What is KJ's problem?

[Huat-Ah]

Londontrader,

We do share some similar views on IMF but I am more of a skeptic of the claim that IMF is "risk free". Although IMF has 188 countries as its members but that doesn't mean that these members are obliged to make guarantee to any loans IMF raised. And of course, we know IMF didn't have the ability to print money though it has gold reserves in its kitty.

I share the view that any loans to IMF by Singapore should go through parliamentary debate or even referendum, especially so when the per capital amount of loans we are lending to it is pretty high as compared to China or USA. We are just a little Red dot.

Goh Meng Seng

You are VERY FUNNY GMS. If you are so good in finance, you would have been invited or selected for the post of CHIEF.

You can't even handle a TINY DOT General Election and now you are talking bullshit theories in FINANCE ?

Give us a break. Your analysis are just plain DUMB. Ultimately you are wasting time and energy....

LOL

Get a life and do better stuff instead lurking here and there !

 

[cass888]

Referendum - a pet solution from both you and your double aurvandil. Even KJ is not so stupid.

Londontrader,

We do share some similar views on IMF but I am more of a skeptic of the claim that IMF is "risk free". Although IMF has 188 countries as its members but that doesn't mean that these members are obliged to make guarantee to any loans IMF raised. And of course, we know IMF didn't have the ability to print money though it has gold reserves in its kitty.

I share the view that any loans to IMF by Singapore should go through parliamentary debate or even referendum, especially so when the per capital amount of loans we are lending to it is pretty high as compared to China or USA. We are just a little Red dot.

Goh Meng Seng

 

[Goh Meng Seng]

It is not just about the knowledge dude. It is about the thought process.

It is really funny to read that people are so ignorant of how investment decisions should be made and they really think by following some books and rules, they can be brilliant. Worse, belittle those and even their qualifications when they can't even see where they fail to see!

For such arrogant people, I do not think they deserve humility. As the saying goes, you can disagree with me, criticise me or even mock at me but not at the rank of qualification I have. You would be insulting the whole lot of Second Class Hons who have graduated together with me and that deserve a wake up call for you. Ironically, the arrogance belongs to JW5, not me. I have never want to mention my Second Upper Hons so far but if he thinks he can take potshot at my whole cohort, he better thinks again.

We have put up our case here, even using real life examples on how people fall for "branding" and greed (Lehman's Brother Minibond, Ponzi Scam etc) which eventually prove that you just can't be that ignorant when it comes to putting billions of dollars into an institution.

Goh Meng Seng

Ahem, Second Class Upper and you boast your knowledge here?

You're worse than Tan Jee Say-

 

[aurvandil]

Can you please share why conducting a referendum on key policy decisions is a stupid idea?

Referendum - a pet solution from both you and your double aurvandil. Even KJ is not so stupid.

 

[Goh Meng Seng]

I am kind of worried when our very own Prime Minister said this:

"Should Singapore’s loan be called on, we would be taking on the credit risk of the IMF rather than the direct credit risk of countries that the IMF lends to. The IMF also has safeguards in place to reduce the risks that it takes in lending to countries. First, the IMF has preferred creditor status — which means that loans granted by the IMF must be repaid ahead of all other creditors. Countries which have historically defaulted on the rest of their debts have in most instances repaid the IMF on time and in full.”"

He made it sound like IMF "baochiak", sure risk free! Especially the last sentence! As a PM, he should not hide the facts that billions of IMF debts have been written off in the past decades! This is a lopsided representation of truth... half truth at best. I understand as the Prime Minister, he wants to sell his policy and management direction as best as he could but he should not just base on half truth and try not to mention the bad side of the situation. Put up all the facts and let people decide. Even if there are facts which do not look good for his decision, he should put them up and try to persuade voters to accept his decisions.


Goh Meng Seng

We seem to be making progress. From some sort of mystical super loan shark who always gets back their money, we now have acknowledgement that the IMF is in the business of making high risk loans. Because these are high risk loans, a large proportion of these gets written off and is never paid back.

 

[Liquigas]

Can you please share why conducting a referendum on key policy decisions is a stupid idea?

No need to disturb voters again lah by carrying out a referendum for this IMF Loan. Afterall voters have elected a President and his stamp of approval on the loan is good enough. KJ is merely asking whether this approval has been sought and if not don't you think it is very improper for MAS as a government agency to go ahead with this loan?

 

[Goh Meng Seng]

I cannot help to think what a simpleton you are.

No wonder so many Singaporeans fall for scams! What has the PRC contributes to the value of the condo? By just selling it at S$2.4m? It is just the same condo with the same size which he purchased for S$1.2m! Well, my correction, together with foreign "investors", they have contributed to creating the bubble! This same "asset" can just fall and turn into S$1m! It is a bit too presumptuous for you to talk about "asset" just yet! I guess many people just forgotten that property prices can and will go down!

Never mind about that. We are talking about FOREIGN CURRENCY RESERVES. I am just asking you, whether the initial "GAIN" of US$1million to Singapore OFR is a good thing? Let's put it simpler, there are no other foreign Currency inputs into the economy, only this US$1m. One year later, Singapore govt will have to raise another US$1m to repay this PRC a total US$2m! So my question is this, is the initial US$1m "gain" in foreign currency reserve really a "gain"? You don't need to be an expert in finance or account to answer this simple question. For this initial US$1m, the country has to come up with US$2m for repayment! So is this a gain or a loss to the State's Foreign Currency Reserves?

I guess I have to admit the Chinese economic writers in mainland are much smarter in every sense. At least, they know the very basics and look beyond the "glory" of "big Foreign Currency Reserves"!

Goh Meng Seng

You are a joker not because you don't know these basic concepts, but because you don't know and still want to talk shit.

In your example, the country of Singapore is not involved in this transaction with the PRC at all.
The PRC now has US$2 Million of cash (an asset), he made a capital gain (profit) of US$1 Million from the sale of his condo.
The person who bought the condo from him took out S$2.4 Million in cash to buy the condo and in return got a condo with market value of presumably
S$2.4 Million (an asset).
The PRC's money never went into Singapore's balance sheet at all.

Please don't make anyone with basic knowledge of finance, accounting and business, laugh at your ignorant comments.

 

[aurvandil]

I don't think Singaporean voters would mind being "disturbed". I suspect that even if voting was non compulsory, the turn out by Singaporeans will be very high as many will want to tell the PAP want they think.

No need to disturb voters again lah by carrying out a referendum for this IMF Loan. Afterall voters have elected a President and his stamp of approval on the loan is good enough. KJ is merely asking whether this approval has been sought and if not don't you think it is very improper for MAS as a government agency to go ahead with this loan?

 

[cass888]

Another quote for the next GE. I sure hope LTK gets you to stand in the Aljunied team.

I cannot help to think what a simpleton you are.

 

[lockeliberal]

Dear GMS

I attach below an article vis sa vis the IMF by Kenneth Rogoff as distinguished a critic of its operations and methodology as any. The distinguishing factor for any IMF loan to a country is that it remains super senior and repayment of it supersedes any private sector debt.

As it stands I hope we are not disputing the need for Singapore as a benefiter of global trade and finance not to contribute in some form to global financial and trade stability. We are just disputing as to the means.

The IMF, the World Bank , GATT and the WTO the UN were born out of the chaos and lack of international corporation that help create the economic depression of the twenties and hence World War II.

As to the means, should it be debated in parliament ? Is a loan or a governmental pledge from the central bank a loan ? For example if in a currency crisis, MAS utilizes its forex reserves to defend another central bank , or maintain currency stability is that a loan ?

It should be announced and it should be discussed, but as to seeking parliaments approval, certain things should be at the discretion of the leadership of the day, vis va vis actions for the global good

Locke






//www.imf.org/external/pubs/ft/fandd/2002/09/rogoff.htm

I am kind of worried when our very own Prime Minister said this:

"Should Singapore’s loan be called on, we would be taking on the credit risk of the IMF rather than the direct credit risk of countries that the IMF lends to. The IMF also has safeguards in place to reduce the risks that it takes in lending to countries. First, the IMF has preferred creditor status — which means that loans granted by the IMF must be repaid ahead of all other creditors. Countries which have historically defaulted on the rest of their debts have in most instances repaid the IMF on time and in full.”"

He made it sound like IMF "baochiak", sure risk free! Especially the last sentence! As a PM, he should not hide the facts that billions of IMF debts have been written off in the past decades! This is a lopsided representation of truth... half truth at best. I understand as the Prime Minister, he wants to sell his policy and management direction as best as he could but he should not just base on half truth and try not to mention the bad side of the situation. Put up all the facts and let people decide. Even if there are facts which do not look good for his decision, he should put them up and try to persuade voters to accept his decisions.


Goh Meng Seng

 

[londontrader]

Londontrader,

We do share some similar views on IMF but I am more of a skeptic of the claim that IMF is "risk free". Although IMF has 188 countries as its members but that doesn't mean that these members are obliged to make guarantee to any loans IMF raised. And of course, we know IMF didn't have the ability to print money though it has gold reserves in its kitty.

I share the view that any loans to IMF by Singapore should go through parliamentary debate or even referendum, especially so when the per capital amount of loans we are lending to it is pretty high as compared to China or USA. We are just a little Red dot.

Goh Meng Seng

I'm not saying the IMF is risk free. With respect to S'pore's Pledge, there is the risk of an IMF Bankruptcy
Just saying that IMF Insolvency is more unlikely than a global bank going bust (which are companies that take on lots of leverage)
Why? because the IMF doesn't take on more risk than it can afford ie. It lends what it has on hand (quota contributions etc) unlike Lehman Bros who "lend" with money it doesn't have ie. borrow short (liquid) and invest long (illiquid)
Also, the IMF can't make any real "independent" decisions regarding eg. debt cancellations
That's because the most powerful members have veto powers over everything the Fund does and no member country is required to guarantee any loan the Fund makes to poor nations.

Agree with the need for Parliament to have oversight and the President to say something (thought he's paid to do that)
No need for a referendum which is expensive, resource heavy and unnecessary for such a straight forward matter

 

[londontrader]

At the time they were being sold, Lehman mini bonds were also classified as "low risk" investments.

On the contrary, the mini bonds were rather risky investments that were MIS-SOLD as low risk
That's why customers in other countries have success in obtaining compensation
It's only in Singapore that our uncles and aunties get screwed by the banks and the MAS says it's your own fault for buying risky products

 

[Goh Meng Seng]

Dear Locke,

Nobody is disputing that such loan will have priority in repayment. However, having said that, it doesn't mean that it will definitely be repaid. i.e. There are still billions of dollars of debt being written off. One should be very careful in making such half-truth representation which may give the wrong impression.

It was PAP who amended that Constitution which requires any loans made by the govt to have approval from parliament as well as the President. Contribution is one thing, how big should the contribution be, is another.

I think discretion to leaders should have a limit else, the whole system will risk taking more bad decisions that it could handle. Consensus building should be the key to any big decisions. And of course, that would require consensus built within the parliamentary system.

Goh Meng Seng

Dear GMS

I attach below an article vis sa vis the IMF by Kenneth Rogoff as distinguished a critic of its operations and methodology as any. The distinguishing factor for any IMF loan to a country is that it remains super senior and repayment of it supersedes any private sector debt.

As it stands I hope we are not disputing the need for Singapore as a benefiter of global trade and finance not to contribute in some form to global financial and trade stability. We are just disputing as to the means.

The IMF, the World Bank , GATT and the WTO the UN were born out of the chaos and lack of international corporation that help create the economic depression of the twenties and hence World War II.

As to the means, should it be debated in parliament ? Is a loan or a governmental pledge from the central bank a loan ? For example if in a currency crisis, MAS utilizes its forex reserves to defend another central bank , or maintain currency stability is that a loan ?

It should be announced and it should be discussed, but as to seeking parliaments approval, certain things should be at the discretion of the leadership of the day, vis va vis actions for the global good

Locke






//www.imf.org/external/pubs/ft/fandd/2002/09/rogoff.htm

 

[aurvandil]

Why is everyone so leery of doing a referendum? Is it because of the very real possibility that a majority of Singaporeans will vote against the loan pledge? If a majority of Singaporeans vote against making the loan pledge, should we still proceed?

No need for a referendum which is expensive, resource heavy and unnecessary for such a straight forward matter

 

[londontrader]

We seem to be making progress. From some sort of mystical super loan shark who always gets back their money, we now have acknowledgement that the IMF is in the business of making high risk loans. Because these are high risk loans, a large proportion of these gets written off and is never paid back.

These loans were funded with quota contributions and retained earning
When they are allowed to default, the IMF stays solvent because they never loaned more than they had on hand
it's really that simple
And they are a super loan shark because they collect more monies than they lose on defaults
Along the way, they also force debtors to surrender their domestic monetary and fiscal regimes to IMF supervision
Sounds like a pretty nasty loan shark to me

If IMF passes the can round and the takings are insufficient, the IMF can and will go bust.

If the IMF can't raise the money it needs, it simply has to scale back it's operations
Because it doesn't take on more risk than it can bear, it doesn't face insolvency risk
It just becomes smaller and smaller in scope
Simple as that

As a global investment banker, I am surprised that you think that the only risk from the loan pledge is the IMF going bankrupt. What about the risk of a debt moratorium/hair cut? Let's say the loan facility is called. After pouring billions into Europe, it emerges that the only way out is a debt moratorium. As part of restructuring, all creditors (IMF included) take a 50% hair cut. Out of the US$4 billion we lend out, we might only get back US$ 2 billion and that it might be like 10 years later that we get our money.

The ONLY risk is an IMF insolvency (the credit event)
Why? because the pledge is a direct and senior loan to the Fund itself with no obligation to guarantee anything else the Fund does on it's own accord
If a haircut is required, the IMF takes the hit and still has to repay the pledged funds
SO the only real risk is an IMF with insufficient cash
Why do I think it won't happen?
Because the IMF will always preserve itself FIRST before Europe or anyone else
It won't extend more help than it can afford to risk (the USA with the strongest veto power would never allow it)
That's how it has survived all these years without getting anywhere close to bankruptcy and always repaying it's creditors on time

I've been in the business for years and have worked with, traded with & traded swear words with these buggers. Self preservation is the 1st order of the day at the IMF. They aren't like Lehman Bros because the "bankers" at the Fund don't get paid extra for taking on risk. They're happy just appearing to do good work and saving the world.

 

[londontrader]

Given China's agenda, we can therefore expect China to do the bare minimum with regard to the IMF. So far on a per capita basis, the China pledge has been embarrassingly small.

Well China is starting to engage global institutions
My take is that the Chinese will contribute more and more and start to muscle their way in
SO bare minimum? I think you underestimate the Chinese ability to play chess with the world
But you're quite right to say that the IMF, World Bank etc.. are all vehicles for political agendas (mainly the USA's and in future China's)

 

[londontrader]

Mr Londontrader,

I salute you for:
- good knowledge of IMF & ability to present it in very simple terms

- stamina & persistence

- patience & desire to continue handling 7 pages now, of some very vexatious smartarses!

- finally, apart from some legitimate steam-letting, by and large, very civic language unlike the likes of papsmearer and chaopappypoodle who may have made very covent points, but spew vitroil as if they live in bitter-cynic-land where their bile far outweigh their brain.

Markets been very stressful lately so I drop in occasionally to let off steam
Some people here post liberally without actually checking the facts (sometimes they don't have any facts at all)
eg. Steffychun and her version of what the UK govt can do without Parliament!!! And I should know what I'm talking about since I've been living in the UK since the 1990s
Just giving my 2 cents worth if anyone is interested
GMS has a 2nd Upper from NUS (econs?)
If that qualifies a person to express views on the IMF then I'll join in
I went to the LSE and left with a 1st in Econs and an Msc

 

[londontrader]

Why is everyone so leery of doing a referendum? Is it because of the very real possibility that a majority of Singaporeans will vote against the loan pledge? If a majority of Singaporeans vote against making the loan pledge, should we still proceed?

Referendums are expensive resource heavy exercises
No need to "go to the people" everytime you a need a decision because we have Parliament (even with some opposition MPs now)

 

[londontrader]

It was PAP who amended that Constitution which requires any loans made by the govt to have approval from parliament as well as the President. Contribution is one thing, how big should the contribution be, is another.

NO GMS, you make the same mistake as KJ
The constitution makes no such reference or else the constitutional law experts (who were very vocal about the Hougang BE case) would rally behind KJ (which they are not)

Think about this.
This constitutional amendment was personally supervised by LKY himself. I understand that the old goat read and approved every line and punctuation mark! He would never have made the govt accountable to anyone with respect to making loans to others ie. just imagine the implications for GIC and Temasek!!

 

[aurvandil]

I have also had dealings with quants for years. Prior to 2007, they used to sneer at everybody as if they knew something that the rest of the world did not. If you understood the math and pointed out the flaws in their empirical work, they would wave you off as someone who just "did not understand". There was the unshakable faith of all and sundry in the financial industry that math had conquered risk. Those who worked at Lehman and their like were revered as servants of the Gods. It took the events of 2007 to show to the world the bullshit of these Wall Street rocket scientists.

After 2007, the world lost faith in Wall Street rocket scientists. Where once being called a quant was regarded as a mark of respect, it began to become an insult that the person is someone who cons using maths no one understands. There was a mad scramble to sovereigns who were regarded as being absolutely safe. The sovereigns took advantage of this trust to avoid the necessary pains of recession and kick the can down the road.

The current Euro crisis has shaken the faith the markets used to have in sovereigns.Greece, Italy, Portugal and Spain became PIGS. Despite its somewhat shady past, the IMF has somehow been rebranded to become some sort of super loanshark who never loses money. What is even more amazing is that although the IMF have lost their 3 largest contributors, there is this strange conviction that it is "safe" to pledge money to the IMF to bailout Europe. Some even likened it to depositing money in a bank which can be withdrawn at any time on demand.

Will folly never cease ...

I've been in the business for years and have worked with, traded with & traded swear words with these buggers. Self preservation is the 1st order of the day at the IMF. They aren't like Lehman Bros because the "bankers" at the Fund don't get paid extra for taking on risk. They're happy just appearing to do good work and saving the world.