The Mess that is Singapore: Explaining the Debt and the Role of CPF

[RandomNexus]

This has not been posted and I thought I post it here for information and discussion.

http://christopherbalding.com/2012/05/09/the-mess-that-is-singapore-part-i-explaining-the-debt/


http://christopherbalding.com/2012/...apore-part-ii-explaining-the-role-of-the-cpf/

To see the suggested assets in management by these entities, see below:

http://www.temasek.com.sg/

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


I always wonder about the returns and value of the investments in these 2 entities. The so-called returns in the range of 10-20% pa by Temasek amazes me as it is extraordinary, even beating Warren Buffett? If you get this return, you are ranked as a very top fund manager in the world. The point is raised if you read carefully in the articles, the expected portfolio values indicated does not match what is the "claimed" values.

I always go by this rule that a high return means nothing if you do not look at the risk quantum. JPM just announced a big loss of a few billions a couple of days ago, and this again has to do with the high risks employed to get its great returns years prior to this loss. If you look at history of big institutions and funds like Long Term Capital Management, Man Global, Lehman Brothers, AIG etc, the same parallel is seen. They have employed too much risks which turn out to be catastrophic for themselves, and sadly, the world as well.

The recent moves by Temasek and GIC to invest in UBS, Citigroup are examples of big gambles. Although it is said Citigroup turned out to be a gain, yet something has to be said about the risks employed. Is it risky? I personally do find it so. As little is known about overall portfolio, we never really know what actually happen, do we?

http://www.asiasentinel.com/index.php?option=com_content&task=view&id=1549&Itemid=433

Above is a catastrophic loss in an investment, ABC Learning which turned out to be a big write-off. With all the brains in Temasek, they did not get this one right though. So they have done massively well in other areas to generate their so called super returns? Yes, I did take note some good moves. Overall, they are supposed to be superb backed by extraordinary financial brains ..so I expect them not to stumble on this one and some others ...

Take a read, and I, by no means, wish to make a judgement as much is not released publicly by Temasek and GIC concerning what they do. Yet I do have nagging thoughts.

 

[mojito]

So many words.

Only 3 things you need to understand.

1) Where the budget surplus go?
2) Where CPF money go?
3) Where $ from sale of public assets (power stations, land, etc) go?

Don't have to jump to conclusions for now. There is a simple and a complex explanation. Go ask your MP and see if they are up to the mark.

 

[scroobal]

I am keen to keen Prof Mukul Asher views on these blog entries. Also keen to see the published work that is expected soon. In the past, the money trail showed massive investment in infrastructure especially during the POSB/CPF twin funding model. It should also be noted that Temasek has been issuing debt in the overseas market.

I am also keen to see how the govt will respond to this. I expect the govt will respond knowing who the individual is.

Great thread! and relevant to all Singaporeans. Thanks.

 

[scroobal]

The last person to ask is your MP. The govt has an obligation to explain. Preferably in a single graphical chart the flow. I remember Proctor and Gamble had a philosophy where if you cannot express the gist of your solution or answer in a single page you either do not know the answer or its not worth knowing.

So many words.

Only 3 things you need to understand.

1) Where the budget surplus go?
2) Where CPF money go?
3) Where $ from sale of public assets (power stations, land, etc) go?

Don't have to jump to conclusions for now. There is a simple and a complex explanation. Go ask your MP and see if they are up to the mark.

 

[Orion]

The CPF monies are spent.

If u been reading the news, when China first setup the CPF system and sought the advise of the Sg gov who was the first to impregment it, the Sg gov advised China to spend the CPF monies and reinvest it as money stored is inflation.

 

[batman1]

Singaporean CPF money is a very cheap source of funds (very low interest rates) to the secretive GIC controlled by MIW with Tony Tan (now 35% president of singapore) as the ex-GIC chief.
No wonder our CPF withdrawal dates have been deferred from 55 yo to 65 yo.
What if u die before 65 yo ?
What if u need money for survival between 55yo n 65 yo ?
Knnccb to the MIW !!!!
Knnccb to the 60 % !!!

 

[zhihau]

The last person to ask is your MP. The govt has an obligation to explain. Preferably in a single graphical chart the flow. I remember Proctor and Gamble had a philosophy where if you cannot express the gist of your solution or answer in a single page you either do not know the answer or its not worth knowing.

do we need to wait out for another 52 man years to know the answer to these questions?

 

[makapaaa]

The latest fiasco by his wife...

[h=2]Temasek Holdings’ investee company, Chesapeake Energy, downgraded to “Junk” by S&P[/h]

April 28th, 2012 |

Author: Editorial

CEO Aubrey McClendon of Chesapeake Energy, a Temasek Holding's investee company

Temasek Holdings’ investee company, Chesapeake Energy Corporation, has its debt rating cut to ‘BB’ which is a “Junk” or Non-Investment Grade by Standard & Poor’s on Thur (26 Apr). Under the S&P’s definition, ‘BB’ refers to “Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions”.
The NY Times has reported that controversial borrowing practices by Chesapeake Energy’s CEO Aubrey McClendon is raising additional scrutiny by the Securities and Exchange Commission (SEC), as well as sinking the company’s debt rating.
The SEC has started an informal investigation into Chesapeake Energy Corp’s controversial program that granted McClendon a share in each of Chesapeake’s natural gas wells. The program allows McClendon to invest with his company in all drilling endeavors to share both expense and profit. However, recent historic lows on natural gas prices are undercutting the value of both his and Chesapeake’s investments.
Chesapeake said it would end the program when it expires in 2015, which effectively gives McClendon a 2.5% stake in every one of the company’s thousands of wells
Reuters reported that McClendon has used his personal stake in Chesapeake to guarantee up to $1.1 billion in loans to fund his personal investment costs in Chesapeake wells.
The majority of his borrowing came from EIG Global Energy Partners, an investment management firm which is also a major investor of Chesapeake itself.
The loans to McClendon had been previously undisclosed to shareholders, analysts and academics said, raising concerns that McClendon’s personal financial deals could compromise his fiduciary duty to Chesapeake.
Investors and analysts have also criticized Chesapeake’s board for failing to monitor McClendon’s borrowing. They contend his personal borrowing may create conflicts of interest that could put McClendon at odds with Chesapeake shareholders.
The company has said it wouldn’t be responsible for McClendon’s loans and denied any conflict of interests.
Meanwhile, Standard & Poor’s cuts Chesapeake’s debt rating to a “junk” category on Apr 26, saying that the internal turmoil at the company could hamper its external funding requirements:
“Turmoil resulting from these developments could hamper Chesapeake’s ability to meet the massive external funding requirements stemming from its currently weak operating cash flow and continuing aggressive capital spending. We are lowering our corporate credit and senior unsecured debt issue ratings on Chesapeake to ‘BB’ from ‘BB+’… We are placing all these ratings on CreditWatch with negative implications.”
S&P also said that recent revelations about personal transactions undertaken by Chesapeake’s CEO relating to the company’s unusual compensation program underscore shortcomings in Chesapeake’s corporate governance practices.
S&P’s noted that Chesapeake’s production is heavily skewed toward natural gas, and natural gas prices are severely depressed at this time. Although hedge-related gains had been an important support to Chesapeake’s earnings and cash flow in recent years, the company terminated its natural-gas related hedge positions in late 2011.
“In its investor presentation dated April 17, 2012, Chesapeake gave guidance of total investment of $10.9 billion to $12.4 billion in 2012, and $10.5 billion to $12.3 billion in 2013. This guidance encompasses well costs on proved and unproved properties, acquisition of unproved properties, and investment in oilfield services and midstream assets. Based on our estimates and price deck assumptions (including natural gas price of $2.00/btu in 2012, $2.75 in 2013, and $3.50 thereafter), we expect Chesapeake’s funds from operations to total only $3.4 billion to $3.8 billion in 2012 and $5.4 billion to $5.8 billion in 2013, implying massive internal funding shortfalls.”
S&P’s also said that at this time, it cannot rule out further rating downgrades of more than one notch.
As the nation’s second-largest natural gas producer, Chesapeake has been struggling lately with natural gas prices near record lows due to a growing supply glut.
According to a CNA’s report [Link] in May 2010, Temasek invested US$500 million in Chesapeake’s convertible preferred stocks. It also had an additional option to acquire a further US$500 million of Chesapeake’s stock. The convertible preferred stock carries a coupon of 5.75 per cent and the proposed investment would translate to about 7% stake in Chesapeake.

 

[yourlaubu]

CPF = Central Ponzi Fund

 

[GOD IS MY DOG]

even when i secondary school time i already know CPF is unsustainable..........................


where the excess money go ah ?


some lost and the rest in LKY's pocket liao lor..................


very easy to legally steal all that money what.................LKY can set up a management firm to advise GIC............take a certain cut with every transaction and on any profits................

 

[mojito]

The last person to ask is your MP. The govt has an obligation to explain. Preferably in a single graphical chart the flow. I remember Proctor and Gamble had a philosophy where if you cannot express the gist of your solution or answer in a single page you either do not know the answer or its not worth knowing.

You are probably right. Nobody would be willing to give the simple explanation on the record because on closer examination it would be a misrepresentation. The complicated one would invite more speculations. As usual the PAP will go on and pretend as if nothing has happened, much alike the antics of our burger loving friend.