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Money matters

Snap Shots

Modern Medicine

Heart to Heart with Hillary

Learn to Live to Learn

Money matters:   Graham Macdonald MBMG International Ltd.

If U.S. Equities are doing so well why is the U.S. Economy struggling? Part 2

At the end of May, the S&P broke record ground for the first time since 2000. The DJ Industrial 30 got to over 13,633. People have short memories or, possibly, do not remember what happened the last time new highs were set - i.e. massive losses soon followed. Even after the correction of February, which was led by sell offs in China, it did not take long for the investors to come back and they have been pushing US markets steadily upward ever since. This time, the nervousness was much shorter-lived. “If we see a 20 or 30 percent decline in the Shanghai index, that will cause investors to sit up and take notice,” Sam Stovall, chief investment strategist at Standard & Poor. “Basically, investors say, ‘You’ve got to increase the shock value, not merely replicate it to get my attention the second time around.’”
Markets in the USA have been strongly supported by one or more of the following: Mergers & Acquisitions, corporate takeovers, companies buying back their own shares and company earnings that are proving to be better than expected.
Things now come full circle. This optimism now seems to be overshadowing worries about the slowing US economy, rising energy prices, increasing commodity costs, a potential rise in interest rates and the problems of the housing market.
“We have a remarkably positive environment for securities,” said James W. Paulsen, chief investment strategist for Wells Capital Management. “You have 5 percent real world G.D.P. growth right now and you have massive excessive liquidity sloshing around.”
As reported in the US press, in the minutes of the Fed meeting in mid-May, officials believe that the economic outlook has improved whilst at the same time admitting the housing market and the problems in subprime mortgages would serve as a bigger drag on the economy than they had previously thought.
These same minutes then went on to show that policy makers are still concerned that inflation is too high and too unsettled to warrant a change in policy. This means that interest rates have had to be left unchanged at 5.25 percent. There are also signs that the recent moderation in inflation could be threatened by rising fuel prices - these have risen to over USD3 per gallon for the first time in almost a year.
However, investors remain unperturbed. While the outlook for profits is not as strong or upbeat as it has been in the last few years it is still quite optimistic.
Also, low interest rates have continued to enable people and businesses to have easy access to credit. “Until interest rates rise significantly and investors become excessively optimistic, the market is likely to continue upward,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Company, a securities firm.
Despite all this some analysts and economists are worried that investors have become too complacent. The S&P has gone up by around eleven percent in the last three months or so. This rise does not allow for the rise in interest rates, the slowdown in the economy and the recent increase in petrol prices.
“Markets never move in one direction for a long period of time,” one investment analyst said. “The glass is being viewed as half full, which it is, but there is always another side to the story.”
The energy sector is now leading the way in the markets. This is followed by the materials business. Both of these sectors have benefited from the upsurge in commodities that has been driven by China, India and other developing nations.
Even though there is evidence to show that the US indices are doing extremely well, there is also doubt at the back of the American investor who can still recall the horrors of 2000 and 2001. The flow of money into mutual funds that concentrate on domestic equities, a good guideline for investor sentiment, has been less than strong over the last few years.
This can be seen from the fact that in the first four months of this year, the US investor has put only USD25.3 billion into mutual funds that specialize in the US markets whereas they have spent more than twice that, $56.1 billion, into international funds.
So, even though the US markets do not appear to be in too bad a shape the reality is that the economy may cause them further trouble and so it is better to be safe than sorry - keep your money out of the US unless you do not mind a rough ride.

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: by Harry Flashman

Can you really throw away your flash?

According to Eastman Kodak, the technology is here now, and will become universal in 12 months, by which low-light photography becomes easy. Provided you have made the jump to digital technology.
Ben Dobbin, reporting for AP writes, “An innovative camera-filter technology promises crisper photos in poor light.”
Rochester, New York (AP) - A year from now, capturing a crisp, clear image of a candlelit birthday party could be a piece of cake - even with a camera phone.
Eastman Kodak Co. said it has developed a color-filter technology that at least doubles the sensitivity to light of the image sensor in every digital camera, enabling shutterbugs to take better pictures in poor light.
“Low light can mean trying to get a good image indoors of your kid blowing out the birthday candles. It can mean you want to take a photograph on a street corner in Paris at midnight,” said Chris McNiffe, general manager of the photography company’s image sensor business. “We’re talking about a two-to-four-times improvement in (light) sensitivity.”
Analyst Chris Chute does not doubt that the new filter system, intended to supplant an industry-standard filter pattern designed by Kodak scientist Bryce Bayer in 1976, represents a breakthrough in boosting photo quality - especially when light conditions are not ideal.
“It’s often the most simple concepts that can have the most profound impact,” said Chute of IDC, a market research firm near Boston. “This could be revolutionary in terms of just changing that very simple filter on top of the sensor and basically allowing companies to use it in all different kinds of cameras.”
Kodak expects to provide samples of its new technology to a variety of camera manufacturers in the first quarter of 2008. The technology is likely to be incorporated first in mass-market point-and-shoot cameras and camera-equipped mobile phones beginning sometime next year.
“Typically new features like this would be more likely to show up in high-end products and then trickle down,” said analyst Steve Hoffenberg of Lyra Research Inc. “But I think the biggest potential benefit of this may come in the camera phone environment. Camera phones are using smaller sensors to begin with and smaller sensors generally mean smaller pixels, which means lower sensitivity.”
When the shutter opens on a digital camera, an image is projected onto the sensor, which converts light into an electric charge. Most sensors use the Bayer mask: half of the millions of cells on a checkerboard grid are filtered to collect green light and a quarter each are filtered to let through red and blue light. A computer chip then reconstructs a full color signal for each pixel in the final image.
The new method, which has been under development for more than five years, adds “panchromatic” cells that are sensitive to all wavelengths of visible light and collect a larger amount of light striking the sensor. Tailoring software algorithms to this unique new pattern enables faster shutter speeds, which reduces blurring when capturing a moving subject, McNiffe said.
So what does all that really mean for you and I? In simple terms, it is the equivalent of using fast film of ASA 1600, instead of the ASA 100 that you normally use. It means that you would be able to hand-hold a low-light shot at 1/60 shutter speed, instead of having to use 1/4 second exposures. It also means (as far as I can work out), that the graininess associated with low-light photography will be overcome.
It is amazing that the Bayer mask has been accepted as an industry standard all this time, especially as it was developed in 1976, which is more than 30 years ago. In this fast-moving technological age, where the electronic gizmo you buy today is superseded tomorrow, we are still using a 30 year old concept.
I have to say that I am somewhat disappointed with the thrust being towards low end point and shoot cameras, and even worse, that abomination called a ‘camera phone’. I do believe we should strive towards excellence, and I don’t need a camera that will telephone people, nor do I need a phone that takes pictures. I have a camera to do that. What do you feel?

Modern Medicine: by Dr. Iain Corness, Consultant

Travel insurance: Are you covered?

When you are going overseas, do you take out travel insurance? Do you buy it from an insurance broker, or from the insurance company, or just from the travel agent? There could be many different scenarios, and you should be aware of them. Medical treatment overseas can be cripplingly expensive.
Unfortunately, many people have a somewhat cavalier attitude to insurance and I’m just as guilty! A few months ago I did mention medical insurance in this column and it was amazing the response that this brought. When people began to see just how much they were financially “at risk” by not having insurance, the better brokers were inundated. Let’s see what the response to this week’s column will be when we look at travel insurance. By the way, this is not travel insurance to cover your lost luggage, but to cover medical emergencies. Your lost good health.
Unfortunately many people travel under the misconception that the travel insurance they took out with the travel agent is going to cover them for all eventualities. Sadly not. The following is a true story, taken from one of my medical journals from Australia. A gentleman with a leaking heart valve, which was under investigation and examination by a cardiologist, has to make a business trip to America. He took out travel insurance from the travel agent, but discloses nothing about the on-going cardiologist’s review, as he does not think it is that important. Two days after getting to San Francisco he got very short of breath and was admitted to hospital. The insurance company was contacted which then asked for a report from the American hospital, and a report from the patient’s usual doctor in Australia. This, by the way, is standard practice.
The history of the cardiac condition now came to light, and the insurance company state (justifiably) that if they had known of this situation, they would not have accepted the man as a reasonable risk and refused cover. Meanwhile, the man’s condition deteriorated rapidly and he has to have an emergency heart valve replacement. All was not plain sailing and he ended up having 42 days in intensive care. Total cost came to $US 576,500, for which the businessman was totally liable. To raise the sum of over half a million dollars he had to liquidate his company and sell his house at “fire sale” prices. But he thought he was insured.
Like another horror story? A young woman is going to the UK for a working holiday. Like many people, she has asthma, but it is reasonably well controlled. Since she was flying directly to the UK and there is a reciprocal medical agreement between the UK and Australia, she decides she “logically” doesn’t need travel insurance. Six hours into the flight she gets an acute attack of asthma and has to be off-loaded in Singapore. Complications occur and she ends up being in Singapore for 6 weeks and then has to be medically evacuated back to Australia with a doctor and nurse escort team. Her stay in Singapore and the medivac came to $A 390,000 and her parents had to sell their farm to raise the money.
So you can see from that example, just because you are covered at the other end of your flight doesn’t mean to say you are not “at risk”. The moral of these two tales is simple - take out good travel (medical) insurance and make sure you declare any pre-existing conditions. Insurance companies are in the business of “risk” assessment. Forgetting to declare your medical history is not thought of as being an acceptable risk. This omission could prove deleterious to both your health and your wealth. As I have pointed out, insurance companies do not just blindly take your medical conditions at face value. Conditions that must have been long-standing will not be covered, unless they are noted beforehand. Degeneration of a hip joint is not something that just arose, out of the blue.
Think about it before your next trip!

Heart to Heart with Hillary

Dear Hillary,
Yes, it is possible to fall in love with a person one has never met. I have fallen in love with you. This of course is predicated entirely on your being a woman and not already married but the latter could be dealt with if you are ready for a change, surely?
You are funny, intelligent, bright, commonsensical, witty, shrewd and have all the mental and spiritual qualities I require in a partner. Clearly, you would hand out the clout of all time to any partner who dared to be silly enough to stray off the path of virtue whilst involved intimately with your splendid self. I have a mental picture of you which does not disappoint and which I am sure will not be far off reality; you are Western; British or Australian; what is known as a ‘handsome’ woman, i.e., not 25 but still very attractive; fun to be with and an intelligent and witty companion and just the lady, I am sure, who could walk tall with me as I bravely enter the twilight years.
But of course, before you say yes to a pig in a poke, you will want to know something about me. I’ve been here for many years, speak Thai and several other languages; have a sense of humor (you need one when you see my face in the mirror each morning), am educated, have been married twice to splendid Thai women and have a lovely, bilingual, Eurasian daughter. I am at the moment unattached and need a companion who is not some silly little biddy who doesn’t know New York from New Year.
As to age: well I’m a youthful mid-sixty-ish type of fellow who looks younger and doesn’t drink; and a past which involved, in part, military experience, has left me with an underlying musculature and no ghastly flab. I walk ten km per day, hence my iron-hard thighs; and I have blond hair. Dyed, of course, but it looks tasty, and I am not bald. I have a sense of humor and am well-read; I love music of all sorts, poetry and good English and I am a published writer.
Enough...crossing your mind is: and I will be delicate here - can I still cut the mustard? I am happy to say, the answer is squarely in the affirmative and no chemicals are involved.
Over to you! Very warm regards from
Dear Edwin,
Goodness me! A 404 word proposal! And so romantic, Petal. I haven’t had an offer like that since little Johnny Carstairs wanted to see my knickers when we were in fourth grade. You so nicely describe me in your mental picture of myself. Ah yes, if I were only 25 again. I too, have a mental picture of you with your ‘suicide’ locks (dyed by your own hand), but I am not sure I needed the description of the thighs, after all, they say thighs doesn’t matter these days! I am a little perplexed about the ‘mustard’ which you want to cut without chemicals. Is this Dijon or Colman’s? Honestly, Edwin, I can cut all kinds of mustard and don’t need chemicals to do it. I usually use one of those lovely cheese knives, as I normally have the mustard on the cheese, washed down with a bottle of bubbles. And here is our first stumbling block - you don’t drink! Don’t drink? Do you have some sort of a medical problem you are hiding from me? And then there’s the military side of things. Sorry, Edwin, but uniforms do nothing for me. I can imagine you shouting at your bilingual daughter and I on our compulsory 10 km walks every day. Left, right, left, right, halt at T junction! So thank you, but unfortunately I must say no. However, congratulations on knowing when to use a semi colon, as opposed to a comma. Very rare, in this day and age.

Dear Hillary,
My agent in the Hammock Room reports that you often wear not one but two Blue Peter badges attached to your DD Cups! I wonder if these relate to your pathological and morbid interest in water loving beasts which led you to being fondly remembered as Buffalo Hill?
Dear Mistersingha,
My day started off well. A proposal of marriage, which I unfortunately had to refuse (if he’d attached it to a bottle of sparkling giggle juice, I might have given in), but then the second email was yours. What a total let-down. However, you have given us all an insight into your fantasies. Blue Peter (for all those unfamiliar with Blue Peter, it is a children’s show on TV, named after the maritime flag that is hoisted when a ship is about to sail), goodness me, Mistersingha, how long have you been watching? The show was supposed to be a voyage of discovery for children. Perhaps you could also sail off somewhere, using some DD cups as kayaks? Please try, that’s a good boy. Off to play then.

Learn to Live to Learn: with Andrew Watson

Organisational Culture

For the purpose of this week’s column, ‘organisational culture’ refers to the characteristics of a school, which permeate all aspects of the organisation, through operational activities, infrastructure and marketing. Organisational culture can be described as the ‘colour of a school’ and is reflected in its values, attitudes and pedagogy. As an artist, I might describe it as “The landscape in which things happen.” The folksy Fullan & Hargreaves (1998) call it, “The way we do things in relation to one another around here.” We should also be clear about what we mean by ‘culture’. For Schein (1985), culture is essentially, “The deeper level of basic assumptions and beliefs that operate unconsciously.”
If it is the organisation’s job to deliver a product (Handy, 1990), then it seems fair to say that ideally, the organisational culture should reflect this objective. However, there are many interdependent variables on which the efficient and effective running of a school depends. It is often a delicate balance which can be upset by the slightest shift in emphasis amongst any of these variables. Organisational culture is not only shaped by market forces and technology, but by the cultural preferences of leaders and interest groups (Trompenaars & Hampden-Turner, 1997). Further complicating the picture are overlays of cultural heritage, size and scale, urban or rural location and even climate (the more you think about it the more it makes sense).
I believe that all systems can work. However, it requires significant acumen to select the right (appropriate) system which will allow an organisation to function efficiently and effectively and equally, to recognise when it is time to adapt or change the system so as to allow this positive and due process to continue. Whatever the case, the structure should facilitate task and process. Because organisations are such diverse structures that evolve over time, it seems fair to reject any one ‘best method’ approach and instead advocate an almost sentient ‘contingency theory’, which is adaptable, realistic, proactive, progressive and pragmatic. Perhaps even idealistic?
Peters and Waterman (1998) describe a kind of relaxed concentration, in advocating ‘simultaneous loose-tight fit’ structures, recognising individuals within the organisation should be allowed freedom to operate efficiently, within guiding parameters. Yer’ man Drucker (1955) also believes in giving full scope to individual strength and responsibility, whilst espousing the benefits of shared vision and team effort.
It is my view that throughout an organisation, all (and I do mean all) employees in the school should be encouraged to share a common vision. For this to happen, individuals need to feel valued, secure and happy in their work. In tandem with a proper system of appraisal and support, affirmation leads to efficient, productive and happy staff. Handy (1990) maintains that shared understanding and a ‘collegiate culture of colleagues’ are essential elements in a successful organisation. Peters & Waterman’s (1982) assessment of ‘excellent companies’ supports this. However, it is important to distinguish between collegiate cultures characterised by apathy which develop low expectations and cultures of mediocrity (manifested in things like low health and safety standards and an attitude of “it’s easier to play golf than work”) and cultures where high professional standards exist and the collegiate culture reinforces and encourages high quality work (“we’re not just here on holiday”) and where underperformance in any sense, is not tolerated.
Akio Morita (1987), chairman of Sony, recognised that the future of the organisation rests with those currently working for it: “The emphasis on people must be genuine and sometimes very bold and daring, and it can even be quite risky, but no matter how clever or crafty you are, your future is in the hands on the people you hire.” Acknowledging this can lead, under mismanagement, to clique building, where an insecure leader surrounds him or herself with ‘yes’ people, generally weak (and self-serving) subordinates.
Clearly, the culture of an organisation is critical to its success or failure. T.S. Eliot claimed that a shared culture is what makes ‘life worth living’. However, in an international school environment, if the dominant culture is oppressive, individualistic, ignorant or nationalistic, then such a shared culture might have quite the reverse effect.
Organisations dominated by a particular culture can expect to see the characteristics of that culture permeate the day to day running of the organisation. This extends to the physical environment, where a school with a dominant British culture might very well model its environment to resemble, for instance, a British public school (there are quite a few examples in Thailand). ‘Monoculturally insistent’ schools can be expected to choose a curriculum reflecting the national academic persuasion (IGCSE, A level), which will in turn attract staff with relevant experience, often quite deliberately recruited from the UK. All of which conspires to formulate a marketing strategy that might very well keep ‘Britishness’ at the centre of its campaign. ‘British’ becomes a brand, to such an extent that schools regularly advertise in their brochures, delivery of the non-existent, namely, the ‘British National Curriculum’ (one of the greater ironies of international schools). Clientele will reflect the branding, staffing and identity, completing a self-fulfilling cycle of ‘Britishness’.
If managed with integrity and imagination with clear lines of communication across well defined structures, there is no reason for ‘British’ to be irreconcilable with ‘International’. However, problems can arise when those two concepts are viewed by one or more of the interest groups in a school as significantly divergent or incompatible. A school strongly ‘British’ in culture might resist what people like Hill (1994) regard as an essential part of international schools, namely ‘where the ethos is one of internationalism as distinct from nationalism’. This can cause massive friction across a school community, especially one in which communications patterns are blocked or confused. The seed of division can be sewn on the grounds of incompatibility between the espoused dominant culture (British) and the ‘International’ identity of the school (a school might have both terms in its title).
I visited one school where the IB diploma programme was viewed by the majority of the school as ‘foreign’ and inconsistent with the concept of ‘Britishness’ peddled by the Principal, who was resistant to what he referred to as ‘someone (the IBO) telling me what to do’. In meetings, staff would question the appropriateness of the diploma programme on the grounds that, ‘we’re a British school, not an international school’. This pervading negativity towards internationalism betrayed profound ignorance of IBO mission statement and philosophy, which encourages authorised schools to reflect IBO philosophy across the organisation, even if they only run one IB programme (e.g. the diploma). Either by neglect or by design, a vacuum of prejudice and ignorance was allowed to develop and the IB diploma was used as a scapegoat for a variety of ailments.
Andrew Watson is a management consultant for Garden International Schools in Thailand. [email protected]
All proceeds from this column are donated to the Esther Benjamins Trust. www.ebtrust email: [email protected]
Next week: “But somewhere, Good Work was being done…”