we pride ourselves in being a middle-class society with a large middle class, then we would have a high proportion of people experiencing an expectation gap,' he adds.

While the 'expectation gap' could cause some unhappiness, he does not believe it will result in a backlash against the Government.

His reason: The gap is not primarily attributed to government policy but to globalisation.(So the other cities aren't affected by globalization? If so, I vote for less globalisation. What is the use if it makes the majority of us poorer?)

'Also, the middle class in Singapore constitutes only a category, not a united, highly charged political force.'

But for a government whose mandate rests on delivering a better life for citizens, it will need to ameliorate the pain, note analysts.

'If the Government can convince the middle class they are doing better than the middle classes elsewhere, and that the problem lies with global competition, then the political consequences could be moderated somewhat, or even become non-existent,' says Dr Tan.

Placating the people

FOR now, it could still be possible to lay the bulk of the blame on external forces like globalisation, because fiscal measures are fuelling the slowly recovering economy.

But not forever.

'If the situation of falling wage levels and declining purchasing power deteriorates rapidly, then it would undermine the performance legitimacy of the Government,' says political observer Eugene Tan.

Economic growth which prospers people is a fundamental basis of the Government's legitimacy, he notes.

'A continual decline in purchasing power will deflate the Government's bragging rights that it fosters shared economic growth.

'In turn, public opinion that the Government's economic policy is not working will be stoked, accompanied by the greater likelihood that voters may be bolder in wanting to try alternatives,' he adds.

If this happens, 'the possibility of a significant swing against the ruling party cannot be ruled out', says the law lecturer from Singapore Management University.

To keep any such eventuality at bay, Singapore needs to fine-tune strategies to ensure that it not only remains competitive but also mitigates the constant downward pressure on wages, notes Dr Gillian Koh, a senior research fellow at the Institute of Policy Studies.

During the depth of crisis, the Government went swiftly to the aid of Singaporeans and companies, unveiling a $20.5 billion Resilience Package in its January Budget.

Families received twice the amount of goods and services tax (GST) credits. Those living in HDB flats also received increased rebates for service and conservancy charges, with one- to three-roomers getting an extra month of rebate and owners of bigger flats receiving half a month more.

In addition, low-wage earners received 50 per cent more Workfare grants to supplement their income as well as more transport vouchers.

Dr Koh says the challenge for the Government lies in convincing people it is doing all it can to improve the economy which, in turn, will increase the number of well-off citizens.

However, Singaporeans too must take the initiative to improve their lives, she adds.

CIMB-GK regional economist Song Seng Wun believes Singaporeans should be better off by 2012, especially if inflation stabilises to around 1.5 per cent.

'With asset inflation, more stable food prices, we'll see affordability moving up if economic growth returns to normal. Wages will be pulled up as well,' he says.

From YouTube: Singapore in 1938

First saw this at FM George Yeo's Facebook page. A friened pointed it out to us again this morning and I decided to "immortalize" it here so that I wouldn't lose it.

Friday, September 25, 2009

The Black Swan The Impact Of The Highly Improbable

An indispensable book on Risk. Check it out as a SlideShare Presentation:

Asset Markets Rallies - A game of transferring wealth

All over the world, especially in emerging economies, asset markets are rallying hot. I did not foresee this and I think it is too late to join the party. Yes, you can still make money but the risk reward now is bad, the margin of safety too small.

Simply put, these are liquidity fueled rallies because cash is returning zero. The best risk/reward is when you got in near the ground floor. Liquidity led rallies have a nasty habit of reversing suddenly, so when it happen, and you had failed to get out earlier, you are square since you entered at the bottom. Everyone else net of those who bought and profit from you has will be staring at losses. May be we will have another round of financially ruined people committing suicide.

A liquidity fueled bull run is nothing but a Ponzi scheme. Wealth is not made as there are no fundamentals, i.e., earnings and cash flows to support higher asset prices. Those who bought low and sold high, must be matched by those who bought high and sold low.

The end of the liquidity binge is almost impossible to forecast, but there are only two causes: natural or unnatural. The natural cause will take the markets higher than the unnatural one. In this instance, the unnatural cause comes from governments draining liquidity, which requires political courage of the first order (not likely). The natural cause is when assets got so over valued, greed eventually gave way to fear against a tower of unreal values. Like a sand pile, it is impossible to forecast when it will collapse, only that it will.

Unfortunately for the prudent, the natural collapse of prices might not happen for a very long time. The wait might be years. Since politicians and central bankers mostly have no guts, this is the more likely outcome.

If you want to make money, on a risk/reward basis, find assets that give you cash flows. Capital gains in this cycle is a fool's game.

Economics of mooncakes

Ever wonder why there isn't a price war to take down the price of mooncakes? Market forces isn't working here.

Economics has too many dismal exceptions. For mooncakes the price didn't fall but the packaging and now even its presentation have improved markedly. The competition in non-price.

To get mooncakes at bargain prices, wait for the 15th day of the eigth lunar month. It is a sale that puts post christmas sales to shame.

Economics 101 I got from school was useless, good only for a world that only exists in computer games.

This is a test blog post from the iPod.

Wednesday, September 23, 2009

So much money, it is producing funny results

If you take the money the US government has pumped into its economy and pour into practically any member of the UN, it will be washed off the surface of this planet. These trillions is producing the most unexpected outcomes. Yesterday I read the FDIC is contemplating borrowing money from the banks the government help to keep afloat because it is short of money from too many banks failing. The regulator is getting money from the regulated? How can this be?

It is beginning to dawn on me that money running around in rivers produce the most unexpected outcomes. When fear was high, the money was trapped in liquidity reservoirs. Now there is enough for it to flow any and every where - It is hasn't come to your neighbourhood yet (not your pocket) don't worry it will, likely as inflation and hopefully as economic opportunities for you as well.

No wonder it is impossible to tell if this economic recovery is real. Tolerate the debts, get on with any productive investment (can never be sure), service, manufacturing and consumption you can find, as long as it is not wasted, we could start virtuous cycles and create a real economic recovery. In short, the recovery is real if we make it so. However if we corrupt or waste it away, we will end up worse than we begun.

Tuesday, September 22, 2009

Asia Recovers

How real is this economic recovery? Let's keep it simple. We fell into this crisis from a massive loss of confidence. We will recover as we regain our confidence. The more indebted economies have less confidence. So they come up more slowly.

Monday, September 21, 2009

My outlier classmate.

So happy for him because he is doing what he loves - the performing arts. Kwong Ming or Jeremiah Choy as he introduces himself these days was my classmate from secondary school.

He has appeared in the papers for the fun stuff several times, but I shall only be able to remember this one because blogs weren't available for journaling.

I have another reason for posting this. To forward it to our teacher who has moved to San Francisco.

How many of us have the same luck as Jeremiah to pursue our passions? I can safely say the majority of us don't even know what our passions are. The thing you are passionate about, especially if you are a young person could very well be a passing fad. That was what my parents though when I became a Christ believer at thirteen. Later in life, key choices we made usually led us away, perhaps forever from discovering our passions. Often the economic imperative consumes most of our energies and attention. We hope with more national and personal wealth, we shall finally have a younger generation with the luxury of discovering and pursuing what they love. I am not so sure.

Beyond passion, I think finding the purpose of our existence is far more important. For most of us, this meaning is embedded in our families and maybe our work. Yet deeper than family and work we must go to plumb for that centre of gravity of why we are here and doing what we do. Eventually we will find ourselves entering the realm of philosophy and religion. And if you never get there, then you have not lived at all.  The majority do not need to articulate its beliefs; and I am afraid many never here never discover they have such a void needing to be filled. However for those living along the fringes, they will always have to explain themselves because they need to connect with the mainstream and obtain permission to influence us. Ticket sales, business success is the mean to this end. In this way, artists can turn their passion into meaning. albeit superficially.

Am I saying that many artists labour under meaningless passions? Perhaps they are still seeking the meaning of their work? Something to ask Kwong Ming when we next have our class reunion.

Ancestral Tablets

Don't you think these three towers that is iconic to the upcoming integrated resorsts (aka casino) look like giant ancestral tablets? This is the result when they are no towering neighbours around to break the view.

When they add the roof which will connect these three towers over the next few months, it will look like an altar. People can climb up and "pray to heaven" for luck before going downstairs to try their luck, which I am sure would be bad luck for most. No net wealth is produced here. It is meaningful only to Singapore if many foreigners come to enjoy themselves and leave their money here, the faster they do it the better. We are not defrauding them, it is just commerce. I don't think it is value for money. It is leveraging human weakness but we will make sure to minimize the impact on the host - Singapore's heartland families.

Amazing US Treasuries

Chinese government bonds have few buyers, but US treasuries is getting lots of demand in view that they are printing money like no tomorrow! This is a very strange world.
Personally I would be wary of holding these bonds long term. The environment is more unstable than ever and the herd keeps changing direction. Nothing is for buying and hold unless the price is right. Such assets needs much hard work to find and identify.

China Can’t Buy Enough Bonds as Dollar No Deterrent (Update1)

By Cordell Eddings and Lukanyo Mnyanda

Sept. 21 (Bloomberg) -- International investors are increasing purchases of Treasuries on a bet U.S. inflation will remain subdued, even as the dollar falls to the lowest levels of the year and the budget deficit tops $1 trillion.

Investors outside the U.S. bought 43.1 percent of the $1.41 trillion of notes and bonds sold by the Treasury Department this year, compared with 27.1 percent of the $527 billion issued at this point in 2008, government figures show. The Merrill Lynch & Co. Treasury Master Index of U.S. securities returned 1.18 percent in the third quarter after the worst first half on record as demand from the investor group that includes central banks climbed to record levels at Treasury auctions.

The trade-weighted U.S. Dollar Index’s 15 percent decline from its high this year on March 4 has proved no obstacle in Treasury auctions, aiding President Barack Obama’s efforts to sell an unprecedented amount of debt. Fund managers say their money is safe in the U.S. with expectations for inflation as measured by indexed bonds below the five-year average.

Treasuries are “starting to look like even a better value with a weaker dollar,” said Dave Chappell, who manages $90 billion in London at Threadneedle Asset Management Ltd., and has been buying longer maturity U.S. government debt.

The 10-year note yield rose 12 basis points last week, or 0.12 percentage point, to 3.46 percent, according to BGCantor Market Data. That’s the most since gaining 37 basis points in the five days ended Aug. 7. The 3.625 percent security due August 2019 fell 1, or $10 per $1,000 face amount, to 101 11/32.

Treasuries were unchanged today as of 10:01 a.m. in Hong Kong, with trading closed in Japan and Singapore for holidays.

Record Issuance

This week the U.S. will sell $112 billion of 2-, 5- and 7- year notes. The amount will be a record for that combination of maturities, exceeding the $109 billion sold the week of Aug. 24. Treasuries rallied that week, with the yield on the 10-year note falling 12 basis points to 3.45 percent.

Federal Reserve holdings of Treasuries on behalf of foreign accounts rose 16 percent to $2.07 trillion since the March high in the Dollar Index.

China, the biggest foreign owner of Treasuries, added $24.1 billion in July after net sales of $25.1 billion in June, raising its stake in U.S. government debt 3.1 percent to $800.5 billion, Treasury data showed on Sept. 16. The country’s holdings have risen 10 percent this year, after a 52 percent gain in 2008 amid the surge in demand for the safety of U.S. government debt as global credit markets froze.

Little Choice

Foreign governments have little choice than to buy Treasuries because they hold so many dollars. The U.S. dollar accounts for 65 percent for world currency reserves, up from 62.8 percent in mid-2008, according to the International Monetary Fund in Washington.

The Obama administration needs the foreign help to fund the debt sales needed for his $787 billion stimulus spending package. Chinese Premier Wen Jiabao said in March that the Asian nation was “worried” about the safety of its investment as a weakening dollar erodes the value of its record $2.1 trillion of foreign-exchange reserves.

“The interest rate on long-term Treasury bonds is at a very low level by historical standards,” said David Dollar, the U.S. Treasury Department’s economic and financial emissary to China on Sept. 11 at the World Economic Forum meeting in Dalian, China. “That says that the market has confidence the U.S. will get the fiscal problem under control.”

Inflation Protected Debt

Yields on U.S. inflation-protected debt show there’s little concern about consumer prices eroding the value of bonds’ fixed payments. The difference in rates on 10-year notes and Treasury Inflation Protected Securities, or TIPS, which reflects the outlook among traders for consumer prices, is 1.82 percentage points. While up from 0.04 points in November, the level is below the average of 2.19 points over the past five years.

The U.S. has the lowest so-called breakeven rates of any major sovereign debt market except Japan. The difference between three-year maturities is 0.71 point, below the average of 2.21 points this decade.

Prices of goods imported into the U.S. tumbled 15 percent in August from a year earlier, after a record 19.2 percent drop in July, the Labor Department said Sept. 11.

“There is no inflation on the horizon,” said Michael Cheah, who manages $2 billion in bonds at SunAmerica Asset Management in Jersey City, New Jersey. “The market is comfortable that the Fed will keep rates low and there isn’t much of an alternative.”

Current-Account Deficit

The Fed’s announcement June 24 that it anticipates the target rate for overnight loans between banks will stay at zero to 0.25 percent for an extended period is keeping two-year notes anchored near current levels. Policy makers meet Sept. 22-23 in Washington. Traders are pricing in less than a 50 percent chance of a rate increase before March, federal funds futures show.

A weaker dollar has increased concern among some investors as the budget and current-account deficits come back into focus in the currency market. The U.S. government and the Fed have spent, lent or committed more than $12 trillion in a bid to revive the economy and credit markets.

Economists forecast the current-account deficit will rise to 3.2 percent of gross domestic product in 2010 and 3.5 percent in 2011 from 2.9 percent this year as consumer and business spending boost imports and oil prices increase, according to the median estimates in Bloomberg News surveys.

‘Hard to Find’

“Even though U.S. asset markets are doing well, they’re not doing well enough,” Steven Englander, the chief currency strategist for the Americas at Barclays Capital Inc., said in an interview with Bloomberg Radio on Sept. 17. “The question is, what is there in the U.S. to attract capital? And that answer is hard to find.”

Investors buying a 10-year note today will lose 0.2 percent if yields rise to 3.57 percent by year-end as projected in a Bloomberg survey of forecasts. On an unhedged basis, European investors would have lost 13 percent on 10-year notes since the start of the year, according to Merrill Lynch index data.

Even with last week’s drop in bond prices, Treasuries have returned 2.8 percent in the past three months, including reinvested interest, beating the 2.3 percent return for mortgage-backed bonds, according to indexes compiled by Merrill. The rally reflects skepticism about the sustainability of the economic recovery once government stimulus ends.

Rising Unemployment

The Obama administration forecasts that unemployment in the world’s largest economy will rise above 10 percent in the first quarter. The jobless rate increased to 9.7 percent in August, a quarter-century high. Fed Chairman Ben S. Bernanke said in Washington Sept. 15 that the worst U.S. recession since the 1930s probably ended, while adding that growth may not be strong enough to quickly reduce unemployment.

If you subscribe to the double dip school of thought this may not be a bad entry point for Treasuries,” said Steve Rodosky, the head of Treasury and derivatives trading at Newport Beach, California-based Pacific Investment Management Co., manager of the word’s biggest bond fund. “The longer-term risk is that the weaker dollar is the cause or affect of people diversifying their holdings or using other currencies as a global currency, but we are a long way from that.”

Yields on 10-year notes may fall toward 3 percent, the least in five months and down from 3.47 percent last week, as the inflation rate drops, Francesco Garzarelli, chief interest- rate strategist in London at Goldman Sachs Group Inc., wrote in a Sept. 15 research report.

“The international community has not lost favor with Treasuries, and the weakening currency allows an opportunity to increase their exposure,” Rodosky said.

Pimco’s Changes

Bill Gross, who runs Pimco’s Total Return Fund, increased holdings of government-related debt last month to the most in five years, according to the company’s Web site. Gross boosted the $177.5 billion fund’s investment in Treasuries, so-called agency debt and other bonds linked to the government to 44 percent of assets, the most since August 2004, from 25 percent in July.

The U.S. will sell $43 billion in two-year notes tomorrow, $40 billion of five-year debt on Sept. 23 and $29 billion in seven-year securities on Sept. 24.

Indirect bidders, the class of investors that includes foreign central banks, bought 49.4 percent of the notes at the two-year auction, up from 33 percent in July’s sale. They purchased 56.4 percent of the five-year notes, compared with 36.7 percent in July, and 61.2 percent of the seven-year securities, above the average of 43.7 percent at the prior six sales of that maturity.

China and a few other central banks have grumbled about the dollar but they don’t have many other alternatives so they keep buying,” said Michael Atkin, head of sovereign research at Putnam Investments in Boston, who helps oversee $12 billion in fixed-income assets.

To contact the reporter on this story: Cordell Eddings in New York at Lukanyo Mnyanda in London at

Last Updated: September 20, 2009 22:25 EDT

What I am sure of the financial market

The financial market is a confusing place. One of the few things we can be sure of is that its players are some of the most pain adverse people anywhere. Until the accumulated results of their actions take them to a place of unavoidable pain, they will never invite the good kind of pain for themselves. No painful restructuring, pay cuts etc., unless it is for the lower levels.

Tuesday, September 8, 2009

Men in White

Just got my copy of "Men in White" an hour ago. This tome is so thick. I wonder when I would start, not to mention finish it. Most likely, I will skip much of it.

I got my copy from Times at Jelita. There were many copies on display. I don't think this book will be moving fast but it is probably a necessary piece of work.

I could have waited for it to be available in our libraries but at so many hundreds of pages, it is not a practical proposition.

Monday, September 7, 2009

A New Blog

Started a new blog last night, not exactly. It is more like spawning off a more focused blog out of the NaviMap one. I have named this new blog "Virtuous Cycles". It is self explanatory actually. One will find lots of NaviMaps with special focus on how virtuous cycles are formed.

Thursday, September 3, 2009

A beautiful message

Here is a card from a friend to all of us. Looks like she has covered every ground. Also she probably isn't writing to young people. You can tell from the list of challenges and trials the folks are facing. Young people today, old tomorrow, you know what could be in store for you. Prepare now even if it means having less of a life now.

Ok, I'm sure that some of you are saying, "OH NO, not another greeting card from that crazy woman!"

But today I know of at least one friend who is VERY near to the California wild fires; one friend who was at work, on the 13th floor of a building in Jarkarta when a 7.3 magnitude earthquake hit; one friend who is living with multiple sclerosis; one friend who is grieving the loss of two beloved pets; one friend who is raising a child with autism; one friend who is in between homes;. other friends who are facing career, relationship, financial or health challenges; a few who may think that they are all alone; several who think that their government has gone to hell in a hand basket; several who are gripped by fears of the future; and, one or two who are having a crisis of faith.

So, here's another card because I don't always know what you're going through on any given day but I always care.


Wednesday, September 2, 2009

The Search For Meaning

I am trying to find the time to begin reading Viktor E. Frankl, "Man's Search For Meaning". May be I will make a quick survey of it today.

In times of prosperity, a book like this seems so unnecessary. Suffering, may be just hardship without its end in sight (think of unpleasant work or preparing for unending tests and exams) will force one to examine the meaning of all these briefly before returning to the pressure cooker.

Even without starting on the book, I believe this is a deeply personal journey which no one can accompany you. Nevertheless we should be able to help each other along the way with our sharing of experience. Isn't Dr. Fankl trying to do this?

For some, the search for meaning will turn out to be the search for God; but for many it would be alloys of denial, ignorance and inner conflict, which is more akin to rebellion. What alloy it will be depends on your natural endowments, defects and the environment.

Tuesday, September 1, 2009

GIC smarter than Temasek

GIC is smarter about this matter. It has appointed regional presidents for Europe/ME and North America. These senior executives will work quietly to help potential investees understand GIC's point of view.

It is best for both SWFs that they are mostly ignored by the foreign media. Temasek has not succeeded here. The way they are running it now, they might as well give us shares as our citizen rights to exercise as we wish.

From opinion piece 31 August 2009
Temasek's Revised Charter

In name, a commercially driven investment company, but in reality, another government appendage.

Temasek released a revised charter last week that emphasized that the Singaporean state-owned fund is managed on "commercial principles" and eradicated any reference to government investment. That's a commendable goal, but it skirts the basic conflict of interest between the public interest of protecting citizens' earnings and the private-market imperative of taking risks to seek returns.

This issue of transparency has come to the fore in the city-state of late because the approximately 127 Singaporean dollar ($88 billion) fund lost a bundle in last year's financial crisis and the new CEO-designate, Chip Goodyear, inexplicably resigned in July. The public uproar is loud enough that even legislators from the ruling People's Action Party have asked for more disclosure.

Temasek released a raft of accompanying documents alongside the one-page charter last week to help clarify its goals. "Temasek is a commercially-driven investment company and is responsible to its sole shareholder, the Singapore Government, for delivering sustainable long-term returns," the company said. But nowhere did Temasek explain what a "sustainable long-term return" is, who sets that goal, or how it is set.

Temasek adds it has "institutionalized its financial discipline" by issuing an annual report since 2004, maintaining a credit rating and issuing bonds. These steps are commendable, but they are also incomplete. The annual report doesn't give complete historical financials, nor does it say how much Temasek pays in dividends to its 100% owner, the Ministry of Finance. A credit rating is one guide to financial health, but given the agencies' recent track records, it's not infallible. As for the bonds, they are only lightly traded, meaning the market signal they send about Temasek's performance is weak, at best.

The fund's relationship with government is equally confused. The accompanying documents say the government "does not involve itself in the operations and business decisions of Temasek" or "direct or influence the investment or divestment decisions of Temasek." Yet the President of Singapore must concur with board member and CEO appointments or removals and has to approve any transactions in which Temasek draws on "past reserves." The fund's Chairman and CEO also report to the President twice a year.

Temasek might gain more public acceptance as a "commercially driven investment company" if it separated itself fully from government and gave Singaporeans the option to keep their money with the fund or take it elsewhere. That's called competition and free choice, and it's the only true test of commercial success.

Teochew Porridge at Upper Bt Timah

It rained quite a bit yesterday cooling the weather and so we came here for a Teochew Porridge lunch. After our meal we went across the road to Bukit Timah Shopping Centre. The place has evolved even more into a centre for maid agencies than the last time (more than year) we visited.