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Money matters: Robert Shiller on the property bubble (part 1)
Graham Macdonald
MBMG International Ltd.
We’ve covered the work of Yale economist Robert
Shiller in previous articles. We note that Barrons Online has picked up on
his property concerns - “Shiller delivers his forecast for U.S. housing
with a scholarly diffidence that only slightly mutes his stark message:
The market is in the throes of a bubble of unprecedented proportions that
probably will end ugly.”
Not the first time that we’ve visited this theme -
or, to be fair, by Barrons either. However, just like last time we visited
Shiller’s property doomsday forecasts, no-one has better credentials
than he for recognising a bubble. The author’s best seller, Irrational
Exuberance, predicted a bear market in U.S. stocks, particularly the
tech and dot.com sectors. What made this all the more startling was the
happenstance that the work hit the bookstores in March 2000, less than a
week before the NASDAQ tumbled from over 5000 to below 1500.
Shiller sees the possibility of a similar real estate
slide sparked by “talk” - “The Home-Price Bubble feels like the
stock-market mania in the fall of 1999, just before the stock bubble burst
in early 2000, with all the hype, herd investing and absolute confidence
in the inevitability of continuing price appreciation. My blood ran
slightly cold at a cocktail party the other night when a recent Yale
Medical School graduate told me that she was buying a condo to live in
Boston during her year-long internship, so that she could flip it for a
profit next year. Tulipmania reigns.”
Barrons reports that Shiller is still “somewhat
coy” about calling how or when the housing bubble will deflate. There is
still strong property price momentum, mortgage rates are still low and
likely to remain so what will be the catalyst that causes the bubble to
burst is far from clear. Barrons compares the US to “the once-red-hot
Sydney, Australia, residential market, where real (inflation-adjusted)
prices rose 12.8% in 2003 before dropping 2.5% in 2004 and remaining
wobbly ever since.”
Property prices tend to be less efficiently measured -
there’s no national register of housing prices that trades every single
saleable property throughout the working day and composites these at the
end of the day into an index for the CNBC-heads to yabber about. So house
price downturns often start almost imperceptibly and can proceed slowly
and virtually unnoticed for quite a while. The data that is used (average
price of transaction is the lead indicator) can be very misleading - if
the market slows more in cheaper areas than in more expensive ones then
the data becomes skewed and a 10% fall in the more expensive areas can
still be reported as an increase in the average price. Unlike a stock, a
homeowner can refuse to sell if he doesn’t achieve his asking price. He
might think that his home is still worth $500,000 when no-one will pay
more than $400,000 and he retains the sanction not to sell and to cling
onto the illusion that the property is “really’ still worth $ 500,000.
Back to our man Shiller - he’s identified that property has become so
overheated in so many areas of the U.S. that once a decline starts it
could continue to spiral for two to three years, bridging the economic
downturn and placing speculative buyers with scant equity but hefty debt
into a real bind. Lending has been effervescent of late with high
multiples and low down payments - this inflates the bubble on the way up
but creates disaster on the way back down. This is why Shiller sees the
possibility of a real price decline of as much as 50% in American
residential property values over the next decade. In fairness this isn’t
as severe as our forecasts of outright unadjusted falls of up to 40% in
the UK and Australian markets over the next 3-4 years. Shiller’s numbers
are, on the other hand, adjusted for inflation - meaning that he only
foresees a 20% to 25% cumulative decline in nominal prices (around -2% CAR
over the decade).
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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]
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Snap Shots: Take your camera on holiday (every day)
by Harry Flashman
Most people do remember to throw the camera in the bag
when traveling overseas, but do you remember to take it into town?
Remember that you are living in a city that tourists save for 11 months
just to be able to get here. They find endless subjects to photograph here
and so should you. So this week, let’s look at a few specific examples
of “how to” when you are looking to record those “once in a
lifetime” images.
Every city, town or village anywhere has its parades.
And there are plenty of them here. Now, have you ever tried to record the
parade? It is actually very difficult. The naked eye sees a long
procession of musicians, marchers and the like as they pass by, but the
camera sees only one slice of the action about 1/60th of a second long!
There is only one secret word for parades, and that’s
Height. You have to get a high viewpoint to successfully record the
action, and preferably use a long lens. By shooting down the oncoming
procession you will get several squads of musicians, marchers etc all on
the one frame of film. By using the telephoto lens you “compress” the
action and get more in the one photographic frame. Honestly, if you
can’t get up high don’t take parades. You will be disappointed with
all ground level shots.
All tourist towns have their nightlife, and we have the
odd nocturnal events and places. Lots of lights, neon signs and flood-lit
fountains are the norm for this type of photograph. The secret here is a
Wide angle lens with an aperture down around f 1.8 and some “fast”
film. This is the time to get some 800 ASA film, or 400 ASA at least. The
other secret is not to use your flash. Now I fully realize that this is
photography after dark, but the whole concept is to let the attractions
provide the illumination, rather than blasting it with your flash burst.
If you try and take neon light using flash you will totally wash out the
neon and again get very disappointing results.
One of the more challenging travel situations is the
summer beach holiday. It is very difficult to photograph the beach and not
end up with a washed out look in the final photographs. The secret here is
a Polarizing filter and the time of day you shoot. This is where the
Polarizer works so well, especially with the glare from the sand. The
Polarizer will also give you a blue sky to contrast the yellow sand. The
time of day is also just as important. Shoot early morning or late
afternoon when the sun’s rays are skimming across the beach and the
tracks and ridges in the sand will show up as shadows.
 Some
of you will be exponents of the wilderness type holiday, trekking and
camping and taking in the vast grandeur of breathtaking natural wonders.
The secret here is a wide angle lens, look for low viewpoints and use slow
film, plus a tripod if you can. The idea here is to use the lens at around
f16 or f22 to maximize the depth of field. This in turn and the slow film,
will require longer exposures - hence the tripod. Shooting in this way
will give you maximum detail in the shot, maximum content and visual
theatre. Finally, shoot early morning or late afternoon as well to get the
dramatic shadow effects and really give the impact to the Grand Canyon!
With charging elephants however, do not wait to see the whites of their
eyes.
The shots taken for this week were on Koh Si Chang, off
SriRacha, still an unspoiled fishing island, that the run-of-the-mill
tourists have not yet discovered.
So you can see, whilst you can get holiday “snaps”
with the trusty point and shooter, to really get the really great holiday
photographs you will need a choice of lenses, a choice of film and a
tripod. You can still get good shots with the cheaper compact cameras, but
great shots need great cameras. Like all things in life, you get what you
pay for.
Modern Medicine: Dengue Fever - again and again and again!
by Dr. Iain Corness, ConsultantDespite
my pleas, (and those of the Public Health Department), Dengue Fever and its
potentially fatal variant, Dengue Haemorrhagic Fever (DHF) is still with us.
The latest figures have now prompted me to repeat my advice on this subject.
If you remember reading about it before, I apologize, but the subject matter
is very important. This is an important ailment, that can be avoided.
However, first you should understand a little more about
Dengue. It was first described in 1780 by a Benjamin Rush in Philadelphia
(so it didn’t start here), when the name Break Bone Fever was applied,
with the symptoms of pain in the bones and rise in temperature. The name
“Dengue” came in 1828 during an epidemic in Cuba. The new name was a
Spanish attempt at a Swahili phrase “ki denga pepo” which describes a
sudden cramping seizure caused by an evil spirit! Let me assure you that the
local brand of Dengue Fever owes nothing to spirits, evil, bottled or
otherwise.
Like Malaria, the virus is carried by mosquitoes, this
time by one called Aedes aegypti. The virus itself is related to Japanese
encephalitis, Murray Valley encephalitis and Yellow fever, and there are
four “serotypes” or subgroups of it.
The mosquito lays its eggs in water containers,
preferring the clean water found in water tanks and pots, in the saucers
under pot plants and even under the pet’s food dish. Inside discarded car
tyres are another favourite spot. These mosquitoes are not of the
adventurous type and feed during the day and spend their time within 200
metres of their hatchery. Consequently, the eradication of any local
breeding areas becomes very important towards maintaining your own health,
as you can see. Keep your home free from lying water for a radius of 200
metres and you’re looking good!
Simple Dengue (if you can call it that) has an incubation
period of around four to seven days and then the full blown symptoms of high
fever and headache begin. The headache is usually behind the eyes and is
made worse by eye movement. From there the pains progress to the limbs with
acute muscle pains, which gave it the old name “Break Bone Fever”.
Interestingly, some patients complain of a metallic taste in the mouth.
(Please don’t ask - I have no idea why!)
On the other hand, Dengue Haemorrhagic Fever can
certainly be fatal! It appears that Serotype 2 may be the culprit here, but
does not usually produce DHF unless you have been previously bitten by types
1, 3 or 4. In addition to the symptoms of Classical Dengue the skin begins
to bruise very easily as the blood haemorrhages into the skin. Children are
also more susceptible to this than adults. This also becomes much more of an
emergency and is best treated in the Intensive Care Unit (ICU) of your
favourite hospital.
With our ability to treat the viral ailments being very limited, the
defence against the Dengue virus lies in the preventive measures. The other
precautions are to wear long trousers and long sleeved shirts, especially at
sun up and sun down, when the mosquito is at its most ravenous. The other
factor to remember is “D” for Dengue and “D” for DEET. DEET is the
magic ingredient in mosquito repellents, so when you go to buy some, check
the label - if it has DEET, then get it. And then remember to use it!
Learn to Live to Learn: The Politics of Knowledge
with Andrew Watson
Current educational theory is keen on the idea that
human knowledge is a “social construct”. If socially constructed
knowledge is ideology, as many like Kelly (2004) maintain, then it is
important to recognise the political implications of this. I would like
to focus at the positive end of an interpretation of the ‘politics of
knowledge’, which can, I suppose, be reasonably well described as the
reasons for a particular direction being taken, from a cumulative body
of opinion. The dominant flavour of a dish with many ingredients, if you
will.
In schools, it has become increasingly clear to me
that in planning a curriculum, it is not merely a matter of what
knowledge we should be trying to transmit, but how that knowledge should
permeate the curriculum. In short, schools should in my view, always try
and keep at the centre of what they do, a question; “What kind of
person are we trying to produce here?” Many schools pay lip service to
this question, which you might expect to see framed in a school’s
mission statement, but how many can truly claim to “do what they
say”?
I would hope that anybody working in education,
particularly those in a position to make decisions affecting people’s
lives can and does demonstrate understanding that education is a way of
shaping people’s value systems. Our value systems, i.e. what we
believe in, are created by dominant groups in society. The imposition of
any one version of knowledge would be expected to reflect the ideology
of the controlling political group. Education can thus be seen as a
means by which a dominant group can control or at least manage their
society. This has obvious dangers, the greatest of which is reluctance
to acknowledge the possibility of the point just made being true.
Knowledge is power.
You might very well think that understanding the
role, the responsibilities and possibilities of education, would, could
and should, generate positive and productive ideas. In the hands of the
competent, I am confident that this is the case. I do not intend to
dwell on the dark side this week, suffice to say that if any of the many
essential elements in education, from accountability and experience to
proficiency, are either lacking or are absent, then the birth of great
ideas and great educational practice can be smothered and suffocated
before they are aloud even to breathe. Sometimes, it’s self-interest
groups and cliques, where incestuous malpractice can fester unnoticed,
which represent the worst of the bottom end of the barrel of the
politics of knowledge. Actually the infected dregs are probably better
referred to as the “politics of ignorance”. Hypocrisy is the pus,
which oozes from such infection. Oops look, there I go again!
On the sunny side, I hope that readers will not be
able to disagree with my proposal that the principal “stakeholder”
in any school society is the student. Students are the reason a school
exists and I would have thought that in recognising this apparent
truism, schools would operate with this in mind. Students should come at
the front of the queue. If their interests are truly listened to via
their representative body (usually a student council), then you might
reasonably hope or indeed expect, that in tandem with the (supposed)
experience, education, understanding and vision of the staff and
parents, there exists a fully representative possibility for something
really exciting to happen.
Here’s an example. I arrived in a school once,
where there was little or no culture of achievement academically, but
much more interest in extra curricular activities. In recognising the
natural inclination of the student body and the pervading culture, I
felt it was important to affirm students in their interests, whilst at
the same time, introduce a way of integrating their interests into the
classroom. By utilising and reinforcing what they were doing well, I
sought to create an environment for students to excel in academics, an
area in which they had hitherto been under-achieving. Often the
solutions to problems are already within our grasp, we just need to
become aware of their presence. And so it was in this case (although if
you will permit me, I have to admit a certain pride in coming up with
the idea). I found the answer in painting, of all places, where “all
things are one”. So I plucked CAS (Creativity Action Service, a
central component of the IBO diploma) from the periphery of the
school’s existence and placed it centrally, so that it might permeate
and impact upon the everyday practice of classroom activity. Instead of
being the preserve of the pre-University years, CAS became a whole
school thing, from years 1-13. Of course, I encountered resistance. Even
after adoption of the idea, some imagined that all we had done was
“rename” the existing activities programme, which was missing the
point entirely. The point was very simple: Use ideology to increase the
possibilities of students having fun, doing well, experiencing success
and building a future for themselves. No longer were students thrown
into IGCSE PE because they “weren’t academic” or forced to take
Visual Arts for the same reason. Where previously, choice had been
dictated by some humdrum outdated political mantra (and nobody
understood why), there now existed equality of opportunity and choice.
It amuses me sometimes when I think of the central role of aesthetics.
[email protected]
Next week: Postcard from Manila
 Heart to Heart with Hillary
Dear Hillary,
My maid has made it clear that I can be her 17 year old daughter’s
Sugar Daddy. The price would be to keep her in goodies, clothes,
shopping trips etc. I am very tempted, but with the possibility that
things can go sour and I’m charged with molestation, can the situation
be legalized with parental consent? Marriage is not an option.
Tempted
Dear Tempted,
There are several ways of looking at this. Being charitable, perhaps the
maid does not want to see her daughter clean up after someone, the way
she has to do. To become a Mia Noi would mean that the young girl avoids
this fate.
However, no matter what you call it, your maid is pimping her 17 year
old daughter. Can you now really trust this maid? She is a pimp, and
willing to live off the earnings of her daughter, because undoubtedly, a
large percentage of any moneys and redeemable items will end up in the
maid’s pocket. How much value can you put on this parent’s consent?
Not much, Petal, not much. I also note there is no mention of the
father’s consent either. You are the one who has to live with your
decisions, not me. You are the one who has to decide if your plan of
action is honorable, not me. However, my advice is to sack the maid
immediately and change all the locks in the house. Inform your lawyer
and you will be able to sleep soundly at night. There must be some
vestiges of honor still within you. Quite frankly, I am appalled that
your question is merely to cover your own backside, without any thought
for the young girl.
Dear Hillary,
While it appears that everyone enjoys your column (except perhaps those
writers who cannot spell, I notice), do they honestly think they are
going to get “professional” advice by writing in, or are they just
in it for the laugh too? What do you think? It has intrigued me for some
time and I really do want to see what you think of it from your side of
the fence.
The Thinker
Dear Thinker,
What an interesting character you are, my Petal. From my side of the
fence, indeed! Just where do you think I am when I write my replies? In
some sort of zoo, perhaps? And are you on the outside looking in - or
are you on the inside looking out? Any advice column such as this has
writers who try their best to honestly and sincerely answer the queries
as they are presented. If the tone of the letter is serious, then it
gets answered in the same way. If, however, it is flippant, then it gets
replied to like the way this one was! By the way, The Thinker by Auguste
Rodin, was originally meant to be Dante in front of the Gates of Hell,
pondering his great poem. And who said that this column is all froth and
bubbles?
Dear Hillary,
This is a real problem. I am in love with two beautiful Thai girls. Both
of them work in the same bar, so it is difficult for me to favor one
over the other, and I really cannot make up my mind just which one I
should settle on. Even taking either one out of the bar without the
other knowing would be hard. Have you any tips for a young man in my
situation? I am serious and want this relationship to last (with the
right one). But how do I find which one it is. What tests can I do? By
the way, I am a well-endowed and energetic man, so I need to have a
“stayer” if you can understand me. I really need your assistance,
Ms. Hillary.
Choices
Dear Choices,
There’s lots you can do. For a start, you can take both out for the
evening together and let them scratch each other’s eyes out. Select
the one who can still see at the end. She is the one with tenacity. Or
alternatively, you can get them to weigh all their gold chains and
necklaces. The one with the most gold is obviously smarter than the
other, but do not worry overly so, my Petal. Both of them are obviously
smarter than you, my well-endowed little Petal. However, the endowment
does not stretch as far as the brain, it seems. Pity that. If it did,
you wouldn’t be wasting Hillary’s time with self-serving fatuous
letters such as yours. So you also need the chosen one to be a
“stayer”! Have you thought about doing a poll of their previous
boyfriends, perhaps personal endorsements would be enough to swing your
preference towards one or other of the ladies. The choices are out
there. In every bar there would have to be at least three or four who
would be willing to line up at the barrier. If you look long and hard,
there must be some intellectually challenged ladies who would be very
happy to settle down with you and look after your long and hard!
Psychological Perspectives: Blues for Thailand
by Michael Catalanello,
Ph.D.
Ever since I was a kid growing up in New
Orleans, the blues has been a part of my life. When I learned that the
first weekend of Koh Samui Music Festival, September 23-25, would feature a
tribute to blues legend John Lee Hooker, I knew I had little choice but to
attend the event.
 Blues
vocalist, pianist Dennis Binder.
The region of the Mississippi delta near my home was a
hub of early blues innovation and development. Major early blues singers,
such as Willie Dixon, Howlin’ Wolf, Sonny Boy Williamson, Elmore James,
Albert King, B.B. King, and John Lee Hooker, hailed from nearby
Mississippi. As a white kid living in the racially segregated south of the
‘50s and ‘60s, however, I was a bit sheltered from the music of these
early Black artists.
Nevertheless, as I was coming of age, the blues had
already established inroads into the musical mainstream nationally, in the
form of rock ‘n roll, and locally, in the form of Dixieland jazz, a
staple of New Orleans culture. Popular local artists like Louis Armstrong,
Fats Domino, Clarence “Frogman” Henry, and, of course, Elvis Presley
were commercial successes, and the blues was an important element of their
work.
In time, the blues would establish itself as an
important musical art form, not simply in the U.S., but around the world.
Its influences can be detected today in a broad range of musical
traditions, including jazz, R&B, gospel, country, folk, and rock ‘n
roll. The blues continues to evolve endlessly, as it filters through the
many voices, instruments, cultures, and life experiences of its diverse
practitioners the world over.
 Me
with blues artist Chris Thomas King.
On hand at the Samui festival were some of music’s
biggest names, including Jerry Lee Lewis, the Original Blues Brothers Band,
Canned Heat, Big Brother & The Holding Company, Ike Turner, Lonnie
Brooks, Eddie Kirkland, Aaron Moore, and Zakiya Hooker, the daughter of
John Lee Hooker, and an accomplished performer in her own right. Artists of
this caliber are capable of drawing audiences in the thousands.
Despite the notoriety of these international artists,
however, the festival was obviously under-attended; at least during the
weekend I was there. A large section of reserved tables and chairs went
virtually unused, as most attendees opted for the less pricey “picnic
style” admission tickets. On the night of Jerry Lee Lewis’s appearance,
the audience occupied no more than 20% of the capacity of the scenic
lakeside venue. Most of those in attendance appeared foreign.
I wondered about the reason for the poor turnout,
particularly among the Thai community. At 1,200 baht per head, per day, the
ticket price may have discouraged participation by working class Thai
locals. Perhaps the promoters’ advertising was inadequate. What, I
wondered, is the status of the blues in Thailand?
In talking to young Thais, I am often reminded how
little awareness many have of this important musical art form. Although
blues clubs do exist in Thailand, most notably, Pattaya’s own Blues
Factory, they seem to attract mainly foreigners. There seems little here to
compare to the widespread fanatical devotion to the blues found among many
of my own countrymen. Is the blues incompatible with Thai culture?
My own theory to explain the limited popularity of the
blues in Thailand is that the blues is often identified as music with
strong ties to a remote time and place, not here, and not
now. The original blues giants were singing about their experiences living
lives in the Mississippi delta in the early to mid 1900s. Even more
contemporary blues popularizers like Eric Clapton and John Mayall,
likewise, must seem antiquated, and out of step with the younger
generation. For these reasons, modern Thais might consider the blues
irrelevant to their contemporary experience.
But while the blues originated in a time and place,
there is nothing preventing it from finding relevance in other times and
places. The blues may be best known for the honest feeling communicated
through the words and sounds of the artist. Since human emotion is
universal, it seems reasonable that the blues could eventually find a
broader audience among people of all cultures, including Thais. Perhaps
what is needed is for some talented young Thai musician with a firm
grounding in the blues to start defining a uniquely Thai variety of blues.
This sentiment is best summed up by the words of Chris
Thomas King, a blues artist, and native of New Orleans who performed at the
Samui festival.
“When I hear Tommy Johnson or any blues artist I
respect from another era,” said King, “I learn a lot about the social
conditions of the day – the culture and where we were as Americans at
that particular time. If you really want to be like Tommy Johnson, I think
you have to live in your time and be true to your experience. Because
that’s what he did.”
Perhaps King’s words could be viewed as a challenge to those Thai
musicians who do appreciate the blues.
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Dr. Catalanello is a licensed psychologist in his home State of Louisiana, USA, and a member of the Faculty of Liberal Arts at Asian University,
Chonburi. You may address questions and comments to him at [email protected], or post on his weblog at
http://asianupsych.blogspot.com
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