- HEADLINES [click on headline to view story]:
Heart to Heart with Hillary
Learn to Live to Learn
Graham Macdonald MBMG International Ltd.
Portfolio Construction - Part 7
Let’s look at speculative development - a survey by de
Montfort University, in Leicester, England, has shown that in 2005 there was £23
billion of development finance out of a total market size of property lending in
the UK thought to be between £164 billion and £175 billion. Six years earlier at
the turn of the millennium, there was only £9 billion of development finance. In
that year, £3 billion was for residential development for sale, and £6 billion
was for fully pre-let commercial real estate development - i.e. there was
nothing whatsoever for speculative commercial real estate development.
Though this category hovered between zero and £3 billion for the five years up
to 2004, it shot forward to £5 billion in 2005. By May 2006, The Times newspaper
of London said of this news that “banks have rapidly stepped up their exposure
to speculative development finance, from virtually nothing five years ago to £5
billion at the end of 2005 ... Lending to speculative commercial developments,
where no business tenants have been signed up in advance to rent the building,
is regarded as risky. In the early 1990s, excessive bank lending to speculative
projects came unstuck when the economy crashed and developers could not repay
their loans ... the rapid increase in lending to these (speculative) projects is
beginning to cause concern among some property analysts, who fear that banks
should be more careful not to repeat past mistakes.”
The mentality of development is dictated by the underlying conditions - a
typical property boom feeds on itself and becomes a race to borrow, buy, build
and sell. Transactional justifications become ever weaker and deals concluded
that logically should never have been done. Individual and corporate borrowers
overstretch, banks distort their lending criteria beyond what is appropriate and
margins everywhere become totally unsustainable. The assumption that booms
continue forever leads all participants to act as though this one will do the
same with no thought for the consequences.
This is readily highlighted in a micro example. There are 13 occupiers in the
city who currently occupy 1 million square feet or more; one can only wonder
what may happen as they grow their need for space. Some of these occupiers have
forecasted that they will grow their businesses at 5 percent per annum and that
therefore they will each need a further 200,000 square feet of space within a
few short years. Assuming that these forecasts are accurate that is another 2.5
million square feet of extra office space.
Many large firms looking for space in the City have started to identify
locations, fuel site assembly plans and, together with a commissioned architect,
design before pre-letting the accommodation from a friendly partner developer.
Essentially, these firms are becoming property developers to satisfy their new
real estate requirements based on an assumption that they will achieve continued
above trend growth. If they fail to hit these targets, they’ll find themselves
holding empty real estate. Not a problem, they can rent it to someone else who’s
growing like crazy. But what if everyone stops growing like crazy at the same
time? And what if everyone has assumed that they will grow like crazy and
corporates and developers are suddenly awash with property? And what if interest
rates are higher on these heavily leveraged properties and at a time when rents
and therefore capital values which are in the commercial world determined almost
exclusively by real rental yields?
Suddenly a booming market is contracting more dramatically than it was growing
and all those ‘what if’ questions that were never asked are suddenly coming home
to roost. An early warning sign in the UK could be the retail sector, where many
retailers are finding trading conditions difficult, yet the property from which
they trade is becoming increasingly expensive in rental and yield terms.
In the US the early warning signs are appearing more and more in the residential
sector. The well-known problems in the sub prime mortgage sector (which all the
eternal optimists are having to work overtime to explain why this should be
contained within this sector when logically this should be the harbinger of
wider problems) are migrating up the risk spectrum, with borrowers now insisting
on at least a 5% down payment for Alt A bonds (loans between sub prime and
Let’s just take a step back - borrowers will now ONLY lend 95% of asset value to
borrowers who aren’t prime and in many cases can’t/won’t document their income?
Not only were they lending 100% to this category before, in many cases they were
lending more than 100%.
The assumption here seems to be that lending 100% today to non-prime borrowers
(remember that the importance of the security or the loan to asset value becomes
more significant as the credit status of the borrower worsens) will be okay
because the loan won’t go wrong and if it does then in a year’s time the asset
will be worth 115% of today’s value so a 100 or 105% loan to value doesn’t
constitute risk. Consumers borrowed 100 percent of their home’s value on about
18 percent of Alt A loans made last year, according to Bear Stearns, the largest
mortgage-bond underwriter. Another 16 percent had loan-to-value ratios above 90
percent as well as limited documentation. The actual lenders themselves aren’t
concerned about risk because after all they’ll sell it on soon enough but what’s
forcing them to change their criteria is that the market no longer wants to
touch these riskier loans or at least a smaller number of interested buyers will
be paying the lenders much lower prices for them. It’s a fact that Bear Stearns
Cos., General Electric Co.’s WMC Mortgage, Countrywide Financial Corp., IndyMac
Bancorp Inc., Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Credit
Suisse have all said recently that they are pulling back from buying Alt A
mortgages sold with no down payment or in a re-financing of the house’s entire
value. This is forcing the lenders to adjust their criteria rather than the fact
that there will be huge defaults. If you don’t plan to own the loan book
yourself you don’t care how it performs, as long as you can sell it.
Anyone who can’t see the madness of that line of thinking probably shouldn’t be
allowed out on their own.
To be continued…
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
Snap Shots: by Harry Flashman
Shoot the Bride (and the Groom to make sure)
I have written about wedding photography before. If you are at all adept
with your camera, someone, somewhere, will ask you to shoot their
wedding. If you can refuse with grace, stop reading and go to the next
page. If, however, you are trapped into it - keep reading!
One very experienced wedding photographer even went so far as to call
the craft, “Hours of controlled patience, punctuated by moments of sheer
terror and intense bursts of creativity.” You have been warned.
However, to make it less of a terror, here are some guides to
photographing someone else’s ‘big day’. It is because it is someone’s
big day that it becomes so important to get it right. You can’t go back
the next weekend and shoot it again!
Wedding photographers talk about the three P’s - preparation,
photography and presentation. From the amateur photographer’s point of
view, the first two P’s are the most important, although you should not
forget the last one.
Preparation. This is very important and can make your job so much
easier. This would include going to the church, temple, registry office
or whatever before the great day to see just what you can use as
backgrounds, and where you can position the happy couple, and their
parents, and their bridesmaids, and their friends, and the neighbourhood
dogs and everything else that seems to be in wedding photographs. Just
by doing this, you at least will know ‘where’ you can take some
Preparation also covers talking to the couple and finding out just what
they expect to be taken. When you take on photographing a wedding, you
are taking on a huge responsibility.
Also part of the preparation is to make sure your cameras are
functioning properly, so check. Note too, that I said ‘cameras’ because
there is nothing more soul destroying than having a camera fail during
an event such as this. Preferably, the second camera will be the same as
the first, so that your lenses will be interchangeable. Yes, lenses! You
will need a wide angle (say 28 mm), a standard 50 mm and a short
telephoto (say 135 mm). The wide angle is needed for the group shots and
the standard for couples and the tele for “head hunting”, looking for
those great candid shots.
Now comes the actual photography itself. You have already written down
all the shots that the couple want, so you can cross them off your list
as you go. One series of shots should be taken at the bride’s residence,
and this includes the bridesmaids. Many of these will be indoor shots,
so do take your flash and bounce the light off the ceiling to soften the
effect of the flash burst. White dresses should appear white, not grey.
Now you have to rush to the church or wherever the actual ceremony will
be, so you can get the bride outside, ready to walk down the aisle with
her father, or whomever is giving the bride away.
With those shots out of the way, now you can go and get the ceremony and
I do not recommend that you use the flash for these photographs. For
some religions, this is a solemn time and flash bursts are very
Cross off the rest of the shots as you cover them - the signing of the
register, emerging arm in arm, confetti or rice and then the formal
shots of the wedding groups.
After all this, everyone is dying for a beer and head for the reception.
However, Mr. or Mrs. Photographer, you must wait a little while yet.
There is the ceremony of cutting the cake to be done yet, and
photographs of the guests enjoying themselves (other than you).
Having crossed every shot off the list, make for the drinks department.
You’ve earned it!
The final ‘P’ is presentation. Photograph albums are inexpensive, so put
the best shots from each series into a couple of albums and present them
to the couple as your gift. And as your final job, make the mental
resolve to never photograph another wedding as long as you live!
by Dr. Iain Corness, Consultant
Ask any man which is his most important organ and he will
undoubtedly point to his bladder’s siphon hose. Perhaps it is the magic
symbol of masculinity, but it is certainly not the be all and end all.
(Though indiscriminate use can end all!)
The liver is one of the more important organs you possess. Without it you
will die, whereas you can get by without a kidney, or a lung or a thyroid,
or even the willy for example. Yes, I’d rate my liver above my thyroid any
Think of your liver as a filtering and de-toxifying device. Chemicals are
taken up by the liver, to be broken down into non-toxic chemicals, all to
protect your system. Clever organ your liver.
The most well known liver toxin is our old friend Ethanol, more usually
referred to as booze. That alcohol affects the liver is very well known,
with the end result being called Cirrhosis, a fibrous hardening of the liver
which then becomes unable to carry out its job correctly. Toxins build up.
You feel unwell and it’s all downhill from there. By the way, the liver only
recognizes Ethanol, not the color or shape of the bottle it came in, or
whether it was aged in wood for two decades. So all those people who will
tell you that you shouldn’t drink beer, but spirits are OK and having both
you, and themselves, on.
Some proprietary or prescription drugs can produce an inflammation of the
liver tissues too. Or worse, produce a breakdown of the liver tissue itself.
Amongst these is the headache medication paracetamol (the ubiquitous “Sara”
tablets, for example), but before you throw them out of your bathroom
cabinet, it requires some heavy and very frequent dosage of paracetamol to
Other prescription items that may produce liver problems include Methyldopa,
several penicillins, Simvastatin (the cholesterol lowering drug), Diclofenac
(a non-steroidal anti-inflammatory) and Ketoconazole (anti-fungal).
Prescription drugs can be dangerous (even though you can get most of them
over the counter in Thailand), that’s why they have a PI (patient
information) leaflet inside the box (the bit you throw away and don’t read).
However, what about “Health” food preparations? The purveyors of these all
cite the fact that the ingredients are “natural” so everyone assumes that
this means “safe”. Not so, I’m afraid. Lead, for example, is a naturally
occurring compound, and not much good for young kidneys. However, since we
are talking about liver problems, hands up all those of you who have heard
of Echinacea? Supposedly fixes everything from falling hair to fallen arches
- but is it “safe”? Well, Echinacea, along with Kombucha Tea are two of the
commonest compounds showing a well documented history of being toxic to the
liver. So if you’re sipping Kombucha tea because you’ve drunk too much
alcohol, I would suggest that you change to water!
Others for sale in the Health Food shops with known toxic effects on the
liver include Evening primrose oil, Valerian, Chaparral, Japanese
Daisaiko-to (for dyspepsia), Chinese Jin-bu-huan and several forms of herbal
teas such as those from Heliotroprium, Senecio crotalaria and Symphytum.
Makes you think that the shops that sell them may be incorrectly named,
But while the column this week seems to be spreading doom, gloom and
disaster, it’s not quite that bad. The liver is a very powerful organ and is
capable of regenerating itself quite quickly, so in most cases of toxicity
following ingestion of chemical compounds, by stopping taking it the liver
recovers and the patient feels well again.
So remember that if you are taking anything regularly and you feel unwell,
it may be the liver - but tell your doctor everything you have been taking!
And no thanks, I’ll give the herbal tea a miss today.
Heart to Heart with Hillary
Well Jeeez!;;; a thousand pardons!!. I didn’t mean to get your knickers in
such a knot. But gawd!; this is the most fun I’ve had since pole-dancing at
Happy A-Go-Go, forgetting to put my clothes back on, being bar-fined by four
tall velvet-voiced Thai ladies and waking up in hotel roo....….mmmm?…when
Please let me explain myself. As regards slang; I said I never hear such
from a “well-spoken Western woman”, as part of my musing, that you are a
man. You are indeed well-spoken. Slang is very useful language, and not at
all beyond the purview of the well-spoken. In fact, slang exists because
there seems no more appropriate word(s) for that which it expresses.
I used the word “dominion” to describe the variety of former English (Did
you know Agatha Christie was English?) colonies you might be from rather
than list them all.
As to my misspelling of “whiles”, which you correctly corrected, I might
point out to you that: “elbow-benders” requires a hyphen, “The Dominion?” is
not a complete sentence and “Petunia” does not require a capital p.
Moreover no Earthling “writes as much as they speak”, whatever that means;
though perhaps many do not write as WELL as they speak. Then again, we have
never spoken to each other (I think?). You also quoted the word “guys” which
I never used.
A marriage proposal is yours once you’ve been given it. But now that I think
of it, the writer didn’t propose marriage at all did he? I was clearly
referring to the people from whom you get your knowledge about Thai girls
etc., as being men at the bar or golf course; who wouldn’t share their
experiences with a farang woman… I was not referring to those who write in
for answers and advice. They’re admittedly clueless. And if you are a man,
as I allege, a good deal of your knowledge might come from personal
experience, which actually advances my case a little further.
I pointedly did not ask you whether you are a man or a woman, or what your
name was or anything else of a personal nature. Not knowing is a (the?) most
entertaining feature of your column, and a tribute to your wizardry. For
heaven’s sake don’t tell us! That would spoil everything; especially if you
turned out to be that 40-something English lady-boy I’ve seen prancing
around Soi Bua Kow….making me only half-right.
And I didn’t ask how I could get your job. I asked: “How do I get a job like
yours?”, a question BTW that you didn’t answer…..Hey!!?…. isn’t this an
Tell you what…meet me at the Pump Station, Sat. 9 p.m.…we’ll swap Thai-girl
stories, I’ll introduce you to Noy and buy you a Chang yai,…that’s about as
bubbly as it gets in Pattaya. Cheers!
Aren’t you just the gentleman! A Chang yai on offer and all I have to do is
get the glad rags on and find some place called the pump station (give me a
clue, is it Caltex or Jet?) and a bottle of Pattaya bubbly is mine. How
could I ever refuse?
However, so that you don’t think I have totally spurned your very kind offer
of marriage, I am not the “40-something English lady-boy I’ve seen prancing
around Soi Bua Kow”, so you’re still in with half a chance. If I ever get
I see you are still hung up on the gender thing though, attributing me with
wizardry, yet another sexist title. Wizards are usually male, my little
Pot-pourri of potted English usage. And how poor old Agatha Christie got
pulled into all this, I do not know. Of course she was English, coming from
Torquay, the veritable Riviera of England, where they experience blistering
temperatures in the summer, sometimes into the teens.
You also have caught the drift that this is a column that can give answers
and advice, and claim you want both. “Hey!!?…. isn’t this an advice column?”
you wrote, and yet in the same letter you denigrate people who ask for this,
writing “I was not referring to those who write in for answers and advice.
They’re admittedly clueless.” Hmmm where does that put you, Tuggy, old chum?
I am writing a paper on the different ways Thai students attempt to learn
English. I recall you’ve received a few letters regarding female students
approaching foreigners in shopping centers for this purpose. Could you let
me know the name and location of thses (sic) shopping centers? I have been
to a couple, but have never been approached by anyone wanting to learn
English or for any other purposes.
Dear Teacher J,
Goodness me! Never been approached? “For any other purposes” either? What do
you mean? I don’t believe it. Do you use a deodorant? There must be
something drastically wrong. Perhaps it is because you make mistakes in your
English. It should have been “these”, not “thses”, my Petal. However, just
be careful in case you get approached by someone called Noy who works
Learn to Live to Learn: with Andrew Watson
More Talking Heads
In semi-structured interviews with five
established regional Heads, I covered a variety of areas which
digressed and diversified, answered some questions and generally
provided many more. The following compiled responses relate to
the subject of Leadership.
Whilst acknowledging that ‘transactional’ aspects of leadership
existed and needed to be addressed, Head 1 intimated that these
aspects of the job were the kind of things that could be
delegated and that a Head of School role had to be much more
‘transformational’. As a leader, he had been able to influence
the direction in which his school was going and is very happy
with the direction in which they are going. He accepted the idea
that people want to be led. Head 1 drew on the idea of a jigsaw
puzzle, saying that it was important to have an idea of the
finished picture, whilst you put the right pieces into the right
places. In bringing people ‘on board’ he cited several
principles; in particular Head 1 mentioned the ideas of Brian
Caldwell and Jim Spinks, in “The Self-Managing School”.
Head 5 spoke of a number of principles on which he operates. One
is that as a father he looks at everything, whether it is the
quality of teaching or health and safety and asks himself
whether he would be happy for his own children to be there. He
stressed how important this was to him and expressed the hope
that most Heads would share that belief. This is where his
personal and professional belief systems met.
Head 1 drew on Stephen Covey quite heavily, especially regarding
Principle-centred leadership. If the development plan, he says,
provides the map, what Covey says about principles provides the
compass. Both areas, says Head 1, need to be nurtured and
developed. He is trying to get “everyone’s compass aligned and
pointing in the same direction”. Head 1 made the point that if
he is getting “bogged down in the detail” then he becomes
conscious of the need to stop what he is doing or change the way
that he is doing it. He distinguished between being proactive
and situations where you have to be reactive and cited Covey’s
approach to time management as a helpful way to deal with
protecting the development of the mission statement and the
development of a “higher order of things”. Head 1 pointed out
the consequences of failing to protect it; suddenly, he
maintains, you have to make philosophical and directional
decisions under too much pressure, or at the last minute. He
finds Covey’s approach a practical help in mixing the higher
order mission type things and the need to deal with minutiae on
a day-to-day basis.
Head 1 spoke of tension between the individual and the
organisation whereby a situation might exist where individuals
know the general direction in which they’re heading, but need to
find a way of meeting agreed principles.
Head 4 indicated that her view of her job was that with the
growth of the school, much of it was to do with facilitating
change and moving forward. Her view was that to a large extent,
her role is transformational, although there is a lot of what
she referred to as “daily grind” which she inferred, allows
transformation to occur. Head 1 maintained that it is very
important that a leader has clear ideas about themselves as a
person, as an educator and as a leader. He indicated that vision
was an important quality; also the capacity to evaluate and the
ability to judge. He made an analogy between leading and
teaching, speaking about ‘pitching’ what you have to give at the
appropriate level, in order to be able to move forward together.
Head 5 was philosophical about his work and engages in a process
of critical reflection. He indicated that there was a delicate
balance to be maintained between remaining true to his
principles and seeking compromise. He was conscious of the need
to model some of the principles to staff because, in his view,
once you lose people’s trust then you are in “difficult
territory”. Head 2 expressed the view that as a leader, it is
important not to lose sight of your position or your beliefs. He
considers how you go about doing your job and getting it done
the pragmatic part, the real challenge.
Head 2 agreed that good business practice and good educational
practice had good organisational practice in common, manifested
by good organisational structure and good administrative
procedures. However, he strongly suggested that aligning
education too rigidly to a business model, for instance thinking
of education as a product, was not consistent with good
educational practice, citing what he referred to as “the
downfall of American education” as an example.
In identifying that most schools in South East Asia run for
profit and a few of them are foundations owned by parents, Head
3 pointed to various difficulties in starting up a school with
the IB diploma programme. Other issues included the rules of the
IBO, which requires a lead time of eighteen months to two years,
and parents, staff and students to be consulted, before
implementation can happen.
For Head 4, it is important that and your own school culture is
understood and appreciated. Every school is very different and
unlike the CIS accreditation process, which asks you state who
you are first, the IBO states who they are first. Because there
are so many different models of international school, it is
important that a school is certain about what its model is and
is able to defend some of the things that it feels it needs to
do. Head 4 feels that this is increasingly pertinent to her
school which has gained in confidence as a result. Head 4
expressed the opinion that implementing the mission statement is
something that an international school should be working
towards, irrespective of whether it is an IB school or a
national school overseas. Difficulties can be encountered when
considering the breadth of its [The IBO’s mission] meaning so
that individual schools have to work out where and how it is
going to make sense. It was Head 4’s view that the IBO mission
statement was something of a “blanket statement” that is hard to
understand until you first understand your own school culture.
Andrew Watson is a Management Consultant for Garden
International Schools in Thailand. email@example.com
All proceeds from this column are donated to the Esther
Benjamins Trust. www.ebtrust. org.uk email: firstname.lastname@example.org
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