Motorcycle Deaths: Do Not Hog the Right Lane

Good day fellow motorists,

There has been a recent spate of fatal motorcycle accidents which are alarming. Amidst Singapore's growing population of humans and vehicles, life is getting more and more stressful, hectic and fast paced. Everyone is rushing, to work, to home, to make ends meet, rushing to find the next pay cheque to pay the bills. As such, motorcyclists have to be very careful on the roads because plenty of vehicles are in a hurry.

If you are a slow or new rider, some GOOD ADVICE would be to KEEP LEFT and avoid the extreme right lane, especially so if your motorcycle is a small capacity bike, which lacks the torque and power to out accelerate the mass of cars on the roads.

An example of a motorcyclist endangering his own life would be the below biker road hogging the extreme right lane. If the car driver is impatient and is trying to overtake, the biker is placing himself at risk because the driver behind is in a hurry and wants to overtake as soon as possible but is unable to because the bike is hogging the extreme right lane. As such, there is a possibility that the car may just try to overtake anyway with whatever space he can find and squeeze the biker off the lane, causing danger to the motorcyclist.

As bikers, we should have the responsibility to take care of our own safety. So the best bet would be to AVOID HOGGING the right lane and KEEP LEFT.

With regards to cars driving fast (Not much opportunity to do so now in Singapore), the Traffic Police is just waiting to book them. Our problem in Singapore is that Traffic Police do not seem to be interested in booking ROAD HOGGERS, thus contributing to the already bad problem of congestion and higher ERP charges.

This would lead us to our future topic of Singapore's FUTURE: What lies ahead for the next generation. Bookmark (Ctrl D) us to keep updated of our latest posts.



Your humble servant of
Justice Bao Gong

Justice Bao Gong: Who's Causing the JAM?

Good day everyone,

In today's post, we have researched and gathered evidence of the inconsiderate RoadHOGGERS that are the reason behind why there are more and more ERP Gantries and why ERP charges are going higher. These inconsiderate ROADHOGGERS could also be the cause of the deaths of some unfortunate victims in ambulances which they have blocked on the expressways. Who are these morons?

We have gathered evidence showing some of the road hoggers contributing to the JAMS along Central Expressway (CTE). They REFUSE TO KEEP LEFT but instead HOG THE RIGHT LANE and go slower than the trucks on their left, causing the perennial jams along the CTE because all the few hundred cars behind them who wants to go faster cannot because they are blocked by these ROAD HOGGERS (If you observe carefully, there are no cars in front of these ROAD HOGGERS (hogging the extreme right lane) but a long queue of cars BEHIND THEM. ie THEY ARE CAUSING THE JAM).
Watch these videos of these ROAD HOGGERS causing the jam and even BLOCKING AMBULANCES:

The Problem is exacerbated by the fact that Traffic Police do not seem to be interested in booking these road hoggers: They seem to be more interested in causing more jams by booking fast moving vehicles rather than road hoggers. Ask around your friends: When was the last time they were booked for road hogging? They probably struck more 4D lottery than been booked for road hogging. Ask around again who's been booked for speeding: probably everyone except the road hoggers.

So, do you think the attitude of the traffic police has resulted in a country of road hoggers: Who cares if I'm causing the jam, Traffic Police are not going to book me anyway, but if I am considerate and go faster so as to filter left to let traffic behind me past, I'll get booked by Traffic Police for speeding. So, is the Traffic Police actually contributing to this problem of road hogging and traffic jams because of their system of booking people. What's your take on this?

So what is the SOLUTIONS to reducing the traffic jams? Traffic Police or Land Transport Authority should BAN these inconsiderate ROAD HOGGERS from using the extreme right lane or

First time Road Hogging offence: Fine $10,000
Second time Road Hogging Offence: Fine $100,000
Third time Road Hogging offence: Banned from Driving on extreme right lane & Fine $200,000.
Okay, the above is a bit too harsh, as much as I would like it to be implemented. But if the law was passed, you can be sure the roads would definitely be more free flowing. Solutions after the videos.

If you're wondering why :
Singapore always kena TRAFFIC JAMs? Why more and more ERPs? Why ERP Charges More and More EXPENSIVE?
CHECK OUT the CAUSE of it here:
(We noticed that TAXIs form the BULK OF THE ROADHOGGING & something must be done about it: In our future posts, we will show the motoring community ALL THE TAXIs HOGGING the extreme right lane. One cannot see the cause of the jam while on the road, but from these videos, one will understand why the CTE is jammed and slow moving: because of these slow Road Hoggers taking their Sunday Drive to the right lane during peak hours)





SOLUTIONS TO EASE THE TRAFFIC JAMS
What one should do is to ALWAYS KEEP LEFT, even though you claim you are travelling at speed limit. In Singapore, LIFE IS HECTIC and there are always people rushing. Don't block their way by hogging the right lane.

He may be rushing to take a loved one to hospital, and there you are hogging the right lane, causing the jam and no one can overtake because of you. A Life could be LOST BECAUSE OF YOUR INCONSIDERATE ROADHOGGING & REFUSAL TO KEEP LEFT!

If you like to travel on the extreme right lane (Because its faster, and you are the type of driver that don't like to change lane or not confident enough to change lanes), PLEASE DO CHECK YOUR REAR VIEW MIRROR AND FILTER LEFT WHEN YOU ARE BEING TAILGATED. YOU ARE BEING TAILGATED BECAUSE THE CAR BEHIND WANTS TO GO FASTER BUT YOU ARE BLOCKING THE RIGHT LANE (WHICH HAPPENS TO BE THE OVERTAKING LANE, in case you haven't realised), and he cannot overtake on the left because the left lanes are for slower moving vehicles. If you think he is speeding, then that's the job of the Traffic Police, who is ALWAYS looking to book fast cars & its not for you to stop him from speeding by ROADHOGGING.

If you insist on hogging the extreme right lane, you are risking the ire of the hundreds of motorists that are caught in the JAM that is caused by YOU. And if you happened to be flashed and horned by the tailgater and you insist on hogging the right lane, there is a high possibility that the whole bunch of drivers would just come out of their cars and give you a free nose job, and you have no witnesses because everyone behind you wants to rearrange your face.

Singapore is already a very stressful and expensive place, Don't Create Road Rage and Don't risk being bashed up by insisting on Road Hogging and Blocking everyone else on the Expressways.

And don't be the cause of the HIGHER ERP charges.

Be Considerate, KEEP LEFT.

(Photograph from : My Paper)

ACCIDENT: APPEAL FOR WITNESSES!

There was an accident involving a taxi who has collided into a motorcycle at the junction of Xilin Ave and Changi South Ave 3.

We appeal to the public to step forward to witness for the motorcyclist, who was turning right when the taxi collided into him.

The motorcyclist vaguely remembers a White Mini Cooper driving behind him and is appealing to this White Mini Cooper driver to step up to be his witness.

We also appeal for other motorists who happened to be present to kindly contact us to provide your much needed witness statements. Yes, we all know that the red tape created by the various Singapore ministries are a waste of time, but we appeal to your compassionate side to come forth to witness for the poor bloke: In Singapore where more and more cars are added into the roads in tandem with the increasing number of ERP Gantries which serve as a CASH TAP for the Government where in times of this financial crisis where their coffers are low, this is one method to boost its treasuries. Just build more ERP Gantries, and before any violent objection surfaces, they inject more COEs to let the COE price fall, and the Singaporean sheep roars into cheers, forgetting about the new ERP Gantries & that they'll start paying more: The government is the ultimate maestro when it comes to making money and keeping the population in check.

With more and more cars on the road, chances of accident will be higher, and you COULD BE NEXT. And when that happens, you would be appealing for witnesses. Time to pause a while, think about the last time you did a GOOD DEED. Please pass this around your friends and if you have witnessed this accident, please do contact us. Your good heart will not go unnoticed.

BUDDHISM:
~Be near when help is needed, but far when praise and thanks are being offered.
Take small account of might, wealth and fame, for they soon pass and are forgotten. Instead, nurture love within you and and strive to be a friend to all. Truly, compassion is a balm for many wounds.~ Dhammavadaka
(http://buddhism.kalachakranet.org/resources/buddhist_quotes.html)

CHRISTIANITY:
"Defend the cause of the weak and fatherless; maintain the rights of the poor and oppressed. Rescue the weak and needy; deliver them from the hand of the wicked." Psalm 82:3-4
(http://home.snu.edu/~HCULBERT/poor.htm)

HINDUISM:
Mercy is heaven itself; to be good, we have all to be merciful. Even justice and right should stand on mercy.
(http://www.vivekananda.net/Quotations/G-M.html)

ISLAM:
Allah doesn't like unjustice. He loveth not those who do wrong. If you end up suffering injustice, we do not know what Allah has planned in the bigger picture of things. Allah is The Just; and will bring justice. If not now, then in the hereafter.
(http://www.geocities.com/mutmainaa/pearls.html)

Your humble servant
Justice Bao Gong

Justice Bao Gong: Solutions to Minibonds PART 2

With reference to our earlier post "Solutions to Minibonds Saga", we would like to share with the masses on the initial cause of the trail leading to the collapse of Lehman and ultimately the man in the street suffers.

People depend on these credit rating agencies to judge a stability of a firm before making a decision to invest certain products, but if these credit agencies do not do what they are supposed to do, the result is this Minibonds debacle. Check out this website on Credit Rating Agencies in nytimes.com .

Also, according to Fitch's (another well revered credit rating agency) website "fitchratingasia.com", page 3: It says that Lehman Brothers and Merryl Lynch's use of Fitch credit services reflect the importance and acknowledgement of Fitch's presence in the rating industry, but what happened? One went bankrupt and the other was bought over by BOA.

I have attached a screenshot for your reference. All these goes to show that in the world of capitalism, greed and self gratification is on the top of almost every organisation's mind: What about the needs of the man in the street?

We the servants of Justice Bao Gong will strive to spill the beans of all who dwells in injustice and will research and analyse to endeavour to find solutions and educate the less fortunate and the poor. Do leave us your comments and opinions.

Your humble servant
Justice Bao Gong

Source: http://www.fitchratingsasia.com/media/Fitch_A_Broader_Perspective_US.pdf

References:
fitchratingasia.com
nytimes.com
Solutions to minibonds

Justice Bao Gong: Solutions to Minibonds Saga

Good morning everyone,

There are 2 articles published today in the straits times forum where a concerned citizen suggested buying back the structured products at market value, and another concerned citizen recommended that heartland banks do not sell risky products. I applaud their concern to write in to publicise their views, but if their views were to be an indication of the general public's view, then it would reflect that the masses have a poor understanding of how these complicated financial products work.

These form of structured product includes reference to a portfolio of underlying securities and probably several hundreds of other entities which could also include several layers of credit derivatives, collaterised debt obligations (CDOs) and asset backed securities, which are extremely difficult to price, especially if it is marked to market. Global liquidity is so tight now their hardly is a market, and that would further push down the prices of these products, much to the disadvantage of the laypeople.

As we had analysed in our previous post "MAS Speaks up- What investors need to beware", Banks are all profit driven entities, money first, everything else later. However, kudos to CEO of DBS Mr Richard Stanley who has made the initial step to compensate those truly in need, the retirees with life savings in the product, as well as Hong Leong Finance who has went further in buying back the Minibonds from investors who are above 62 and those with lower education.

These are the organisations with a heart, and with a management team like that, you can rest assured these are the banks that will take care of your finances. There are also several other banks who have also marketed the Lehman Brothers Minibonds, but are all sitting quietly at the sidelines waiting and assessing public opinion and MAS next move before they respond: They have a lot to learn from DBS and Hong Leong Finance.

Everyone would like to know how can banks allow a product which is credit linked to an entity that is going to go bankrupt? According to report by asiaone.com, minibonds latest series was just sold to the public on August 2008, where on 15th Sep 2008, Lehman Brothers filed for Chapter 11 Bankruptcy!

Apparently the biggest crook here would be RICHARD FULD, CEO of Lehman Brothers. How can he carry on selling USELESS DEBT to counterparties despite knowing his firm is already on the brink of bankruptcy?

Next on the firing line would be the counterparty banks who had accepted and created this MINIBOND product without doing their due diligence on Lehman Brothers (Their extremely flimsy and weak financials would have been shown in its balance sheet as it had gone bankrupt the very next month!)

The last category that needs to be whipped will be the CREDIT RATING AGENCIES: Why is it that a bank, which is on the brink of bankruptcy, not accurately reflected as it is in its CREDIT RATING? When this final product finally gets packaged and all the various counterparties already got their fat cut of the revenues, the ultimate RISK IS PASSED DOWN TO THE MAN IN THE STREET: The retirees, the man in the street making $726 per month as opposed to Richard Fuld's $726 MILLION!

What the world needs to do is to persecute Richard Fuld and strip him of ALL HIS WEALTH And redistribute this to all the retail buyers who had been conned to buy his criminal products.

The next step for the FED is to slap a heavy fine on the various CEOs of financial partners who had created the MINIBOND together with Lehman Brothers for FAILURE TO UPHOLD DUE DILIGENCE and redistribute this amount to the aggrieved.

The LAST PEOPLE TO be grilled would be the RETAIL Institutions for failing to do their own due diligence on the credit worthiness such as lehman brothers. But DBS bank and Hong Leong Finance had realised their mistake and had been very responsible in proactively stepping out to assist the man in the street by way of their announcing their compensation plans way ahead of the other banks, who are still sitting on the sidelines awaiting if they could get away with it.

SOLUTION TO PROBLEM:

There is a kind soul, Jean-Michel Bardin, who has wrote in the Straits Times with an indepth analysis of the root of this Minibond saga and the proposed solution to it, which is exactly the essence of what we had published earlier in our post "What's the Difference: Banks & Ah Longs". Click there to read more on the detailed solution and do leave your views & comments.


Your humble servant
Mulia
Justice Bao Gong





references:
The Straits Times
asiaone.com
Richard FOOL's blood money: abcnews.go.com

Guarantee Make Money Seminars: BEWARE

Good morning everyone,

This is an article you must read BEFORE you part with your hard earned money to someone else and the person guaranteed to be rich is him and NOT you.

Today we are going to spill the beans on some GUARANTEED MAKE MONEY seminars: Be it FX, Options, Real Estate, MLM, Education, Stocks, Marketing or Internet. You will definitely learn something useful in every seminar, but the main issue is the cost of these seminars.

Economic times are bad, but there are always innovative people who can make money at any economic climate: Most are mainly making big money at the expense of the middle and lower class, but the poor do not realise that, due to excellent marketing and half truth presentations by these marketing maestros.

We spill the beans on what goes on behind the scenes, and the other half truths that are NOT told to you at the seminars, before you make an informed decision to part with your hard earned money.

Everybody wants to make lots of money, and humans are blinded by this desire: They see the testimonials of former participants making money and they think, hey, so many people are making money, then I would too! But what they do not realise is the other participants who LOST money, and their testimonials are not printed.

Fact Number 1: These money-spinning maestros would have a clause requiring students to print their testimonials if they make money, and those who lose money would be brushed aside. If you see it from the BIG picture, its all a numbers game: 100 people sign up for the FX or Options Course, some will make money, some will lose money. It is impossible for everyone to lose money, so all they need to do is to publish these winning testimonials, and you have a small piece of the jigsaw puzzle showing all the glitz and glamour of your ticket to retirement by paying them the course fees. But put in ALL the jigsaw pieces together and you see a good number of participants losing money and YOU could be one of them.

Fact Number 2: Becareful about Guarantees that these maestros claim. The word Guarantee by itself has a calming subconscious effect on your emotional urge to part with your money. HOLD YOUR WALLETS! Observe how the guarantee is phrased:
"We Guarantee that you will make money in your trade!" People who see these phrase would think they are guaranteed to make money: WRONG! These maestros structure the phrases cleverly to play with your mind.

What it means is that if you lose in your first trade, and you lose in your second trade, and you lose in your third trade, but you make money in your fourth trade, the guarantee has been valid, but you still lose money overall! But by the time you realise this, you have already parted with your hard earned money, because the money back guarantee applies if you do not make a winning trade (But you did made money on your 4th trade! so no money back for you).

Fact Number 3: This is an important note: Take Past Performance with a pinch of salt. If the speaker blows his trumpet on his 100% or 250% returns on investment during the past few years, DO TAKE NOTE OF THE TIME FRAME: Between the years 2003 to end 2007, the Singapore Straits Times Index has steadily increased from a paltry 1291 to an all time high of 3906 (Reference: sg.finance.yahoo.com). During those years, every hedge fund was making big money, even your coffeeshop auntie and taxi uncle are boasting of their 300% ROI. So, don't be carried away by these maestro's impressive marketing strategies. The impressive and really outstanding fund managers are those that have made similar returns between late 2007 till now.

Fact Number 4: Normally, the terms and conditions will be given to you after you have parted with your hard earned money, and it usually includes disclaimers where they will make you accept that your investment decisions are done at your own will and any losses will be at your own expense, and there is no refund of course fees. By the time many participants who are losing money realised this, they have no recourse and have to live with it. These are the people we want to help. Of course there will always be the other half which will make money: its because they are destined to make that amount of money in this lifetime, so even if they do not sign up for the seminar, they will make that money somehow in future.

In these bad times, the best way to earn quick money is to sell 'Get rich quick' products: You see it in seminars daily in newspapers, internet,etc, but the law of the universe is that not everyone can get rich: This is a fact; there is only 1 Bill Gates, 1 Mariah Carey, 1 Warren Buffet and plenty of poor people around. Some people who are destined to be rich but are still poor now is because their time is not ripe yet, but when they attend such seminars and become rich, they start their own seminars selling their rags to riches story: Yes everyone should try to have the millionaire mindset, but the law of the universe cannot be changed, or else everyone would be having at least a million bucks in their bank account.

It is always good to attend seminars, because there are much to learn, but we only have limited cash in our bank accounts. Some are charging as much as $2- $3 thousand dollars or even more, and that is way too much. A range of less than $1,000 would be a reasonable range, considering the amount of time and capital you need to recoup the investments, and for the information learned.

The servant of Justice Bao Gong may not share Warren Buffet's wealth, but, having paid MUCH money to help these maestros get richer for their seminars, the least I can do is to share my knowledge with the rest of the lower and middle class who have the desire to obtain a better life for their families. Because after attending so many seminars, the cost do not justify the knowledge learned: Much of these knowledge are actually bits and pieces of information already floating around the internet, it is just placed together in a system and sold to you at a very high premium.

For your information, as all these FX, options and stock trading methodology can be found free of charge in the Web, you just need plenty of time to sieve through and compile the various strategies.

If time permits, I will prepare an ebook on how to trade FX and stocks and distribute free to the masses, so that everyone can benefit from it: It will be the same as what you will receive in these seminars that you pay so much for, but it will be for free.

BUDDHISM:

Buddha commented that wealth should be utilized wisely for the benefit of wife and children, relatives and friends. The foolish make his own misery with the craving for wealth as it happened to another millionaire named Ananda whose attachment was so great to wealth that he advised his son Mulasiri to not give anything to anyone as wealth would decline. He himself too hid his wealth under ground without giving to anyone. And that who was born as a lame beggar who was abandoned by his family itself. (Dhammapada-Balavagga)(http://home.pacific.net.sg/~bvs/economics.htm)

CHRISITANITY:
Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up. Galatians 6:9

(http://www.joministries.com/Seven%20Steps%20to%20Destiny.htm)

ISLAM:

"I know of one who repays a profit of more than seven hundred to a dirham (Arabian currency)." He then recited the verse of the Noble Quran in which Allah Almighty mentioned this profit. "The likeness of those who spend their wealth in the Way of Allah, is as the likeness of a grain (of corn); it grows seven ears, and each ear has a hundred grains. Allah gives manifold increase to whom He pleases. And Allah is All-Sufficient for His creatures' needs, All-Knower." (2:261)

(http://www.sahaba.net/modules.php?name=News&file=article&sid=233)

HINDUISM:

Among the wealthy, compassionate men claim the richest wealth, For material wealth is possessed by even contemptible men. Find and follow the good path and be ruled by compassion. For if the various ways are examined, compassion will prove the means to liberation.
- Tirukkural 25: 241-242

(http://www.writespirit.net/religious_traditions/hinduism/quotes_of_hinduism/index_html/?searchterm=wealth)

TAOISM:
In that state of true enlightenment, you and I will give everything without a second thought… and receive the universe.

(http://www.taoism.net/living/1999/199907.htm)

Mulia
Servant of
Justice Bao Gong

WARNING TO ALL DRIVERS: INFORM YOUR FRIENDS NOW!

We have received grapevine on the below (not yet authenticated but better heed on the side of caution)

TO ALL FELLOW DRIVERS AND NON-DRIVERS

LTA has contracted six traffic wardens from a private company at $34,000 a year to take down the licence platenumber, make and colour of vehicles that intrude into bus lanes at peak hours.
(They are incognito with camera in hands......so don't expect to see a TP, etc)

Note you can get fined $130 for dropping someone off at or near the bus stop.

LTA has intensified their operations at the following areas:
1) Eunos Link
2) Hougang Ave 3
3) Jurong Town Hall Rd
4) Lorong Chuan
5) Orchard Rd
6) Upper Serangoon Rd
7) Upper Thomson Rd
8) Yishun Ave 2

Additional spots where speed traps were seen,
1) PIE towards airport near Toa Payoh exit, tripod mounted speed camera at the pedestrain overhead bridge. 90km/h
2) PIE towards jurong near adam road exit, tripod mounted speed camera over at Adam Road flyover. 90km/h
3) Braddell Road after Bishan Junction towards CTE, tripod mounted speed camera at the pedestrain overhead bridge. 60/kmh
4) Queensway towards Bukit Merah, tripod mounted speed camera under tree before Ridout McDonalds. 60km/h
5) Spot along Upper Bukit Timah Rd towards Woodlands Rd, tripod mounted speed camera under tree after a curve turn - 60km/h.

Fine imposed is $170 and 8 demerit points.

EMAIL YOUR FRIENDS & ASK THEM TO BOOKMARK justicebaogong.blogspot.com now!

Your humble servant,
Mulia
Justice Bao Gong

Justice Bao Gong: LOST AND FOUND N82 Handphone

To all fellow Singaporeans :

LOST & FOUND : NOKIA N82 BLACK EDITION HANDPHONE

A fellow Singaporean has lost his brand new Nokia N82 Black Edition Handphone and has requested that any kind soul who has found it to kindly return it to him. He has been having 2 months of sleepless nights as the phone means a lot to him:

* There are pictures of his wife and his son in the N82 handphone.
* Their honeymoon pictures (only copies) are also in the handphone
* Important business, personal contacts and other vital information are in the handphone
* He is still paying for the handphone by instalments
* He pleads to anyone who have found the handphone to contact Mulia of Justice Bao Gong as he will give a cash reward to the kind soul

We, at Justice Bao Gong have verified with the owner and will ensure that a cash reward will be given to the kind soul who is willing to return the Nokia N82 handphone to the rightful owner.

Please do contact Mulia via email at justicebaogong@gmail.com or leave contact details via comment in our blog should you have found this N82 Nokia Black Edition Handphone.

Thank you and may the heavens bless you a hundred-fold for your kind heart.

• Buddhism:
  
  • Hurt not others in ways that you yourself would find hurtful." (Udana-Varga 5:18)
  
  
• Christianity:
  • "And as ye would that men should do to you, do ye also to them likewise." (Luke 6:31, King James Version.)
  
  
• Confucianism:
  • "Do not do to others what you do not want them to do to you" (Analects 15:23)
  
  
• Hinduism:
  • This is the sum of duty: do not do to others what would cause pain if done to you. (Mahabharata 5:1517)
  
  
• Islam: "None of you [truly] believes until he wishes for his brother what he wishes for himself." (Number 13 of Imam "Al-Nawawi's Forty Hadiths.")

Source of quotations : http://www.religioustolerance.org/reciproc.htm

Mulia
Your humble servant,
Justice Bao Gong
justicebaogong@gmail.com

Clearing Trays at Hawker Centres

(Source: The New Paper)
There has been a recent debate over the 'clearing of trays' at hawker centres and this article has proven to be the last straw. In our previous post of Inflation: Excessive Rising Cost of Food, we have analysed and highlighted the discrepancy between lower cost of food and rising prices of hawker food and also pinpointed that someone along the food chain has been profiting unethically at the expense of the man in the street.

We would like to highlight that this article by KF Seetoh to be highly insensitive and adding on more financial pressure on the man in the street. He is suggesting that people who do not wish to clear their trays after eating should PAY A SURCHARGE, AMIDST RIDICULOUSLY HIGH FOOD PRICES ALREADY CHARGED BY THESE HAWKER CENTRES.

For someone who is earning good money and making a living going around eating good food and not having to worry about financial expenses to make such a suggestion is preposterous. What he is suggesting will only make the already rich monopolistic hawker centre owners even richer at the expense of the lower and middle class citizens, with their inflated food prices despite the plummeting cost of food in this worldwide recession. It is common knowledge that food prices remain stubbornly high despite the plunge in cost of food, and someone is unethically profiteering at the citizens' expense.

I hope that a well-known celebrity like him could reflect on his comments and think about the less fortunate and the less well off first, before publishing an article like that to add on the already magnified problem of food inflation, which is already a huge burden on the less well off. There are hordes of people who has to ration food among their family members because their salaries are not increasing with the ludicrous rise in food and hawker prices, and not everyone has the good fortune to enjoy the good life of tasting good food all around the world without worrying about the ridiculously high prices of hawker food.

After a few focus group sessions, many agreed that the BEST SOLUTION would be for the monopolistic hawker centre owners to REDUCE THEIR FOOD PRICES to a reasonable level, as they had increased during the commodities bull run previously, and you can rest assured, the citizens would be more than willing to help clear their trays. Nobody faults you, as a capitalistic business owner of these monopolies of hawker centres earning indecent amount of profits, but by making these profits at the expense of the poor, can you live with that? Even if you can, judgement day will come (Kiamat menjelang), and justice will prevail.

As a personal opinion, I feel the current route in financial markets is good, and I do hope it will prevail until public pressure would help bring down the prices down in Singapore as well as the rest of the world. However, in Singapore, where population remains high and continuing to increase, inflation and the existence of monopolies will always be a big problem for the masses. In a future post, we will analyse the cause and solutions of monopolies and profiteering parties and how it affects the man in the street in greater detail.

If you need help, or advice regarding a problem, do drop us a comment and we will endeavour to research and attempt to find a solution to the best we can. We are not wealthy, but we have the heart to make life better for the masses.

Your humble servant.

Justice Bao Gong: What's the difference between Ah Longs and Banks?

(Source: Straits Times)
Very simple: Banks are clever while Ah Longs are at the short end of the intellect stick. Ah Longs hang PIG HEADS (Tiao Ter Tao) in debtor houses and get caught by police. Banks sell useless debt (Structured Products) but police cannot apprehend them. Why? Let us explain:

In today's forum, 2 concerned citizens have wrote in the Straits Times to suggest methods to prevent the same fiasco from occurring in future. But all these methods are already in place. With reference to our earlier post "MAS Speaks up- What investors need to beware", we have outlined how banks work behind the scenes and why they will never be wrong. We can only hope that they be ethical and assume responsibility rather than push the blame to the relationship managers (RMs).

Banks have already in place, compulsory compliance and audit training, risk disclosure forms for RMs to sign where they explicitly tell RMs that they have to disclose ALL the risks involved for every product that they sell to customers. As such, banks have already well protected themselves in case a debacle occurs, which it finally did, as in the Lehman Brothers case.

What banks have done was very clever: They need the revenue, but they want to thread on the safe end of the cliff, and thus, they create the above structures to protect themselves, while pushing the onus on the RMs to get the sales and take the blame. Imagine, using a reasonable man's point of view: If a RM is to tell the customer that he stand a chance to lose all his money should a reference entity faces a credit event; would the customer still want to buy the product? Definitely NO, so the onus is on the RM to subtly tell the risks involved while emphasising on the potential PROFIT of the product to influence the greed aspect of the customer such that the customer signs the product even though the RM has briefly mentioned about the risk (but only briefly & briskly) such that the customer did not heed the aspect of the risk but was actually thinking of the potential profits of the product. So when the tapes are replayed, it can be heard that the RM actually did mention about the risk, but the whole conversation was cleverly presented to emphasis on the emotional and the profit side of the product rather than the risk. That is why the suggestions given will not work. We do have a suggestion on a better way to protect the consumers, but the banks may not like it as it will hit their bottom line:

Currently, RMs' remuneration is pegged to the amount of revenue they make for the bank, which means the more 'high revenue' products they sell, the more they earn. What needs to be done is NOT to pay the RM according to the revenue they make, but rather peg the RMs' remuneration based on Customers' SATISFACTION and you can bet RMs will take much better care of their customers, as their income depends on the customers' satisfaction. As we speak, banks will HOWL with protest, as they know their bottom line will be hit. Well, it is for the public to judge: Do you want the banks to earn more? or do you want the bank staff to place priority for your financial well being? You be the judge.
Your humble servant

Singapore Newspapers - Totally free from Government Control?

Most western newspapers are free from government control, and they strive to post articles which are impartial and non partisan, so you receive news that are the fact, whereas newspapers that are not non partisan generally posts articles that may not paint the full picture. We always believed that some control in the press is important to keep the public peace, but too much, to the extent that the voice from the man in the street is not heard, is too much.

Check out the last 2 paragraphs of this article in the International Herald Tribune: http://www.iht.com/articles/1993/04/07/sing.php

We are a non partisan blog that strives to help the less fortunate and the man in the street, and do not wish to step across the line that the authorities have set and confined us in, but if you are always interested to find out more about what is happening behind the scenes in Singapore that is not reported in traditional media, send us a comment.

Your humble servant.

Singapore Government finally Guarantees all Bank Deposits

(Source: The Straits Times)


With reference to our earlier post "Good Pressure on the Singapore Government", the Singapore Government has finally decided to guarantee all bank deposits with immediate effect. In Singapore where almost everything is either a monopoly, duopoly or oligopoly, it is good to have some competition to ensure some equity.

This is a sharp turnaround from their declaration that there is no need to guarantee bank deposits just 2 days ago:
(Source: earthtimes.org )

This is because, as mentioned in our previous post, Singapore cannot afford to have foreign funds migrating to Hong Kong: It will only spell the beginning of the end for Singapore. By matching Hong Kong's move, what will be incurred from this guarantee will be higher banking operational costs, which will still be passed down to the us consumers, because banks, being profit oriented entities, are not going to absorb costs for the masses (More details on everything you wanted to know about what happens behind the scenes in the banks, in our earlier post "MAS Speaks up: What Investors Need to Beware").

We will analyse rising costs and inflation and how it affects the man in the street in our future post. Meanwhile, please do leave your comments or email us should you have any issues that affect the average man.

Your humble servant.

References:
The Straits Times
Good Pressure on the Government
earthtimes.org
MAS Speaks Up: What Investors Need to Beware

Justice Bao Gong: Increase in Electricity Prices NOT justified

(Source: The Straits Times)


Good morning Singapore and the Rest of the World,

This is a good opportunity for everyone in the world to see what really happens in Singapore- Whatever the Government says is always correct and everyone else is wrong, regardless of the facts that are backing the man in the street.

Attached is the reply from Director of Corporate Communications, Energy Market Authority (EMA), which we assume should be responsible for the increase in the electricity tariffs, since they replied in the forum to our good man, Mr Bruno Serrien, who has written in to question on the increase of electricity tariffs at a time when oil prices have been falling.

Mr Bruno noted that electricity prices have shot up 48% in the past 12 months, whereas oil prices have went down. The reply from the director of Corporate Communications was that price of electricity is pegged to the cost of fuel, and she claims that the increase was necessary because of the 38% spike in FORWARD fuel oil price from US$83 to US$115 per barrel between April and July this year. She also mentioned they will also continue to help households to conserve energy and thus save on our electricity bills.

OK, let us analyse the statistics: From October 2007 last year, oil prices closed at US$81.27pb. Today's Crude Oil nov contract is US$73.07 as I type. Thus, there is a decrease of 10% in oil prices since last year, but electricity tariffs have went up by 48% in the past 12 months: So am I doing the sums wrongly or is it the Energy Market Authority (EMA)? Details of world oil prices can be found here.

Maybe we give the director the benefit of doubt, as there was a substantial increase in oil prices in the previous quarter. So, going by her calculation, by next quarter, we should have a decrease in electricity prices by 58%. Let us see how electricity is priced next quarter then. Bookmark our page & follow this blog & wait for our update on this issue.

In light of the need for more transparency and disclosure following the financial turmoil debacle such as structured products being widely mis-sold to retirees who have lost their life savings, Singaporeans and the world would want to see greater disclosure and transparency on how pricing is actually calculated- If there is no arbritrary increases in pricing, then why shy away from disclosure and transparency?

We hope that the increases are not passed down to consumers because of poor market hedging. We welcome ALL comments from everyone around the world. If you are an expert in oil and electricity pricing, kindly do assist the man in the street by giving us a comment on how oil prices affect retail electricity prices.

Your humble servant.


References:
The Straits Times
Energy Information Administration

Good Pressure on Singapore Government

Good news again for the people in Singapore. Hong Kong, once again, coming in as the white knight to assure the Hong Kong people of its banking strength, has guaranteed all banking deposits for 2 years, putting pressure on Singapore Goverment to match the move, so as to retain its competitiveness in Asia. Without Hong Kong's move, it is highly unlikely any positive move be made, except, maybe, raising more tariffs (more details here). This will mean the current guarantee for banking deposits for Singapore banks may be raised to match Hong Kong's (Currently, Singapore deposits are guaranteed to only a paltry $20,000). More non partisan details can be obtained at nytimes.com.

Hong Kong is deemed to be a direct competitor in terms of attracting foreign investments from other parts of the world, due to their close proximity, good governance and excellent infrastructure. As such, Hong Kong would be Singapore's closest competitor in terms of fighting for a bigger pie of the financial inflows from the rest of the world.

In future posts, we will talk in detail about Singapore's future. Singapore has no natural resources, no land, no nothing, only people. Singapore's future can only be sustained for another few decades at most, propped up by the incoming integrated resorts. We have come a long way from a small fishing settlement, to manufacturing base to financial hub. With the financial turmoil still not yet fully over, our integrated resorts may not take off, as the success of Singapore's future depends on tourism & domestic consumption, which is why if you noticed Singapore is getting more and more crowded, be it in the trains, the walkway, the CTE or Orchard road. This is because Singapore needs the population to prosper. Take away the tourists, reduce the immigrants and Singapore will be in recession. We will discuss this in future posts and what lies ahead for Singapore's next generation and how to prepare ourselves for it.

Your humble servant.

EARN MONEY for your time

For those with some time to spare and are healthy & may want to make some money, you can try to contact Pfizer. If you do not mind the side effects, you can both contribute to medical advancement as well as earn some money while at it.

Your humble servant.

Why the increases despite Worldwide Recession?

(Source: The Straits Times)
WORLD STOCK MARKETS ARE PLUNGING
DOW JONES DROP BELOW 10,000 MARK
NIKKEI DROPS BELOW 10,000 MARK
STI DROPPED TO 2,000
OIL PRICES PLUMMETED TO LOW of 86.03.
AUSTRALIA, CHINA, SOUTH KOREA AND TAIWAN CUTS INTEREST RATES.

World markets & interest rates are seeing record falls but
what happens in Singapore?

Singtel INCREASES its phone charges.
(Source: The Straits Times)

Singapore Government INCREASES Electricity Tariffs.

According to the report, Mr Tharman mentioned "price of electricity has risen much less than oil prices", but according to the facts, oil prices from Oct and Nov last year ranges from $80 - $90 which is similar to what the oil price right now, so the increase is not justifiable.
Citizens of Singapore are welcome to analyse the facts and figures here .

A silver lining would be STARHUB, who has done the community a service by providing free services rather than increase prices like Singtel. At times like this, the Government should be working to reduce inflation via reducing cost of land, property, transportation, energy costs and food costs instead of increasing it. (We all understand the need to boost the Government reserves due to the falling financial markets wiping out huge percentage of equity of sovereign wealth, hedge and private equity funds, but please, not at the expense of the man in the street).

At Justice Bao Gong, we welcome ALL constructive COMMENTS. Please do bookmark us, and forward this blog to your friends so that everyone can benefit from the articles. If you do know of a topic that affects the man in the street, do email us or drop us a comment. We will endeavour to research the topic and post it for the benefit of all.

Your humble servant.

Car Insurance: Good hearted Man caught in insurance quagmire. YOU could be NEXT!

Car insurance industry in Singapore is apparently a very complicated and shady industry, as after so many changes to insurance reporting procedures to attempt to streamline accident claim procedures, accident claims remain ridiculously HIGH and nothing effective is being done about it despite several people having sufficient evidence that something wrong is going on among the various parties involved from workshop repairs to insurance claims. There has been several cases of very unhappy Singaporeans with the way inflated claims are not being investigated into and the cost of insurance are being passed on to the man on the street.

In this post, we will highlight the plight of businessman Mr Amirul, who is faced with claims of $18,000 for a small carpark bump in which his own repair for his Toyota Wish is only $650! We have done an interview and will unfold the events that occurred, resulting in this exhorbitant claim, and how you can PROTECT yourself against unscrupulous people who have no qualms about taking advantage of the complicated system to benefit themselves and passing on the cost of insurance to you:

The accident occurred on 5th Nov 07, when Mr Amirul was reversing his Toyota Wish, from the left of the picture, into an area which resemble a delivery ramp (Refer to Picture A). At the same time, the insurance agent was coming from behind and thus the accident occurred.

ACCIDENT SITE

The Toyota Wish was hit from the back of his vehicle as shown in the next picture, while the insurance agent’s Nissan Sunny was hit at the right side of his car during the accident. In Singapore, the car that knocks the behind of the car in front is generally at fault, but in this case, both parties seem to share a fair share of fault.

Nissan Car showing very slight dent in front right with no visible damage to headlamps nor bumper

Mr Amirul’s Toyota Rear Bumper showing a bigger dent

Immediately after the accident, the Insurance agent came out of his vehicle, bend down to look at the damages, walked to his car boot, opened up his briefcase and took out a piece of paper. He wrote a note explicitly stating Mr Amirul was at fault and asked Mr Amirul to sign which of course he did not. Mr Amirul disagreed that he was responsible for the accident but acknowledged that the accident did occur. The insurance agent wrote another note of acknowledgement that accident did occur and he claimed that it was for insurance claim and no lawyers involved. As Mr Amirul does not want to cause any obstruction to other vehicle along the driveway and the insurance agent ‘appeared’ to be very honest and sincere (he even offered to give Mr Amirul a better deal in his next insurance renewal and given his name card; AIG Insurance agent).They had the agreement that no lawyers will be involved and they will let the insurance settle the small accident as they assumed that damages would be limited only to a few hundred dollars, as shown by the pictures ( by the way those were the exact original pictures taken at the point of accident). At the point of accident, nobody was injured, including Mr Amirul’s 77 year old mother-in-law and 17 year old son who was sitted behind. Both parties then agreed to make report to IDAC separately. As for Mr Amirul he drove and proceeded to Paya Ubi IDAC straight away to do the necessary report, but according to the Amiruls, NO PHOTOGRAPHS were taken when their car was there.

A few weeks later in Dec 07, Mr Amirul received a lawyer’s letter demanding claims of $4672. And fast forward 3 months on 6 March 2008, Mr Amirul received a letter from NTUC Income for injury claim of $13,070! The injury claim was in respect of injury sustained by the insurance agent as a result of the minor accident. The insurance agent had gone to the Department of Emergency of Alexandra Hospital in the evening of the same day of the accident. In his medical report it was stated that he was ‘hit by a reversing car on the front of the door and subsequently developed cervical neck and left shoulder pain and was given 5 days mc’. ‘Subsequent visit for complaint of low back pain after the accident. X-rays done were normal and he was discharged with 2 days mc’.

According to Mr Amirul, he has gathered more than sufficient evidence that the exhorbitant claims is not justifiable and he has also engaged a private investigator showing the other party going through his normal daily movements which does not correspond to his claimed medical injuries. Mr Amirul had approached NTUC Income several times with these evidence, but NTUC remains unconvinced that the evidence is sufficient.

A few doubtful points were raised:

- Why is it that the insurance agent did not make a police report within 24 hours of the accident if he suffered a genuine injury? And only to come back with lawyer letters claiming exhorbitant injury claims 3 months later?

- The insurance agent’s medical report stated that his car was hit on the front of the door, but the original pictures show that the dent was at the front right side fender just behind the right headlamp.

- How fast can a car travel in a tight carpark area like the one shown above such that a 29 year old man can suffer injuries that can demand injury claims of $13070 while a 77 year old lady is not the slight bit injured?

- Why is it that the insurance agent who had a clear view of Amirul’s car in front and thus, can anticipate the impending accident, suffer a whiplash injury to back and neck while Mr Amirul’s 77 year old mother-in-law, who had no idea nor no any view of any impending accident did NOT suffer any slight injury at all?

Bear in mind the driver of the Nissan Sunny who made the exhorbitant claim is an insurance agent who has been in the insurance line for 7 years, while Mr Amirul has no inkling of the intricacies of insurance. Being in the insurance line for so long, it is obvious that one party knows the industry very well, and its very loopholes and thus more likely to be able to capitalise on the system.

Mr Amirul has been kind enough to share their experience to benefit the man on the street so that they will not fall into the same predicament. Remember, the above could happen to YOU! Do share with your friends this website and bookmark this website (Ctrl D) so that everyone can benefit from it. So, what should you do in an accident?

- NEVER sign any written acknowledgement which has any words that suggest you are at fault, as it could be cleverly phrased and used against you in Court.

- Always take pictures (closed up and with vehicle number visible together with damage).

- Exchange particulars of all parties.

- Obtain witness contacts and if possible, written account of their testimonials, as cases can drag for months and witnesses will forget the details

- Confirm that no party is injured (Record conversation or have it stated in writing to declare that everyone is not injured, or get witness to verify) This is to ensure that neither party will malinger and slap you with ridiculous medical injury claims later on. Everyone knows how easy to fake injury or illness or attribute old injuries to this accident in order to unethically claim insurance monies at another party’s expense.
We are a non partisan blog and we welcome the other party to post his comment and let the public decide.

If you suffer from similar insurance grievances, I implore all readers to place a comment, email us & bookmark us, and ask your friends to visit justicebaogong.blogspot.com to place their comments. All constructive comments are welcome. If you suffer from similar grievances, do place your comments, and we will endeavour to highlight your predicament so that other people can benefit. We strive to reach out to as many people as possible and through collective strength, we can create change for the better. We welcome anyone to link articles to our articles for the benefit of all.

Your humble servant

Inflation: Excessive Rising Cost of Food Amidst Lower Commodity Prices

Excessive rising prices are putting a heavy financial strain on the middle and lower class citizens. Transport prices rise, gasoline prices rise, newspaper charges rise (Noticed recently the price increase in your newspapers?), More and more Electronic Road Pricing (ERP) gantries are sprouting everywhere and traffic jams are becoming worse correspondingly and it seems people are paying more to get more jams. Even our neighbours from Malaysia who visits Singapore finds prices in Singapore exhorbitantly high (Check out a blog from our Malaysian counterpart who visited Singapore yesterday : http://www.lovechildrenright.com/2008/10/our-singapore-trip.html ).

However, it is the constant increase in FOOD PRICES that places the greatest strain on the man on the street.

The previous rally in commodities have have ended or at least, corrected and in view of the financial turmoil facing the world right now, world demand for oil is expected to drift much lower, led by America, which accounts for a quarter of the world’s oil consumption (Source: http://www.nationmaster.com).

Price of commodities have dropped, including rice. As at June 2008, The Straits Times article ‘Price of rice likely to fall in next few months’ quoted that the price of fragrant rice could tumble to US$1,000 (S$1,370) a tonne by year-end, importers forecast.

As at 2nd October 2008, the quote for commercial rice from Thailand is about USD$625 - $690 per metric tonne (which is approximately SGD$940 per tonne). That is a hefty drop in the price of rice. The prices of other food commodities are also falling in tandem, but prices of hawker food still remains high. A bowl of rice used to cost 20cents before the commodities rally, and every hawker took the opportunity during the commodity price rally to increase it to 50cents to a dollar per bowl. Now that commodity prices have fallen, why is it that their food prices still remain high?

An interesting highlight of how much food prices have escalated: With reference to Mr Brown’s article on rising prices: He has commented his roti prata has increased price by 10cents, and that was dated 3 July 2006. During 2006, the cost of a prata kosong was 50cents, fast forward 2 years now it costs from $1.00 to $1.30! and all these within 2 years! The cost of retail food has been increasing at a much higher rate than the price of commodities. So, somewhere along the food chain, the savings from the drop in commodity prices is not being passed down to the ultimate consumers. Someone along the food chain must have been making a tidy profit at the expense of the man on the street.

One would think it is the hawkers that are profiting from this because commodity prices have been dropping but he is still selling at the same high price. Others would think it is the landlord who is profiting from this, because the landlord raises the rent, which in turn forces the hawker to raise the price. Then another group of analysts says that the landlords are forced to increase the rent because they bought the property at high prices (We will talk about property prices and its effect on the ordinary man on the street on a later post). So, ultimately, the source of this rising food prices starts from property prices, which then results in higher rentals, which in turn results in higher food prices and the final consumer suffers the consequences. Of course, along the complicated chain, every party adds on a premium as profit and the cost snowballs to the final consumer by way of a $1.30 kosong roti prata or a 50cents small bowl of rice or 50 cents more for a few strands of extra noodles. Life is becoming more and more difficult for the middle and lower class Singaporean.

What we can do is to highlight the various eateries that charge reasonably cheap food and also those that charge high and yet cut down on the ingredients for the benefit of everyone.

We welcome suggestions and comments of eateries and we will post them for the benefit of all.
Your humble servant.

References:

http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption

http://www.straitstimes.com/Free/Story/STIStory_251740.html

http://www.riceonline.com/uploads/prices2.htm

http://www.mrbrown.com/blog/2006/07/today_sporeans_.html

Justice Bao Gong: MAS speaks up- What investors need to beware

In today’s Straits Times newspaper, MAS said it will review the way complicated investments are marketed and sold to investors. That will include risk rating, clearer product labelling and stronger suitability requirements.

MP Cynthia Phua also suggested such financial products should be graded and offered to investors who can fully understand the underlying risks.

OK, the above is what that has been printed in the newspapers. So, what is behind the scenes that the ordinary man in the street need to take note of? In www.justicebaogong.blogspot.com, we explain what the layman needs to know:

Firstly, financial institutions are there to make a PROFIT- their FIRST priority is to MAKE MONEY, everything else is secondary. Take their ‘customers first’ marketing with a pinch of salt. If you do not buy investments and insist on leaving money in fix deposits, you can be assured you won’t be their ‘first rate’ customers. If they tell the whole truth to customers, nobody would buy the products, and everyone will leave their money in fixed deposits or under their pillow.

So what these institutions will do is they will put in place a very good system of reporting to MAS that they have forms and brochures that clearly states the risk of each and every product (which comes in small print and SEVERAL pages), that they give AUDITED training to all their sales staff to ensure that they COMMUNICATE ALL RISKS to customers, and they make their sales staff acknowledge and SIGN on the training forms so that if there is any customer complaints, the institutions, by reasonable man’s standards, have certain immunity as they can prove that by way of the above systems, they have done a reasonable man’s standards in communicating the inherent risks to customers.

So this places the onus on the sales staff or bankers, who are given very high ‘revenue targets’ which they have to meet in order to keep their high paying jobs ( In banking, sales staff remuneration are tied to the products they sell - look out for Justice Bao Kong’s future blogs, his servants will elaborate in greater detail how the bankers’ remuneration works, and you will have a better idea why your bankers don’t tell you the whole truth). These poor bankers are coerced to sign on forms provided by their financial institutions which require them ‘to communicate the whole product risks, structure and other terms and conditions’ clearly to customers and they will be LIABLE for any customer complaints of misrepresentation. These poor souls are facing a dilemma: If they tell the whole truth to customers, it is likely they will not get the sale, and thus they do not achieve their targets and they get fired. So, what naturally happens is that bankers will tell selective truths and run through quickly on the ‘risks’ area and cover them up with the potential of returns, etc such that they did communicate the ‘inherent risks’ to customers, albeit not clearly, and customers get the impression of the ‘potential returns’ but not registering the full risks involved due to the clever presentation by the sales staff. Thus, the turnover rate of bankers are extremely high: The only way these institutions can maintain their high revenue targets is to ‘hire and fire’. Sales staff initially start off achieving their targets, and until a few months later, when their customers have no more money to buy investment products, they get fired and new bankers are hired and they bring in their portfolio of customers, sell products, no more money left to buy, bankers get fired, and the cycle goes on. Just ask any investor on the street how many bankers have they had within the same bank in the period of two years? 6 bankers? or 8? That explains it all.

In summary, when planning to do investments, always take responsibility to do research and speak to friends who have experience. The government can only do so much, the onus is on oneself to protect one’s assets and investments. This is the world of capitalism, every man for himself, profits come before compassion. And this is why we created http://justicebaogong.blogspot.com, to help the man in the street understand more and not be taken advantage by hungry capitalistic corporations.

Your humble servant

source: Singapore Straits Times

Justice Bao Kong: Sub Prime: Additional Information

I have attached a video (source: Youtube) which a mortgage broker spills the beans on fraudulent loan builders whom he says causes the sub prime mess. His testimonial would relate to events prior to the banks and brokers packaging the ABS into CDOs and reselling to various financial institutions and investors.

Your humble servant.

Justice Bao Gong: Subprime: What your banker did NOT tell you

Much have happened in the recent weeks in the financial circles. The origin of the financial turmoil is from the American housing market, where a recipe of cheap money then and the American Dream of house ownership coupled with bankers and mortgage brokers too keen to achieve their sales targets resulted in today’s financial mess. How then, does this result in the failure of 2 of US largest investment banks and the downgrade of the last 2 to commercial banks? How did Bear Stearns and Lehman Brothers go bankrupt? How did AIG, the largest insurer in America go illiquid?

Around midyear 2003, US Fed Fund Rate was a paltry 1% (Source: http://www.wsjprimerate.us/fedfundsrate/federal_funds_rate_history.htm), creating cheap money and liquidity. Previously, it was the bond insurers and experienced traditional investors who maintained a standard of risk management by placing a premium on the loans based on the seller’s credit worthiness or track record. But due to the growing competition and appetite of these mortgage brokers, more and more brokers are creating ’synthetic ABS’ or CDOs, collateralised debt obligations. The tight spreads on triple B ABS squeezed the traditional bond insurers out of the market, leaving the subprime securitisation market to the CDO sector.

The problem here is that when brokers package these CDOs, they do not assume the inherent risks involved in the underlying ABS- It is the investors that bear the credit risk. Renowned credit rating agencies rate these CDOs based on the underwriters, ie the mortgage broker or the banks, and they generally obtain very good credit ratings, and they may not rate the underlying asset which are the slices of subprime securities which are difficult to assess due to the intricate layers of packaging.

So, now comes the important part: What your bankers DID NOT tell you:

When investors, especially retirees who invested their life savings, 401k, etc into such structured products, ie minibonds, etc, they are usually not told the whole story. In fact, the name of the product is already misleading. When laypeople hear the word ‘minibonds’ they were given the impression they are buying a double A rating bond linked to the huge investment bank or corporation. What the salesperson may not tell you is that this CDO product is also linked to hundreds of ABS. aka, sub prime securities which are not rated and any credit events occurring on these securities could result in loss of capital.

The salesperson cannot entirely be blamed too. He is also working for a living, and he has revenue targets set by his bank and he will be fired if he does not meet his targets. If the salesperson tells the whole truth to the customer, he will lose the sale and face the possibility of being fired.

Banks make their sales staff sign on declaration forms that on one hand, require their bankers to explain ALL the risks related to the products to their customers, and yet on the other hand, will fire them if they do not achieve their sales targets. This is a fantastic way of protecting the bank themselves while relegating the blame to the sales person if anything goes wrong. There was an article written by a kind certified public accountant to Monetory Authority of Singapore (MAS) but according to the article, not much has been addressed- I have attached the letter for your reference (source: Today Newspaper)

Why do I know so much about banking products? Because I was a former banker, and I have been through it all, and it is time to share with the masses all that is happening behind the scenes, and share with the man on the street things that your bankers do not tell you.

If you find the articles to be beneficial, do Bookmark us (Ctrl D) and recommend the website to your friends so that they too can benefit, and please do send in your constructive comments. If you know of a subject that is currently creating some hardship for the man in the street, please do post it on this blog and we endeavour to research and publish it for the benefit of all.

Your humble servant.

(Source: Today Newspaper)