From mrbrown:
President: Why I Said Yes
Sums up everything about the front page article...
Btw, isn't it good to be president in sg? Even if you unlock the reserves, using "It’s for the Government in power to determine what needs to be done.I'm not an Executive President." absovles you of all responsibility if things don't work out.
Friday, February 20, 2009
Saturday, February 14, 2009
Interest Rates and Money Supply
In school, I was taught that the government can only control one of the following: Interest Rates or Money Supply.
If the government is to fix the interest rate, it has to let the money supply expand or contract as the market demands. Similarly, if the government is to fix the money supply, it has to let the interest rate swing freely.
What are the differences between the two policies?
For one, by fixing money supply, it will definitely encourage speculation as interest rates are allowed to swing freely. Bond prices, instead of remaining relatively stable as will be the case if the government chose to fix interest rate, will fluctuate wildly in accordance with the changes in interest rates. Bonds will gain greater prominence as a speculation instrument.
But the interesting questions are 1)Which policy will encourage the economy to grow faster, 2)Which policy will help to moderate booms or busts in the economy and 3)What are the effects of each policy during a boom and during a bust?
If the government is to fix the interest rate, it has to let the money supply expand or contract as the market demands. Similarly, if the government is to fix the money supply, it has to let the interest rate swing freely.
What are the differences between the two policies?
For one, by fixing money supply, it will definitely encourage speculation as interest rates are allowed to swing freely. Bond prices, instead of remaining relatively stable as will be the case if the government chose to fix interest rate, will fluctuate wildly in accordance with the changes in interest rates. Bonds will gain greater prominence as a speculation instrument.
But the interesting questions are 1)Which policy will encourage the economy to grow faster, 2)Which policy will help to moderate booms or busts in the economy and 3)What are the effects of each policy during a boom and during a bust?
Reserves
From Todayonline 110209,
It has emerged that Temasek lost about 31% of its investment portfolio due to the financial crisis, which is about $58 billion. Compared to other indices such as MSCI Singapore and MSCI Asia ex-Japan, which fell 44 and 45 percent respectively, I would say Temasek did relatively well, if it is just another fund out there.
But Temasek is not just any other fund. First, like what other bloggers have noted, Temasek does not just invest in equities alone. It invests in several other sectors, and thus comparison with the indices are inappropriate to begin with.
Second, the money it uses are the people's money. They are there to be used "for a rainy day", like what SM Goh Chok Tong said. If that is the case, why is so much exposed to sectors which will be hardest hit in a crisis? What is the point of investing in assets that will bear the full brunt of crises when you specifically intend to only use the funds in the face of crises?
Finally, even if Temasek beats the market, I still have a bone to pick. I thought we pay our ministers world class salaries because they claimed they are world class talents? In that case, how come they cannot see the crisis coming and take appropriate measures? Why are they like the common analyst who failed to foresee the extent of the damage to the economy, instead of the exceptional few who took steps to prepare themselves for the coming plunge in the market? This episode just proves that people like Warren Buffet, George Soros, John Paulson, and Peter Schiff are the real world class talents. Next time our ministers boast about their credentials I think we can just regard it as mere fluff.
Yesterday, the Government disclosed the
extent of the decline in Temasek’s investment
portfolio in an eight-month period: A slump of
31 per cent to $127 billion at end-November,
from $185 billion at end-March last year.
It has emerged that Temasek lost about 31% of its investment portfolio due to the financial crisis, which is about $58 billion. Compared to other indices such as MSCI Singapore and MSCI Asia ex-Japan, which fell 44 and 45 percent respectively, I would say Temasek did relatively well, if it is just another fund out there.
But Temasek is not just any other fund. First, like what other bloggers have noted, Temasek does not just invest in equities alone. It invests in several other sectors, and thus comparison with the indices are inappropriate to begin with.
Second, the money it uses are the people's money. They are there to be used "for a rainy day", like what SM Goh Chok Tong said. If that is the case, why is so much exposed to sectors which will be hardest hit in a crisis? What is the point of investing in assets that will bear the full brunt of crises when you specifically intend to only use the funds in the face of crises?
Finally, even if Temasek beats the market, I still have a bone to pick. I thought we pay our ministers world class salaries because they claimed they are world class talents? In that case, how come they cannot see the crisis coming and take appropriate measures? Why are they like the common analyst who failed to foresee the extent of the damage to the economy, instead of the exceptional few who took steps to prepare themselves for the coming plunge in the market? This episode just proves that people like Warren Buffet, George Soros, John Paulson, and Peter Schiff are the real world class talents. Next time our ministers boast about their credentials I think we can just regard it as mere fluff.
Sunday, February 8, 2009
Kindle
Is Kindle replacing traditional books?
Personally, I still prefer the allure of having something solid to flip through when I read. But if Kindle is ever to become my main medium for reading, it won't be because I prefer to read text on the device rather than traditional books. It will instead be due solely to convenience's sake:
1. Capability to read even in the dark. This is useful, not only in the case of blackouts but especially when you are sharing room with other people who want to sleep.
2. Many books in one device. There always approaches a time when we are near-but-not-so-near to the ending of a book, and we are stuck in a dilemma on which book to bring for an extended trip. The almost-finished one, with the risk of finishing too soon and nothing to entertain for the rest of the trip, or the brand new one, forgoing the building excitement and anticipation in the other book? With Kindle, two books can be stored in one device, hence I can have my cake and eat it too.
3. Lightweight, easy to carry around. This is one major advantage over traditional books. Let's say this book is interesting, but it's bulky and heavy and not-so-nice to bring everywhere with you. The only time when you can read is back at home. Kindle will enable me to bring whatever reading material I desire with me, allowing me to read anything anywhere, anytime.
4. Search? I don't know whether Kindle has a search feature, but if it has, that is a plus point. There are times when I'm reading a book and it draws on previously-mentioned info which I had forgotten/neglected. When this happens, Kindle will trump the traditional book, as there is no longer any need for me to futilely flip through the stack of previous pages just to locate the elusive data. Ctrl-F will solve everything.
5. Buy books online? I also don't know whether Kindle has an Amazon shopping function, but if it has, it can save a whole lot of hassle. Instead of going to the local bookstore, or waiting for the ordered book to arrive through mail, I can achieve instantaneous gratification with the purchase of an eBook.
Personally, I still prefer the allure of having something solid to flip through when I read. But if Kindle is ever to become my main medium for reading, it won't be because I prefer to read text on the device rather than traditional books. It will instead be due solely to convenience's sake:
1. Capability to read even in the dark. This is useful, not only in the case of blackouts but especially when you are sharing room with other people who want to sleep.
2. Many books in one device. There always approaches a time when we are near-but-not-so-near to the ending of a book, and we are stuck in a dilemma on which book to bring for an extended trip. The almost-finished one, with the risk of finishing too soon and nothing to entertain for the rest of the trip, or the brand new one, forgoing the building excitement and anticipation in the other book? With Kindle, two books can be stored in one device, hence I can have my cake and eat it too.
3. Lightweight, easy to carry around. This is one major advantage over traditional books. Let's say this book is interesting, but it's bulky and heavy and not-so-nice to bring everywhere with you. The only time when you can read is back at home. Kindle will enable me to bring whatever reading material I desire with me, allowing me to read anything anywhere, anytime.
4. Search? I don't know whether Kindle has a search feature, but if it has, that is a plus point. There are times when I'm reading a book and it draws on previously-mentioned info which I had forgotten/neglected. When this happens, Kindle will trump the traditional book, as there is no longer any need for me to futilely flip through the stack of previous pages just to locate the elusive data. Ctrl-F will solve everything.
5. Buy books online? I also don't know whether Kindle has an Amazon shopping function, but if it has, it can save a whole lot of hassle. Instead of going to the local bookstore, or waiting for the ordered book to arrive through mail, I can achieve instantaneous gratification with the purchase of an eBook.
Saturday, February 7, 2009
Temasek
So Ho Ching has finally stepped down.
http://in.reuters.com/article/innovationNews/idINTRE5152VT20090206
http://www.bloomberg.com/apps/news?pid=20601087&sid=am4yMINfiRLI&refer=home
Well, even if "Temasek Chairman S. Dhanabalan said Ho's decision to step down was not linked to performance, and it was too early to determine if investments made in the last two years would lose out in the long-term", I still think otherwise.
An excerpt from the Bloomberg article:
"Along with China Development Bank Corp., Temasek paid 3.6 billion euros ($4.6 billion) in 2007 for a 5.2 percent stake in Barclays and added another 4.5 billion pounds in June at about half the price. Barclays’ share price plunged nearly 66 percent since June."
Assuming other investments are similar to the Barclays' deal, share prices have to triple just for Temasek to break even.
Even if Temasek focuses on long-term returns, to bet on current share prices to beat 300% is still difficult. And one more thing to take note is that most of its investments are in large cap companies, which are unlikely to grow at spectacular rates.
http://in.reuters.com/article/innovationNews/idINTRE5152VT20090206
http://www.bloomberg.com/apps/news?pid=20601087&sid=am4yMINfiRLI&refer=home
Well, even if "Temasek Chairman S. Dhanabalan said Ho's decision to step down was not linked to performance, and it was too early to determine if investments made in the last two years would lose out in the long-term", I still think otherwise.
An excerpt from the Bloomberg article:
"Along with China Development Bank Corp., Temasek paid 3.6 billion euros ($4.6 billion) in 2007 for a 5.2 percent stake in Barclays and added another 4.5 billion pounds in June at about half the price. Barclays’ share price plunged nearly 66 percent since June."
Assuming other investments are similar to the Barclays' deal, share prices have to triple just for Temasek to break even.
Even if Temasek focuses on long-term returns, to bet on current share prices to beat 300% is still difficult. And one more thing to take note is that most of its investments are in large cap companies, which are unlikely to grow at spectacular rates.
Subscribe to:
Posts (Atom)