I have to agree that the man clings very tightly to his views (despite the facts)
But, he's entitled to his point of view
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What is KJ's problem?
- Thread starter steffychun
- Start date
I have to agree that the man clings very tightly to his views (despite the facts)
But, he's entitled to his point of view
Somewhere along the way, the sense of proportion has been lost in this debate. US$4 billion has somehow become a trivial insignificant amount of money.
I know that they are completely different things. What is the same is the dishonesty and the deception. Our MAS is supposed to ensure that there is no mis-selling and no misrepresenntation. How can it do that when in response to KJ, they misrepresent the loan pledge as some kind of risk free loan that can be taken back on demand? Tharman and LHL are behaving like those ah beng /ahlian salespeople that sold aunties and uncles the mini bonds.
Referring to the Wikilinks article, this view of referendums is not universal. There are non binding referendums and even referendums initiated by private citizens who have garnered a required level of public support via petition.
The key difference really is who do you think the US and key players will save when the chips are down.
You come from the point of view that the IMF will be saved. To do this, they will restrict the IMF to make only very conservative loans. This is even if the ECB goes bust and the euro becomes worthless.
I come from the point of view that they will save Europe rather than the IMF. If the chips go down and the ECB is in danger, they will break the piggy bank wide open. They will pass the can around and around again and again. If we want to play good global citizen, the US$ 4 billion will just be the start. Which is why I asked the question how big a loan pledge before we need a referendum. How about US$ 40 billion? Will that be large enough to warrant a referendum?
You come from the point of view that the IMF will be saved. To do this, they will restrict the IMF to make only very conservative loans. This is even if the ECB goes bust and the euro becomes worthless.
I come from the point of view that they will save Europe rather than the IMF. If the chips go down and the ECB is in danger, they will break the piggy bank wide open. They will pass the can around and around again and again. If we want to play good global citizen, the US$ 4 billion will just be the start. Which is why I asked the question how big a loan pledge before we need a referendum. How about US$ 40 billion? Will that be large enough to warrant a referendum?
Dear Londontrader,
You are pretty optimistic here.
At this moment, IMF may not have to activate and utilize additional loans from other countries like Singapore but as you have agreed, if this crisis is not managed properly, it may be blown out of proportion. That is why they need the pledge of $4B from Singapore and that's when the indication of IMF is going to loan beyond what it has in its coffers right now.
We have stressed again, IMF doesn't need to go bust before we start losing our monies. Arrangement can be made for hair cut on both sides. As we all know, IMF has always been the international political tool of US and Europe, both Aurvandil and I believe that they would rather save Europe than maintain IMF's self preservation. This crisis is totally a different monster than all other monsters we have seen in the past.
If I am not wrong, IMF has already committed loans to EU. You said IMF needs permission from stakeholders to grant loans to the PIIGS but look, let's be realistic, you have clearly stated that the G8 are the main stakeholders... who are they? US may not be able to help EU directly and thus, it would not want to lose an important ally in EU. Thus, most probably US will agree for IMF to grant the loans. No prize for guessing what will other EU members in the G8 cum IMF decide.
The source of the potential international crisis starts right in EU. I think it would be silly for IMF to sit and do nothing in EU at first sight of fire there and wait for the fire to spread to other places before it starts to open its hoses. Even that, that EU source of crisis isn't that small at all. The conclusion we have is, whatever amount Singapore is ready to pledge, we better make sure that's what we could afford to lose totally.
As I have said, Singapore is just a tiny little ally of US and we are pledging S$1500 per capital. What about Korea, Japan and Taiwan? India? These countries have substantial foreign reserves as well!
What you are saying now is that even if we lose that $4B in IMF, it is still peanuts to the potential $100B we would lose in an extended crisis derived from EU fire. I think it really depends but most probably, Singapore may lose even more than that by the look at the Singapore PAP's attitude at risk taking, keep talking about EU bonds are good buy! The most important question is, it may be peanuts but why should we lose more peanuts when other countries are smart enough in keeping self preservation as their first priority?
The Germans and French are not ready to jump into the hell hole just yet because of self preservation consideration, not just politics. So I would think the most convenient side steps they could get is to get IMFs (under their heavy influences) and World Bank to be first in line to burn in this hell hole.
The present consideration of whether to break up the EU to contain the problems is not merely political one, but also involves economic considerations. If you break up EU during normal peaceful times, there would be little impact. But if they are going to do it now under the tremendous pressure of crisis, it will create tremendous fear factor and the psychological impact on the economic front would be like a 100m Tsunami which may just drown everyone within and beyond. As you should know, part of the problem lies in psychological shifts and impacts, just as any pledge would give people some psychological confidence in IMF and the whole system and thus, would not result in total mob panick. To break up the EU right now would do exactly the reverse economically as well as politically. Thus, it is the view of many experts that such move is a very dangerous one. It may just give the whole system more than what it needs in shock sparks to trigger an even worse crisis.
There is no right or wrong here, just a matter of different perspectives in dark motions where nobody knows exactly how the storm will act up because there isn't any precedent experience where we could tap on. I stress again, as a small country like Singapore, it is important for us to consider very carefully what's the best options we have. Our $4Billion is peanuts to the whole situation, be it to our potential loss of hundreds of billions or to the whole EU problem. Insignificant in size doesn't equate to insignificant to our small population.
Goh Meng Seng
You are pretty optimistic here.
At this moment, IMF may not have to activate and utilize additional loans from other countries like Singapore but as you have agreed, if this crisis is not managed properly, it may be blown out of proportion. That is why they need the pledge of $4B from Singapore and that's when the indication of IMF is going to loan beyond what it has in its coffers right now.
We have stressed again, IMF doesn't need to go bust before we start losing our monies. Arrangement can be made for hair cut on both sides. As we all know, IMF has always been the international political tool of US and Europe, both Aurvandil and I believe that they would rather save Europe than maintain IMF's self preservation. This crisis is totally a different monster than all other monsters we have seen in the past.
If I am not wrong, IMF has already committed loans to EU. You said IMF needs permission from stakeholders to grant loans to the PIIGS but look, let's be realistic, you have clearly stated that the G8 are the main stakeholders... who are they? US may not be able to help EU directly and thus, it would not want to lose an important ally in EU. Thus, most probably US will agree for IMF to grant the loans. No prize for guessing what will other EU members in the G8 cum IMF decide.
The source of the potential international crisis starts right in EU. I think it would be silly for IMF to sit and do nothing in EU at first sight of fire there and wait for the fire to spread to other places before it starts to open its hoses. Even that, that EU source of crisis isn't that small at all. The conclusion we have is, whatever amount Singapore is ready to pledge, we better make sure that's what we could afford to lose totally.
As I have said, Singapore is just a tiny little ally of US and we are pledging S$1500 per capital. What about Korea, Japan and Taiwan? India? These countries have substantial foreign reserves as well!
What you are saying now is that even if we lose that $4B in IMF, it is still peanuts to the potential $100B we would lose in an extended crisis derived from EU fire. I think it really depends but most probably, Singapore may lose even more than that by the look at the Singapore PAP's attitude at risk taking, keep talking about EU bonds are good buy! The most important question is, it may be peanuts but why should we lose more peanuts when other countries are smart enough in keeping self preservation as their first priority?
The Germans and French are not ready to jump into the hell hole just yet because of self preservation consideration, not just politics. So I would think the most convenient side steps they could get is to get IMFs (under their heavy influences) and World Bank to be first in line to burn in this hell hole.
The present consideration of whether to break up the EU to contain the problems is not merely political one, but also involves economic considerations. If you break up EU during normal peaceful times, there would be little impact. But if they are going to do it now under the tremendous pressure of crisis, it will create tremendous fear factor and the psychological impact on the economic front would be like a 100m Tsunami which may just drown everyone within and beyond. As you should know, part of the problem lies in psychological shifts and impacts, just as any pledge would give people some psychological confidence in IMF and the whole system and thus, would not result in total mob panick. To break up the EU right now would do exactly the reverse economically as well as politically. Thus, it is the view of many experts that such move is a very dangerous one. It may just give the whole system more than what it needs in shock sparks to trigger an even worse crisis.
There is no right or wrong here, just a matter of different perspectives in dark motions where nobody knows exactly how the storm will act up because there isn't any precedent experience where we could tap on. I stress again, as a small country like Singapore, it is important for us to consider very carefully what's the best options we have. Our $4Billion is peanuts to the whole situation, be it to our potential loss of hundreds of billions or to the whole EU problem. Insignificant in size doesn't equate to insignificant to our small population.
Goh Meng Seng
By the time there is a risk that IMF will go bust, all the major banks will be in trouble. Our money is safer in the IMF than in, say, Standard Chartered Bank.
I might have missed that out. How much did they pledge FOR THE PRESENT CRISIS?
Goh Meng Seng
Goh Meng Seng
Dear. GMS
it's at times like despite the fact that u r a trained economist I am glad you are not anywhere close near the levers of power.
There are two separate issues at hand processes and policy and whilst I can agree that the processes suck, the policy remains a wise one.
The five billion is a commitment on Singapores part to a stable global economic order, Even if ur wildest dreams happen and we lose that five billion, I will almost guarantee you that the economic dislocation that happens because we lose that five billion would have wiped out the value of our squirreled away assets.
We have benefitted from stable capital and trade flows, if the world goes under, we go under , and if five billion is insurance it's pretty cheap insurance because the alternatives are a lot worse.
Do read up American Isolationalism , Depression, Protective selfish monetary economists, What you feel is rational for an individual is collective economic suicide if no one acts
Locke
You are pretty optimistic here.
At this moment, IMF may not have to activate and utilize additional loans from other countries like Singapore but as you have agreed, if this crisis is not managed properly, it may be blown out of proportion. That is why they need the pledge of $4B from Singapore and that's when the indication of IMF is going to loan beyond what it has in its coffers right now.
We have stressed again, IMF doesn't need to go bust before we start losing our monies. Arrangement can be made for hair cut on both sides. As we all know, IMF has always been the international political tool of US and Europe, both Aurvandil and I believe that they would rather save Europe than maintain IMF's self preservation. This crisis is totally a different monster than all other monsters we have seen in the past.
If I am not wrong, IMF has already committed loans to EU. You said IMF needs permission from stakeholders to grant loans to the PIIGS but look, let's be realistic, you have clearly stated that the G8 are the main stakeholders... who are they? US may not be able to help EU directly and thus, it would not want to lose an important ally in EU. Thus, most probably US will agree for IMF to grant the loans. No prize for guessing what will other EU members in the G8 cum IMF decide.
The source of the potential international crisis starts right in EU. I think it would be silly for IMF to sit and do nothing in EU at first sight of fire there and wait for the fire to spread to other places before it starts to open its hoses. Even that, that EU source of crisis isn't that small at all. The conclusion we have is, whatever amount Singapore is ready to pledge, we better make sure that's what we could afford to lose totally.
As I have said, Singapore is just a tiny little ally of US and we are pledging S$1500 per capital. What about Korea, Japan and Taiwan? India? These countries have substantial foreign reserves as well!
What you are saying now is that even if we lose that $4B in IMF, it is still peanuts to the potential $100B we would lose in an extended crisis derived from EU fire. I think it really depends but most probably, Singapore may lose even more than that by the look at the Singapore PAP's attitude at risk taking, keep talking about EU bonds are good buy! The most important question is, it may be peanuts but why should we lose more peanuts when other countries are smart enough in keeping self preservation as their first priority?
The Germans and French are not ready to jump into the hell hole just yet because of self preservation consideration, not just politics. So I would think the most convenient side steps they could get is to get IMFs (under their heavy influences) and World Bank to be first in line to burn in this hell hole.
The present consideration of whether to break up the EU to contain the problems is not merely political one, but also involves economic considerations. If you break up EU during normal peaceful times, there would be little impact. But if they are going to do it now under the tremendous pressure of crisis, it will create tremendous fear factor and the psychological impact on the economic front would be like a 100m Tsunami which may just drown everyone within and beyond. As you should know, part of the problem lies in psychological shifts and impacts, just as any pledge would give people some psychological confidence in IMF and the whole system and thus, would not result in total mob panick. To break up the EU right now would do exactly the reverse economically as well as politically. Thus, it is the view of many experts that such move is a very dangerous one. It may just give the whole system more than what it needs in shock sparks to trigger an even worse crisis.
There is no right or wrong here, just a matter of different perspectives in dark motions where nobody knows exactly how the storm will act up because there isn't any precedent experience where we could tap on. I stress again, as a small country like Singapore, it is important for us to consider very carefully what's the best options we have. Our $4Billion is peanuts to the whole situation, be it to our potential loss of hundreds of billions or to the whole EU problem. Insignificant in size doesn't equate to insignificant to our small population.
Goh Meng Seng[/QUOTE]
it's at times like despite the fact that u r a trained economist I am glad you are not anywhere close near the levers of power.
There are two separate issues at hand processes and policy and whilst I can agree that the processes suck, the policy remains a wise one.
The five billion is a commitment on Singapores part to a stable global economic order, Even if ur wildest dreams happen and we lose that five billion, I will almost guarantee you that the economic dislocation that happens because we lose that five billion would have wiped out the value of our squirreled away assets.
We have benefitted from stable capital and trade flows, if the world goes under, we go under , and if five billion is insurance it's pretty cheap insurance because the alternatives are a lot worse.
Do read up American Isolationalism , Depression, Protective selfish monetary economists, What you feel is rational for an individual is collective economic suicide if no one acts
Locke
You are pretty optimistic here.
At this moment, IMF may not have to activate and utilize additional loans from other countries like Singapore but as you have agreed, if this crisis is not managed properly, it may be blown out of proportion. That is why they need the pledge of $4B from Singapore and that's when the indication of IMF is going to loan beyond what it has in its coffers right now.
We have stressed again, IMF doesn't need to go bust before we start losing our monies. Arrangement can be made for hair cut on both sides. As we all know, IMF has always been the international political tool of US and Europe, both Aurvandil and I believe that they would rather save Europe than maintain IMF's self preservation. This crisis is totally a different monster than all other monsters we have seen in the past.
If I am not wrong, IMF has already committed loans to EU. You said IMF needs permission from stakeholders to grant loans to the PIIGS but look, let's be realistic, you have clearly stated that the G8 are the main stakeholders... who are they? US may not be able to help EU directly and thus, it would not want to lose an important ally in EU. Thus, most probably US will agree for IMF to grant the loans. No prize for guessing what will other EU members in the G8 cum IMF decide.
The source of the potential international crisis starts right in EU. I think it would be silly for IMF to sit and do nothing in EU at first sight of fire there and wait for the fire to spread to other places before it starts to open its hoses. Even that, that EU source of crisis isn't that small at all. The conclusion we have is, whatever amount Singapore is ready to pledge, we better make sure that's what we could afford to lose totally.
As I have said, Singapore is just a tiny little ally of US and we are pledging S$1500 per capital. What about Korea, Japan and Taiwan? India? These countries have substantial foreign reserves as well!
What you are saying now is that even if we lose that $4B in IMF, it is still peanuts to the potential $100B we would lose in an extended crisis derived from EU fire. I think it really depends but most probably, Singapore may lose even more than that by the look at the Singapore PAP's attitude at risk taking, keep talking about EU bonds are good buy! The most important question is, it may be peanuts but why should we lose more peanuts when other countries are smart enough in keeping self preservation as their first priority?
The Germans and French are not ready to jump into the hell hole just yet because of self preservation consideration, not just politics. So I would think the most convenient side steps they could get is to get IMFs (under their heavy influences) and World Bank to be first in line to burn in this hell hole.
The present consideration of whether to break up the EU to contain the problems is not merely political one, but also involves economic considerations. If you break up EU during normal peaceful times, there would be little impact. But if they are going to do it now under the tremendous pressure of crisis, it will create tremendous fear factor and the psychological impact on the economic front would be like a 100m Tsunami which may just drown everyone within and beyond. As you should know, part of the problem lies in psychological shifts and impacts, just as any pledge would give people some psychological confidence in IMF and the whole system and thus, would not result in total mob panick. To break up the EU right now would do exactly the reverse economically as well as politically. Thus, it is the view of many experts that such move is a very dangerous one. It may just give the whole system more than what it needs in shock sparks to trigger an even worse crisis.
There is no right or wrong here, just a matter of different perspectives in dark motions where nobody knows exactly how the storm will act up because there isn't any precedent experience where we could tap on. I stress again, as a small country like Singapore, it is important for us to consider very carefully what's the best options we have. Our $4Billion is peanuts to the whole situation, be it to our potential loss of hundreds of billions or to the whole EU problem. Insignificant in size doesn't equate to insignificant to our small population.
Goh Meng Seng[/QUOTE]
Lehman Brothers Minibond is termed as "irrelevant" by some here on this thread.
What we are raising here is about the process of risk management and how we should examine risk level not simply by looking at the rate of return as well as whether anybody has been defaulted at this moment. In depth risk assessment should involve portfolio analysis as well as the overall environment projections.
People jump into Minibonds because they only look at the superficial surface of return and "branding", without putting effort in analysing exactly what they are believing in. Similarly for IMF. What we get from the official statements is just how "Safe" IMF is and such faith is only based on "selective past records" without mentioning the potential danger of debt write offs in their portfolio. While Londontrader may keep the view that IMF has not asked any stakeholders to write off their loans to IMF to correspond to total write off IMF has done, but from circumstantial observations, if there are people making request IMF to sell off its gold to cover the losses but failed, somebody somewhere must have taken up the tap somehow.
But even if we chose to believe that IMF has not asked anyone to write off their loans to it in the past, but we may not apply this "past record" for this impending crisis that we facing. This crisis is special not only because it involves five PIIGS (last I heard, some other countries may join the rank...) but the fact that they are in the same common currency zone EU. The complexity of this crisis can never be underestimated. We have a group of countries with same currency system but very different fiscal structures. The Monetary system is basically de-linked from Fiscal systems and what makes it worse than a system of Federal states like US, each Fiscal system is embedded with Sovereignty issue.
As a small country, Singapore is pledging what seems to be a "peanut" amount of $4B but to a small population in Singapore, that is way above ALL countries in terms of per capital basis. The important question we should ask is, as good practice for every loans we make, are we prepared to lose this $4B altogether? We cannot take the attitude like those Minibond investors that it is a totally safe investment without any psychological preparedness to lose every single cents of it.
Thus, Lehman Brother Minibond issue is used here to make a contrast of mental state before committing our limited funds. We should not have the same mentality as Minibond investors which to us, both MAS and PM are trying to project here but rather, a more cautious mindset when we make consideration on such loans to IMF.
Goh Meng Seng
What we are raising here is about the process of risk management and how we should examine risk level not simply by looking at the rate of return as well as whether anybody has been defaulted at this moment. In depth risk assessment should involve portfolio analysis as well as the overall environment projections.
People jump into Minibonds because they only look at the superficial surface of return and "branding", without putting effort in analysing exactly what they are believing in. Similarly for IMF. What we get from the official statements is just how "Safe" IMF is and such faith is only based on "selective past records" without mentioning the potential danger of debt write offs in their portfolio. While Londontrader may keep the view that IMF has not asked any stakeholders to write off their loans to IMF to correspond to total write off IMF has done, but from circumstantial observations, if there are people making request IMF to sell off its gold to cover the losses but failed, somebody somewhere must have taken up the tap somehow.
But even if we chose to believe that IMF has not asked anyone to write off their loans to it in the past, but we may not apply this "past record" for this impending crisis that we facing. This crisis is special not only because it involves five PIIGS (last I heard, some other countries may join the rank...) but the fact that they are in the same common currency zone EU. The complexity of this crisis can never be underestimated. We have a group of countries with same currency system but very different fiscal structures. The Monetary system is basically de-linked from Fiscal systems and what makes it worse than a system of Federal states like US, each Fiscal system is embedded with Sovereignty issue.
As a small country, Singapore is pledging what seems to be a "peanut" amount of $4B but to a small population in Singapore, that is way above ALL countries in terms of per capital basis. The important question we should ask is, as good practice for every loans we make, are we prepared to lose this $4B altogether? We cannot take the attitude like those Minibond investors that it is a totally safe investment without any psychological preparedness to lose every single cents of it.
Thus, Lehman Brother Minibond issue is used here to make a contrast of mental state before committing our limited funds. We should not have the same mentality as Minibond investors which to us, both MAS and PM are trying to project here but rather, a more cautious mindset when we make consideration on such loans to IMF.
Goh Meng Seng
Dear Locke,
As I reiterate again, I am not against doing our part in this crisis. The question is HOW MUCH? We must look at things in proportionate perspective. If $4B is considered as meagre sum, then whether it is half a billion or a billion, it doesn't really make a difference to the world, but alot difference to a country with a small population like Singapore.
As I believe Londontrader has said, it is just a matter to show there is money ready for crisis, just a kind of bluff to stabilize situation, retain international confidence etc. For a small country like Singapore, just too insignificant.
The biggest confidence we can get is from big wealthy countries like Saudi Arabia. I would expect the oil rich countries like Saudi and even Kuwait to contribute many times more than Singapore!
I have done some search and yes, India has pledged $10B but wait, how big is India's economy and population? S. Korea and Saudi pledging only $15B each? Do we have an economy one third of theirs? Population size? We are basically pledging more than we should.
Goh Meng Seng
As I reiterate again, I am not against doing our part in this crisis. The question is HOW MUCH? We must look at things in proportionate perspective. If $4B is considered as meagre sum, then whether it is half a billion or a billion, it doesn't really make a difference to the world, but alot difference to a country with a small population like Singapore.
As I believe Londontrader has said, it is just a matter to show there is money ready for crisis, just a kind of bluff to stabilize situation, retain international confidence etc. For a small country like Singapore, just too insignificant.
The biggest confidence we can get is from big wealthy countries like Saudi Arabia. I would expect the oil rich countries like Saudi and even Kuwait to contribute many times more than Singapore!
I have done some search and yes, India has pledged $10B but wait, how big is India's economy and population? S. Korea and Saudi pledging only $15B each? Do we have an economy one third of theirs? Population size? We are basically pledging more than we should.
Goh Meng Seng
At the local level, 4 billion is not small I agree. The point was that there is already enough money in the pocket to find the 4 billion to build critical infrastructure and make life easier, without having to go to the ATM (reserves).
In the grand scheme of things, 4 billion out of 200 billion OFR is not a big deal. Even in the unlikely event that IMF loans the full 4B and then defaults completely on it, that will be the least of our problems. We will probably be spending 10 times that amount just managing the daily currency fluctuations that will emerge out of the global economic fallout.
From a risk free loan, the loan pledge is now an insurance premium! Incredible !
Given our voting rights, we have almost no say how our US$4 billion is going to be used. If you believe LT, the IMF will take our money. Instead of putting it to good use, the US and other major players will save the IMF rather than Europe which kind of defeats the purpose of us putting US$ 4 billion.
If you subscribe to my hypothesis, the IMF will break the bank saving Europe. We should therefore be prepared to lose a substantial proportion of the US$ 4 billion.
Since the start of the crisis, there has been a huge amount of research done on the nightmare scenarios. There will be a rewriting of the world order if the worse comes to pass but it will not be the end of civilisation as we know it. In almost all scenarios, resource rich countries will come out far ahead. If you really want protection, we will be much better off using the US$ 4 billion to buy oil, gold or other physical commodity asset.
Given our voting rights, we have almost no say how our US$4 billion is going to be used. If you believe LT, the IMF will take our money. Instead of putting it to good use, the US and other major players will save the IMF rather than Europe which kind of defeats the purpose of us putting US$ 4 billion.
If you subscribe to my hypothesis, the IMF will break the bank saving Europe. We should therefore be prepared to lose a substantial proportion of the US$ 4 billion.
Since the start of the crisis, there has been a huge amount of research done on the nightmare scenarios. There will be a rewriting of the world order if the worse comes to pass but it will not be the end of civilisation as we know it. In almost all scenarios, resource rich countries will come out far ahead. If you really want protection, we will be much better off using the US$ 4 billion to buy oil, gold or other physical commodity asset.
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If things get to that stage, the US$ 4 billion will just be the first of many calls for money. How much are we going to give?
On having enough money, I question that assertion because during his tenure in office, Prataman authorised 27 draws on the reserves for SERS, land acquisition and other projects. If money is so plentiful, why the need to draw 27 times?
On having enough money, I question that assertion because during his tenure in office, Prataman authorised 27 draws on the reserves for SERS, land acquisition and other projects. If money is so plentiful, why the need to draw 27 times?
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IMHO, most of the time Goh Meng Seng is STUBBORN.
But of course that is his charcater...
Same reason why they approached prataman for a 4 billion draw on the reserves in 2009 to fund the jobs credit and the bank lending (can't remember exact name) scheme. The 4 billion was available in the current budget or could be easily loaned on the international bond market; they chose to draw the reserves instead.
People who read my posts will know that I often disagree with GMS. But in this, I have to take his side.
At best IMF should be treated as a cooperative and its mission is to help out those economies that are in trouble and that itself spells trouble for those who invest money in it irrespective of the expected rate of return they get.
Anyone who manages a broad range of investments will know that the expected rate of return is proportional to the risk involved. When a lender defaults, to cover for the loss, new contributions have to be called for. Are you going to invest in a subsequent round? As the economic situation worsen lender's risk gets higher, expected rate of return is higher and the risk of default gets even higher. In a deep crisis that lasts several years, eventually there will be few takers for investment. Whether IMF decides to inject further money into the crisis depends on its governors and handle wrongly IMF can go into default.
Short of funding which is more likely to be the case, the crisis just develops further on its own steam with IMF and World Bank not able to do anything. When the crisis has ran its course and the defaults have seriously weaken the reserves of the IMF and WB, the economies can then get together to strike out a new arrangement to
address future crises.
In the whole process, several economies will lose a lot of money or their money will have depreciated a lot in value. As IMF is just a cooperative, we should not be punching above our own weight but just contribute our proportional share. As the govt can decide to do more, this should have the oversight of the Parliament.
At best IMF should be treated as a cooperative and its mission is to help out those economies that are in trouble and that itself spells trouble for those who invest money in it irrespective of the expected rate of return they get.
Anyone who manages a broad range of investments will know that the expected rate of return is proportional to the risk involved. When a lender defaults, to cover for the loss, new contributions have to be called for. Are you going to invest in a subsequent round? As the economic situation worsen lender's risk gets higher, expected rate of return is higher and the risk of default gets even higher. In a deep crisis that lasts several years, eventually there will be few takers for investment. Whether IMF decides to inject further money into the crisis depends on its governors and handle wrongly IMF can go into default.
Short of funding which is more likely to be the case, the crisis just develops further on its own steam with IMF and World Bank not able to do anything. When the crisis has ran its course and the defaults have seriously weaken the reserves of the IMF and WB, the economies can then get together to strike out a new arrangement to
address future crises.
In the whole process, several economies will lose a lot of money or their money will have depreciated a lot in value. As IMF is just a cooperative, we should not be punching above our own weight but just contribute our proportional share. As the govt can decide to do more, this should have the oversight of the Parliament.
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Dear Londontrader,
I think the feeling is mutual but at least, we have progressed from our initial discussions as listed by Aurvandil.
I mean, in spite of the various evidences raised about the possibilities embedded in IMF's past activities, which includes write offs, you are still clinging to your view that IMF is a safe bet just because it loans what it could afford...But you didn't take into account that this PIIGS EU crisis is going to be very different from all other crisis, though you have acknowledged that it could become one of the worst crisis ever.
But I would say, I have to agree that you are a good person to have discussion with, as your wealth of knowledge in the international financial sector has contributed tremendously to the public education process here in this forum. Looking at the number of hits of this thread closing in to 10K within these few days of our discussion, no matter who is right or wrong, we have achieved public education and raising awareness among the readers.
Similarly, you are entitled to your views on where we disagree and we will agree to disagree. Cheers!
Goh Meng Seng
I think the feeling is mutual but at least, we have progressed from our initial discussions as listed by Aurvandil.
I mean, in spite of the various evidences raised about the possibilities embedded in IMF's past activities, which includes write offs, you are still clinging to your view that IMF is a safe bet just because it loans what it could afford...But you didn't take into account that this PIIGS EU crisis is going to be very different from all other crisis, though you have acknowledged that it could become one of the worst crisis ever.
But I would say, I have to agree that you are a good person to have discussion with, as your wealth of knowledge in the international financial sector has contributed tremendously to the public education process here in this forum. Looking at the number of hits of this thread closing in to 10K within these few days of our discussion, no matter who is right or wrong, we have achieved public education and raising awareness among the readers.
Similarly, you are entitled to your views on where we disagree and we will agree to disagree. Cheers!
Goh Meng Seng
The statements above are FACTUALLY incorrect, i.e. wrong, inaccurate.
It is not just a matter of opinion here.
But as a wannabe MP/politician with a known identity, he has chosen not to retract or correct the statements or even say nothing, buy instead gave more factually incorrect statements and irrelevant examples to back up his original incorrect statement.
Do we want such a person in parliament?
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