Hospital charges – Malaysia, Singapore, US

Medical fees may be a drain on household income if any member of the family falls sick.
Besides long term medication costs, one of the big portion of medical fees will be hospital charge.
Malaysia hospital charges
Malaysia’s government hospital charges (various types of medical fees and dental fees, for class 1, 2, 3; refer to form A to G)
Malaysia’s Ministry of Health website
I wonder whether there is similar compilation on medical fees in private hospital.

Singapore hospital charges
Singapore’s medical charges (different types of wards, surgery, different procedures)
Information about different hospitals, volume, average length of stay, 50th percentile bill size, 90th percentile bill size are included.
Singapore’s Ministry of Health website

US medical procedure charges
US medical cost by principal procedure from a health insurance website
The data above are older data.

Economist - David Friedman

David Friedman is the son of economists Milton Friedman and Rose Friedman. He is one of the Chicago School economists too. He is a PhD. in Physics and has taught economics and law (AP of Econs, Professor of Law).

Some of his books:

• The Machinery of Freedom
• Price Theory: An Intermediate Text
• Hidden Order: The Economics of Everyday Life
• Law’s Order: What Economics Has to Do with Law and Why It Matters
• Future Imperfect: Technology and Freedom in an Uncertain World

David Friedman’s website; blog (I have put into my bloglist) and
his books, book chapters, papers, detailed course outlines etc..
(Many webbed drafts, sample chapters are available.)

I like these 2 books by David Friedman: Law’s Order and Hidden Order.
The rest I haven’t browsed through.
Law’s Order links economics to law whereas Hidden Order links economics to everyday life issues.

I think I’ll like the book Future Imperfect. It is a book linking economics, laws and technology.

There is a portion "Living Paper: An Open Source Project" in his website which are software programs/simulations to teach economics. Some programs are available.

Cassandras of current financial crisis

In Greek mythology, Cassandra was granted the gift of prohecy, but was cursed such that no one would ever believe her predictions.

Quite some time back, I read with interest this article in Nouriel Roubini’s RGE Monitor on "the thinkers who predicted early on many aspects of this financial crisis". Many of the "Cassandras of current financial crisis" are mentioned.

Great article ! At least we would know whose theories/methods to learn from to make sense of root causes of the current financial crisis. Maybe we can learn the ability to "forecast" too.

Highlights of these "Cassandras of this financial crisis":

• Robert Shiller : housing bubble
• Kenneth Rogoff and a few other economists: the unsustainability of the US current account deficits and of the global imbalances
• Raghu Rajan: agency problems and incentive distortions deriving from compensation schemes in financial institutions
• Nassim Taleb and a few other finance scholars: the risk of fat tail extreme events in financial markets
• Paul Krugman: currency and financial crisis theories in international macro
• Stephen Roach, David Rosenberg and a few other financial sector analysts: the shopped-out, saving-less, bubble-addict and debt-burdened US consumer
• Niall Ferguson: between historical episodes of financial crises and current vulnerabilities
• Hyun Shin and other scholars in academia: modeling of illiquidity and of the perverse effects of leverage during asset bubbles
• William White and his colleagues at the BIS: how the "Great Moderation" may paradoxically lead to "Financial Instability", asset and credit bubbles and financial crises
• Gillian Tett and a few other FT journalists: complexity of credit derivatives and structured finance and of the systemic risks deriving from these new exotic financial instruments

MAS report on sales & marketing of structured notes

On 7 July 2009, Monetary Authority of Singapore (MAS) has issued a report titled:
Investigation report on the sale and marketing of structured notes linked to Lehman Brothers

The press release provides a good summary.

10 distributors (banks/finance companies and stockbroking firms) of structured notes linked to Lehman Brothers:
(i) ABN AMRO Bank N.V. Singapore Branch (ABN)
(ii) CIMB-GK Securities Pte Ltd (CIMB)
(iii) DBS Bank Ltd (DBS)
(iv) DMG and Partners Securities Pte Ltd (DMG)
(v) Hong Leong Finance Ltd (HLF)
(vi) Kim Eng Securities Pte Ltd (KESPL)
(vii) Malayan Banking Berhad Singapore Branch (MBB)
(viii) OCBC Securities Pte Ltd (OSPL)
(ix) Phillip Securities Pte Ltd (PSPL)
(x) UOB Kay Hian Pte Ltd (UOBKH)

Structured notes linked to Lehman Brothers concerned: (with $ amount sold to retail investors)

• Minibond series 1 to 10 (except series 4): $508 million, 7800 retail investors
• High Notes 5, arranged by DBS Bank: $104 million, 1000 retail investors
• Series 3 LinkEarner Notes/Jubilee Notes, arranged by Merrill Lynch: $18 million, 350 retail investors
• Series 9, 10 Pinnacle Notes, arranged by Morgan Stanley Asia: $25 million, 650 retail investors

Findings on individual distributors in the PDF file above are indeed eye-opening.
Highlights of some of the findings (cases from individual institutions) from the report: (I tried to classify them into categories)
1. No due diligence on products sold

• did not conduct any formal product due diligence on product

2. Wrong classification of risks of products

• failed to sufficiently distinguish the Minibond Notes from bonds and in fact informed its RMs that the Minibond Notes were suitable for clients who wanted to diversify their portfolio with bonds.
• "low to medium" risk classification for the Minibond and Pinnacle Notes was inconsistent with the prospectuses

3. Communication errors or improper communication

• mis-communicated the risk as conservative to relational manager (RM); reclassifications were solely by way of email to RM
• did not expressly communicate its internal product risk rating to its RMs;
  instead relied on a general understanding among RMs, as communicated during training for other products, that non-capital protected products were to be rated "Growth".

4. Improper training system and training management system

• did not however monitor whether RMs who missed the arranger’s briefings were briefed at the branch level.
• not all RMs who sold the products attend training and take the test.
• not provide sufficient guidance to its RMs on how to factor in a structured note into client’s portfolio

5. Improper risk profiling of clients

• question in risk profile questionnaire erroneously scored.
• not allocate a numerical score to the client’s investment time horizon, experience and diversification needs towards computing that client’s risk profile and suitability to purchase an investment product, nor were alternative forms of guidance provided to the RMs on how to factor in such information.

The report’s Annex 2 shows settlement outcomes of these affected structured products.

The ban on selling structured products will eventually be lifted when the ban period is over. As investors, we should always bear in mind the lessons learnt in this whole saga. Buyer beware ! Be extra careful when dealing with financial institutions, particularly before you are signing on the dotted line. We have seen how ridiculous the financial institutions can be in doing due diligence, classifying risk of products, communicating within the institutions, training staffs and doing risk profiling of clients. Just wonder how to justify the high remuneration/bonus paid to the financial institutions’ top management and board of directors.

Stonehage Affluent Luxury Living Index 2009

Stonehage Affluent Luxury Living Index, or SALLI is an index to measure the inflation experienced by High Net Worth (HNW) and Ultra High Net Worth (UHNW) individuals and families. It’s Sterling-based.

PDF file : SALLI 2009

One key highlight is that SALLI actually falls by an average of 3.7% in 12 months ended on April 09, compared to average inflation rate of 2.3% of UK’s CPI over the same period. This is under the background of significant fall in the value of Sterling against USD and Euro. SALLI deflation will be even greater if not for this reason. In a way, recession affects HNW/UHNW individuals spending. In another way, it’s “cheaper” to live as HNW/UNHW individuals now.

We can take a glimpse of luxury industry through SALLI.

It’s eye-opening to see what the High Net Worth (HNW) and Ultra High Net Worth (UHNW) live on. This can be seen from the component items of SALLI from the pdf file. (Check out the items, the brands etc…)

It’s really an extremely big gap between HNW/UHNW and the masses. :-)