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Money matters:
Graham Macdonald MBMG International Ltd.
Alas, poor Lehman, I knew him well... part 2
At a recent closed-door fundraiser in Texas, where he thought
it was safe to tell the truth, President Bush summed up the financial crisis:
“There’s no question about it, Wall Street got drunk, that’s one of the reasons
I asked you to turn off the TV cameras. It got drunk and now it’s got a
hangover.”
It’s been drinking too much for years - this became worse when macro strategy
(under Greenspan and Bernanke) made all the booze more readily available - Paul
Volcker is getting an extremely positive retrospective re-appraisal because of
the actions of his successors - what was the phrase about taking away the punch
bowl?
James Quinn wrote last week that, “George Bush will depart for his Texas ranch
on January 20, 2009 knowing that his ‘no financial regulation’ agenda has
resulted in the greatest financial catastrophe in the United States since the
Great Depression. Luckily, he should be able to muddle through on his $10
million net worth and the millions he will rake in writing his memoirs and
making inspiring speeches.”
I cannot argue with that but I would say that, so far, this is the worse
financial catastrophe since the Great Depression but it may not be finished yet
and every US president since and including JFK is culpable.
Clinton repealed Glass-Steagall, Nixon removed the gold standard, Bush presided
over the current fiasco - none of these presidents have had the conviction to
challenge the way that society has moved and FNM/FHMC are reflections of that.
Quinn points out that, “The economic situation has gotten worse. There are 4.7
million homes for sale representing an 11.2 month supply, the highest in
history. Home prices have fallen 16% in the last year according to the Case
Shiller Index. Prices are expected to fall through 2011 according to John Burns,
a real estate analyst who has been correct for the last five years. Foreclosures
totalled 1.2 million in the first six months of 2008, a 100% increase over the
prior year, and are accelerating at the fastest pace in three decades. Option
ARM mortgage and Alt A mortgage delinquencies will be accelerating in 2009 based
upon their date of issuance. This will lead to more foreclosures and much lower
prices. Unemployment is accelerating and will not peak until 2009, probably
north of 7%. People without jobs can’t make mortgage payments or buy HDTVs at
Best Buy. We have entered a recession that is being driven by consumers with
vast amounts of debt. This recession will be deep and long. The greatest debt
bubble in history does not pop without making a huge mess. Credit is getting to
be scarce. Forced consumer spending reductions will bankrupt overleveraged
retailers, mall developers, and commercial developers.”
That is pretty close to and certainly not more pessimistic than our take - the
question is whether the financial system will remain intact. Despite the panics,
the system has, with support, stood up so far - we were terrified that we would
have seen Armageddon by this stage. We were wrong. However, just because it has
not happened yet is not the same as saying it won’t happen - for us the future
of Citicorp is the key event here.
The average American created events of last weekend. Unwittingly. People have
bought unsustainable dreams from slick politicians peddling snake oil ever since
the 1960s started - JFK and the US nation, in the era of hope and technology,
were made for each other. Corners were cut, people started to act for the moment
and eventually, as my mum always used to say “if you have your fun, you’ll have
to pay one day” - that day is now.
I do not blame Jimmy Cayne or Stan O’Neill any more than LBJ or JFK or Dubya. I
think that it is too cruel to say that people get the leaders that they deserve
- the people (whether American, British, Irish, Thai, etc.) have been duped and
their morals have gone out of the window - they were happy to be duped at the
time but now they are realizing the cost; if only they had known what was going
to happen then they would not have gone along with this... but they didn’t
know... and they didn’t ask and they didn’t even know what they should ask...
that’s not meant to be a cruel or a moral judgement, just an observation - my
job is to observe and to try to see how this affects the client money that I am
trusted with.
A client asked yesterday, “What would MBMG have done in 1929?” It’s hard to
answer that - but we would have been totally spooked by the valuations, the
macro conditions and the volatility and I think that we would have avoided
equity exposure, at least high Beta exposure to equities. What are we doing
today? I can answer that; we are making money by focusing on not losing it:
1) Diversify - there are multiple asset classes. Use them; cash is an asset
class, now is a good time to be overweight cash (and commodities and pure
arbitrage and hedge funds).
2) Make the most of each asset class - if you’re going to have high allocations
to cash, get the best returns on cash.
3) Genuinely diversify - no point splitting between just two asset classes that
currently have high correlations (e.g. equities and property).
4) Avoid Beta - now is a time for lowering risk. When there is so much
uncertainty the best that you can generally do is try to insulate yourself.
5) Liquidity - even with the best laid plans. Only take positions from where you
can see the exits and only ones which do not have high exit penalties.
The MBMG philosophy right now is that when the really big crap hits the really
big fan it all correlates to one - in times of extreme distress everything
suffers - Asian may be in better fundamental shape than the west BUT we have
been avoiding equities here since last year because when the US sneezes etc. -
Asian markets lost 4% yesterday because of FNM and FHMC; Asia’s time will come
again sooner than the west’s but the sidelines is a good place to be right now.
Diversification, risk management, squeeze the pips and stay liquid. Despite all
of the above, this is an opportunity for portfolios and so far nothing has
played out that good fund managers such as Scott Campbell were not expecting.
Thanks to the boys at Midas Capital, MBMG portfolios have no exposure to banking
stocks or finance companies and from the results of daily traded assets such as
gold and currencies, the last couple of weeks have been extremely profitable for
our managed currency client portfolios.
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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]@mbmg-international.com.com
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Snap Shots: by Harry Flashman
Indian tailors and photography
 Would
you believe me when I say that you can get a very valuable piece of
photographic equipment at the local Indian tailors? Probably not, but
you really can buy something there which is of inestimable value for
special effects in photography.
Indian tailors fit into low budget special effects photography, and when
I say “low budget”, that is exactly what I mean. In my personal library
I have books that claim to do just this and then go on for one chapter
about the “low budget” equipment required - like an enlarger,
registration table with registration pins, copy stand and photo floods
and studio strobes. Hardly what I would call low budget!
However, it is possible to produce many special effects photos without
having to purchase expensive equipment, work with slides only or have
studio strobes. The first item you need is a roll of black velvet.
Black velvet is a very important part of photography, and in my studio,
I used to keep several meters of the stuff. Why? Because it is one of
the easiest ways to introduce some very different effects into your
photographs.
The secrets behind the use of this material include the facts that it is
non-reflective, it does not affect exposure values when taking the shot
and shadows do not register on it. Mind you, fluff, dust, cigarette ash
and dirt does, so you have to keep it scrupulously clean!
Because it does not affect the final image, this makes black velvet the
ideal material to use as a background when you wish to combine images,
or do other special effects using Photoshop or whatever is your favorite
graphics package.
Here are just a few ideas you can do with black velvet. Simple double
exposure in the camera becomes very easy with this material in the
background. Set your camera in the double exposure mode (or if you have
not got one, select “B” for time exposure). Position the subject to one
side of the picture and pop the flash to take the shot. Now reposition
the subject on the other side of the picture and shoot again. You will
have two perfect shots on a perfectly black background. (For those using
the “B” setting you have to have the room dark and the camera on a
tripod. Cover the lens between taking the shots to stop extraneous light
coming into the camera too, but it is possible to get excellent double
exposures in this way.)
Another use for black velvet is in making pictures of light trails.
These can be very spectacular special effects pictures and are very easy
to make. Stick the black velvet on the ceiling and suspend a torch from
the centre. With the camera facing upwards, twirl the torch and record
its movement for ten seconds or so. You have just made a totally
original print!
Photo montage is another simple effect you can produce, using the black
velvet as the background. Here you let your creative self run riot. You
can produce any picture you want, whether it be yourself standing on top
of the Statue of Liberty or three elephants standing on a beach ball -
you are in total control!
With this type of special effect you have to cut out the elements you
want from other pictures, be they prints or magazine photos or whatever.
Cut carefully and then run a black felt-tip pen around the edges (See
why? It will sit on black velvet!) and you are ready to combine all your
subjects.
Put your composition (photo montage) together and positioning your
camera above the montage, look carefully through the viewfinder. This is
how the shot will look, remember. Reposition any items at this stage.
Next important item is to keep the camera back (film plane) parallel
with your background as this will keep all the elements in focus. Now
shoot!
If you find the direct flash gives you a reflection problem, you can use
household “floodlights”, one each side at 45 degrees to the surface. You
will get a “warm” color cast, but since you are producing “surreal”
photographs, it does not really matter. Have fun this weekend, after
you’ve been to the tailors!
Modern Medicine:
by Dr. Iain Corness, Consultant
Can EPS help you live longer?
Back in the good old days when oils came out of the ground,
and not manufactured in a research lab, there was a type of lubricant called
“EP”. That acronym stood for “extra pressure” but has nothing to do with the
medical EPS acronym, which stands for ElectroPhysiolgic Study. Of course,
one of the great problems with acronyms, is that the letters can stand for
all sorts of other things, such as in this case “Earnings Per Share”
(currently a doubtful entity with Wall Street tottering) or even more
esoteric, “Elizabeth’s Percentage System, a mathematical formula developed
by Elizabeth Zimmermann to determine how many stitches to cast on for a
sweater.” (But who knits sweaters these days?)
Medical EPS is a relatively new diagnostic procedure in which we can see
just how well the electrical side of your heart is working. Just the same
way as your engine needs a correctly timed electrical spark to each
cylinder, your heart chambers need a correctly timed electrical impulse to
make them contract at the right time (the rhythm or heart beat).
When the electrics start malfunctioning, the heart will also malfunction.
Disturbances of normal heart rhythm may only cause annoying symptoms
(palpitations, lightheadedness, dizziness) that pose no serious threat to
life. Other rhythm disturbances, however, can be associated with dangerous
risks (loss of consciousness, seizures, stroke or cardiac arrest). These
varying symptoms can occur when the heartbeat is seriously slowed,
dangerously rapid, or just highly irregular. Heart rhythm disorders can be
part of almost any type of heart disease, and can be provoked by various
medications or electrolyte abnormalities, but can also occur in the absence
of readily identifiable underlying heart problems. These disorders are
called ‘arrhythmias’.
Some arrhythmias can occur without symptoms and may only be picked up during
an EKG (electrocardiogram), but the simple EKG will not pinpoint the
electrical breakdown, only indicate that there is a malfunction somewhere.
An ElectroPhysiologic Study (EPS) is one of a number of tests of the
electrical conduction system of the heart performed by a cardiac
electrophysiologist, a specialist in the electrical conduction system of the
heart.
The EPS should pinpoint the location of a known arrhythmia and determine the
best therapy, determine the severity of the arrhythmia and whether you are
at risk for future life threatening heart events, especially sudden cardiac
death, and can also check the efficacy of medications being used to regulate
heart rhythm, and evaluate the need for a permanent pacemaker or an
implantable cardioverter-defibrillator (ICD).
The way the EPS is done is where modern medical technology is used. Just as
when an electrician tests the conductivity of a wire with a testing light,
to test the heart’s electrical system, several thin, flexible, electrical
catheters (fancy wires each about the thickness of a strand of spaghetti)
must be inserted into various parts of the heart, to test the electrical
pulses.
To provide maximal sterility of the catheters being inserted, the
introduction sites are thoroughly cleansed. Most catheters are inserted via
needle punctures through the anesthetized skin, making cutting and stitching
unnecessary. Once the catheters are carefully positioned inside the heart,
the electrophysiologist mans computer equipment, making recordings of the
heart’s intrinsic electrical properties. Occasionally, electrical stimuli
are administered to the heart by the conductive catheters, to check its
response.
The catheters enter the heart via the right atrium, which is the low
pressure side of the heart. The advantage of this is that the right atrium
is where the electrical generator (the SA node) is located. The right atrium
is also the location of most of the common re-entrant pathways associated
with atrial flutter. If a catheter is placed with the distal tip in the
right ventricle, it may be possible to measure conduction through the
central electrical tissue bundle, which is useful to determine the level of
heart block (where the atria and the ventricles beat independently). If the
catheter is placed in the coronary sinus, it is also possible to measure
electrical activity in both the left atrium and the left ventricle without
entering the high pressure arterial system associated with the left side of
the heart.
EPS can save your life.
 Heart to Heart with Hillary
Dear Hillary,
No hard fealings (sic), I mean feelings. My wife tells me that in Thailand there
are what she calls “bad people”. You’re not “bad people”, are you? Anyway, I’ve
recently had my motorcycle (Honda Phantom) engine rebuilt. At my behest the
mechanic did some performance work; 30 over, high compression piston, head
ported and relieved and, hotter plug, etc. Sure, I may be “A kindly old uncle”,
however, not quite ready for a walker. Now, here’s the problem; after these
modifications, my engine runs very rough on 91 octane. I need 95 octane but 95
octane has been phased out. Khun Hillary, what am I to do? Well, this IS an
advice column isn’t it? “Singed” but not burnt,
Uncle Bill
Dear Uncle Bill,
What a lovely man you are? Entrusting the care of your Honda Phantom to Aunt
Hillary. However, as you say, this is an advice column, so here goes: Since your
mechanic knew what to do with porting your head (did he begin at your ears or
your mouth?) as well as relieving you (sounds very naughty, Uncle Bill), he then
is surely the one to tell you what to do with your 95 octane problem. Agreed? So
ask the nice man, my Petal, not Auntie Hillary. In the mean time, try siphoning
some 130 octane avgas from a plane near you. That always worked in my
boyfriend’s Beezer Bantam.
Dear Hillary,
After a few misfires at finding a good woman, I started reading your column and
found that I wasn’t the only one with problems. So I could see where we were all
going up the wrong road. I slowed down and took a turn the other way and very
soon met a beautiful woman who was interested in me and not my bank account. She
has never asked me for a penny for anything, while all the ones before always
had their hand out for something or other, new phones, gold, motorcycles, house
for Mama Papa and all the other reasons that these women seem to find. I could
appreciate her for what she was - a good woman. I consider myself to be very
lucky to be with someone like that. For my so-called friends it has been a bit
of a shock, as she used to work in a cabaret, but I don’t believe it is
important what anyone used to be before. Sorry no champers, for guessing. Yes,
she is a katoey, but is still the best woman I’ve ever been with.
Graham
Dear Graham,
Yours is an intriguing story, and I agree with you that what someone was before
really does not matter. It is the ‘now’ that is important, and if you and your
“best woman” are happy in the ‘now’, that is all that matters. Ignore those
people who would make judgments, it is your life, not theirs. Graham, I also
want you to read the letter below, it came in a couple of years ago, but is very
pertinent to your life.
Dear Hillary,
I have been a loyal supporter of your particular column. I find your column very
rewarding in that it is sort of like group therapy for us Thailand stricken
folks. I find you very caring, loving, but mostly supportive of one and all who
write in with their trials and tribulations that are sincere and
straightforward. There are certainly so many varied experiences that us farangs
encounter when first arriving at the gates to heaven on earth. I do not want to
get into any long stories about my particular adventures in the wonderful land
of smiles, but suffice to say, they have all been earth shattering, and
downright addictive in nature. After many years of learning from my mistakes, I
now find myself engaged in a loving, caring, and real marriage to a bar girl. In
my eyes, and that’s the key; if we truly fall in love with another human being,
then we should be willing to ignore all the flack, and give all our hearts and
souls into that relationship, and embrace that individual’s culture and customs
and adapt! Simple as that! I think the key is learn from our mistakes! And make
the necessary adjustments if that is really what you want. MONEY! Money is for
here and now, so let’s enjoy all our adventures, good and bad, and try to make
this planet a better place for everyone, not just the chosen few. Thanks very
much for all your hard and entertaining work Ms. Hillary.
Jon
Dear Jon,
Thank you for all the nice words. It is always nice to think that someone
appreciates what goes into the column. You are also very caring and loving, and
have obviously developed a broader viewpoint of life, and as you say, “lets
enjoy all our adventures, good and bad, and try to make this planet a better
place for everyone, not just the chosen few.” I also like your philosophy on
love, especially putting hearts and souls into the relationship. Sure, you may
get burned on the way through, but it is never the end of the world. If you made
money once, you can make it again. If you loved once, you can love again. And
you are right, my Petal. Learn from your mistakes - in everything in life. Again
thank you. You made my world a better place today as well.
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
Star Wars: The Clone Wars: US Animation / Sci-Fi - A new
adventure in the “Star Wars” series, and here the usual excellent
storytelling is done with animation. We see our favorite characters,
such as Anakin Skywalker and Obi-Wan Kenobi, along some brand-new heroes
like Anakin’s learner, Ahsoka. And there are of course sinister villains
who are poised to rule the galaxy. Stakes are high, and the fate of the
“Star Wars” universe rests in the hands of the daring Jedi Knights. Some
voices provided by Samuel L. Jackson and Christopher Lee.
Disaster Movie: US Comedy - Follows the comic misadventures of a
group of ridiculously attractive twenty-somethings during one fateful
night as they try to make their way to safety while every known natural
disaster and catastrophic event - asteroids, twisters, earthquakes, the
works - hits the city and their path as they try to solve a series of
mysteries to end the rampant destruction. Most reviewers do not hold out
much hope for this movie.
Luang Pee Teng II: Thai Comedy - Monks meet misadventures, make
merit.
Eagle Eye: US Action/Mystery/Thriller - Shia LaBeouf and Michelle
Monaghan play two strangers thrown together by mysterious phone calls
from a woman they have never met. Threatening their lives and their
family, the phone calls push the two into a series of increasingly
dangerous situations. These two ordinary people become the country’s
most wanted fugitives, who must now work together to fight a faceless
enemy who seems to have limitless power to manipulate everything they
do.
Dive!: Japan Drama - Three young men try to turn their dreams of
Olympic gold into a reality in this sports drama from Japan. The Mizuki
Diving Club has enjoyed a reputation for transforming talented young
divers into world-class champions, but in recent years the club has had
a run of bad luck, and with few winning divers emerging from their
ranks, sponsorship is dwindling and unless things change the MDC could
go out of business.
Mamma Mia!: US/UK/Germany Comedy/ Musical/ Romance - Meryl Streep
plays Donna, an independent, single mother who owns a small hotel on an
idyllic Greek island, and who is about to let go of Sophie, the spirited
daughter she’s raised alone. Sophie, on a quest to find the identity of
her father to walk her down the aisle, invites to the wedding three men
from Donna’s past, all possibly her father. Contains much ABBA music
that is horrifyingly infectious. It’s an extraordinarily vivacious and
energetic musical that is bound and determined to make you sing and
dance and feel good about marriage and things like that. Mixed or
average reviews.
You Don’t Mess with the Zohan: US Action/Comedy - Starring Adam
Sandler. Zohan is an Israeli commando who fakes his own death in order
to pursue his dream: becoming a hairstylist in New York. It’s an Adam
Sandler comedy, and if you like his kind of low and crass comedy, you
should like this one very much. Here he plays the Israeli/Palestinian
conflict for laughs. I laughed. A lot. And cringed. A lot. Mixed or
average reviews.
Burn: Thai Thriller - All you ever wanted to know about “SHC” -
Spontaneous Human Combustion. As you certainly know, that’s the familiar
medical condition wherein a living human being suddenly bursts into
flames. Director Peter Manus comes up with a pretty far-fetched
explanation for this pretty far-fetched human malady. Slow and not
really too scary or gory; the film is more of a drama, and you’ll be
quite surprised at who the villain turns out to be. Some interesting
effects and moods.
Bangkok Dangerous: US Action/Drama - Directing twins Danny and
Oxide Pang return to remake their popular 1999 thriller about a ruthless
hitman (this time Nicolas Cage) who travels to Bangkok in order to carry
out four murders. During the course of his jobs, the triggerman falls in
love with a pretty local girl (Hong Kong actress and pop singer Charlie
Yeung in a quite affecting performance) while also forming a friendly
bond with his young errand boy (nicely played by Thai actor Shahkrit
Yamnarm). A fairly decent but predictable low-powered action flick, shot
in some interesting locations in Bangkok. For Nicolas Cage fans.
Boonchu 9: Thai Comedy - A continuation of this popular Thai
comedy series. The son of the original Boonchu is a happy monk who is
defrocked by his mother and sent to university in Bangkok. There he
meets up with questionable new friends who drug him and mug him. But it
all turns out all right eventually because this is a feel-good movie for
Thais from start to finish. It is the gentlest of comedies/family
dramas, with the sweetest of characters.
The Deaths of Ian Stone: US/UK Horror/Thriller - On an ordinary
night, the young Ian Stone encounters a mysterious creature and is
forced into the path of an oncoming train. Rather than facing certain
death, Ian finds himself reborn into a new life that feels strangely
familiar. It soon becomes apparent that Ian is being hunted by an evil
presence, and will be forced to die every day until he can solve the
mystery of his own life. Rated R in the US for violence, some drug
content, and brief language. Generally favorable reviews.
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