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Money matters: How past can affect present and future
Graham Macdonald
MBMG International Ltd.
Recently, we have looked at the history of the Fed. Now
let’s see how the past can affect the present and the future. Alan
Greenspan bowed out a while ago with an interest rate hike combined with
characteristic verbiage. If there is one change that Greenspan has made
to the rule of chairman of the Federal Reserve it has been, as we’ve
noted before, moving markets not just with what he does, but with what
he says.
Manipulating the markets by indicating what the Fed plans to do in the
future wrapped up in a miasma of eccentric metaphors, arcane similes and
impenetrable figures of speech has allowed the Fed to hint at future
policy without having to spell out its precise intentions. Interpreting
Greenspan’s oracular opacity became an industry in itself and utterances
such as “irrational exuberance” and “a conundrum” acquired legendary
status.
One of the persistent criticisms of Greenspan has been his dogmatism -
his insistence in the efficiency of capital markets. This has encouraged
the amount of financial derivative contracts to expand exponentially
with Big Al condoning the practice generally as being a contribution
towards market efficiency and stability. The danger of a major blow up
causing the collapse of several major counterparties is now both clear
and present, and also probably too far gone to be corrected. Warren
Buffet sees this as one of the biggest financial dangers faced by the
global economy and we can understand why.
The LTCM crisis of 1998 is another example of this. By cutting interest
rates in September, the crisis could have been averted. Greenspan knew
this and although he was to cut rates a month later for economic
reasons, he refused to sanction bringing this rate rise forward by a
month to prevent the LTCM crisis happening. In Greenspan dogma,
efficient markets need to sacrifice the weak or foolish and the pain is
good for the wider market.
William McDonough had to sit all the Wall St leaders around the board
table of the New York Fed, get them to agree to bail out Long Term
Capital Management, the financial world had to endure some very nervy
moments, a hedge fund had to be sacrificed but the “invisible hand” of
the markets that has been as important to Alan Greenspan as it was to
Adam Smyth eventually put everything to rights.
We would rather that the visible hand of the Fed hadn’t necessitated the
crisis just to make its own point about how efficient a machine the
financial markets are. Except for a few financial professionals the
message was pretty well lost at the time and now it’s buried. The
importance of this episode is that to us it highlights the weaknesses
that characterised Greenspan’s tenure.
1) The pre-eminence of dogma and financial ideology over pragmatism -
the LTCM affair saw the Fed going to perverse lengths to incept an
unnecessary crisis JUST to show how well the markets could bear it.
2) Undermining publicly delineated policy with contrary behind the
scenes action - I guess that there are those who would say that speaking
with a forked tongue is justifiable as long as you get away with it
(we’re a bit old-fashioned about that kind of thing, ourselves) and
Greenspan certainly did that but post-Alan Greenspan, we believe that
the standing of Central bankers has been damaged, probably permanently.
Ben Bernanke’s pronouncements will, in all probability, be taken with
pinches of salt because of the lack of respect shown by his predecessor
to the financial markets. Next week, we’ll look at other commentators’
views on the Greenspan era.
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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: Digital versus film photography – a direct comparison
by Harry Flashman
With the fact that film is going to be discontinued in the not so
distant future, and I have been writing about digital photography for
some time, I thought it was about time I tried something of a back to
back comparison between film and digital SLRs. However, before you read
further, this was more of an “impression” rather than a good scientific
test.
FM2 film (left) and D50 digital (right)
For the film SLR I used my trusty, decades old, Nikon FM2n, and fitted
the standard 50 mm lens. Undoubtedly this is my favorite camera, fully
manual and I am fully conversant with it. This camera has an equally
venerable Metz 45 CT1 flash attached and is used most of the time,
especially with portraits as a flash fill.
For the digital SLR, I borrowed a Nikon D50 belonging to my photographic
friend Ernie Kuehnelt, with the 18-55 zoom lens as sold as the standard
package. I was not at all conversant with this camera and found that I
had to refer to the manual to do anything other than turning it on.
The first comparison came in just picking up the two outfits. The FM2
and the Metz makes for a heavy instrument, whilst the D50 is very light.
The D50 is, however, much more smoothly ergonomic than the rectangular
FM2.
I unscrewed the lens from the D50, and the lens (made in Thailand, by
the way) weighs nothing! Well, in comparison to the old lenses it weighs
nothing. For an old newspaper photographer, I could not imagine this
lens being around in 20 years, the way my battered old lenses are.
The comparisons I made by using both cameras, taking the same shot twice
and comparing the results of the final image. The film negative was
converted directly to CD, with no scanned hard copy in between. The
digital images were also burned to CD directly from the memory chip. In
this way it was easy to compare the final images, with both digitized
and viewed using an ACDSee program.
The first foray was a night shot, and it was disaster for the D50. The
little on-camera flash was unable to throw enough light far enough,
whilst the Metz 45 CT1, which will light up the other side of the moon
if I ask it, gave the film final image the distinct edge. Or so I
thought, until I read further into the D 50 owners manual the next
morning, to find I had not set the flash correctly.
I then moved on to something easier - daylight photography, taking
people pictures. For the FM2 it is a simple case of keeping the aperture
on 5.6, setting the flash one stop less and adjusting overall brightness
with the shutter speed. I can do this with my eyes closed.
For the D50 I also tried to do this and was again disappointed, until
Ernie showed me the pictograph for portraits on the multi-purpose mode
control. Flash “on”, was also selected, and lo and behold, good
portraits. Where I was going wrong, was trying to run the D50 as a
manual camera, when Mr. Nikon had already done all the sums (or is that
‘algorithms’) and would select the optimal settings (without me).
I have to say that for me, I found that the D50 controls were somewhat
bewildering. I have a dread of drop-down menus, when simple controls are
much easier (because they are simpler). Converting to a digital SLR,
from a manual film SLR is not easy. What you learned with the manual
does not translate easily to the digital. There is a good reason that
Mr. Nikon gives the purchaser a thick instruction manual. There is much
to learn. One should take the time to learn all the various controls and
functions. I had not.
As a comparison test, this all fell down because I was not familiar
enough with the D50, so all comparisons are flawed to begin with.
However, I do have to say that the ability to instantly review the
photographs on the LCD panel was wonderful. The anguish of waiting to
see if you have been successful has been overcome. For that reason
alone, I would buy digital!
Modern Medicine: Quitting the Weed Part 2. How to do it
by Dr. Iain Corness, Consultant
Last week in this column I wrote about the difficulties
involved in giving up cigarettes. Smokers are not creatures of habit,
smokers are people caught in the clutches of addiction. A prime example is
one of my friends who is on a vigorous exercise regimen and vegetarian diet
as he wants to get fit – but is still smoking. He may as well eat anything
he wants, because the cigarettes will kill him before bad diet does.
To give up cigarettes there are many, many ways, ranging from acupuncture,
hypnosis, the I Ching, Nicotine Replacement Therapies (NRT), chewing gum,
patches, nasal spray and many others all the way through to cold turkey. Hop
onto the internet and you are besieged with offers, all of which will make
it ‘easy’ for you to stop smoking, and all of which will cost you money!
What you have to realise is that Nicotine is more addictive than heroin. I
know that’s probably hard to believe, but that really is the crux of the
matter. You take Nicotine into all of your metabolic pathways until you
“need” to have Nicotine to be able to function. Nicotine becomes part of
your metabolic chemical chains, and they don’t work properly without it. Now
you can see just why you feel so dreadful when you go without cigarettes
(nicotine) for any period of time.
Now, leaving aside hypnosis and acupuncture, about which I know very little,
but the good books tell me do not enjoy high success rates, let’s look at
the other methods. The majority rely on Nicotine Replacement Therapy (NRT).
All the gums and sprays do is to make Nicotine available for you in measured
doses – much like cigarettes do. You get the craving, you chew the gum. You
get the craving, you squirt the spray.
Patches are slightly different. They deliver the Nicotine slowly over a 12
or 24 hour period and are supposed to stop the craving before it happens.
But often do not.
After stabilizing on the NRT it is time to bring the dosage down, which is
the next hurdle at which many fall. The end result can be cigarette smoking
plus NRT – a potentially fatal combination. In fact, I strongly believe that
NRT should only be done under close medical supervision. Too much nicotine
can kill too!
So to the best way – Cold Turkey. The proof is in the numbers. There has
been enough research done and the prime factor is that the quitter has to be
committed to the concept of becoming a non-smoker. Doing it (quitting) for
somebody else, because you lost a bet, because you are being nagged into it
by your wife, girlfriend, boyfriend is doomed to failure, I am afraid. This
is something which requires your total commitment. 100 percent all the way.
Last week I mentioned just how I thought it would be a bad scene for a
couple of days, and then found that it was a couple of weeks of torture.
Here I am a couple of decades later and I could begin smoking again
tomorrow. It requires dedication and commitment. Yours! No one elses!
So, I admit that those who go cold turkey may go through a rough time with
withdrawals initially, but the majority are still non-smokers after one
year. The same cannot be said for the others. The “hard” way is ultimately
the best way.
You have to make the decision to quit. You set the day. You tell all your
friends that you are now a non-smoker – and you stick to it!
Become a non-smoker for 2006!
 Heart to Heart with Hillary
Dear Hillary
I refer to your answer last week to “The Boxer” and I am completely agreed
with you. Anyway I feel Pattaya is not a city to settle down. It is too much
“rock and roll” too much traffic problems, sometimes too much people and too
much pollution and to much criminals Thai and Farangs. I will not recommend
anybody who will have a nice life to stay in Pattaya and as especially
Pattaya is not a city to raise up children. Pattaya is the city for people
who want have “rock and roll”. Now I stay outside Ayutthya in a small
village and everything here are different. Here is the real Thailand. I also
have a nice lady and I remember when we lived in Pattaya there were men
(Farang and Thai) offering her much money for to go with them, but she
refused of course. No, Pattaya is not Thailand. Pattaya is a multikulturel
(sic) city and of course a bit of Thailand but they who never have been
outside Pattaya have never visit Thailand. I have lived in Chiang Rai,
Chiang Mai, Pattaya and now outside Ayutthya so it means I have some
experience. Okay anyway I visit Pattaya every month because of my health
problems and I have some problems in my head to change doctor, but sure I
can find good doctor and hospital where I live now. Back to your answer :
Okay you can maybe have a good life in Pattaya but I will recommend you not
to stay in an apartment on Beach Road, Second Road or Third Road but maybe
uppersit (sic) Sokumwitt (sic) but as you said “change your area.” I hope
you not misunderstand me I will not talk bad about Pattaya. Remember I meet
my wife in Pattaya so that I not forget but when you have found your “right
woman” you must say goodbye to your “rock and roll” life from before, and
then you maybe can be happy together with your wife.
David
Dear David,
Whew! That was straight from the heart, wasn’t it, my Petal. However, as
well as your highlighting problems with Pattaya, I left in a couple of the
problems you seem to have with spelling, but never mind, the rest I
corrected, and the ones I left could be understood. Mind you, I do hope that
English is not your native tongue, otherwise you must have skipped a few
lessons in school! I do agree that Pattaya is not Thailand, being more often
considered to be Thailand’s answer to Disneyland (but the rides are better)
according to my spies in Soi 6! Having said that, I should also point out in
Pattaya’s defense, that there is far more to it than just “rock and roll”.
It is becoming much more of an upscale international resort city, but like
an a la carte menu, everything is on it, but it is up to you what you
select. That is what I was trying to suggest to “The Boxer”.
Dear Hillary,
I read on a website that Chiang Mai’s go-go bars have been closed down. Is
this true? While I enjoyed the Lanna laid-back lifestyle, I also enjoyed a
little go-go entertainment at night. It is bad enough that the powers that
be try and tell us tourists what time we have to go to bed at night (at
least they aren’t telling us with ‘who’ we can go to bed at night), but what
is the point of closing the go-go bars and putting people out of work?
Go-Go George
Dear Go-Go George,
Your source is not quite correct, Petal. The local boys in brown have not
closed the go-go bars, they have been much more clever than that. They have
taken away the chrome poles! To give the dancers support, management has had
to install bus hanging straps from the ceilings, so rather than introduce
lap-dancing, Chiang Mai has retaliated with strap-dancing. Fortunately, they
left the mirrors in place, as everyone knows Thai girls cannot dance without
a mirror so they can ensure they look suitably sexy from all angles.
Dear Hilary,
I have a charming young lady from PatPong. We exchange emails loving
regularly. Yesterday she explained that she was in a spot of bother because
she is sick and can no longer work. This has lead to her being unable to pay
her rent. She has requested that I send her some money, and she has given me
the bank details of a charitable young Thai gentleman who has offered to
marshal my transactions for her. I have auctioned all my possessions and
withdrawn my savings from a high interest account. I was wondering if you
could tell me the most tax efficient method of transferring these funds to
my Tilac.
Yours in sincerety,
Generous Graham
Dear GG,
What an amazing coincidence, your initials remind me of a horse, and the
back end of it too. The best method would be to just send everything in cash
to the kind young Thai gentleman, who I am sure will not pay tax on the
windfall, so you can rest assured that whatever your Tilac gets is tax free,
less handling, freight, banking, grafting, slicing off the top and other
minor charges against the sum which the young man in question will have had
to impose.
A Female Perspective: More men open up
with Sharona Watson
When I do the rounds, talking to men about
something as personal as marriage, I have to admit I’m surprised how
prepared they have been to talk relatively openly about quite personal
things. I mean, you can’t get much more personal than talking about your
marriage, can you? So I would like to thank all those guys out there who
have contributed to this debate; I hope it’s providing you all with
something to (constructively) argue about! Seriously, I hope some good will
come of it all.
 Steven
and Sarah Denning; married for love.
One of those ‘guys out there’ is a man called Steven. He’s from the North of
England, like his wife, Sarah. He’s a big lad, but carries it well. He looks
powerful, that’s for sure, and he’s handsome in a rugged kind of way. Having
agreed to be interviewed, I have to say he looked a bit taken aback by my
first question; I wondered about the time before marriage, when they were
dating. At that stage, it seems like there’s a bright flame burning. After a
few years of marriage, a lot of women seem to feel that the flame has gone
out. What does he do to keep the flame burning bright?
Steven thought hard on this point and then replied, “I don’t know … it’s
just natural.” Naturally, I persisted. But what does he do for his wife?
What does he do that pleases her? Perhaps he was warmed up now, because he
was pretty quick to respond; “Helping. Always. We help each other, we sort
problems out together … the kids bring a lot of pleasure, obviously”.
I think what I was really getting at was romance. Is he a romantic person?
“I must admit I’m not overly romantic in things like sending my wife flowers
and chocolates and things like that but I like to think that we actually
don’t spend money on those kinds of things, instead we’ll do things as a
family. We’ll go out for day trips, we’ll save up and go on a holiday
together, just generally do things as a family, rather than buy stuff
individually.” So ‘no’, then. At least not in the traditional sense!
I’m still pressing on this point though… What does he do just for Sarah? Is
there something that he does that she is particularly pleased with? “I
wouldn’t say I do anything out of the ordinary. Like everybody else, we have
difference of opinions. Generally speaking she walks away having got her own
way…” Interesting! Does Steven let her get her own way? Does it make him
happy? “It’s usually me that bows down.” OK, but why is that? “Because she’s
stubborn. She’ll dig her heels in. And she’ll let things go on and on and
on. So it’s usually me who has to back down.”
Change of tack, I think. Steven and Sarah have been married for eleven
years. And they married for love, right? “Yes,” Steven said and smiled.
Happily married? “Yes. At least I hope so.” You have to love the honesty of
northern English people. How did it all start? “When we first met I was
going out with her older cousin. After three or four years we split up and I
didn’t see anything of Sarah for about two to three years. Then it were all
arranged through Sarah’s Auntie that one night we meet up. So it was sort of
an unbeknown thing and we just started from there”.
So why did he choose Sarah as his wife? (I trust it was reciprocal!) What
was he looking for in his woman when he got married? What was his vision?
What would she contribute to his life? (quite a barrage of questions!)
“Companionship, like a soul mate really. You know, that’s it. Once you’ve
gelled, I mean I don’t think it was love at first sight, although she has
always been very attractive – I was looking for somebody who is prepared to
give and take, somebody who wants to make something of their life. There are
such a lot of people who just sit back on their laurels and let the state
keep them. We wanted to better ourselves and I was looking for someone to
walk down that road with me.”
Does he go shopping with Sarah? “I do. I push the trolley. If she walks past
something I know we need, I’ll pick it up. Yes, we do all those sorts of
chores together. I’ll even go clothes shopping with her. It’s not my best
way of spending a Saturday afternoon but I will do it. I will go around with
her. And if it’s for the kids, I don’t mind that at all.”
Mmmmm. It all sounds ideal. I’m getting envious. Perhaps, there’s something
that Sarah does that annoys him? Maybe something you’d like to change?
“Yeah. She never backs down. She finds it very hard to apologise. If a
disagreement has gone on, even if I know that I’m one hundred percent right
in what I’m saying (I imagined men thought they always were!) but she still
disagrees with me, it won’t be her who comes forward and says, ‘sorry, I
shouldn’t have said that’ or whatever. It’s always me. I’m looking for the
word, ‘sorry’ or something. I don’t think it’s in her vocabulary.” (Steven
says this with a wry smile; Sarah is listening.)
Anything else he’d like to change? “No, just listen to my point of view.
Listen to my reasoning. Try and see the logic in things that I say
sometimes. Put an idea in her head and it’s ‘blinkers’. Sometimes she
doesn’t seem to want to hear anybody else’s side … although I must admit
recently, she has!” (another big smile.)
I must say that Steven’s words sounded quite familiar to me. Possibly
uncomfortably so! Maybe that’s one of those ‘he said this, she heard that’
things. Most importantly, though, would he say that he is fulfilled with
Sarah? Without a moment’s hesitation came the reply; “Yes!”
Next week: “He said, She said”
[email protected]
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