TR EMERITUS

I’m now in Vietnam for a short trip and I am being reminded of the time that my day job boss made a remark about how I only got a “serious” job at 38. He exclaimed “I don’t know how you survived before that.” I bring this topic up because, while Vietnam has made great strides economically, it’s still an obviously poor place and I’ve encountered all of two people begging (that’s from three days of this trip and three other weekly trips in the last decade). For the most part, the place is filled with micro-enterprises where someone turns a hole in a building into a shop selling something or other. These guys are the answer to how I survived before I got a serious job. They are also what you call the unknown reason as to why people become entrepreneurs. For me, I ended up as a “free-lance entrepreneur” because I didn’t have a choice. I had to do something to put money in the pocket. I had burnt out and crashed after my first job in a fly-by-night agency, which worked me the most ridiculous hours. It didn’t help that the girl I was with at the time decided that my job was her jealous competitor and would either call up crying or stalk me in the office. The average lifespan of someone in my job was three weeks (including the two week notice period) and I somehow managed to last four-months. However, when I went to look for other jobs, people didn’t see me as someone with four and half months of experience. They saw me as someone who quit too easily and given that there was a recession in 2001 and the advertising and PR industry had been hit, I wasn’t exactly anyone’s favourite choice to get hired. A friend from university days then suggested that rather than look for someone to pay me a salary, I might as well go straight to the source of the money – the client. I remember my first client being a Holistic Living festival. Made all of $400 from the job and then I picked up a client called Tempur, who made the most expensive but the most interesting sleep materials. I spent slightly over a decade freelancing. I did have spells in agencies but somehow got myself fired after four months. I did try to teach and ended up resigning because I dreaded the bureaucracy involved (I am allergic to “committee meetings” and I can say with some pride that I never have been and never will be involved with committees again). Somehow, I managed to last a decade with no agency experience in an industry that only “respects” industry experience. One of the most fundamental questions that I was consistently asked during that period was “why can’t you get a proper job?” If I think back, I guess my answer was simple – no one wants to hire me (at the time I had a very patchy work history) and so I have no choice but to hire myself. Now, I failed to build anything resembling a business. However, I will make the point that the path of entrepreneurship isn’t a conscious choice. There are a few too many self-help books telling you that you are either an employee or an entrepreneur. Then, you live in Singapore, you get a government that believes that entrepreneurship is nothing more than a fancy word to show that you’re trendy and I do get the feel that the government tends to see entrepreneurship something it can offer the citizens as an alternative career. Truth be told, entrepreneurship is not for everyone. Too many people talk about it as the only way to get rich but ignore the fact that most of the journey an entrepreneur makes is long, hard work and the opposite of financially rewarding. Not everyone is cut out for that. However, that being said, there may not be a choice for an increasing number of us. The tech lay offs should be a very good indicator for many of us that the concept of a steady job isn’t so steady anymore. It’s even if worse if you happen to be over 45 and some bureaucrat in the accounts department in New York or London sees you as a costs to the CEO’s bonus. You can get culled and unfortunately, we live in a world where the HR department is not going to look at your “loyalty” or “skills and experience” but what you’re costing the company. An increasing number of HR departments look at a guy with skills and the fresh graduate with no skills and figure out that its cheaper to hire the fresh graduate and train him or her with the skills than to keep the old timer. So, an increasing number of us have to understand that we’re not going to have income security. We need to understand that we have to have something to sell regardless of our employment status. It’s as simple as sell or die. Governments talk about economic growth. Individuals need to talk about survival. Sure, at certain stages you may get a hand out. However, that won’t last forever. Always look for something to sell. When you’re in entrepreneurship mode, you stop looking at defending your turf and look for various angles to get something from a situation. For example, if you lose out on a job, do you sit there and complain about how unfair life is or do you find a way of getting something from the guy who got the job? An increasing number of working professionals will need to understand that they have to think like the food vendors on Vietnamese streets. Governments and corporations from elsewhere will not rescue you. The only choice is to always have something to sell or die.   Tang Li *Although I’ve been based mainly in Singapore for nearly two decades, I’ve had the privilege of being able meet people who have crossed borders and cultures. I’ve befriended ministers and ambassadors and worked on projects involving a former head of state. Yet, at the same time, I’ve had the privilege of befriending migrant labourers and former convicts. All of them have a story to tell. All of them add to the fabric of life. I hope to express the stories that inspire us to create life as it should be.      Read More →

This is a report from Germany, the home country of Biontech. There is a drastic change of Narrative now. The Health Minister has admitted that adverse events occured in at least 1 in 10000 Vax persons. In Germany, the government will compensate Vax injured a MONTHLY allowance based on individual cases. A major lawsuit is launched against Biontech which will start in April 2023, even though they are supposed to enjoy immunity under contract. The German Health Minister has admitted that he has talked rubbish of exaggeration when he twitted that the vax is "totally safe with no side effects". The tide has changed. It will definitely reach our shores. Karl Lauterbach is Germany’s Federal Minister of Health. Yesterday, he dropped a bombshell on Germans in an interview. It has been posted on Youtube with English subtitles. You can find the video here (start: 3:54; end:15:17 [interview with minister of health starts at 8:07). The COVID-19 ‘vaccine’-induced injuries that were covered in this program are severe, life-altering, and permanent. More people are waking up to the reality that more of these severe injuries have occurred and continue to emerge than what has ever been admitted publicly by those pushing the shots. This is the nature of passive monitoring systems, particularly when coupled with active dissuasion of reporting. COVID-19 ‘vaccine’-injured people are finding themselves falling between the cracks in health care systems. This is horrible, but unfortunately, is not news for most of us. The news agency and Minister of Health confirmed that the Pharma companies are free of liability due to ‘vaccine’ injuries. This highlights all that is wrong with the clinical implementation of vaccine technologies, but there is no news here either for most people. Governments pushed the shots on the public and the public paid exorbitantly for them to do so. Now, growing numbers of people are suffering severe side-effects, and the public is also on the hook to pay for these outcomes, which, by the way, were foreseeable to vaccinologists and many other scientists with integrity. Any way you look at it, taxpayers have lost and will continue to lose massive sums of money due to this global debacle. This will be ongoing for a long time due to the massive damage to the global economy. Unfortunately, most victims of COVID-19 ‘vaccine’ injuries are receiving a pittance for the severe harms they experienced. Worse, many injuries are not being compensated at all because those pushing the narrative are ultra-slow in acknowledging many of the clinical problems caused by the shots. Interestingly, Germany’s federal Minister of Health hopes the Pharma companies will voluntarily help to compensate those harmed by COVID-19 ‘vaccines’. “That’s because the profits have been exorbitant. Simply exorbitant profits.”, said Lauterbach. Rhetorically, is it at all possible that ‘exorbitant profits’ blinded common sense? Let’s see how much the companies donate! Here are some bombshell admissions that came from the chat between Lauterbach and the newsman, who did a great job of keeping the Minister of Health on the hook… COVID-19 ‘vaccine’-induced injuries are unique and often not amenable to traditional medical interventions! Research is required to figure out how to treat the unique injuries caused by the experimental COVID-19 ‘vaccines’ that are still in their initial phase 3 clinical experiments to assess their safety despite there no longer being any placebo-treated controls to facilitate the detection of safety signals! Government agencies need to get faster at recognizing injuries caused by COVID-19 ‘vaccines’; hard to do when all they can do is robotically and incessantly state they are “safe”. Government compensation programs are a mess, hence why Lauterbach felt compelled to say, “so I can see why the people here are making complaints”. “And we are slowly [yes, way too slowly!] gaining a clearer understanding of the situation”; meaning, ‘we are starting to recognize that way more people are ‘vax’-injured than what we have ever publicly admitted’! “So, you’ve always given the impression that side-effects aren’t really a thing.“ And here is the biggest bombshell of them all: With respect to severe COVID-19 ‘vaccine’-induced injuries, Lauterbach stated: “I’ve always been aware of the numbers. They have remained relatively stable. …1:10,000: some may say that’s a lot, and some may say it’s not that much.“   Goh Meng Seng      Read More →

A business may be profitable but it can still be wiped out by liquidity problems - that is, not having sufficient cash to meet immediate requirements. This is especially important for banks. If all customers were to turn up suddenly at commercial banks and demand to withdraw their deposits, all such banks in the world, including all the strongest ones, will collapse. This is because when customers place their deposits, the bank will keep a certain amount in their reserve account with the central bank (as required by regulation), invest some in low earning liquid assets, and the balance loaned out to borrowers or invested in non-liquid assets in order to earn enough to pay interest to their depositors and make some profit. Banks keep a certain amount of currency notes for day-to-day needs of their customers. In a bank run, these currency notes run out very fast. The bank then uses their money in the reserve accounts to requisite more currency notes from the central bank. If this is not enough, the banks sell their liquid assets. Still not enough, the central bank allows the bank to draw on temporary credit facility in exercise of their lender of last resort function. This occurs only if the bank is viable and the the situation is seen only as a liquidity problem. Bank runs occur often due to rumours. When the situation is clarified and trust returns, the bank run stops. Because the withdrawal is in physical cash, it takes a long time to clear the queues. In addition, even under normal conditions, there is also a limit on maximum cash withdrawal. Large retail and corporate accounts would need to withdraw by transfers or cashiers orders which require a couple of days for clearance. There is sufficient time for the bank and the authorities to clear the rumour and bring trust back. In today's digital world, electronic banking and online apps enable depositors to move their funds out in seconds. Thus in a bank run, such services would immediately be shut down as it would lead to an immediate collapse of the bank. We saw this with crypto exchange platforms where withdrawal apps were shut down immediately in a run. As I understand, SVB operation is not very high tech, so they most probably have no online banking apps. This makes sense as they are not in the retail business. SVB financial highlights (US$) : Total assets -- $212b Cash -- $14b Securities -- $120b Loans to customers -- $74b Equity -- $16b Customers' deposits -- $173b Borrowed -- $19b (short term - $14b) On paper, SVB is solvent. It has enough assets to settle liabilities with equity still intact. Of the securities, $91b are in their HTM (hold-to-maturity) portfolio. These are securities that will be held till maturity when they will be repaid at face value. Accounting treatment of HTM securities is to book at cost. There is no mark to market. A valuation would have shown the portfolio has an unrealised loss of $15b. This would have almost totally wiped out its equity, but SVB remains solvent on paper. It's loans of $74b are to a few market segments, primarily tech sector, start-ups, and venture capitalists. SVB business model : The bank started in 1983 to concentrate only on the tech sector. It rose very fast with the dot com boom to later suffer big losses in the dot com burst. It then rebuilt its business on the private equity ecosystem. The era of cheap money saw great wealth amassed by the few. More billionaires were born whose money has to go somewhere. Most end up in the stock and real estate markets causing asset valuations to soar. With too much liquidity chasing higher yields, money then poured into the higher risk private unlisted companies. Soon investor money found a new darling in the tech start-up sector. It's a good marriage of the filthy rich investors and the money gobblers of tech start-ups which use the 'cash and burn' business model. As the private equity capital market boomed, SVB rode on its back and expanded rapidly to become the 16th largest financial group in US. Start-ups have no revenue and normal banking credits are not available to them. SVB helps put up some seed capital collateralised on founders' shares. It connects founders to its network of private equity capitalists. These start-ups then work their way up the funding timelines till they IPO. This way, SVB became a key player in the start-up sector and customers it helped continued to bank with it after IPO. By 2022 about 56% of all tech start-ups in the US, both in incubation and those that IPO'd, bank with SVP. Commercial banks invest heavily in promotion to build up their deposit base. Customer deposits is a crucial source of funds. SVB has no need to attract depositors. When their start-up customers receive funding, they deposit their cash with SVB in non-interest bearing current accounts and some in time deposits. Each funding round is in the tens to hundreds of millions. Almost all these start-ups bank only with SVP which end up having cash like manna from the skies. Flushed with depositor money, SVP has to make the money work. SVP's charter is a commercial bank but it does not operate as one. It is more a special purpose bank. The bank simply put a big chunk of their money (57%) into securities. It does some commercial lending in a selective market segment (35%). In short, SVP basically lived off fixed income from their securities portfolio. Which is pretty much a low risk operation. In the 2 years 2020 and 2021, SVP deposit money increased by an astounding $127b. The reason is simple. The pandemic drove start-ups to require more cash so more funding rounds took place. Interest rates have already been very low, but with the pandemic, rates were further lowered to spur the economy. With Treasury bills at almost zero rates, SVP was forced to invest in longer term securities to seek higher yield. With a normal yield curve, the longer term bonds have a higher interest rate. SVP securities portfolio has an average term of 10 years at average rate of 1.56% pa. Risk management failure : For 8 months SVB had no Chief Risk Officer after Laura Izurieta left April 2022, at the inopportune time when the yield curve reversed. The new CRO Kim Olson only came on board January 2023. Going into 2022, SVB had 3 challenges on hand: (1) A liquidity problem due to high cash out by start up depositors experiencing private equity capital pull back. It must quickly arrange for liquid assets to meet increased withdrawals. What did they do? The bank arranged $15b short term loan. This can be seen in their liabilities of $19b borrowing which included $14b balance of the short term loan. The funds borrowed is reflected in the Cash balance of $14b. With no bank run, they bought themselves enough time and safety net. (2) An interest rate problem that's hurting the bottom line. SVB had non-interest bearing customer deposits of $81b which is cost free. The balance $92b is interest bearing. Due to an upward movement in interest rates, the bank experienced higher cost of funds. If we use a 3-month term deposit as example, the interest rate is about 3.88% pa. Since their fixed income on securities average 1.56%, that means with every $1 earned on the investment of the $92b deposit, SVB is paying out more than $2 in interest. They were staring at huge interest losses. (3) A valuation problem of unrealised losses on their HTM securities portfolio of $91b. With portfolio average rate of 1.56% and short term Treasury Bills now at 4.7%, the portfolio carries an unrealised loss of about $15b. The bank has 2 options: (a) Hold to maturity. Unrealised losses on HTM securities is not recognised in the profit & loss. By holding to maturity, the bank will eventually recover the full face value. But in the meantime, the assets are low return fixed income earners and the bank suffer interest losses; or (b) Rebalance the portfolio. Sell the securities, recognise the losses immediately, but invest the proceeds in higher yielding shorter term securities. They suffer valuation losses in the year of sale, but fixed income interest earnings improve in future years. In summary, SVP took on short term debt of $15b, sold long term securities of $21b which as expected, wrote off losses of $1.8b. It took further steps to shore up capital by arranging to issue $2.25b worth of new shares. In reality, SVP did everything right by the book but nobody is talking about this. On Wednesday Mar 7, the bank was still solvent. So why the bank run and the collapse? Wrong reasons for the bank run : Leaving aside the bigger macro issues of the economy, there are 3 reasons you hear and read about which are all wrong. These are - (1) Massive withdrawals by depositors caused the bank run. Wrong.This is putting the cart before the horse. The geeks from the tech start-ups do not have their focus on the banking scene. They had no difficulties drawing for their payroll or other bills prior to the run. There was no cause for concern up to Thursday morning Mar 8. (2) SVB's huge exposure to start-up tech companies is a huge risk that worried investors. Wrong.This turns on it's own head. The bank has a small loan exposure to the sector, but it is actually holding $174b of the money of start-up customers. The tech start-ups together has a $174b exposure to the bank. The credit risk is actually the other way round. (3) The securities loss of $1.8b and new share capital issue of $2.25b spooked the market. Wrong. The bank balance sheet is still relatively strong. With balance sheet size of $212b it can absorb the loss. The $1.8b loss would normally have seen a slight price correction, not a 60% drop in one single day. How the bank run occurred : It's the investors who watch market development, not the geeks in the start-up companies. Primarily, it was Peter Thiel, the Paypal founder. Thiel runs the venture capital Founders Fund. Shortly after SVB announced the $1.8b securities loss and capital issue of $2.25b, Thield advised all his portfolio companies to get out of SVB. Thiel was soon followed be a few other big VC funds who also asked their portfolio companies to dump SVP. The fund managers' advice amounted to fear mongering which triggered the big sell down. These are all big boys and their mass exodus caused the SVB price to tumble 60% last Thursday. Shares tumbled in like manner as the shorting of Adani's company. For all we know, don't be surprised Thiel shorted SVB big time. By Thursday afternoon, depositors saw the developments in the equities market and rushed to get their money out. It was panicky investors who caused depositors to rush to the bank, not a bank run that caused the share prices to drop.   Patrick Low * Article first appeared on Down The Rabbit Hole.      Read More →