Trickle-down Economics

Read At the Polls, Icelanders Punish Conservatives.

...“It is the same poisonous philosophy that we had here, based on a lack of moral awareness and greed, and people who thought nothing of flying Elton John into Iceland for their 50th birthdays and paying him 70 million Icelandic kronur,”

Steingrimur Sigfusson, Iceland interim finance minister.

Photographs of bankers who left Iceland after the financial crisis have a new use in the restroom of a bar in Reykjavik, the capital.

27 April 2009

Statistics

A reader's comment on TOC It does get worse.

" I heard on CNA yesterday that the new HDB development, The Peak @ Toa Payoh is selling at $720k for a 5 room flat…To me, this is a ridiculous price to pay.

I remember that when I first graduated as an Engineer 18 years ago, my starting pay was at $2+k then (common amongst my cohorts) and now after so many years I am hiring fresh graduates also in the same $2+k range.

I struggled then to pay my executive HDB flat as a fresh grad which cost me $200k then.

I wonder how the young graduates can pay for decent living in Singapore with the same salary I had when I first graduated so many years ago.

Life in Singapore has regressed. Sad. "

The Peak @ Toa Payoh

http://theonlinecitizen.com/2009/04/it-does-get-worse/#comments

18 April 2009

Fancy Finance = Economic Progress ?

Paul Krugman on Making Banking Boring.

"... Despite everything that has happened, most people in positions of power still associate fancy finance with economic progress. "


Some readers' comments:

" Funny you should mention "The Gilded Age". Mark Twain co-authored a satirical novel of the same name in 1873 and I quote his view of the world economy at the time.

(A US congressman is giving his view of a woman lobbyist): "She was nothing but a woman, and did not know how much of the business prosperity of the world is only a bubble of credit and speculation, one scheme helping to float another which is no better than it, and the whole liable to come to naught and confusion as soon as the busy brain that conceived them ceases its power to devise, or when some accident produces a sudden panic".

This is 1873 mind you! I guess we will now start the cycle over again. "

— Gerry, Sherborn,MA

http://community.nytimes.com/article/comments/2009/04/10/opinion/10krugman.html

" The insane elevation of finance in our country reminds me of crank mega-vitamin health theories. Of course it turns out that finance really is like vitamins:

we need some. More than enough doesn't really help. Too much can be toxic. "

— Joe, Somerville, Massachusetts

http://community.nytimes.com/article/comments/2009/04/10/opinion/10krugman.html

" If the money supply and the banking industry are modeling what is happening in the real economy, then any extreme growth of profits in the banking industry vastly overwhelming the growth in the real economy must be a sign of serious distortion.

The model takes off on its own, but that doesn't mean real life has gotten better. It only means that the model is out of whack.

Unfortunately the keepers of the model stand to profit short-term from distorting it and the public needs to keep a watchful eye. How come the conservatives can see distortions of the model when it comes to grades and school performance, but why are they so blind when it comes to the modeling role of the financial system relative to the underlying real economy? "

— E. Kuhn-Osius, New York

http://community.nytimes.com/article/comments/2009/04/10/opinion/10krugman.html

" One aspect of banking that also influenced the current financial meltdown is the advent in the 1980s of the 401k.

With so many Americans now having considerable "skin in the game" and with the banking sector contributing significantly to mutual fund gains over the past 20 years, it will be difficult to implement regulations that reduce the influence of this sector.

Other less risky options for retirement planning will need to be developed before strong regulations in the banking sector can be implemented.

Or, another sector, perhaps energy, will need to show promise as a replacement option in IRA portfolios. "

— Dianne, Columbus

http://community.nytimes.com/article/comments/2009/04/10/opinion/10krugman.html

I would like to think that our CPF (Central Provident Fund) is generally safe and also prudent. What with a rate of return of "only" 2.5% and 4% for the Ordinary and Special account respectively. I hope our skin, as a nation, is not too deep into the game.

11 April 2009

Universal Healthcare

China says will have healthcare for all by 2020.


08 April 2009

Paul Krugman is a bad influence... ?

A reader's comment on Krugman's "The Market Mystique"

" A pretty good piece, Mr. Krugman. It embodies the views supporting it very well – that the purpose of any humanly engineered framework (such as markets, governments) is to improve the lot of man irrespective of individual efforts.

Don’t get me wrong: while I disagree with the underlying premise, it certainly is a legitimate view to hold, and is held by many.But it’s wrong. At least for America.We start from very different premises.

To me, the purpose of government is NOT to tell me what I must do but what I must not do (for the benefit of all, or at least the great majority). It’s up to me to improve my own lot and, to the extent that my abilities and character permit, to improve the lot of man.

I work within a framework of law that tries to keep me honest and seeks to protect others from my possible predations.To you, the purpose of any such framework is to advance the material well-being of people. Sounds great, but it’s never worked – nothing planned and acted on by anything other than individuals ever has. Beyond that, it’s dreadfully condescending – in that world people are incapable of transcending difficulties and natural challenges through hard work, risk-taking and guts, and coming out the other side as winners in life; they require organized help from a paternalistic system, a market that’s gerry rigged to try to guarantee an outcome that some believe is good. So, while I acknowledge your premise I disagree with it.

The “Market Mystique” is not invalid because it occasionally fails without appropriate controls, and that’s bad because markets have as their purpose some social good. They don’t. They’re merely mechanisms that allow people to do what they want to do – it’s people who either embrace social advance or don’t and through their own actions validate themselves or don’t.

So, by all means, re-regulate those markets to limit potential for catastrophic failure. But stop thinking that they’re the answer to poverty, disease and the failings of the human spirit.

They’re not. You are. "

Richard Luettgen, New Jersey

Stop begging! Work hard!

No matter. Just keep writing...

" ...If Singaporeans share no idealism except the logic of the free market, we will sell our citizenships to the highest bidder, the country that can accord us the better standard of life... "

The Online Citizen.

And why not! (In a moment of despair...)

06 April 2009

Voodoo Economy

CEO to leave GM with US$20m

Good deal!

Now, he can do without the work stress and still get to keep US$ 20, 000, 000.

What is US$ 20, 000, 000 ? This amount is just too mind boggling for lesser mortals to comprehend.

How the world economic system can get so out of whack that we can pay a person twenty million US dollars, while 1.1 billion people are living on US$1.00 and another 2.7 billion people living on US$2.00 a day ?

How do you value money? Imagine with all the money in this world put together, can the earth produce enough to meet the money? If not, then the prices of these "produce" will have to be increased until such point where all goods equal all these money.

But with this rise in price, the very poor might as well go kill themselves!

02 April 2009

Do world's corporate leaders know the value of money?

Straits Times Forum 02 April 2009

" REFER to Mr Liew Kai Khiun's Forum letter, "Review executive rewards", last Thursday.

I agree with him that companies should always review their top executives' remuneration packages periodically to stay in tune with the economic situation and communicate to the public a sense of fairness and decency - more so in these challenging times.

What is happening to our world's top corporate leaders?

Minutes after the Edinburgh home of RBS bank's disgraced former chief executive was vandalised, an e-mail message that was sent read: 'We are angry that rich people like him (Sir Fred Goodwin) are paying themselves a huge amount of money and living in luxury, while ordinary people are made unemployed, destitute and homeless.'

Among his excesses was the 5.3 million pound sterling (S$11.5 million) refurbishment of a building - styled "Sir Fred's Pleasure Dome" by staff - that was barely used.

Do the world's top corporate leaders have so much money that they have forgotten its real value?

The wealth wasted could have been used to save millions of people out there who are homeless and struggling to have a simple meal.

United States President Barack Obama has indeed a mammoth task ahead of him to try to cleanup this mess that has been left behind by these so-called 'most successful' corporate leaders.

Phang Geak Lean (Ms)
http://www.straitstimes.com/ST+Forum/Online+Story/STIStory_357434.html

Protests flare in London

" We have been robbed. I am coming to support the older people who have been working all these years. If we did any stealing we would go to jail. "

Vinzcente Oliver, 22, from northern England, protesting about how low interest rates have hit savers and pensioners

No wonder they are so angry !

02 April 2009

Performing CPR on a Voodoo Economy

" How did so much of our economy become defined by the process of turning money into more money, with no new product, service, or innovation in between?

And merely openning up the flow of credit is not going to create jobs -- already, there are many who would qualify for loans, especially at these low rates, but don't borrow, because there is no demand for whatever enterprize they are investing in.

The economy is a living system -- and just as multi-organ failure creates vicious cycles that make survival nearly impossible, it feels as though there are too many things that have gone wrong, too badly, to expect a single solution to work.

It is like trying to feed a banana to someone in cardiac arrest because they have low potassium.

What they really need is potassium IV, oxygen, a defibrillator, intubation, a ventilator, and dialysis -- with a lot of close monitoring to be sure the patient isn't brain dead. And if there is active bleeding, that needs to be stopped too, and the blood replaced.

I know "the problem was building up over a long time, and won't be solved overnight" -- but this doesn't address the fact that our living economy is at risk of becoming brain dead as we speak -- the life support of bailouts will create the illusion of survival for a while, but the patient may never wake up.

We really only have about four minutes to get this initial resuscitation right. "

— Randall, Minnesota

http://community.nytimes.com/article/comments/2009/03/27/opinion/27krugman.html?s=3&pg=9

02 April 2009