Two town councils invested in Lehman and Morgan Stanley.

[sbs99]

Honestly, im rather disturbed that the money we paid monthly, has much excess and town councils having access to these excess, and using it for investments (to earn more!??)

Before such news, i never knew town councils could 'invest' in banks, i believe at least 50% of local population doesn't know that either.

Somehow it just makes paying up, a much harder pill to swallow, as the money is now known to be pooled to be 'invested' around by others. And it's not even the question of whether town councils are allowed to use 'collected money' for their own investment, the whole thing sound so wrong (of coz if you are reaping benefits from such investments, you might not see any wrong in doing so).

:thumbsd:

 

[weiconghon]

Its a honest mistake, lets move on!

 

[night86mare]

Before such news, i never knew town councils could 'invest' in banks, i believe at least 50% of local population doesn't know that either.

:dunno::dunno:

http://www.thisissussex.co.uk/news/...mise-risksarticle-439159-details/article.html

 

[sbs99]

Maybe it's just me...not knowing what actually a "Town council" in Singapore means, and it's functions. Something juz occured to me, all these little town councils seem more like those koei history games (eg. rotk), where all the little states/fiefs collect resources for the entire kingdom, generally following orders but yet have minds on their own, waging war against rival states and so on. *shivers*

 

[waileong]

Honestly, you need to understand a bit more about cash management. Any organisation that handles cash will have surplus and shortage from time to time, and it's the treasurer's job to manage this.

When they are short, typically they turn to short term loans, and when they are long, it's their job to park the funds to earn a return rather than just keeping it in a savings account earning 0.25%.

Excess funds can be parked in anything from term deposits to money market funds depending on how soon it's needed, and it's the treasurer's job to maximise returns on idle cash.

In this case the town council finance managers prob thought the minibonds were very safe and offered a good return. So prob it was an honest mistake.

But I wonder if these finance managers will ever work as finance managers again.

Honestly, im rather disturbed that the money we paid monthly, has much excess and town councils having access to these excess, and using it for investments (to earn more!??)

Before such news, i never knew town councils could 'invest' in banks, i believe at least 50% of local population doesn't know that either.

Somehow it just makes paying up, a much harder pill to swallow, as the money is now known to be pooled to be 'invested' around by others. And it's not even the question of whether town councils are allowed to use 'collected money' for their own investment, the whole thing sound so wrong (of coz if you are reaping benefits from such investments, you might not see any wrong in doing so).

:thumbsd:

 

[mattlock]

:dunno::dunno:

http://www.thisissussex.co.uk/news/...mise-risksarticle-439159-details/article.html

that is in UK.

 

[night86mare]

that is in UK.

i know..

i could provide more articles that show various "perceived to be government and nonprofit organisations" having investments - worldwide

i am also surprised why people were unaware

 

[Gunbucker]

Excess funds can be parked in anything from term deposits to money market funds depending on how soon it's needed, and it's the treasurer's job to maximise returns on idle cash.

In this case the town council finance managers prob thought the minibonds were very safe and offered a good return. So prob it was an honest mistake.

So technically, in 2010, a town council treasurer should be fine to maximize the returns at Marina Sands dice table?

 

[sbs99]

i am also surprised why people were unaware

Yah i know, but then again, many of us don't usually know of such stuff or financial stuff in particular. For me, im just low wage earner, not saying that all low wage earners don't know such stuff.

But as a layman, i wouldn't know bout banking stuff, bonds, investments, or maybe if you can put it - i can't be bothered to find out. (although i have friends working in finance, i could simply ask them, but probably couldn't absorb/understand what they say..haha)

And yah, i think many really don't know bout town councils using fees collected to do such investments, all along for so many years i thought town councils were like departments to manage maintainence of neighbourhood, rubbish disposal, sweeping, drain clearing, the usual stuff we see everyday. Definitely not knowing they had so much funds, and their legal power to actually use those funds to invest. It's like...woaaah...info overload, don't compute.

So i though maybe in today's context, town councils are actually..erm... business like?

 

[night86mare]

So i though maybe in today's context, town councils are actually..erm... business like?

well, you could say so to a certain extent..

 

[flowerpot]

as usual... no one takes accountability... :dunno: whether its a mistake or poor hindsight...
12 millions could have help many needy ppl within the 2 town councils... with the billions in reserves, hopefully some of it can be used to help the needy in these difficult times...
anyway there is nothing much we can do about it... thats how things works... the matter will die down after a while... their usual tactics...

 

[night86mare]

So technically, in 2010, a town council treasurer should be fine to maximize the returns at Marina Sands dice table?

i do not think it fair to compare a product from a financial institution to the marina sands dice table.

in any case, a lot of people just saw "wa, lehman brothers", "wa, this company big big name" .. and just bought in without properly understanding what they are buying into.

 

[sbs99]

Not trying to stir any sentiment here... but honestly i fear the day someone lifted the entire carpet to find what's underneath all the while... damn scary. :bsmilie:

 

[spindoctor]

Actually this topic has been discussed for quite some time now. For those who read Mr Wang's blog, its nothing new:

http://mrwangsaysso.blogspot.com/2007/12/you-give-your-money-to-your-town.html

http://mrwangsaysso.blogspot.com/2008/05/aljunied-town-council-and-matter-of.html

Personally, I knew its a matter of time before something blows....

 

[MichaelLee]

what is lost, is lost. I am haivng doubts how would TC adopt the investment strategy to invest into structure product.

Let be clear that those structure offer potential yield enhancement. maximum is around 5% return. Once there is credit event, most likely investort lost the entire capital. So to speak, upside 5%, downside 100%. Did the TC understand this ?

Assuming TC understand this before they made the investment.
My Question - WHy they were so desperately to get the extra 5% to risk 100% of the capital ?


Assuming TC DID not understand this .
- Wa liao...i tot they are SMART people working for TC..? YOu mean they did not understand and read the prospectus blindly and then made a decision to investment into the fund ?


And this raised another questions. DBS would compensate certain investors who lost money in the structured fund. These investors are senior citizen (age 62 and above) and less educated. The rest of investor would not get the compensation.

Come on..you must be kidding. Even TC did not understand the prospestus and the risk associated in the structure product..of course normal people like me, would not understand as well. Why only less educated and senior citizen get compensated ??

Or are you saying that TC are also by senior Citizen and less educated as well ?

 

[waileong]

Are you tan kin lian's 2-I/C?

what is lost, is lost. I am haivng doubts how would TC adopt the investment strategy to invest into structure product.

Let be clear that those structure offer potential yield enhancement. maximum is around 5% return. Once there is credit event, most likely investort lost the entire capital. So to speak, upside 5%, downside 100%. Did the TC understand this ?

Assuming TC understand this before they made the investment.
My Question - WHy they were so desperately to get the extra 5% to risk 100% of the capital ?


Assuming TC DID not understand this .
- Wa liao...i tot they are SMART people working for TC..? YOu mean they did not understand and read the prospectus blindly and then made a decision to investment into the fund ?


And this raised another questions. DBS would compensate certain investors who lost money in the structured fund. These investors are senior citizen (age 62 and above) and less educated. The rest of investor would not get the compensation.

Come on..you must be kidding. Even TC did not understand the prospestus and the risk associated in the structure product..of course normal people like me, would not understand as well. Why only less educated and senior citizen get compensated ??

Or are you saying that TC are also by senior Citizen and less educated as well ?

 

[MichaelLee]

Are you tan kin lian's 2-I/C?

huh. catch no ball.
duno who is tan kin lian until i google to find out his blog. http://tankinlian.blogspot.com

wat do u mean ?

 

[Wibblo]

what is lost, is lost. I am haivng doubts how would TC adopt the investment strategy to invest into structure product.

Town Councils usually invest a certain amount of their reserves in the hope that they could earn more (interest-wise)..if u read the reports carefully...its not 100% of the TC reservesl....but a certain percentage...all monies are invested with Finance/Investment Advisors...who give periodic reports/review on their investment portfolios and such...

Let be clear that those structure offer potential yield enhancement. maximum is around 5% return. Once there is credit event, most likely investort lost the entire capital. So to speak, upside 5%, downside 100%. Did the TC understand this ?

This is something I have no idea - frankly..aint involved mah

Assuming TC understand this before they made the investment.
My Question - WHy they were so desperately to get the extra 5% to risk 100% of the capital ?

As said..not 100%...and now....5% per annum for past 3-5years...its not desperate..they have already spread the risks a little by having a combination of investment (err..angmo a bit gabra here) avenues....JUust see it this way...by hoarding all the funds and earning 1% interest only...I forsee SC&C raising a lot on a yearly basis..with the "extra" interests earned...they are able to keep the increase lower....to me...why not...


Assuming TC DID not understand this .
- Wa liao...i tot they are SMART people working for TC..? YOu mean they did not understand and read the prospectus blindly and then made a decision to investment into the fund ?

Times had been good....do read that they received on average 5% ROI which before the Financial Tsunami is better than the 1% Interest earned if kept in banks...TC are manned by volunteer Town Councilors who in their own area of specialty serves the community...and they have (therefore) appointed Financial Consultants/Advisors who are "qualified" to invest on their behalf...still there are accountability...as I have read is that Periodic Reviews of Portfolio were given to each TC on their investments..


And this raised another questions. DBS would compensate certain investors who lost money in the structured fund. These investors are senior citizen (age 62 and above) and less educated. The rest of investor would not get the compensation.

Come on..you must be kidding. Even TC did not understand the prospestus and the risk associated in the structure product..of course normal people like me, would not understand as well. Why only less educated and senior citizen get compensated ??

Or are you saying that TC are also by senior Citizen and less educated as well ?

Last sentence a bit over for me...but its your view...all I can say is..Town Councilors VOLUNTEER their time and service....oh and lastly..me aint Town Councilor

 

[MichaelLee]

Agree that TC only invested a small sum in the structure product. they did spread out the fund into other investment. I am looking particular why structured fund was even in the portfolio.


Did TC understand the risk of structured product ? If yes...why risk 100% to get 5% ? Although it is volunteer basic, that does not mean you should apply anyhow investment strategy or people buy i buy loh kinda strategy.
If I told you that there is such a investment of risking 100% capital in order to get max 5% (but not guaranteed) return...wat do you think ?


Did TC understand the risk of structure product ? If no...why not ?
- If TC could not understand, dun expect others like us slightly more educated than senior citizen less educated to understand fully. then the financial inst. also compensate ALL, not just particular group.

- Did TC voluntarily service and blindly rely on the financial adviser ?
If that is the case, can less educated senior citizen volunteered to be TC ? Since they are also rely on the financial adviser...

 

[mattlock]

what is lost, is lost. I am haivng doubts how would TC adopt the investment strategy to invest into structure product.

Let be clear that those structure offer potential yield enhancement. maximum is around 5% return. Once there is credit event, most likely investort lost the entire capital. So to speak, upside 5%, downside 100%. Did the TC understand this ?

Assuming TC understand this before they made the investment.
My Question - WHy they were so desperately to get the extra 5% to risk 100% of the capital ?


Assuming TC DID not understand this .
- Wa liao...i tot they are SMART people working for TC..? YOu mean they did not understand and read the prospectus blindly and then made a decision to investment into the fund ?


And this raised another questions. DBS would compensate certain investors who lost money in the structured fund. These investors are senior citizen (age 62 and above) and less educated. The rest of investor would not get the compensation.

Come on..you must be kidding. Even TC did not understand the prospestus and the risk associated in the structure product..of course normal people like me, would not understand as well. Why only less educated and senior citizen get compensated ??

Or are you saying that TC are also by senior Citizen and less educated as well ?

there are a large number of TCs. Does this mean that there are different people of varying degrees of financial savvy investing people's money?
Doesn't it make more sense to have the money invested by a direct body that oversees the investment of all TCs, hiring people who are actually more aware of all these risks and the moral issues involved and making sounder decisions?

Also, in an ideal world everyone would understand every initiative the government takes but most laymen will not understand or take time to understand every single initiative the government takes, and this must be taken into account.
I doubt most people knew that their fees were being used for investments to such a degree

Anyway in this case some people's heads should roll, specifically in those offending TCs

One more thing: If TCs are run by volunteers, then should these volunteers have the authority to make choices on how people's money should be used?
Does this mean that the bank/financial advisers that is the most savvy in convincing the town councils and these volunteers have an easy source of money?
More transparency on this process please