Pattaya Mail — Columns

Winebibber’s Grapevine  

Dolf Riks: About golden beaches and great volcanoes

In the early fifties I sailed as a third officer on the MV Waiwerang, a ship so called after a tiny village on a small island in the Lesser Sunda Archipelago (Nusa Tengara) in Indonesia. The ship was especially built for the transport of cattle, which we carried from Bali and the other islands of the group to Singapore and sometimes to Bangkok. The sub archipelago of Nusa Tengara consists of 5 large islands: Lombok, Sumbawa, Flores, Sumba and the, at present, controversial island of Timor. These large islands are complimented by numerous smaller islands. Two of these, between Sumbawa and Flores, are the home of the famous pre-historic lizards, the Komodo Dragon, and another is just a volcano called Gunung Api, or " Fire Mountain", a name most appropriate as I will explain later.

The Waiwerang and three of her sister ships were unusual vessels with main and tween decks built like stables. On Starboard as well as Port, we had cattle bridges, which folded out of side of the ship. The cattle were driven over these bridges, into the ship, where inside we had another cattle bridge connecting the main deck with the other decks for the poor animals, ready for slaughter, to be walked to their berth for the long voyage to their destination. Squealing pigs, stuffed in bamboo baskets, were loaded with derricks and winches and stowed in tiers, often four stories high on the poop deck aft.

The first port of call after Jakarta, where I had signed on, was Buleleng on the north coast of Bali, the port of Singaraja, capital of North Bali. From Buleleng one can not see the magnificent Gunung Agung, as the coastal mountains in the hinterland hide it, but after heaving anchor and sailing east, the "Lord of Mountains" came into view. In those days the volcano was dormant and it had the perfect shape of a volcanic peak, like Mount Fuji in Japan. It was a few hundred meters higher than it is now. In February - March 1963, during the most important festival held every hundred years at the mother temple of Besakih on the slopes of the Gunung Agung, it erupted and the top blew off, killing over a thousand worshippers.

The voyage along the north east coast through the Straits of Lombok is an experience to remember. When the weather is favourable the great mountain, as well as its brother the Gunung Abang, can be seen in all their glory. The sea is a dark blue and dozens of Balinese sailing Prahus with outriggers dot the water, which is disturbed with eddies, as it is here that the Java Sea meets the Indian Ocean, through the Straits of Lombok.

Our next anchorage was Padang Bai on the east coast of Bali in a picturesque cove, where in the mysterious depth of the indigo sea, swift dark shadows circled the ship underneath. From Padang Bai we proceeded to Benoa, the port of the Southern capital, Denpasar. This was probably the most difficult fairway to navigate in Indonesia, because of the numerous corral reefs, the narrow channel and the complicated manoeuvres to get alongside the wharf without getting slashed to shreds by the razor sharp reefs. Days in advance our captain, a very able navigator with a pleasant outgoing personality, was a nervous wreck and quite impossible when the ship was bound for Benoa.

The Balinese cattle are beautiful beasts, with almond eyes and a soft brown tan. It is a disgrace that these loveable creatures are slaughtered. It should not happen. Other livestock we loaded were "Water Buffaloes" and "Brahmans", the latter an animal with a most disagreeable temperament, extremely difficult to handle, aggressive and down right dangerous.

Our itinerary wasn’t always the same. It depended very much on the demand in Singapore, Bangkok and other destinations, as well as the supply of the livestock on the islands. Often we loaded the animals from deserted beaches onto the rafts (made from two special sturdy cargo/life boats, tied together and covered with a wooden platform). We officers were also very much involved in the difficult task of loading the beasts from the beach into the ship. Sometimes we were working in the sea, on the motor boat and the raft for days, getting only on board for a brief lunch or dinner and a glass of Indonesia’s excellent beer.

This reminds me that once we were on the roads of Wini, a former Dutch and later Indonesian enclave on the north coast of East (Portuguese) Timor. The beaches could be turned into a tourist resort these days with massage parlours, "bar beers", luxury hotels and Baht buses. It would be tragic indeed. In those days it was completely deserted but for some Timorese out of the interior and the mournful cattle.

At one point, while working with the motorboat, a piece of rope fouled the propeller and one of the sailors and I, trying in vain to clear it, drifted farther and farther away from the ship and the beach. It was getting rather awkward and while struggling with the impossible piece of sisal or whatever it was, I looked under the bottomless depth below me. At this point I recalled that my father had once told me that the Timor Sea, the very expanse I was swimming in at that moment, was invested with sharks. Immediately I panicked and felt the monster nibbling at my legs, a thought so horrifying that I became paralysed and I had to be dragged out of the water. The others managed to free the propeller eventually and we could get on with the work.

Most people believe that the eruption of the Krakatao in the Straits of Sunda between Java and Sumatra was the most violent eruption in at least 200 years. This is because of a lot of publicity. People have written about the Krakatao and the calamitous consequences of its eruption. One Hollywood film mogul even made a movie about it with a good dose of romance added to the plot. He was well informed indeed and called it "Krakatao East of Java". Obviously he never looked in the atlas to discover that the volcanic island was situated "West Of Java".

The Tambora, a majestic volcano on the north coast of Sumbawa, the island after Lombok, was dormant for as long as anybody could remember, when on April 5, 1815, it exploded and blew its top. Before the eruption the mountain was about 4000 meters high and after it had calmed down there was a mere 2743 meters left of it. More than ten thousand people lost their lives, everything in a radius of 1000 km was destroyed and afterwards 66,000 people still died because of starvation, injuries and disease. The ash and other volcanic impurities in the atmosphere spread out all around the world and blocked out one fifth of the light of the sun, resulting in very cold summers, bad harvests and unseasonably cold weather. In the US, on the east coast there was snow and frost in the month of June.

I mentioned the Gunung Api before in this story. One day we left Sumbawa Besar in the shadow of the Tambora and we set sail to the west in order to arrive in Ampenan, the Port of Mataram in the early morning. I took over the watch at four p.m. The sky was leaden and grey as if it was going to snow and when it became dark the head wind out of the west became stronger and stronger while it started to rain. At first I did not notice anything unusual but after a while I felt that the rain wasn’t pure water. I went into the chart room and discovered that I was covered with back mud.

Since we did not see any glow from the crater of the Tambora behind us we could not understand what had happened until the next morning when we dropped anchor on the roads of Ampenan, Bali. There, people looked at us with astonishment, as they thought that we were visited by a war ship. The mud had dried and made the whole ship a slate grey. Months later when we washed the decks and during severe rainstorms, traces of this slate would still come out of nooks and corners.

What had happen was that the Gunung Api behind and east of us had erupted with the loss of many lives. Great furnaces like an erupting volcano need oxygen and it cost a wind toward the hearth. The hot mud is shot into the atmosphere for thousands of meters and drifts slowly from the volcano, slowly descends and is blown back carrying the slate with the wind back toward the mountain. That was what gave me my mud bath.

Dear Hillary,

Please can you help me? My eight-year-old son is a computer freak. Since he’s got his own laptop from his uncle it’s hard to get him away from that horrible thing. As soon as he comes home from school, he plugs it in and I can forget him for the rest of the day. He will be sitting for hours, testing new programs or playing games. I’ve tried everything already, but right now he is not even interested in watching a movie. I am afraid he will soon have a problem with his eyes, not to mention school. My husband, who is at work all day and comes home very late, seems not to be interested at all in this problem. All he wants to do is relax - in front of his computer.

What should I do to save our family life?

Not a Freak.

Dear Not a Freak,

Electronics are now a part of our daily life. Nobody could imagine anymore how to live without them. Especially children are fascinated by this kind of media. There’s nothing wrong with that, except it gets out of hand. I agree with you in this point. A child is still a child and should play with something else as well. It’s the parents who have to lead them the right way. Of course the temptation is strong, since the electronics industry always brings something new on the market - and kids (also grown-ups) want to have it immediately to be always up to date. Other students play a big part by telling their classmates about what is ‘in’. If your husband is a ‘freak’ as well, he is not the right person to put a stop to it, it’s you who will have to handle the situation. Make a daily plan for your son, insist that he will stick to it and watch him carefully the first time. I believe this is the only way to control the hours your son is sitting in front of the computer.

Dear Hillary,

It took me quite a while until I started to write this letter to you. My problem is, I am terribly bashful. Just thinking of a certain situation makes my heart beat faster, I break out in perspiration and my stomach cramps. Like going to a party without my husband or sitting in the audience and watching a magician performing - and all of a sudden he would ask me to come on stage and help him to show a trick. To hold a speech would be impossible for me. I don’t even dare to walk into a restaurant all by myself and order a coffee. I don’t understand why I am like that. My mother was just the opposite. She talked to everybody (I can’t), told everyone about her life and always made fun of my shyness. My husband doesn’t want to understand me anymore; I have the feeling he becomes more and more embarrassed with me. One time he almost screamed at me in front of people to take my hand away from my mouth while I am speaking. I had to go to the toilet to hide my tears. Later on I went home, to write everything in my diary - it helps me to feel relaxed. Why doesn’t he understand that I feel safe at home and that I don’t want to talk to other people? Or is it me who should change?

Shy

Dear Shy,

Many people are shy. Many people are traumatized by the thought of being brought up on stage in front of a large audience. Many people are too shy to talk. Many of those people, like you, have a very strong mother. Opposite to you, your mother was not shy at all. She could talk to people and tell them everything about her life. Did she tell them about your life too? Usually, if mothers talk about their children they feel very embarrassed. It makes them shy. The normal upbringing of a child is when grown-ups talk; a child has to be silent. This is another reason for a child to become shy. You said that you like to write everything in your diary. I am sure it helps you a lot, for you can, by writing down all your thoughts, express your feelings, which is very necessary for person.

As far as I understood, you don’t have a very special friend who could help you. Try to talk to your husband and try to read aloud out of your diary. I am sure this would be a big step forward if you are able to do it. Try also to find a friend with whom you can talk freely. It might be very hard at the beginning, but don’t give up - even talking has to be learned. In case none of this helps, I would advise you to seek professional help. A good psychologist can help you.

  Thai Idiom: Yort

‘Huh?’

‘It’s that robot in The Day the Earth Stood Still’

‘No. That was ‘Gort’.

‘Muesli?’

‘No. That’s ‘Gorp’.

‘Well, maybe...

We’ll let the discussion continue.

Yord means the ‘zenith’ or very top of something, such as Yort Khao, ‘mountain peak.’

As an idiom, it means the best, fantastic, wonderful.

It is much less annoying than Jaap.

Pronounce it on a falling tone. Don’t sound the ‘T’.

  Family Money

Investing in the markets - Part II

Stocks & Bonds: What are they?

Last week we discussed how market forces determine stock prices, and how most "average" investors tend to buy in late, and sell out late.

How then do people make money on the stock markets, and why do stocks outperform bonds which outperform cash over the longer term?

The fundamental reason why stocks (shares) increase in price is because the value of the assets they represent have increased in value.

Shares of a firm represent a slice of that firm’s assets. If it is a trading firm, or manufacturing firm, or mining firm, the firm has acquired goods or raw materials and turned these into something more valuable, which it then sells to someone else at a profit.

These profits may be partially reinvested into expansion - new equipment, new buildings, additional outlets - which all increase the value of the firm, and hence the value of the shares in that firm. Additionally, some of the profits are returned to shareholders as dividends - a ‘thank you’ for providing the capital to allow the firm to operate and expand.

Cash deposits in the bank, on the other hand, do not represent increase in fundamental value. Your deposits are lent by the bank to other people, who pay interest on the money they have borrowed. This is the way banks make money. Not by digging something out of the ground and turning it into a car or a toaster, or a drug to cure some dread disease, but by charging a somewhat arbitrary percentage for lending your money to someone else.

If there’s plenty of money around to lend, interest rates stay low. Why? Because the banks only make money when people borrow from them, so they need to entice people to borrow by making it easy and inexpensive.

If money becomes tight, or other investments are more enticing, interest rates rise.

This of course is a simplistic picture, and in reality it’s all rather more complicated. But basically that’s the fundamental difference, and why stocks always outperform cash deposits over the longer term.

Bonds are debt

What about the bond markets? What are these things called bonds, gilts, fixed-interest securities?

Some people are thoroughly confused by these different terms for what are really the same thing.

I am often asked, "If it’s a fixed-interest security, don’t I earn a guaranteed income from it?"

Well, yes, you do. But a bond is not a cash deposit in a bank: it’s a loan for a fixed period of time on which a fixed rate of interest will be paid throughout its term until the maturity date, which may perhaps be 20 years off in the future.

Bonds come in several varieties. When a government wants to build a new airport, or expressway, or undertake some other capital project, it has to raise the money from somewhere to do so. It can’t just divert taxes to this project; those are already spoken for in the annual budget, its current account.

So the government raises the capital it needs by borrowing money from the public. And to do so it must entice money away from bank accounts or other areas of investment.

Additionally, because it estimates it will take a long time to repay this money - perhaps as long as 20-25 years - it has to reassure the lending public that their money is safe.

What is does then is make a bond issue, whereby it guarantees to pay a fixed amount of money on each set dividend day for a fixed period of time, and to repay the principal amount at some fixed date in the future - perhaps 5, 10, 15 or even 25 years into the future.

So, the bond states what amount of capital it represents, which will eventually be repaid. This is called the ‘coupon value’.

The dividend paid has to be higher than the prevailing bank interest rate to entice investors to lend their money to the government for perhaps 20 years rather than keep it liquid in the bank or invested in other areas.

The bond certificate therefore states what dividend amount will be paid out regularly until maturity. This is why it’s called a ‘fixed-interest security’: the interest is permanently fixed in relation to the coupon value.

For example, a 10-year bond with a coupon value of $100 and a yield of 6% will always pay out $6 every year until the bond matures 10 years after the date it was issued, when the holder can collect the $100 coupon value.

Because the issuing government guarantees to repay the debt, and because it is generally accepted that it is highly unlikely that the government will default, such instruments are regarded as relatively safe investments. Hence the name ‘securities’.

In Britain the piece of paper that acknowledges the loan and sets out its terms - the bond certificate - has a golden edge to it; hence they were dubbed ‘gilt-edged securities’, or ‘gilts’ for short.

So government bonds, fixed-interest securities and gilts are in fact just different names for the same thing - government debt.

But there are other types of bonds also. When a city wants to raise funds to build a school, or a road, for example, it also floats a new bond issue - i.e., makes an offer to the public that it will guarantee to pay a fixed rate of interest on the money it is borrowing and repay the principal at the end of a specified period of time, the maturity date.

These instruments are known as ‘municipal bonds’.

Similarly, a large corporation wishing to build a new factory, such as Boeing when it needs very large amounts of capital to develop and manufacture a new aircraft, will make a similar offer to borrow money from the public. These instruments are known as ‘corporate bonds’.

Obviously there is a risk that the corporation, or city, or even government will not be able to repay the capital at maturity, or even pay the interest when it’s due. This risk is generally greater with a corporation than with a municipality, and less with a government.

Thus the enticements to the public must be relative to this risk: the promised interest will tend to be higher for a corporate bond than for a municipal bond, which will usually be higher than for a government bond.

The yield & price relationship

But what happens when bank interest rates rise above the fixed payout - the yield - from a bond?

People holding bonds might prefer to have their money liquid in the bank, so might want to sell them. To induce someone else to buy their bonds - which may not mature for another 5, 10, or 15 years - they have to sell them for less than their face value, at a discount, in other words. The yield will remain fixed in monetary terms, but has risen as a percentage of the discounted price.

Thus when one reads or hears about bond yields rising, it means the price of the bond in the marketplace is falling.

Similarly, when bank interest rates drop, bonds tend to look more attractive, so their price in the marketplace tends to rise, and they are traded at a premium to their face value. The fixed dividend remains unchanged, but drops in percentage terms relative to the higher price the bond is now trading at.

Put simply, the yield moves inversely proportionally to the price.

(To be continued next week)

If you have any comments or queries on this article, or about other topics concerning investment matters, write to Leslie Wright, c/o Family Money, Pattaya Mail, or fax him directly on (038) 232522 or e-mail him at [email protected]. Further details and back articles can be accessed on his firm’s website on www.westminsterthailand.com.

  Health & Nutrition Facts: What is Cholesterol?

Confused about cholesterol? You are not alone! Fat and cholesterol are easily mixed up since they often appear together in foods of animal origin and because their roles in health are so intertwined. Cholesterol is a fat-like substance but it is not a fat itself. Foods can contain fat and no cholesterol and vice versa. For example, peanut butter contains fat but no cholesterol whereas shrimp contains cholesterol but very little fat. We do not get any calories from cholesterol because our bodies cannot break it down to derive energy. Cholesterol has a different structure from fat and performs different functions in your body. Some of these functions promote health, and some don’t.

Cholesterol is part of every cell in your body and is a key component in some of your hormones like estrogen and testosterone. Cholesterol is part of a substance called bile that comes from your gall bladder and helps your body digest and absorb fat. With the help of sunlight, cholesterol in your skin can change to vitamin D, a nutrient essential for bone building. However, too much cholesterol in your bloodstream is linked to heart disease.

The cholesterol that circulates in your blood comes from two sources: the food you eat and cholesterol produced by your body. Your liver makes most of your cholesterol but every body cell is also capable of producing it. There are two types of cholesterol in your body. High-density lipoprotein (HDL) cholesterol carries cholesterol from every part of your body back to your liver for disposal. Since this cholesterol can reduce your risk of heart disease, it is often called "good" cholesterol.

The second type of blood cholesterol is Low-density lipoprotein (LDL) cholesterol. LDL carries cholesterol from your liver to other tissues in your body. Along the way, it forms deposits on the walls of arteries and other blood vessels and hence earns the name "bad" cholesterol. HDL and LDL cholesterol are found only in your bloodstream, not in your food. Your food choices do influence LDL levels. A diet high in cholesterol, saturated fat, and total fat can raise LDL levels. To maintain healthy HDL levels, keeping physically active is more important than what you eat.

Cholesterol in your body also comes from foods and beverages you eat-but only those of animal origin, such as eggs, meat, poultry, fish, and dairy products. Animals produce cholesterol, but plants do not. An easy way to remember if a food contains cholesterol is to ask yourself if the food came from something with a liver.

Our bodies were designed with a cholesterol feedback system to regulate the amount of cholesterol and keep it at a healthy level. When we get more from our diets, our bodies naturally cut back on the amount produced. Our bodies make more cholesterol when we eat less, keeping it at a desirable level. However, many of us have feedback systems that do not work effectively to control our cholesterol levels. This is why moderation is advised and some of us are told by our doctors to follow a low cholesterol diet.

Cholesterol is a necessary component of our diets to keep us healthy. Eating a variety of foods in moderate amounts is the best way to control the fat, saturated fat, and cholesterol in your eating plan.

Readers may write Laura care of the Pattaya Mail with questions or special topics they would like to see addressed.

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