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Money matters: How past can affect present and future, continued…
Graham Macdonald
MBMG International Ltd.
It’s not that Alan Greenspan was unaware of the
developing bubble or even the action that was needed; “By the late
1990s, it appeared to us that very aggressive action would have been
required to counteract the euphoria that developed in the wake of ...
extraordinary gains in productivity growth spawned by technological
change,” he said.
Austerity measures were needed; the punchbowl should have been taken
away and corporate, federal and consumer America given the opportunity
to drink some black coffee. Instead the party got more and more out of
control. Greenspan’s justification for not taking away the punchbowl has
been that, “In short, we would have needed to risk precipitating a
significant recession, with unknown consequences. The alternative was to
wait for the eventual exhaustion of the forces of boom.”
Well that is the job of the chairman of the Federal Reserve System -
that’s what all the predecessors had to do and that is what Alan
Greenspan has evaded doing. His view is, “We concluded that the latter
course was by far the safer.” Our take is that he abdicated all
responsibility.
Fleckenstein interprets this as the Fed realized that there was a bubble
forming (although as Fleckenstein points out at the time the Fed denied
this, but we now know that the Fed speaks with a forked tongue) but
didn’t worry because they assumed that they could fix it. The Greenspan
view is that, “Relying on policymakers to perceive when speculative
asset bubbles have developed and then to implement timely policies to
address successfully these misalignments in asset prices is simply not
realistic ... It is difficult to suppress growing market exuberance when
the economic environment is perceived as more stable.”
Fleckenstein has highlighted a range of measures that the Fed could have
introduced (we would have liked to have seen tax hikes - admittedly that
would have required Presidential initiative beyond Greenspan’s remit,
but he certainly didn’t have to make his policies so accommodating to
the suicidal tax cuts of the Bush regime).
Among these are: Regulation T - margin requirements can be raised to
reduce risk and change market psychology. Regulation X. Part of the
Defence Production Act of 1950, this regulation let the Fed set minimum
down payments and maximum mortgage-repayment periods for residential
properties. The Fed gave up the authority a few years later, but could
have asked Congress to redress this.
Failing that, inflicting short term pain on the economy for longer term
gain is what Paul Volker and predecessors have had to do. The 13
interest rate cuts, all the way down to 1%, were irresponsible and have
created the greatest bubble that the world has ever seen - the US
housing market.
Fleckenstein summarises, “The fallout from the housing boom, the
unfinished business from the stock boom and all the derivatives he’s
championed for his beloved deregulated financial system will combine to
hit with full force somewhere down the road. By then, of course,
Greenspan will be long gone.”
Bill Fleckenstein, a hedge fund manager based in Seattle, recently used
his daily Market Rap column to unburden himself about the outgoing Fed
chairman’s legacy. In this column he is highly critical of the easing of
monetary policy in the mid 1990s that created the housing and equity
bubbles that we have seen since then. Greenspan has claimed that, “The
equity market’s ability to withstand periods of tightening arguably
reinforced the bull market’s momentum.”
Fleckenstein believe that it was the Fed bail-outs of the like of Orange
County, Asia and LTCM that was to blame - Fleckenstein insists that the
“endless bailouts” created the notion of the “Greenspan put.” “Purely
and simply, it was his practice of bailouts and market-cheerleading
(which reached fevered pitch at the peak) that turned the boom to
bubble.”
In his main criticism of Greenspan Fleckenstein said, “Tools were
available to choke off the stock-market boom, but those tools would only
have been effective if they undermined market participants’ confidence
in future stability.”
Fleckenstein on the other hand harks back to the era of former Fed
Chairman Paul Volker, who was a big believer that when the party’s gone
on too long, you have to take away the punchbowl before everyone
over-indulges with unpleasant after effects. Alan Greenspan never
believed in taking away the punchbowl but referred to mutter away about
irrational exuberance - the Fed Chairman becomes the party guest who
opines that he’s stopped drinking because of the lateness of the hour
and if you don’t you’ll regret it in the morning. That wouldn’t be so
bad if at the same time Greenspan hasn’t been adding his own special
recipe to the punch and making it taste better than any other punch that
anyone had ever tasted!
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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: Weird photographers - Edweard Muybridge
by Harry Flashman
Photography can certainly bring out some of the real characters in this
world. A few months back I brought Weegee to your notice, the man I like
to call the father of photojournalism. He was the chap ready to
photograph a body on the pavement, but I doubt if he would ever have
been involved in holding a blanket to catch the jumper! No, the photo
came first. So to another for whom photography came first – weird
Edweard Muybridge was another of these ‘characters’ and while decidedly
eccentric he did further scientific knowledge and in fact made the first
cinema projector, so should be remembered fondly.
 Edweard
was born plain Edward Muggeridge in the UK in 1830 but emigrated to
America in the early 1850’s and changed his name (as did a lot of other
people emigrating in those days – and even these days to places like
Thailand). Edward’s reasons for emigration were not stated.
In the 1860’s he took up photography and gained some fame as a
topographical photographer and even published a book, “Scenery of the
Yosemite Valley” in 1867, so Ansel Adams was not the only one to see the
possibilities in the majestic landscapes.
However, it was the photography of motion that attracted Edweard. In
1872 he finally managed to successfully photograph a horse in motion
showing that at certain times all four hooves are off the ground
simultaneously, this fact being one of much controversy and wagers.
Unfortunately, immediately after proving his point, he was tried for
murdering his wife’s lover but was acquitted. He was then sued for
divorce by the distraught lady and finally widowed. All this kept
Edweard away from his photography of motion for four years.
Returning to photography, with the millionaire railroad builder, Leland
Stanford as his sponsor, Edweard developed a unique system in 1878 which
was in reality 12 cameras mounted side by side and operated by trip
wires. By the following year he had expanded this to 24 cameras and
could thus take very short time interval photographs of horses, dogs,
pigeons and goats in motion. This in turn led to photographing moving
humans, despite enormous problems in getting people to walk past his
battery of 24 cameras in the nude! However, by 1881 he published these
in a book.
His next objective was to show these as motion and he invented the
“Zoopraxiscope” which projected sequences of these photographs mounted
on a glass disc to give the impression of true motion. This was in fact
the worlds first cinema projector and preceded Thomas Edison’s
“Kinetoscope” by some twelve years.
In 1882 Edweard went to Europe, hopeful of raising sponsorship to
continue his photographic study of movement, but returned to America
with empty pockets. He was then lucky enough to get backing from the
University of Pennsylvania. They kept him alive while he photographed
2000 models, male and female, clothed and nude, as well as wild animals.
When he ran out of models, he even used himself, taking his serial shots
of himself walking up and down ramps. 20,000 photographs of almost 800
different subjects were published in a book called “Animal Locomotion”
in 1887.
Once again, he was to run out of money for his grandiose schemes and
tried selling the “Animal Locomotion” book at $100 a book. Needless to
say it was not an overnight best seller.
This led our Edweard to new heights. He built a hall to demonstrate the
Zoopraxiscope, called the Zoopraxographical Hall in the 1893 Chicago
World’s Colombian Exhibition. This was the world’s first movie theatre
and predated the Lumiere brothers “Cinematographe” presentations by
three years.
Despite his inventiveness, the world did not beat a path to his studio
and Edweard decided he had enough of this photography lark, returning to
the UK, where he bequeathed all his photographic equipment to the local
library. At the turn of the century he reprinted his original books,
earning enough to eke out his last four years of life.
Of course, what Edweard did not realize was that almost 100 years later
the scientific community would find that he had left them the most
complete records of animal motion ever produced and in fact in 1979 his
books were republished. It’s a (Ed)weird world we live in!
Modern Medicine: Passive smoking –
should we take it passively?
by Dr. Iain Corness, Consultant
For the past two issues I have concentrated on smoking and
its effects, and how to stop. It requires dedication and commitment, and I
congratulate all people who have given up smoking. You have done your health
profile in the future a great service. While smoking cigarettes does not
mean you will automatically get lung cancer, or other smoking related
illnesses, by becoming a non-smoker does guarantee that your chances of
getting the above conditions are very much less. And before the cigarette
smokers out there start waving their arms (or cudgels), the evidence is in
the arena of public knowledge. Read it.
However, there is one more aspect of smoking, which I should mention. That
is “passive” smoking. So what exactly is passive smoking? In essence, it is
breathing in other people’s cigarette smoke, which the scientists break up
into two parts – “sidestream” smoke from the burning tip of the cigarette
which the scientists say accounts for 85 percent of the smoke in an enclosed
area, and “mainstream” smoke that has been inhaled and then exhaled from the
lungs by the smoker. I usually refer to this 15 percent as “second-hand
smoke”.
The situation associated with passive smoking has been well investigated by
the scientific communities of the world, and the following information was
extracted from the Scientific Committee on Tobacco and Health (SCOTH) in the
UK. For example, is tobacco smoke a simple compound? No, tobacco smoke
contains over 4000 chemicals in the form of particles and gases. The
particulate phase includes tar, nicotine, benzene and benzo(a)pyrene. The
gas phase includes carbon monoxide, ammonia, dimethylnitrosamine,
formaldehyde, hydrogen cyanide and acrolein. It has been estimated that
tobacco smoke contains as many as 60 substances which cause - or are
suspected of causing - cancer. And many irritate the tissues of the
respiratory system. The Environmental Protection Agency (EPA) in the USA has
classified environmental tobacco smoke as a class A carcinogen - ranking it
alongside asbestos and arsenic. You don’t need to be an academic
toxicologist to understand that formaldehyde and hydrogen cyanide are hardly
amongst the compounds that are “good” for you!
SCOTH looked at the situation and concluded that passive smoking can cause
eye irritation, headache, cough, sore throat, dizziness and nausea. Just 30
minutes exposure can be enough to reduce blood flow through the heart. If
your blood supply to the heart is only just sufficient under normal
conditions, this could be enough to tip the scales. More than slightly
worrying! There is also evidence to show that people with asthma can
experience a significant decline in lung function when exposed.
The advantage of well based scientific study is that large groups of people
can be examined and findings collated. When large exposed groups show a
preponderance of any sign or symptom, compared to a group not exposed, then
you can place some credence on the findings. Here are some of them.
Non-smokers who are exposed to passive smoking in the home have a 25 percent
increased risk of heart disease and lung cancer. Researchers from London’s
St. George’s Medical School and the Royal Free hospital have recently found
when you include exposure to passive smoking in the workplace and public
places the risk of coronary heart disease is increased by 50-60 percent. A
major review in 1998 by SCOTH concluded that passive smoking is a cause of
lung cancer and ischaemic heart disease in adult non-smokers, and a cause of
respiratory disease, cot death, middle ear disease and asthmatic attacks in
children. Children in smoking households have a much higher risk of
respiratory problems (72 percent) than those raised in non-smoking
households. The UK Government’s Committee on Carcinogens concluded that
environmental tobacco smoke is carcinogenic, and responsible for several
hundred deaths a year in the UK.
I do not need further proof. Do you?
 Heart to Heart with Hillary
Dear Hillary,
I am in my mid 30’s and have been taking out a young woman from where I work
(I work in a large organization) and it was all very good to start with. She
was happy to come out for dinner or a movie, but recently at work she is all
cold and distant, so much so that I haven’t bothered speaking to her and am
thinking about taking out one of the other women at work (there’s lots). Do
you think I’ve offended her, or what? I am not sure of these Thai women.
Confused
Dear Confused,
You will always be confused, my Petal, and it is nothing to do with your
girlfriends being Thai. You must have heard about the book “Men Are From
Mars, Women Are From Venus” the classic guide to understanding the opposite
sex, John Gray, Paperback, ISBN: 0060574216, in the Self-Improvement
category at your local bookshop. We girls are different from you buys in the
basics, let alone when the ethnic differences get added in as well. Even the
old adage, “Men give love to get sex, but women give sex to get love” has
more than a faint ring of truth to it. I have no idea whether you have
offended GF1, but since there’s lots as you say, play the field. You are
still young in your mid 30s, so you should not settle down with the first
woman you take to dinner. Take it slowly, the right one to match your own
temperament will come along. Believe me.
Dear Hillary,
Help! I have fallen hopelessly in love with a lovely young lady here. She
returns my feelings and when we are together it feels just right. Here’s the
problem – she works from 5 p.m. till 3 in the morning, while I work from 8
in the morning till 6 p.m. The only time we can meet up is on Sunday
afternoons when I finish work at 2 pm and before she starts again at 5. That
is three hours a week only. Sure I can see her at work, but since she is in
charge of the bar, she cannot just sit down and chat with me for more than 5
to 10 minutes at a time. I can’t even pay a ‘bar-fine’ because she’s in
charge. Is there any future in this relationship, Hillary? Please tell me as
I am going nutso about this. We have been meeting like this for the past
month.
John
Dear John,
I am very worried about you, John. You say, “When we are together it feels
just right.” What feels just right? I do wish you men would be more
specific. I won’t even go so far as to imagine what “it” is that you are
referring to. Sounds to me like you want this relationship to go further,
but it certainly won’t go far on three hours a week. That’s the sort of
relationship couples get into after 25 years of marriage, not during the
lusting and trysting phase. One of you is going to have to change jobs, but
after only one month, I doubt if any sane person would throw it all in. It
really doesn’t look too good, Petal. I suggest you continue on for at least
another three months of Sundays and if you both still feel the same then
discuss ways to spend more time together after that. The hopelessness will
hopefully have worn off by then, too.
Dear Hillary,
I have a real problem, which I hope you can help me with. Even if you can’t,
then just by publishing this letter it may help, because the people who are
producing this problem do not seem to know it exists but I know they read
your column! Let me explain, dear Hillary. Everyone I know around me seems
to have no idea of what time is about. Meetings that are supposed to last
for two hours drag on for three because the people in the meeting can’t get
there on time. You make an appointment to go to lunch or dinner and the
other person shows up an hour late. You go to an appointment and get there
on time to find the person you are meeting hasn’t come back to the office
yet because they were late for the earlier meeting they were going to. If I
did precious little all day it would be fine, but I have plenty of things to
do and sitting twiddling my thumbs isn’t one of them. What do you suggest
Hillary?
Tempus Fugit
Dear Tempus Fugit,
You have my sympathies. Watches are cheap and plentiful in this country, but
the ability to actually tell the time seems to have been lost by many of the
locals. I used to have a friend who was woefully late everywhere. After
putting up with his terminal tardiness I invited him to dinner at a
restaurant at 7.30. When he had not shown up by 7.45 I ordered my meal and
by the time he arrived, full of apologies as usual at 8.30, I had finished
my meal. I left him the “Check Bin” and went home immediately. He has never
been late since. What I suggest is that when appointments are made you
stress the fact that you will be on time and will wait 15 minutes only – and
do it! But lots of luck, Petal!
A Female Perspective: “He said, She said”
with Sharona Watson
One of the funny things about listening to
my husband is that I wonder sometimes whether he is aware of how ridiculous
he can sound. On the other hand, he might feel the same when he’s listening
to me, so I should be careful what I write!
Have you ever played the game where you ask your husband, “What have I just
said?” If like me you have, then more than once, I bet you’ve found your
husband uncharacteristically lost for words. Well, allow me to recommend a
website specially designed to aid husband-wife understanding, or perhaps I
should say, “Interpretation”. It’s non-sequitur.com where you can find a
hilarious comic strip entitled, “Why We’ll Never Understand Each Other”,
created by Wiley Miller. Like most comic strips, it’s very clever. Here’s an
example;
What he heard: “Your right to independent thought and ability to form an
opinion has been revoked.”
What she said: “I do!”
 Marriage:
complicated?
I’ve been talking to quite a few men and women about their views on marriage
and it’s quite scary sometimes how we can almost become parodies of
ourselves, as if we are subscribing to a cliché. Think about it. How many
men out there have described their wife as a ‘ball and chain’ or (a term I
hate) ‘her indoors’. But most of the time we’re not exaggerating. It’s just
how we feel, how things are and humour can often be the best tool for
dealing with the situation of marriage, or any other situation for that
matter.
I think that the next example is kind of unisex:
What he heard: “You’re way too stupid to be trusted driving alone in bad
weather.”
What she said: “Drive carefully, dear!”
Andy always says ‘Drive carefully, dear’ to me. I don’t think that he
distrusts me, or hasn’t got confidence in my driving. He’s genuinely
concerned. Although when I reversed into a dark car on a darker night
recently, I did wonder whether his primary concern was for me or the
vehicle. By comparison, when he pranged the car in daylight a week later,
there was stony, deafening silence, although I was smiling quite loudly.
This one happens a lot in our house:
What she heard: “It’s your lot in life to stop whatever it is you’re doing
in order to serve my every need.”
What he said: “Honey, do you know if we have any more triple-A batteries?”
What is it with men? Why can’t they find things in their own house? Useless.
I have to find all the things which are always in the same place as usual,
where he has already looked! It’s ridiculous. Yet when I can’t find
something and I ask (as I’m sure we all do) whether someone has moved it,
his incredibly annoying response is always, “It’ll be where you left it”.
It’s the sort of thing your Grandma says to you.
Here’s a funny one:
What he heard: “I’m going to make you wish you were dead for the rest of the
week.”
What she said: “Tell me the truth, honey…do I look fat in this?”
Andy always claims that I don’t look fat, even when I think I do and you
always wonder, is he just saying that? What does he want? I think in his
case, he is giving his honest opinion, because when it comes to giving his
thoughts on my favourite pair of ‘going out’ shoes, he doesn’t hold back.
“They are truly dreadful. I’ve seen better shoes on a horse.” Things like
that. Funnily, I don’t take any notice of him anyway when he says such
things!
I try sometimes not to take any notice of my mother-in-law (bless her). Of
course, she’s fantastic really; sweet, generous, full of advice, keen to
offer her opinion and the rest. As a mother of four boys, I don’t know
whether it’s just her being maternal or me being over-sensitive, but the
following kind of sums up what I have felt on occasions:
What she heard: “Anything less than absolute perfection makes you an utter
failure as a wife and mother.”
What he said: “My mother is coming for dinner!”
I should talk. My mother hasn’t spoken to me since it became clear that I
was seriously considering spending my life with Andy. Really. However, this
hasn’t stopped us taking the children around to see their Grandma. It’s just
that when we do, Andy and I have to sit outside in the car. Incredible, but
true.
Getting ready to leave the house is a favourite one:
What she heard: Life as we know it will cease to exist unless you can alter
the space-time continuum!”
What he said: “Honey, are you ready yet?”
I’ve noticed that Andy has developed a tendency to decide that I am in
charge of getting the children ready to go out and locking the house, whilst
he observes the operation from the comfort of the driving seat of our car.
Maybe it is true that women take longer to get ready to go out, I don’t
know. If we do, perhaps it’s because we like to take care of ourselves and
look and feel good before we leave. I can’t see much wrong with that myself.
Recently, I was ill and confined to bed for a few days, feeling very weak.
I’m quite a good patient, I think and for the first day, I was treated with
compassion and understanding. But then my husband seemed to start suffering
even more than me, crawling upstairs with tea, moaning about how exhausted
he was from having to look after the children and the house and me. I should
have pointed out that sometimes I feel tired for the same reason, but I
didn’t. Women are just too nice for that. But I had to laugh when I saw the
following in “Why We’ll Never Understand Each Other”:
What she heard: “You don’t expect me to take care of the kids, clean the
house and make dinner, do you?”
What he said: “Feeling any better, honey?”
Next week: Once bitten, twice bitten
[email protected]
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