US Likely to Avoid Debt Default

It seems that the US will avoid a potential debt default. After weeks of following this issue on and off, I was quite amazed at the amount of politics at play here. It seems that congressional leaders will most likely approve a deal to raise America's debt ceiling. And somehow I don't think the deal was what President Barack Obama wanted as he was initially calling for one, broad debt agreement that included cuts, entitlements and also taxes.

The final deal that will go before Congress this week seems to be a compromise which includes cuts of about $1 trillion and also relying on a bipartisan congressional committee (I will take that to mean comprising both Democrats and Republicans) to propose by November another $1.5 trillion in other deficit reductions that could range from cuts, entitlements or tax increase. This new dealwill pave the way for US to avoid the Aug 2 default.

With this good news, gold prices decline from their record prices while oil prices continue to climb. Will the Singapore stock market also respond positively to the news once the final agreement is reached? It is scary to think that one day away from the deadline, the most powerful nation in the world is leaving it really till the last minute to finalise something as important as this.

Concerns Over Dubai World Result in Increase of Debt Insurance Costs

Dubai World, Emirate's flag bearer in global investments, is undergoing a $22 billion debt restructuring. This has provoked a lot of speculations and an air of uncertainty has started to settle over the financial market. As a consequence, bond yields as well the debt insurance cost of Dubai World has started to shoot up. This looks particularly striking when you think of the recent billion dollar bailout of Dubai by Abu Dhabi.

The finance world was virtually speechless when this investing giant declared in November that it is going for a debt payment standstill. Dubai World can proceed with debt payments owing to the extremely expensive bailout by Abu Dhabi. However, no official agreement regarding payment standstill has been reached.

There has been a surprisingly sharp increase of five year credit default swaps (CDS) for Dubai recently. They are right now quoted at 510 bps. Do you understand the implications? It would cost more than .5 million to insure $10 million of the emirate's debt for five years.

The sources at ING investment management say that the announcement from Dubai World was absolutely unexpected and they did not have a clue about it. Sources confirm that ING did not receive any proposal from Dubai World. The whole issue is quite obscure right now.

The CDs are about to reach a level which was witnessed in the eve of the bailout. This has triggered the shooting up of debt insurance costs for Abu Dhabi and Bahrain as well. However, the rise in debt insurance has been relatively small for them. Financial experts opine that Standard and poor’s decision to revoke its rating for Dubai Holding Commercial Group has made quite an impact in this part of the world. Clearly, the apprehensions about Dubai World are affecting other companies like Dubai Holding.

It is significant that the rise in debt insurance costs came at a time when Greece is knee deep in debt and other countries in the euro zone are facing debt crisis as well (In fact debt management is quite an issue in euro zone right now). There is no question of an emergency situation right now but people are naturally skeptical since there is a possibility of debt rescheduling.

The $10 million, thanks to Abu Dhabi, will help Dubai World to refinance for 2010 as well as 2011. Moreover, its sister concern Nakheel has a domestic bond which is supposed to mature soon. Experts predict a $ 1,0 billion in net international bond insurance in this part of the world in the current year.

Author Bio:
This is a guest post by Kevin Craig who is a financial writer for various finance related Communities. He has been providing advice on debt relief since 2007.He has helped many indebted people to get out of debt by giving them proper financial advice for debt management. With his advice many are now living a debt free life. You can get in touch with him at kevin.craig672@gmail.com.

Alternative Investments - Own the Sun

Apparently from a news report, somebody now owns the sun. This is really innovative as people exploit loopholes in the law to register themselves as the lawful owners for planets, the moon and now even the sun. She apparently wants to charge people for using the sun. How ridiculous can this be? Since she is the rightful owner, can I sue her if it gets too hot? The news report is below:

MADRID - AFTER billions of years the Sun finally has an owner - a woman from Spain's soggy region of Galicia said on Friday she had registered the star at a local notary public as being her property.

Ms Angeles Duran, 49, told the online edition of daily El Mundo she took the step in September after reading about an American man who had registered himself as the owner of the moon and most planets in our Solar System.

There is an international agreement which states that no country may claim ownership of a planet or star, but it says nothing about individuals, she added.
'There was no snag, I backed my claim legally, I am not stupid, I know the law. I did it but anyone else could have done it, it simply occurred to me first.'

The document issued by the notary public declares Ms Duran to be the 'owner of the Sun, a star of spectral type G2, located in the centre of the solar system, located at an average distance from Earth of about 149,600,000km'.

Ms Duran, who lives in the town of Salvaterra do Mino, said she now wants to slap a fee on everyone who uses the sun and give half of the proceeds to the Spanish government and 20 per cent to the nation's pension fund. She would dedicate another 10 per cent to research, another 10 per cent to ending world hunger - and would keep the remaining 10 per cent herself. -- AFP

Profitable Plots - Another Land Investment Firm Gone Wrong?

I wrote sometime back warning readers about land banking.

I was just generally uncomfortable with some of the ideas that were being surfaced in the market and after talking to a few friends who had invested in land banking products, realised that the deals might not be as good as they are marketed to be. Of course, I could be wrong and there might be some good land banking deals out there. But for me, I will stay clear of this kind of investment.

Of course, I was not surprised to read in the papers about another troubled investment firm - Profitable Plots which is currently under probe by the Commercial Affairs Department (CAD). I remember their glitzy advertisements during EPL half time match breaks and also saw some of their booths at Great World City before. So I am not surprised that some investors have lost their money. Who can resist such sales tactics?

It seems that 106 investors have lost a combined $9.5 million. Profitable Plots has some 1,000 clients here so I am not certain why only 106 people went to the CAD. Shouldn't all the clients be clamoring for the $60,000 that is left in Profitable Plots coffers? If that is so, each one of them will only be entitled to less than $60. And I hope that they don't need to pay any legal fees for that!

My guess is that some of these clients probably do not even know that Profitable Plots is in trouble. They are probably not monitoring their investments and the news. After all, I also did not know that Profitable Plots was in trouble. I just found out like today when reading the newspapers.

I have said it once, and I will say it again: Beware of any deal that sounds too good to be true.

Median Monthly Income Goes Up

A survey by the Ministry of Manpower finds that the median monthly income of full time resident workers have risen by 4.2% to $2,710 this year. This is compared to $2,600 for the previous year.

The data for median gross monthly income for the full-time employed (less full-time national servicemen) are as follows:

2006: $2,170

2007: $2,330

2008: $2,590

2009: $2,600

2010: $2,710

CIMB-GK regional economist Song Seng Wun noted that real wage growth was "just barely keeping pace with inflation".

Rooney, Manchester United and Job Loyalty

So Wayne Rooney has been having a poor form lately in football. This was after his dismal World Cup performance earlier in the year. Then some news came out that he had an affair while his wife was pregnant. To make things worse, his form on the pitch did not improve and he was left on the bench for many games. For some of the games, he was not even considered for the bench.

Now, the latest news is that Alex Ferguson and Wayne Rooney are going their separate ways. After some weeks of denying that Rooney wants to leave, newspapers today reported that Wayne Rooney had asked to leave Manchester United. That's after he had spent almost 6 years at United since moving over from Everton. Job loyalty? Just throw it out of the window. Here comes the mercenary. Well, at least that's how the newspapers were reporting it.

Come on.

Who amongst us dares to say that we have sticked with one company for 6 years? Most people don't even practice job loyalty nowadays yet when soccer players want to change clubs, we suddenly call them mercenaries and blast them for being selfish, money-faced and what nots.

This is incredible considering that many people today do not even stick with a company for 6 years! Most people I know have only been with their company for less than 4 years. In fact, it seems common for people to change companies ever so frequently nowadays. Job loyalty? It seems that people nowadays are no longer loyal to only a certain company. After all, no company today dares to promise its employees lifelong employment. What they can guarantee is lifelong employability and not lifelong employment.

Considering that soccer players have only such a short career span, it definitely makes sense for them to eke out the best opportunities for themselves before they hit the "official" retirement age of 35. To be left on the bench for a season is almost akin to loosing your work experience for like 10% of your working life.

Job loyalty certainly does not exist in work outside football so why do we expect this kind of standards from footballers. Give Rooney a break.

Peter Lim - Almost Liverpool Owner.

So the news is out. Peter Lim withdrew his offer for Liverpool after its owners did not revert back on his better offer than New England Sports Ventures (NESV). And NESV are now the proud new owners of Liverpool which just lost 2-0 to Everton. Liverpool now stands at the 2nd last in the English Premier League and are in the relegation zone. Of course, it is still way to early in the season to tell.

I guess it is really a pity that our very own Singaporean billionaire did not get the chance to be the owner of Liverpool FC. Imagine the limelight it will throw on Singapore. A Singapore owner for one of the top football clubs in Europe and England! What a pity. I guess most people underestimate how such things can actually bring so much other untold benefits to Singapore.

For one, readership of this blog went skyhigh during the news of Peter Lim making an offer to buy Liverpool. My readership for this blog hit record highs for a few days consecutively. Too bad the news has died down almost as fast as it started. And I am sure many Singaporean Liverpool fans are sorely disappointed.

I guess we can only think about all the "what ifs" now.

Perhaps Manchester United next ? =)

Remisier King Peter Lim Offers $750m for Liverpool

Peter Lim had increased his bid for Liverpool to fend off US rivals. Besides offering to clear the debts of Liverpool, he is also willing to give an immediate cash injection of 40 million pounds for the football club to buy new players. His bid is also attractive as it does not require an financing.

This comes amidst a bitter court battle over the sale of Liverpool. The other two bidders are New England Sports Ventures (NESV) and Mill Financial (a US hedge fund).

Mr Lim is the son of a fishmonger and is revered in Singapore financial circles for being an extremely savvy investors. Known as the "remisier king", he amassed a large fortune and had a winning touch in various companies - the biggest being that in Wilmar International which grew from $10 million initial investment to close to $2 billion today.

He however has business relationship with Manchester United and has the sole rights to own, operate and develop a chain of the famous club's restaurants across Asia. Whether he will give up the venture remains unknown.

The fate of offer will however depend on the court battle that is currently being waged between Liverpool's owners and chairman. The Liverpool owners want to stop the sale as they claim the price is too low. If the court rules in favor of the current Liverpool American owners, the club is likely to go into administration and will lose even more points in the Premier League.

Being a savvy investor, Peter Lim certainly must know what he is doing and while English media and fans are wary of the bid, Singaporeans here are cheering that our very own local hero could potentially own one of the biggest sporting clubs in English football history. Others have however questioned whether that money could be invested in the ailing local soccer scene which would benefit in a big way from that amount.

As Andy Ho, president of the local Liverpool supporters' club says: " This will put Singapore on the world football map."

Girl Made to Sign Pre-Nup Agreement

Apparently, some girl was about to get married when her in-laws and husband-to-be sat her down and wanted her to sign a pre-nup. They also wanted the marriage registered in the US so that the pre-nup will be enforceable as pre-nups are not recognised for marriages registered in Singapore.

The forum thread is attached below:

Read this : http://forums.asiaone.com/showthread.php?t=33015

Do you think pre-nups are necessary? Is it wrong for the rich to try to protect their assets?

AXA FutureProtector High Lapse Rate

It was reported in the Straits Times today that AXA, an insurance company, is trying to claw back $7 million from local financial advisory firm Finexis.

Last year, Finexis had a promotion where they were giving away free 1 year term insurance to its customers and potential customers. This free 1 year term insurance was AXA's FutureProtector policy. Most probably unknown to AXA, Finexis gave away all these insurance policies without asking customers to pay a single cent.

This was my personal experience:

Financial Planner from Finexis: "I got free insurance to give you. Just sign it here and after 1 year cancel it. Free, why not just take it. $200K coverage."

Me: "Okay lor"

I readily signed up for the free insurance from Finexis with the mindset to cancel the policy after 1 year. Afterall, that was what I was told to do. In fact, just this year, the agent sent me a giro cancellation form so that I could cancel off the policy as agreed upon. But I had no use for the form as I had already informed the bank beforehand to cancel off the giro agreement at the start of the year.

So now we know the repercussions of giving away free insurance. I am pretty certain that many of those who took up the free insurance just lapsed their policies as they saw no need for that protection at all in the first place. The only reason they took it up was because it was given totally free of charge without them having to purchase any other policy at all. We Singaporeans love free stuff =)

What is Happening to Singapore?

I must be crazy. Or perhaps I am just short tempered lately. But what on earth is happening to Singapore?

In the past 1 to 2 years, I have been encountering more and more service staff who have no inkling of how to speak English at all!!! And they are supposed to be in the customer service line!!

The reason I am angry is because one would expect them to at least speak some basic English considering the job that they are doing. Afterall, there are people in Singapore who do not speak Chinese.

Some of these service staff also have an attitude to go with it. I remember once when I clearly saw a service staff who I know was from China at first glance. I spoke in Chinese and asked for one food item. She packed in two instead and I quickly corrected her to say that I only wanted one. She had the cheek to speak back to me and said that I actually said two!! Wah...fainted...

The last encounter was really amazing. I was asking for a high chair for my child at a supposedly Western restaurant. The service staff stared blankly at me and I repeated the request.

The woman actually said this in Chinese: " Ni jiang hua yu hao ma?" (Can you speak in Chinese please?) I have nothing against speaking in Chinese to service staff. But my thoughts go out to the non-Chinese speaking population. How do they cope?

I have even seen with my own eyes, a service staff trying to speak to a Malay in Chinese before. After the Malay ignored her, she even like rolled her eyes, most probably thinking to herself why the customer was ignoring her.

My oh my...What is happening to Singapore??????????? Is it just me?

Independent Financial Advisers?

I read in the Straits Times the letter to the forum by Larry Haverkamp titled : "Onus on insurers to boost transparency".

In it, he referred to another recent article which mentioned that financial advisers should not call themselves "independent" if an insurance company pays them a bonus for hitting sales targets. Mr Haverkamp goes on to suggest that dropping the term "independent" is a good idea but might not be a big deal as advisers will still continue to push the products that pay them the most.

MAS actually has guidelines on whether a financial adviser is "independent". And at times, it can be pretty grey as certain product providers do provide incentives that might make them bias in favour of a particular investment product.

Haverkamp is also correct to point out that playing with the word "independent" is actually just a small step forward. The ideal reform would be to empower consumers and let them make decisions based on a complete knowledge of the various products namely:

1. DIY method (Buy Term Invest the Rest)

2. ILP

3. Endowment

4. Whole Life Plans

Sing Dollar Rises with Record GDP Growth Forecast

With Singapore's GDP expected to grow at a record 13 to 15 percent in 2010, the Sing Dollar is also expected to rise to curb inflation. MAS has declared that it will maintain a modest and gradual appreciation stance for the currency at the next policy meeting.

I have always been quite interested in economics. Unfortunately, I have never been trained in this subject. The closest I got was to study Economics 101 in university and that was pretty much about supply and demand lines. We hardly talked about currency appreciation and inflation.

This is my version or laymen's language of what is going on:

1. Singapore's output in terms of products and services have been pretty high over the past 2 quarters. As such, the expected GDP figures are going to be between 13 to 15 percent. GDP stands for Gross Domestic Product and is basically a measure of the country's economic output. For the long term, a healthy GDP growth is around 3 to 5 percent.

2. When GDP rises, inflation is also expected to increase. This is because firms require more workers and start bidding against one another to attract workers so as to produce a higher output. This leads to an increase in the prices of goods and services and thus leads to inflation. When GDP grows rapidly, inflation is also expected to rise rapidly. Most economists try to keep a low steady inflation rate of 2 to 6 percent. That basically means that there will ALWAYS be inflation in Singapore as it is judged that low rate of inflation is good for the economy. So do take note that inflation is not some airy fairy thing that only takes place once in a blue moon. Most countries try to keep a positive inflation as they view that deflation is bad for the economy. In that sense, we can expect inflation to be always with us.

3. By appreciating the Singapore currency, inflation will be kept in check to the low rate. MAS is not trying to abolish inflation. Rather, it is trying to achieve the targeted inflation rate of 2 to 6 percent which is deemed healthy.

I am not an economist and I am also not from MAS. But I guess this is the linkage between GDP, inflation and currency appreciation. At least, this is the way I understand it to work =)

Median Income to Rise by 2020

I haven't had much to write about in the couple of days. Today, when I turned to the front page of the newspapers, I saw the headlines that states that average Singaporeans can expect their incomes to rise from the current median income of $2400 per month to $3,100 per month.

The funny thing about how I read news articles is not on what they report but rather on certain aspects that probably interests noone else but me. In reading this news article, I was more interested in why the goal was to raise the median income instead of the average/mean income. The 2nd thought that formed in my head was this: Will an average Singaporean earn more or less than the median income of $3,100 per month?

The difference between median and mean

This is probably secondary school maths but I guess there is a slight difference between median and mean (or average) when used in statistics. Generally, it depends on the data set and whether the mean or the median gives you the more accurate representation of what "average" really means.

When data is symmetrically distributed, the mean is a good way of calculating the average income. The mean is simple obtained by adding all incomes together divided by the total population. However, when data is skewed either to the left or the right, it might be better to use the median income to give a more accurate reflection of what "average" is in Singapore. So the question that is left to be answered is whether the income distribution curve is skewed to the left or the right. (Of course, to measure income that is not symmetrical, the median is a much better way that the mean).

So there is the tricky part if you say that the "average Singaporean can expect his income to rise because the median income is expected to rise." Here, what it means is that median income actually represents the "average" Singaporean's income more truthfully.

So I basically answered my two thoughts in this posting.

1. To measure income which is often not symmetrically distributed, we use median income which reflects the average income much better.

2. An average Singaporean can expect to earn the median income of $3,100 in ten years time and not more or less.

Other questions that will probably go unanswered are these:

1. Is the mean income in Singapore higher or lower than the median income?
2. Which one is harder for the government to achieve? Increasing the mean income or the median income?

Are You A "Loser" for Eating Alone?

I saw this short article on Straits Times regarding eating alone.

In Singapore culture, it is deemed embarrassing to be seen eating alone. In fact, I think most people would rather skip their meals if they have to eat alone.

Is it true?

Based on my personal experience, I have certainly felt that way before. In the past, when I was still working in an office, we would all go and eat lunch together at the cafeteria nearby. Sometimes, due to work committments, my usual lunch kakis would be out of office and I was left alone. It was really "embarrassing" in a sense to be seen eating alone in the cafeteria where there were many other acquaintances / colleagues around. These are of course the people that you don't usually mix around with because they are from different branches and departments.

Many times, I found that I resorted to packing my lunch and eating at my desk rather than be seen eating alone.

Nowadays, I have overcomed that fear. Perhaps it is because I no longer work in an office. I certainly don't mind eating alone. But there is still that nagging fear that I might meet someone I know and it might be an "embarrassing" situation.

Do you dare to eat alone?

What Happened to Michael Fay?

I read with interest the news on a Swiss man who has been charged with vandalising the MRT trains at the train depot in Singapore. 33 year old Oliver Fricker has been released on a bail of $100,000 even though his passport is still impounded. His accomplice who is British is apparently already out of Singapore.

This reminded me of the Michael Fay incident back in 1994 where there was this whole big hoo haa when Singapore decided to cane a 18 year old American (who was reportedly suffering from ADHD) after he vandalised cars and stole road signs.

So what happened to Michael Fay?

After much pleading from the US, Singapore still proceeded to cane him at Queenstown Remand Prison. President Ong Teng Cheong however reduced the number of strokes of cane from 6 to 4. Still, the United States media had a field day thrashing Singapore's supposedly draconian laws, almost labelling us as a repressive state for scarring a poor boy for non-violent act.

When he was released from prison, Michael Fay flew back to the United States to be with his biological father. He had moved to Singapore earlier to join his biological mother and step-dad.

After that, he went on various television interviews and claimed that he was "tortured" and did not actually vandalise any cars. He admitted to stealing road signs but not to vandalism. Subsequently, he was involved in substance abuse and also possession of marijuana. He was also involved in reckless driving and stuff in Florida.

What Will Happen to Fricker?

So if an 18 year old American teenager who supposedly came from a broken family and had ADHD was actually sentenced to jail and given 4 strokes of the cane, what will happen to Fricker?

33 years old isn't exactly young.

Perhaps his punishment might be even more severe. But then we can only wait and see....