Sunday, May 27, 2012
Protecting money from our soft spot for beautiful women
Throughout history, there have been many great men felled by their weaknesses for seductive women. In the East, we have the 四大美女 (4 great beauties) of China. These women got their names because they were responsible for the sinking of mighty empires and the deaths of thousands of men who got drawn into wars started by these beautiful faces. The West has its share of such women too. Think of Helen of Troy, the face who launched a thousand ships which led to the destruction of Troy.
Recently, Singapore has its own version of such a woman. She is an under-aged teen prostitute who led to the downfall of 48 men. Women throughout the developed world are protected by divorce laws which force men to give half their assets in a divorce. Here, even under-aged but sophisticated prostitutes are protected. In this particular case, the prostitute was sophisticated enough to cheat 48 successful men with distinguished careers into thinking that she was legally open for business.Why does not the law protect the men who got cheated?
I am amazed that in a world where laws are mostly made by men, why do men treat themselves so unfairly? Why shower so much protection to women (get rich from divorces) and neglect protection for ourselves when history has thrown out so many examples that proves that men are weak and vulnerable to manipulation by seductive and beautiful women?
The lust for gorgeous women is programmed into our DNA. We need not be taught to lust. We just know it, feel it and manage it so that it does not run out of control as we grow up. Being a man, I am acutely aware of my built-in vulnerability. Firstly, I will talk about how I personally manage this weakness to protect my money. Secondly, I would like to suggest laws to protect the wealth of rich men who have poor self-discipline against ravishing and manipulative women with foul intentions.
It is a time-tested and effective business practice to employ attractive women to get men to part with their money. Some restaurants employ scantily-clad waitresses so that men can feast with their eyes while feasting with their mouths. Ever been to Hooters? Car shows employ sexy models because fast cars are associated with sexy female passengers. In the recent tragic Ferrari fatal accident, the rich PRC driver Ma Chi was accompanied by a sexy female companion (Wu Weiwei) who was said to be wearing a white spaghetti-strap tank top and hot pants at the time of the accident.
Most of us have been approached by bank relationship managers to buy financial products. So far, all the female managers whom I have encountered are highly attractive. Knowing that my judgment will be clouded in the presence of an attractive sales person, I never allow her to close the deal on the spot. Instead, I ask for printed materials to bring home so that I can analyze the numbers alone without her presence affecting my judgment. By keeping emotions away, I protect my money. Buy because the numbers look good, not because the face and body look good. If the presence of a gorgeous lady adversely affects your judgment, make sure that the decision-making process is done in her absence. Only the message matters, the messenger should not at all. Preferably, the message should boil down to a set of analyzable and fairly accurate numbers.
One reason I do not go to the casino is that there are too many beautiful faces and colorful lights inside the casino that distorts one's judgment. I think I stand a better chance of making money with my investments alone in front of the computer to analyze financial statements and price/volume movements without sexy distractions.
In my next article, I will make suggestions on protecting rich men's money from manipulative gold-diggers and their own poor self-discipline.
PS: Most married men who get into trouble with other women had it coming to them because of their own poor discipline and bad behavior. This post is not meant to push the blame to women. Rather, it is written by a man who is acutely aware of his own weakness and feels it is a pity to see so many potential great men who could have gone to greater heights in life be destroyed by this weakness.
Sunday, April 8, 2012
Will fee-based financial advisory model lead to more financial literacy?
Recently, an insurance agent called me in my office. He was very polite, so I did not want to cut him off too quickly. He started off recommending whole-life insurance products. I was not interested. Then, he went on talking about savings and endowment plans. I still was not interested. Finally, I told him to email me the information so that I could end the conversation. Before hanging up, I told him I am interested only in insurance plans that offer purely protection and have absolutely no interest in savings-related or investment-linked insurance products. After all, insurance is all about protection. Savings and investment should be secondary considerations. This insurance agent never contacted me again.
Several years ago, an insurance agent came over to my home because I wanted to buy H&S (Hospital and Surgery) plans for my whole family. He spent the first half hour talking about critical illnesses and endowment plans which I have never express interest in. I listened patiently and politely since the agent took the effort to travel down to my home. I refused to buy any of the plans that the agent recommended because I prefer term plans which are cheaper. Before he left, I guess he could not hide his irritation and told me that the commission he earns from my H&S plans can at most pay for the transport he took to come to my place. I am not sure if this is an exaggeration. At least I know now that agents are paid a pittance for selling term-plans. So, in future, if I should need to buy products that an agent seems uninterested to sell, I will go to his office myself.
For the past decades, insurance sales is driven by commission. Commission-driven insurance agents plus financially ignorant or lazy consumers has resulted in Singaporeans overpaying for insurance protection and yet, remain under protected. How can Singaporeans have adequate insurance protection if the salesmen's main priority is to recommend savings or investment-linked products or expensive whole-life plans that cover death and 30 critical illnesses rather than hospitalization which is much likelier to happen? There is nothing evil in their actions because I will do the same thing in their shoes. If I were an insurance agent, I too will focus on selling products that pay me the most commission instead of selling the most appropriate product to the client. Client analysis means selling the highest-paying commission product that he can afford and probably likes, not necesarily the best product for his financial future. Hey, my own financial future comes first before my clients, right? Let us not be hypocritical. We are all like that.
Ravi Mellon(Managing Director, Monetary Authority of Singapore) made a dreaded speech on 26 March 2012 to the Life Insurance Association. Ironically, this much dreaded speech addressed to the financial advisory community is entitled "Putting the Customer First". Why should a speech from a regulator that puts customers first be received with such dismay? This really highlights the serious conflicts of interests between customers and financial advisers.
Some interesting nuggets from this speech that reveals why that insurance agent started off recommending whole-life insurance plans first;
Unfortunately, fee-based financial advice does not come cheap. These advisers charge by the hour and the average fee comes to around $3000 on average, $2000 at least (correct me if I am wrong). If a person has savings of around $10k-$30k, it does not make sense to go for fee-based advice because the fees are too significant as a percentage of the money being managed. This cuts off the lower-income and youngsters who still have not accumulate a meaningful sum of savings. This is still better than the present commission-driven model because no advice is still better than bad advice. Bad advice is unavoidable when there is a serious conflict of interest between advisers and clients.
I think fee-based financial advisory business will evolve to serve mainly the rich because that is the profitable way to go. What does it leave for the rest? When consumers want something but cannot afford or do not want to pay for advice, they will have to educate themselves. Perhaps the best thing to come out of the move towards fee-based financial advice is that more people will become financially literate in insurance matters.
By the way, do not expect members of the financial services community to educate you. They actually have an interest in keeping their clients ignorant. Ignorant customers are the easiest to do a rip off. There are knowledgeable people around who are generous in sharing their knowledge on financial forums. Below are some links that may be useful;
http://www.valuebuddies.com/thread-389.html
http://forums.hardwarezone.com.sg/money-mind-210/newbie-guide-how-find-good-agent-investment-insurance-2818607.html
Several years ago, an insurance agent came over to my home because I wanted to buy H&S (Hospital and Surgery) plans for my whole family. He spent the first half hour talking about critical illnesses and endowment plans which I have never express interest in. I listened patiently and politely since the agent took the effort to travel down to my home. I refused to buy any of the plans that the agent recommended because I prefer term plans which are cheaper. Before he left, I guess he could not hide his irritation and told me that the commission he earns from my H&S plans can at most pay for the transport he took to come to my place. I am not sure if this is an exaggeration. At least I know now that agents are paid a pittance for selling term-plans. So, in future, if I should need to buy products that an agent seems uninterested to sell, I will go to his office myself.
For the past decades, insurance sales is driven by commission. Commission-driven insurance agents plus financially ignorant or lazy consumers has resulted in Singaporeans overpaying for insurance protection and yet, remain under protected. How can Singaporeans have adequate insurance protection if the salesmen's main priority is to recommend savings or investment-linked products or expensive whole-life plans that cover death and 30 critical illnesses rather than hospitalization which is much likelier to happen? There is nothing evil in their actions because I will do the same thing in their shoes. If I were an insurance agent, I too will focus on selling products that pay me the most commission instead of selling the most appropriate product to the client. Client analysis means selling the highest-paying commission product that he can afford and probably likes, not necesarily the best product for his financial future. Hey, my own financial future comes first before my clients, right? Let us not be hypocritical. We are all like that.
Ravi Mellon(Managing Director, Monetary Authority of Singapore) made a dreaded speech on 26 March 2012 to the Life Insurance Association. Ironically, this much dreaded speech addressed to the financial advisory community is entitled "Putting the Customer First". Why should a speech from a regulator that puts customers first be received with such dismay? This really highlights the serious conflicts of interests between customers and financial advisers.
Some interesting nuggets from this speech that reveals why that insurance agent started off recommending whole-life insurance plans first;
- Take for example a whole life insurance policy. An FA representative could earn a basic commission of 50% of the policy’s annual premium in the first year, and another 40% of the annual premium during the following five years. (Whole-life premiums usually cost around SGD2000 a year)
- His supervisor would in turn earn overriding commissions throughout the first six years. There is typically a third tier comprising the agency managers who also get overrides.
- Total overrides during the first six years can amount to 70% of the policy’s annual premium.
- Together, the total commissions and overrides earned by the representative and his supervisors would be equivalent to about 160% of the policy’s annual premium.
Unfortunately, fee-based financial advice does not come cheap. These advisers charge by the hour and the average fee comes to around $3000 on average, $2000 at least (correct me if I am wrong). If a person has savings of around $10k-$30k, it does not make sense to go for fee-based advice because the fees are too significant as a percentage of the money being managed. This cuts off the lower-income and youngsters who still have not accumulate a meaningful sum of savings. This is still better than the present commission-driven model because no advice is still better than bad advice. Bad advice is unavoidable when there is a serious conflict of interest between advisers and clients.
I think fee-based financial advisory business will evolve to serve mainly the rich because that is the profitable way to go. What does it leave for the rest? When consumers want something but cannot afford or do not want to pay for advice, they will have to educate themselves. Perhaps the best thing to come out of the move towards fee-based financial advice is that more people will become financially literate in insurance matters.
By the way, do not expect members of the financial services community to educate you. They actually have an interest in keeping their clients ignorant. Ignorant customers are the easiest to do a rip off. There are knowledgeable people around who are generous in sharing their knowledge on financial forums. Below are some links that may be useful;
http://www.valuebuddies.com/thread-389.html
http://forums.hardwarezone.com.sg/money-mind-210/newbie-guide-how-find-good-agent-investment-insurance-2818607.html
Sunday, February 12, 2012
Loss of my favourite dividend child - Nera Telecommunications
I like to own companies that pay good dividends. I view them as my children. These children pay me annual allowance for my living expenses.
The best children are those with growing income and pay me a reasonable percentage of their income as dividends. This percentage should not be so high until their own growth is stunted because they are not reinvesting enough of their profits back into the business. This percentage should also not be so low until I have problems paying for my living expenses. No parents like children who are stingy with their allowance despite earning fat salaries. A fast-growing income means that the children can afford to pay me rising, comfortable allowance without holding back their own wealth accumulation or even putting themselves into hardship. These are the best sort of companies to buy for dividends. They are very hard to find but if you can find them, they will not only deliver consistent dividends but good capital gains as well.
I do not like children who pay me generous allowance when times are good and ask for the money back (and more) from Papa when bad times hit. These children share a common name. Not all of them behaved this way but quite a number of them did in the credit crisis of 2008. The name of these children is REIT. I forgave them because the law stipulates that they have to pay at least 90% of their income as dividends which means they may not have enough internal cash to put back into the business. It is not their fault but this defining characteristic means the sustainability of dividends paid by REITs is questionable. I will consider buying REITs on a depressed basis when bad times hit and after they have raised money from other people.
One of my favourite child is Nera Telecommunications. Although this child does not enjoy growing profits, it has been able to pay out very generous dividends because of its strong, consistent cashflow. See the table below to judge how filial this child has been to me for the past 8 years.
For the past 8 years, Nera Telecommunications have been paying dividends with yields ranging from 7.65% to 47.37% (yes it's 47%, no typo error). On a growth basis, NeraTel is not impressive. In fact, the book value has been sliding down since 2003. Its earnings has been quite flat over the years too with earnings per share hovering at around 3cts per share. PE ratio is not impressive at an average of 17 for the past 4 years. So, one way to interpret this is that NeraTel has been sacrificing growth to pay generous dividends to its shareholders. So shareholder-friendly. Such a filial child.
A good question to ask at this point is whether the dividends are sustainable. Since dividends are paid from hard cash and not accounting profits, it is better to look to the cashflow statement rather than the income statement for the answer. NeraTel's operating cashflow grew 15% in 2010, 16% in 2009 and a whooping 80% in 2008. The absolute amount of the operating cashflow is comfortable enough to cover the generous dividends. Based on the cashflow numbers, there is good reason to believe that the generous dividends are sustainable in the years ahead. There must be something about the business being a cash gusher that enables it to have a consistent track record of paying generous dividends for 8 years throughout good and bad times.
On 10 Feb 2012, ST Electronics made an announcement to buy my favorite child away. The price offered is $0.45 cents per share. The actual price paid by the Acquiror is only $0.39 excluding 6cts of dividends that will be paid by NeraTel.
Is the offered price $0.39 too cheap? If the worth of a company is the sum of its future cashflows, then NeraTel is surely worth more than $0.39 based on its strong, consistent, stable dividends in the past decade. In fact, the dividends that NeraTel paid in the past 7 years alone already exceeds $0.39 which is the offered price today. ( I hope any potential acquirer will take note of this point) Now, ST Electronics wants to pay only $0.39 to swallow up all the future dividends for decades to come.
This cheap $0.39 offer comes at a time when the no-growth baby is starting to show some growth after expanding their Telecom business to new markets in Middle East and North Africa. In the latest announcement for FY2011, NeraTel net profits grew 23.9% and increased its already high dividends by 50% to 6cts per share.
Some may ask, if NeraTel is really worth that much, why is its biggest shareholder Eltek selling it so cheap? The answer is found in their balance sheet for FY2010. Eltek has NOK600m debt versus NOK6.8m cash. With the ongoing European sovereign crisis, it is not surprising Eltek is hard up for cash and has to sell its assets cheap to raise cash.
It is very hard for me to find a better child than NeraTel. Nera Telecom has been a good child to many minority shareholders. Don't insult me with a cheap price tag. I will vote no! How about the rest? What say you?
Disclosure: This post has been written with vested interest.
The best children are those with growing income and pay me a reasonable percentage of their income as dividends. This percentage should not be so high until their own growth is stunted because they are not reinvesting enough of their profits back into the business. This percentage should also not be so low until I have problems paying for my living expenses. No parents like children who are stingy with their allowance despite earning fat salaries. A fast-growing income means that the children can afford to pay me rising, comfortable allowance without holding back their own wealth accumulation or even putting themselves into hardship. These are the best sort of companies to buy for dividends. They are very hard to find but if you can find them, they will not only deliver consistent dividends but good capital gains as well.
I do not like children who pay me generous allowance when times are good and ask for the money back (and more) from Papa when bad times hit. These children share a common name. Not all of them behaved this way but quite a number of them did in the credit crisis of 2008. The name of these children is REIT. I forgave them because the law stipulates that they have to pay at least 90% of their income as dividends which means they may not have enough internal cash to put back into the business. It is not their fault but this defining characteristic means the sustainability of dividends paid by REITs is questionable. I will consider buying REITs on a depressed basis when bad times hit and after they have raised money from other people.
One of my favourite child is Nera Telecommunications. Although this child does not enjoy growing profits, it has been able to pay out very generous dividends because of its strong, consistent cashflow. See the table below to judge how filial this child has been to me for the past 8 years.
|
Year
|
Dividends per share
(cts)
|
Dividend yield based
on price at beginning of year(%)
|
Stock price at
beginning of year when dividend is paid
|
|
2003
|
2.875
|
7.65%
|
$0.376
|
|
2004
|
2.875
|
9.36%
|
$0.307
|
|
2005
|
3.245
|
9.69%
|
$0.335
|
|
2006
|
18
|
47.37%
|
$0.38
|
|
2007
|
4
|
10.26%
|
$0.39
|
|
2008
|
3
|
15.79%
|
$0.19
|
|
2009
|
3
|
7.89%
|
$0.38
|
|
2010
|
4
|
10.81%
|
$0.37
|
|
2011
|
6
|
13.95%
|
$0.43
|
For the past 8 years, Nera Telecommunications have been paying dividends with yields ranging from 7.65% to 47.37% (yes it's 47%, no typo error). On a growth basis, NeraTel is not impressive. In fact, the book value has been sliding down since 2003. Its earnings has been quite flat over the years too with earnings per share hovering at around 3cts per share. PE ratio is not impressive at an average of 17 for the past 4 years. So, one way to interpret this is that NeraTel has been sacrificing growth to pay generous dividends to its shareholders. So shareholder-friendly. Such a filial child.
A good question to ask at this point is whether the dividends are sustainable. Since dividends are paid from hard cash and not accounting profits, it is better to look to the cashflow statement rather than the income statement for the answer. NeraTel's operating cashflow grew 15% in 2010, 16% in 2009 and a whooping 80% in 2008. The absolute amount of the operating cashflow is comfortable enough to cover the generous dividends. Based on the cashflow numbers, there is good reason to believe that the generous dividends are sustainable in the years ahead. There must be something about the business being a cash gusher that enables it to have a consistent track record of paying generous dividends for 8 years throughout good and bad times.
On 10 Feb 2012, ST Electronics made an announcement to buy my favorite child away. The price offered is $0.45 cents per share. The actual price paid by the Acquiror is only $0.39 excluding 6cts of dividends that will be paid by NeraTel.
Is the offered price $0.39 too cheap? If the worth of a company is the sum of its future cashflows, then NeraTel is surely worth more than $0.39 based on its strong, consistent, stable dividends in the past decade. In fact, the dividends that NeraTel paid in the past 7 years alone already exceeds $0.39 which is the offered price today. ( I hope any potential acquirer will take note of this point) Now, ST Electronics wants to pay only $0.39 to swallow up all the future dividends for decades to come.
This cheap $0.39 offer comes at a time when the no-growth baby is starting to show some growth after expanding their Telecom business to new markets in Middle East and North Africa. In the latest announcement for FY2011, NeraTel net profits grew 23.9% and increased its already high dividends by 50% to 6cts per share.
Some may ask, if NeraTel is really worth that much, why is its biggest shareholder Eltek selling it so cheap? The answer is found in their balance sheet for FY2010. Eltek has NOK600m debt versus NOK6.8m cash. With the ongoing European sovereign crisis, it is not surprising Eltek is hard up for cash and has to sell its assets cheap to raise cash.
It is very hard for me to find a better child than NeraTel. Nera Telecom has been a good child to many minority shareholders. Don't insult me with a cheap price tag. I will vote no! How about the rest? What say you?
Disclosure: This post has been written with vested interest.
Saturday, January 28, 2012
Letter to Prime Minister on Ministerial salaries
Dear PM Lee,
I thank you for having the courage to take the unpopular measure of cutting your colleagues' salaries, including your own. The parliamentary debates have focused on setting the right level of pay to attract good people. My humble opinion is that for our country, it is more important to focus on setting the right incentives than setting the right remuneration amount. It is not only wasteful but even harmful to spend lots of money to attract brilliant people and then drive them with the wrong incentives. The best example to illustrate this point is Wall Street in 2008. Wall Street, with all the money it could throw, attracted the best minds from all over the world. Yet, it failed so spectacularly in 2008. Why? Because the people working on Wall Street were driven with a set of perverse incentives that rewarded them for behaving badly. Many of them took excessive risks because when things turn out well, they scoop up the gains but when things turn out badly, other people pay for their mistakes. In such a system, good people eventually turn bad. The smarter the people, the faster the system is driven into self-destruction because smart people know how to game the system more effectively. The world would have been a safer place in 2008 if Wall Street had hired stupider people.
I had seen how bad incentives made good people turn bad when I was in secondary school. My math teacher was a dedicated teacher. She would give the weaker students remedial lessons during the holidays. I respected her until perverse incentives made her behave badly. It came after the Ministry of Education introduced school ranking. To get her promotion, she pressured the weaker students to drop Additional Mathematics because weak students will pull down the average and affect the school ranking. Things got so bad that one of the parents went to the Math Head of Department and threatened to report this matter to MOE. The HOD relented. Luckily, he did because the son of this parent later got distinction in 'O' Level A Math to the pride of his father. It is hard to know how many children suffered from such tactics by our educators during that period. I do not blame my teacher. I blame the bad incentives that drove her to behave so badly.
In a one-man-one-vote electoral system, it is to the interest of the ruling party to peg their salaries to the masses instead of to a tiny representation of 1000 top income earners (Only 1000 votes, how to stay in power?). The right incentives should drive government servants to serve the masses and not the minority rich because that will result in the maximum number of votes won. Also, the incentives will make a big difference to the thinking and hidden agenda behind the decisions made by policy makers. If salaries are pegged to the top 1000 income earners, their internal biases will be to favor the rich. This will worsen the income-inequality problem which is already a major threat to social stability today.
I hope you would consider pegging Ministerial salaries to a high multiple of the median income of Singaporeans and bonuses pegged to the real inflation-adjusted median income growth. Real median income growth represents rising purchasing power of the people. I think many Singaporeans would not begrudge Ministers' generous bonuses if GDP growth had delivered rising purchasing power to them. Instead, Singapore's strong GDP growth benefited mainly the rich and punished the rest with rising cost of living. How could the people not be angry? There is even a perception among the people that policy makers took the easy way out to grow GDP to hit their own bonus targets by opening the floodgates to foreigners without spending the necessary infrastructural investment to accommodate the enlarged population. Whether right or wrong, perception does matter.
Rising purchasing power means cost of living got to be kept low. I hope the KPIs(Key performance indicators) of government officers would focus more on reducing cost and less on boosting profit. Profits are best left to the private sector. It is not healthy for the public sector to focus on profits because they can simply take the easy way out to raise fees and charges. Worse still, they may even transfer the cost of their mistakes to the public. Since the public services are usually monopolies, there is nothing the people can do. Let us not waste the brainpower in the government and direct them to serve the people by lowering our cost of living. I hope future KPIs will focus on how fees and charges for the people are being brought down through public-sector efficiency and not just profits which can be made from squeezing the people.
How high should the multiple of the median income be? As long as Singaporeans prosper together with Ministers, I think it is fine if Ministers get paid very well. My humble view is that Ministers should be paid as high as possible to attract able leaders but not so high until the people lose respect and trust for our leaders. I think that level has been breached and I thank you once more for taking action to restore some of the lost respect. 失民心者失天下。欲得天下，先得民心。
It is not out of jealousy (too far out of the league to be jealous) that I support cutting Ministerial salaries but out of concern as a citizen that it will harm our country's long-term future. I hope you will forgive me for being brutally honest on this issue.
As you have mentioned in Davos in Jan 2012, Singaporeans and the government have to work together. It is hard to work together if the people no longer trust and respect the government. If there is no respect, unpopular but sensible messages will be lost on the people when delivered by a messenger who is not respected. If there is no trust, new policies will always be interpreted by the people in a bad light (They are just doing this for selfish reasons. Just want to make money for themselves etc).
When salaries are too high, it actually worsens your problem of attracting the best candidates to join you. When the people start to associate politicians with greedy Wall Street bankers, potential candidates who actually want to serve the people will stay out for fear that their own image will be tarnished. This makes it very hard for our country to attract able people from the private sector to come forward. Able people from the private sector usually have to take a pay-cut when they join the government. They will probably join if they are compensated with non-monetary rewards like having a higher standing and respect in the public eye. I think one of the greatest rewards of holding a political office is when strangers thank you and you could genuinely feel the sincerity of their respect for you. It will be better for our country to use the respect commanded by the office to attract able people rather than throw money at them and risk attracting the wrong kind of people.
When salaries are set too high, it is unfair to Ministers who do not need the extra money but want more respect from the people. When annual salary has already exceeded the million dollar mark, that extra hundreds of thousands do not matter anymore. If a public servant says otherwise, then it is dangerous to have him around because he probably has a very expensive lifestyle to maintain. Such a person has a higher risk of falling victim to corruption and bribery. Singaporeans will prefer senior public servants to lead simple lifestyles because these people tend to be incorruptible (that extra money is immaterial because I already have enough). I am glad to learn from your sister's letters to the Straits Times that your family lead a simple lifestyle. Past high Ministerial salaries have unfairly tarnished the image of Ministers who lead simple lifestyles and do not need that much money. I think they would rather trade for more respect than more money. When Ministers don't feel respected, it will surely affect their job performance to a certain extent.
Lastly and ironically, when salaries are too high for senior public servants, they no longer have a stake in the long-term future of Singapore. With globalization, the rich can simply migrate to greener pastures and take their money along with them. It is middle-class people like me who have a bigger stake in the future of Singapore and this is why I am writing this long letter. When public policies take decades to realize their effect, it is important that policy-makers have a long-term stake in the country's future. Otherwise, they will game the system by taking short-term monetary gain at the expense of the long-term good. Earn as much as you can while you can, place low priority on the long-term good because if the country crumbles later, just migrate! It is very hard to set incentives to get people to focus on the long-term because they come and go. Pensions are effective in that regard. Perhaps a return to the pension system would be desirable but you may consider putting a significantly higher percentage of the remuneration into the pension.
I am not sure if you are still reading at this stage. If you are, I sincerely thank you for sacrificing time to read a letter from an insignificant but sincerely concerned citizen of Singapore.
I thank you for having the courage to take the unpopular measure of cutting your colleagues' salaries, including your own. The parliamentary debates have focused on setting the right level of pay to attract good people. My humble opinion is that for our country, it is more important to focus on setting the right incentives than setting the right remuneration amount. It is not only wasteful but even harmful to spend lots of money to attract brilliant people and then drive them with the wrong incentives. The best example to illustrate this point is Wall Street in 2008. Wall Street, with all the money it could throw, attracted the best minds from all over the world. Yet, it failed so spectacularly in 2008. Why? Because the people working on Wall Street were driven with a set of perverse incentives that rewarded them for behaving badly. Many of them took excessive risks because when things turn out well, they scoop up the gains but when things turn out badly, other people pay for their mistakes. In such a system, good people eventually turn bad. The smarter the people, the faster the system is driven into self-destruction because smart people know how to game the system more effectively. The world would have been a safer place in 2008 if Wall Street had hired stupider people.
I had seen how bad incentives made good people turn bad when I was in secondary school. My math teacher was a dedicated teacher. She would give the weaker students remedial lessons during the holidays. I respected her until perverse incentives made her behave badly. It came after the Ministry of Education introduced school ranking. To get her promotion, she pressured the weaker students to drop Additional Mathematics because weak students will pull down the average and affect the school ranking. Things got so bad that one of the parents went to the Math Head of Department and threatened to report this matter to MOE. The HOD relented. Luckily, he did because the son of this parent later got distinction in 'O' Level A Math to the pride of his father. It is hard to know how many children suffered from such tactics by our educators during that period. I do not blame my teacher. I blame the bad incentives that drove her to behave so badly.
In a one-man-one-vote electoral system, it is to the interest of the ruling party to peg their salaries to the masses instead of to a tiny representation of 1000 top income earners (Only 1000 votes, how to stay in power?). The right incentives should drive government servants to serve the masses and not the minority rich because that will result in the maximum number of votes won. Also, the incentives will make a big difference to the thinking and hidden agenda behind the decisions made by policy makers. If salaries are pegged to the top 1000 income earners, their internal biases will be to favor the rich. This will worsen the income-inequality problem which is already a major threat to social stability today.
I hope you would consider pegging Ministerial salaries to a high multiple of the median income of Singaporeans and bonuses pegged to the real inflation-adjusted median income growth. Real median income growth represents rising purchasing power of the people. I think many Singaporeans would not begrudge Ministers' generous bonuses if GDP growth had delivered rising purchasing power to them. Instead, Singapore's strong GDP growth benefited mainly the rich and punished the rest with rising cost of living. How could the people not be angry? There is even a perception among the people that policy makers took the easy way out to grow GDP to hit their own bonus targets by opening the floodgates to foreigners without spending the necessary infrastructural investment to accommodate the enlarged population. Whether right or wrong, perception does matter.
Rising purchasing power means cost of living got to be kept low. I hope the KPIs(Key performance indicators) of government officers would focus more on reducing cost and less on boosting profit. Profits are best left to the private sector. It is not healthy for the public sector to focus on profits because they can simply take the easy way out to raise fees and charges. Worse still, they may even transfer the cost of their mistakes to the public. Since the public services are usually monopolies, there is nothing the people can do. Let us not waste the brainpower in the government and direct them to serve the people by lowering our cost of living. I hope future KPIs will focus on how fees and charges for the people are being brought down through public-sector efficiency and not just profits which can be made from squeezing the people.
How high should the multiple of the median income be? As long as Singaporeans prosper together with Ministers, I think it is fine if Ministers get paid very well. My humble view is that Ministers should be paid as high as possible to attract able leaders but not so high until the people lose respect and trust for our leaders. I think that level has been breached and I thank you once more for taking action to restore some of the lost respect. 失民心者失天下。欲得天下，先得民心。
It is not out of jealousy (too far out of the league to be jealous) that I support cutting Ministerial salaries but out of concern as a citizen that it will harm our country's long-term future. I hope you will forgive me for being brutally honest on this issue.
As you have mentioned in Davos in Jan 2012, Singaporeans and the government have to work together. It is hard to work together if the people no longer trust and respect the government. If there is no respect, unpopular but sensible messages will be lost on the people when delivered by a messenger who is not respected. If there is no trust, new policies will always be interpreted by the people in a bad light (They are just doing this for selfish reasons. Just want to make money for themselves etc).
When salaries are too high, it actually worsens your problem of attracting the best candidates to join you. When the people start to associate politicians with greedy Wall Street bankers, potential candidates who actually want to serve the people will stay out for fear that their own image will be tarnished. This makes it very hard for our country to attract able people from the private sector to come forward. Able people from the private sector usually have to take a pay-cut when they join the government. They will probably join if they are compensated with non-monetary rewards like having a higher standing and respect in the public eye. I think one of the greatest rewards of holding a political office is when strangers thank you and you could genuinely feel the sincerity of their respect for you. It will be better for our country to use the respect commanded by the office to attract able people rather than throw money at them and risk attracting the wrong kind of people.
When salaries are set too high, it is unfair to Ministers who do not need the extra money but want more respect from the people. When annual salary has already exceeded the million dollar mark, that extra hundreds of thousands do not matter anymore. If a public servant says otherwise, then it is dangerous to have him around because he probably has a very expensive lifestyle to maintain. Such a person has a higher risk of falling victim to corruption and bribery. Singaporeans will prefer senior public servants to lead simple lifestyles because these people tend to be incorruptible (that extra money is immaterial because I already have enough). I am glad to learn from your sister's letters to the Straits Times that your family lead a simple lifestyle. Past high Ministerial salaries have unfairly tarnished the image of Ministers who lead simple lifestyles and do not need that much money. I think they would rather trade for more respect than more money. When Ministers don't feel respected, it will surely affect their job performance to a certain extent.
Lastly and ironically, when salaries are too high for senior public servants, they no longer have a stake in the long-term future of Singapore. With globalization, the rich can simply migrate to greener pastures and take their money along with them. It is middle-class people like me who have a bigger stake in the future of Singapore and this is why I am writing this long letter. When public policies take decades to realize their effect, it is important that policy-makers have a long-term stake in the country's future. Otherwise, they will game the system by taking short-term monetary gain at the expense of the long-term good. Earn as much as you can while you can, place low priority on the long-term good because if the country crumbles later, just migrate! It is very hard to set incentives to get people to focus on the long-term because they come and go. Pensions are effective in that regard. Perhaps a return to the pension system would be desirable but you may consider putting a significantly higher percentage of the remuneration into the pension.
I am not sure if you are still reading at this stage. If you are, I sincerely thank you for sacrificing time to read a letter from an insignificant but sincerely concerned citizen of Singapore.
Thursday, December 8, 2011
Retrenchment hits me
A recession is when your neighbor loses his job. A depression is when you lose yours. Depression (figure of speech, not literally) has hit me. I have just been retrenched.
For many, retrenchment is not just economic depression. It is also emotional depression, self-worth depression and a humiliating depression. For me personally, it is even more embarrassing because I have been known to bring work home and reject invitations to go out and play over the weekend. Perhaps some people are having their last laughs now.
Retrenchment leaves a person with plenty of time to think. Don't waste the experience. He needs to be brutally honest with himself. In my case, I cannot honestly say it was mainly my fault. It was the free market at work, fair and square. I work in the Electronics industry in Singapore. Although electronic gadgets(iPhones, e-books, smartphones) are still changing our lives for the better, fellow Singaporeans who work in the same industry will know that electronics in Singapore has been on the decline for more than a decade. The big companies (foreign MNCs) are moving out, there are no big local companies to take their place and the smaller companies which usually service the big ones are dying away. It is not just high labor cost. Land (especially land), transport and energy costs also make us uncompetitive. These are infrastructural costs which the government can do their part to keep low. If these infrastructural costs are kept low, then our wages can have more room to move up without hitting our competitiveness.
If the company cannot grow, my immediate supervisor cannot be promoted. If he cannot be promoted, how can I be promoted? This time round, everyone lost their jobs including my boss. One consolation was that I got a "diligent and honest worker" in my appraisal before the retrenchment. Hopefully, this is not just a parting gift just to be nice.
I am tempted to lament on how unfair life is. However, this is useless to me and readers who could not care less until the same thing happens to them. Rather, it is more useful to think about the practical measures to cope with retrenchment.
The first thing that comes to mind is to cut down on all unnecessary expenses. Unnecessary expenses refer to expenses incurred beyond keeping one alive. Eat the simplest, cheapest food. As long as it fills your stomach, it is good food. Try to eat at home. Don't eat out. The rental cost in Singapore is so high, why pay for them by eating at expensive restaurants?
Entertainment expenses should be cut mercilessly. I do not subscribe to the theory that good things must come with a price. A lot of good things in life can be very cheap or even free of charge. A person can go to the library and borrow wonderful books free of charge. Get entertained and be educated free of charge. There are plenty of quality documentaries on Youtube. Again, one can get entertained and be educated free of charge. Use the spare time for learning at low or no cost.
There are certain expenses which must not be cut. This is allowance to parents and parents-in-law. The first response from parents is to cut or stop their allowance upon learning of their children's retrenchment. I have never heard of parents stop providing for their children when they are out of a job. Therefore, why should children stop providing for their parents when they become jobless? People who stop their parents' allowance are making a gross miscalculation. Their own children will do the same thing to them when they grow up. They will not feel a pang of guilt because their own parents did the same thing to their own parents. Setting a good model example to the children is the most effective and yet, least time-consuming way to educate them. Much better than spending so much time giving them tuition yourself and yelling at them. They either end up resenting you or hating the subject.
The standard advice from government help bodies is to get retraining or some educational certificate to make your resume look good. While these people have good intentions, take their advice with a pinch of salt because you know your personal situation better than them. Is your personality suitable for the type of job you are retraining for? Will employers be willing to hire you even after you have earned a certificate because of certain discriminatory practices? (Age, hiring their own kind)
I am not willing to invest in higher education to make the resume look good because the education fees is too high today and the investment returns do not look good. Too many people with higher education but are there enough jobs requiring such higher education? In fact, after spending a bomb for that piece of paper, a person may even get discriminated during job interviews because he is overqualified or the interviewer feels threatened.
Finding a job is not the only option. One can think about his personal strengths. Think about his hobbies. Can he turn them into useful products/services to sell to people? If one can successfully do this, he can be a very happy person instead of slaving for people whom he has been yearning to say "fuck off".
Quite a number of retrenched people will be thinking of investing in the financial markets to make a living. On the surface, it looks like an easy way out. Psychology plays a very important role in successful investing. Retrenched people should be self-aware of their own weakened psychology as market participants. Given the heightened volatility in the financial markets today, weak psychology can lead to bad decisions because it is easier to be tricked by the high volatility to buy high and sell low given the weaker state of mind. Investing is a fun game for me (on a part-time basis only) and I am reasonably good at controlling my losses in terrible times. But, I have to take my own advice and be self-aware of my new deficiency from now on.
For many, retrenchment is not just economic depression. It is also emotional depression, self-worth depression and a humiliating depression. For me personally, it is even more embarrassing because I have been known to bring work home and reject invitations to go out and play over the weekend. Perhaps some people are having their last laughs now.
Retrenchment leaves a person with plenty of time to think. Don't waste the experience. He needs to be brutally honest with himself. In my case, I cannot honestly say it was mainly my fault. It was the free market at work, fair and square. I work in the Electronics industry in Singapore. Although electronic gadgets(iPhones, e-books, smartphones) are still changing our lives for the better, fellow Singaporeans who work in the same industry will know that electronics in Singapore has been on the decline for more than a decade. The big companies (foreign MNCs) are moving out, there are no big local companies to take their place and the smaller companies which usually service the big ones are dying away. It is not just high labor cost. Land (especially land), transport and energy costs also make us uncompetitive. These are infrastructural costs which the government can do their part to keep low. If these infrastructural costs are kept low, then our wages can have more room to move up without hitting our competitiveness.
If the company cannot grow, my immediate supervisor cannot be promoted. If he cannot be promoted, how can I be promoted? This time round, everyone lost their jobs including my boss. One consolation was that I got a "diligent and honest worker" in my appraisal before the retrenchment. Hopefully, this is not just a parting gift just to be nice.
I am tempted to lament on how unfair life is. However, this is useless to me and readers who could not care less until the same thing happens to them. Rather, it is more useful to think about the practical measures to cope with retrenchment.
The first thing that comes to mind is to cut down on all unnecessary expenses. Unnecessary expenses refer to expenses incurred beyond keeping one alive. Eat the simplest, cheapest food. As long as it fills your stomach, it is good food. Try to eat at home. Don't eat out. The rental cost in Singapore is so high, why pay for them by eating at expensive restaurants?
Entertainment expenses should be cut mercilessly. I do not subscribe to the theory that good things must come with a price. A lot of good things in life can be very cheap or even free of charge. A person can go to the library and borrow wonderful books free of charge. Get entertained and be educated free of charge. There are plenty of quality documentaries on Youtube. Again, one can get entertained and be educated free of charge. Use the spare time for learning at low or no cost.
There are certain expenses which must not be cut. This is allowance to parents and parents-in-law. The first response from parents is to cut or stop their allowance upon learning of their children's retrenchment. I have never heard of parents stop providing for their children when they are out of a job. Therefore, why should children stop providing for their parents when they become jobless? People who stop their parents' allowance are making a gross miscalculation. Their own children will do the same thing to them when they grow up. They will not feel a pang of guilt because their own parents did the same thing to their own parents. Setting a good model example to the children is the most effective and yet, least time-consuming way to educate them. Much better than spending so much time giving them tuition yourself and yelling at them. They either end up resenting you or hating the subject.
The standard advice from government help bodies is to get retraining or some educational certificate to make your resume look good. While these people have good intentions, take their advice with a pinch of salt because you know your personal situation better than them. Is your personality suitable for the type of job you are retraining for? Will employers be willing to hire you even after you have earned a certificate because of certain discriminatory practices? (Age, hiring their own kind)
I am not willing to invest in higher education to make the resume look good because the education fees is too high today and the investment returns do not look good. Too many people with higher education but are there enough jobs requiring such higher education? In fact, after spending a bomb for that piece of paper, a person may even get discriminated during job interviews because he is overqualified or the interviewer feels threatened.
Finding a job is not the only option. One can think about his personal strengths. Think about his hobbies. Can he turn them into useful products/services to sell to people? If one can successfully do this, he can be a very happy person instead of slaving for people whom he has been yearning to say "fuck off".
Quite a number of retrenched people will be thinking of investing in the financial markets to make a living. On the surface, it looks like an easy way out. Psychology plays a very important role in successful investing. Retrenched people should be self-aware of their own weakened psychology as market participants. Given the heightened volatility in the financial markets today, weak psychology can lead to bad decisions because it is easier to be tricked by the high volatility to buy high and sell low given the weaker state of mind. Investing is a fun game for me (on a part-time basis only) and I am reasonably good at controlling my losses in terrible times. But, I have to take my own advice and be self-aware of my new deficiency from now on.
Sunday, November 27, 2011
Market commentary 27 Nov 2011 - European debt crisis dominates
Individual stock picking has not been effective since August 2011. Market movement is dominated by events related to the debt crisis in Europe. When markets make big moves up and down, the source of the news is almost always traced back to Europe. In such a backdrop, macro-analysis makes more sense than bottom-up investing in individual stocks.
The Straits Time Index, along with most global stock indices, bottomed on 5 Oct 2011. A new rally began the next day, topped on 28 Oct 2011 after which it started its decline. From the STI chart, the market went into correction on 18 Nov 2011. It was a short-lived rally.
What happened near 28 Oct 2011 which marked the start of the decline? Global markets anticipated a European rescue plan which explains the rally which started on 6 Oct 2011. After the rescue plan was announced on 27 Oct 2011, global stock market began its descent again. The rescue plan was not enough to reassure the markets. On the day of announcement, global stock indices actually made a massive rally. Then, it looked like the rally that started on 5 Oct was here to stay. On the next day, new worries emerge when Italian 10-year bond yields tops 6%. On Nov 25, 10-year Italian bond yields reached 7.23% despite mighty ECB buying the bonds. This is serious because (1) Italian bond market is the 3rd largest in the world. A disaster there is highly contagious. (2) Greece, Ireland and Portugal were forced to seek financial rescues when their bond yields reached around 6.5%. Italy today is worse (3) Italy has high debt(118% of GDP) and slow economic growth. How can Italian bond investors be confident that their debts can be repaid in full? Besides, further austerity (demanded by Germany) may slow down growth further or even tip country into recession.
One feature of the rescue plan was that investors who bought CDS (credit default swaps) on Greek debt as insurance will not be paid because the deal agreed to was voluntary. Now, investors who hedge their sovereign debt risks using CDS are scared. If investors cannot reduce credit risk by buying CDS as insurance, then they have to reduce credit risk by demanding higher bond yields. I think this is a major reason European bond markets came under increasing attack almost right after the rescue plan was announced.
In the past weeks, every time European bond yields go up, global stock indices will go down. In the coming weeks, European bond yields should be the key indicators to observe for equity investors.
I am waiting for something to happen for global stock markets to have a solid rally. This something is Germany agreeing to print money. Printing money is the least painful way to repay debt. I am not sure whether money printing is a good economic solution because there are side effects like inflation. However, I am highly confident that once Germany agrees to money printing, a global rally in equities lasting months will follow. See what happened in 2009 after massive money printing by the Fed.
The alternative to money printing is austerity. It is by no means superior to the money-printing solution. When debt levels are too high (like the PIGS countries) and requires strong future economic growth to pay down debt, then austerity actually worsens chances of paying off debt by weakening the economy. Furthermore, austerity dampen domestic consumption by cutting spending and raising taxes. Therefore, economic growth must come from strong exports. Problem for Europe is, export to who? If everyone else is tightening their belts for austerity, who is going to buy the exports? Germany? The great export-machine of Europe to transform into a big import-sucker? European demographics worsen the problem. Too many old people, too few young people is bad enough for growth. Protective labour laws and culture further worsens the situation by protecting the old workers who are hard and expensive to fire at the expense of young workers, many of whom are on contract work, don't get good training opportunities or simply unemployed. Today, Spanish youth unemployment is a whooping 21.2%. When corrective economic measures are too painful, it may cause social riots. The situation can be highly unpredictable and chaotic. The last time a great nation was subjected to great economic pain, the people elected a madman into power. That mad-man was Adolf Hitler.
Of course, the best solution is economic growth from the creation of real productivity from real products/services of high social utility and not financial engineering techniques like printing money. However, you need plenty of good engineers for that. Engineers have bore the brunt of retrenchments in recent recessions. I know because I am an engineer. This time round, I will not be spared. I have received notice I will be retrenched. Today, there are very few students who want to study engineering and many of the best engineers have switched lines to work in banks. In fact, many engineering students went straight to the banks after graduation without ever working as an engineer.
Eventually, I think Germany will allow money-printing to ease the European debt crisis because austerity is doubtful to be effective. I cannot think of other solutions that politicians can depend on now.
The Straits Time Index, along with most global stock indices, bottomed on 5 Oct 2011. A new rally began the next day, topped on 28 Oct 2011 after which it started its decline. From the STI chart, the market went into correction on 18 Nov 2011. It was a short-lived rally.
What happened near 28 Oct 2011 which marked the start of the decline? Global markets anticipated a European rescue plan which explains the rally which started on 6 Oct 2011. After the rescue plan was announced on 27 Oct 2011, global stock market began its descent again. The rescue plan was not enough to reassure the markets. On the day of announcement, global stock indices actually made a massive rally. Then, it looked like the rally that started on 5 Oct was here to stay. On the next day, new worries emerge when Italian 10-year bond yields tops 6%. On Nov 25, 10-year Italian bond yields reached 7.23% despite mighty ECB buying the bonds. This is serious because (1) Italian bond market is the 3rd largest in the world. A disaster there is highly contagious. (2) Greece, Ireland and Portugal were forced to seek financial rescues when their bond yields reached around 6.5%. Italy today is worse (3) Italy has high debt(118% of GDP) and slow economic growth. How can Italian bond investors be confident that their debts can be repaid in full? Besides, further austerity (demanded by Germany) may slow down growth further or even tip country into recession.
One feature of the rescue plan was that investors who bought CDS (credit default swaps) on Greek debt as insurance will not be paid because the deal agreed to was voluntary. Now, investors who hedge their sovereign debt risks using CDS are scared. If investors cannot reduce credit risk by buying CDS as insurance, then they have to reduce credit risk by demanding higher bond yields. I think this is a major reason European bond markets came under increasing attack almost right after the rescue plan was announced.
In the past weeks, every time European bond yields go up, global stock indices will go down. In the coming weeks, European bond yields should be the key indicators to observe for equity investors.
I am waiting for something to happen for global stock markets to have a solid rally. This something is Germany agreeing to print money. Printing money is the least painful way to repay debt. I am not sure whether money printing is a good economic solution because there are side effects like inflation. However, I am highly confident that once Germany agrees to money printing, a global rally in equities lasting months will follow. See what happened in 2009 after massive money printing by the Fed.
The alternative to money printing is austerity. It is by no means superior to the money-printing solution. When debt levels are too high (like the PIGS countries) and requires strong future economic growth to pay down debt, then austerity actually worsens chances of paying off debt by weakening the economy. Furthermore, austerity dampen domestic consumption by cutting spending and raising taxes. Therefore, economic growth must come from strong exports. Problem for Europe is, export to who? If everyone else is tightening their belts for austerity, who is going to buy the exports? Germany? The great export-machine of Europe to transform into a big import-sucker? European demographics worsen the problem. Too many old people, too few young people is bad enough for growth. Protective labour laws and culture further worsens the situation by protecting the old workers who are hard and expensive to fire at the expense of young workers, many of whom are on contract work, don't get good training opportunities or simply unemployed. Today, Spanish youth unemployment is a whooping 21.2%. When corrective economic measures are too painful, it may cause social riots. The situation can be highly unpredictable and chaotic. The last time a great nation was subjected to great economic pain, the people elected a madman into power. That mad-man was Adolf Hitler.
Of course, the best solution is economic growth from the creation of real productivity from real products/services of high social utility and not financial engineering techniques like printing money. However, you need plenty of good engineers for that. Engineers have bore the brunt of retrenchments in recent recessions. I know because I am an engineer. This time round, I will not be spared. I have received notice I will be retrenched. Today, there are very few students who want to study engineering and many of the best engineers have switched lines to work in banks. In fact, many engineering students went straight to the banks after graduation without ever working as an engineer.
Eventually, I think Germany will allow money-printing to ease the European debt crisis because austerity is doubtful to be effective. I cannot think of other solutions that politicians can depend on now.
Saturday, November 12, 2011
Get risk-free SGD160 from credit card application. Offer valid till 30 Nov 2011
It has often been said that there is no such thing as a free lunch. If something is too good to be true, it often is. Now, I am sharing something which is worth several free lunches and too good to be true. Unfortunately, I am not being paid any commission.
There is a wonderful offer from Standard Chartered that credits SGD80 into your credit card account once it is approved. I applied for two credit cards from Standard Chartered and received SGD160 in total. I just saw SGD160 in my account on internet banking. So, it sounds not only too good to be true but really true indeed.
This offer is valid till 30 November 2011. It is an offer that one simply cannot refuse. At least, I cannot think of a good reason why one should not take up this offer. Can you?
Some may wonder why Standard Chartered Bank is behaving so stupidly. Giving free money away? No, the people working there are smarter than most of us. We should not direct our thanks to SCB. We should thank the people who used their credit cards to spend money which they do not have, pay only the minimum sum on their monthly statement and roll over their credit card debts. Being a selfish man, I urge these people not to follow the advice in the link below, even though I am absolutely in love with the writer.
http://help-your-money.blogspot.com/2010/08/paying-off-credit-card-bills-is-best.html
I dedicate the following song to the invisible credit-card friends who have made this wonderful offer possible. Pay attention to the lyrics.
http://www.youtube.com/watch?v=AUnmTE6ljRg
There is a wonderful offer from Standard Chartered that credits SGD80 into your credit card account once it is approved. I applied for two credit cards from Standard Chartered and received SGD160 in total. I just saw SGD160 in my account on internet banking. So, it sounds not only too good to be true but really true indeed.
This offer is valid till 30 November 2011. It is an offer that one simply cannot refuse. At least, I cannot think of a good reason why one should not take up this offer. Can you?
Some may wonder why Standard Chartered Bank is behaving so stupidly. Giving free money away? No, the people working there are smarter than most of us. We should not direct our thanks to SCB. We should thank the people who used their credit cards to spend money which they do not have, pay only the minimum sum on their monthly statement and roll over their credit card debts. Being a selfish man, I urge these people not to follow the advice in the link below, even though I am absolutely in love with the writer.
http://help-your-money.blogspot.com/2010/08/paying-off-credit-card-bills-is-best.html
I dedicate the following song to the invisible credit-card friends who have made this wonderful offer possible. Pay attention to the lyrics.
http://www.youtube.com/watch?v=AUnmTE6ljRg
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