The Hong Lim Park (27 Sep 2014) Incident

Two events held at Hong Lim Park at same time on Saturday

By Faris Mokhtar
 
27 Sep 2014 22:06


One was the YMCA Proms @the Park, which received approval to hold their event on Sep 9, according to NParks and the police. The other event, a protest rally against the CPF scheme, had its permit approved on Sep 22. 

SINGAPORE: Hong Lim Park saw two events held at the same time today, resulting in some unsavoury scenes.

A group protesting against the CPF scheme were seen marching round a YMCA carnival at the Park. They held placards and shouted slogans, frightening those at the carnival and disrupting performances, including those by special needs children.

The Show-Off Society - Symptoms of Income Inequality

SEPT. 25, 2014

Paul Krugman

Liberals talk about circumstances; conservatives talk about character.

This intellectual divide is most obvious when the subject is the persistence of poverty in a wealthy nation. Liberals focus on the stagnation of real wages and the disappearance of jobs offering middle-class incomes, as well as the constant insecurity that comes with not having reliable jobs or assets. For conservatives, however, it’s all about not trying hard enough. The House speaker, John Boehner, says that people have gotten the idea that they “really don’t have to work.” Mitt Romney chides lower-income Americans as being unwilling to “take personal responsibility.” Even as he declares that he really does care about the poor, Representative Paul Ryan attributes persistent poverty to lack of “productive habits.”

Let us, however, be fair: some conservatives are willing to censure the rich, too. Running through much recent conservative writing is the theme that America’s elite has also fallen down on the job, that it has lost the seriousness and restraint of an earlier era. Peggy Noonan writes about our “decadent elites,” who make jokes about how they are profiting at the expense of the little people. Charles Murray, whose book “Coming Apart” is mainly about the alleged decay of values among the white working class, also denounces the “unseemliness” of the very rich, with their lavish lifestyles and gigantic houses.

In praise of China’s new economic normal

BY YAO YANG

SEPTEMBER 26

China’s economy is, at long last, undergoing a rebalancing, with growth rates having declined from more than 10 per cent before 2008 to roughly 7.5 per cent today.

Is this the nation’s “new normal”, or should Beijing anticipate even slower growth in the coming decade?

China’s rebalancing is apparent, first and foremost, in the export sector. Export growth has slowed from its 2001 to 2008 average of 29 per cent annually to below 10 per cent, making foreign demand a far less critical engine of growth.

Moreover, manufacturing employment and output, as a share of the total, began to decline last year. In fact, in the first half of this year, services accounted for more than half of total economic growth.

It is no surprise then that China’s current-account surplus has shrunk rapidly, from its 2007 peak of more than 10 per cent of gross domestic product to about 2 per cent of GDP today.

The political forces shaping our future

TODAY

Singapore

By Devadas Krishnadas

September 25


Following its poor showing at the 2011 General Elections, the ruling People’s Action Party (PAP) is recasting itself as being more responsive to the people and investing in social policies to make its platform more “people-centric”.

Various education, healthcare, housing, retirement, immigration and labour policies have been tweaked or are under review.

If opinions on popular social media platforms are anything to go by, the PAP’s relentless campaign to overhaul its image has been a mixed success.

The opposition Workers’ Party has also largely proved ineffectual despite its strengthened representation in Parliament. This prompts the question: What about our political environment is proving so challenging for both the incumbent and opposition to find traction?

Ways to fix the missing cab problem

Sep 25, 2014

JERMYN CHOW


DITCH all surcharges, impose all-day levies at far-flung places or introduce even more surcharges to solve the longstanding problem of disappearing taxis just before the peak period.

These are some of the solutions that experts, industry players and taxi drivers have suggested, after the issue resurfaced recently.

Financial Realities - Youth and Retirement

TODAY

SEPTEMBER 12

S’pore youth feel financially unprepared for future: Survey

PAUL LIM


SINGAPORE — Many young Singaporeans feel they are not financially ready for the future and their projected amount of savings falls far short of the amount they believe is necessary to fund their retirement, a recent survey commissioned by NTUC Income showed.

The Nielsen survey — which polled more than 1,000 final-year polytechnic students, university undergraduates and young workers aged between 18 and 29 — also found that the majority of young Singaporeans had prudent attitudes towards financial planning. Most respondents agreed that saving was a priority and expressed the need to be in control of their financial matters.

However, despite knowing the importance of financial planning, only 18 per cent of respondents had created a financial plan for themselves, while only 7 per cent had reviewed their financial situation.

Kind helper bonds with ah ma

Sep 24, 2014

By Corrie Tan


My grandmother died a few weeks ago. She went very peacefully, in the comfort of home, at the grand old age of 96.

Ah ma, as we called her in Teochew, was diagnosed with dementia nearly 20 years ago, and she also had Parkinson's disease, which meant that her motor skills eventually degenerated and that she moved from being wheelchair-bound to bedridden.

We started hiring domestic helpers who had the physical strength to help her move around and use the shower and bathroom. She eventually became completely uncommunicative verbally - she could not hold conversations or express how she felt.

This was around the time we hired our final domestic helper, a young woman from Indonesia named Yuli. She had never worked abroad. She giggled incessantly at first when my mother taught her how to care for my grandmother and how to do basic household chores.

But she was sweet and earnest - and despite having no common language with which to connect with my grandmother emotionally, Yuli grew very fond of her.

When my grandmother was admitted to the hospital last month for developing an auto-immune disease, Yuli was deeply worried. She approached my mother and asked if she could give her $100 for my grandmother's hospital fees.

My mother declined this, of course. The amount was nearly 20 per cent of Yuli's pay, a huge sacrifice for a young woman supporting a family back home.

Earlier this week, I watched a video put together by my colleagues at The Straits Times Digital team about 60-year-old Richard Ashworth, who had hired a male helper from Myanmar to care for his elderly adopted father John, 81, who had dementia.

The younger Ashworth said, teary-eyed and voice cracking, that he had considered suicide because he just could not cope with the demands of caring for his father, whose behaviour was getting more and more difficult to manage - even turning violent.

Laminn Koko, the young man from Myanmar that Mr Ashworth had hired, was disappointed at the standards of the nursing homes they visited, and said he could take care of Uncle John better on his own.

He said: "I told my boss - I'm still here. I can take care of both Uncle John and you."

There is a gratitude I am not sure I will ever know how to express to the men and women who treat our grandparents - and parents - like their own.

When the undertaker and his assistants arrived to take my grandmother's body and prepare it for the funeral, Yuli cried silently, standing vigil by the doorway, shoulders shaking in quiet sobs. She scrolled through pictures of herself and my grandmother that she had taken on her mobile phone.

In her broken English, she told us, haltingly: "Ah ma and ah kong (grandfather) are together now."

Yuli reminded me of humanity's ability to look past the borders of culture, nationality, skin colour and language, to be able to adopt another person as part of our own emotional family - moving from the divide of employee-employer to the realm of kith and kin.

My youngest sister, who is 19, rarely had the chance to communicate with my grandmother in her lifetime; the past decade of ah ma's life was spent drifting in and out of lucid moments.

She told me wistfully: "It's so strange - ah ma is my biological grandmother, but Yuli is closer to her than I ever was."

I, too, felt a deep twinge of guilt and regret. I had been so fixated on how I would never be able to communicate with my grandmother - she spoke only Teochew and I spoke none - that I had forgotten about how to connect with her by simply being there. Holding her hand. Taking her out for some fresh air.

So many of the domestic helpers who flock to Singapore in search of a better life eventually form deep bonds with the people they meet here. Their employers, initial strangers, soon become the bedrock of their new life.

These helpers might live with a single family for years and years, watching the children in their care grow up, or they might, like Yuli, spend a short but intense period with the employer.

Yuli has since changed employers - she will be caring for another elderly woman with dementia.

I wish her all the best, and I hope she will bring as much kindness and generosity to her new family as she did mine.

Cap use of CPF monies for housing

Linking CPF monies to housing makes Singaporeans’ retirement funds vulnerable to the cyclical patterns of the property market. 

MARCUS KOK

SEPTEMBER 24, 2014


At a recent seminar, Associate Professor Lum Sau Kim from the National University of Singapore (NUS) noted that the use of Central Provident Fund (CPF) monies for housing payment had constrained retirement adequacy.

“If so much of CPF funds are dedicated to housing, then we have poorly diversified household portfolios ... the nest egg that we have will be vulnerable to housing sector shocks and greater risks,” she said.

This raised an important question on whether the use of CPF savings for housing has been too liberal and whether it is time to impose limits to enhance Singaporeans’ retirement adequacy.

There are pros and cons to linking CPF to housing. The benefit is clear, for without the provision to use CPF to fund property loans, far fewer Singaporeans would be able to buy a home. Currently, home ownership rate stands at about 90 per cent, among the highest in the world.

However, on the flipside, linking CPF monies to housing makes Singaporeans’ retirement funds vulnerable to the cyclical patterns of the property market. For instance, when the property market contracts and valuations plunge, CPF members who are retiring and intending to unlock some or all of their housing assets to fund their retirement could be heavily hit.

Truths of a French village

 SEP 24, 2014

BY ROGER COHEN

A FEW weeks ago, I was in France, where I have owned a village house for almost 20 years that I am now planning to sell. A real estate agent had taken a look at the property and we had made an appointment to discuss how to proceed.

She swept into the kitchen, a bundle of energy and conviction, with an impassioned appeal: "Monsieur Cohen, whatever you do, you must on no account sell this house." I gazed at her, a little incredulous.

"You cannot sell it. This is a family home. You know it the moment you step in. You sense it in the walls. You breathe it in every room. You feel it in your bones. This is a house you must keep for your children. I will help you sell it if you insist, but my advice is not to sell. You would be making a mistake."

Who runs the girls?

Sep 22, 2014


By Ashley Mears

A FEW years ago, I attended a party at a nightclub in the meat-packing district of Manhattan with about 10 young women, most of them models, and two club promoters, men whose job was to bring beautiful women to exclusive parties.

Beyonce's hit single Run The World (Girls) boomed, and the girls danced to the beat, singing: "Who run the world? Girls! Girls!" One promoter joined in, with his own twist on the chorus: "Who run the girls? Boys! Boys!" The men high-fived, and everyone laughed. Many of the models who walked the Fashion Week runways this month in New York, London, Milan and, starting this week, Paris, are the same women who pass through these clubs.

The fashion shows and the international circuit of VIP parties - Miami in March, Cannes and St Tropez in May and July, August weekends in the Hamptons - serve as case studies in an old debate. Does the celebrated display of female beauty and sexuality empower or exploit women?

Luck running out for Singapore's two casinos?

Singapore's two casinos have encountered slowing growth lately, partly due to a more tepid economic outlook. But the root of the sector's problem remains the Government's heavy hand in the industry.


SEP 23, 2014

BY GRACE LEONG

THREE years before their 10-year duopoly is due to expire, Marina Bay Sands (MBS) and Resorts World Sentosa (RWS) seem to be running into headwinds.

The two casinos were granted exclusive rights in Singapore from 2007 to 2017, partly so that their operators - Las Vegas Sands and Genting Singapore - could get a head start in recouping their large investments.

These rights allowed the integrated resorts (IRs) to rev up from zero to more than US$1.2 billion (S$1.5 billion) in combined quarterly revenues in the space of a few months, and soon made the casinos the world's most profitable, with margins of about 40 per cent.

But takings have plateaued lately. Last year, the IRs' combined revenue was about $7.4 billion - a rise of just 3 per cent from that in 2012, according to estimates from UOB Kay Hian.

Higher income growth for HDB households

Sep 19, 2014

BY JANICE HENG

OVER the last five years, household incomes rose across the board, but they did not do so evenly.

Households living in Housing Board (HDB) flats had higher income growth than those in condominiums and landed property.

And although income from work went up, it now forms a smaller proportion of overall household income.

HDB households' incomes grew 5.2 per cent a year on average, according to yesterday's Department of Statistics' Household Expenditure Survey release. In contrast, incomes rose 3.6 per cent a year for those living in condominiums and other apartments, and 4.2 per cent for those in landed property.

Conducted every five years, the latest survey is based on data from 2012 to last year.

In absolute terms, the gap remains stark. The average monthly household income was $7,900 for HDB households, compared to $20,536 for those in condominiums and $26,058 for those in landed property.

Government Policies relating to Property Market 2009 - Jan 2013

Singapore's Property Market Cooling Measures and Government Policies

Source: SLP International Property Consultants (2011); “Property Herald, 4Q2011”

Announcement Date	Summary of Government Property Market Curbs & Government Policy
14 Sep 2009	·         Removed Interest – Absorption Scheme (IAS) and Interest – Only Housing Loans
19 Feb 2010	·         New Sellers’ Stamp Duty (SSD): 1% - 3% if sold in year 1 ·         Loan to value (LTV) lowered from 90% to 80% ·         Increased number of residential sites for sale in GLS program
30 Aug 2010	·         LTV (2nd mortgage) lowered from 80% to 70% ·         Sellers’ Stamp Duty imposed increased from 1 year to 3 years from which property is bought ·         Increased minimum cash payment from 5% to 10% for buyers with outstanding loans ·         HDB Minimum Occupation period increased from 3 years to 5 years ·         Concurrent ownership of HDB flats and private residential property within the 5-year MOP is disallowed
13 Jan 2011	·         LTV (2nd mortgage) lowered from 70% to 60% ·         LTV (2nd mortgage) lowered from 70% to 50% for non-individual property purchasers ·         Sellers’ Stamp Duty of 16%, 12%, 8% and 4% for private homes bought and sold within 1 year, 2 years, 3 years and 4 years respectively.
15 Aug 2011	·         HDB income ceiling raised to $10,000 from $8,000 ·         EC income ceiling raised to $12,000 from $10,000
7 Dec 2011	·         Additional Buyer’s Stamp Duty imposed ·         Singapore citizen: 3% ABSD for the 3rd and subsequent residential property purchase ·         Permanent Resident: 3% for the 2nd and subsequent residential property purchases ·         Non-resident foreigner and corporate entity: 10% ABSD for all residential property purchases
5 Oct 2012	·         Tenure of all loans for residential property is capped at 35 years. This will apply to loans to both individual and non-individual borrowers, as well as refinancing loans, from 6 October 2012 ·         LTV ratio for new residential property loans to borrowers who are individuals, if the tenure exceeds 30 years; or if the loan period extends beyond the retirement age of 65 years. For these loans, the LTV limit will be: ·         40% for a borrower with one or more outstanding residential property loanss; and ·         60% for a borrower with no outstanding residential property loan.
12 Jan 2013	·         Additional Buyer’s Stamp Duty imposed on, (i) PRs purchasing their first residential property at 5%; (ii) Singaporeans purchasing their second residential property at 7%. ·         LTV lowered for (i) individuals obtaining a second housing loan to 50%, (ii) individuals obtaining third or subsequent housing loans to 40%, (iii) non-individual borrowers to 20%. ·         Minimum cash down payment for individuals applying for a second or subsequent housing loan increased from 10% to 25%. ·         HDB will offer housing loans with mortgage servicing ratios (MSR) of up to 35% of gross monthly income, down from 40%. For loans granted by financial institutions, MSR is set at 30%. ·         PR households will be disallowed from subletting their whole HDB flat. ·         PR households must dispose of their HDB flats within 6 months of purchasing a private residential property in Singapore.

Helping the Arabs to help themselves

SEPTEMBER 19

An existential struggle is taking place in the Arab world today. But is it ours or theirs? Before we step up military action in Iraq and Syria, that is the question that needs answering.

What concerns me most about United States President Barack Obama’s decision to re-engage in Iraq is that it feels as if it is being done in response to some deliberately exaggerated fears — fear engendered by YouTube videos of the beheadings of two US journalists and fear that the Islamic State is coming to a mall near you. How did we start getting so afraid again so fast? Did not we build a Department of Homeland Security?

I am not dismissing the Islamic State. Mr Obama is right that the group needs to be degraded and destroyed. But when you act out of fear, you do not think strategically and you glide over essential questions, such as why is it that Shia Iran, which helped trigger this whole Sunni rebellion in Iraq, is scoffing at even coordinating with us, and Turkey and several Arab states are setting limits on their involvement?

What do Singaporeans do with their CPF at age 55?

Sep 11, 2014


ASK: NUS ECONOMISTS

Q: What do Singaporeans do with their Central Provident Fund savings withdrawn at age 55?

A: Many countries rely on pension savings to meet individuals' retirement needs. A key question that arises is whether individuals should be allowed easy access to pension savings.

Easier access may make pension savings more flexible and attractive, generating more savings and higher retirement income. But there is concern that access to one's pension savings can result in excessive present consumption at the expense of future retirement security.

Despite the importance of this issue for policy formulation, the evidence remains limited on the reasons for pension saving withdrawal and the usage of these funds.

For example, in Singapore, the Prime Minister in his National Day Rally speech raised concerns about the viability of Central Provident Fund (CPF) savings and the wisdom of letting people access their CPF funds at the age of 55. There has been a lot of discussion on this topic since, and some have argued that letting people withdraw the money is unwise as it may lead to excessive current consumption at the cost of lower levels of savings for the older years.

In a recent research paper, we attempt to shed more light on this issue.

Since Singapore allows individuals to cash out a fraction of their CPF at age 55, we wanted to find out:

First, do consumers actually withdraw their CPF when they have the option of doing so at age 55? Second, how does the option to withdraw CPF savings at age 55 affect the consumption and savings decisions of these consumers? Third, what motivates the withdrawal decision of these consumers? Do they make decisions due to credit constraints and demand for financial flexibility?

Today, CPF members reaching 55 can withdraw at least $5000, as well as CPF balances in excess of the Minimum Sum of $155,000.

Aggregate statistics from the CPF board show that close to SG$3 billion of CPF funds are withdrawn each year, which amount to about 1 per cent of the 2011 Gross Domestic Product in Singapore.

The average withdrawal was SG$11,000 per person, almost triple the average monthly salary in the population.

We wanted to examine CPF withdrawal and subsequent consumption behaviour.

To do so, we used a unique panel dataset of monthly consumer financial transactions from a large financial institution in Singapore. We then examined the response of bank account balances (which serves as a proxy for the withdrawal amount), credit card spending and debit card spending to reaching the withdrawal age.

The data that we use spans from April 2010 to March 2012. During this period, Singaporeans were allowed to withdraw between 10 and 30 per cent of their CPF cash balances on their 55th birthday, regardless of whether they had met the minimum sum.

We find that, on average, as individuals became eligible to cash out a fraction of their retirement savings, their bank balances rose by about SG$15,000 (approximately 2.5 times that of average monthly income in our sample) one month after turning 55.

Strikingly, despite the large withdrawal, cumulative credit and debit card spending rose by only about $600 twelve months after turning 55.

Most of this spending was driven by an increase in debit card spending and increased spending for poorer consumers. Richer consumers, on the other hand, did not change their spending patterns appreciably in response to the increase in disposable income.

Overall, bank account balances decline by about one third after 12 months, with the balance remaining significantly higher (SG$10,000) than before the member turned 55, even at the end of our sample period.

Which individuals had swollen bank balances upon turning 55 - who might be those who had withdrawn their CPF?

We find that consumers' demographics, especially those related to financial literacy and sophistication are important determinants of the withdrawal decision.

Consumers with more banking experience or access to financial advisors through a priority bank account were significantly less likely to withdraw their CPF savings.

Being eligible to withdraw CPF funds when they turn 55 does not appear to have a large effect on the consumption patterns of the average consumer, suggesting most people do not intend to consume (much of) their withdrawn funds.

On the other hand, the withdrawal decisions of these near-retirement consumers are also fairly puzzling - on average, consumers neither spend, nor do they invest the withdrawn money in more productive savings vehicles.

The average Singaporean consumer appears to be willing to forego an estimated 4 per cent interest rate by choosing to leave their withdrawn balances in a low-interest bearing savings account rather than in their Retirement Account.

But one caveat of our analysis is that we do not observe consumers' financial behaviour beyond the one year horizon - one possibility is that consumers may begin to invest their CPF withdrawals in higher-yielding interest accounts after one year.

Caveats aside, our findings suggest that consumer financial literacy and sophistication are important factors driving withdrawal decisions. This suggests that early access to pension savings may lead individuals to make sub-optimal savings decisions.

But there is little support in our findings for the major concern that consumers will overspend their withdrawn savings and fritter away all their retirement savings when given the option to access their pension savings.

Sumit Agarwal is Low Tuck Kwong Professor of finance and real estate, and research director at the Centre for Asset Management Research and Investments.

Jessica Pan is assistant professor of economics; and Wenlan Qian assistant professor of finance. All three are from the National University of Singapore. 

Real solutions needed to deal with income inequality, says PM Lee at Singapore Summit

Sep 20, 2014

By Tham Yuen-C


SINGAPORE - Income inequality has become a fashionable topic, with many articles and books written about it, but the way to deal with the gap between the rich and the poor is through concrete solutions, said Prime Minister Lee Hsien Loong on Saturday.

Among these are to equip people with skills that are in demand by the economy, and to redistribute wealth so that everyone can have "chips to play with".

These are the things that individual governments can do, he said.

Mr Lee made these remarks when answering a question about what Asian governments can do about income inequality, during at a wide-ranging dialogue during the Singapore Summit conference here.

Elaborating on these solutions, he said making sure that people have the necessary skills to succeed - and not just those with a degree, but those who took the technical route too - can help to generate growth and jobs.

Redistributing wealth, by making sure that people have access to housing, a good education and high quality health care, will also help people level up and "enable a greater sense of equity and justice in the system", he added.

Acknowledging that income inequality causes social tensions and unhappiness, and that something has to be done about it, he noted that it has also become the "fashionable thing to talk about".

A book on the topic by French economist Thomas Picketty had become a best-seller, he said, adding: "(It) is quite amazing for a subject like that."

But he cautioned against theoretical solutions to the problem, such as having a global wealth tax or global income tax.

"I don't think those are going to happen, and I don't think if you try to do that you will make the world happier," he said.

He added: "What is possible to do within individual countries, we can do. The income inequality will be there, but in absolute terms we can improve lives for nearly everybody in the society, provided they work and are prepared to make the effort."

On whether income equality is the result of rapid growth, he said he did not think so.

He noted that this was a trend in European countries, in the United States, and in Japan, where growth has slowed.

Rather, he said, globalisation and technological advancements were feeding the trend. He noted that workers now have to compete with the hundreds of millions of workers joining the global economy from countries such as China and India, and also with robots and computer programmes that can handle skilled jobs.

During the 45-minute-long dialogue, he was also asked about the rising nationalism of countries in Asia, the threat posed by the Islamic State of Iraq and Syria (ISIS), the viability of Scotland being independent, and the Trans-Pacific Partnership mega free-trade pact.

S’pore tops ranking of most efficient healthcare systems

September 19


SINGAPORE — The Republic has overtaken Hong Kong to top a ranking of the most efficient healthcare systems, as the Government boosts spending on medical services to support an ageing population.

Singapore was rated first among 51 countries, said an annual ranking compiled by Bloomberg that tracks factors including life expectancy, the cost of healthcare as a percentage of gross domestic product and total medical expenditure for each person. Hong Kong dropped to second place and Italy was ranked third, while the United States was 44th and Russia last.

Walter Woon, Tommy Koh differ on 377A anti-gay sex law at NUS forum

Top lawyers debate repealing of Section 377A at human rights session


SEP 18, 2014

BY WALTER SIM

The subject of universal human rights took a local turn at a university forum on Tuesday night, with two top lawyers disagreeing over whether an anti-gay sex law should be done away with.

National University of Singapore (NUS) law don Walter Woon said he was in favour of repealing the law because of what he sees as a "constitutional problem".

The Government has said that the law will not be proactively enforced. But Prof Woon, a former attorney-general, cited Section 35(8) of the Constitution to make the point that the powers to prosecute lie with the Attorney-General.

"So we have a very dangerous precedent here where the political authorities are saying to the Public Prosecutor - who is supposed to be independent - there are some laws that you don't enforce," he said at the 12th NUS Tembusu Forum attended by about 250 students.

"I find that very uncomfortable," he added.

History's many shades of grey

Sep 15, 2014

By Tan Tai Yong For The Straits Times


WHY is history important? Let me begin by asking another question: After 50 years of nationhood, how well do Singapore citizens know their country's history? In attempting to answer this question, I should make a distinction between historical literacy and historical consciousness.

Put crudely, the first is knowing what; the second, knowing why.

Show of force by Taiwan with its biggest naval exercise in 25 years

Sep 17, 2014

 

HUALIEN, Taiwan (AFP) - Taiwan's navy fired anti-submarine rockets and guns on Wednesday, simulating their response if China launched an invasion, as part of the island's biggest naval drill in 25 years.

The event was presided over by President Ma Ying-jeou and staged primarily in the coastal waters off the eastern Hualien county.

A total of 88 vessels were mobilised during the event, which is part of the five-day "Han Kuang 30" (Han Glory 30) war game that began on Monday. "By the number of warships, it is the biggest naval drill for 25 years," Defence Ministry spokesman David Lo told AFP.

The exercise, which is held annually, usually features around 50 vessels, Vice-Admiral Huang Shu-kuang said.

This year the war games included a scenario where Taiwan was facing attack by Chinese invaders and featured a simulated submarine ambush on the naval forces, as well as staged attacks by air and other ships.

"The scenario is multiple threats by the enemy from the air, the surface and under the sea," Vice-Adm Huang said.

At the end of the drill, Mr Ma reviewed the fleet in a rare grand maritime parade.

Ties between Taiwan and China have improved markedly since 2008 after Mr Ma from the China-friendly Kuomintang party came to power on platform of ramping up trade and tourism with China.

But China still refuses to renounce its use of force against Taiwan should the island declare formal independence.

Taiwan and China split in 1949 at the end of a civil war.

Subverting Democracy - Elitism, Oligarchy, and Plutarchy

Sep 13, 2014

The poisonous politics of the elite

By Dani Rodrik

IT IS hardly news that the rich have more political power than the poor, even in democratic countries where everyone gets a single vote in elections.

But two political scientists, Professor Martin Gilens of Princeton University and Prof Benjamin Page of Northwestern University, have recently produced some stark findings for the United States that have dramatic implications for the functioning of democracy - in the US and elsewhere.

The authors' research builds on prior work by Prof Gilens, who painstakingly collected public-opinion polls on nearly 2,000 policy questions from 1981 to 2002.

The pair then examined whether America's federal government adopted the policy in question within four years of the survey, and tracked how closely the outcome matched the preferences of voters at different points of the income distribution.

When viewed in isolation, the preferences of the "average" voter - that is, a voter in the middle of the income distribution - seem to have a strongly positive influence on the government's ultimate response. A policy that the average voter would like is significantly more likely to be enacted.

But, as professors Gilens and Page note, this gives a misleadingly upbeat impression of the representativeness of government decisions. The preferences of the average voter and of the economic elite are not very different on most policy matters.

For example, both groups of voters would like to see a strong national defence and a healthy economy. A better test would be to examine what the government does when the two groups have divergent views.

To carry out that test, the authors ran a horse race between the preferences of average voters and those of the economic elite - defined as individuals at the top tenth percentile of the income distribution - to see which voters exert greater influence. They found that the effect of the average voter drops to insignificant levels, while that of the economic elite remains substantial.

The implication is clear: When the elite's interests differ from those of the rest of society, it is their views that count - almost exclusively. (As the authors explain, we should think of the preferences of the top 10 per cent as a proxy for the views of the truly wealthy, say, the top 1 per cent - the genuine elite.)

What's a Degree worth?

Sep 07, 2014

When degrees become the norm, what’s a parent to do?

By Chua Mui Hoong, Opinion Editor


When he was doing his postgraduate studies in England, economist Wilson Wong noticed that many waiters and waitresses were graduates.

As he wrote in an Opinion article published in The Straits Times on Friday: “It is not uncommon for fresh graduates to spend extended periods waiting on tables while clinging on to fading hopes of finding the elusive dream job in keeping with their university education. Currently, an estimated 1.2 million youth (between the ages of 16 and 24) in Britain are in jobs for which they are overqualified.”

Dr Wong’s point: It’s better for Singapore to strengthen vocational skills training to allow young people to climb the career ladder, than to have more university places. Too many uni places can lead to underemployment, he said.

It’s a call his colleague at UniSIM Randolph Tan would agree with. Dr Tan trawled through employment statistics to argue in this article that there are growing concerns about graduate employment.

“In Singapore, the number of unemployed residents with degrees is now higher than for groups of any other educational level,” he said.

Grade expectations

Ivy League grade inflation

An “A” is not what it used to be

Sep 6th 2014

“WE DO not release statistics on grade-point averages so we can’t speak to the accuracy of the information you have.” That was a flack for Yale, but other Ivy League colleges—with the partial exception of Princeton—were equally reluctant to discuss their grading practices with The Economist.

China's bad loans spell bad news for global economies too

Sep 16, 2014

WILLIAM PESEK

THE risk of what Nobel laureate Paul Krugman calls "Japanification" - a semi-permanent economic funk - has haunted China for at least a couple years now.

Last week, a Bank of America Merrill Lynch report again asked: "Will China repeat Japan's experience?"

Let's dispense with the suspense: Yes, China very likely will. And the outcome will have far more serious global implications than Professor Krugman's main worry, which focuses on the chances of stagnation in Europe.

The Purpose of Education - or just Higher Education

Sep 10, 2014

What we have before us then, is three distinct purposes for a university: The commercial purpose (starting a career), Prof Pinker's cognitive purpose (acquiring information and learning how to think) and Deresiewicz's moral purpose (building an integrated self).

Moral morass plagues elite US varsities today

"Becoming a Real Person" - DAVID BROOKS


THIS summer, The New Republic published the most-read article in that magazine's history. It was an essay by William Deresiewicz, drawn from his new book, Excellent Sheep: The Miseducation Of The American Elite And The Way To A Meaningful Life.

Everyone is born with a mind, he writes, but it is only through introspection, observation, connecting the head and the heart, making meaning of experience and finding an organising purpose that you build a unique individual self.

This process, he argues, often begins in college, the interval of freedom when a person is away from both family and career. During that interval, the young person can throw himself with reckless abandon at other people and learn from them.

UK pound weighs on Scottish independence

Sep 09, 2014

PAUL KRUGMAN

NEXT week, Scotland will hold a referendum on whether to leave the United Kingdom.

Polling suggests that support for independence has surged over the past few months, largely because pro-independence campaigners have managed to reduce the "fear factor" - that is, concern about the economic risks of going it alone. At this point, the outcome looks like a toss-up.

I have a message for the Scots: Be afraid, be very afraid. The risks of going it alone are huge. You may think that Scotland can become another Canada, but it's all too likely that it would end up becoming Spain - without the sunshine.

Comparing Scotland with Canada seems, at first, pretty reasonable. After all, Canada, like Scotland, is a relatively small economy that does most of its trade with a much larger neighbour.

"Singapore is the happiest place in Asia" - Dan Buettner shares the secrets to longevity

Grace Yew

TheSmartLocal.com

Sun, Jul 6, 2014

About Dan Buettner


It's no surprise that Dan Buettner was chosen to give the keynote speech at last month's launch of upcoming waterfront resort Treasure Bay Bintan. Buettner is an established National Geographic journalist and author who’s done extensive research into “blue zones” - places where residents enjoy greater longevity and better health than anyone else on Earth. In short, he’s the perfect pick to promote a health resort like Treasure Bay.

We had the opportunity to attend Buettner’s press conference and get some of his pointers on living a long and healthy lifestyle. He had a lot to say about Singapore in particular!

Inequality for Dummies

By BILL KELLER

December 22, 2013

Inequality is in. The president, you have probably heard, has declared income inequality to be “the defining challenge of our time.” (Except he didn’t quite, but we’ll get to that.) Politicians, pundits and activists on the left have seized on the president’s words, along with the rising fortunes of progressive idols Elizabeth Warren and Bill de Blasio, to refute the apostles of austerity (mostly Republicans these days) and lay down early populist markers for the 2016 elections. Liberals of a more centrist bent — notably the former Clintonites at the Third Way think tank — have refused to join the chorus and been lashed by fellow Democrats for their blasphemy. Senator Warren has suggested that liberals who disagree with her are in the pocket of Wall Street. Third Way executives took to the op-ed page of The Wall Street Journal to accuse the populists of indulging a “ ‘we can have it all’ fantasy.”

UK Kilt - the Scottish Referendum

On Sept 18, Scotland will vote in a referendum on independence, the result of which rests on a knife-edge. Here's a look at what lies ahead depending on which way the vote goes

How support has shifted

BOTH the YouGov and ICM polls show that disdain for Westminster - either its politicians or its policies - is the key reason to vote for secession.

But YouGov credited former Labour prime minister Gordon Brown, a Scot who is the only British politician that Mr Alex Salmond is said to fear, with winning back support for the union.

"His warnings that independence would be bad for jobs and family finances have struck home," Mr Peter Kellner said of the 63-year-old former premier, who has hit the road in Scotland to give an impassioned defence of the union.

The latest polls showed that fears of what independence might mean for bank accounts in the event of a crisis similar to the 2008 turmoil, which Mr Brown grappled with as prime minister, was an important pillar of the unionist vote.

China Is Mass-Producing Islands To Extend Its Strategic Borders

10 Sept 2014

 

A dramatic change is taking place in the South China Sea where, since the beginning of this year, Beijing has created at least five new islands by dredging rock and sand and pumping it into reefs to form new land. By doing so, the Chinese are sending a blunt message to its neighbors and the U.S.: Keep out.

Why Investment is little more than Gambling.

From a Comment by UraniumC • 3 years ago

 

On this article: 

 

Ten Reasons You Should Never Own Stocks Again

[Appended below for convenience.]

 

Well said, James. This is maybe the best thing I’ve yet to read on the subject.
here’s my 2-cents:

as mentioned elsewhere in the comments, at a certain point you’re going to have to invest what you’ve earned, and that comes down to indexing vs. active management. Yours or some fund manager’s.

Always a fascinating debate and I’ve been on both sides of it at various times in my 60 years. For a very long time I laughed at the indexers. I made all of the arguments and then some.

After all, if you just avoided the obvious dogs you’d do better than average, right? Who would be stupid enough to own GM a couple of years ago? Or Ford? Opps. Better forget about Ford. Hindsight is a beautiful and perfect thing.

I even took a major pay cut to join an investment research firm mid-career. There I was surrounded by exceedingly bright people. Each focused on one, maybe two industries and perhaps 6-10 stocks. More than one was honored in the trade press as “Analyst of the Year” for their work.

They knew each of these companies inside and out. They knew the top executives. They knew the middle-managers and the front line people. They knew the customers. They spoke to all of them weekly. Sometimes daily.

They didn’t get info before everyone else (that’s insider trading and illegal, and common). But they did know exactly when and how the info would be released, as did every other competent analyst around the world. Any new information was reflected in the stock price within minutes.

They issued reports our institutional investor clients paid dearly for in soft dollars. And yet, predicting stock performance remained frustratingly elusive.

If you’ve worked in a publicly traded corporation it is not hard to see why. The CEO and CFO work with internal forecasts from their teams. The process looks something like this:

Salespeople are required to forecast what their customers will spend. Since these buys are rarely locked in far in advance, and can be cancelled anytime, nothing is certain. Add to this all the pending business that may or may not come to fruition and basically you are asking the field salesperson to predict the future. So, of course, they take a guess.

These guesses get passed on to their managers, who now have their own forecasts and decisions to make. Do I take these sales forecasts at face value? Do I adjust them based on knowing Suzy is an optimist and Harry always sees dark clouds? So, of course, they take a guess and pass it on to the next layer of management.

So it goes until all these guesses are consolidated into the nicely packaged budget/forecast binders presented to top management. More often than not, after one look, they’ll say: “This is unacceptable. We can’t present this forecast to Wall Street. Go back and revise these numbers.” Back down the chain it goes. Maybe multiple times, and each time the numbers get a bit further from reality.

Now predicting the future is a dicey proposition for even the most gifted psychics, and they are not burdened with this process.

Suddenly my enormous hubris was clear. Somehow reading a few books and 10ks was going to give me an edge? Over not only the professional analysts who lived a breathed this stuff all day every day, but also the executives that ran the companies in question? I could succeed where they could not?

Suddenly I realized why even rock star fund managers find it almost impossible to best the simple index over time.

There is a reason names like Buffet and Lynch are so revered and well known. There are also reasons more fortunes have been made brokering trades than making them.

That’s why I’m an indexer. If you choose to try to best the averages, God Bless and God Speed. You may well be smarter and more talented than I. You are most certainly likely to be better looking. I’ll look for your name along with Warren and Peter’s in the not too distant future.

I extend the same to all those folks I’ve met in Vegas who assure me they have bested the house. I listen, gaze up at the billion dollar casinos and reflect on how many smarter, more talented and better looking people there are than me.

 ------



April 2011

10 Reasons You Should Never Own Stocks Again 

James Altucher

I’m really bullish on stocks and the economy but I don’t think you should waste your money investing in stocks. You might as well flush it down the toilet. Or throw a big party. Don’t give it to charity either. We already went over that. And please don’t buy a home. Just relax a little bit if you have some extra money.

I’ve been writing about stocks for almost ten years now. The first time I ever got paid for writing anything was a check for $200 I got from thestreet.com when I wrote in late 2001 about stocks that were trading for less than the cash they had in the bank. I never cashed the check.


10 Reasons Not to Buy Stocks
 
1. You’re not that good at it. Its really hard to buy stocks. Its not just picking stocks and watching it go up 10,000%. Its buying them and watching them go down 80% before they end up going 20% from your original price. Its waiting. Psychology is at least 80% of the game. I don’t need to go over the statistics. Most people sell at the bottom and buy at the high.

I think I’m pretty good at it but maybe I’m fooling myself also. Because  I can think of at least 3 times when I sold most of my holdings at the low and bought at the high. Even after I had years of experience. Sometimes its psychology, and sometimes you just have to do it. There’s only so much money you want to lose. So if you hit that point, and you sell your stocks, and then they go up, then guess what – you just sold at the low. Congrats. You’re a disciplined idiot. Just like me.


(9 out of 10 people think they are an above average drive. 9 0ut of 10 people think they are an above average investor. Both are impossible)

2. Your competition wants to slit your throat in a dark alley. You know how Batman’s dad got killed? He’s walking in the street with his beautiful bejeweled wife and his innocent little son, Bruce. Then this guy comes up to them and says, “give me your wallet and your jewels”. So Dr. Wayne (somehow he made billions being a doctor but thats another story) hands over his wallet and his wife’s jewels. Bruce, the son, is scared to death. Then you know what happens?

The thief shoots the father and mother in the head and runs away. He ALREADY had the money and he still shot them in the head and killed them when they had nothing left.  Little Bruce watches and screams while blood streams out of his both his parents. Hopefully they died instantly.


I happen to know who that thief is. Warren Buffett. And you are Bruce Wayne’s dad. Warren Buffett, Stevie Cohen, all the great investors go outside every day and they want to take your wallet, steal your diamonds, maybe rape you, and then after they’ve gotten everything they can get from you, they are going to shoot you in the head in front of your child and run off into the dark of the night.

Good luck fighting that kind of competition.

3. Competition, part II. A broker once told me this about Stevie Cohen. (see also, “How Stevie Cohen Changed My Life”) I don’t know if its true. I don’t care. Its just gossip. Maybe it was even a joke but he was a broker and he told me this. I’m not making any accusation. But the story was this. Cohen would find out where the CFO of a public company was going on vacation. Then he’d send a guy over there. Suddenly on the beach, the two would just happen to be getting their tans right next to each other, share a few margaritas, the information starts flowing. I’m not saying inside information. Its all just conversation. And it might not be Stevie Cohen. Its any of these guys. Every day there’s one dollar up for sale. Who is going to win that one dollar. You? Or the guy who sends his private detective to lie down on the beach next to the CFO of the Next Big Thing.

4. Competition, part III. I know another guy. He has code that scours the FDA databases looking for any microscopic changes in any documents. You know what happens when some of those documents change just a little? A press release comes out a week later. A stock gets halted. It opens up or down 50%. Who is going to win the dollar? You, or the guy who wrote 100,000 lines of code scouring the FDA databases.

5. It’s mostly a scam. I’ve been in or involved with senior management on two public companies and, additionally, have known many public CFOs. I would never ever trust any number that comes out on a 10Q, no matter how GAAP compliant it is according to government standards. Enron was GAAP compliant. Until they were bankrupt and everyone either went to jail or mysteriously died. If you were fully loaded in their stocks you might die also. From pills or a noose or from mistreatment in a mental health clinic. Because its not fun what happens to the shareholders. (see, “Should Insider Trading Be Legal”?)

6. True wealth in the stock market only comes if you make all the wrong decisions and then get lucky. I’ll give you an example: imagine having 100% of your portfolio in one stock, never ever diversifying for 20 or 30 years, and watching it sometimes go down over 50%, maybe even in a day. Guess who makes mistakes like that. Bill Gates (MSFT stock) and Warren Buffett (BRK-A stock) [See, 8 Unusual Things I've Learned About Warren Buffett]. So the guys who make real stock market wealth never diversify and never sell. You know how many guys get rich like that? Less than 100. Then there’s the other 100 million people who own stocks.

7.The best investors in the world make on average between 10 and 15%. We already know because of the above that you are probably not going to be among the best. So, if you pick some stocks and passively hold them maybe you’ll earn half that: 7%. Are you happy with that? Then fine. But given the volatility in the market I don’t think thats a good enough return for most people. Look,some people are good. And some people should invest. But most shouldn’t.

8. Competition, part IV. Some trading firms set up their operations right next to the buildings with the computers that process all the trades on the exchanges. They then pay for high speed cables to go right into these exchanges so their trades get their before yours. These guys make a lot of money in the markets by getting in the middle of every bid-ask faster than anyone else can. Its a race to the bottom but billions are made. So we see now the way to huge wealth is to either trade in millionths of a second or to hold huge blocks of your net worth in one stock for years. This is not a good strategy for 99.9% of people.

9, Well, what about daytrading? A lot of people seem to do that successfully. Please see my article “8 Reasons Not to Daytrade”. I got a lot of criticism after that. People wanted to show me their tax returns to show me how good they daytraded. Get lost, punks. Some people make millions playing the violin also. Doesn’t mean the other six billion people on the planet should perform in Carnegie Hall. In any case, we’re talking about investing in stocks. Not scalping like a little kid with eight terminals in front of him. And guess what, even the best daytraders in the world with twenty year track records go broke sometimes.

10. Stocks are really boring. Other than Apple, which is a fun stock.  I own a stock right now that cures irritable bowel syndrome, for instance. You know how many hours I had to research all the drugs for irritable bowel syndrome? And then talk for many more hours with the CEOs of every irritable bowel syndrome company? And then try to figure out how big the market is? Not an easy task. Would you admit in a poll that you have irritable bowel syndrome? And some of the cures for IBS sound worse than the disease. And then how do you value one of these companies? Oh my god. Its so boring. And so now I own this irritable bowel syndrome stock that I think will do well. But when? Maybe it goes down for five years before it goes up 1000%. Who knows? Maybe someone has a bad day at the FDA (maybe an undiagnosed IBS “incident”) and a drug that everyone thought was a no-brainer gets rejected. Who knows? WHo really knows? No matter how much information you have about a stock we’re all going to be dead in 100 years anyway. But hopefully a few less people will be dead from irritable bowel syndrome. (Btw, aren’t you happy that I didn’t include an image about IBS here?)

So wait, not so fast. You said you were “incredibly bullish on stocks”. And you even write about stocks sometimes. So what are you talking about? Is it all a big scam?

Yeah, it is. But 200mm ipads are going to sell in the next couple of years. So I happen to like Apple. (see also, “Apple will be the first trillion dollar company“) And a trillion dollars in stimulus still hasn’t hit the economy. So I like stocks in general. Not everything has to make perfect sense. Make your own decisions. Financial media pretends to hold your hand but thats a big scam also. Look at all the data, then make your own decisions.

The best way to take advantage of a booming stock market is to start a company. Because everything goes up. If you have an extra $50,000 don’t put it into stocks. Put it into yourself. You’ll make 10,000% on that instead of 5% per year.

I’m sitting in a cafe right outside the Wall Street Journal as I write this. I think lots of stocks are going to go up in the next few years. I think a lot of people are going to be happy if they wait out this economy. There’s a guy who works here who doesn’t seem to like me because he’s sweeping all around me.  I think they want to close up and I’m clearly in his way right now. He wants to go home early, maybe, and kiss his wife and kids. Hopefully his wife is in a good mood. Maybe they’ll fool around a little tonight. He’s had a hard day here today. I hope to god five years from now he’s happier than he is now.

Taking a position on plane comfort

TODAY

SEPTEMBER 12

To recline or not to recline? That is the question being hotly debated among air travellers after three flights were forced to land following fights among passengers over reclining seats.

However, are passengers really the problem? The real issue may be that most airline seats are not designed to fully accommodate the human body in its various shapes and sizes.

“We are fighting each other, but the seats are not designed right,” said Dr Kathleen Robinette, professor and head of the department of design, housing and merchandising at Oklahoma State University. “The seats don’t fit us.”

Dr Robinette would know. She is the lead author of a landmark anthropometric survey conducted by the United States Air Force with a consortium of 35 organisations and published in 2002. It has been widely used by seat makers and other designers.

The abuse of mobile-phone data

The two towers

Junk science is putting innocent people in jail

Sep 6th 2014

SOMEONE strangled a prostitute in Portland, Oregon in 2002. The police arrested Lisa Roberts, the victim’s ex-lover, who spent more than two years in custody awaiting trial. Shortly before the trial the prosecutor told Ms Roberts, via her lawyer, that tower data collected by Verizon, her mobile-telephone network, showed precisely where she was at the time of the murder. As her lawyer recalled, the prosecutor said Ms Roberts could be “pinpointed” in a park shortly before the victim’s naked and sexually assaulted corpse was found there. She was told she faced 25 years to life in prison. She accepted a deal to plead guilty and serve 15 years.

But the high-tech evidence against her was bunk. Routinely collected tower data can place a mobile phone in a broad area, but it cannot “pinpoint” it. That would require a special three-tower “triangulation”, which cannot reveal past locations. It took a decade for Ms Roberts’s guilty plea to be thrown out. On May 28th she left prison, her criminal record clean, after nearly 12 years in custody.

Asia arms up to counter growing Chinese might

11 Sept 2014

TODAY

BEIJING — Vietnam has nearly doubled its military spending, Japan is requesting its biggest-ever defence budget and the Philippines is rushing to piece together a viable navy.

Several Asian nations are arming up, their wary eyes fixed squarely on one country: A resurgent China that’s boldly asserting its territorial claims all along the East Asian coast.

Defending Japan - Facts and Figures

Japan

PwrIndx: 0.5581

 MANPOWER
Wars of attrition favor those with more.

 Total Population: 127,253,075
 Available Manpower: 53,608,446
 Fit for Service: 43,930,753
 Reaching Military Age Annually: 1,214,618]
 Active Frontline Personnel: 247,746
 Active Reserve Personnel: 57,900

Defending China - Facts and Figures

China

PwrIndx: 0.2594

 MANPOWER
Wars of attrition favor those with more.

 Total Population: 1,349,585,838
 Available Manpower: 749,610,775
 Fit for Service: 618,588,627
 Reaching Military Age Annually: 19,538,534]
 Active Frontline Personnel: 2,285,000
 Active Reserve Personnel: 2,300,000

China-based MNCs starting to move operations to S’pore

SEPTEMBER 11

SINGAPORE — General Motors moved the headquarters of its international division from Shanghai to Singapore last month, while agribusiness giant Archer Daniels Midland is gradually doing the same with its Asia and Pacific operations. Other multinationals, such as IBM, have also shifted employees here for functions such as treasury operations.

“I’m going to spend a lot of time going back and forth — the five-hour flight is going to be my monthly bus trip,” said Mr Ismael Roig, president of Archer Daniels Midland’s Asia and Pacific operations.

Kitchen confidential: The truth behind ‘bad service’

BY DARREN WEE

SEPTEMBER 11


Singapore’s well-known for many things, and our national pastime of eating is one of them. Many cafes and restaurants have also sprouted up in the past few years. Many of my friends, too, have left their stable, comfortable paying jobs to pursue the simple dream of running a cafe, which requires admirable courage to begin with. To be honest, it is only when we finally open for business do we realise how this industry takes its toll on us: The long hours that are physically and mentally draining; the one million and one things that you have to learn to deal with, such as troubleshooting a blackout; dealing with “sky’s the limit” type of expectations from customers; and, of course, the constant issues related to the severe shortage of manpower.

It makes me wonder if us F&B owners are just whining about the situation or is there really a problem to begin with? And as customers, do we really see the underlying reasons related to “bad service”?

Advisory body to look into possible enhancements to CPF appointed

The panel will study, among others, how Minimum Sum can be adjusted beyond 2015, how members can withdraw more as a lump sum.

SEPTEMBER 10, 2014


SINGAPORE — The Central Provident Fund (CPF) Advisory Panel to study possible enhancements to the CPF system has been formed, announced the Ministry of Manpower (MOM) in a press release today (Sept 10).

The panel will convene from mid-September and the study should be completed in a year. Initial recommendations will be provided by early next year, the MOM said.

“The Government has been studying further enhancements to some key aspects of the CPF system to make it more flexible to meet the needs of more Singaporeans and provide additional options in retirement,” the ministry said, adding the panel will “study these possible enhancements further, including the benefits and trade-offs involved”.

The Family Dollar deal embodies everything wrong with American capitalism

For low-income Americans, even shopping at Family Dollar can feel like an uphill climb.

Matt Phillips

July 29, 2014

The French economist Thomas Piketty could not have dreamed up a better illustration of the problematic and growing income inequality in the US than the Family Dollar-Dollar Tree combination.

Let’s start with the backdrop: Essentially, the lower-income Americans that are the target customers of dollar stores have gotten too poor to buy anything other than food (a vivid illustration of Piketty’s point about income inequality). That has depressed margins and profits at these discount retailers.

The fact that these poor Americans—and the retailers that serve them—are doing so badly attracted the attention of some of the richest and best-connected investors in the world. Funds associated with the activist investors Nelson Peltz and Carl Icahn have snapped up significant chunks of Family Dollar in recent months—as has the hedge fund manager John Paulson.

And they have been pushing for a sale. Which makes sense, from their point of view: Combined, they stand to earn hundreds of millions on the deal, at least on paper. (Again, the fact that financiers have done well on the deal, even as low-income folks struggle, squares with Piketty’s view that large fortunes tend to grow faster than overall income, resulting in mounting piles of capital owned by the wealthy.)

Other people that stand to earn a tidy sum on the merger? Well, Family Dollar’s CEO Howard Levine owns roughly 8% of the shares outstanding, so the deal price would land him with paper gains of about $130 million. Perhaps he deserves it? Not so fast.

As we said earlier, the entire reason the company was pushed to sell by the activist investors was because its numbers under Levine haven’t been great. The fact that a CEO at the helm of a struggling company is able to harvest such a rich payout is quite in keeping with Piketty’s contention that outsized pay packages for corporate executives—even when there is less-than-clear evidence that they’re deserved—are key drivers of US inequality. On top of that, as if to emphasize the points about the growing importance of inheritance that Piketty makes in his book Capital in the Twenty-First Century, Levine is the son of the founder of the firm, Leon Levine. (We put in a request to Family Dollar asking for comment, but haven’t heard back.)

Well, surely the deal will lead to a healthier retailer in the long run, right? That’s far from clear. This deal is being financed by roughly $9.5 billion in borrowings. The debt used to finance the deal could result in a credit rating cut for Family Dollar, which is already flirting with junk status, Bloomberg notes. In other words, Family Dollar could be in worse financial shape after the deal, not better.

Oh, and what’s next for the company? A wave of cost-cutting, aimed at helping the combined dollar store giant take advantage of the significant synergies and efficiencies that the deal creates. While the companies have said they don’t plan on closing stores, cost-cutting waves usually aren’t great for employees.

In short, this deal—prompted by the hardship of low-income customers—leaves a few well-connected investors, executives, and the bankers who arranged the deal much better off, as the finances of the business, its customers and, perhaps, its employees languish.