COLUMNS
HEADLINES [click on headline to view story]:

Money matters

Snap Shots

Modern Medicine

Heart to Heart with Hillary

Psychological Perspectives

Money matters: “We Don’t Need No Education…”

Graham Macdonald
MBMG International Ltd.

Pink Floyd’s ‘The Wall’ hit number one 25 years ago - the same day that the price of gold hit an all time high. At the end of January 1980 gold touched $850, before plummeting. In fact, the very next day gold fell by $113 to $737. By the 18th March 1980 it was back below $500! Of course $850 was the nominal gold price. In today’s money, $850 would be worth $2303. So today’s gold price of $423 represents a greater-than-80%-loss in value since 1980. In 1980 ten ounces of gold might have bought you a nice car. Now it might buy you a nice bike.

If gold is a “collective hallucination,” what is a US Dollar? Or a share of Google? Or a 30-year Treasury bond? Aren’t these paper assets merely derivatives of a hallucination? Would you rather receive shares in Yahoo as payment for your month’s labour or worse yet, at retirement?

To rephrase the question: “If we investors are all hallucinating to some extent, might some hallucinations be more benign than others? Might the current market value of gold, for example, be a less dangerous ‘hallucination’ than the current market value of a dollar bill?” Even conceding the fact that our eyes may be deceiving us, we think we perceive more value in an ounce of gold costing $432.00 than a US Dollar costing 1/432 an ounce of gold. Indeed, we suspect that the dollar’s illusionary value is the sort of deceptive apparition that entices unsuspecting investors to stroll off a financial cliff.

How many times have I heard: “Gold is valuable only as long as we collectively agree that it is. It may be soft, shiny, durable, and rare, but it has no more intrinsic value than toilet paper or a lock of Elvis Presley’s hair ... Buying gold is the purest form of speculation ... You’re buying into a collective hallucination - exactly what those dot-com investors did in the late nineties. One could say that gold is the biggest, most durable bubble in history.” In the sterile environment of pure financial theory, this sounds a valid argument.

But when exposed to the virulent microbes of real-world economics, this thesis degrades rapidly. To be sure, the value of EVERY asset in the world relies upon a collective judgment - or hallucination, if you prefer. But this is hardly a groundbreaking insight. No financial asset - gold included - possesses an absolute, eternal value. Rather, all values are relative. However, any financial asset whose relative value remains somewhat constant over time is deemed to be a “store of value.” In this respect, gold has proven itself to be an extremely lifelike hallucination - having successfully retained its value relative to competing assets over several thousand years. The same cannot be said for paper currencies or government bonds, both of which routinely find themselves cluttering the waste dumps of financial history. But gold’s relative long-term value has nothing to do with its short-term investment merit. Indeed, 1000-year investment trends rarely benefit those investors who operate on a shorter time horizon, as gold’s recent history plainly shows.

To emphasize this point, we note that gold is up “zero percent since 1988, while the S&P 500 has almost quadrupled.” Very true; but if we were to mine for data in more recent annals of financial history, we would discover that gold and stocks have reversed roles. Since 1998, it is the S&P 500 that is “up zero percent,” while the yellow metal has advanced more than 50%. Selective slices of history are just as likely to deceive as to inform - as the saying goes, “There are lies, damned lies and statistics”. Truth resides with long-term investment horizons. Gold wasn’t born yesterday...

Both gold and paper dollars have history, but gold has far more of it. Both gold and dollars have a future too. But, and this is the important part, gold is likely to have more of that, too. Indeed, we suspect gold is likely to grab an outsized share of the immediate future, thanks to the substantial pressures weighing on the US Dollar. These are the deepening current account imbalance, the worsening trade balance and the rise in the net U.S. ownership of foreign assets.

All three trends provide solid reason to believe that gold should strengthen while the dollar weakens (although in the very short term, corrective factors might actually temporarily reverse both of these trends).

Foreign central banks may soon begin to disgorge some of the hefty dollar reserves on which they are now choking - following the examples of Australian and New Zealand central banks in managing their reserves the way that any multi-national conglomerate would do - if its CFO expected to keep his job. A bull market in gold may very well result. We remain bullish on the thing that glints in the sunlight, is recoverable at five parts per billion from the earth’s crust and has no central banker.

Money For Nothing And Chicks For Free…

Mark Knopfler’s wish is something every asset manager should take to heart. If surfers, rock stars and movie stars can do it, then so can we. Let me explain. “Crude oil may be the next commodity on tap in the world of exchange-traded funds,” reports a recent Wall Street Journal. It will not be the last, we predict. Commodity-based ETF’s will proliferate, not only because they provide a direct means of investing in specific commodities, but also because they provide an indirect means of investing OUT of US Dollars. Commodity-based ETF’s offer a unique kind of alternative to the US Dollar. They are currency in ETF’s clothing. In other words, the investor who is canvassing the world for hedges against dollar weakness will find the commodity ETF’s to be very handy vehicles.

As it happens, the NYMEX already offers a very handy crude-oil-based hedge against dollar weakness - and this hedge sells for a discount! The forward strip of crude oil contracts on the NYMEX are in backwardation – i.e. the short term oil cost is greater than that in the longer term future. In this case, the spot price of crude oil is $48.38 a barrel, while the contract for delivery in 2010 is only $38.17 a barrel. In other words, an investor may buy a barrel of crude oil today for $38.17 and take delivery of that barrel (or sell the contract) in 2010. (Actually, one futures contract on the NYMEX covers 1,000 barrels of oil. So the investor buying one contract would pay $38,170). If the oil price does not change between now and 2010, the far-sighted oil investor would bag a profit of $10.21, or 27% over 6 years. That’s a return of about 4% per year, before commissions. But just maybe, the oil price will not be $48.38 in the winter of 2010. It might be lower, of course. But it might also be much, much higher, thanks to soaring demand for crude or a falling dollar or rising terrorist activity, or all three. In short, there are probably worse hedges against monetary and geopolitical uncertainty than the December 2010 crude oil futures contract.\

In Conclusion

Gold and oil are but two of the seventeen commodities included in the CRB (Commodity Research Bureau) Index. To us it is clear that the commodity cycle is far from over. We have just started the long and profitable road to the previous high of the early eighties. In commodities we trust (as much as we trust in anything right now).

The above data and research was compiled from sources believed to be reliable. However, neither MBMG International Ltd nor its officers can accept any liability for any errors or omissions in the above article nor bear any responsibility for any losses achieved as a result of any actions taken or not taken as a consequence of reading the above article. For more information please contact Graham Macdonald on [email protected]


Snap Shots: Eye-catching inexpensive wall art

by Harry Flashman

There is something about walking into a house and seeing some spectacular photographs being used as wall art. This week’s column will show you how you can produce your own wall art inexpensively.

One very good way to give extra impact to your photographs is to ‘pair’ your images by use of contrasts. Contrasting images are excellent subjects for wall art - that photographic end product that can make you a ‘star’ even if it is only in your own lounge room!

The first, and one of the most obvious contrasts is to take the same subject, but at different times of the day. The “cold” blue light of morning, compared with the “warm” golden glow of the late afternoon. The sun will be coming from different angles, and the light is totally different. If you have a tripod, you could even add a third image by taking a shot just after sundown as well.

Now there are a couple of tricks here that you have to watch. The first is that you must take the shots from exactly the same position, even if you have to camp there all day! However, what I often do is to mark the spot where the shot was taken in the morning, so I can come back and find the identical spot later. The second factor is to make sure that if you are using a zoom lens, that you use the same setting each time. The idea is to ensure that the only item of change is the lighting.

Another contrast is to use the weather to give you a different look to the same subject. Even a street scene with pedestrians taken in daylight and then again with umbrellas in the rain tells a very different story. Once more, you are recording the same subject in another way. So next time it is teeming down with rain go outdoors with your camera and get something pleasing and then recreate it in the dry.

What we will do now is to exercise our minds (yours and mine) and come up with some opposites - then work out how to present these on film. As I have said so many times, a good photograph is “made” rather than just happening. The way the pros work is to build on a concept and then work out the way of showing it on film.

So let’s take some - there is young and old that springs immediately to mind. A shot of a very old person with a young child is always an attention grabber. Or even the same person 50 years apart. How many times have you seen big advertising companies use just that shot? Lots!

What about old and new? The range here is as big as your imagination. A shiny new car parked beside a wrecked one, a new beach umbrella beside a tattered old one, a shot of a workers corrugated iron and packing case ‘house’ beside a bright, spanking new mansion. Or even a photo of a box Brownie and a new Nikon.

There’s plenty more - hot and cold, rough and smooth, light and heavy - there is really no end to what you can portray.

But it doesn’t end there either. Think about the different ways you can do things. From digging a trench with an old shovel, to watching a huge mechanical ditch digger at work. How about a sundial with a watch hooked on it? A light bulb and a candle, a horse and buggy and a new Mercedes. Again, just let your imagination run riot and go from there.

The presentation of contrasting images is important. Select the best two shots and get enlargements done. 10 inches by 8 inches (called 8R by most labs) is a good size and then get them mounted side by side using a double matte. With the cost of framing being so cheap in Thailand it is very easy to produce great wall art. All that is needed are your images and some original imagination. This weekend, make some wall art and amaze your friends with your creativity.


Modern Medicine: Knees up Mother Brown - if she can

by Dr. Iain Corness, Consultant

Unfortunately, we all wear out. Joints in particular are mechanical devices, with one bone sliding on another with a slippery bit (called cartilage) in between. Most joints, especially knee joints, are designed to last our three score years and ten, and that’s about it. We now live longer, but we have not worked out how to make the joints last longer!

We do know why they wear out, especially knee joints. Since they are mechanical, increase the loading on the joint and it wears out quicker. Imagine that your knee has been designed to hold up 80 kg for 70 years, and now increase that loading to 120 kg. That same knee now has to support 50 percent more than it was ‘designed’ for, so you can expect it to wear out 50 percent sooner. Simple.

Of course, when the damaged knee starts to give its owner pain and grief, what happens? For a start they stop walking and exercising because it becomes too painful. This in turn means that they will now become more overweight, and so the problem gets worse, and worse, and worse.

So they hobble down to the doctor and ask for something for the pain. The doctor thinks through the latest medical drugs for this condition, and most probably will hand over some Non Steroidal Anti Inflammatory Drugs (NSAIDs) and tell the patient to lose weight.

Now I am not saying that this is totally wrong - but - when the NSAIDs first came out (hands up all those who remember Indocid) they were heralded as being the answer to these problems. Some were even supposed to ‘grow’ new cartilage. The answer to a maiden’s prayer, or the osteoarthitic’s prayers at least.

Unfortunately, we very quickly found that Indocid and its ilk drilled holes in the lining of the stomach and were more than slightly dangerous. So we developed newer and better and more stomach-sparing NSAIDs. Unfortunately, these too produced problems.

Nothing daunted, we came up with even newer and more wonderful NSAIDs, which came with even newer and more wonderful array of side effects. Really, we have been chasing our tails here, and not winning.

So what can the poor patient do? The doctor is not offering help, only tablets with abominable (read abdominal) side effects. Most patients have already tried paracetamol, hot water bottles, someone else’s great new tablets, NZ green lipped mussels, a cabbage leaf (which does work for mastitis, or so the ladies tell me), various herbal or homoeopathic medications, yoga, meditation, copper bracelets, and goodness knows what else.

So what can the “osteo” sufferer do? Exercise does help to improve the mobility in the knee joint, and by strengthening the muscles and ligaments around the knee, give it more stability.

There is another avenue in the treatment, and that is direct injections into the affected joints. This produces spectacular results, which unfortunately is short lived. However, even a couple of weeks can make it such that the person can go on holidays and actually enjoy some mobility.

Finally, there is surgery, which currently is the treatment of last resort. Since around 90 percent of patients show lessening of pain, improvement in functional status and overall quality of life, I think we should be looking at operation sooner, rather than later. But that’s just my opinion.

In the meantime, Mrs. Brown should take paracetamol and short bursts of NSAIDs when required. However, if she is over 60 years of age, stick to paracetamol and talk to the orthopaedic surgeon about knee replacements.


Heart to Heart with Hillary

Dear Hillary,
Year after year, I see and hear many lonely, ignorant, old, fools complaining about Pattaya’s bar girls and freelancers. But can you really blame them? Can you imagine yourself shaking up with someone who is 15, 30 or 50 years older than you are and expect to be happy? What do they expect? Thai girls, well as all girls in the world want to be with someone their own age and not someone who can be their father’s or grandfather’s age.

Thailand and especially Pattaya attracts some of the worst quality tourists and expatriates in the world. We are talking about, etc. Albeit, we do have some good “dirty-old-men” here who treat these girls and women nicely and gets along fine.

So stop whining. We have a good thing going here and enjoy Thailand while it’s still affordable.
Happy Camper

Dear Happy Camper,
Oooh, I must meet your friends! Are all of them alcoholics, druggies, perverts, pedophiles, psychos, delinquents, criminals, crooks, losers and loners? No wonder you have such an attitude. I would too, surrounded by all that lot! However, getting back to your letter, I wonder if it should have been “shacking up” rather than “shaking up”? Although I suppose they can almost be the same thing! In actual fact, the old adage is very pertinent here, “You get what you pay for!” So if your motley lot are happy to pay for the pleasures, knowing there is no permanence being offered, then let them continue, and ignore their complaints. By the way, not all the farangs here are “alcoholics, druggies, perverts, pedophiles, psychos, delinquents, criminals, crooks, losers and loners”. I met a very nice chap the other evening. I just can’t remember his name!
Dear Hillary,
She said, “Hello, handsome man,” and led me into her bar where she then challenged me to a game of pool. She beat me three games to zero. I then challenged her to a game of darts. She threw with pinpoint accuracy and beat me four games straight.

Not wanting to be outdone by a cheeky female who was only five feet tall, I instructed the bar staff to keep the beers coming until one of us quit drinking. She was about to order her tenth bottle when I quit on my eighth. I took her to the grill house and ordered two large sirloin steaks. She quickly devoured hers and was looking through the menu to order more food, whilst I struggled to finish mine. On the disco floor, she energetically bumped, rocked and bopped, I tripped, stumbled and flopped. Later, with the bedroom Olympics well under way, she immobilised me in some kind of Greek Kama Sutra wrestling hold that completely depleted me of my remaining power, and I was finally forced to admit defeat. The next morning she flipped a coin, double or nothing for her taxi fare money. The coin came down heads and, you guessed it, she picked heads.

Am I doing something wrong or are all Walking Street girls this skilled?
Mighty Mouse

Dear Mighty Mouse,
Oh my poor little (less than Mighty) Mouse, how can you allow yourself to be deceived in this way? You should have known from the first greeting of “Hello, handsome man,” that she was being somewhat sparing with the truth. Even Happy Camper’s “alcoholics, druggies, perverts, pedophiles, psychos, delinquents, criminals, crooks, losers and loners” get that greeting as well. We are not talking about ‘skill’ here, my smooth grey Petal. We are talking about ‘practice making perfect’. Your lady of the night was no enthusiastic inexperienced amateur novice, but a well experienced professional who could toss ten heads in a row (and probably has)! So you lost at pool, darts, dental diversions, the disco-duck, rumpy-pumpy and the taxi fare. Why didn’t you challenge her to ‘Connect 4’ as well? You would have been able to add that to your list of defeats, my Petal. Hillary has told you before, nice little mice should not be out at night. There’s far too many pussies looking to pounce on little mice and devour them after dark!
Dear Hillary,
Nit and Ying (the adorable wee ones) have legged it northwards for the buffalo tickling and so I popped down to ‘Percy’s Puds’ the other day for lunch with Hortense Slobotham. Horti tells me that her new bar is progressing nicely but would benefit further by having an ‘Aunty in Residence’. Fancy hanging out at ‘Slobotham’s’ Hillary? Hammock provided (Nit likes stripey ones) and a flute of Brut as required!
Mistersingha

Dear Mistersingha,
Lunch with Hortense has all the portents of disaster, Mistersingha. For her sake, I hope she didn’t have to pay for your lunch, as I doubt very much that you would have offered to pay for hers. Since you are so well experienced in all things Thai, I would imagine that you would have done a runner before the third course, giving you time to leg it before the cashier could add up the total. And does Hortense know that you are offering me a flute of Brut, from her bar? I doubt it, my prevaricating Petal. Why don’t you just accompany Nit and Ying and practise buffalo fighting with red cape and butter knife, that’s a good chap. Please feel free to contact me again after you’ve made good on last year’s promises.


Psychological Perspectives: Is love a mental illness?

by Michael Catalanello, Ph.D.

During my trip to the US at Christmas time to reconnect with my family, I had occasion to spend some time with my friend Ted. Ted, once a member of our family through marriage, has been divorced and living as a single man for more than ten years. Despite this, Ted has continued to appear regularly at our periodic family gatherings, and is considered a family member in good standing.

Ted’s big news was that he had finally met his “soul mate” through an online dating service, and was planning to be married. As I listened to Ted waxing poetically about the spectacular qualities possessed by his “perfect” new love interest, I had a feeling not unlike the experience of hearing a mental patient discuss the details of his… dare I say it… delusions! In psychological jargon, delusions are patently false beliefs firmly maintained by people suffering with psychosis. “Has Ted developed a psychotic disorder?” I wondered.

Last week’s Valentine’s Day column on the topic of love prompted this question from my colleague Dr. Marisa: Can love “get out of hand enough to actually become an illness?”

I can imagine some manifestations of love and affection that might qualify as symptoms of any number of medical and/or psychological disorders.

The incurable romantic might experience recurrent and persistent thoughts about the object of his affections. Clinically, these might be considered ruminations or perhaps obsessive thoughts. If accompanied by some form of repetitive behavior, such as repetitively checking for text messages or emails from the person, it could be a sign of an obsessive-compulsive disorder (OCD). This is particularly true if the obsessing person recognizes that his thoughts or behaviors are excessive or unreasonable, and experiences distress as a result.

The experience of distress is an important component of many emotional disorders. People experiencing romantic love, however, rarely experience it as distress. They are more likely to experience it as extremely pleasant and desirable. Without distress, we would be hard pressed to consider romantic love as a mental disorder. I’m sure Ted would have denied that his love affair was disturbing, nor in the least bit problematic.

We often see evidence of love afflictions in the lyrics of popular songs. This excerpt from Cole Porter’s song, “Night and Day,” for example, seem to be romanticizing an obsessive brand of love:

“Like the beat, beat, beat, of the tom-tom;
When the jungle shadows fall,
Like the tick, tick, tock of the stately clock,
as it stands against the wall,
Like the drip, drip, drip, of the raindrops,
When the summer show’r is through;
So a voice within me keeps repeating, you, you, you —
Night and day
you are the one,
Only you
beneath the moon
And under the sun.
Whether near to me or far,
It’s no matter,
darling, where you are
I think of you
Night and day.
Day and night”

Is his reference to “a voice within me” an indication of auditory hallucinations? From these lyrics, it sounds as if Cole Porter may have been just one step away from becoming a stalker!

Perhaps nowhere does love appear more like a mental disorder than in cases of domestic abuse. Many women, and even some men, continue living with a partner who regularly abuses them physically, sexually, or verbally. Typically, a victim of domestic abuse will strongly resist abandoning an abusive partner, often citing “love” as the rationale for remaining in a dangerous and often life-threatening situation.

Whether love is really responsible for a decision to remain with an abusive partner, however, is highly questionable. There is a fair amount of research to suggest that people who remain in abusive relationships are doing so, not out of love, although they may very well consider themselves to be in love with their abuser. Rather, such people usually experience a feeling of helplessness. They tend to view their lives as being under the control of external factors. They are convinced that they have no other option than to remain, often fearing that they will be killed if they leave.

It is important to keep the two issues of “love” and “mental illness” separate. People with mental illness who fall in love may give love a bad name, because their disturbed emotions and behavior become superimposed upon their relationships. Beliefs such as, “I’m nothing without you,” “I can’t live without your love,” “You’re perfect,” and “I can’t think of anyone but you,” are more properly viewed as signs of irrationality, than as indicators of love or affection. People holding such beliefs might not qualify as emotionally disturbed based upon their “love.” Beliefs like these set the stage, however, for poor decision making and disturbed emotions down the road.

Dr. Catalanello is a licensed psychologist in his home State of Louisiana, USA. He is a member of the Faculty of Liberal Arts at Asian University, Chonburi. Address questions and comments to him at [email protected]