The recent and current worldwide economic turmoil caused by the greed of the new-age bankers who seek only THEIR own fortune has sent ripples to even the economically-sound city of Singapore.
Singaporeans can be considered quite money-wise. They invest in stocks, trust funds and treasury notes and dabble in options and forex trading. It is a Singaporean thing – to make money at all costs. However, the economic crisis resulted in many losing their hard-earned money in myriad of financial instruments, such as the DBS notes (which invested in the forsaken Lehman brothers).
I read an article yesterday about how a wheelchair-bound individual could stand to lose the $200,000 of insurance payout that he put into his investment (2.5y maturity). Well, the fact that his story was reported in the New Paper meant that he is desperate for help, which is why he was fine with his story being published in a semi-tabloid paper. And I applaud the writer and the photographer – portraying the fella as a hapless person, who was not only handicapped but can also be financially crippled (pun intended).
My sentiments when I read the article: serve you right; have you not heard of caveat emptor?
One may wonder why I develop no mercy or sympathy for these people who need a helping hand.
During the late 1990s and early 2000s, Singapore had a spate of bucketshops tricking people. These people literally trick you into parting with your money without even revealing anything. My dad got tricked of over $100,000 by a company claiming to be associated with the government. When he and others called out for help, no one could help, not CASE and not the MPs, because the money has been wasted in the market. There was an expose on the bucketshops resulting in the clampdown of all such operations, but the losers remained losers. They did not get their money back no matter how much they pleaded for help. My dad spent another $5000 employing a lawyer who was purported to be good at persecuting such companies, but in the end, he too faded away.
My dad and I learnt a great deal from that experience. It was a lesson from the school of hard knocks. And we blame ourselves for being foolish, and promised to never act so irrationally and foolishly again. Fast-forward to today – we’re just fine.
So, now ask me again why I have no sympathy for the guy in the wheelchair? It’s cos he deserves to be taught a lesson. He should have read the fine prints and should have the common sense not to put ALL his money in one basket (what kind of an idiot is that?). At least the banks did wrte the risk down in fine prints – the bucketshops that cheated my dad, didn’t!
And all the blokes who, like the wheelchair fella, believed that they can only gain and not lose money in the investments ought to be knocked on the head! What the hell were they thinking? There is no such things as 100% risk free. Even deposits in large established banks can be defaulted – Northern Rock, Lehman, etc, such that the Singapore government had to assure the citizens that all deposits will be protected!
So, whose fault is it? It’s really theirs. Economic turmoil is just part and parcel of the world economic cycle. The economy cannot be perfect all the time – it’ll have to crash some time. But these fellas actually believed that the economy is invincible. If you ask me, idiots with that mentality deserved what they got.
But alas, the gullible wheelchair bound person will not lose all his money as his principal amount of $200,000 is guaranteed as long as he keeps the investment to term. There goes a good lesson down the drain. I’m pretty sure the fella is going to invest his money on something else safer in future, and he will make the same mistake again and he will plead again and be given the lifeline again… He may never learn.
Exactly my sentiments too, but I have been bashed up verbally for taking this stand. There is such a thing as market cycles and no such thing as risk free investments, people just dream on and kpkb when things do not go their way. High risk, high returns, even CPF can go bust, do not discount such thoughts. There are some who were mis-sold some crap products but the majority were just plain greedy. That said, can I return my apartment that I bought back to the agent, I did not know I have to pay for it. hehe.
While I agree that one needs to understand risks involved, I would like to caution against comparing investing in a mutual fund run by a fairly reputable bank and as you call it, bucket shops.
“These people literally trick you into parting with your money without even revealing anything. My dad got tricked of over $100,000 by a company claiming to be associated with the government.”
I’m assuming that your “these people” really didn’t reveal anything about their business model to their clients. It would appear your father was summarily duped just by simple claims of association with the government.
Yet the market is never inherently good, and caveat emptor is heartily espoused bitterly by parties such as yourself who have never received any reprieve, and scam artists (such as investment bankers, heh) who would rather have unregulated markets where they can spin their tales and bathe in mountains of money.
Point is, while there is no such thing as a “100% risk-free” venture, no one would be willing to invest their capital in anything that was only laden with risk. The government has to provide a framework where there is compensation in cases of gross fradulence and misrepresentation. Without such guarantees in place, there would be very few people brave enough to invest anything, and there would be little economic growth.
In short, you do need some sort of legal framework where people can seek redress for gross financial injustice. It might not apply to the case of the handicapped man, but without such measures in place, there would be little confidence in banks and other financial or commercial institutions.
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Mercia – well said.
It is exactly what all the other countries are trying to do … to restore confidence in the investment climate and the financial systems.
Only fools will take the stand that these people ought to learn a lesson and let’s just move on.
No investment … no growth. Many of my friends already think Hong Kong is faring better as a financial hub because their regulators are more nimble in making assurances and decisions.
Lately, our government has shown to be very tardy in national events, like in the Selamat’s case, this saga is watched and assessed by others.
The government has to provide a framework where there is compensation in cases of gross fradulence and misrepresentation
Strong agree! Except that in the case of the minibonds, High 5 notes etc, I’m very sure that there aren’t cases of “gross fradulence (sic)and misrepresentation”, or else the directors of the various banks wld have alredi been arrested n charged!
Wonder what the vocal TKL etc wld have said back in the days when minibonds etc were hot investments, had MAS stepped in to say u can’t buy if u are old, uneducated, non-English educated. Wah, I’m sure such a ruling wld have started a war against discriminating those who happen to fall into such categories and MAS wld have been called fascist n illiberal.
As for HK: I’m at a loss y anyone shld want S’pore to imitate or lead HK in the current crisis management. HK is far more exposed $ for $; there was a bank run there for heavens sake! 100% deposit insurance is a desperate last ditch measure: used only when u don’t have any more fire power or when all around u have jumped n threatened to capsize u.. deposit insurance isn’t cost free, for the depositors, banks, taxpayers..
Didn’t Singapore resort to 100% deposit gurantee too?
In fact, we even gurantee the foreign deposits!?
I think it is important to have a framework. As I read more about these “structured deposits”, the more I am convinced they are really junk products sold as premium deposits.
I think it may do the banks more good to just resolve the issue fast and move on. Afterall, it’s only 10,000 of them affected.
I am a customer of DBS and how they are handling this issue disturbs me. Small thing like that cannot handle, what happens when there is really a bank run on it?
Afterall, not forgetting that DBS has a very high risk exposure on the IR project. Fear arising from any bad news about the project tanking is going to trigger mass exodus. Sands is now teethering on bankruptcy.
So, it’s no brainer that I have moved 80% of my funds elsewhere. I don’t want to have to stand under the hot sun at Hong Lim one day. I prefer shopping at Vivo.
Of cos S’pore now has 100% deposit guarantee. That’s wot I meant when others do it, S’pore is also forced to jump in, even tho the inherent strength of our banking system doesn’t need it.
And S’pore isn’t alone in guaranteeing foreign deposits becos unless u are the DR of Congo, you wld have foreign banks operating on yr shores and yr citizens wld be free to deposit with foreign or domestic banks n foreigners are also welcome to deposit in yr country. FYI, ireland which started it all began by guaranteeing only domestic banks but had to guarantee all banks within a few days. Ditto now for all countries which provide guarantee
And Anon Uncle, I hope the bank you’ve moved into is more solid than DBS and operates in a country as solid as S’pore. Otherwise u won’t even have Hong Lim Park to protest in! LOL!
The banking sector in Singapore has been downgraded. I normally don’t take the local papers very seriously despite their assurances that Singapore banks are “solid” as you termed it.
Lehman Brothers was solid not long ago.
Uncle Anon:
The banking sector in Singapore has been downgraded.
So have all the banks across the globe, in case u haven’t noticed.
When I say “solid”, I’m talking abt solid facts such as capital adequacy ratios (u don’t know, meh; S’pore banks have one of the highest, if not the highest, in the world); fewer non-performing loans than those elsewhere; full write-offs against CDOs etc.. and yes, NO domestic bank here has called for capital infusion, unlike those in US, UK, Europe etc
Hope wherever u’ve sent yr savings to can boast similarly objective criteria. If not then, u may have to say ta-ta to yr hard earned money, assuming it’s hard earned..
Auntie seemed very concerned with my hard earned money.
Nowadays, no point talking about the past performance of our local banks.
Going forward is going to be difficult. Today, Singapore is given a swap credit line. Better to read behind the news than to quote them wholesale. Important to know the right people too.
I’m no financial expert like you. Just a simple bloke who wants to keep his hard earned savings protected.
Frankly, never trusted those RMs. A few that I spoke to knew lesser than this old man.
You must be a very very young auntie to still believe in objective criteria and that money can be hard-earned or otherwise.
By the way, nice knowing you.
But I am out of town for a long while.
Cheers.