Minimum wages + ObamaCare + Unemployment = ???

This is the awful monster that you get when you put minimum wages (aka maximum wages), Obama's Affordable Care Act (aka national insurance plan for everyone that no one wants to pay for) and Unemployment Insurance (aka insurance against trying to find work).

For the majority of you who don't read US news, this is basically a combination of three "well intended" populist vote buying laws that had morphed into a horrible monster that forced employers to...

1. Pay the minimum wage since there is no incentive to pay more.
2. Convert as many permanent staff to temporary staff as possible to kill entitlements such as bonuses and benefits.
3. Restrict working hours to 29.5 hours per week as you must pay for the ObamaCare if you go over 30 hours or risk a hefty fine.

And the net result is let's say you are working in New York, you get $214 per week (29.5 x $7.25) flipping burgers, assuming you can land yourself a job in the first place.

And so how does the employee responds? Simply reduce productivity since there is no prospect whatsoever for conversion to a permanent position, pay raise or bonuses.

Oh why even bother to try to work when you can collect your unemployment benefits at 60% of you last average weekly wage which is $128.40 doing nothing at all for 99 weeks?

Source : http://www.zerohedge.com/news/2013-08-19/obamacare-strikes-forever-21-which-forcibly-demotes-some-workers-295-hours-week

Reading tea leaves

Have you notice that DBS has been changing the denominations and minimum withdrawal accounts at their ATMs?

First, ATMs with a minimum withdrawal of $200 appeared. For the folks trying to withdraw the bare minimum amount of $20 for whatever reasons (don't lie, it is because they are broke and/or didn't have financial discipline), not because of the fear of loss), sorry, you are out of luck.

Then with time, even more ATMs dispensing only $50 appeared. And lately, they started to dispense $100 notes as well.

How I interpret the bank's actions is that these are the bank's reaction to inflation. When inflation is creeping upwards, customer draws cash in ever larger amounts and therefore forced the bank to refill the ATMs at a higher frequency.

Moreover, it makes little sense to spend more to employ more Certis Cisco guards for more ATMs refilling runs.

What I am expecting is that inflation will be rearing its ugly head again and MAS is likely to strengthen the Singapore dollar to rein it in.

And so our overseas holidays will likely to become even cheaper in the future.

Random thoughts on why Singaporean don't make babies

1. When people were poorer than, their retirement plan was their children who will support them when they are old. Nowadays, things had changed. The parents do not need financial support or didn't expect the children to. Thus the people no longer are willing to have children.

2. There was no reliable birth control or safe abortion then. No way to terminate once the act was done.

3. There was no TV or internet. No distractions in other words.

Hence the fastest way to make babies is to destroy TV, internet and make people all dirt poor. Tada! We don't need any more FTs...once the new babies grow up.

Trying to swim is really hard when ...

I was trying to go for a swim in the evening last week and I arrived at Ang Mo Kio swimming pool to stare at a notice that it was close for 3 days due to maintenance. Undaunted, I cycled to Bishan swimming pool and I realised I had forgotten my towel. After the swim, I had to dry myself using my stinky shirt but found that the towel wouldn't have mattered anyway because I had to cycle home in the rain.

Today, while changing into my swimming trunks, the elastic strings snapped from the inside and I had to go home instead.

Wow, it's not easy to swim these days.

Adding to the flaming topic of population growth of Singapore.

I came across an interesting article posted on the Worker's party website, "A Sustainable Singapore with a Dynamic Singaporean majority" by MP Low Thia Khiang which was delivered in Parliament on 7 Feb 2013.

A PDF document titled "Table of Different Solutions to the Problems" caught my eye. Within the document, a summary of the solutions supported by the Worker's party and PAP were listed.

Without permission, I copied and pasted the content of the PDF here and added my own comments. As this is an article and document written by the Worker's party, any of the solutions supposedly coming from PAP should be taken with a ton of salt because it is bound to be bias. Let's objectively go through the content of the PDF file.

1. Low birth rates
   
   Workers’ Party solution
   Institutional reforms to remove obstacles for young couples and set birth rates on path to recovery.
   
   
   
   PAP Government solution
   Use monetary incentives to entice young couples to have more babies and hope birth rates will improve.
   
   My comments.
   Worker's party solution using institutional reforms will also unlikely to work, along with the monetary incentives employed by the PAP government. My take is that the diagnostic made was wrong in the first place. It made several assumptions that the problem was caused by high housing costs, lack of family and social support, lack of quality childcare options, and bad work-life balance that are preventing young couples from marrying earlier and having more babies.
   
   What I think that the cost of a country with a large middle class. The problem was the mindset of the new generations. Let's face this, there is no incentive to reproduce as people get more and more materialistic. Why saddle yourself when you can enjoy the world with your love?
   
   Back in the days of 1950s, housing costs was cheap but the young couples were typically living in with the husband's family, so they didn't have to move out and get hit by any housing cost. But now, the expectation is that you can never place more than two female in the kitchen without bloodshed, so young couples prefer to move out upon marriage. Contributing to the lack of family support, the parents of the new couples were also questioning why they are expected to look after their grand children when they are already so old. Maybe taking care of the first grand child was fun, how about the next?
   
   Work life balance is a personal choice most of the time. The better your own productivity, you can work less and get more. The reason why work life balance is out of whack is the fact that the young couples were chasing dollars in order to maintain a higher standard of living and unwilling to let it go. Just two decades ago, dining out was considered a luxury and was only done for celebrations. Take a look now and I believe this is true.
   
   The mindset of the people towards the family has to change. Unless institutional reforms includes forcing people to get married and have children, none of this is likely to work. On the flip side, think about the conditions that made my parents. My grandparents were not rich, there were no TV, no Internet and no condoms. Two generations were living under a single roof but there were children everywhere. Maybe those are the right conditions for high birth rates. Thus does having a couple with no distractions, no entertainment and no contraceptive methods may yield better results? Maybe throwing in a free porn channel can help too.
   
2. Shrinking citizen core
   
   Workers’ Party solution
   Focus on recovering citizen birth rates to maintain citizen core; grant citizenships to foreign spouses .
   
   PAP Government solution
   Give out new citizenships to immigrants to top up shortfalls to meet birth quota.
   
   My comments.
   Both solutions are not exclusive and are necessary. I am not a big fan of the idea of defining "The citizen core" as locals versus foreigners. Historically, the demographic of the island is changed with every successive generation. Every since 1819, foreigners have arrived in mass, worked, lived and integrated with the island's original population over time. I came to the conclusion that the term "local" in Singapore is nothing but a contemporary thought. With globalisation, this process of de-localisation and the internationalised identity of the local population is inevitable.
   
3. Immigrant integration
   
   Workers’ Party solution
   Promote integration through family ties and educational institutions
   
   PAP Government solution
   Integration through online course and participation in PA activities
   
   My comments.
   Again, none of these will likely to work. Promotion of integration through family ties? Unless you are talking about a foreign spouse, family ties are useless. In the case of a foreign spouse, they have to integrate or the marriage is over anyway. This makes the point made by Mr Low meaningless. Similarly, educational institutions and PA activities are unlikely to help much either.
   
   However, I must admit that this is not an easy thing to do and I do not have any solutions on this one either. The time required for integration for every new citizen can take decades with varying results. From my observation, by the time the next generation, when their Singaporean children are born, the integration is as good as done as the children are raised and educated like most children in Singapore.
   
4. Ageing population
   
   Workers’ Party solution
   Senior citizens are a resource and could be encouraged to work in appropriate occupations
   
   PAP Government solution
   Elderly citizens are a burden to society that needs to be supported by immigrants
   
   My comments.
   The only way senior citizens can be a resource is by re-entering the workforce and ending the idea of retirement. This will increase the manpower pool and drive salaries down for jobs that they can perform.
   
   I had always scorned the idea of retirement, thinking that this is a way to remove headcount from the workplace by "natural" attrition or a chance to slash their ever-growing salaries which must have grow over the years while in employment. Probably when I am near the age of retirement, I will be faced with the dilemma of not saving enough to slack till I die,or to accept a lower salary to for the same job, assuming my employer still wants my services.
   
   Therefore, as a voting citizen upon retirement age, I have the option of either continuing to seek employment for a low wage or to get immigrants to support my retirement. Since I will not be squeezing in the peak hour trains if I am retired, why should I vote for the Worker's Party?
   
   And yes, senior citizen is a burden to the country if they did not save enough for their own retirement. Strangely, Mr Low asked "Is the government admitting that the CPF scheme is causing insufficient savings that our senior citizens will become a burden?" I had no idea what is the basis of CPF being the cause of our senior citizens becoming a burden because it sounds like an oxymoron. Preparing for your own future is everyone's personal responsibility and the CPF was never meant to allow you to retire at your current lifestyle.
   
   "The government sees our senior citizens as fiscal and healthcare burdens."
   How is this not the case? Again, if the senior citizen does not save sufficiently for their health care, the load has to be passed to the taxpayers or we can leave them to die on the streets instead.
   
   "The government’s solution is again immigration, as though by increasing the support ratio, our senior citizens will be magically supported."
   There is no magic. It call creating a larger tax base to pay for the current cost. Yes, this is a Ponzi scheme involving getting the new comers to pay for the people who are already in the scheme. The only way not to continue the Ponzi scheme is to remove entitlements, remove subsidies and basically reduce cost to the point that you no longer need to do so.
   
   Otherwise, we can print more Singapore dollars or sell more debts and pass the ensuring hyperinflation bill to our future generations. Somebody got to pay the bills someday.
   
5. Slowing economy
   
   Workers’ Party solution
   Promote resident workforce growth through greater labour force participation of women and seniors
   
   PAP Government solution
   Promote foreign workforce growth
   
   My comments.
   This is a right answer to the wrong problem. If the answer is for promoting a greater local workforce to meet the demand of a growing economy, increasing labour force through a greater participation of women and seniors is a good idea.
   
   However, the reason of the slowing economy is Singapore is not because the labour force, local or not, cannot meet the demands of the economy. The economy in Singapore is driven by foreign trades, and that is declining due to the on-going global economic crisis. Increasing the labour force does not address the underlying issue of decreasing demand.
   
   I don't think the PAP is promoting foreign workforce growth as the solution to the slowing economy. The foreign workforce are for filling gaps that the locals cannot fill at a reasonable price or speed.
   
6. Infrastructural
   
   Workers’ Party solution
   Build for the quality of life of current population
   
   PAP Government solution
   Build to prepare for worst-case scenario of immigration tsunami
   
   My comments.
   Referring to my comments in problem 2, we are actually part of an older immigration tsunami and we are in no position to deny the next. Why are we always talking about a "current population" when it is not something you can make static in today's world? Either we prepare for tomorrow or we will be left behind in the world.
   
7. Workers’ Party solution
   For Singaporean families
   
   PAP Government solution
   For Immigration
   
   My comments.
   For integration. Immigration is inevitable, is a part of our history and our national identity. There is never a point in history since 1819 that we had deny immigration and we should not do so just to put a show of nationalism which is meaningless in a globalised world. This sounds more like hypocrisy and double standards to me.
   
   From a hundred local folks in 1819, we had grew to 5.3 million today. Seriously, do you think that a bunch of locals suddenly decided to reproduce themselves since then? It was all through immigration.
   
   Not to worry, the immigration tsunami will stop as soon as Singapore becomes unattractive to them. Probably at the same time, our "locals" will also be joining another immigration tsunami, going for the next best country of the time.
   

Last words before I get flamed.
Given a choice, there is nothing to stop you or me from migrating to another country doing the immigrants are doing and facing exactly the same issues as they do.

We are not Japan and will never want to be. Read the following Wikipedia article for an idea of what is to be expected if we following the path of what the Worker's Party is advocating. Aging of Japan.

My take on sustainability is that none of what we are doing or going to do are sustainable. Like it or not, we are in the greatest global Ponzi scheme ever in human history. There is little room for moral values, nationalism and protectionism. Our future as a national depends on how much you can grab now, not how much you can grow in the future.

Is Trust Built, Earned Or Given?

Often, we hear the phrase, "you have to earn my trust" when establishing any relationship but in reality, what people tend to do is to give it away blindly.

Personally, i believe trust is neither earned SMS certainly not given, it is built.

You may ask, doesn't earned and built actually the same thing? It is not. Earned imply the concept of doing something and getting something, in this case, trust in return. So can we spend trust? No!

That's the difference between building trust and earning trust. Building trust as with earning trust takes time, but the quality of the trust varies and it is put entirely at stake every time. You can't spend a bit of trust, you either build more of it or lose it all in a collapse.

Giving trust blindly is even worse, because this is an open invitation to disaster. I am pessimistic to human behaviour, and if left alone, self interest will rule their actions. When you give away trust freely, and you have a resource in demand, you will probably get abused because you are not protecting it.

So this is what i mean whenever i says, "trust is built, not given".

Post mortem of an epic disaster that almost happened

Seldom do I blog about work but I can't really resist doing an entry on the most miserable failures I have seen in my career.

All names are falsified to protect to guilty and innocent alike.

Ahem. Here I go.

People who know me will find me pretty confrontational at times, because of my stance at drilling down to the most painful spot to address problems at it's root, while people prefer to sweep the dirt under the carpet to maintain the status quo. I learn that from history that it is a timeless truth that ignoring a problem or pretending that it doesn't exist will never solve a problem. But instead, when left unchecked, the problem will snowball into a hollywood-class disaster that will make Fukushima seems like paradise.

Although some short term pain may be unpleasant and unavoidable, it is my prerogative to steamroll over the problem as long as it in my interest to do so. At work, I do somewhat run a team of contractors and vendors as part of my job in IT infrastructure department. Learning from a couple of negative examples, I knew that it is important to keep morale high and the way I do so is to let my team know that their contribution is important and recognised, never to be taken for granted. The team needs to be properly protected from external parties from abuse and misuse. This will give me a reliable team which will be willing to go for the extra miles whenever needed.

This is somewhat lacking within my organisation. We engage many contractors and vendors to support our operations but they were often treated unfairly as outsiders and the bias is obvious throughout. However this is not the topic of this blog entry and the spotlight is on what happens when you blindly treat them as resources and not your arms and legs.

The star in this story is one of the developer in the application support team who is in charge of several key systems, which are crucial to the operation of the organisation. Let's just call him developer X, who is supplied by a vendor for close to a year by the time of writing.

Over the course of the year, there were a number of incidents on one of the key systems. As I dug deeper, the investigation showed that there were multiple errors generated by the application and the IT infrastructure systems are working perfectly. Developer X took a short little peep at the errors and did not proceed to investigate further, saying that the errors did not cause the failures so far. Troubled by the lack of evidence that the troubleshooting was done properly, and more importantly, being sick of wasting my valuable resources on handling application failures, my patience finally ran out. Instead of treating the failures as isolated incidents, they are properly grouped a chain of incidents and brought to the attention of Developer X's manager, the business owner and the VP. Even so, the glacial progress was miserable at best, with the case running into triple digits in downtime. I don't understand why did the business owner didn't tighten the screw on Developer X when they are paying for the application.

Unfortunately, the fun had just begun. Due to a company restructuring exercise, changes are required for two of the key systems. The deadline was to be two months before the deployment to the production environment. Towards the last few weeks of the deadline, it became apparent that Developer X did not understand the requirements of the exercise. There were so many missing and incomplete deliverable that it would have be a complete disaster if not that the restructuring exercise deadline was extended by another month due to other reasons.

Getting really worried and convinced that we were going to have a couple of major deployment failures and serious data integrity issues in the production environment,  I decided that hopium wasn't in my diet and the stakes were too great. Despite that it is not my job to meddle with application development, I had to divert attention to this exercise to prevent a perfectly preventable catastrophe on multiple key systems.

It turned out to be a case of a bad apple, with the manager unaware of the situation and a tub of worms to be sorted out. Things got more and more amazing as we went go. The developer didn't understand how the applications functioned and didn't know what was needed to complete the project. It got even better when Developer X wanted to deploy the solution into the UAT environment when the solution was not approved by his manager nor the business owner. Further more, the deployment process was not followed, without proper documentations and testing.

It didn't help when we have a problem understanding Developer X because of conversation problems and Developer X's comprehension skills is blindly poor.

This was a major red flag as this is a recipe for disaster. At this point, it was obvious that we have a severe competency issue and the problem had to be escalated all the way to the VP. I could see that there was a high risk of data corruption due to the design of the solution and deployment failure due to poor documentation.

The vendor has to send in

The deployment plan turned out to be problematic as well, with important activities being overlooked.

Things wa

3G Sucks In Singapore

Perhaps the most common complain that you can hear these days is the woeful state of the mobile 3G service in Singapore. No service provider is spared from the scorching comments from their customers.

So what had happened? Simply look at your favourite Telco's mobile phone offerings. Almost every phone offered these days are smart phones. The explosive popularity of smart phones in Singapore has completely outstrip the telco's ability to provide 3G data to then. Remember, Smart phones in Singapore uses the 3G service to quench their ever growing thirst for more data bandwidth.

For every user checking out their Facebook walls, whatsapp messages, words with friends, draw something, and twitter feeds, the more data bandwidth is required to connect to the internet.

Now the interesting part is that i suspect that the telco are using the same base stations that they has already previously installed all over Singapore for GSM service, for the 3G service. For each base station, it has an independent link to the internet. This link is shared among all the users in the area connected to the base station.

This means if there are too many smart phones users in the area, the base station will simply run out of data bandwidth while still showing full bars for 3G. Remember the bars are meant to show signal strength, not speed.

This is based on something that i am observing almost everyday. During peak hours, every time a fully packed train pulls into the station, internet days traffic went from ok to totally dead. As soon as the train pulls away, my internet connection confess back to life. Also every time I stray near AMK hub, my data connection drops dead as well. In both scenarios, the 3G bars are at a healthy max level.

So the i hope this explains why your mobile device simply don't hook up to the internet during peak hour in the train or stall in a busy shopping centre.

This might also be the reason why i never came close to busting the 12gb data limit imposed by my data plan from Stinktel.

As every telco had the same issue, the only solution is to move on to 4G as Laghub and M1 fare no better either. Or maybe we can force the telco to stop charging us a premium for 3G when they cannot provide sufficient data bandwidth at their end of the bargain.

Will you trust your wealth to financial advisers?

It's a straight up "No" for me.

I got a general distrust of the financial advisers and planners I have met so far. Generally, they claim to be able to help with your financial but end up trying to sell a load of financial products to me. This is the hallmark of the typical salesman.

Let's apply some common sense and see why I don't think all these add up at all.

1. Qualification and experience
   Slapping a CFA (Chartered financial analyst) certification on top of a salesman doesn't make things better. A CFA certificate is valuable in basic understanding of the financial markets but doesn't not mean that the CFA holder is able to help you to manage wealth.
   
   Things are worse when the financial planners are fresh graduates with little wealth management skills to speak of. Reciting lines from seminars and presentations does not imply true understanding of the subject.
   
   Further more, I find it hard to accept advice from someone without actual experience in managing wealth successfully.
   
2. Conflict of interest
   Having little true financial analysis skills, many of these people claim to have an army of researchers performing all forms of analysis to find the best product to ... help you instead of maximising profits for their company and to get a larger commission in returns.
   
   However the problem is that the advisers and planners is not independent and is inclined to sell products offered by their employer. With the majority of the financial advisers and planners coming from the insurance and funds brokerage and their resellers, it makes sense that they will be interested in selling various forms of their primary products to you.
   
   Think about it, the more risky or lousier the product, more commission is needed as an incentive to promote and push the hot potato to the customers. A good product needs little promotion. Do you need a salesman to tell you that the iPhone is a great product?
   
3. DiversificationOn the topic of investment, whenever some adviser or planner tried to discourage me from going into stocks and instead, diversify my risks my buying mutual funds, I always have this urge to ask them what is their understanding of diversification. In a nut shell, buying a couple of funds is not diversification, even it's across industries and countries.
   
   True diversification requires investment in difference asset classes, which are the following: equities (stocks), fixed-income (bonds) and cash equivalents (money market instruments), commodities and real estate.
   
   
   Putting all your money in mutual funds as your "investment" is generally a bad idea because the money is heavily vested in the equities and bonds market. Any shock to the economy typically sinks both of them together, albeit at different rates of decline. Any actual gains will be subjected to a million management fees conjured by the funds management. I got enough of the bullshit and took out every cent from these vampires.
   
   A FX coach, Thomas said this: "There is nothing mutual about mutual funds. They don't make losses when you do."
   
4. Making the sales pitch
   The financial planners and advisers I had met so far are quite a disappointment in this expect. The usual approach will be a courtesy call to arrange for a catch up session in an attempt to find out your current ability to purchase more of their products.
   
   Usually they will have this new great product(s) that they are offering and you should sign up immediately. It can be a insurance policy that you do not really need, an upgrade to your policy, a new fund etc.
   
   The data presented will almost try to put the product is a positive light but a fair comparison with a similar competing product will never be provided.
   
   The sales pitch for funds can be really bad too. There is no market timing involved. Market timing, an important and key factor in any profitable trade is played down as not important or hard to do. Instead, dollar cost averaging is advocated instead. This completely goes against the common sense of buying low and selling high. Why will anyone buy something close to the historical high? The risk of going down is so much higher and typically not worth the possible drawn down ahead to realise a possible tiny gain. Using a chart without showing 2008 data is as good as lying.
   
   Oh wait, does these guys actually know how to read a chart? We go into that next.
   
5. Charting
   I learnt that when dealing with anything to do with the financial world, charting is the number one skill required. For most of the general public, a chart with a positive trend line is all you need to know that the product is going to make you millions. Didn't everyone said that the trend is your friend? Unfortunately, that's also why so many people are losing money in the financial markets.
   
   Without going into details, let's stick to buying low and selling high. You need to know where was the historical low and high, and where you are now. If you are not sure where the market is now, get your favorite chart showing 5 years of data and get a 5 years old to answer you.

That sums it up my rumblings.

Disclosure: I had exited all my investments in mutual funds a couple of years back. Too much drawn down and a little net gain is not something I am interested in. I am a speculator in the spot FX and spot precious metal markets.

I want to save $10,000 a year.

I have this conversation with my Mother last night which makes me wonder whether personal finance should be taught to everyone.

It started with my Mother coming into my room, pondering aloud whether it is worthwhile for her to continue working at her job while complaining about the high cost of public transport in Singapore. I walked her through the maths and came into conclusions that transportation cost does not eat up her whole salary.

Knowing that my Mother isn't financially savvy, I continued to probe further on what is her expectations and learn that she is trying to save $10,000 a year when her basic annual take home salary is $9600.

From there, I tried explaining that in order to see an increase in personal wealth, you need to do the following:

1. Cut expenses.
   Going on 2 overseas holidays a year is not exactly the best way to do so.
   
2. Increase gross salary.
   Not possible for an uneducated worker near retirement age.
   
3. Alternative income.
   Frankly, investment is not for everyone and speculation is even worse. Another part time job will kill her. The best I can do for her is to convince her not to put $50,000 in a fixed deposit for a measly $900 bucks. That's 1.8% interest in an environment that is expecting 2.5%-3.5% inflation rate in 2012.

I went on to say that going by the advice by financial planners is good but typically useless. You can find out your income and your expenses, but the will power to perform the 3 items above is all she needs. As long as she is proactively doing the 3 items, her bank balance will grow.

As expected, she ended up walking out of the room looking confused. This reenforce my conviction to teach my kids if any in the future the importance of financial education.