Its the banks which cause the mortgage crisis. I never trusted
banks in my life before.
But i must say POSB is not bad..though interest is low, but
money is still there.
Actually what "caused" the
banks to go under is their relentless quest for profits outside of
mom and pop banking.
When you have in your hands so
many billions that the company you control owns and so many
billions people deposit with you, you start to feel like you are
GOD!!!!
You start to think how you can,
as GOD, make more money with the depositors' money in ways more
lucrative than lending the money to borrowers, what depositors gave
you.
Then you think up risky
"products" that you think, you can control, the risks, with
sophisticated algorithms running on super computers.
So you expand and expand and
suck in more and more money and you take on more and more risks to
generate more and more profits.... until...
What worked in the beginning
stopped working!
The risk spirals out of
control. As Alan Greenspan puts it, "the computers did not take
into account these parameters because humans did not input these
parameters, and humans did not because.... in ther words, when what
you put in is garbage, what the computer generates out, is
superior, super computer generated garbage"
Did I relate this before? MOF
Singapore called for an open tender sometime back on "real-time"
"risk analysis" "portfolio balancing" "worldwide online" "24/7
connected" software. Together with a Japanese MNC I put in a tender
as well. (if you go to my website and click on "more info on the
author" - you might be able to figure out which Japanese MNC, which
has since changed name with a merger, it was. hahaha)
E&Y if I remembered
correctly put in a bid of $111 million.
I dont remember what happened
to the tender because it did not look as if we would have won it
and I was busy partying in Bangkok.
Anyway, when the risks the
banks took went out of control, they started to bleed profusely and
with the massive overheads of their global operations now with no
income to sustain it, the double blow wiped them out.
Right POSB. No way it could
have been caught up with this. They are not "smart" enough to
understand what was going on. All they know is, use the depositors
money to lend to borrowers at a higher interest rate, that's all,
and that is why they are safe.
