RookieLi
Today, 02:42 PM
The American elites and those in government, have fooled the populace for about two decades that if the rich gets richer, then they (the rch) will trickle down the wealth to the average Joe. President Obama have debunked this notion and the financial crisis shows that greed knows no bounds. The richer someone gets, the more he wants to make and keep and after money, they go for power too.
After all these, I thought we would have learnt our lessons too but looking at our budget rescue measures, it seems like we are still behind in our learning curve:
1) Rental Rebates: Rental over the last three years have gone up 3 - 4 folds and landlords were merciless and have no regards for whether their tenants can survive the surge in rental. With the blessing of the Minister of National Development who boldly claimed that the high rental is sustainable whilst the people on the ground thinks otherwise, landlords were all ready for long term tenants to move out in order to enjoy the rental surge. Major shareholders, CEOs and top management were all too eager to enjoy the short term benefit of high bonus and the wealth that came with their share options as their share prices skyrocketed.
Meantime, the poor tenants were forced to relocate or shut down. Now the government, instead of giving the rental rebates directly to the tenants to help them survive is instead giving it to the landlord and hope that they will all of a suddden have such compassion for their tenants that they will pass the rental rebates down the line? Second point is that business volume has dropped 30-40% across the board, so rental should reflect this new reality and fall accordingly by the same amount. The small amount of rental reduction, even IF it ever get passed down will not help at all. If landlords have a conscience, they should make massive downward adjustment without tax payers handout.
2) Bank Guarantee Scheme of up to 80%. This is a nice concept but impractical. Banks did not exist to do charity and bank's shareholder's funds represent about 10% of its asset base. In other words, if a bank lends out $100.00 only $10.00 belongs to shareholders, whilst the rest comes manily from deposits. The shareholders of the bank is interested in protecting their own $10.00 more then anything else whilch is the reason why in the US, banks are not lending monies despite massive government injection of funds. As such, even if the government were to guarantee 80% of a loan, shareholders will lose more then their share of capital if the loan defaults. Do you think bank will lend simply because of a 80% guarantee? Of course not. Banks will lend when they have certainty of the loan being repaid not because of the 80% guarantee.
A common sense question will be will anyone lend $100.00 to your neigbour who is unlikely to be able to pay you back even if you are guranteed $80.00 if your neigbour defaults? In fact, if this scheme is not administered properly it will even be subjected to abuse. Greedy bankers can, for instance, be drawing on the government guarantee for credible loans, enjoy the benefit of a guarantee from the government and yet charge the customer very high interest rates. Banks are still making tonnes of monies and if they are socially responsible organizations, they would have stepped forward to help by reducing their consumer loan interest such as for housing and credit cards to help the average Joe tie over this difficult time. Banks could well afford this as the gap between deposit interest rates (near zero) and lending rates provide banks now with a huge margin. I think banks do not need tax payers to subsidize them at this stage. If they are socially repsonsible, they will do the right thing but looking at the mess they have brought upon the world, I am just not optimistic.
3) Wage Credit scheme. Good idea but with no strings attached, it will only benefit corporates by shoring up their bottom line. MNCs will not stop retrenchment because of the few dollars in saving for their lower level staff. They hire fast, pay top dollars but will let go of staff just as fast. The local MNC executive here will take instructions from the global HQ. The wage credit will not stop them but will hep them shore up their bottom line. Let us remember that MNCs did not site themselves here for social reasons but for profits. As to local companies, the consideration will not be any different. The humane & socailly responsible bosses would have tried his or her best to keep as many staff as possible and would have scaled down by now what they cannot keep. The others will still fire and keep what they need and enjoy the 12% rebate from the government and still drive their BMWs & Mercedes.
To me all these schemes still depend on the charity of private sector bosses and rich owners to pass down the benefits. Yet when we do not see this happening during the good times (I am not saying evryone is merciless but only majority) what will make us believe that in these trying time when their own survivals are at stake that they suddently become socially responsible creatures who will lend monies at their own expense or pass on their little profits down the line Trckle Down effect?
It is sad to see the respond of the PAP MPs to Mr. Low's comment and it surprises me that given their calibre, they did not see the problems that he highlighted. This is a national crisis and therefore bipartisan politics should not be allowed to crowd good judgement. A one party system will rot from inside when the people inside start speaking only what their pay master wishes to hear and not used their education, intelligence and expereince to help the government come to a more informed and rational decision.
BTW, to the PAP MPs who responded to Mr. Low, he (Mr. Low TK) do have a name. It is terribly impolite to keep referring to call him "he" instead of Mr. Low or the honorable member. Remember he is an elected official of the house and he is also a leader of a respected opposition party. Disagree with the views but do not show disrespect to the person.
http://comment.straitstimes.com/showthread.php?t=16680&page=2
Today, 02:42 PM
The American elites and those in government, have fooled the populace for about two decades that if the rich gets richer, then they (the rch) will trickle down the wealth to the average Joe. President Obama have debunked this notion and the financial crisis shows that greed knows no bounds. The richer someone gets, the more he wants to make and keep and after money, they go for power too.
After all these, I thought we would have learnt our lessons too but looking at our budget rescue measures, it seems like we are still behind in our learning curve:
1) Rental Rebates: Rental over the last three years have gone up 3 - 4 folds and landlords were merciless and have no regards for whether their tenants can survive the surge in rental. With the blessing of the Minister of National Development who boldly claimed that the high rental is sustainable whilst the people on the ground thinks otherwise, landlords were all ready for long term tenants to move out in order to enjoy the rental surge. Major shareholders, CEOs and top management were all too eager to enjoy the short term benefit of high bonus and the wealth that came with their share options as their share prices skyrocketed.
Meantime, the poor tenants were forced to relocate or shut down. Now the government, instead of giving the rental rebates directly to the tenants to help them survive is instead giving it to the landlord and hope that they will all of a suddden have such compassion for their tenants that they will pass the rental rebates down the line? Second point is that business volume has dropped 30-40% across the board, so rental should reflect this new reality and fall accordingly by the same amount. The small amount of rental reduction, even IF it ever get passed down will not help at all. If landlords have a conscience, they should make massive downward adjustment without tax payers handout.
2) Bank Guarantee Scheme of up to 80%. This is a nice concept but impractical. Banks did not exist to do charity and bank's shareholder's funds represent about 10% of its asset base. In other words, if a bank lends out $100.00 only $10.00 belongs to shareholders, whilst the rest comes manily from deposits. The shareholders of the bank is interested in protecting their own $10.00 more then anything else whilch is the reason why in the US, banks are not lending monies despite massive government injection of funds. As such, even if the government were to guarantee 80% of a loan, shareholders will lose more then their share of capital if the loan defaults. Do you think bank will lend simply because of a 80% guarantee? Of course not. Banks will lend when they have certainty of the loan being repaid not because of the 80% guarantee.
A common sense question will be will anyone lend $100.00 to your neigbour who is unlikely to be able to pay you back even if you are guranteed $80.00 if your neigbour defaults? In fact, if this scheme is not administered properly it will even be subjected to abuse. Greedy bankers can, for instance, be drawing on the government guarantee for credible loans, enjoy the benefit of a guarantee from the government and yet charge the customer very high interest rates. Banks are still making tonnes of monies and if they are socially responsible organizations, they would have stepped forward to help by reducing their consumer loan interest such as for housing and credit cards to help the average Joe tie over this difficult time. Banks could well afford this as the gap between deposit interest rates (near zero) and lending rates provide banks now with a huge margin. I think banks do not need tax payers to subsidize them at this stage. If they are socially repsonsible, they will do the right thing but looking at the mess they have brought upon the world, I am just not optimistic.
3) Wage Credit scheme. Good idea but with no strings attached, it will only benefit corporates by shoring up their bottom line. MNCs will not stop retrenchment because of the few dollars in saving for their lower level staff. They hire fast, pay top dollars but will let go of staff just as fast. The local MNC executive here will take instructions from the global HQ. The wage credit will not stop them but will hep them shore up their bottom line. Let us remember that MNCs did not site themselves here for social reasons but for profits. As to local companies, the consideration will not be any different. The humane & socailly responsible bosses would have tried his or her best to keep as many staff as possible and would have scaled down by now what they cannot keep. The others will still fire and keep what they need and enjoy the 12% rebate from the government and still drive their BMWs & Mercedes.
To me all these schemes still depend on the charity of private sector bosses and rich owners to pass down the benefits. Yet when we do not see this happening during the good times (I am not saying evryone is merciless but only majority) what will make us believe that in these trying time when their own survivals are at stake that they suddently become socially responsible creatures who will lend monies at their own expense or pass on their little profits down the line Trckle Down effect?
It is sad to see the respond of the PAP MPs to Mr. Low's comment and it surprises me that given their calibre, they did not see the problems that he highlighted. This is a national crisis and therefore bipartisan politics should not be allowed to crowd good judgement. A one party system will rot from inside when the people inside start speaking only what their pay master wishes to hear and not used their education, intelligence and expereince to help the government come to a more informed and rational decision.
BTW, to the PAP MPs who responded to Mr. Low, he (Mr. Low TK) do have a name. It is terribly impolite to keep referring to call him "he" instead of Mr. Low or the honorable member. Remember he is an elected official of the house and he is also a leader of a respected opposition party. Disagree with the views but do not show disrespect to the person.
http://comment.straitstimes.com/showthread.php?t=16680&page=2
