structured whatnots part 2, deposit guarantees

glad that the straits times is finally putting up articles on this nonsense, after the speaker's corner event took place...

on another note, also glad that mas and mof have finally decided to guarantee bank deposits until dec 2010 although how they intend to use s$150bn to cover approx s$700bn is beyond me.. sdic's website is also not updated yet...

i also note, rather disgustedly, that the motivation for this move was to "avoid an erosion of banks’ deposit base and ensure a level international playing field for banks in Singapore" - pro-business reason, rather than for pple's ease of mind... of course, other govts have also been doing it to shore up confidence for their banks...

the stated reasons for NOT guaranteeing bank deposits fully work in all circumstances:

1. if banks are already safe, there's no need to guarantee..
2. if banks are not safe, then it will cost too much to guarantee and this will eventually trickle down to taxpayers (well, in fact this cost thing was used by mas to justify the measly 20k limit, so if banks are not safe one can only imagine that this reason will be strutted out even more)

BUT, now that banks' competitiveness is threatened, they guarantee the bank deposits... so my romantic notion that the govt works for the good of the pple has just been dented...

structured whatnots

Just read a CNA online report on 983 S'poreans petition for MAS to probe sale of credit-linked securities. Actually I'm subscribed to the RSS feed of TKL's blog. In any case, I hope that the govt really looks into this....

I've always been moving money around in fixed deposits based on interest rate (well, my father makes me), so... starting from last year, whenever I deposit to/withdraw from the FD, the counter staff would always ask me whether I'm interested in a higher interest rate yadda yadda... Had it not been for the fact that this is actually not "really" my money (i.e. it is not my salary), and that my father really doesn't approve of "this kind of thing", I might really have deposited this money into this kinda product... thinking that it would be safe. Gosh. From the fallout, it seems like these things are very far in terms of risk from fixed deposits, so why in the world are they like recommending it to pple who are opening FD accounts... duh...

Not to mention, I keep getting flyers advertising these structured whatnots along with my statements.

Anyways, learning from the mistakes of others, I guess one really must be aware that the bank's primary purpose is profit-making. The goodwill from giving good advice is apparently simply not worth the peanuts obtained from recommending such stuff to pple.

And of course I hope MAS will look into this, even though the statements made so far seem to me (a lay person) that it just doesn't want to get its hands dirty with this. If nothing is done should I conclude that the govt is more interested in maintaining a business-friendly environment over here? In that case, perhaps staying around in SGP isn't such a good idea after all; I will someday grow old and senile and trusting of banks too...