SOMEONE sent me an article written obviously from the point of view of a member of the Jewish community, lamenting the rip-off pulled by Bernard Madoff against many of the rich and famous denizens of both Wall Street and residents of the rarefied gated communities like Palm Beach in Florida. But what seems to incense the author of the article is that this fellow Madoff scammed even Jewish organizations and charities. On the other hand, others are simply incensed that this fellow managed to create an aura of investment invincibility around him, to the point wherein people would join exclusive clubs like the Palm Beach Country Club just to have a chance to “invest” in Madoff’s fund…which, of course, turned out to be nothing but another glorified Ponzi scheme. One has to ask how otherwise astute and hard-nosed individuals could be suckered into placing their hard earned monies into a fund with very little transparency about it. It was a closed shop that made use of its own brokerage agency, got itself audited by a no-name firm of three members, and had family members manning sensitive positions in the firm. When I was once tasked with running a European based fund intended for investing in the Philippine market, we had to undergo all kinds of scrutiny and were subject to the usual checks and balances before we undertook any investments or placements. This guy managed to fool the richest of the rich, and even made it seem like a cachet to have had done business with him. But Madoff is just another sign of the growing malaise that seems to have taken over much of the world’s financial systems. All of a sudden, companies that were once looked up to as paragons of financial propriety have been exposed for having fallen prey to one shenanigan or the other. All in the name of expanded sales and increasing the bottom line--to the detriment of shareholders, depositors, investors, and the general public. Imagine the spectre of one of the world’s largest financial institutions being propped up by tens of billions of dollars in direct investments plus several HUNDREDS of Billions of dollars in guarantees! And here we see ourselves back in our lonely investment backwater – generally below the radar of investors – plodding along, but without committing the great blunders of the big companies in the world’s great economies. Our country knows what it is like to undergo the scrutiny of a World Bank--IMF program wherein all sorts of strictures in the name of better fiscal and monetary management. Having exited from the most recent program -- and benefiting from the (still) huge dollar inflows coming from our overseas workers -- our country seems to be really plodding along despite the lack of significant growth in industry and productive resources. On the other hand, I have seen figures indicating a possible deficit for the USA of about $1.2 Trillion in 2009. But the bills are still coming in as more and more sectors demand bailouts or financial guarantees. Even the crazy porn industry is looking for a bailout of about $5 Billion...to help them weather the decline in purchases or usage of their products. Hmmmmm!! It is not far-fetched to imagine that more and more scam artists will try their luck in beguiling suckers out of their hard-earned money. In fact, in an actual case involving a person known to me, our friend fell victim to a plea from a person met over the internet for financial assistance for various ailments in their family. Our good hearted Samaritan obliged, and only woke up after realizing that he was funding someone with cash for the stupidest of reasons. The Internet can be a dangerous place for the unwary, and identity theft occurs so often that one should be immediately suspicious of pleas for help even supposedly coming from good friends. A common ploy is for an innocent query supposedly from one’s freemail Internet provider asking for the restatement of one’s email address and password. That allows the thief to send emails to everyone in the address book, most of the time claiming to be stranded in some faraway capital after having lost one’s passport and funds. Aha! Then, the unwary people in the mailing list are instructed to send the funds to a Western Union or similar account, etc. An acquaintance who has had to do work with institutions in various parts of Africa actually met some of those famous Nigerian scammers pretending to be relatives of fallen royalty, etc., and who then ask for anything between a few thousand to hundred thousand dollars for help in freeing the frozen accounts of their relatives. Aha!! According to my friend, these scammers were almost all teenagers working out of Internet cafes in the Nigerian capital, all happily sending out hundreds of letters each day to, hopefully, snare at least one or two unwary victims. There must be some truth to that saying that “A sucker is born every day!”
Recently in Service Category
By Digoy Fernandez THE news that a leading international bank -- OK, its Citi -- will knock off more than 50,000 jobs did not excite the markets, but it raises the specter of diminishing service in a service-oriented industry. I remember all too vividly arguing with a very rude Citi rep a few years ago -- probably one from their call center -- and recounting this to one of my classmates who was a former high ranking executive of the bank. He agreed that the service of the bank had gone down tremendously. The net effect of all this is that, after I mentioned the incident to my family and friends, they all resolved to bring their banking business elsewhere. We talk about outsourcing here in the country as if it will be a panacea for all our economic woes. True, employment in this sector is expected to be more stable than most as international companies shed staff and outsource certain functions to firms like those found in this country. But outsourcing can only go so far. The news today about additional woes in Quantas -- an airline that had once been proud of its service history -- as yet another plane suffered from a failure in one of its systems. The sudden increase in incidents in this airline are said to be traceable to its having outsourced the maintenance function. This is not a wrong move, per se, but an airline certainly cannot take chances that something will go terribly wrong with one of its airplanes as it coasts at 30,000 feet above sea level. The TV program Air Crash Investigation has highlighted the danger to a plane if one little part gives way, or if a plane passes cursory inspection only to fall from the sky because of something the mechanic forgot to do. One airline that they featured had taken shortcuts in their maintenance schedule by maximizing the length of time between mandatory service schedules, and an air crash was the result. That is why I look apprehensively at any airline that publishes many flights on any given day, and, after considering the number of aircraft that they have available for flight, come to the conclusion that someone is short-circuiting maintenance schedules. Last week, a funny thing happened to me when I sat down to eat in one restaurant (initials GG) in an upscale mall in Alabang. I sat for fully 10 to 15 minutes and saw many waiters pass by and practically ignored me. And this was at 2 PM after the usual noon rush hour! I stood up and crossed over to another restaurant that had long been a favorite of my son (initials NP). The service staff in NP also studiously ignored me as I sat there waiting for anyone to acknowledge my presence. After another 15 minutes of waiting, I decided to test restaurant GG to see if the first incident was a fluke. I waited at the entrance to be shown in, and even sat down on one of the chairs provided there for that purpose. Alas, the staff had mastered the art of avoiding eye contact as they kept on bantering and moving around and ignoring me. Again??? I stood up once again and decided to also give NP another try. To make a long story short, one of the staff promptly noticed me, showed me to a seat, put one of their paper table runners that also serves as a menu, and then left me to my devices for the next quarter hour. Hay Naku!! Convinced that the food gods were conspiring against me, I went to another section of the mall and decided that I wanted some food with couscous, and settled on the Café Mediterranean (I mention their name because their service was excellent, as usual). Not only were the staff hovering over me, they practically were anticipating my every need. That is why it remains a favorite of mine and my son to this day. What could be the main cause behind the lack of attention by service staff? Well, maybe they were dog tired after the noon rush hour. Or, possibly, relying on a depleted number of staff -- compared to full strength -- as some may have been taking their break. But I believe that, in the case of GG at least, the restaurant really sucks when it comes to service. They really take long to serve and have no sense of professionalism or pride in their work, which means that it will be a cold day in hell before I dare eat there again, even if my family begs me to bring them there!
By Digoy Fernandez THIS blog is inspired by a lament from one of my relatives who sent us an email wherein she stated her frustration at the huge decline in the values of country-issued bonds, like those of the ROP for example. In a normal market situation, conservative investors find solace in long term bonds, or issues like second tier capital requirements of well known banks. This is no longer a normal world, nor are the financial and capital markets behaving normally in the sense that we have known them to be. Consider therefore, a corporation that dutifully set aside its contributions to a pension and health plan for its employees. It is a safe bet to make that, unless the monies in the fund were invested in super secure and bullet-proof assets, that one would find a serious decline in said pension fund (and in most others besides). Is there really such a thing as a bulletproof investment these days? Probably not. But it pays to know ones fundamentals and limit oneself to going for the safest investment alternatives that your financial planner can suggest. Most derivatives would certainly be thrown out of the window. Country bonds? Only if you are in for the long haul and will not choke at seeing the lower redemption rates that are prevailing in the markets today. Long term deposits? Only if your bank(s) is/are doing their job conservatively and not taking long positions on risky assets. It would be a good idea to visit your local banker to examine the values of your investments. If you set aside trust accounts for your kids, it may also be wise to see if the investment strategy once presented to you as bulletproof is still holding up in the rather heated and irrational markets of today. Then, one could work on a more reasonable strategy. In today’s modern world, banks and financial institutions trade over the Internet in the trillions of dollars daily. Each assumes that the other will fulfill its obligation. After all, one of the sacred stones upon which the trade and commerce regimen is built is the substitution of a bank’s good name and creditworthiness for that of a client. This is seen in the use of LCs and other instruments that offer a safe alternative to barter trade between two parties who would like to ensure that the transaction proceeds without a hitch. Imagine, therefore, the situation when banks begin to fail and other banks refuse to accept their guarantees or papers!!! It is interesting to note that the banks least affected by today’s financial problems are those that did their banking the old-fashioned way. They stuck to the boring formulas of lending (knowing their clients very well) and borrowing (accepting mostly old-fashioned deposits) and keeping a wary distance from what value investor Warren Buffet has called “financial instruments of mass destruction”. Even his value-based fund has had to take a beating, what with the good stocks going down with the bad. But value investors will have a better chance of surviving the violent swings and surges of today’s market, certainly much more than those who invested on the basis of rumors and so-called inside info. It is necessary to go back to conditions that ensure fair trade and a conservative return on one’s investments and deposits. To do this, you will have to let the institutions you deal with that you want to know what they are doing with your money. They must treat your money as if it were theirs to lose.