Categories
Sports

[1830] Of meanwhile back in the Eredivisie

This season of the Eredivisie has been extraordinary. It began with none of the traditional Big Three at the top. Two of them lingered in mid-table while another dangerously lurked at the bottom. Sure, it was early and panic would be excessive. But with about two-thirds of the season to go, the Big Three collectively are struggling.

Ajax only recently found themselves fighting their way back to the top. Currently third, there is a good chance that Ajax will move to the second place after today. Already the result shows that Ajax is leading by 2 goals against Sparta Rotterdam. PSV is right behind Ajax but with the recent shocking loss to NEC Nijmegan yesterday, Ajax should be able to build up some cushion away from PSV.

The saddest of all of the Big Three is Feyenoord. The traditional rival to Ajax has not been well for the past few season but this year is probably one of the worst for Feyenoord. It is unlikely for Feyenoord to mount any reasonable challenge to the title as well as for places in the Champions League and the UEFA Cup.

Ajax has been impressive so far since it is troubled with injury and suspension. And this is also despite the fact that performance on the pitch is not so convincing. One could actually wonder how the hell Ajax has been so lucky so far.

In any case, the leaders of the table from Day 1 to now have been unexpected. Groningen, NEC, Twente. These teams are proving that they are not scared of the Big Three anymore and certainly, not of Feyenoord at all. The kind of disrespect they have shown Feyenoord is hair-raising.

I am unsure if these teams have gotten better over the years. It is probably more of a case which the Big Three have not been performing, with Feyenoord representing an extreme case. The performance of Dutch teams in European competition is another point which supports this hypothesis.

Mediocrity has made this season one of the most egalitarian version of the Eredivisie. This is simply sad but the socialists are probably celebrating. (Heh. I cannot help it. Their penchant for wealth egalitarianism is missing the larger picture.)

There is another team that probably has demonstrated consistent improving and that is AZ Alkmaar. Currently second and mostly like to come out first at the end of today, AZ under former Ajax manager, Louis van Gaal. With Feyenoord floating like a deadwood in the Rhine, AZ is likely to assume Feyenoord’s position as the feared Dutch-trio.

Looking at the Eredivisie so far however, it is hard to say the term Big Three without incredulity. The first and the fifth placed team are only separated by 5 points.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

p/s — after the dust settles for the week, three teams at top — in the order of AZ, Ajax and NAC Breda — share the same points, separated only by goal difference.

Categories
Economics

[1829] Of libertarian paternalism in EPF?

One aspect of the stimulus package announced by the Finance Minister earlier was smart enough in its execution that it needs a mention. While the 3% return of money to workers is optional, the return is done automatically unless the workers request not to.[1]

This is similar to the thinking of libertarian paternalism. Despite the term libertarian in it, do not be fooled by it because libertarian paternalism is not libertarian at all. In it the idea of the state knows best, “nudging” — as they call it; there is a controversial book called Nudge which had the libertarian world went on frenzy mode — individual to the option which the state thinks is the best or more often than not, prefers, with no coercion.

The idea of this particular implementation is to spend existing savings. With a high saving rate of over 30%, resources for spending to give the economy a little jolt is there. It is never a question whether the Malaysian government has any resources to stimulate the economy — that is, if it needs stimulation — but rather how does the government ensure that there is spending rather than a simple cash transfer which only ends up as savings again and therefore blunting the stimulus package.

Researches cited by libertarian paternalism indicate that individuals to large extent suffer from status quo bias. It means individuals are comfortable with current settings even if new settings are more efficient than the existing ones. The automatic EPF return takes note of this pattern.

If there was no automatic return, it is likely that the money would not be spent or distributed more widely in the economy, due to status quo bias. Many people would probably leave it in the EPF.

By having automatic return, individuals suddenly hold more disposable income with all else being constant. Thus, greater capacity for spending.

Opposition against the automatic return has been expressed[2], seemingly opposing libertarian paternalism. How many is unclear but there are those with low discount rate who would like to keep those 3% in EPF and the execution plan by the EPF only forces them to do more work than necessary. Groups, including those with the capability to fight instant gratification have demanded for the process to be reversed: return needs to be requested. That, indeed, the way it must be done.

In any case, in the end of the day, I am just glad that I will get some of my money back. In fact, to hell with paternalism as a whole. I want all of my money back and I want to decide how I want to spend or save the money.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — Following up on the announcement, the EPF had instructed that those employees who did not wish to reduce their statutory contribution from 11 per cent to eight per cent a month would have to state that in writing by filling up a form. [EPF procedure to carry out 3pc cut ‘not practical’. New Straits Times. November 8 2008]

[2] — Various parties have voiced concern about the procedure for workers to reduce their contribution to the Employees Provident Fund (EPF) by three per cent for two years, which the government has proposed. [EPF procedure to carry out 3pc cut ‘not practical’. New Straits Times. November 8 2008]

Categories
Politics & government

[1828] Of what the GOP needs to do

I typical share via Google Reader these days but I thought, this post from Greg Mankiw deserves extra attention basically because I agree with it. He theorizes that the youth moved away from the Republican Party because of social conservatism. I expressed the same concerned earlier.

…It was largely noneconomic issues. These particular students told me they preferred the lower tax, more limited government, freer trade views of McCain, but they were voting for Obama on the basis of foreign policy and especially social issues like abortion. The choice of a social conservative like Palin as veep really turned them off McCain.

So what does the Republican Party need to do to get the youth vote back? If the Harvard students are typical (and perhaps they are not, as Harvard students are hardly a random sample), the party needs to scale back its social conservatism. Put simply, it needs to become a party for moderate and mainstream libertarians. The actual Libertarian Party is far too extreme in its views to attract these students. And it is too much of a strange fringe group. These students are, after all, part of the establishment. But a reformed Republican Party could, I think, win them back. [The Youth Vote and the GOP. Greg Mankiw’s Blog. November 5 2008]

Will it happen?

Categories
Environment

[1827] Of what about the Kyoto Protocol, Mr. Democrats?

Since the Democrats are in control of both the White House and the Congress, will it finally ratify the Kyoto Protocol?

Categories
Economics

[1826] Of the stock market offers minimum risk?

In his speech unveiling a RM7 billion economic stimulus in the Parliament, the Finance Minister Najib Razak touched on the earlier injection of RM5 billion into ValueCap (translated):

In stimulating the capital market, I announced an additional RM5 billion fund for ValueCap for the purpose of purchasing equities of companies which are priced lowly due to uncertainty in the global equity market but yet exhibit strong fundamentals. The fund will be secured through a loan from the government-guaranteed Employees’ Provident Funds (EPF). Therefore, the loan not only guarantees higher returns vis-a-vis deposit rate offered by banks but it also poses the least risk to the EPF.[1]

Firstly, in the current climate it is hard to believe that the secondary equity market is able to provide better returns in the short run compared to even the dull fixed deposit account. In the long run, maybe but with the stated goal of stimulating the local capital market, surely the investment horizon is short.

Secondly, the equity market is not the least risky options available. In fact, it is probably one of the riskiest there are out there due to its inherent uncertainty. It is hard to imagine why the stock market with erratic prices would be less risky than a fixed deposit which offers stable income stream. Furthermore, if the EPF is interested in investing the least risky field with local context, it should consider investing in risk-free government bonds.

The second point on riskiness as said by the Finance Minister could either be an outright lie or a very, very ill-advised statement.

In any case, the intention behind the injection is suspect, especially, as reported by The Malaysian Insider, ValueCap is due to repay its RM5 billion loan to its three shareholders, Khazanah, the EPF and PNB.[2] Information at hand at the moment suggests that the RM5 billion would be used to pay back those lenders; it appears that the EPF would be the one financing the repayment.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — Untuk merangsang aktiviti pasaran modal, saya telah mengumumkan penambahan dana Valuecap sebanyak 5 bilion ringgit untuk pembelian ekuiti syarikat-syarikat yang mempunyai asas yang kukuh tetapi nilai pasaran mereka kini terjejas berikutan kesan pergolakan pasaran ekuiti global. Dana tambahan ini akan diperolehi melalui pinjaman daripada Kumpulan Wang Simpanan Pekerja (KWSP) yang dijamin oleh Kerajaan. Oleh itu, pinjaman ini bukan sahaja menjamin pulangan yang lebih tinggi daripada kadar deposit institusi perbankan, tetapi juga merupakan pelaburan yang mempunyai risiko yang paling minimum kepada KWSP. [Economic package unveiled (Updated with full text). The Star. November 4 2008]

[2] — KUALA LUMPUR, Nov 3 — State investment company Valuecap Sdn Bhd owes its three shareholders RM5.1 billion, which is due to be repaid in February 2009.

This debt, in the form of interest-bearing unsecured bonds, raises questions over plans for the Employees Provident Fund to lend RM5 billion to Valuecap to invest in the stock market.

In March 2003, Valuecap borrowed RM5.1 billion from shareholders Khazanah, Kumpulan Wang Amanah Pencen and Permodalan Nasional Bhd to invest in the stock market. At the time, world stock markets were bracing for a looming war in Iraq which followed on the September 2001 attacks on the US.

Valuecap’s bonds were due to be repaid in February 2006, but the company was given another three years to this coming February. At the end of 2006, the three shareholders each held RM1.7 billion in these bonds, according to documents obtained by The Malaysian Insider. [Question marks over Valuecap debt . The Malaysian Insider. November 3 2008]