Word for the Day: Gubernatorial.
One can understandably be quite clueless about this word. It means "of or pertaining to a governor". Its origin is Latin: gubernare (to govern); gubernor (governor).
So, in the United States mid-term elections just ended, candidates who sought state governorships were competing in gubernatorial races. But why use an archaic Latin derivative?
Anyway, still on the US midterm elections, the "trifecta" did not happen. The Democrats retained the Delaware and Nevada senatorial seats, losing only Illinois to a Republican chap. But, hey, that was Barack Obama's old seat!
My main post today reflects on the latest COE bidding results, just out today. All categories were up, except for motorcycles. Yet the system actually allows for bidders to submit $1 bids, and secure COEs at $2. It happened once, in Category A (1600cc and below, as well as taxis). Why only once?
I wrote an article on this issue in The Sunday Times, and for some reason the CPF Board liked it, and put it on its iSavvy section. What appears below is the full article, that is, before editing for space:
Someone asked me: Will you bid for your own Certificate of Entitlement (COE) if you see your dream car beckoning from the showroom?
Then I had a dream.
I dreamt of snagging a $2 COE and dashing over to get my metallic object of desire.
Why a $2 COE?
It has happened before – on a day in November 2008.
True, it happened amid a banking crisis-sparked recession. The COE price for Category A cars (up to 1600cc) crashed to $2.
As my colleague Chistopher Tan wryly noted to me:
“On the afternoon of the freak $2 result, those who were monitoring the tender closely noticed that a crash might be imminent.
“Hence they went in with ultra-low bids.
“It was a confluence of many aligned stars: the world economy was tanking, people were losing their jobs, salaries were being cut, and last but not least, COE supply was near its highest.
“Plus, the car ‘population’ had become very young after years of abundant COEs. Plus, many people were stuck with cars bought at high loans, and were not able to trade them in for new ones.”
In other words, car showrooms were empty and it was mostly individuals, not the dealers bidding on behalf of buyers, who put in bids that fateful November 2008 day.
Maybe it was because I had recently seen the movie Inception, but in my dream, people bought into the idea that they should do their own COE bidding, that they did not need car dealers to provide a package deal.
Hence, the $2 COE for Category A was replicated, without most of those underlying factors my colleague cited.
This was what happened in my dream. I first “entered” the mind of the person who devised the scheme, to really grasp the fuel-injected mechanics of the COE system.
He or she must have had a devilish sense of humour and understood Fallen Man.
This person created a bidding set-up that tantalised would-be car buyers with a minimum $1 bid price (a cup of kopi-o at a foodcourt) yet set the actual bidded price at the sum Bidder X is prepared to pay.
Simply put, Bidder X is the price setter.
He epitomises you and me, who desire a "low" COE (who does not want a cheap and good deal?) but who is prepared to pay for a "high" COE simply because you and I have already made up our minds to buy a car, and so many others are rushing to the showrooms (the best shorthand here is "kiasuism" -- the fear of losing out).
In my dream, this kiasuism was expunged from our human nature.
Instead, a number of bidders were prepared to become what I shall call “suckers”. But that is not a fair label, because these people did want a new car but were prepared to wait many, many months to get it. They were motivated by public-spiritedness.
Remember, it was a dream.
You can go to the Land Transport Authority's website on how COE bidding works, or you can Google "how COE works" for simple yet accurate examples. I'll use a simplified illustration myself.
Supposing there are 10 Category A COEs for the current bidding round. Technically, everyone -- say, 20 bidders -- can bid at $1.
But Bidder X will not emerge because there is no price setter to enable 10 bidders to secure the 10 COEs. All 20 have "lost" and the 10 COEs go into the next bidding round.
But Bidder X comes into being, in this example, if 10 people had bid only $1 and the 11th bidder had put down $2. He is the price setter. The 12th to 20th bidders, together with Bidder X, have now secured all 10 COEs.
These others (apart from Bidder X) had all bid more than $2. Bidder No 20 can even bid $1 million or more and still get his COE at $2.
In fact, this kiasuism was understood by the devilish creator of the scheme, since a high bid ensures the bidder’s success! It also, typically and across the board, ensures in the real world that COE prices are not freak $2 ones.
But should everyone be like the 20th bidder, and bid outrageously?
As the ancient Chinese said, "You may get what you wish for." The $1 million sum may well become the price setter if bidders 1 to 10 bid from $1 to $999,999 and bidders 12 to 20 bid above $1 million.
If you have now truly, truly grasped this Nobel Prize-worthy scheme, you can enter my dream world and bid, with me, in such a way that the outcome is $2.
Indeed – and this is real, not from the dream – the LTA has been on our side, helping us out, by allowing realtime transparency in the bidding. You can actually monitor the first to the last bid.
To repeat my dream scenario, individuals – not car dealers – did the bidding.
Also, there were enough "suckers" who bid $1 to enable Bidder X to set the price at $2. But who wants to be a sucker?
Think of it this way: even with the current annual COE quotas, how many genuine car buyers will be thwarted from getting their new cars within a reasonable time?
Even if the patient ones wait a year, remember – that COE will cost only $2!
Assuming there are 600 Category A COEs up for bidding (I use only one category to simplify my model), 599 people must bid more than $2, and only one must bid $2.
The rest (just one person if there are only 601 bidders) must bid $1.
Hence, an alternative model would see only 601 people come in to bid in this round, and plus or minus 600 in the next round, based on the actual available COEs each time.
In this case, only one person puts in the $1 bid and the other 600 can put in $2.
Come on, we can do it. Just hold back on your need for a car this round. It's worth it, for $2. Haha.
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