Mark Twain

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”

~ Mark Twain

FT Weekend: Air care for frequent fliers

Air care for frequent fliers

By Emma Jacobs

Published: February 2 2008 02:00 | Last updated: February 2 2008 02:00

A petite woman with an elfin haircut, in a black waisted tunic and 4in heels, stands before a group of immaculately tidy men and women. She is delivering a lesson but she has one instruction just for the men – they must never wear Lancôme juicy tubes at work. Mim Allgood will, however, permit tinted moisturiser, clear mascara and lip balm.

That’s because Allgood is teaching grooming to a group of wannabe air stewards and stewardesses in an unprepossessing metallic grey building near Gatwick airport. Inside, the Virgin Airlines campus is like being in Britney Spears’s Toxic video – everyone wears their compulsory post-box red uniforms and the women’s hair is swept up in French pleats and rolled ponytails.

It’s a relatively easy look to maintain on the ground but how do flight attendants manage to look so groomed and fresh at the end of a long flight while passengers’ skin is blotchy and their hair frazzled? Even in the relative luxury of business class, the pallid zombie look, a by-product of the aircraft’s recycled air, is hard to avoid. So perhaps a few tips from the airline grooming classes at Virgin and Silverjet will help to even the score.

Allgood’s class is peppered with women who look like they’re in the qualifying heat for a Miss UK competition. Everyone is impossibly glossy and neat. But the overall message from this seminar is that frequent flying is bad for your skin. The air in the cabin is dehydrating, and moving between climates and time zones will increase your skin’s sensitivity. More worryingly, frequent flying can be ageing. Remedial and preventative action must be taken.

“When you start flying, your skin will become very dehydrated. Look at a bowl of fruit in first class. At the start of the flight, it’s really juicy. At the end, it’s wrinkly and shrivelled. Same for your skin. Even oily skin,” Allgood warns. “People with oily skin often think they escape dehydration because they look shinier at touchdown. But it’s not true.”

The mantra is: drink lots of water, limit tea and coffee, and avoid alcohol. It’s not just imbibing water but also spritzing it on your face and hair, if it’s prone to frizz. However, steer clear of sprays that are pure water. Marcella Knibb, the Silverjet instructor, puckers her face in disgust at the very thought of them. Water sprays dehydrate your skin by sapping it of any existing moisture so she advises using one with refreshing, hydrating additives such as aloe vera, mint or lavender. If you don’t like spraying liquid on your eyes, then squirt it on cotton pads first. Skin wipes are also a good way to refresh your skin but steer clear of the ones they give away on aircraft – the lanolin in those can be an irritant. Go for ones such as Dermalogica’s skin purifying wipes, which have the added benefit of not being included as a liquid for airport security rules.

Ideally, passengers, not cabin crew, should take make-up off at the start of a flight. But if that is unrealistic, then at least some products are no-nos. Red and yellow dyes in make-up, including red lipstick and fake tan, are dehydrating. We are all fiercely warned away from YSL’s Touche Eclat, which is too drying to wear on a flight. In fact, we should restrict our use of the magic wand for special occasions and never wear it as a concealer – it reflects light so highlights rather than hides spots.

The best make-up for flights is mineral-based such as the ranges produced by ID Bare Minerals or Jane Iredale, which use 100 per cent minerals and no preservatives or oils. Unlike a powder, the crushed minerals won’t be absorbed into pores and nurture spots. “It’s so pure, you can sleep in it,” laughs Allgood. She catches herself: “Although don’t. Always take your make-up off.” Also beware of make-up exploding because of cabin pressure. If you reapply mid-flight, always put a napkin on your lap in case of leaks.

We are advised that, whenever possible, we should use flights for a bit of pampering. Knibb takes us through a flight’s pampering routine and instructs us to scrape our hair back, cleanse and tone. If you’re prone to spots, try pinning your hair back on a flight as flopping fringes will only exacerbate the problem. Then, she suggests using a multivitamin concentrate or Dermalogica’s skin hydrating booster and then moisturiser such as Dermalogica’s anhydrous barrier repair. “Don’t worry about nipping to the toilet to rub in body lotion. It’s only the exposed areas – face, hands and neck – that dry out on flights,” she points out. “If you have the guts, put a face mask on, though not a clay-based one to save embarrassment. [Try] a clear one, perhaps a rose hydrating mask by Aromatherapy Associates.” Allgood would go one step further and put an eye mask on, such as one by Guinot. She recommends dunking the tube in some iced water to make it extra soothing. Steer clear of eye drops as they’re drying.

If all these potions look like they’re going to breach security rules, you should pick up samples from beauty department stores. They’ll fit into the airport’s clear plastic bags.

For those who haven’t the time or inclination to pack a range of products or go through a mile-high beauty routine, Elizabeth Arden’s eight-hour cream is “an essential”, says Allgood. According to Rebecca Wadsworth, a member of British Airways’ crew, her colleagues swear by it as the ultimate multitasking cream. It can be rubbed into cuticles, heels, on your face, on your lips before applying lipstick, on your hands and to calm any rashes.

But the ultimate beauty no-no on a flight is alcohol. On this topic, everyone agrees that water or maybe a drink with Vitamin C is best – and if you’re in the mood for a cocktail, try a tomato juice or water with fizzy Vitamin C as an alternative.

Er, what about something stiffer? “If you need to calm your pre-flight nerves, substitute alcohol with cotton wool dipped in lavender and put it in a sealed plastic bag – open it up and smell it when you need a boost,” suggested one flight attendant. Not quite the substitute you were hoping for? Herbal tea was the other accepted alternative.

But if you just have to have a drink, then be sure to have two glasses of water for every alcoholic beverage. That way, your repeated trips to the loo will give you a bit of exercise and prevent swollen ankles.

‘Make yourself feel better with a pampering session’

Elle Macpherson, model and businesswoman: “After long-haul flights, I go to the Luzmon Clinic in Kensington, London, to relieve jet lag and for rebalancing. Luzmon technology is thermostimulation, a combination of electrostimulation and infra-red heat and works wonders for detoxification.”

Sean Harrington, managing director of Elemis: “There’s a lot of dead time when you travel, so if you can make yourself feel better in the sky with a good pampering session, then why not? I think a scrub is always good to do or even a face mask that you can leave on, so that when you get off the plane, you don’t look exhausted, especially if you have a business meeting straight away.”

Amanda Wakeley, fashion designer: “I always get cold on flights, so I wear different layers of my ultra-fine cashmere that I can peel off as I warm up. I find that Australian Bush Flowers travel essence is unbeatable in countering jet lag. I also advocate going straight to the gym post a long-haul flight – it gets your circulation flowing properly and again counters jet lag. I am also a great believer in mind over matter: set your watch to your destination’s time as soon as you board and begin to imagine you are already there.”

Susan Harmsworth, chief executive of ESPA International, a spa and beauty company: “I swear by the Bose noise eliminators that reduce jet lag by cutting out the sound of the engines during flight.”

Copyright The Financial Times Limited 2008

SIA shoddily handled extra baggage allowance request

I HAVE always associated Singapore Airlines (SIA) with exceptional customer service, but was disappointed before even boarding my flight.

I am a student going overseas on a six-month study attachment and am facing great difficulty in squeezing all my necessary baggage into SIA’s 20kg Economy Class Checked Baggage Allowance. Hence, I wanted to see if there was any solution other than paying high overweight baggage charges. This was the start of my frustration.

First, I called the Baggage Office number on their website. The baggage officer informed me that I could request for a Baggage Allowance Waiver with valid reasons by calling SIA’s Reservation Hotline. Several attempts to call the hotline were met with a dead tone. When I finally managed to get an officer on the line, I was informed that they had no authority to grant such waivers. He then said that I should call their ‘baggage department’ and directed me to SIA Cargo.

The officer at SIA Cargo directed me back to the Reservation Hotline. The second reservations officer then told me that if I required additional baggage allowance I should have booked my ticket via a travel agent, as there was some extra baggage benefit. Having booked my ticket several months back, this was not a viable alternative. Upon further enquiry, I was told that I should e-mail SQ Reservations with my request. The short reply to my e-mail was that they could not grant my request due to ‘high operational costs’.

My issue is not with being denied the waiver but with the constant redirection of my request to yet another inappropriate department and the shoddy way in which it was handled. With its reputation as a world-class airline, I expected better of SIA. I can only hope that such substandard service is the exception rather than the rule.

Angela Ang Jie Ling (Miss)

What will destroy us?

The things that will destroy us are: politics without principle; pleasure without conscience; wealth without work; knowledge without character; business without morality; science without humanity; and worship without sacrifice.”

~ Mahatma Mohandas K. Gandhi ~

MM Lee says Singapore must find fourth generation of leaders soon

By May Wong, Channel NewsAsia | Posted: 01 February 2008 2115 hrs

SINGAPORE : Minister Mentor Lee Kuan Yew believes that Singapore needs to find its fourth generation political leadership by the next two elections or it will be in deep trouble.

Speaking at a conference on Friday on the future of Singapore as a global city, he also said he believes that the optimum size of Singapore’s population should be between 5 million and 5.5 million. This compares with the target of 6.5 million set by the country’s planners.

The audience heard Mr Lee’s views on why Singapore should not become like Hong Kong but maintain a certain greenery and space and be unique.

Mr Lee said: “I have not quite been sold on the idea that we should have 6.5 million. I think there’s an optimum size for the land that we have to preserve the open spaces and the sense of comfort.”

The main theme though was on how talent in a globalised world is scarce and for Singapore, this talent pool is scarce.

MM Lee said: “Now we’re confined to a Singapore team. It’s one thing going to the South China Sea for deep sea fishing. It’s another going to Sentosa lagoon. The size of the fish are different.

“But despite that, we have succeeded because I could sense that if we do not produce a team A, what the original team has done would peter away.”

Even among his grandchildren, only one took up a scholarship and he is concerned the rest may not return after their overseas study.

Mr Lee stressed several times that Singapore is losing its top talents abroad. And he is extremely worried that the country will not have enough people to produce a good team of leaders to come up with the best solutions to see Singapore through into the future.

He said that a core of “A” team Singaporeans, born and bred here, has to be found to lead Singapore in the next two elections.

Mr Lee added: “They are the guarantors of the values, the continuity, the sense of commitment that cannot waver in any crisis. I see that as our major threat. Not so much the attraction of talent coming in, but the loss of talent attracted out.

“If in this two elections, you don’t see the silhouette of a fourth generation A team, then you have reasons to worry.”

Mr Lee noted that many talented Singaporeans are drawn to big financial and legal institutions overseas. So the country has set up organisations like Contact Singapore to try and attract them back home with the opportunities available here.

If Singapore wins the challenge of retaining at least two-thirds of the nation’s top talents here, then the country will have a strong central core.

And it is these leaders who have to manage expectations of a population which will increasingly see income disparity.

Derivatives

Notional Value

The total value of a leveraged position’s assets. This term is commonly used in the options, futures and currency markets because in them a very little amount of invested money can control a large position (have a large consequence for the trader).

For example, one S&P 500 Index futures contract obligates the buyer to 250 units of the S&P 500 Index. If the index is trading at $1,000, then the single futures contract is similar to investing $250,000 (250 x $1,000). Therefore, $250,000 is the notional value underlying the futures contract.

Credit Derivative

Privately held negotiable bilateral contracts that allow users to manage their exposure to credit risk. Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private investors or governments).

For example, a bank concerned that one of its customers may not be able to repay a loan can protect itself against loss by transferring the credit risk to another party while keeping the loan on its books.

Credit Default Swap

A swap designed to transfer the credit exposure of fixed income products between parties.

The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product. By doing this, the risk of default is transferred from the holder of the fixed income security to the seller of the swap.

For example, the buyer of a credit swap will be entitled to the par value of the bond by the seller of the swap, should the bond default in its coupon payments.

Inemuri

Sleep, or rather the lack of it makes us less able (if not downright dangerous) in the workplace according to sleep expert Dr Neil Stanley of the Norwich University Hospital. “Sleep is as important as diet and exercise when it comes to the nation’s health,” says Dr Stanley, “but we place no importance on it in our culture. When you are sleep deprived you are putting yourself in a stress situation. In our culture it is socially acceptable to have had no sleep and go into work, even though your ability to function is severely impaired and you could be dangerous.” The good doctor recommends ‘power napping’ as a way of countering the effects of too little rest. “A 20-minute nap gives you an amazing boost, it’s much better than having a coffee,” he says. “Even closing your eyes for 20 minutes is better than nothing, but in the UK it is culturally unacceptable for us to be found napping with our head on the keyboard. However, it’s fine to pump yourself with caffeine even though it it’s nowhere near as effective.” Whilst nodding off at work is still largely unacceptable here, across the world in Japan it’s almost mandatory. Know as ‘inemuri’ or ‘to be asleep while present’, the custom is seen as a demonstration of how committed you are to the job (i.e. you are exhausted because you are putting in so many hours for the company). So well regarded is inemuri that many workers apparently fake it even if they aren’t really tired just to impress their bosses. Interesting place Japan. You couldn’t make this up.

Black swan theory

“So far, the losses reported on Wall Street are staggering. But rumors of much larger losses are being whispered…and at least one source has suggested that the firms may be bankrupt…crushed by total system-wide losses of more than $3 trillion.”

In Nassim Taleb’s definition, a “black swan” is a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations. Taleb regards many scientific discoveries as black swans—”undirected” and unpredicted. He gives the September 11, 2001 attacks as an example of a Black Swan event.

The term black swan comes from the ancient Western conception that all swans were white. In that context, a black swan was a metaphor for something that could not exist. The 17th Century discovery of black swans in Australia metamorphosed the term to connote that the perceived impossibility actually came to pass.

Taleb’s Black Swan has a central and unique attribute: the high impact. His claim is that almost all consequential events in history come from the unexpected—while humans convince themselves that these events are explainable in hindsight.

Taleb believes that most people ignore “black swans” because we are more comfortable seeing the world as something structured, ordinary, and comprehensible. Taleb calls this blindness the Platonic fallacy, and argues that it leads to three distortions:

1. Narrative fallacy: creating a story post-hoc so that an event will seem to have a cause.

2. Ludic fallacy: believing that the structured randomness found in games resembles the unstructured randomness found in life. Taleb faults random walk models and other inspirations of modern probability theory for this inadequacy.

3. Statistical regress fallacy: believing that the probability of future events is predictable by examining occurrences of past events.

He also believes that people are subject to the triplet of opacity, through which history is distilled even as current events are incomprehensible. The triplet of opacity consists of

1. an illusion of understanding of current events

2. a retrospective distortion of historical events

3. an overvalue of facts, combined with an overvalue of the intellectual elite

World's Largest Law Firms

This list of the world’s largest law firms by revenue is taken from The Lawyer and The American Lawyer and is ordered by 2006 revenue:

1. Clifford Chance, £1,030.2m – International law firm (headquartered in the UK);
2. Linklaters, £935.2m – International (UK);
3. Skadden, Arps, Slate, Meagher & Flom, £884.6m – New York City (USA);
4. Freshfields Bruckhaus Deringer, £882.1m – International (UK);
5. Latham & Watkins, £776.1m – National (USA);
6. Baker & McKenzie, £742.9m – International (USA);
7. Allen & Overy, £736.3m – International (UK);
8. Jones Day, £706.0m – National (USA);
9. Sidley Austin, £617.6m – International (USA);
10. White & Case, £574.7m – International (USA);
11. Weil, Gotshal & Manges, £558.5m – New York City (USA);
12. Mayer Brown, £538.5m – International (USA);
13. Kirkland & Ellis, £533.0m – Chicago (USA);
14. DLA Piper (USA), £489.3m – National (USA);
15. Sullivan & Cromwell, £480.8m – New York City (USA);
16. Greenberg Traurig, £472.8m – National (USA);
17. Shearman & Sterling, £458.8m – International (USA);
18. Wilmer Hale – £447.8m, Washington, D.C. (USA);
19. O’Melveny & Myers, £444.0m – Los Angeles (USA);
20. Morgan, Lewis & Bockius, £442.0m – National (USA);
21. McDermott Will & Emery, £439.3m – National (USA);
22. Cleary Gottlieb Steen & Hamilton, £417.6m – New York City (USA);
23. Gibson, Dunn & Crutcher, £409.9m – Los Angeles (USA);
24. Simpson Thacher & Bartlett, £399.5m – New York City (USA);
25. Lovells, £396.2m – International (UK);
26. Hogan & Hartson, £384.6m – National (USA);
27. Morrison & Foerster, £377.5m – San Francisco (USA);
28. DLA Piper (Europe), £366.5m – International (UK);
29. Paul, Hastings, Janofsky & Walker, £366.5m – National (USA);
30. Akin Gump Strauss Hauer & Feld, £339.6m – National (USA);
31. Foley & Lardner, £335.4m – Milwaukee (USA);
32. Davis Polk & Wardwell, £332.1m – New York City (USA);
33. Bingham McCutchen, £325.8m – National (USA);
34. Eversheds, £323.1m – International (UK);
35. Slaughter and May, £321.2m – London (UK);
36. Holland & Knight, £319.5m – National (USA);
37. Dechert , £317.0m – National (USA);
38. Pillsbury Winthrop Shaw Pittman, £315.4m – National (USA);
39. Winston & Strawn, £313.7m – Chicago (USA);
40. Paul, Weiss, Rifkind, Wharton & Garrison, £309.3m – New York City (USA);
41. Reed Smith, £309.1m – Pittsburgh (USA);
42. Ropes & Gray, £306.6m – Boston (USA);
43. Orrick, Herrington & Sutcliffe, £304.4m – San Francisco (USA);
44. Fulbright & Jaworski, £296.2m – Houston (USA);
45. Herbert Smith, £296.2m – International (UK);
46. Debevoise & Plimpton, £294.2m – New York City (USA);
47. King & Spalding, £282.7m – Atlanta (USA);
48. Vinson & Elkins, £280.2m – Houston (USA);
49. Cravath, Swaine & Moore, £275.0m – New York City (USA);
50. Milbank, Tweed, Hadley & McCloy, £272.5m – New York City (USA);
51. Cadwalader, Wickersham and Taft, £265.4m – New York City (USA);
52. Heller Ehrman, £261.0m – San Francisco (USA);
53. Hunton & Williams, £261.0m – Richmond, Virginia (USA);
54. Kirkpatrick & Lockhart Nicholson Graham – £257.71m – National (USA);
55. Arnold & Porter, £255.8m – Washington, D.C. (USA);
56. Proskauer Rose, £249.2m – New York City (USA);
57. Sonnenschein Nath & Rosenthal, £246.2m – Chicago (USA);
58. Wachtell, Lipton, Rosen & Katz, £243.4m – New York City (USA);
59. Willkie Farr & Gallagher, £243.4m – New York City (USA);
60. LeBoeuf, Lamb, Greene & MacRae, £241.8m – National (USA);
61. Baker Botts, £238.7m – Houston (USA);
62. Goodwin Procter, £228.0m – Boston (USA);
63. Simmons & Simmons, £226.9m – International (UK);
64. Wilson Sonsini Goodrich & Rosati, £226.4m – Palo Alto (USA);
65. Squire, Sanders & Dempsey, £225.3m – National (USA);
66. Bryan Cave, £219.0m – National (USA);
67. Alston & Bird, £217.0m – Atlanta (USA);
68. Dewey Ballantine, £215.7m – New York City (USA);
69. Fried, Frank, Harris, Shriver & Jacobson, £214.3m – New York City (USA);
70. Ashurst, £214.0m – International (UK);
71. Katten Muchin Rosenman, £212.4m – Chicago (USA);
72. Howrey, £211.3m – Washington, D.C. (USA);
73. Kaye Scholer, £210.7m – New York City (USA);
74. Norton Rose, £210.2m – International (UK);
75. Covington & Burling, £208.8m – Washington, D.C. (USA);
76. Nixon Peabody, £205.2m – National (USA);
77. McCarthy Tétrault, £203.8m – National (Canada);
78. Freehills, £194.8m – National (Australia);
79. Mallesons Stephen Jaques, £190.7m – National (Australia);
80. McGuireWoods, £187.4m – Richmond, Virginia (USA);
81. Seyfarth Shaw, £184.9m – National (USA);
82. CMS Cameron McKenna, £181.3m – International (UK);
83. Fidal, £181.3m – National (France);
84. Schulte Roth & Zabel, £176.4m – New York City (USA);
85. Dorsey & Whitney, £175.0m – Minneapolis (USA);
86. Perkins Coie, £174.7m – Seattle (USA);
87. Pinsent Masons, £172.0m – International (UK);
88. Minter Ellison, £171.7m – National (Australia);
89. Clayton Utz, £163.7m – National (Australia);
90. Cooley Godward, £163.7m – Palo Alto (USA);
91. Addleshaw Goddard, £161.3m – National (UK);
92. Duane Morris, £159.6m – Philadelphia (USA);
93. Jenner & Block, £158.0m – Chicago (USA);
94. Baker & Hostetler, £156.0m – Cleveland (USA);
95. Allens Arthur Robinson, £154.9m – National (Australia);
96. SJ Berwin, £154.9m – International (UK);
97. Edwards Angell Palmer & Dodge, £153.0m – Boston (USA);
98. Thelen Reid & Priest, £152.7m – San Francisco (USA);
99. Loyens & Loeff, £151.9m – Rotterdam (Netherlands);
100. Denton Wilde Sapte, £147.5m – International (UK).

Singapore apparently paid Citi more when China refused

Singapore apparently paid Citi more when China refused
By MarketWatch
Last update: 9:25 a.m. EST Jan. 15, 2008
The Singapore government’s main investment vehicle agreed to increase the amount it planned to inject into Citigroup (C:C 26.24, -0.70, -2.6%) “apparently to cover” the approximately $2 billion Citi had unsuccessfully sought from the government of China, a person familiar with the situation said Tuesday.

During most of the day, Government of Singapore Investment Corp. (GIC) was committed to invest about $4.8 billion to $5 billion in Citigroup, but later in the day apparently told Citi it would “cover” the amount of money ($1.8 billion to $2 billion) the bank had hoped to raise from the Chinese government, the person said.

GIC’s decision partly reflected GIC’s long-standing relationship with the new CEO of Citi, Vikram Pandit, the person said. GIC was an original investor in Old Lane Partners, a hedge fund Pandit co-founded; it was later bought by Citigroup.

China Development Bank’s rejection of Citi’s request emerged Monday night.

The Singapore government would consider additional investments in Citigroup “if the opportunity and the need arises,” the person said.

Singapore has two sovereign wealth funds – GIC and Temasek Holdings Pte. – which have taken stakes in troubled financial institutions in recent months.

The terms of GIC’s purchase of $6.88 billion in Citi convertible bonds reflect the cash-strapped bank’s lack of leverage: GIC said the instruments will earn a hefty 7% non-cumulative interest, payable quarterly.

The conversion premium is a fairly low 20% and is “subject to adjustment in certain limited circumstances.” However, GIC noted these instruments give “appropriate downside protection.”
The press release didn’t give further details.

All told, GIC will own 4% of Citi as a result of the transaction; it already held 0.3% of the bank. GIC said it won’t “take” a board seat at Citi. Indeed, political sensitivities have prompted sovereign wealth funds providing financial infusions to U.S. and European banks to emphasize their intended roles as passive investors.

GIC pumps S$9.8b into Citigroup

GIC pumps S$9.8b into Citigroup
By May Wong, Channel NewsAsia | Posted: 15 January 2008 1951 hrs

SINGAPORE: The Government of Singapore Investment Corporation (GIC) will soon have a bigger stake in US-based Citigroup.

GIC will pump in US$6.88 billion (S$9.8 billion) into one of the world’s largest banks. This is part of Citigroup’s bid to raise US$12.5 billion of capital to boost its financial position.

GIC is the hand behind the management and enhancement of Singapore’s reserves.

That is exactly what the company is doing with its latest purchase into Citigroup. The two companies took just eight days to seal the deal.

GIC’s investment is done through a financial instrument called convertible preferred securities. This will effectively give GIC some form of protection.

For example, if Citigroup’s stock price falls, GIC does not have to convert its securities into shares and will continue to earn dividends of 7 percent.

But such a prudent investment, with lower risks, will also mean that GIC will see relatively lower returns.

In a news release, GIC’s deputy chairman and executive director, Tony Tan, said the company looks for returns on a long-term basis. He believes GIC’s latest Citigroup investment will meet that objective.

Dr Tan said: “GIC is a financial investor seeking commercial returns on a long-term basis … We believe that the investment in Citigroup will meet our long-term investment objective in terms of risk and return.”

GIC now holds 0.3% of shares in Citigroup. The new deal will bring GIC’s stake in the bank to 4% if converted to shares.

The investment will make GIC, as a single entity, one of the top five investors in Citigroup. However, GIC says it will not sit on Citigroup’s board.

GIC’s latest investment comes hot on the heels of a major deal last month, when it pumped nearly S$14 billion into the Swiss banking giant UBS. – CNA/ir

Citigroup, Merrill Lynch Get $21 Billion From Outside Investors

Citigroup, Merrill Lynch Get $21 Billion From Outside Investors

By Yalman Onaran

Jan. 15 (Bloomberg) — Citigroup Inc. and Merrill Lynch & Co., two of America’s largest financial institutions, turned to outside investors for a second time in two months to replenish capital eroded by subprime mortgage losses.

Citigroup, the biggest U.S. bank, is getting $14.5 billion from investors, including the governments of Singapore and Kuwait, former Chairman Sanford Weill, and Saudi Prince Alwaleed bin Talal, the New York-based company said today in a statement. Merrill, the largest brokerage, said it’s receiving $6.6 billion from a group led by Tokyo-based Mizuho Financial Group Inc., the Kuwait Investment Authority and the Korean Investment Corp.

Wall Street banks have now received $59 billion, mostly from investors in the Middle East and Asia, to shore up balance sheets battered by more than $100 billion of writedowns from the declining values of mortgage-related assets. Citigroup was propped up in November by a $7.5 billion investment from the Abu Dhabi Investment Authority. New York-based Merrill was helped by a $5.6 billion cash infusion last month from Singapore’s Temasek Holdings Pte. and U.S. fund manager Davis Selected Advisors LP.

“The only reason the banks are raising capital from the Middle East and Asia is because those are the only people who have the excess capital to lend,” said Jon Fisher, who helps oversee $22 billion at Minneapolis-based Fifth Third Asset Management, which holds shares of Citigroup and Merrill.

Citigroup declined 68 cents to $28.38 and Merrill fell $1.25 to $54.72 in early New York trading.

The writedowns have reduced Citigroup’s so-called Tier 1 capital ratio, which regulators monitor to assess a bank’s ability to withstand loan losses. With today’s capital increase, the Tier 1 ratio would be 8.2 percent, Citigroup said, keeping it above the company’s 7.5 percent target.

`Capital at a Cost’

Morgan Stanley, UBS AG, Merrill Lynch & Co. and Bear Stearns Cos. also reached out to sovereign wealth funds or state- controlled investment authorities in Asia for money after bad investments depressed profits.

“It does show that investors aren’t completely ignoring the sector,” said Peter Plaut, a senior credit analyst at Sanno Point Capital Management, a hedge fund based in New York. “They are putting in capital but it’s at a cost. Now it’s up to the CEOs to be able to generate returns that exceed that cost of capital.”

The Kuwait Investment Authority, which invested in both Merrill and Citigroup, was formed by the Middle East’s fourth- biggest oil producing country in the 1980s to manage the nation’s wealth. Kuwait may have as much as $250 billion of assets, compared with about $875 billion for the Abu Dhabi Investment Authority, the world’s largest sovereign wealth fund, according to an estimate by Morgan Stanley analyst Stephen Jen.

Singapore, Alwaleed

The Government of Singapore Investment Corp. invested almost $7 billion in Citigroup convertible preferred securities and said in a statement today that it will own about 4 percent of the bank if the securities are turned into shares. With a 4 percent stake, Alwaleed has been Citigroup’s biggest individual shareholder since the early 1990s, when soured investments in commercial real estate left corporate predecessor Citicorp short of capital.

Singapore and Alwaleed, along with Los Angeles-based Capital Group Cos., the biggest U.S. manager of stock and bond mutual funds, Kuwait, the New Jersey Division of Investment and Weill, will receive a 7 percent annual dividend from the investment in Citigroup.

Merrill’s convertible securities will pay a 9 percent annual dividend on the securities until they automatically turn into Merrill shares in 2 3/4 years’ time. The group will get fewer shares if Merrill’s stock price climbs above $61.31 and more if it drops below $52.40, according to the company’s statement.

SEC’s Concern

Foreign investors whose stakes rise about 10 percent trigger a review by the U.S. Committee on Foreign Investment, which examines whether acquisitions by overseas buyers compromise national security.

U.S. Securities and Exchange Commission Chairman Christopher Cox said in December that the growth of state-run investment funds may lead to an increase in political corruption because governments might abuse the funds’ leverage over markets and companies.

While there may be “hand-wringing” in Washington over the investments, there won’t be an attempt to tighten rules on foreign investors, said Todd Malan, executive director of the Organization for International Investment.

“Congress realizes that we need this investment,” said Malan, whose Washington-based group represents 141 non-U.S. companies investing in the country.

The following is a table showing banks and securities firms that have sold stakes to shore up capital. All except Barclays Plc raised the cash after reporting asset writedowns and credit losses amid the collapse of the U.S. subprime mortgage market.

Firm Infusion Investor Stake

Citigroup $6.8 Government of Singapore 3.7%
Investment Corp.

7.7 Kuwait Investment Authority; not
Alwaleed bin Talal; Capital specified
Research; Capital World;
Sandy Weill; public investors.

7.5 Abu Dhabi Investment
Authority 4.9%

Merrill Lynch 6.6 Korean Investment Corp.; not
Kuwait Investment Authority; specified
Mizuho Financial Group

4.4* Temasek Holdings 9.4%**
(Singapore)

1.2 Davis Selected Advisors
(U.S.) 2.6%**

UBS 9.7 Government of Singapore
Investment Corp. 10%
1.8 Unidentified Middle Eastern
Investor 2%

Morgan Stanley 5 China Investment Corp. 9.9%

Barclays 3 China Development Bank 3.1%

2 Temasek Holdings 2.1%

Canadian Imperial 2.7 Li Ka-Shing; Manulife not
Financial; others specified

Bear Stearns 1 Citic Securities Co. 6%***
(China)
_____

TOTAL $59.4

* Temasek has an option to invest an additional $600 million.

** Estimate based on purchase price of $48 a share.

*** Citic has an option to increase its stake by as much as
3.3 percent.

Ten little Injuns

Ten little Injuns standin’ in a line,
One toddled home and then there were nine;
Nine little Injuns swingin’ on a gate,
One tumbled off and then there were eight.
One little, two little, three little, four little, five little Injun boys,
Six little, seven little, eight little, nine little, ten little Injun boys.
Eight little Injuns gayest under heav’n.
One went to sleep and then there were seven;
Seven little Injuns cuttin’ up their tricks,
One broke his neck and then there were six.
Six little Injuns all alive,
One kicked the bucket and then there were five;
Five little Injuns on a cellar door,
One tumbled in and then there were four.
Four little Injuns up on a spree,
One got fuddled and then there were three;
Three little Injuns out on a canoe,
One tumbled overboard and then there were two.
Two little Injuns foolin’ with a gun,
One shot t’other and then there was one;
One little Injun livin’ all alone,
He got married and then there were none.

One little, two little, three little Indians
Four little, five little, six little Indians
Seven little, eight little, nine little Indians
Ten little Indian boys.

Ten little, nine little, eight little Indians
Seven little, six little, five little Indians
Four little, three little, two little Indians
One little Indian boy.

Golden Oldie

Golden Oldie
FORBES
Bernard Condon, 12.10.01

Having called the top of the gold market 22 years ago, a goldbug now thinks that he has found the bottom.

In 1977 James Sinclair boldly predicted that gold would rise from $150 per troy ounce to $900. Gold never reached that mark, but it came close on Jan. 21, 1980, peaking at $887.50. The next day, says Sinclair, he unloaded his entire gold position, personally netting $15 million. Pointing to the U.S. Federal Reserve’s efforts to fight inflation, Sinclair then predicted at an annual gold conference that the metal would languish for the next 15 years. It did. On Friday, Jan. 20, 1995, it closed at $383.85.

So this is a guy to listen to. He’s bullish again. Why? Because he believes, despite the whiff of deflation in the October producer price index, that the U.S. is headed for mild inflation. He thinks that the dollar is due for a fall. He is also impressed that mining companies, which routinely sell unmined metal forward at fixed prices to protect themselves against further price drops, have recently pulled back from placing these hedges, a move that should prompt gold prices to rise. If they do, Sinclair expects a squeeze on gold speculators, who have $36 billion in short positions. Sinclair figures that the shorts will cover their positions soon after gold hits $305, a move that could force the price to $350, even $430.

Persuaded? On the New York Mercantile Exchange you can buy an option to purchase 100 ounces of gold in six months with a strike price set at a slight premium to today’s price. An option exercisable at $300 will cost you $9 an ounce. If gold hits $350 you pocket $4,100 in profits.

Sinclair is not buying just futures and options. Since 1996 he has invested $11 million to develop 5,600 square kilometers of barren land in central Tanzania that he’s convinced hold vast gold deposits. Drilling on the property is still in the early stages, but Barrick Gold is already pulling metal from an adjacent site whose proven and probable reserves have nearly tripled to 10 million ounces in the past two and a half years.

It’s a gamble not many investors would make, but Sinclair has always stood apart from the crowd. On the walls of his office hang six photographs of Shri Sathya Sai Baba, a guru in India whom Sinclair visits several times a year. Sinclair’s love of carrot juice recently turned into a 25-kilo-a-week habit that was brought to a halt only when his doctor grew alarmed at the orange tint to his skin. A loner, Sinclair paid $3 million in 1983 to turn a 19th-century barn into a reception hall for his house but has held only three parties there.

After his 1970s career as a goldbug, Sinclair retreated to his Connecticut estate, where he played with his helicopters, show ponies and collection of Ferraris. He didn’t stay idle long. He built cable systems at Cross Country Cable, a company he started with two friends, then made millions selling some of them to John Malone’s TCI.

“Jimmy is different,” says his onetime cable partner Vincent Tese, the former New York State banking commissioner and now a Bear Stearns director. “But in the trading business people don’t care if you’re purple, just as long as you’re making money.”

In 1989 Sinclair got back into metals after buying a small stake in a Vancouver, Canada, mining company called Sutton Resources. During a trip to Tanzania for the company that year to check out a potential nickel site, Sinclair became intrigued by a 140-square-kilometer patch of land called Bulyanhulu. It was studded with greenstones, volcanic rocks marked by long seams that are often rich in minerals. Some greenstone mines, such as those in Canada’s Kirkland Lake Camp, have been yielding gold for a century and do so now at the relatively low cost of $200 an ounce.

“The opportunity stared at me as it did with cable and gold,” he says. “The only way to make big money is to have the courage to put your eggs in one basket.”

Sinclair helped Sutton buy rights to mine Bulyanhulu, then lobbied for it to do the same in adjacent lands. Sutton balked and eventually sold Bulyanhulu to Barrick. Sinclair decided to go it alone.

By the summer of 1999 he had invested $4 million in the lands near Bulyanhulu. He faced a sickening prospect. Gold had just hit a 21-year low of $246. Bears were predicting $150 soon, a price that could wipe out the profits from even the most efficient of Tanzania’s mines.

“I felt a pit in my stomach, like hunger,” Sinclair recalls. “When I was a young trader, I used to think that I was invincible. Now I feel the risk.”

Simple logic mitigated his fears. It costs most companies $250 (including back-office support) to extract an ounce of gold. With gold trading below cost, it made no sense for mining companies to hedge against further price reductions. Recognizing that such hedges meant that an important force pulling gold down would soon disappear, he reasoned that the bottom was near.

Over the next nine months Sinclair spent $1.5 million on tests that measured magnetic pull to help locate seams in his greenstone. Soon after the tests ended, in February 2000, news broke that some big mining companies had indeed stopped placing new hedges. Sinclair reached into his pocket for $5 million to buy more mining rights in surrounding lands. Barrick expects that the $199 an ounce it is paying to mine gold at Bulyanhulu will drop to $130 over the next three years.

Sinclair hopes to sell his operation to a big mining company soon. To do that he’ll need to prove that his gold can be as richly mined as it is in Bulyanhulu. And pray that bullion doesn’t plummet again.

Sinclair’s bullishness is catching on. One well-regarded bear, Andrew Smith of Mitsui, surprised the markets in September by announcing that he expects the metal to go to $340.

Maktub (it is written)

“You have told me about your dreams… And I am a part of your dream, a part of your destiny, as you call it.

That’s why I want you to continue toward your goal. If you have to wait until the war is over, then wait. But if you have to go before then, go on in pursuit of your dream. The dunes are changed by the wind, but the desert never changes. That’s the way it will be with our love for each other.

“Maktub,” she said. “If I am really a part of your dream, you’ll come back one day.”

Ministry of Sound sues Singapore licensee

MoS Int’l takes suit against S’pore licensee to High Court
By Chua Hian Hou

A LONDON-BASED nightlife company is taking its lawsuit against the firm running the Ministry of Sound (MoS) club in the Republic to Singapore’s High Court.

Ministry of Sound International earlier filed a suit against the Singapore licensee in the British courts, but it seems it has now moved this legal action over to the courts in the Republic.

The MoS outlet at Clarke Quay, which opened in 2005, is run by LB Investments, a subsidiary of listed Singapore firm LifeBrandz.

LifeBrandz told the Singapore Exchange last Friday that Ministry of Sound International has served a writ of summons on LB Investments.

It said the writ ‘alleges breaches of certain terms and conditions of a licence agreement pertaining to the ‘Ministry of Sound’ brand’.

LifeBrandz said it would ‘vigorously defend’ the ‘unmeritorious’ allegations.

The same announcement also said that Ministry of Sound International had ‘discontinued’ its ‘entire claim’ against LB Investments. These claims had been originally filed with the High Court of England and Wales in mid-November.

The lawsuit earlier filed in Britain alleged that LB Investments had violated its licensing guidelines. The alleged violations included not playing the right type of music, not maintaining a stable website and not using the right staff uniforms.

Ministry of Sound International was reportedly suing LB Investments for damages and to force it to stick to its licensing guidelines.

A LifeBrandz spokesman could not be reached for comment yesterday.

LifeBrandz shares closed unchanged at 5.5 cents yesterday.

Reflections of a Recycled Bureaucrat: Leadership Lessons from Hon Sui Sen

When I joined the service, my first permanent secretary was Hon Sui Sen. When he died in harness, in the mid-1980s, he was the Minister for Finance, and I was one of the permanent secretaries in that ministry. He was my boss for most of the intervening 25 years. He was, without doubt, the best reporting officer I had, a perception that most of my contemporaries who served under him shared. I have tried to apply his template of leadership and management in the many areas where I have worked, albeit with nowhere near as much success.

Nonetheless, I was fortunate to observe that template at close hand and to try to replicate it. I suppose that is how traditions in an institution are built, and a culture of good governance is fostered. Like most good things in life, the concept is deceptively simple, the application a matter of discipline. It is a distillation of principles and practices that have stood the test of time. But for success, the environment has to be wholesome.

The example must come from the top. If that vital element is missing, good deeds below decks may ameliorate the situation, but cannot make up for that critical deficiency. So, what was it in Hon Sui Sen’s leadership style that many of my contemporaries and I admired?

Without doubt, integrity—not just moral, but intellectual. Some will say, “What is so unusual about integrity?” Surely, leaders must have integrity to get to their lofty position. Integrity is more than keeping the hands off the till, although scary examples in recent times suggest that some leaders cannot even refrain from doing that. Consider Enron, WorldCom, Tyco, Parmalat.

Then, there are shades of grey—ethical issues that do not transgress any law except one’s sense of honour and straight dealing. But intellectual integrity goes further than that. It is a matter of quietly defending your position no matter how unpopular it may be to the institution.

A second outstanding quality of Mr Hon was his ability to delegate a large measure of authority to his subordinates, to leave them to run their show, and to avoid breathing down their necks. Of course, they were held accountable for their actions, and Mr Hon was no namby-pamby when it came to disciplining people. Yet, he would always support subordinates who made an honest error, and did not shield himself by assigning blame to others. He took the rap for anything that went wrong in his bailiwick.

You may well imagine that such behaviour comes from enormous self-confidence, without arrogance. It is the measure of a person’s generosity of spirit, modesty, the even tenor of his ways, and a forgiving nature. At the same time, while Mr Hon was prepared to defend his officers and ministry, he was respectful of authority, following the age-old principle of rendering unto Caesar that which is Caesar’s.

A third, key attribute was his skill in drawing out ideas from his officers through a heuristic approach, gently challenging assumptions, and urging thinking out of the box. He got the best out of his people.

That, in a nutshell, is what characterises an outstanding leader and manager. Textbooks, management consultants, workshops, seminars, and executive courses, all play a role in the effort to learn about management and leadership; or, if you like, in the context of present-day Singapore, creativity, innovation and entrepreneurship. But above all, keep the eyes and ears open. There are always many examples of outstanding leadership around.

The attributes of good leadership are eternal and universal. They stem from traditional norms embellished by sound management-practices that have evolved and been refined with experience.

The starting point is clarification of the mission, based on a realistic assessment of the environment, and courage in pushing the envelope. Strengthen the organisation, paying particular attention to how people are managed and endowed with authority. Encourage openness, do not fear dissent within limits, and allow those now-cherished attributes of creativity and innovation to flourish. Finally, define and know your customer, and respond to his legitimate needs.

When I look back on the institutions in which I have worked, I do not see any fundamental difference in the package of leadership and management skills that contributes to success. Of course, each institution is unique, with its own mission and culture. An adaptable leader can, within reason, certainly function in many environments. The civil service, or at least the administrative service, testifies to that dictum. The key to successful leadership lies in the individual, the experiences he has been exposed to, the environment. Management gurus, seminars, consultants, and so forth, may be useful tools. They cannot substitute for the real thing.

~ JY Pillay, Reflections of a Recycled Bureaucrat, April 2004

'Mispricing' could cost Deutsche Bank over $1m

‘Mispricing’ could cost Deutsche Bank over $1m
By Goh Eng Yeow, Markets Correspondent

DEUTSCHE Bank could lose more than $1 million after a bungle that underpriced a keenly-awaited new warrant being sold to Singapore investors.

The bank suspended trading of the warrant – issued on Hong Kong-listed China Railway – from 9am yesterday, and it might ask the Singapore Exchange (SGX) to cancel the mispriced trades.

Traders said, however, that should the SGX decline to do so, Deutsche Bank’s losses could well exceed $1 million.

Deutsche Bank announced yesterday afternoon that trading in the warrant would resume at 9am tomorrow.

The bank’s call warrant on China Railway started trading on Monday last week, two weeks after the stock started trading in Hong Kong. Holders can use one warrant to buy two China Railway shares at HK$9.50 each. The warrant expires in June this year.

One dealer said, based on China Railway’s close of HK$10.74 last Friday, the warrant should now be worth over $1, given its long period before maturity.

UNDERPRICED ISSUE
The new warrant was issued by Deutsche Bank at 78.7 cents apiece. It closed last Friday at 77 cents on a heavy volume of 10.65 million shares, after it gained 44.5 cents from Thursday’s close of 32.5 cents.

Deutsche Bank said trading in the warrant was suspended pending the resolution of error trades – ‘due to significant mispricing on its part in the warrant’.

Dealers contacted by The Straits Times believed the warrant attracted heavy trading last Friday, as traders became aware of the serious mispricing. ‘Deutsche Bank will be making a big loss if the bulk of the 10 million warrants was sold by the bank,’ said a remisier.

Still, many were amazed that errors in pricing the warrant went undetected for two days.

‘When Deutsche Bank announced that it was launching the new warrant, it clearly stated that the issue price was 78.7 cents,’ said a market observer.

Warning bells should have been sounded when the warrant was trading at only 32.5 cents last Thursday, even though China Railway’s share price was surging at the time, he added.

Given the two currencies involved, the error could have been caused by a Deutsche Bank trader entering the wrong conversion price into a pricing model.

Still, unless the SGX allows Deutsche Bank to cancel the error trades, there is nothing much the bank can do. ‘There is a consultation paper to give the SGX the power to adjust the transacted price of the trade, rather than cancel them outright, but this policy has not been implemented yet,’ a banker said.

Some traders are also wondering if it is advisable for a warrant issuer to suspend trading of a warrant simply because of error trades.

Deutsche Bank’s warrant mispricing follows error trades at other warrant issuers.

Societe Generale apparently had to pay millions three years ago when a wrong keystroke sent shares of and warrants on Total Access Communications into a tailspin. Last year, DMG & Partners stopped online warrants trades completely, after an Internet trader nearly lost $426,000 on a warrant sale.

Merrill Lynch seeking new capital from Chinese and Mideast investors

You see? Temasek, you see?

Merrill Lynch seeking new capital from Chinese and Mideast investors – report
December 30, 2007: 08:46 AM EST

LONDON, Dec. 30, 2007 (Thomson Financial delivered by Newstex) — The new chief executive of Merrill Lynch (NYSE:MER) (OOTC:MERIZ) & Co Inc is in talks with Chinese and Middle Eastern investors this weekend that could lead to a capital-raising sale of another big stake in the US investment bank, the Observer reported.

John Thain is taking calls from a number of potential buyers, understood to include sovereign wealth funds from the Gulf and China, in a bid to raise extra capital, the newspaper quoted an unidentified US observer as saying.

Singapore state-linked investment company Temasek Holdings (Pte) Ltd said on Dec 26 it had invested 4.4 bln usd into Merrill — equivalent to 91.7 mln of Merrill’s shares at 48 usd a share — plus options to buy more shares worth up to 600 mln usd, as a vote of confidence in Thain’s leadership.

The newspaper quoted the unnamed US observer as saying the Temasek cash would not be enough to insulate the group from the impact of the global credit crunch and another unidentified source as saying Thain was seeking extra overseas capital to boost Merrill’s balance sheet and to avert potential future liquidity problems.

Bonuses for top lawyers hit 9 months

More propaganda to stem the loss of talent. It does not say what proportion of lawyers get nine months. Usually 1 or 2.

Straits Times, 29 Dec
Bonuses for top lawyers hit 9 months
Business boom leads to larger payouts this year, with big firms paying 5-1/2 months and upwards
By K.C. Vijayan, Law Correspondent

BIG law firms, buoyed by the business boom, are handing out bigger year-end bonuses this year, with the best payouts breaching the nine-month mark.

The Straits Times understands that top performing lawyers in top-league firms like Drew & Napier and Rajah & Tann are getting high payouts across the board as rewards to recognise good work when the going is good.

Other firms like Harry Elias Partnership (HEP) and KhattarWong also awarded fatter bonuses of between 5-1/2 and eight months to its lawyers.

HEP’s managing partner Latiff Ibrahim said its top performers are in the ‘booming corporate, construction and litigation practices’.

KhattarWong’s Subhas Anandan said the bigger bonuses also spilled to the non-legal support staff, with the best receiving up to 5-1/2 months.

Lawyers generally attributed the fat bonus cheques to the strong economy, increased revenues and the need to pay high performers for ‘all the hard work and all the nights they have put in’.

WongPartnership, one of the biggest firms here, has had an ‘extremely good year’ in terms of the transactions and briefs received, said Mr Chou Sean You, a partner in the firm.

‘We expect to remunerate our lawyers well for all the hard work they have put in throughout the year,’ he said, adding that his firm traditionally declared its bonuses in January.

The upturn has benefited small and medium-size firms as well, especially in conveyancing work, said senior lawyer N. Sreenivasan.

‘Whether the property boom continues into the new year remains to be seen,’ he added.

He said that ‘with expected rental and salary increases next year, law firms will have to be more efficient, to reduce the impact of these increased overheads on the cost of legal services’.

Small firms which may not be able to match the fat bonuses of their bigger counterparts are unfazed, with some noting the hidden toll in work-life balance for those working in the top league.

Said Mr R. Kalamohan, who has run his own firm for more than 18 years: ‘I don’t know how many ‘handicaps’ I have compared to big firms, but when you look at the work-life balance, it is a different issue.

‘I am not constrained to burn the midnight oil every day unless there are exigencies. I do not think income is the main criterion for a good life.’

Give that man a Tiger.

Sailing a Pico in St Stephen's Beach


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St Stephen’s Beach is a very nice area near Stanley market. It is located within the same bay and if you stand at Stanley together with the tourists and look out to sea and to your left, you will see a boathouse and a patch of sand which is called St Stephen’s Beach. I say it is nice because it is tranquil and not packed with tourists or commercial interests, unlike Sentosa in Singapore. Indeed, the South side of Hong Kong is always beautiful, at any time of the year.

The sailing centre at St Stephen’s Beach is much better than the Sai Kung one, because it’s 5 times less crowded and the staff are more friendlier, i.e. have more patience with newbies like me. In addition, the boats are newer and I would say better than the RHKYC ones.

So last Sunday, I rented a Laser Pico. I had initially invited this Indonesian babe from Morgan Stanley to sail with me but it turns out she had other plans during that Christmas weekend (which is understandable because the concept of Indonesian and babe is a remote combination in the SAR). Since I had already paid for the boat, I went out alone. Now I had never sailed a Laser Pico before, but I did my best in rigging up (and some fellow sailors pointed out that I got one or two riggings wrong) before setting sail for Stanley Bay. After about 15 mins of happily cruising in the bay (wind was gusty but more tolerable than Deep Water Bay), I noticed that I was slower than all the other Picos in the bay and could not catch up with any of them no matter what I tried. So I thought to myself, wow, everyone here must be really good. I also made a mental note to get in a lot more practice, since I had already registered for a Laser racing clinic with the RHKYC in January and did not want to be last in class (you can tell I am a true blue Singaporean).

Well mental notes aside, after another few minutes, the front of my hull decided to go underwater. I was really shocked because in my limited sailing experience with Lasers, the front of a boat never gets dragged underwater like that. It was as though some invisible hand had just dragged the whole boat underwater! I panicked and thought that maybe there was some kind of fishing net or rope that got stuck on the front and caused the boat to tilt downwards. So after a few seconds it surfaced and all was fine. I crawled to the front to inspect the hull but no, no rope or anything like that. Then after a while it went underwater again. I knew by then that something was wrong with this boat and decided to immediately get back to base. However, even though I had formed the intention to cut losses at this stage, my Sunday adventure had just begun. The hull dipped a few more times under the choppy waves. And then it capsized.

As any beginner can tell you, the worst part of sailing is capsizing, not because you are announcing to everyone around you that you are a beginner, but because it takes a tremendous amount of energy and co-ordination to get the boat back upright. In addition, you would have immediately lost any race that you were in, and the inconsolably unfriendly concept of wind-chill would sit right next to you whether you like it or not.

So I slowly flipped it over, and it promptly replied to me by capsizing again. Strange, I wondered, why is it capsizing so easily and with no apparent fault in my sailing technique. And so after flipping it up I loosened the sails to prevent the wind from causing a capsize, but it still capsized. Then I lifted the rudder, it still capsized. Then I did all of the above and lay flat in the boat, still capsized. It consecutively capsized 15 times until I was running out of energy and it dawned on me that the hull of the boat was sinking deeper and deeper underwater each time I righted it up. It was like I was standing on a plastic iceberg. Water was rushing into the seating area as though a dam had somehow been broken and the water would just rush in. The boat just would not drain out the seawater. Gosh, I thought, this boat had to be leaking and I somehow managed to rent a boat with a leaky hull. Luckily I am close to shore otherwise I’ll be in big trouble. So I waved the rescue boat to come over to save me from this difficult situation. As it took time for them to come (they were busy rescuing other windsurfers who had capsized for reasons different from mine), rather than wasting my energy righting up the boat umpteen times, I allowed it to capsize and sat on the hull.

When the rescue boat was approaching my boat they asked what the problem was. I told them water was entering the boat, and I remember the pair of sunglasses smiling back:

“Did you remember to fasten the drain plug before you took the boat out?”

Care taken to maintain order at ZoukOut party

Care taken to maintain order at ZoukOut party
ST 27 Dec

IN RESPONSE to Mr Kwok Chee Chiu’s letter, ‘Stop diseases, ban parties like ZoukOut’ (ST, Dec 14).

From the nature of the letter, I assume Mr Kwok did not attend ZoukOut and the opinion may be based on The New Paper post-coverage and the translated version carried in the Chinese dailies. This is unfortunate as it was only The New Paper that took this angle out of more than 150 local and foreign publications that attended and covered the event.

This highlights the fact that that story was not an accurate overall reflection of the 23,000 attendees over the 12-hour period, and the pictures featured were of isolated incidents of consenting adults who may have been behaving more intimately than some would consider appropriate but, by no means, against the law. The article may have provoked strong emotions but we assure everyone that Zouk takes safety and managing a party within the legal parameters of the Singapore judicial system very seriously.

Although we respect Mr. Kwok’s point of view, we believe such a call for action, if implemented, would not benefit Singapore’s nightlife industry, tourism (more than 9,000 international guests attended), world democratic standing or economy. ZoukOut has become a national event over the last seven years and a fixture on the international dance and music calendar, considered by many to be one of the best in the world in terms of management, production and entertainment. As responsible organisers, our pre-emptive measures to maintain law and order and abide by licensing conditions included hiring more than 150 security personnel, plus another 40 uniformed police. In addition, ZoukOut is one of the few major events in Singapore where attendees must present photo ID stating they are above 18.

To call for a ban of events like ZoukOut, that promote tolerance, uniting people from all walks of life, regardless of nationality, as the solution to stopping the spread of diseases is in our view misguided and not the most productive way to address the issue. Echoing Forum respondent Dr Wong Jock Onn on Dec 18, it is through better education that people have a greater awareness of how sexually transmitted diseases are spread and ultimately make the right choices.

It was heartening to see all three respondents (Andre Oei, Owen Yeo and Anna Wong) in the ST YouthInk section on Dec 24, all under the age of 21, making concise, analytical and educated statements on whether such events should be banned. They leave us with confidence that the youth of Singapore are more knowledgable, responsible and informed than some may think.

Tracy Phillips
Marketing Manager
Zouk Management

Citi, HSBC among banks considering sale of units

Citi, HSBC among banks considering sale of units
They turn to asset sales to generate immediate cash as credit woes persist

NEW YORK – UNITED States and European banks including Citigroup and HSBC Holdings are mulling over sales of parts of their businesses in a nod to crunch times ahead, the Wall Street Journal reported on its website.

While Citigroup may shed or shut several of its mid-size units, HSBC could exit all or parts of its US$13 billion (S$18.9 billion) auto finance arm, said the paper yesterday, citing unnamed sources.

They estimate that Citigroup could dispose of as much as US$12 billion worth of what are considered non-critical assets. These include Student Loan Corporation; its North American auto lending business; its 24 per cent stake in Brazilian credit card company Redecard; and its Japanese consumer finance business.

Talk of the potential moves comes days after Merrill Lynch announced that it would sell most of its commercial-lending business to General Electric for US$1.3 billion. Morgan Stanley pocketed more than US$250 million last month by selling a slice of its

MSCI investment-analysis unit in a public offering.

‘I think we are going to see a real wave of these coming through in the first half of next year,’ said Morgan Stanley banking analyst Huw van Steenis.

Buyers could be hard to find in an environment where many financial companies are in trouble but analysts said the motivation to sell is strong, said the Journal.

This is because asset sales generate quick cash at a time when banks are likely to face persistent difficulties in borrowing money.

Rates at which banks lend to one another are still prohibitively high because of lingering worries about further losses from US sub- prime mortgage investments, it added. Other sources of funds, such as commercial paper, remain frozen or too expensive.

Several of the world’s largest banks have recently sold multibillion-dollar stakes to state-owned Asian and Middle Eastern investors to boost their capital.

But as banks increasingly take onto their balance sheets assets that had been held off-balance, their capital needs have grown.

In a report this month, Goldman Sachs estimated that US$475 billion of extra assets had been moved to bank balance sheets since the credit crunch sped up earlier this year, said the Journal.

Changes in leadership at Citigroup and HSBC also increased the likelihood of sales, it added. Citigroup recently installed Mr Vikram Pandit as its new chief executive, while Mr Brendan McDonagh took over in February as head of HSBC’s US consumer unit, HSBC Finance Corp, after the unit suffered heavy losses on investments in US home loans.

Why Temasek should stop investing in investment banks

Dear Temasek shareholder

Did you know that, at the current state of play, several investment banks are technically insolvent the moment they disclose their true financial situation? And that the U.S. Federal Reserve, the European Central Bank (ECB) and the Bank for International Settlements (BIS) are trying their best to prevent such a blowup from occurring, including lending unlimited amounts of money to these banks? Are you aware that the international press is clueless or does not wish to write about what is really going on within the investment banks, much less how structured products are priced, valued and traded? Why do you think that no person, entity or government corporation in the U.S., Europe, or the Asia-Pacific (other than yourself) wanted to touch the shares in these investment banks with a ten foot pole?

The Reason

According to banking regulators, there are three kinds of assets in the world:

Level One assets are actively traded. You can know exactly how much they’re worth based simply on their price in the open market. Examples of Level One assets are common stock, bonds and funds.

Level Two assets are not actively traded. But they’re similar enough to actively traded assets to give you a reasonable estimate of their value. Examples of Level Two assets are preference shares, antiques and paintings.

Level Three assets are the most slippery. In addition to having no active market, they’re so unique, there’s no reliable way to estimate their true value. Instead, all that banks and regulators can do is guess. And the only tools they have to support their guesswork are unproven mathematical formulas. Examples of Level Three assets are structured products like credit derivatives, collateralised debt obligations (CDOs) and credit default swaps (CDS).

Here’s the key:

The money panic brewing today is driven largely by this third kind of asset — derivatives of questionable value that were artificially created by Wall Street brokers, officially sanctioned by Washington regulators, and falsely rated by Wall Street rating agencies.

These are the sinking assets that are hitting the big Wall Street firms … panicking investors all across the U.S. and Europe … even threatening some money market funds.

Some of Wall Street’s investment banks have more Level Three Assets than they have capital

Specifically, according to data compiled by the Financial Times:

Merrill Lynch has US$27.2 billion in Level Three assets, the equivalent of 70% of its stockholders’ equity. In other words, for each $1 of its capital, Merrill has 70 cents in assets of questionable and uncertain value.

Goldman Sachs has US$51 billion in Level Three assets, or 130% of its equity.

Bear Stearns has sunk its balance sheet even deeper into the Level Three asset hole, with US$20.2 billion, or 155% of its equity.

Lehman Brothers is in a similar situation — US$34.7 billion, or 160% of its equity. And …

Morgan Stanley tops them all with US$88.2 billion in Level Three assets, or 250% of its capital. That’s an unwieldy $2.50 cents in Level Three assets for each dollar of capital. It implies that, in the absence of new capital infusions, all it would take is a 40% loss — and Morgan Stanley’s capital could be 100% wiped out.

Bottom line: The huge Wall Street write-downs you’ve heard about to date — among the largest in history — could be just the tip of the iceberg.

All told, there are 968 U.S. commercial banks that invest in derivatives. But among them, 963 banks hold a meager 1.5% of all the interest-rate and credit derivatives in America.

In contrast, just five banks hold an amazingly large 98.5% of all the interest-rate and credit derivatives.

That is why no one in the entire world, other than Qatar, Saudi Arabia and Temasek wanted to become shareholders of UBS or Merrill Lynch! Why would international IBs have to turn up, cap in hand, at the doorsteps of little red dot sovereign funds?

Helping to cut through some of the uncertainty, the Office of the Comptroller of the Currency (OCC) evaluates the credit exposure of each U.S. bank holding derivatives. In other words, it asks the question:

Regardless of whether the bet is a win or a loss, what happens if the investor on the other side of the bet doesn’t pay up?

In normal times, such payment defaults are rare. So this is largely a theoretical question. But in a money panic, when markets can go haywire and available cash financing can suddenly dry up, a chain reaction of defaults could make this a very urgent and practical question. The answers, according to OCC data are that overall, including all types of derivatives:

Wachovia has credit exposure that’s equivalent to 89% of its capital. In other words, if all of its counterparties defaulted on their bets with Wachovia, nearly nine-tenths of its capital would be wiped out.

Bank of America is exposed to the tune of 99% of its capital. Assuming no capital infusions, it could be virtually wiped out in an extreme money panic scenario.

And at three banks, the panic would not have to be quite that extreme:

Citibank has 292% of its capital exposed to this kind of credit risk.

JPMorgan Chase has 387% of its capital exposed.

HSBC beats them all with an exposure of 388% of its capital. That means that even if its counterparties defaulted on just 26% of their bets, its capital could be wiped out.

Now, remember what I told you about Level Three assets — that they don’t have a regular place to trade.

Well, we could say something similar about the overwhelming majority of derivatives: They are not traded on regulated exchanges. Rather, they are traded over the counter, based on individually negotiated contracts.

In other words, if there’s a default, the parties have to work through it directly, one on one. Exchange authorities are not going to step in to help manage the crisis for them.

And currently, four of the five U.S. banks I named earlier trade over 90% of their derivatives in this way — outside of regulated exchanges.

At JPMorgan Chase, Bank of America, Citibank and HSBC, the derivatives they trade outside of exchanges represent 94%, 93%, 97% and 97% of their total, respectively. Only Wachovia has a somewhat lesser amount in this category — 77%.

What does this mean?

That the upcoming financial collapse will be the worst of its kind in human history, and will make 1929 “look like a walk in the park”.

Ah, but you say, ML and UBS are fine. They are immune. They are in a different class altogether. You have spoken to their finance departments, their auditors have produced interim reports. No problem at all.

Well, two points:

1. It is not in the interests of the vendor of an asset (and neither is it under any obligation) to inform you that it’s asset is worthless, or even worse, a liability (aka, caveat emptor).

2. If it’s too good to be true, it usually is.