Saturday, 4 October 2008

Man Must Be Crazy

The two events that shocked the world. Big banks collapsing and tainted milk.

Both events have caused chain reaction. I didn't think such a great effect that the issue of sub-prime market will have on the financial industry. But after thinking a little deeper, I've seen some light to it. Due to the property boom time in US, banks are lending out to people and many were not checked for their credibility. As the values of the properties go up, property started changing hands and loans keep getting bigger. When it comes to a point where the borrowers are unable to pay back the mortgage, the crisis starts.

What goes up must come down. The property value starts to drop and many people are unable to fork out the difference (amount borrowed and lower actual value of property). Defaults starts to come in, banks are unable to provide interest payment to lenders and thus investors and depositors are affected.

The financial industry works like this. There must be people to lend and to borrow. There are banks, investors, etc who have the money and will invest on such investment packages. Such packages derived from banks packaging a whole lot of mortgages into investment products for investors to put their money in. Just like the Lehman Notes that DBS issued. When defaults occur, the banks holding such products are unable to fulfill their obligations to investors and incur debts (either interest payment or principal payment). Thus investors are affected with all their investments wiped out.

Banks borrow from other banks to finance mortgage loans and thus this domino effect that banks start crumbling as defaults rack the high notes, banks can't pay other banks. Debts will incur and thus the situation is similar to investors. The investments were wiped out and banks start to crumble.

The root of the problem is actually the greed of man. Individuals want to earn the extras through buying and selling, in the process loans are obtained from banks. Banks seeing such huge interest will definitely ride on the bandwagon and accept loans as their target is to earn the interest that individuals promise to pay (i suppose irregardless of credibility). And thus everywhere people are jittery about the financial outlook.

The tainted milk is also another case of greed. Low costs, high output equals huge profit will have drive many unscrupulous merchants to mix melamine with milk to produce high protein milk powder and products to earn the profits. People use efficiency in the wrong way. For the same amount of milk can produce more milk powder with the combination of melamine. There is no ethics in these merchants.

The victims are actually the cow farmers and consumers. From here we can see that the rotting part is actually the "in-between" of this whole process. To earn the difference, such acts to improve protein count by adding melamine is being used. We can foresee other "creative ideas" coming up and causing further damage to mankind. Man is truly crazy.

Wednesday, 1 October 2008

Financial Advisers!!!!

I guess I can't be soft on those financial advisers who always try to push their products to customers. Saying as we age the premium will be higher and try to advise me get the product before I turn 30 so that I do not need to pay a higher premium.

I had previously turned her down to purchase the policy as I'm cash strapped. Its really frustrating to hear her say the same thing again on the phone to ask to meet me up to explain the policy further. I was like if I agree, I'll have to waste another couple of hours and if I'm soft hearted, I'll have to squeeze from my savings to pay for the premium.

Other advisers are about the same. As I told them I had allocated all my income accordingly and I do not have extra cash to purchase the policies they recommend, they'll look at my allocation and advise me to cut this, cut that, take out my savings to purchase, recommend only products suitable for the individual needs, etc.... But I can only say I will look at the products when I've got extra cash but at the moment I'm cash strapped once again. Now I dread to see my financial advisers. As such a session can last at least 2hours. What a waste of time!!!

But I do learn something from this. Financial advisers are really a pain in my ass. Though some of my friends say that I realise it a little too late but for me is, it is better to learn it late than never learn at all.

Happy Hari Raya Puasa and Children's Day

Children's Day
Children are you feeling short-changed. Haha... A combination of two holidays into one day. That sure dips a little mood here.

After enjoying so many children's day, I didn't feel the urge to find out why there's children's day. So today I decided to look up why there is a children's day. A search on wikipedia found that it is actually a day that was set by the UN General Assembly in 1954 that all nations to observe a Universal Children's Day as a day of worldwide fraternity and understanding between children and of activity promoting the welfare of the world's children. Each country is responsible for passing legislation providing a day and name appropriate for compliance with UN resolution and in Singapore it is on the 1st October.

Welfare of children is to provide a good environment for their normal development in aspects of health, education, emotional and social. It is easier to achieve the physical aspect such as health and education. But the spiritual aspect like emotional and social are much tougher to achieve. In Singapore, children are provided with good medical and education assistance. The development of spiritual falls on parents. But due to societal changes, it seems parents still need to work harder to achieve spiritual development of children.

Hari Raya Puasa
Happy Hari Raya Puasa to all Muslims. Since I'm searching on children's day, I might as well search on Hari Raya Puasa too. Haha.... its a good learning experience.

This festival is a day to rejoice. It is also known as Edil Fitri in Arabic. It is a celebratory occasion after a month of fasting (Ramadhan) and not as some mistook it for a new year of muslims. It is a religious period for Muslims. Before this day, Muslims read the Quran, fast, abstain from sensual and worldly pleasures. The purpose is for Muslims learn to appreciate the finer aspects of life and incline towards giving to the less fortunate.

Fasting is expected of all adults but flexibility is practiced where old people, the sick and pregnant women are not required to fast. Make up for lost days are allowed too where one is has fallen ill, required to do physical work all day, etc. The method of fasting follows how Prophet Mohammed broke fast. Young children are trained to fast at the age of 6 where they fast for half a day to prepare for full fasting when they are adults. Family members and friends are brought closer during this daily fasting as at break of fast tarawih prayers are conducted. Friends take turns to exchange invitations to break fast known as majlis berbuka puasa meaning "breaking of fast" as one big happy family. It is a time of forgiveness within the Muslim community and a time for strengthening of bonds amongst relatives and friends. New clothes, decorated houses and exchange of invitations between friends and relatives commemorate Hari Raya Puasa. Children salam (greet) their parents on the morning of Hari Raya Puasa and ask for forgiveness and blessings.

The first three days are the days of "open policy" where friends and relatives visit. (Oh no wonder, some mistook Hari Raya Puasa as a new year for Muslims. Its similar to chinese celebrating CNY). Muslims will visit the dead too. There's a ceremony called Malam Tujoh Kikur (all souls night), where 7 days before Puasa, a lamp is added each day and by the seventh day there are seven lamps lit in a complete row. These lamps are meant to welcome the souls of the departed who are supposed to be visiting their families in the night.

On Hari Raya Puasa, food is prepared and everyone had a heartly meal. There will be beef rendang, ketupat and lontong. There will also be desserts like cookies cakes and pineapple tarts.

This day is really very meaningful where Muslims go through the process of enduring, hardship, etc to remind themselves not to take things for granted. And with the celebration with family members, relatives and friends, no wonder Muslim society is still closely knitted.