|
Money matters:
Graham Macdonald MBMG International Ltd.
It’s the End of the World as We Know It
The above R.E.M. title implies chaos and
confusion. However, one thing that is steady in this present world of
instability is the US dollar and it is getting stronger. Despite the fact that
it should not be, people have shown faith in the Greenback when all else looks
to have failed.
It is meant to show the strength of the US Government and its policies. How ill
conceived this is. Despite the claims of prominent political economists such as
Professor Ngaire Woods who says that, “For the American government there is
simply no such thing as living beyond its means. With the rest of the world
demanding dollars, all the US has to do is to keep printing them,” many analysts
now think that the present crisis could be the pinnacle for the US dollar and
lead to its long term demise.
It must be remembered that until recently this is what was happening anyway. “I
think today’s financial crisis is going to hasten the end of the dollar as the
world’s reserve currency,” says Avinash Persaud, chairman of Intelligence
Capital Limited. “For the first time ever we’re now seeing that in the financial
markets it costs money to guarantee you against a US government default.”
The argument for this is that it is backed up by, as John Cleese so aptly puts
it, “the bleedin’ obvious”. The combined cost of wars in Iraq and Afghanistan as
well as funding American armies, navies and air forces all over the world is
getting to be more than a tad expensive. Add to this the current bailout at home
and it can be seen as the feather that breaks the camel’s back.
This could be something that the US does not like but will have to come to terms
with as it would basically mean that it will lose its reserve currency status.
Put another way, it is like writing a cheque that nobody bothers to cash. If all
the other countries on God’s earth want US dollars then America will keep on
printing them. This gives the US a massive advantage; one that led to a
statement of pure (but truthful) arrogance from John Connolly, the ex-US
Treasury Secretary who said the US dollar was “our currency but your problem”.
Over the last decade Europe has had its own currency and quite well it has done
too - until recently. However, it has definitely become a lot stronger than many
predicted it would and has certainly taken on the US dollar and hit it where it
hurts. As reported recently, it even got to the stage where supermodels were
asking to be paid in euros - even when they did appearances in America.
Despite all of the overall positives of the euro, there is too much
diversification and political disagreement for the euro to take over as the
world’s new reserve currency. Many people realize this and that is why there has
been a flight back to the old US dollar and not the new euro.
Also, with non-alignment of European fiscal policy, many leaders in Europe do
not want the euro to become the new reserve currency. As David Marsh, who has
just finished a book on the euro says, “Europe has a much less vast set of
ambitions than America has ever had.” By adopting the euro, Marsh continues, it
showed nothing more than a “flight into a lack of ambition”.
So, if not the euro, is there anything else that might take over the baton? What
about China? At the moment, it probably will not as it does not have the
capability via open markets or internationally competent banks and institutions
to cope with this.
However, as Persaud points out, neither did the US have these in 1908. In fact,
it did not even have a central bank a year before World War I started. However,
within a generation, the debt acquired during the war to end all wars marking
the close of the so called imperial century (1815-1914) saw an incredibly sudden
and dramatic change in fortunes.
The gold standard, under which one pound was worth US$4.85, was suspended at the
outbreak of the war, with Bank of England and treasury notes becoming legal
tender. Prior to this, the United Kingdom had one of the world’s strongest
economies, holding 40% of the world’s overseas investments. By the end of the
war the country was £850 million in debt, mostly to the United States, with
interest costing the country some 40% of all government spending.
In an attempt to resume stability, a variation on the gold standard was
reintroduced in 1925, under which the currency was fixed to gold at its pre-war
peg, although people were only able to exchange their currency for gold bullion,
rather than for coins. This flew in the face of the new economic reality and had
to be abandoned during the Great Depression.
Sterling suffered an initial devaluation of some 25% and only recovered slightly
to $4.03 by 1940. However, there was no little doubt that in a twenty-five year
period the US dollar had taken over from sterling as the world’s strongest
currency and this was confirmed by a further 30% devaluation in sterling in
1949.
Since that point, sterling has never since traded above $4 to the pound. Nor has
it ever looked likely to do so again until this level was contemplated as being
one of the more extreme plausible outcomes to the current crisis at MBMG’s June
2008 investment seminar.
The modern world contains a great many imponderables and innumerable
opportunities for the law of unforeseen consequences to take hold. The
irrefutable rise in the economic and political power of China is one of these -
China has over USD1 trillion worth of US$ denominated assets thanks to its
massive export growth over the last fifteen years plus. This gives the Chinese a
lot clout because if it chose to move its money in one go then the US economy
would be rudderless, paddleless and up that well known creek.
One the other hand, China is sensitive to preserving the value of its US assets
and the outcome of this cross between a Mexican stand-off and a global financial
game of chicken is entirely unpredictable - as one former US Secretary put it so
succinctly this is the “balance of financial terror”.
The well regarded political analyst, Barry Eichengreen, has likened it to the
nuclear deterrent employed by the superpowers during the Cold War, “We hope that
everybody becomes respectful of the financial power of the other side, but that
such destructive power won’t be deployed.” The difference, to our mind, is that
China was never a nuclear power. Chinese history provides many examples of
voluntarily enduring great pain to achieve small relative gains - pain is
bearable as long as your enemy suffers more of it.
In this new millennium it’s not just China pointing the loaded gun - Emerging
Market Economies own so many US dollars that America probably cannot afford to
annoy them either. The Gulf Markets now price oil in ‘petro-dollars’. Europe
doesn’t know what to price anything in.
The new president and his administration will be divided on what to do. Everyone
outside of the US may well want a strong US dollar but not everyone within
America will want this - especially the exporters. One of the reasons that a
weak US dollar has not really bothered the Bush administration is that it has
helped US exports. The head of Global Economic Research at Goldman Sachs, Jim
O’Neill, reckons that, “We are emerging into is this very hazy and slightly
worrying state of affairs where there isn’t going to be any single country
leading the world in the way the US has done and with it no single currency
either.”
If these newly acquired wealthy nations do not like what is happening to the
American dollar then they may look for other ideas or places to put their money.
The only question is “Where?”
As the global balance of power changes from the west to the east, everyone knows
that the USD cannot maintain its present standing. For now it is the currency of
choice because there is no alternative. When one materializes, then watch out
for a massive flow out of the currency and into the new kid on the block.
Put it another way, the US dollar is no longer America’s currency and everyone
else’s problem, it is now the world’s currency and a bigger problem for the US
than anywhere else. At the moment bluster, smoke and mirrors can keep it in
suspended animation. An opportunity for China to replace the US as the leading
global economy could be the catalyst that sees this taken away and the
reverberations will be felt everywhere of the final shattering of the dollar
into thousands of tiny shards of an economic empire that burned brightly but
endured oh too briefly.
The problems facing other economies, in the short term, are in many cases as
severe and maybe even more severe than those facing the US and a relief rally in
equity markets lasting until Q1 or Q2 next year may provide additional support
for the dollar. But at anywhere below $800 per ounce, gold is the best insurance
policy any portfolio can hold until the currency picture settles down and the
long term decline of the dollar and rise of the East becomes ever more apparent.
|
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
|
Snap Shots: by Harry Flashman
Bracketing for beginners
Last week I mentioned “bracketing”. Read any good photographic book and
you will read the word “bracketing”. With modern cameras being so good,
almost intuitive if you read the publicity blurb (hint: don’t read the
blurb, but do read the manual), then why should bracketing still be
necessary?
First off, let’s define bracketing. This is taking the same subject
three times with three different settings. Basically, more light than
you imagine is needed, the correct amount of light, and finally, less
light than you imagine.
Now I do not really care how you gauge the “correct” setting, whether
you get it from the camera’s built-in light meter, or from a hand held
light meter, or even if you used the photojournalist’s f 8 and be there,
the important factor is just that you do have a ‘starting point’ to work
from.
I am also aware that most cameras these days do have a good metering
system, taking readings from various points in the viewfinder and
working out a good average, but you must remember that all the camera
can do is give you a ‘good average’. This does not mean that it is the
‘best’ exposure.
There is much in the literature too about how good digital cameras are
in problematical light situations. Surely the digital range is enough to
get you out of trouble, under any situation? Simple answer is, No. If
you are looking for a really good final image, you have to give the
camera as close as you can to the ideal exposure for that picture. There
are limits in how far you can go away from the ideal.
What I am preaching here is that you should always try for excellence in
your photographs. Do not think that if there is not enough light, then
you can fix it all with Photoshop or other fancy computer technology.
You can’t. It will end up as a trade-off between detail, brightness and
contrast. And nothing beats correct exposure in the first place.
So we return to bracketing, one of the oldest methods of getting a
properly exposed print, and still significant in the digital age. As
stated above, you have to have a starting point, and what you have to do
is to decide just what is the main element in the photograph you wish to
take. Is it the person, or is it the countryside, or is it the building,
or sunflowers such as the photographs with this week’s column? Having
decided on the main element try and get a light meter reading from it.
Even walk up close so that the main element fills the viewing screen and
get your initial light meter reading exposure values. This is the
starting point, so set your camera to the values indicated. Such and
such f stop at so and so shutter speed. If you have metered correctly,
then you will get an image that is close to perfect. But only “close”.
To get that perfect exposure, now you bracket.
The easy way is to take two more shots, one set at half a stop “under”
exposed and the other at half a stop “over” exposed. Now you can do this
easiest by changing the f stop (aperture) by half a stop, as most lenses
have the half stop increments, while the camera has full stops with the
shutter speeds.
The three shots shown here were bracketed with the half an f stop
increments, as it is always very difficult to estimate bright exposures.
As you can see, the one in the first is probably best, though the
brightest one is also acceptable. The dark one is throw away value only!
Nest time you are trying something just a little tricky - remember to
bracket the exposure!
Modern Medicine:
by Dr. Iain Corness, Consultant
Christmas Disease - Too much plum pudding?
I know Christmas was a few days ago, and I hope none of you
found out you were suffering from Christmas Disease - which has nothing to
do with Santa or your melted credit card, but everything to do with Stephen.
Stephen Christmas, that is. Stephen, a young British lad, was the first
patient with a bleeding tendency recognized to have a different form from
“classical” haemophilia (or hemophilia if you come from the left hand side
of the Atlantic Ocean). I have mentioned Christmas Disease before, but being
that time of year again, it is worth repeating myself.
His condition was studied by researchers Biggs, Douglas, and Macfarlane 55
years ago, who discovered that young Stephen was missing a different
coagulation factor than the more usual one (which is known as Factor VIII).
They named Stephen’s missing factor as Factor IX, and his condition later
became known as Christmas Disease.
Just to confuse the issue, we also call Christmas Disease by other names,
including Factor IX deficiency, hemophilia II, hemophilia B, hemophiloid
state C, hereditary plasma thromboplastin component deficiency, plasma
thromboplastin component deficiency, and plasma thromboplastin factor-B
deficiency. There’s probably more, but Christmas Disease has a much nicer
“ring” to it. (Probably “Jingle Bells” at this time of year!)
From the diagnostic viewpoint, it is very difficult to differentiate between
classical hemophilia and Christmas Disease (my editor does come from the
left hand side of the Atlantic, so I will use ‘hemophilia’ to humor him).
The symptoms are the same, with excessive bleeding seen by recurrent
nosebleeds, bruising, spontaneous bleeding, bleeding into joints and
associated pain and swelling, gastrointestinal tract and urinary tract
hemorrhage producing blood in the urine or stool, prolonged bleeding from
cuts, tooth extraction, and surgery and excessive bleeding following
circumcision. (Why we have to chop bits off ourselves I do not know - I am
quite sure any rational person would not like it, given the choice. Why stop
with the prepuce? May as well lop the odd ear off as well. And please don’t
write in, I am aware of the religious belief.)
Christmas Disease covers around one in seven cases of the total hemophilia
incidence and is around 1/30,000 in the general population. This disease is
also male dominated, being called a sex-linked recessive trait passed on by
female carriers. This means the bleeding disorder is carried on the X
chromosome. Males being of XY make-up will have the disease if the X they
inherit has the gene. Females, who have XX chromosomes, are only carriers if
either X has the bleeding gene.
Hemophilia has been noted in history for many years, and Jewish texts of the
second century A.D. refer to boys who bled to death after circumcision (not
an ideal way to go - see my remarks above), and the Arab physician Albucasis
(1013-1106) also described males in one family dying after minor injuries.
In more recent history, Queen Victoria of Britain’s son Leopold had
hemophilia, and two of her daughters, Alice and Beatrice, were carriers of
the gene. Through them, hemophilia was passed on to the royal families in
Spain and Russia, including Tsar Nicholas II’s only son Alekei.
Initially the medical profession thought that the bleeding tendency was
caused by a structural defect in the blood vessels, but in 1937, a substance
was found that could produce clotting in the blood of hemophiliacs. This was
called AHG, or ‘anti-hemophilic globulin’.
However, in 1944 researchers found a remarkable case where blood from two
different hemophiliacs was mixed, both were able to clot. Nobody could
explain this until 1952, until the researchers in England working with
Stephen Christmas documented there were two types of hemophilia. They called
his version Christmas disease. So it became obvious that there were two
factors at work and when the different bloods were mixed, they supplied for
each other, the missing AHG’s.
The actual names were assigned to these AHG’s by an international committee
in 1962. Factor VIII deficiency became known as Hemophilia A, and Factor IX
deficiency as Hemophilia B or Christmas Disease.
I hope you had a Merry Christmas and a Happy New Year to you all.
Dr. Iain.
 Heart to Heart with Hillary
Dear Hillary,
Thank you for the nice reply you gave to the Chemical Engineer, and as you say
if he would like to take a holiday here in Chiang Mai I would be delighted to
take him to my temple in Lamphun Province. There he could meet and talk to Khru
Bah Noi who loves taking people around his “Petrodiesel” plant.
Khru Bah Noi said with a further one million baht added to his project he could
produce petrol and LPG at the plant.
The Chemical Engineer could also visit the small service station that is set up
near the Village of Ban Jambon where the Bio Diesel that is also produced from
the plant is sold.
If the chemical engineer looks up “Petrodiesel” on Google, and another site
“Petrol from Plastic” he can get answers to his questions, but as a Chemical
Engineer he probably knows the answers already!
If I don’t write before Christmas or the New Year, all the very best to you
Hillary and all the staff at the Pattaya and Chiang Mai Mail. Thanks for a great
column and publishing my letters. Oh! And I haven’t fallen off my motorcycle for
a few months now!
Delboy
Dear Delboy,
I do hope the chap who signed himself off as the Chemical Engineer takes you up
on your offer to visit you and Khru Bah Noi up there in the north. I’d come up
myself, but I’m too scared to fly and too old these days to be riding sidesaddle
on your motorbike. (You aren’t allowed to carry petro-diesel on planes anyway!)
However, it sounds to me as if it is people like your young monk who will save
the planet. Happy New Year to you too, Petal.
Dear Hillary,
I have a Thai wife now, not a Thai girlfriend. No Mike, your wife does not need
to be a UK resident as you have paid your taxes. Now go to UK gov.com and get
Dependants form BF 225, fill it in and send it away.
Archie
Dear Archie,
Thank you for stimulating so much debate about the UK pensions and increasing
the traffic through my pigeonhole, even though it was a little different from
the usual broken hearted ex-boyfriend of go-go dancer number 88. Or number 27,
or number 123. I wonder if they are actually learning out there in
broken-heartland? Or is it the ‘lemmings’ over the cliff again? They will learn
eventually, other than Mistersingha of course, who seems incapable of learning
anything.
Dear Hillary,
Lots of long faces everywhere, but not mine. I think many people talk themselves
into feeling down, but I read you every week and I always get a smile, reading
about how these guys end up in the same sort of trouble every week. How do you
keep a straight face some days, Hillary? Have a great Christmas and New Year.
I’m stuck in the US this year, but I’ll be over later in 2009 and I’ll bring
some bubbles and bon-bons with me. All the best.
Chuck
Dear Chuck,
Thank you, my Petal, for being a regular reader, and I shall await the promised
bubbles and baubles. As you say, there are plenty of long faces around, but by
staying positive you have a much greater chance of finding the way through the
financial mess. By the way, don’t worry about chilling the wine, the fridge in
my office works well, but keep the bon-bons in a cool place!
Dear Hillary,
I never thought I would have this problem, but I’ve certainly got it now. I have
met a right stunner. She is really super and works in an office near mine, in
the same building in fact, so I see here every day. I’m not the sort to rush in,
I have done the homework and she’s not married or attached or anything like
that, but here’s the problem. The girls in my office who have done the detective
work tell me that she doesn’t speak English. I really want to get close to this
woman, but I haven’t got enough Thai to be able to chat her up or anything.
What’s my next step, Hillary?
Tongue Tied Ted
Dear Tongue Tied Ted,
What a dilemma! After hours of surveillance, and some none too subtle
investigations, here you are, hormones raging at the thought of this nice young
woman and you don’t know how to pop the question. Or any question, for that
matter. You have just discovered a simple and inescapable fact, my tongue tied
Petal. The country the woman lives and works in is called Thailand. That’s not
tongue tie-land, either. This is her country, and the language she speaks gets
her everywhere, and everything. There is a lesson for you here. If you want to
have a relationship with this Thai lady, then go and learn some basic Thai. Then
go and try it out on her. If she thinks you are a nice chap, she will even help
you with the pronunciations. However, if she doesn’t respond, then you have to
accept the fact that you didn’t make her hormones explode, the way she made
yours. Best of luck with the language course.
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
Australia: Australia Drama/ Adventure – Hopes are
riding high on this film, at $130 million the most expensive ever made
in Australia – for the studio, for Australian tourism, and for director
Baz Luhrmann in his first feature film since 2001’s Moulin Rouge.
Turns out it’s a grand and sweeping epic adventure set in northern
Australia just at the beginning of World War II. An English aristocrat
(Nicole Kidman) inherits a sizable cattle ranch “down under.” When
English cattle barons plot to take her land, she reluctantly joins
forces with a rough-hewn drover (Hugh Jackman) to drive 2,000 head of
cattle across hundreds of miles of the country’s most unforgiving land,
only to face the bombing of Darwin, Australia, by the Japanese forces
that had attacked Pearl Harbor only months earlier.
There’s much to take issue with in terms of its simplified
interpretation of history, particularly Australia’s relationship with
its Aborigines, and the tale is full of clichés – but I would guess most
of the audience here has never heard them before, so how can they really
be clichés?
It’s being shown here in a re-edited version with a happy ending, after
negative audience reaction to the Jackman’s character’s death in the
original cut. In true epic style, the film is 165 minutes long, so make
yourselves comfortable for the ride. Mixed or average reviews.
Bedtime Stories – Adam Sandler in a family comedy about a hotel
handyman whose life changes when the lavish bedtime stories he tells his
niece and nephew start to magically come true.
4 Romance: Thai Romance/ Drama – Four love stories directed by four
leading Thai filmmakers. Each story offers unique angles of love from
different perspective and storytelling style: comedy, drama, action, and
musical. Discover the answer and the meaning of love in 4 Romance.
Madagascar: US Animation/ Family – A delightful animated film, which
I thought quite cute.
Super Hap: Thai Comedy/ Musical – As Korean fever is now the trend
in Thailand, two young Thai guys are put together to form a Korean style
boy band, hoping to make a big break in the music industry. One doesn’t
look the part, but has a good voice; the other has the looks, but a
terrible voice.
Happy Birthday: Thai Drama/ Romance – Starring Ananda Everingham. A
weepy love story, and almost incomprehensible to anyone without a deep
intuitive understanding of Thai customs and social behavior. For most
of us the courting behavior is an unfathomable mystery, and quite
foreign. Ananda is a travel photographer who travels around Thailand
with his guide/girlfriend, until she has a car accident and ends up in a
hospital in a coma, while Ananda waits endlessly at her bedside for her
to wake up. Maddeningly tedious to most farangs, I’m afraid, though the
Thais I was with seemed to enjoy the first half a good deal. Beautiful
location photography.
The Day the Earth Stood Still: US Drama/ Sci-Fi/ Thriller – Other
than the child, I enjoyed this! If you like sci-fi thrillers, you
should too, except for the child. Of course, you have to be willing to
accept a lot of the “aliens invade Earth” conventions. I did, and found
it a lot of fun. Except for the child, who simply spoils every scene
he’s in – and he’s in it a lot. Seems to me he’s a sterling example of
why you shouldn’t adopt stray kids. However, the bright side of it is
he’s apparently a thoroughly spoiled brat of an actor who very likely
will take to drugs and self-destruct soon, saving us from having to see
him again. (But none too soon – would you believe, he’s now been given
the role of the Karate Kid in the upcoming sequel?) As for Keanu
Reeves, he’s perfect for the part of the alien! Absolutely perfect,
because he really is an alien himself! I think all of us have always
known that. Mixed or average reviews.
Transporter 3: France Action/ Crime – It’s an action movie all right
– a lot of explosions, car crashes, and men being violent and
assertive. All quite brilliantly done, and seasoned with just the
slightest bit of plot and humor. If that’s what you like, this is for
you. It stars Jason Statham as a former British Special Forces soldier
turned mercenary, whose specialty is delivering risky items in a timely
fashion. Mixed or average reviews.
Ong-Bak 2: Thai Action/ Adventure – With Tony Jaa, who also
directed. Quite dark, and exceptionally violent. Not for children!
But it’s extraordinary in many respects, and approaches almost every
aspect of an action film in a new way. And it seems a terribly personal
film for Tony Jaa, in which he seems to be exorcising inner demons. A
fascinating attempt, and quite exciting.
Beverly Hills Chihuahua: US Family – Well done Disney talking-animal
comedy, with parts a lot of fun. Mixed or average reviews.
|
