Tuesday, August 19, 2014

Defending Unorthodox Ways Of Doing Business

While Brazil has denied links with property firm EcoHouse, a developer who claimed to be working with a Brazilian government social housing programme, it has not refuted reports that GIC Private Limited (formerly known as Government of Singapore Investment) has acquired an 18.5 percent stake in Brazilian education services company Abril Eduacao.

Opaque as ever, GIC did not disclose how much was shelled out for Brazil's primary and secondary school market. Reuters is guessing that the investment is worth about $330 million. How much of that has been tapped from the Central Provident Fund ("GIC pays no regard to what the source of funds is" - Tharman) is more difficult to decipher. We know CPF can be used for our children's education, but spending it on Brazilian kids?

Skip to 49:50 of the video (Lee Kuan Yew speaking in October 1998 at the Shell Distinguished Lecture Series: "The Origin of the Meltdown in East Asia") where he says, "I'm not wanting to defend unorthodox ways of doing business," just after defending Suharto and family for stashing away $42 billion of a nation's wealth. It's okay, he said with a straight face, because Suharto and his family had vested $42 billion and their enterprises in Indonesia, "they didn't put their money outside". 30 years of "corruption, cronyism, bribery and the rest of it" was justifiable in his eyes "because they made growth". What brought the country down was foreign debt, and he blamed IMF for highlighting the financial morass.

We may not have to worry about foreign debt, but the local debt could bring us down to our knees. The composition of government borrowings outstanding as of March 2013 was S$396 billion (comprising T-bills ($60 billion), SGS Bonds ($87 billion) and SSGS ($249 billion)). We now know what SSGS is. We now know where the SSGS ends up. What we don't understand is why they are still saying our CPF is risk free.

12 comments:

  1. Is voting PAP really risk free?

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  2. Didn't Temasek get a shellacking to the tune of $S400 million in 2008 in ABC Learning which went into receivership? In 2009, a Temasek spokesman said: "We continue to monitor the situation but are not in a position to provide further comments." Obvious, the money has already skidaddled. Why this obsession with acquiring education services? Are these investments "flame-proof"?

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    1. Obviously they didn't learn their ABC - Avoid Brazilian Companies........

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    2. Australia, Brazil, China.....our Sovereign Wealth Fund alphabet soup investment strategy.

      Our total GDP in 2013 was $S372.8 billion at current market price. Since our CPF in the GIC alone is $S249 billion, it is 66.8% of GDP! Our total debt is $S396 billion, which is 106.2% of GDP. I am no economist, but isn't any debt of over 100% of GDP asking for trouble, even if it is local debt?

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    3. " I am no economist, but isn't any debt of over 100% of GDP asking for trouble, even if it is local debt?"

      haha

      how can the debt be risky and asking for trouble when the debt may have not to be repaid back.
      "CPF Life – How can fund become insolvent and thus stop payouts?"

      http://www.theonlinecitizen.com/2009/07/how-can-fund-become-insolvent-and-thus-stop-payouts/

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    4. Madam not worried about losses, she has a super investment called Olam - specialists at mirages and camouflages, will help dress up a pig with lipstick so even losses appear as stellar returns. Its not for nothing that Olam CEO Verghese cut his teeth in Nigeria, mother-land of best financial scams..

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    5. Olam - Obfuscating Lights And Mirrors.
      Nigeria - mother-land of E Bo Lah

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  3. /// What we don't understand is why they are still saying our CPF is risk free. ///

    Well, I think this needs a bit of explaining. It is risk free to GIC and Temasek since if the investments are doing okay, then they reaped all the rewards. If the investments go sour, then the tax payers will pay the bill. Hence risk free as far as they are concerned.

    In other words, privatization of profits and socialization of costs/losses.

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    1. It is a risk free source of money because there is zero chance that the CPF money will ever need to be returned back to the Singaporeans?
      Is this the meaning of risk free???

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  4. What Tharman mean when he say "risk-free" is from the point of view of the PAP government. The PAP government takes little to no risk because they can use our CPF money as they like, give us pittance interest rate and keep postponing the withdrawal age. With the new CPF life, they can finally suck the life out of all CPF holders.

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  5. They did not say it would be risk free for the owners of the CPF money right? So technically they are correct to use the term :risk free":if what they actually meant was that it was "risk free" because the Govt bears no risk when you lose yr CPF money as a result of their gambling. Some chief just would surely interpret it that way. And even if they have to repay you, they have a technology called the money printing press, just like the Fed. Of course the Sing dollar is not a reserve currency, printing sing dollars will lead to inflation, like a banana island once called syonan-to, which old fart knows alot about. But who cares abt inflation later when for now, as long as they continue to draw millions, they will buy some landed properties, some gold.

    so to extend the logic, they will pay you the risk free rate of return, which by definition, is what

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  6. They keep saying its "risk free" bcoz Its backed the the G, who commands unfettered power to tax plus lots and lots of reserves. Which sounds good on paper, until you grasp that the reserves are all being invested in lots of risky business like hedge funds or some banks like UBS or Merrill Lynch. As for the power to tax, they will surely tax you like crazy to make good the money they borrowed from you which they lost in the casino. Circular errors everywhere, but it's good enuf for the spin masters in the state propaganda newspapers.

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