Friday, October 31, 2008

The Bigger Picture of the Financial Problems

Afternote: Ok, Lucky Tan feels that the Conspiracy Theory is really unbelievable as Science Fiction. I would say that what is written by the Conspiracy Theorist is really exaggerating but the mechanism that he has mentioned still merit some thought. So beware when you read on the Conspiracy Theory, it should not be taken literally but the purpose here is to understand some of the mechanism that brings this world into this financial crisis.

This issue is linked to the so call Credit Default Swap (or Credit Risk Swap) which both Lehman Brothers Minibonds, DBS High Notes and many other structured credit-linked financial products.

To fully understand the whole issue, we will have to look at how the whole banking and financial system works. Economic times has sketched the structure of sub-prime induced mortgage credit-linked derivative products.

The two articles below, one by Economic Times, the other by a Malaysian Conspiracy Theorist Matthias Chang

Crisis: Don't blame it on subprime loans
30 Oct, 2008, 1345 hrs IST,T T Ram Mohan, ET Bureau

Single page view Text:

There is a pat explanation that’s been put forward to explain the subprime crisis. The US Fed and other central banks flooded the world with liquidity and created an era of low interest rates. Greedy bankers sought to take advantage of low interest rates by selling housing loans to greedy consumers who could not afford these (subprime loans). Once interest rates started rising, defaults on these loans were bound to go up, housing prices fated to fall and institutions exposed to these loans bound to fail.

In other words, an asset bubble, financial inclusion and human greed combined to create the havoc visited on the financial system today. This is only a half-truth at best. You can have a housing bubble, a boom in subprime loans and lots of greed but it does not follow that there should be a financial crisis.

Banks’ losses on subprime loans cannot explain the crisis we have today. The US subprime market is estimated to be $1.3 trillion — or around 10% of all mortgage loans. How much have banks lost on subprime loans? According to the IMF’s Global Financial Stability Report, October 2008 (GFSR), just $50 billion!

It’s true that defaults on subprime loans have a snowballing effect as a fall in housing prices begins to impact on the economy at large. But even if we take this effect into account, the losses are not crippling. Losses on all loans, including commercial real estate, consumer loans, corporate loans, etc, have so far amounted to $425 billion with losses being shared by banks and other financial institutions. This is an order of losses that the financial system can withstand.

However, the financial system has suffered additional losses of $945 billion on investment in securities. Of these, losses on subprime related securities amount to $500 billion. These securities are not entirely subprime-related. Subprime loans are often one underlying component in a package.

It is losses on subprime-related securities that have complicated matters. An important reason why losses on these have been so large is that the accounting treatment of securities is different from that of loans. Traded securities have to be valued at market prices. If market prices fall below the face value of securities, banks must promptly recognise the associated losses. Loans are not required to be ‘marked to market’. Banks make provisions against loans as per regulatory norms.

Financial institutions invested in securities that were highly rated, meaning the risk of default on the underlying loans was believed to be low. When the default rate on subprime loans turned out to be higher than expected, the institutions panicked and wanted to get rid of subprime related securities. In the market, when everybody wants to exit, prices tend to overshoot their correct levels.

The market prices of many securities portfolios today are believed to be lower than warranted by the default rates on the underlying loans. For many illiquid securities, market prices are not available. They have to be valued using methods that tend to understate their values.

The GFSR shows what a world of difference there is between loan exposures and securities exposures. Losses on banks’ housing and real estate loan portfolios amount to only 3.6% of loans outstanding. For the reasons mentioned above, losses on subprime-related securities amount to a staggering 30% of the securities outstanding. Financial institutions are highly leveraged. For an institution that has capital equal to 10% of assets or less, the difference between a 3.4% loss on assets and a 30% loss is the difference between life and death.

So, explosive growth in subprime loans and the collapse of a housing bubble cannot explain the sheer magnitude of the crisis we are facing today. It was the “marketisation” of loans — the conversion of loans into tradeable securities — that created a crisis on such a scale.

True, such “marketisation” facilitated rapid growth in subprime loans. But rapid housing loan growth has happened elsewhere within the banking system without creating a financial crisis. Banking regulation has responded to the challenge through means such as increased risk weights on housing loans and limits on exposures.

When loans were “marketised”, they moved into a netherworld in which regulation was not equal to the task. This is a world that bristles with problems that have been written about so much — incorrect credit ratings, large exposures on the part of highly leveraged institutions dependent on wholesale funding, mark-to-market accounting, etc.

You can have low interest rates, an asset bubble, financial inclusion through subprime housing loans and greedy bankers and consumers. It does not follow that there must be a severe financial crisis. We have one today because traditional loans came to be substituted by financial instruments for which regulation was inadequate.

From Matthias Chang

By Matthias Chang

Let me explain why the situation is so dire and dangerous.

Since Wednesday, when the financial shits hit the ceiling fan, I was hoping that the so-called leading economics and financial commentators and opinion makers would explain the situation to the Malaysian public via the national dailies, the blogs and the TV network. I came across not one article or broadcast that explains the underlying reasons for the inevitable dire consequences.

Sure there were articles on the crisis, but they were merely describing the rescue of the largest insurance company in the USA (A.I.G.) if not the world and the amount involved. No explanation whatsoever, as to why only a few days earlier the Fed and the Treasury allowed the 4th largest bank, Lehman Bros to fold up but rushed in to rescue AIG with an unprecedented US$ 85 billion.

In my various articles published in my website and my final volume of the Future Fast-Forward Trilogy – The Shadow Money-Lenders and the Global Financial Tsunami – I explained in great detail the corruption within the global banking system and how these financial leeches through fraud and political protection created and amassed a global financial fortune in excess of US$500 Trillion. ( A book riddled with racist overtones)

Let me assure you that this is not a typo error. You got it right. It is not billions but a whopping US$500 trillion. I have been advised that as of the Q2 of 2008, the figure may have reached US$565 trillion.

This is a complex subject but I shall endeavour to make it as simple as I can.

Starting Point

The Ponzi Scheme

The crux of the fraudulent Ponzi scheme is the twin pillars of:

1) Fannie Mae & Freddie Mac – the two giant mortgage corporations of USA

2) The Derivative financial tool known as Credit Default Swap (CDS)

Once you have a grasp of these two concepts, you cannot but agree that we are facing total global banking collapse. Why? Because the entire global banking system has been built on these two financial pillars! But the system became irreparable in the last 7 years when CDS became the linchpin in the massive expansion of derivative trading and financial engineering.

The Mechanics

1. Banks became greedy and were unwilling to earn safe and steady profits from mortgages for housing and commercial properties which usually spread over a period of between 5 to 30 years.

2. Banks wanted massive profits in the shortest period of time and the ability to lend massive amounts and not be regulated as to how to do it.

3. The crooks devised a scheme. It was a simple idea.

4. Banks will provide mortgages to all and sundry.

5. I am going to use a simple example and using small numbers to illustrate for ease of calculation. Thus, assuming the Bank gave out US$1 million to finance mortgages, bearing interest at 10%.

6. The bank then sold the mortgages to Fannie Mae and Freddie Mac at a discount. Fannie Mae and Freddie Mac being Government Sponsored Companies (GSCs) are able to get cheap financing to purchase these mortgages as they were assumed to be “guaranteed by the US Government”.

7. Fannie Mae and Freddie Mac then package these mortgages into all sorts of structured financial products and these were sold to investors (private as well governments). Central Banks hold massive amounts of dollar reserves and they need to find a safe haven for them. Hence, and invariably, Central Banks invest their reserves in US Treasuries and financial “mortgage-backed” products issued by Fannie Mae and Freddie Mac as well as other US financial institutions.

8. With the payment of US$ 1 million by Fannie Mae / Freddie Mac, the bank by law, can lend ten times the amount after keeping 10% reserves i.e.US$100,000. Therefore, the bank can lend US$9 million by “creating money out of thin air” i.e. by crediting the borrowers in their loan accounts in amount of the loans extended. These US$9 million loans secured by mortgages are then sold to Fannie Mae / Freddie Mac again.

The cycle keeps repeating and the banks keep creating more and more loans.

It was so easy that the banks decided to create dubious loans called “Liars Loans” whereby the borrower need not state the actual income and or ability to repay.

9. As more and more of these loans were created, investors (government and private) demanded assurances that these loans were good for investments. The rating agencies (e.g. Moodys, Standard & Poor and Fitch etc.) who in collusion with banks, gave AAA ratings to what were essentially junks. This fraud led investors to believe that these financial products were good investments.

10. The rating agencies were only too aware that this scheme needed something more concrete to prolong the fraud and induce the investors to part with their monies.

11. The insurance companies like A.I.G. came into the picture. They were seduced by the idea that if they can insure against risks of accidents, storms etc., they could also insure risks against default by the mortgage holders. Thus was born the financial innovation – Credit Default Swap (CDS). Any financial product with a sound CDS would be rated AAA. It was as good as being guaranteed by Uncle Sam. *******s the world over, especially central banks, fell for it – hook, line and sinker. Bank Negara was no exception.

12. The scheme works out like this – AIG sells protection – i.e. in the event there is a default, AIG will pay out to the buyer who buys the protection (the CDS) in exchange for the payment of premiums covering the period of protection not unlike your usual insurance policy. It was easy money for everyone.

The banks get to sell their loans and have the liquidity to create more loans.

Fannie Mae / Freddie Mac and other financial institutions get the opportunity to repackage these loans / mortgages and sells them to investors with a tidy profit.

The investors are happy with their so-called guaranteed returns. The insurance companies, investment banks and other players get their premium income for selling protection. It was old fashion mafia loan sharking and protection business dressed up in modern financial jargon and everyone was too arrogant and greedy to see through the fraud.

13. When loans default and continue to be delinquent, the law (depending on each country) provides that if the loan is in default for 90 days or more, it should be declared a Non-Performing Loan (NPL) and banks must provide reserve to cover the loss.

14. What happened was banks were covering the defaults and kept them on the books for two years or more in the hope that no one would be wiser and interest income from new loans would cover the defaulted old loans – the classic ponzi modus operandi.

15. When the two years default reached critical proportions starting with the sub-prime loans, the fraud began to unravel. Investors began demanding their protection money for the losses arising from these defaults. It has been estimated that the market value of the CDS was in excess of US$60 trillion but the capital of the insurance companies like AIG are only in the billions. It is therefore a physical impossibility to make good the demand for payment for the defaults.

16. If AIG the No. 1 insurer in US and the world is in default, it means the rest are in deep shits. You can take it as a given that no one and no one has good coverage and protection anymore.

17. When there is no coverage and protection, how can there be AAA ratings for new issues of such financial products? Fannie Mae/Freddie Mac etc. cannot package these products for sale to investors and if they cannot sell, they will have no funds to buy more dubious mortgages from corrupt and fraudulent Wall Street banks. With no additional funds, these crooks in JP Morgan Chase, Goldman Sachs, Citigroup, Lehman Bros., Morgan Stanley, Merrill Lynch, Bank of America, UBS, Barclays, HSBC, Deutsche Bank, Credit Suisse, etc. will have difficulty extending new loans.

The “Musical Money Chair” will have to come to a complete halt. The entire system gets into a gridlock.

Given the above explanation, can the US government and the Fed continue to bail out banks and other financial institutions? When US is in deficit in both the budget and current accounts, where else can they get the extra monies except by creating out of thin air (virtually by keying digits into computers) or print more dollars.

If you are a sovereign lender or a private hedge fund, knowing the situation, would you lend more monies to the US Treasury knowing that each dollar issued (whether digitally or in printed notes) are not worth the value stated therein.


The bulk of our reserves are in US dollars. Our trade – petroleum products, palm oil and other exports are mainly traded in dollars. When the dollar dives into the cesspool of waste, what then?

This is the impending mess that Malaysia will be facing as early as end of 2008.

Have you heard anyone other than this writer talking about it?

Flawed Financial Products-DBS High 5 Notes

The following article on Today has highlighted that DBS High 5 Notes is actually a FLAWED product with a risk factor of 8 or 9 out of 10. But yet, it was systematically sold to people who are only interested in fixed deposits with fixed interests.

Similarly, as explained in my last article "This is what Minibond is all about!" and a similar article in Chinese which illustrated that Lehman Minibonds is NOT Bonds at all.

In fact, it has ABSOLUTELY NOTHING to do with BONDS but just a HIGH RISK product which is TOTALLY FLAWED. Not only that it makes investors become INSURERS of Lehman Brothers but in actual fact, it practically makes investors to GIVE Lehman Brothers the right to use their hard earned money to GAMBLE in the financial derivatives market to earn HIGH RETURNS for Lehman Brothers without having it to bear any risk at all..i.e. Lehman Brothers will have a RISKLESS GAMBLE while all risks are born by investors!

If they make it big gamble, they will only give 5.1% to investors and they keep the rest of the winning. If they lose, sorry, investors will be the ones who will lose the money!

Goh Meng Seng

Products were flawed
High-risk High Notes should not have been sold at all, they contend
By Francis Chan
View more photos

SOME DBS High Notes 5 investors are broadening their complaints against the bank that sold them Lehman Brothers-linked investments that are now worthless.

They want to press the case that the structured product had 'flaws' and should never have been sold to them to start with.

This is different from complaints that have so far been lodged against the bank, which centre on allegations of 'mis-selling' of products that did not suit investors.

Two representatives from the 250-strong grouping - which has dubbed itself the 'DBS Hi Notes Investor Group' - spoke to The Straits Times in between two forums organised by DBS at Suntec City yesterday. They contend that High Notes 5 was a high-risk product not suitable for retail investors.

'There is a systemic failure in the product itself,' said one, who asked to be known as Mr Leong, 47. 'In fact, we got the bank to admit during the forum that the product is indeed not a low-risk product,' he added. Said the other representative, 38- year-old Kenneth Tay: 'We asked them to rate it on a scale of one to 10, with 10 being the highest, and they said High Notes 5 was between eight and nine.'

Mr Leong invested $100,000 in the doomed product and Mr Tay, $75,000. Their argument marks a shift away from the current focus on investor complaints about mis-selling of Lehman-linked products, especially to elderly or lowly-educated investors who could not understand their complexities.

DBS, like other financial institutions, has agreed to focus on helping 'vulnerable' investors such as the elderly and less educated and to probe mis-selling claims.
The bank is reviewing all sales transactions on a case-by-case basis regardless of whether a complaint has been made.

Mr Leong said the 250 investors agreed that High Notes 5 had three key flaws. 'The first is the product itself, the second is the sales process and third, the way the bank targeted customers,' he said.

On product flaws, Mr Leong said that with help from a 'finance expert' who had experience in manufacturing structured products, the group had learnt that as investors of High Notes 5, they had unfairly become 'insurers' to the credit default swaps (CDS) which backed the product.

On the sales process, Mr Leong said that it was agreed among the group that the DBS relationship managers who sold the product could not even explain the product features clearly.

'It is our view that they are inadequately trained, so how can inadequately trained people with faulty knowledge hope to advise people who know nothing?' he asked. Mr Leong said the third issue was the way in which the bank had approached customers to sell the product.

'Many [investors] share this story: They went to the bank to renew or open a fixed deposit and somehow ended up buying into High Notes 5,' he added. 'How can one associate a customer who is looking for a largely safe product like a fixed deposit ending up with such a high-risk product?'

Mr Leong and Mr Tay said they did not get satisfactory responses at the forums from DBS consumer banking head Rajan Raju. When asked to comment on the systemic flaws raised by investors, Mr Raju told reporters: 'All investments, as you know, are governed by the Financial Advisers Act in Singapore...and so far, all our products are benchmarked to the Financial Advisers Act.'

He added: 'What we are trying to say is that where there is a breakdown in our process, we will make sure that we take the responsibility and fix the problem.'
More than 360 investors of High Notes 5 attended the two sessions of the dialogue organised by DBS.

These came after 166 investors had visited DBS' Shenton Way headquarters on Oct 21 to call for an open forum. One investor, who declined to be named, said he had heard little new. 'But today they gave us this complaint form with 16 questions to complete, and promised us a fair review, so let's hope for the best - there's not much else I can do anyway.'

The 1,400 investors who bought High Notes 5 would have received letters from DBS by today informing them that their investments are worthless.



1。 请愿书最新消息报告
2。 帮助拟草投诉书
3。 与分销商的高级管理层对话
4。 集体诉讼事宜(最后抉择)
5。 投资者根据分销商聚集
6。 华语翻译


Tuesday, October 28, 2008

































Monday, October 27, 2008


在过去的两个星期,有许多苦主都问我同样的一个问题: 到底什么是雷曼迷你债券?





MAS responsibility in Minibonds-- Moral Hazards

The reason I feel that MAS has failed miserably in its role of a regulator is basically because it has failed to identify the MORAL HAZARDS involved in the structure of Lehman Brothers Minibonds.

First of all, the mention of the Six reference entities that consists of big names in the banking industry is TOTALLY MISLEADING, especially so when the risk that involves in the basket of Collateral Assets were not mentioned. In fact, as far as I know, at the time of sales, the list of 150 companies and their derivatives, were not even identified to the investors! How could anyone, be it MAS, banks or investors, really evaluate the TOTAL RISKS involved in this Minibonds if the bulk of risk that lies in this list of 150 companies was not even identified?

This is why I am very puzzled why this Minibonds has been approved by MAS to be sold to consumers VIA BANKS if the risk nature of it was not determined fully.

Secondly, there is an obvious MORAL HAZARDS that lies within this structure of Minibonds. The two SWAP PARTIES are actually the SAME! Minibonds Ltd is just an empty shell company created and owned by Lehman Brothers!

And due to the way that this Minibonds is structured, it would then mean that in the interests of Lehman Brothers, money invested by investors would be used to buy derivatives that would give the highest return while all these returns would be all given to Lehman Brothers. But in return Lehman Brothers would only give 5.1% to investors while investors would have to bear the risks of that Minibonds has taken, for the benefits of Lehman Brothers, in investing in all these high risk derivatives!

This is a CLEAR indication of MORAL HAZARDS. There is basically NO PROTECTION of investors' interests in preventing of taking too much risks for that amount of 5.1% return.

No investors would have known Minibonds Ltd is RELATED or even CONTROLLED by Lehman Brothers itself. And no investors would know EXACTLY HOW MUCH RISKS they are taking because the list of 150 companies and their derivatives was not even determined at the point of sales. This may explain why sales representatives would mislead investors into thinking that their money would be invested in the six reference banks or even Lehman Brothers itself! They may not even know the existence of the 150 companies' derivatives as in the Collateral Assets! How would a sales representative sell something that they don't even know what they are selling in the very first place?

The more I look at the whole structure, the more I feel that MAS has failed miserably as a regulator and YET, there are people who would claim this got nothing to do with the Government! How could PAP government that pride itself as World Class, filled with high paid elites, could ever allow such TOTALLY FLAWED and TOXIC financial products to be sold in Singapore is really something I could not understand.

Goh Meng Seng

This is what Minibonds is all about!

The name "Minibonds" itself is a misleading word for investors. Whatever money you have invested in this "Minibonds" are not invested in bonds of the six reference banks or bonds issued by Lehman Brothers.

This is how it works. Lehman Brothers may or may not buy any bonds from the six reference banks but it is just using these banks as "reference entities", some sort as a "bet" with Minibonds holders. There are basically 5 entities involved in the Minibonds arrangement.

1)First of all, its Lehman Brothers as the credit risk swap (I will explain what credit risk swap entails in this case later) partner.

2)Secondly, Lehman Brothers has created an empty shell company Minibond Ltd which will issue the Minibonds to investors.

3)Third, the investors.

4)Forth, the money taken from investors will be invested in a basket of AA financial products from 150 companies which includes CDOs which is basically collateral debts obligations, some of them are related to SubPrime debts.

5) The reference banks which has nothing to do with investors' investment other than being a betting reference: i.e. if any one of them failed, it would be a credit event that make investors lose money to Lehman Brothers.

For simplicity to understand the whole arrangement, just take it that Lehman Brothers has bought some bonds from these six reference entities (banks) and it needs somebody to insure its risk of exposure to these banks. It did not insure its risks from insurance companies like AIG but instead, via this Minibonds arrangement, bought insurance from investors like you.

Through the Credit Risk Swap, you as an investor has agreed to sell insurance to Lehman Brothers with regards to the reference entities. In order to become an insurance agents of Lehman Brothers, you will need to come up with money as collateral. This money is collected from you via the financial institutions that you bought the Minibonds and given to Minibond Ltd to invest in a basket of CDOs issued by 150 companies.

Whatever returns from these CDOs issued by these 150 companies (variable returns) are given to Lehman Brothers. In return, Lehman Brothers will give Minibonds Ltd a FIXED premium (most probably higher than 5.1%) and Minibonds Ltd will give investors 5.1% returns for their investment.

Now, the variable returns from the Collateral Assets may be higher or lower than 5.1% but investors will only get back 5.1%. It means that Lehman Brothers will take the risk of variable returns from these Collateral Assets in return for your risk taking on the reference entities. This complete the Credit Risks Swap, swapping your risks of variable returns for a fixed returns, while you in return, insured Lehman Brothers for their risk exposure to the Six reference entities.

The problem is that Minibonds Ltd, under the control of Lehman Brothers, may choose to invest in a higher risk instruments or CDOs because it would be very profitable if the returns from these investment is higher than 5.1% that Lehman Brothers promised you. Especially so, when they do not need to bear the risks of defaults these CDOs or any of the assets in the basket of Collateral Assets. The returns from these Collateral Assets, they take but you bear the risks of defaults from these assets.

Under the contract, once a CREDIT EVENT happens, the whole arrangement will be liquidated. The Credit Event involves:

1) If any one of the reference banks failed, it is considered as a Credit Event and the investors will have to pay Lehman Brothers for the insurance it bought via the Credit Risks Swap. Meaning, investors will lose all money invested.

2) If more than 11 companies of the 150 companies listed in the Collateral Assets failed, or a certain percentage of the CDOs or credit-linked derivatives held as Collateral Assets go into default, the whole Minibonds will be liquidated and any loss from these defaults will be born by investors (not Lehman Brothers).

Afternote: Someone asks me about where does the prospectus point out about Credit Event no. 2. This is the tricky part, when you were sold the product, they did not point out directly the more important risk involved in the collateral assets and in the base prospectus , it was not listed as "Credit Event" or "Risk" but instead it was listed under the section on Mandatory Redemption. I have seen the pricing statement and such important HIGH RISK was not prominently mentioned also. Someone pointed out that under the various series'prospectus, it was mentioned as follows:

- for minibond series 3 if 10 credit events happen to the 150 companies, investor would experience some loss of principal. If there are 12 such credit events investor will loss all principal.
(Prospectus pg 20)

- for minibond series 5, if 11 credit events happen to the 150 companies, investors would experience some loss of principal. If there are 13 such credit events investor will loss all principal.
(Prospectus pg 21)

- for minibond series 7 (they don't even state the numbers now). Investor will experience some loss of principal if a "specified amount" of loss from the unknown number of companies.
(Prospectus pg 22)

Most important of all, the prospectus did not list out the 150 companies

But the definition of Credit Event does not includes the failing of Lehman Brothers as the Credit Risks Swap partner. Thus, at this moment, investors do no face immediate liquidation of the Minibonds and suffer immediate losses.

However, investors RISK losing a lot of money due to the fact that the value of the basket of CDOs and other credit-linked derivatives held as Collateral Assets has devalued tremendously due to the present financial crisis. The likelihood of a credit event triggered by the failing of a substantial number of companies within the list of 150 is very high at this moment.

Furthermore, as Lehman Brothers has gone into bankruptcy, it will no longer give you the 5.1% as it promised and in this financial crisis, the variable returns from the basket of CDOs and credit-linked derivatives would be nearly zero as most of them are linked to SubPrime products.

Thus, with this basic understanding of the product Minibonds, I shall answer Peter's questions:

1) What was sold to the unsuspecting and gullible investors ? Is it a Credit Default Swap( CDS ). What is a CDS ?

Credit Default Swap, also commonly known as Credit Risk Swap, is a mechanism whereby two parties "exchange risk". In this case of Minibonds, it is totally an UNFAIR swapping. The "RISK" Minibonds Investors swapped with Lehman Brothers is the VARIABLE RETURNS from the basket of Collateral Assets they implicitly invested via Minibonds Ltd controlled by Lehman Brothers. However, the risk of the failing of the whole basket of Collateral Assets are not insured by Lehman Brothers. Thus, Lehman Brothers will not compensate investors if they lose money due to defaults of the CDOs and credit-linked assets held in the basket of collateral assets!

This is where the tricky part is. Lehman Brothers could use Minibonds Ltd to invest in many HIGH RISK financial derivatives to get very high variable returns and it will benefit from these returns while only giving back a fixed 5.1% to investors. But if these HIGH RISK derivatives failed, investors will have to bear the brunt.

On the other hand, Lehman Brothers has used the Six Reference banks as a risk bet to Minibonds investors. It seems to me that using such reference entities of "Low Risk" nature as Credit Default Risk exchange is MISLEADING as it creates an impression of "LOW RISKS" while in fact, the amount of RISK investors born is very much higher as they are responsible for the risk of the Collateral Assets!

2) What is the purpose of REFERENCE ENTITIES ( REs ) ? The REs are prominently displayed in the brochure and fooled us into thinking we are investing in their bonds.

As explained, the Reference Entities are just a reference of "Risk" that Lehman Brothers is swapping with you. Your money invested did not invest in these banks but rather in a list of 150 companies' credit-linked derivatives which may be of HIGH RISKS nature.

The main Risk that investors is taking lies in the basket of Collateral Assets.

3) The money collected from investors, what did they do with it. I saw the swapping chart in your blog in chinese. Can you kindly prepare one in english and email to me so that I can photocopy and distribute this sat. at speakers corner to help investors achieve some understanding.

The money collected from investors are invested in a basket of HIGH RISK derivatives issued by 150 companies. High risk derivatives may give high VARIABLE returns but the returns from these High Risk derivatives was swapped by the arrangement of CREDIT DEFAULT SWAP, to Lehman Brothers. That means that investors are bearing the HIGH RISKS of this basket of derivatives (not bonds, but CDOs and credit-linked derivatives) but Lehman Brothers has taken all the returns from these derivatives and in return, only promised to give you a FIXED return of 5.1%!

4) The REs have not defaulted,but the value of our investments have plumetted to almost zero. What is the rationale behind this incomprehensible senario.?

Although the REs have not defaulted but the basket of HIGH RISK derivatives that your money actually invested in as a basket of Collateral Assets has actually diminished due to the financial crisis that we are facing. Although you as investors have not enjoyed the high returns from these high risk derivatives (which you have swap and given to Lehman Brothers for 5.1% return) but you bear the risks of defaults or devaluation from these financial derivative instruments.

5) Did the distributor :-
a) misrepresented this product ( not aware of it's true nature and operating mechanism )
b) concealed the material fact ( they knew but did not tell us )

a) From the many descriptions given by investors with regards to the information they received from sales representatives, it is a CLEAR MIS-INFORMATION and MIS-REPRESENTATION of this product. The RISK you faced is not LOW as the failure of any one of the six reference entities. You, as an investor, also face risk of defaults or devaluation of the basket of HIGH RISK financial derivatives issued by the 150 companies and yet, you did not enjoy FULLY the potential high returns from these instruments but taking the risk of these instruments! Basically it means that, somebody used your money to invest in HIGH RISKS products and keep all the potential HIGH RETURNS from your investment but in return, they only give you back a FIXED 5.1% and you bear all the risks of defaults and devaluation of these products. I believe if this is represented properly to you, many investors would not be investing in this product. I mean, who wants to bear all the HIGH RISK while taking back only a FIXED 5.1%?

b) I am not in the position to say whether "they knew but did not tell you" or they conceal any material facts because I am not vested and would not know whether those front line sales representatives actually know what they are selling in the very first place. I believe not many people really understand this Lehman Brothers Minibonds when it was first sold. If those financial elites at MAS actually study the whole structure carefully, they would realize that this Minibonds is DETRIMENTAL to consumers' interests and it is a totally UNFAIR Credit Default Risk Swap as Lehman Brothers controlled the Swap Party Minibond Ltd.

I hope my explanation is clear enough for you to understand.

Goh Meng Seng

Reader: What is Minibonds?

I have received an email from reader to ask me about what is exactly Minibonds. I am in the process of doing a comprehensive write up on what exactly Minibonds is all about, for the benefits for both my English as well as Chinese readers.

Dear Mr. Goh Meng Seng

I had the pleasure of exchanging a few words with you last sat. at speakers corner,
and had met you previously in WP's hq. just before the last GE.

I had invested 80k of my retirement funds into this product and wish to learn from my mistakes. Up to now nobody could tell me the true intent and nature of this product called MINIBOND.
Most of us have been deceived by this word and thought we had invested in a basket of bonds.
I tried rereading the prospectus to get some answers but ended up confused and bewildered by the terminologies, technical jargon & legalese. ( I had retired from the construction sector )

These are some of questions, hope you can help :-
1) What was sold to the unsuspecting and gullible investors ? Is it a Credit Default Swap
( CDS ). What is a CDS ?
2) What is the purpose of REFERENCE ENTITIES ( REs ) ?
the REs are prominently displayed in the brochure and fooled us into thinking we
are investing in their bonds.
3) The money collected from investors, what did they do with it.
I saw the swapping chart in your blog in chinese. Can you kindly prepare one in english
and email to me so that I can photocopy and distribute this sat. at speakers corner
to help investors achieve some understanding.
4) The REs have not defaulted,but the value of our investments have plumetted to almost
zero. What is the rationale behind this incomprehensible senario.?
5) Did the distributor :-
a) misrepresented this product ( not aware of it's true nature and operating mechanism )
b) concealed the material fact ( they knew but did not tell us )

I have come across anecdotes where complainants were bullied and brow-beatened at the
interviews by reps of the banks and brokerages.
Without a proper knowledge and understanding ( in Hindsight ) of this product, this will always be the norm at such interviews.

Mr. Tan Kin Lian and your goodself have selflessly contributed your time and efforts to
help us, the ordinary citizens, and for that we are eternally grateful to you gentlemen.
I had initially wanted to send this email to Mr. Tan but do not wish to burden him
unnecessarily and also hope this is not the case with you.

Thank You


Sunday, October 26, 2008

不关政府的事? (二)







1) 政府属下的机构金融管理局监管疏忽,竟然应许这种高风险和结构复杂的金融产品让银行售买给那一些只寻求底风险定期存款回报率的客户。人们到储蓄银行存钱就是因为他们是保守,不愿承受高风险。这也就是说,金融管理局无视这明显的风险比对的差误而继续让银行为寻高利润而误销这一些产品。

2) 在这次风波发生前,我相信金管局已经接到许多关于银行职员用不良销售手法推销这一些结构性金融产品的投诉。对于这警钟的敲起,金管局当时似乎视而不见,只是口头上提醒银行而没有采取实质性的行动去真正了解下方实际情况从而制止不当误销行径继续发生。这样纵容银行不当的销售方法,代表政府的金管局真是难辞其咎!

3) 最重要的是,环顾世界上所有国家和地区,为什么唯独新加坡和香港会有普通市民被误销这类结构性金融产品呢?新加坡和香港政府为了争个“亚洲金融最开放的市场”这个虚名,枉顾消费者的利益而大打“解除监管”的大招牌,把一些连西方国家都不愿让储蓄银行销售的金融产品都摆在我们的银行里售卖。这不是一个自认负责任的政府所应该做的事。

我最看不过眼的是,政府在这事件中,摆着事不关己的态度。 就连贵报资深评论员也有意无意地为“不关政府的事”制造论据。虽然香港和新加坡政府一样都犯了同样的错误,但与香港政府对整个事件处理的积极性相比,新加坡政府就显得没有诚意,相形见绌了。香港政府除了积极为苦主收集投诉外,还主动安排把他们的投诉分批处理。除此之外,香港政府还誓言如果有必要的话,会通过资助他们的消费者协会为苦主打官司!相比之下,新加坡政府竟然通过金管局呼吁向金融机构投诉而接受金融机构的调查。可笑的是,金管局竟然相信这一些金融机构能“公正、合理”处理这一些个案!据我所接触的苦主的叙述,他们前往金融机构面谈时都遭到金融机构的代表以有如高压盘问犯人的手法对待,使他们倍感压力!在这样的情况底下,我们怎么期望苦主会得到应有的“公正、合理”的对待?





作者:韦春花 10:37am 26/10/2008






* 从求见议员的选民的语汇中,可知他们自有一套思维方式。对于一些机构的概念,他们并不清楚。……还是因为人们多年来建立了对政府的信任,甚至养成依赖,有时可以不求甚解?又或者是人们自己拒绝去理解,只选择听自己想听的内容?……平日没有出乱子时,很多人都不会留意执行时所出的纰漏,我们也不会在意其中所谓 “弱势”的概念。但是这一次,因为牵涉到金钱的利益和售卖方式的正当与否,在处理问题时,当局就提出了“弱势”的归类。……现在,金融管理局已经有一套协助不同类型投资者的方案,有关机构需要时间去处理和解决。我所关心的是在这次事件以外的……相当一部分人即便懂得英语,甚至受不错的教育,对于我们生活中许多情况,政府的政策等等,也还是未必有清楚的概念。在我看来,更深层的,其实是其中知识结构的问题。而知识结构不只是有没有文凭和证书,是否有接受某种技能培训而已,是整个的知识面的宽窄,对课题认知的深浅。


其实这个“懂”与“不懂”之争,在于谁定义这两个词?在以总理、资政作后盾的金管局和以陈钦亮为代表的民间力量之间的角力,到底是谁教会谁真正的“懂”?金管局的不断U转(请参考 TOC选读:MAS——像只绝望的无头鸡),说明是他们在受教。之前,连最简单的人心向背都“不懂”。







作者:冬冬 2:15pm 26/10/2008









A Mis-sold Government!

The following is another comment from the same anonymous reader. My response is this: Ever since I get involved in helping Mr. Tan Kin Lian in delivering his translated speech, some people approached me in private, even come to my shop and said, as a middle-upper class Singaporeans, they have finally awaken to the fact that this PAP government isn't as good as they claim to be. They could make grave mistakes. In this saga, apparently anyone with a critical mind, would come to the conclusion that MAS has mishandled the whole saga and that, MAS itself was the main culprit in allowing such complex financial product to be sold to people who are only interested in putting their money in safe bank fixed deposits.

And I am glad to hear from these people that they finally realized the importance of having alternative voice, checks and balances within the political platform, namely the parliament. I hope this will materialize in the next GE.

The following is the comment from anonymous:

I'm the same anonymous who wrote the above. I want to say somemore.

We as Singaporeans serve NS and do our reservist duties. But everyday many of us ask what we will be fighting for. Not towering million $ condominiums downtown or not the wealth of the companies that set up here and can close shop and leave when the bad time comes. We defend our pledge which holds the values that binds our society - democracy, justice, equality.

We have understood that we voted for a govt who will serve the people. But in times of crisis like this, we see the govt is not even sure which side to stand. It is like an NS man who is not sure whether to fight or not. There is no question in my mind that the leadership has to be on the side of the people from day 1. What we saw was dithering, denial and trying to spread the blame. It was shameful. Totally shameful. The MAS and govt seems to be hiding from the people on the 1st week of the saga. It was when Tan Kin Lian screamed "MAS Do the right thing" on his blog that people in the ivory tower realise they need to act.

10,000 ordinary Singaporeans losing their lifesavings wrought no sense of urgency from this govt. Their natural instinct was to adopt a minimalist approach if there was "little noise" from the ground.

I did not invest a single cent in structured product but I invested my entire life in this society called Singapore and accepted this form of elitist govt sold to me by the PAP. I've been mis-sold a govt. They are not worth the millions they are paid. There is no guarantee they are on the side of the people in times of crisis. There is no protection of the values in our pledge - Justice and equality. It seems their only interest in running this country to make money from ordinary people to grow the GLCs for the benefit of a handful of elites.

It is very clear to me that I've been mis-sold a whole govt called the PAP. It is a structured product - they have a power structure that downgrade the interests of the ordinary people. They structured our society so that there is a huge income gap between themselves and the ordinary folks. This structured product matures/expires in 3 years time, I'm not sure if I can get my 'principle' back. I'll make very sure the next time I stand in front of that ballot box I'll make the right decision. No amount of advertising and marketing will help them to mis-sell this structured product called PAP to me ever again.

MAS responsibility

The following is a comment left on my blog by anonymous reader:

A few points that I want to bring up:

1. Minibonds were not sold in many countries because there regulators deem it too complex e.g. Malaysia did not allow it.

2. MAS allowed the minibonds to come into Singapore but did not regulate the selling process. Oversight was missing and there were numerous complaints in the past but nothing concrete was done.

3. There is clear mis-selling on the part of the banks - minibonds were not bonds in the first place.

4. When the fiasco erupted MAS took a reactive approach.

It is the job of the govt to see that justice is done and the truth is found. The HK govt made ths same mistake as the Singapore govt in allowing these minibombs to be sold. But once it is clear the ordinary people will lose out, the HK govt stand firmly on the side of the people. We don't see this in Singapore. It is very disappointing for Singaporeans.

Saturday, October 25, 2008

MiniBond Related Chinese Articles

I must apologize to my English readers about the many Chinese articles related to Minibond issues.

I have been working closely with Mr. Tan Kin Lian to help out Minibond investors to secure their rights and seek redress for the mis-selling of such complex financial instruments to layman retail investors. I guess I should not term them as investors as many of them are just simple folks who seek higher return for their fixed deposits with their banks.

I have agreed to become Mr. Tan Kin Lian's Chinese translator and delivering his speech in Mandarin on his behalf.

As I have given my blog's address to many of the Chinese educated people who have been affected by the structured financial products so that they could have a source of information in Chinese. This is why for this week my blog is mainly filled with Minibond-related Chinese articles.

I am going to write on the issue of Social Justice shortly, a reflection on the whole issue of Minibombs.

Goh Meng Seng


芳林公园演说者角落 – 25 Oct 2008


第一步是向你所购买的金融公司陈上你的投诉信 必须诚实。在你的投诉信里,你必须很诚实的举出你是怎么样被引导和误导致使你决定购买这金融产品。很多人都被给予保证这产品是“安全”、“低风险”和是“定期存款”的一个很好的替代品。如果他们是这样跟你说的话,你可以如实的把它记录在你的投诉文件里。




Read this advice:











a) 投资者是怎么被行销代表所提供的资讯给误导

b) 金融公司应该要如何对这一些误导销售和错误意见赔偿损失。







Tan Kin Lian



■什么是结构产品(structured product)?


  结构产品大致可分三种:本金保证(capital guaranteed)、资本回本(capital protected),另一种则完全没有保证。




■雷曼兄弟迷你债券(Lehman Minibonds)


  雷曼兄弟投资的是一篮子的信用(credit)工具,同时把产品与六家金融机构的信贷可靠程度挂钩。如果其中一家机构发生信贷事件(credit event),如破产、未能偿还债务、进行重组等,票据就会被终止,发行商将提早赎回票据并进行结算。



■星展高升短期债券5(DBS High Notes 5)和美林Jubilee联赢票据3(Merrill Lynch Jubilee Series 3-LinkEarner Notes)



(DBS High Notes 2)


  这一篮子信用工具,包括倒闭的雷曼兄弟、房地美(Freddie Mac)和房利美(Fannie Mae)的债券。由于这些债券的信贷评级被降级,算是发生信贷事件,它们就像小地雷一样,把投资者的手脚都炸掉了。


Thursday, October 23, 2008









Wednesday, October 22, 2008




笔者在各大小钱庄负责企业融资超过二十年,眼见各媒体对雷曼迷你债券都没有正确报道。笔者读毕其issue prospectus和programme prospectus,并尝试用知识拆解它的谜团(系列 36)。不过,笔者要提醒大家,雷曼迷债还有很多资料是没有在该两本说明书列出的。


其实很多人到现在还不知道,雷曼根本不是借款人或担保人。在整系列的迷债中,雷曼都只是安排行,透过一间表面独立、没有任何关连的空壳公司 Pacific International Finance Limited(PIF),去买一些抵押债务证券(CDO)。不过,雷曼非但没有发任何担保给小投资者,更甚的是,雷曼机关算尽,把所有CDO的利益都拿走了,风险就全留给散户,而报酬就是那区区的5%年息!换言之,即使雷曼目前还健在,按现在的CDO市场,迷债仍然是亏本的。且看下面分解。




4.一旦这些CDO期内有什么冬瓜豆腐,即如CDO发行机构破产或不能履行合同,小投资者便要承担损失。也就是这样,PIF把这些CDO卖得多少,散户就收多少;还有,散户也要付予雷曼提早中断CDS的termination fee(分手费,计算方法极为复杂,暂且按下不表)。

从上面看来,迷债徒有债券之名,表面上,散户好像是借了钱予PIF。实情是,散户透过PIF投资了一些CDO,但CDO的收益,PIF已帮散户在与雷曼签的CDS中,以五厘息让与雷曼。不过,这些CDO本金和违约风险,仍然是散户的!还有,迷债无论有什么问题,PIF都只赔散户那些CDO和其跟雷曼 CDS订下的权益。 PIF其他的资产,散户无权拿,也即是说,散户也没有权利把PIF清盘。笔者明白此举原意是保障其他投资者,用来作为不同系列的防火栏(ring- fencing),即系列36有事也不会影响其他系列1至35 。但此等细节事前肯定无人告知散户,现在便变成了PIF的金钟罩。但话得说回来,PIF根本是一间空壳公司,那里还有另外的资产还钱予散户?看过上面的条款,散户还怎么说此等迷债是普通的债?完全是委托投资。









1. 散户跟谁赌?

在迷债中,是空壳公司Pacific International Finance Limited,雷曼没有任何担保。

2. 赌什么?


3. 最后回报?




Monday, October 20, 2008

Volunteers Needed

I have met up with some of the Minibond holders and those who are affected by the various structured financial products. Many of them are not able to read English nor understand English at all, least write English.

Thus I am thinking ahead and feel that they may have problems writing a proper complain letters to the various financial institutions. I have discussed with Mr. Tan Kin Lian and we agreed that we could have volunteers to offer help to these people at our next meeting at Hong Lim Park this coming Saturday.

I am calling for interested readers here to volunteer your help. I am expecting about a couple of hundreds, if not more, to approach us for this little service. Thus, due to time constrain, we may need more than 20 volunteers to help out.

This is a strictly volunteering work and we will not allow soliciting of any business in whatsoever ways through this process.

For those who are interested, please email at
Please include in your email:

Name, HP number and email address (please use a valid return email address)

Goh Meng Seng





Registered Address
112 Robinson Road #13-03
HB Robinson
Singapore 068902

Tel: (65) 63278878
Fax: (65) 63278488

Opening Hours:
Mondays, Wednesdays, Fridays 9.00 a.m to 6.00 p.m

Tuesdays, Thursdays 9.00 a.m to 7.30 p.m
(prior appointment required after 6.00 p.m)



Sunday, October 19, 2008

TOC: MAS——像只绝望的无头鸡 (Translated)

A translated article from TOC

2008年10月18日 星期六

● 卢鸿佩 /副编辑


或许我在两个礼拜前,陪陈钦亮先生到珊顿大道金管局办公室代苦主们提交请愿书就该嗅出端倪。我在那里等候已经提前进去交请愿书的陈钦亮先生,以便和他会合。就在外面闲逛的当儿,我就被保安人员问了三次,还有一位小姐自称来自comms department,大概就是所谓的公关部门。她显然很担心我会拍下金管局大厦的照片,或者有关陈先生在里面交涉过程的任何照片。



如陈幸运在他的博客 Minibonds : No leadership in times of trouble....! 所写:咱们政府好像跟香港政府亦步亦趋,有时落后一步,有时则两步。










陈钦亮先生芳林公园演讲译稿Translated Script of Mr. Tan Kin Lian

The following is the translated speech I have presented on behalf of Mr. Tan Kin Lian in Hong Lim Park this evening:


6 p.m. Saturday 18 October 2008



7。 金管局呼吁那一些真正被误导销售结构金融产品的苦主去你所认购的金融公司去投诉。金管局要求这一些金融公司严格审慎的对每个投诉作出合理的处理。他们必须认真给予独立人士的意见一定分量的重视。







a) 这一些资金是投资在那一些涉及信贷机构的债券

b) 所有的相关信贷机构必须倒闭后,他们才会损失所有的本金




























翻译: 吴明盛

Saturday, October 18, 2008

National Parks Website Down

After note: I finally managed to get into National Park website to register myself to speak at the very last minute before I set off to Hong Lim this evening. I shall be putting up Chinese translated of Mr. Tan Kin Lian's speech on my blog later.

I want to register to speak at Hong Lim Park today but it seems that the National Parks Website is down for the whole afternoon. I just cannot believe that with a World Class government, such things could actually happen and detrimental to our freedom of speeches at this little small park!

I will still go ahead to speak, basically to help Mr. Tan Kin Lian to translate his English speech into Mandarin, in order to help those who could not understand English well to get the necessary information for their next moves.

Mr. Tan Kin Lian has been doing a great job in helping Minibonds and Structured Deposits holders in this difficult times and I admire his courage and righteous spirit in helping out these Minibond holders. He has given me a call this morning to request for my help to address many of the Chinese educated elderly uncles and aunties. I have agreed to help him at short notice but unfortunately, the National Park website to register myself to speak at Hong Lim has been down for the whole afternoon!

I may risk charges for making an "illegal speech" at Hong Lim Park, all thanks to National Parks' faulty website, but I guess I am prepared to go to jail (nope, I am not going to pay the fines) for a righteous cause like this one.

Goh Meng Seng

Friday, October 17, 2008

A Nation in Gamble

The recent happenings have kept me thinking, are we a Nation in Gamble?

First, we have a million dollar man flip flop. One day claims that our financial system is very stable, we don't need 100% guarantee for bank deposits, but within 48 hours, a total U-turn and announce that MAS will provide 100% guarantee for all bank deposits after all. But wait, please notice the difference here. MAS is providing such guarantee not because it thinks that it has the obligations to local Singaporeans, but rather, it is because it is afraid that the exodus of foreign money will destabilize the whole financial system! Well, we have to settle for the fact that the PAP government will always take filthy rich foreigners' interests at first priority rather than local Singaporeans' interests. We will always be the last priority.

Some friends were making noise about this silly statements by MAS that it would not provide 100% guarantee to depositors because it believes that our financial system is very safe. Then it begs the question, if the system is so safe, it would be definitely "riskless" for MAS to give additional assurance to Singaporeans by providing that 100% guarantee, right?

And now, does it mean that since MAS finally did a total U-turn, would it imply that our financial system has suddenly become unstable? No, says MAS, its because we want to keep foreign money on our shores! Does it then mean that if all these foreign money vacate from Singapore, our financial system will become unstable?

This kind of attitude really reminds me of people gambling at the Black Jack table. They just could not think properly whether to take the card or not when they have 16 points at hand. I would expect that our people should get better judgment and performance from the million dollar ministers at such sensitive time. We are sitting right in the middle of the Crisis of Confidence (which I will write on it for my next post) and yet, they are giving out contradicting signals that may well shaken our confidence further.

This is especially true when we assess how MAS performs in this Minibonds issue. It would just push off responsibility and not act on it. It would be understandable for its "weak leadership" in such disputes because Singapore is dominated by Government Linked Companies. MAS, as a government agency, would not want to jeopardize its own money making machinery, would it? This is exactly the same problem I have mentioned in my previous post on Public Transport: how could we ever expect the government to regulate the companies that it owns? This is against human nature and totally absurd. Thus I could only advise Minibonds and other structured deposits holders to come together, stand in unity and go for class action lawsuit. They should not hold on the classic view that this PAP government will solve all these problems for them, especially so when it involves monies and interests of a stingy government. I know many of these people have not intended to gamble with their money when they first bought these Minibonds, but yet, I guess they are taking a big gamble if they think they could depend on MAS to help them out. Please remember, this government is more worried of foreigner's money than yours. It will only take less than 48hrs for them to make 180 degrees policy U turn when it involves foreign interests, but definitely not yours.

The fact that MAS actually allows Minibonds to be sold in Singapore, itself is a sign that we are fast becoming a Nation in Gamble. Minibonds is effectively a bet put on the reputation of some other bigger names. Minibonds holders effectively become the insurers of other bigger giant banks and financial institutions. It is absurd if you see it in its naked perspective but yet, these absurd instruments with many hidden risks are packaged as "medium-low risk investment" for our consumers. Even CPF allows such structured derivatives to be "invested" as "medium-low risk" instruments! And the fact that even some GLCs created their own version of structured products which is basically nothing but a financial bet, "invested" in CDS CDO with whatever names that are so complex to layman. Do all these relevant authorities, establishment and companies know exactly what they are doing? Are they pushing the whole Nation into Gambling?

Singaporeans are traditionally more conservative and risk adverse in their investment choice. How could they package such risky instruments (technically speaking, not even assets to speak of, but financial bets) to sell them to our citizens is something I could not really fully understand.

Well, talking about Gambling, no bigger and prominent Gambling is more obvious than our two Casino resorts, building in process. It seems that all hopes are pinned on these two gigantic projects that the whole Nation has taken up as their engine towards "Golden Period". But the recent news report worries me. Some foreign workers were protesting outside MOM against their employers who intend to cut their pay or even force them to be sent back to their country of origins. These foreign workers work for one of the big construction company which I believe is one of the main contractors of the Casino resort at Marina. And it was reported that when the matter has been settled, the workers return to their construction site, doing nothing more than AREA CLEANING! I mean, 100 people doing AREA CLEANING?

It worries me. I was thinking to myself, WHAT IF, a BIG BIG IF, any of these two Casino resorts failed to take off even before they are built, what will happen to us? Our schools and polytechnics has trained so many students ready to be employed for these casino resorts. Our banks have given out so much loans to finance these casino resorts construction (not only the owners, but constructors, subcontrustors...etc). What IF anyone of them or even Both of them fail? Are we staking our whole economy on these Casino resorts?

Well, maybe some may say I am really paranoid, how could these BIG casino companies go bust? This is especially so when our PAP government has claimed to conduct all due diligence in screening these casino companies.

It seems a little bit unbelievable but nowadays, when even the big 4 investment banks in USA could go bust, what else isn't possible? Anyway, with this little question in mind, I did a research. I have found that LV SANDS, the owner of Singapore Marina's Casino Resort, has filed for Chapter 11 (bankruptcy protection) in USA before! It was 1998 when Sands filed for bankruptcy, right after the 1997 financial crisis, though we all believe that USA is not affected by this financial crisis at all. Then there is another recent article I have found on the net. Its entitled "Is LV Sands headed for Bankruptcy?"

In this article, it claims that LV Sands' share price has dropped from a high of $148 to $14.05! It has lost a lawsuit without allocating the amount of money to pay for the damages. Its earnings has plunged dramatically, with Return on Equity (ROE) dropping from 67% to a mere 5.38%. All these are worrying signs, not only for LV Sands, but the whole Singapore!

I could hardly imagine what would happen to Singapore IF, a BIG IF, Sands goes under. The PAP government has put Singapore into a BIG GAMBLE that we may be ill afford to play.

On the other hand, we have the most direct impact on our pockets from absurd electricity tariff pricing. We were told that for this quarter, we will be paying our electricity bill based on future price of US$155 per barrel of oil when the oil price right now is US$71 per barrel! How absurd this could be? Well, should we feel "lucky" because there is someone who makes claim that the price of oil could well reach US$200 this year end? So is this future price of US$155 based the "discount" from US$200 per barrel? Is this another GAMBLE that went wrong and innocent Singaporeans have to paid for such losses?

These are the events that have more direct impact on our lives to be mentioned here. There are more gambles going on, taking up by GIC and Temasek Holdings all around the world. Our SWF has thrown billions of dollars into failing companies and later getting their shares diluted by injection of rescue funds by the various government agencies. My gut feeling is that our GIC and Temasek have taken up these gambles too early with too much money thrown in. We are a small country in the world with limited resources. We must be extremely prudent in investing whatever we have. Plunging ourselves at the start of this financial turmoil will definitely cost us dearly and force us to take up unnecessary risks. Could we really afford to take up all these gambles?

With the total melt down of the current financial markets, I really doubt that those investments done by GIC and Temasek would come up good. We thought we could save UBS but eventually Swiss Government has to step in to take over the bank. We thought we could save US banks, but it seems that the more merger and take overs occur, our shares in them would be totally diluted. How much more Gamble should we take as a Nation before we could shout STOP? I suspect one day, we would wake up as a Nation, just like all Minibonds holders, having a shock that we have actually lost so much in all these Gambles when in the first place, we are just a Nation of conservative and risk adverse citizens. That would be a day of reckoning, shock and devastation.

Goh Meng Seng

Wednesday, October 15, 2008

迷债事件 “七宗罪”

This is an article from Ming Pao, Hong Kong stating the root of the problem: Lapses in in the regulatory role of HK Monetary Authority.

迷债事件 “七宗罪”










城安曾于一饭局中遇上雷曼的营销人员。当时侍应送上一碟略嫌未煮透的肉食,该人员就将其打回头,然后大有反应的向我们说“唔熟点食呀! ”城安当时自然礼貌陪笑,但心里就觉得此人相当厉害,说不定睡梦中也会在讨价还价云云。


Tuesday, October 14, 2008






银行倒闭 雷曼老董无伤



菁英分子 华尔街纸醉金迷


美国社会 拜金主义正横流



辛勤工作者 我们才该崇拜




Saturday, October 11, 2008


The following is not my article but re-posted article.

● 佘长年