What is KJ's problem?

[lockeliberal]

Dear GMS

It is a dog eat dog world, and Singapore has refined it to a fine art. Vis sa vis our GDP size, do u know how much Singapore contributes to a) world bank b ) asia development bank, c) Who and d) all manner of international organizations ? We give loans to the IMF because it is in our national interest, we give pittances to all other manner of international organizations because it is not in our national interest.


The fundamental question is even for market economist, do we accept some degree of moral hazard in return for greater and tighter regulation. Does the IMF create Moral Harzard ? We have to remember that if a country was not in shit, it would not have turned to the IMF to begin with. No healthy functioning government and or economy turns to the IMF. The IMF may be a loanshark but countries turn to the IMF after they have defaulted on debts to the private sector and have no other funding. The internal adjustment by the IMF is always painful but the alternative a lot lot worse.

Our national interest is a healthy stable functioning global market economy with free trade and capital flows. Dams and Development, health etc etc be dammed :_))


Locke

Locke,

I have to borrow a word from the old man, Highfalutin ideals but Singapore is just a tiny red dot. We are in no way going to have the ability as well as resources to provide that kind of international leadership required to save the world.

It is a dog eats dog world out there and the first principle applied is self-preservation for his own country. At the very best, we are just a tiny little side dish for such display of "superman action", not even an icing of the big cake.

If we are as big as US or China, yes, I would fully support of such actions and contributions because, at the end of the day, ironically, it still boils down to politics which you so detest in getting into the way. You got to face the harsh reality, whether to join the game or not, all boil down to politics, not some Highfalutin ideals of saviour, unity or world stability.

As a small country, we are always stingy in giving out aids to other countries... sometimes, just half a million for some disaster effort for our neighbours. Sometimes, even less than a couple of hundred thousands. I wish we could do more on that rather than making a loan commitment to IMF with exceptional high per capital impact on Singaporeans (about S$1500 to $1600 per Singaporean, alot of char kuey tiao to start with!) vs others (China works out to be just less than S$40 per PRCs!). If we are going to be just a small icing on this big show, I guess even $1B is too much for us to bear.

Saving the world is one thing but it will create another problem: Moral Hazards. Just like AIG and banks, after being saved, they just give their own management a big bonus for the job well done in getting monies from the govt.

Goh Meng Seng

 

[londontrader]

It is a dog eat dog world, and Singapore has refined it to a fine art. Vis sa vis our GDP size, do u know how much Singapore contributes to a) world bank b ) asia development bank, c) Who and d) all manner of international organizations ? We give loans to the IMF because it is in our national interest, we give pittances to all other manner of international organizations because it is not in our national interest.

That's right, S'pore has been trying to be a good global citizen (putting our own interests 1st as always) for sometime already.
So, why the fuss now?
We had a BE and a GE, nobody thought to raise this before? some people think it's impt enough to call a referendum to decide this!

I just read Tan Kin Lian's latest contribution to the ST Forum Page
The man demonstrates (again) that he knows very little about the law (Constitutional Law) but has lots of opinions to share
He couldn't understand the limited role of the elected President (stated in the Constitution) and now he doesn't understand the language and conventions used to draft and interpret Constitutional Law.
Wonder why he thought he was good enough to stand for the Presidency at all

 

[londontrader]

So far, everyone has run screaming from the idea of a referendum like a vampire running from a crucifix. The most commonly cited concern is the cost of conducting a referendum. Given that it is US$4 billion that is being pledge, the cost would seem to be small. Why is everyone so scared know the opinion of Singaporeans on whether we should proceed with the pledge?

You want to hold a referendum to decide every major issue in Singapore?
Then what's the point of having a Parliament????
Wake up! Better democracies than us don't hold referendums every other month

 

[londontrader]

For mini bonds, they were mis-sold to naive Singaporeans as "safe" investments by those slimy sales people that grow in banks.

For the IMF loan pledge, they are being mis-sold to naive Singaporeans as a "safe" loan by an equally slimy salesman with a shining forehead.

If things go bad, I expect an old man who refuses to die to lecture us about how we went in with our "eyes wide open".

Dude,

What are you doing here????
You've lost the script!

 

[londontrader]

Enjoyed following this thread. Welcome back to LT whose occasional visits as always interesting. Quick summary
1. Quants went out the door after LTCM (Black-Scholes / Merton / Nobel ) spectacular collapse
2. Door was locked on Quants after discovery that AIG entire risk coverage on swaps was based on a a single quant from academia. The bail-out went past $100B.
3. The description "Sovereign" moved back to the political space from the economic space where it went for frolick and the Russian undressed it.
4. KJ is not interested about where the amount lands and if it is a pledge, loan or investment. He is also not interested in default rate, the risk or the appropriateness. He is questioning if the check and balance mechanism is functioning as it should.
5. We all have a role to play as a Global Citizen. There is an expectation to provide such pledges. The issue again is control mechanism.
6. Mini-bond is as relevant to this discussion as much as a curling iron is to a bald man.
7. IMF has one single purpose and only one - bailing out nations. It is there not to make money or provide a return to those who contribute.
8. Besides being a Global citizen, countries contribute to avoid adverse impact to their own economy - the contagion effect in the worst case scenario and slower growth at the best of times.

Nice Summary!
I especially like no. 7
Hope it is clear now that the IMF is not a bank selling bonds etc

 

[aurvandil]

First it was the cost. Now it is an almost hysterical tirade about how it will be "funny" or "silly" to hold a referendum.
Why are you so scared of what Singaporeans will vote for?

You want to hold a referendum to decide every major issue in Singapore?
Then what's the point of having a Parliament????
Wake up! Better democracies than us don't hold referendums every other month

 

[aurvandil]

I am just saying that Tharman and LHL are being as dishonest as those sales people who sold the uncles / aunties mini-bonds.
I am also saying that when things go wrong, the PAP will wash their hands of the matter and says it is someone else's fault.

Dude,

What are you doing here????
You've lost the script!

 

[cass888]

You hold a referendum for every fucking issue you the Colonel minus 4 ranks Goh Meng Seng takes issue with, the teachers will be cursing and swearing at you, having to work every Saturday. Or you think they're going to buy computers from your bankrupt computer shop to run the referendum?

First it was the cost. Now it is an almost hysterical tirade about how it will be "funny" or "silly" to hold a referendum.
Why are you so scared of what Singaporeans will vote for?

 

[aurvandil]

Another illogical objection to having a referendum.

You hold a referendum for every fucking issue you the Colonel minus 4 ranks Goh Meng Seng takes issue with, the teachers will be cursing and swearing at you, having to work every Saturday. Or you think they're going to buy computers from your bankrupt computer shop to run the referendum?

 

[londontrader]

Dear London,

Its a question of balance, I guess at the end of the day,perhaps an emergency session of parliament, some debate before the deed is done is necessary, engaging the opposition icing on the cake , political PR but the substance cannot change.

The substance is a need for coordinated action, a need to calm markets, a need for a stable global economy. A need for leadership and for politics to work united to provide that leadership. I hate to imagine what happened if politics had gotten in the way of the AIG rescue.

The IMF may be terrible and for that matter the World Bank, but it is the only thing we have and by god with globalization and how all the interconnectedness which can provide both disaster and growth, its best to have fast and firm action with some degree of debate but not debate which stifles action.

I have no objections to the IMF Pledge, despite my pretty low opinion of the IMF
Anybody who can't understand the need for it, needs to be parachuted into Latin America at the height of it's debt crisis
Maybe the simple exercise of buying bread in the midst of hyperinflation will serve as a wake up call

The problem is "mechanism control" as Scroobal puts it
This IMF Pledge and govt response to KJ's criticism, makes use of the same "mechanism" as that other Pledge made years ago (during the Asian Crisis) to Suharto.
So, I agree that some adjustment in "balance" needs to be done

 

[londontrader]

Another illogical objection to having a referendum.

What's wrong with Parliament having a role in this?

 

[londontrader]

I am just saying that Tharman and LHL are being as dishonest as those sales people who sold the uncles / aunties mini-bonds.
I am also saying that when things go wrong, the PAP will wash their hands of the matter and says it is someone else's fault.

Okay then say it like you mean it
stop digging up Lehman Bros, mini-bonds etc....
Totally irrelevant stuff

How can the PAP say it's somebody else's fault?
They have taken total OWNERSHIP of this decision by not allowing Parliament a role

 

[cass888]

Holding a referendum is the most illogical suggestion in the first place. The whole idea of representative democracy (*sob sob, no PR so you SLTC (minus 2 ranks) Goh Meng Seng got no seat) is for the elected representatives to govern the country until the next election. Even in the bastion of democracy, the US, referendums are used only when (1) the legislature refuses to act or (2) the people outside the government want to reverse the legislature.

In any case, a $4 billion loan (not gift) is but 1% of the national reserves - hardly deserving of a referendum.

Another illogical objection to having a referendum.

 

[londontrader]

But coming back to the IMF issue, that's the point. If IMF is to keep writing off bad debts, someone will have to foot the bill. That is why I suspect why G8 was involved in the process when they decide to discuss about the African's write off... G8 will be the ones who will foot the bill.


Goh Meng Seng

Okay GMS, Let's try this again

1. The IMF writes off debt but it collects back more than it writes off in aggregate
2. The IMF doesn't face bankruptcy when writing off debt because it only lends money it can afford to lose ie. it's NOT a bank than borrows on the short end of the yield curve and lends on the long end.
3. Some one actually foots the bill for all this lending and writing off + operational expenses like Presidential suites at top hotels for the IMF Director etc.
4. That person (who pays) is the collective membership of the IMF who all make quota contributions (Singapore contributes too)
5. The G8 must be consulted on such a HUGE write off of multilateral debt (ie. IMF, World Bank etc...) because the G8 nations have VETO powers over all the decisions made by the IMF etc...
6. Yes, the G8 paid for the write off too because their quota contributions are the highest amongst the membership.

 

[aurvandil]

Parliament should of course play a key role. The purpose of having a referendum is simply to seek the opinion of Singaporeans before MP's vote to decide on whether to proceed. Without a referendum or any kind of equivalent study, how will we know whether Singaporeans are for or against the pledge? If it is in Singapore's national interest, the PAP can still vote to proceed with the loan pledge even if the majority of Singaporeans vote against it in the referendum. The PAP would however need to make their case clear and answer to voters at the next GE.

What's wrong with Parliament having a role in this?

 

[aurvandil]

That is the hallmark of the PAP. I am sure they will find some way to say it is not their fault.
I wasn't paying attention to the earlier S$10 billion loan to Indonesia. Was any of it paid back?

How can the PAP say it's somebody else's fault?
They have taken total OWNERSHIP of this decision by not allowing Parliament a role

 

[londontrader]

Parliament should of course play a key role. The purpose of having a referendum is simply to seek the opinion of Singaporeans before MP's vote to decide on whether to proceed. Without a referendum or any kind of equivalent study, how will we know whether Singaporeans are for or against the pledge? If it is in Singapore's national interest, the PAP can still vote to proceed with the loan pledge even if the majority of Singaporeans vote against it in the referendum. The PAP would however need to make their case clear and answer to voters at the next GE.

Do you know why we have a Parliament?
Because there are a lot of Singaporeans out there and it's quite an exercise to try and find out what Singaporeans think about something the govt wants to do. It's nice if we can all sit together around a table vote about each and everything that affects our lives BUT it's got to be a damn big table!

MPs are supposed to take the pulse of the people (ie. find out what they think)
So, let Parliament do it's job and save the referendums for the really serious issues

Let me clear something up,
1. If you hold a referendum, you must abide by the result. You can't ignore the vote and still push matter thru, even if you have a more than 2/3s majority in Parliament

2. A referendum is not a simple OPINION SEEKING EXERCISE like those marketing people who call you on the phone. A govt is legally bound by the collective decision made thru the ballot

 

[cass888]

You fucking nitwit General of the Armies (minus 10 ranks) Goh Meng Seng, the fucking loan wasn't even disbursed. Habbibe was cursing and swearing that the loan was conditional (we lend them money to buy our goods) not cash and kicked up a big fucking fuss.

Are you even for real?

That is the hallmark of the PAP. I am sure they will find some way to say it is not their fault.
I wasn't paying attention to the earlier S$10 billion loan to Indonesia. Was any of it paid back?

 

[londontrader]

That is the hallmark of the PAP. I am sure they will find some way to say it is not their fault.

I think it is clear to any thinking person that the executive (the govt) takes full responsibility for a decision that was taken without Parliament's input. So if the PAP succeeds in a lame blame shifting exercise (if things go wrong) AND people still vote for them, THEN Singaporeans deserve to have a PAP govt!

I wasn't paying attention to the earlier S$10 billion loan to Indonesia. Was any of it paid back?

That's more impt than an IMF pledge (which the rest of the world agrees is necessary)
I believe the late JBJ make an objection on the same grounds as his son, KJ
The PAP govt responded in the same manner as they do now (to KJ)
So, it's plain to me that we have a problem with the "mechanism"

to answer your Q,
It was a pledge and no money changed hands b/c Suharto went belly up soon after

 

[aurvandil]

I am not familiar with regard to the specific laws governing referendums in Singapore. According to Wikipedia, referendums can be both binding and non-binding.

http://en.wikipedia.org/wiki/Referendum

From what I had written, I was obviously referring to a non-binding kind of referendum.

On keeping referendums for "big" issues, how big is big? To me, US$4 billion seems huge. Do we need the pledge to be like US$40 billion or maybe US$400 billion before it is "big" enough to need a referendum?

Let me clear something up,
1. If you hold a referendum, you must abide by the result. You can't ignore the vote and still push matter thru, even if you have a more than 2/3s majority in Parliament

2. A referendum is not a simple OPINION SEEKING EXERCISE like those marketing people who call you on the phone. A govt is legally bound by the collective decision made thru the ballot