Players.

“All the world’s a stage, And all the men and women merely players…”

– As you like it, W. Shakespeare.

“…corruption flourishes not just because these …shell companies, offshore bank accounts, and dubious trusts are located in far-flung overseas territories …or rogue states, but because they are supported by apparently respectable firms at the heart of some of the world’s biggest and most advanced cities.”

– The Right Honourable Gordon Brown, former Prime Minister of the UK, and brother inlaw to Sarawak-born Clare Rewcastle-Brown, author of The Sarawak Report.

Personally, I prefer “playground”. All the world’s a playground. Some games are no fun. Or else nobody’s playing by the rules. Others……. well, you’re still playing 🙂

Sarawak is in East Malaysia, and while I have never been, I spent 8 formative kindy and primary school years in Sarawak’s closest neighbouring state of Sabah, before moving to Penang in West Malaysia (I was however born in Petaling Jaya, near the capital. In other words, I know I’m Malaysian, just not sure how to explain where from.)

While the largest indigenous group in neighbouring Sarawak is Iban, many of my former Sabahan classmates boasted at least some Kadazan blood. (Henry Golding, heir apparent and eligible bachelor on Crazy Rich Asians, is half Iban btw, even observing traditional rituals like the rite of passage into manhood known as bejalai).

CAVEAT: They slaughter a pig the traditional way in the video below, and while it’s blurred out with little blood you can hear the screams.

East Malaysia is about 51% Indigenous, 15% Malay, 14% Malaysian Chinese. Add to that I’m Straits Born Chinese, and 3 out of 4 of my English-educated/ Chinese-illiterate grandparents look it (my lone grandma of direct Chinese descent had fled Guangdong when her family lost their land*.)

Anyway my time in East Malaysia (Sabah) – weekend market drives on dirt roads passing indigenous women walking to market (slender necks, small and slight figures, effortlessly balancing huge baskets on their heads – it was where I first formed the impression a woman could be tough as nails, without ever showing or even thinking about it), visiting the Sepilok Orangutan Rehabilitation Centre in the family car which was by necessity a 4 wheel drive.

I have fond memories of primary school mates who were really good at digging up antlions (one of ’em has his own medical practice in the UK today – but what I always remember is Steady Supply Of Antlions :D) and thanks to them I had several large glass bowls of the things. We fed them huge red ants from the garden (occasionally the ants won).

 

-diagrams from oldblockwriter.blogspot.org and sacnaturecenter.net and there’s umm.. even some study on antlion hunting behaviour. Just happened to find it. I have absolutely no idea how us kids started doing this one day, suddenly kids started bringing antlions in from outside and then we would dump the pretty, colourful erasers (like the Hello Kitty or Smiggle nowadays) out of their plastic cases so we had something to put the things in.

Another tuition mate from that time is today a surgeon (of humans). I used to wish my parents were both veterinarians so I could help out in their clinic in Sandakan….. until I watched her mum cut a few large tumours out of one of my hamsters with a scissors and no anaesthesia (it was over 3 decades ago and they didn’t want to risk it. My hamster screamed and screamed until it couldn’t anymore, around the time she started stitching it back up. After a brief maggot scare it went back to running around my room in the night like nothing happened. But I couldn’t look at scissors the same way for awhile. Stupid hamster.)

Oh, what were we doing in Borneo (East Malaysia)? My dad’s field was botany, soil science. Periodically his work necessitated us living in the more agricultural areas of the country. I just rarely mention because he declined to comment early on – all living things evolve to suit their climate and since rubber, oil palm etc etc are well, rooted to the ground and on huge plantations, it’s not like they can walk indoors, dig burrows, or throw on a jacket. He used to trek for days through thick primary jungle after first travelling by helicopter or jeep, in order to reach plantations deep beyond various Malaysian/ Indonesian/ Philippino jungle so he could see how the plants grew in their natural environment. To him the climate conditions in HK produced something so different that I may as well have been asking him about aliens.

And with that background of what I remember of Borneo, The Sarawak Report is a blog that began out of a Sarawak-born Englishwoman’s love for the Malaysian rainforests, her writing meaning to draw attention to the great need for conservation and the environment….. which then greatly assisted the about-turn of how the funds of a naturally rich agricultural country were (mis)run. Now it’s a book as well: The Inside Story of the 1MDB Expose.

“Dedicated to my mother and father who spent their young adult lives serving in Borneo with integrity and commitment…”

“Without the support of so many Malaysians who encouraged me every inch of the way, I could never have begun to create an impact… This is their book as much as mine..”

– Rewcastle-Brown

“The Sarawak Report is a triumph… for the blogosphere.. despite the fact that it was written by a bona fide journalist with an extensive portfolio. …exposing the deforestation in Sarawak and the individuals who were lining their own pockets in the process of granting and receiving concessions… now a …tome of outstanding investigative journalism.

– Andrew Leci, unreservedmedia.com

Rewcastle-Brown, 58, started writing the book in 2010. The book after the blog details among others the harassment and legal action she faced in getting it published. Former British Prime Minister Gordon Brown describes her efforts as, “At great personal cost, including risks to her safety…”

Then there was the giant mess of blog noise. (Read the whole thing before you freak out at part of what I type.) Part of the reason I deleted, rewrote, deleted, deleted, deleted, took so long, is because if you look at the detail in her book, you will get an idea of the extent to which stuff really flies everywhere – lotsa shots at different peoples and countries appearing and often incongruously.

Now, we are no strangers to misconception – the latest funny one is that I’m Kings’ second wife by which we have HN, and Rockstar is Kings’ child by his first wife. Sure I have been asked whether both kids are mine, but then various Asian wait staff abroad have been strangely peevy….. until I realised they probably thought something like I had stolen Kings from his first wife because Rockstar couldn’t possibly be mine… (they were actually much nicer when I jokingly said something about how no one ever believes Rockstar is also my kid).. So for the record we’ve only ever been married to each other, and both kids are ours. Also, I speak no Tagalog. If I did though, I’d be happy to respond 🙂

Anyway, all the noise out of Sarawak Report. Rewcastle-Brown documents it all. The book is after all freaking 500+ pages. But I pick some stuff and not others and people gonna jump up and down about what I did pick… or what I didn’t pick. So I didn’t pick. I just put down the first colourful eg of nonsense I came to:

Among others, there was a site that popped up purporting “to offer (so-called) Texan right-winger Americans relevant news” that then linked to a website by a known Texan Republican speechwriter and started talking about former Malaysian Deputy Prime Minister of the ’90s Dato’ Seri Anwar Ibrahim (currently Prime-Minister-In-Waiting to the newly re-elected Prime Minister Dato’ Seri Dr Mahathir Mohamad), petitioning against former Prime Minister Najib Razak a.k.a. Guy Taken Down By Sarawak Report And Being Tried For Massive Misappropriation of 1MDB Funds.

In other words, any real “Texan right-winger Americans” who found themselves reading it probably went through said intricacies of Malaysian politics and something about an “upper-crust Brit… making the welfare of every bee and bug in Sarawak (her business),” and be like:

<clicks away>

Not too long after I first started to mummy-blog, I commented that it takes relatively a much larger amount of resources to maintain and police content consistently over time (I was talking about the difficulty blog directory sites have in perpetually keeping track of what they link to at the time), than say, to add another link on, yes – possibly anonymously – in the course of “regularly managing” the things.

Oh yeah the money, the crazy shopping sprees. Imelda Marcos, then “First Lady of the Philippines,” once fled her country famously leaving behind 2,700 pairs of shoes at the presidential abode in Manila. When then-“First Lady of Malaysia”s home was raided, they found 567 Hermes, Prada and Chanel bags, 423 mostly-Rolexes, some USD 300 mio in jewels and cash. (I noted with absolute respect for Rewcastle-Brown that she had even pointed out that in adopting said title in Malaysia as the wife of the then-Prime Minister, Puan Mansur was effectively “ousting”  the wife of the King of Malaysia. It shows how much Rewcastle-Brown understands of the country.)

As for the crazy shopping sprees – we have 2 wrists, 2 shoulders, 2 arms, 2 feet, 365 days most years to use the stuff… WHO IN THEIR RIGHT MIND DOES THIS?

HOLD ON. One in five. That’s FOUR of you don’t get to go THAT’S MY BOSS!! Aren’t statistics fun? (Aforementioned study is covered by this article in The Telegraph btw)

Anyway, the excesses out of 1MDB are widely reported, lotsa star-studded names. Back in 2015 cleanmalaysia.com put the tally of the number of countries involved in the investigation at 6 – Malaysia, Singapore, Hong Kong, Switzerland, the US, the UK… now they think it’s just the tip of the iceberg, the Wall Street Journal recently published how China has now offered to assist.. No point me regurgitating.

In the beginning I was all Whoa, and that’s just the cash, wait ’til they get to the book keeping for their derivatives. On second thoughts though, I would flippantly say I’m not sure anyone bothered very much. They didn’t need to, they were super flush. A lot of the time derivatives are for achieving leverage – tapping increased returns by taking on increased risk… without coming up with the initial funding. This one looks more like one big fat orgy of a shopping spree.

This a pretty good description from an old article on WSJ:

“…the very nature of these synthetically created securities makes it difficult for those outside Wall Street to debate their merits. For some, the definition alone is enough to cause eyes to glaze over. Essentially, derivatives are risk-shifting agreements whose value depends on — is “derived” from — an underlying asset, financial instrument, or event…” 

(“Risk shifting”. That’s what they’re supposed to do. Depending on how they’re accounted for, they can also conceal. Pretty sure that used to happen, but the ISDA (International Swap Dealers Association – which is headquartered in NYC) has come quite some way, in regulating the disclosure of swapping. Without closely regulated disclosure requirements (when to recognise the risk on your books, whether you have swapped out or swapped in further risk), you can quite simply say, conceal a “buy” into a “sell” – buy the stock or bond, then buy huge credit default protection on the same name <shrugs> Effectively, you are not exposed to the risk of the bonds after all – unfortunately, you are exposed to the risk of whoever you’re buying protection on the bonds 😀 Now, maybe Management was fine with the initial risk, but is in fact not fine with that much exposure to your swap counterpart)

But since we’re on about derivatives:

“..Making matters more difficult, however, is the fact that the value of certain complex varieties, such as options, asset-backed securities, and credit-default swaps, depends on many inputs…”

(A.k.a. Garbage In Garbage Out)

“…The fear is not derivatives, but the misuse of derivatives via too much leverage.”

One example is the series of little options known collectively as the now-notorious Accumulator. Before the massive losses though, for 7 months I had a job in Pricing and Execution at a bank that did a lot of these. (It was my first pure execution job,  a big name house I found a job in after my original beloved employers had been gutted in an aggressive acquisition, the second of my former career. Both acquired institutions had had their own unique expertise and client base, making them desirable acquisition targets. And so they were savagely bought over. A lot of “bad” things happened to the “good” people. Lemme tell you – it always happens. Cockroaches have more finesse in filth. If you are innately uncomfortable playing dirty, you are always at a disadvantage. there is no shame in it, but you should be kinder on yourself and recognise it’s simply not your natural element 🙂 Not every bright, hungry person plays in the same playground. By a form of “natural selection” “good” people get killed off in “bad” organisations because the place is no longer a fit for them . Without the crash though, inertia has a stronger hold – while it’s scary, isn’t it also exciting, to be striking out for new waters?)…

Then came the ICBC IPO and at the time unprecedented deal volume, and I quit after the worst of it was over because I became very rundown (at almost 5ft 7inches, I weighed just below 45kg/100lbs). I declined to come back when I found I was unexpectedly pregnant (with Rockstar). Then I got myself hired (yes, pregnant) at a much more conservative house that didn’t do unfunded products (ie the kind that allows huge leverage.)

One day there was this rather sensationalised article of a woman who was devastated and planning to sue A Bank I Have Never Worked At, because she had apparently lost something like tens of millions of HKD in Accumulators. One of my RMs (Relationship Managers – they handle the clients and sell the products I source or put together – I’ve told them if I cannot make them understand a product in 5 mins, I need to find something else for them. Also, we like to start the pitch with the worst thing that can happen to the investor, because if they cannot accept that, we need to yes, find something else for them).. So anyway, my RM showed me the article and asked, “Did anyone notice her actual job (was something like handling a photocopy machine)? How did she even have that amount of capital to leverage up, and then lose?“

My then-RM had worked it out backwards that the lady had likely made really good money off it first. And then kept going back in. What special kind of hell is it, to know you had made enough for your retirement several times over…. only to lose it all and more. (That is so terrible. I’d rather just never have had it. Come to think of it, even when Kings and I were both in banking, we never made anywhere close to that kind of money haha)

Anyway, the not being able to stop in itself is not that unlike buying 2,700 pairs of shoes or 567 Hermes, Prada and Chanel bags (or eating or gaming excessively – remember the CNN article about the 32yr old man who died from heart failure aggravated by the fatigue of gaming for too long). And we as a people keep doing this to ourselves over and over – encouraging that kind of dysfunction at least tacitly.

What never seems to look cool is exercising restraint. The kinds of personalities who don’t buy in to that kind of behaviour are not traditionally encouraged. My bank employer that didn’t allow those massive leverages or the structures that encouraged them was not respected for it. It was very hard for the RMs to secure clients. Because the clients wanted to open accounts and do these things. (Oh, you thought only parents have a really hard time saying no to their kids? :D) And then the RMs in the big houses that do allow these things are under very heavy pressure to sell them, and risk losing clients to other RMs who are willing to do them, if they’re not. Everyone is under this intense, intense pressure to perform. That performance is measured by grades your bottom line. You perform by doing these things. You lose a lot of ability to perform if the house you are with doesn’t do them. Who collectively agreed that life selling investment products would be like that? 

What’s that they say about taking a calculated risk – a ship in the harbour is safe… but it’s not what ships are built for. Yet neither do they go out without checking the weather reports.

But if you grew up where you were going to sail….. if you had a unique understanding, garnered from work or personal experience, you might know something even the best researchers in the field who have never lived there or been in that industry or etc etc don’t. (I said. MIGHT.)

Taking a view works essentially the same way in both derivative and vanilla, you are meant to go in when it’s cheap – and by cheap I mean you take a view that the market has not already priced in. If everyone else agrees with you, the trade is already “expensive” (no matter how pretty it looks). Unless things get even better, you’re not going to make money out of it, you already paid for it. AND upfront to boot. People liked to go into Accumulators in bull markets – which means they were accumulating stock below current market, while current market price you dealt at galloped up, up, up, like a runaway horse. Sounds like a win? It’s too expensive a trade (because it’s a priced-in “sure-win”) without adding a Knock-out. Your awesome trade stops accumulating when the stock price reaches the KO level. At the height of it, those KOs were being reached every 20 mins or so. That’s when people kept going right back in to do the trade again. At current higher price. Oh yes, it’s higher. And again. Higher still. Higher, and higher. But all things that go up have to come off the high, at least correct a little. And many people got caught.

A derivative magnifies, reduces, diversifies off the original vanilla (and of course can also conceal*) – whether a particular kind of research in the industry was likely to be approved. Or even succeed. Buy the stock <shrugs> Borrow massively to buy the stock? You’d probably think twice. But do the derivative? Is not borrowing what, is “investing in a sophisticated derivative”? (Answer is Yes That IS Totally Still Borrowing, In That Case.)

Time is both our friend and our enemy… Time ages us, decays all things…. but in many ways time reveals truths and lessons… There’s at least a couple things health researchers learned from observing things like the health of the elderly in far-flung villages where the inhabitants eat certain staple foods in that region.

You might have a distant relative you’re going to visit this CNY. Maybe you go down this year, and he tells you people in the small town are almost sure that company-owned-by-that-other-publicly=traded=company’s plans to set up a new plant are going to come through. After all, they recently discovered the area was rich in a particular ore/ new health and beauty benefits from the indigenous plants that only grow in these climate conditions. Decades ago there were.. what, 6 known vitamins? How many are there today, 20? 30? In another few decades, what’s that number going to be? Thing is, pharmaceutical companies cannot manufacture the next big super vitamin if it hasn’t been discovered yet.

And with that, it’s gonna be a happy, happy Chinese New Year. May we seek new and ever more exciting opportunity together.

 

*My grandma from Guangdong (because I’ve been getting asked more frequently, recently) – She’s an amazing person, she came to Malaysia alone when she was about 16, dressed as a boy for safety, supporting herself as a seamstress. Then there were the effects of the second World War in Malaysia, the Japanese Occupation. When things eventually settled, her only son travelled abroad, where he married a German woman – 6ft tall, blonde. My cousins are all over 6ft. They remained in touch and visited – when my uncle fell terminally ill, my grandma upped and moved to the little German town to help care for the family until he passed away.

I mention, because I’ve often gone over what I knew of her growing up – she had been the youngest daughter in a large, wealthy family with a farm. Her eldest brother and her father’s pet, the daughter of his old age, and therefore quite unburdened by familial obligations and responsibilities. She ran free, on unbound feet – something she would describe as a huge advantage – trying to ride on the cows. (Not horses. Cows.) She never said, re her father, all the years she sat for me, but the last thing she saw before fleeing her home forever was her eldest brother shot. I wonder often, what confluence of nature and nurture produced such resilience? I think, part of it we all have in us. We never know just how strong we can be until we are tested.

One of my half-German cousins – the closest thing I have to an older brother, I was otherwise a Lonely Only” surrounded by animals – served in the Iraq War (step-dad is British-born Chinese I believe, “a fair man,” my cousin once said. He signed up to serve in the Army voluntarily). He has childhood memories of our tiny, spunky, power-walking granny determinedly navigating grocery stores in the little German town they were in, “(when) money was tight, she always made sure she got the exact change,” while his mother worked and his father was very sick.

He still visits her memorial at the Penang Buddhist Association building, when he’s in this part of the world. She passed away peacefully in her sleep following about 6 months of illness, while I was at Nanyang Technological University in Singapore, and for the first time in my life I failed an exam. I had been preoccupied throughout that semester, I wrote to her by snail mail about 5 times a week. That was pretty much suicide, academically – entry requirements for Malaysians into the Accounting degree at NTU that year were a minimum of 3 Cambridge A-Level Distinctions. Failing a core paper – Management Accounting – and producing meh grades for the rest during the time cost me severely. MA had become one of my favourite subjects by the following semester at the re-exam, one of my strongest, but well, it’s the initial failing grade that they take… Which I well knew, when I worked hard on the re-test <shrugs>..)

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Also, I missed putting this in the previous post:

Mystique, the shape-shifting mutant from the X-Men movies who is born blue and scaly (it’s. An. Anology. And a conveniently safe one, I might add) struggles to accept herself, and Magneto illustrates that energy she expends on hiding who she is is energy that she might need to someday save her life:

(Oh, so tha’ats why she’s always blue when she fights :D)

But seriously, knowingly maintaining a lie for a long time – one of those big ones, not the I’m Almost There Please Hold My Table ones, not liking yourself very much, costs you.

You need energy to get better at stuff, and you don’t get to have your cake and eat it, you don’t get to spend that same energy on both things, at the same time…