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Heart to Heart with Hillary
Let’s go to the movies
MBMG International Ltd.
Nominated for the Lorenzo Natali Prize
Many analysts have thought most assets have been overvalued
for quite a while now and that the politicians have had to keep interest rates
at virtually zero whilst pumping money into the economy as if there was no
tomorrow so as to keep their respective countries going.
Bill Gross of PIMCO is definitely in this camp. He believes most of the
developed countries, especially those in the western hemisphere, have been
“significantly and artificially influenced by asset price appreciation for
decades.” This is definitely the case in recent years when people have
refinanced assets and gone spending. Put another way, all the supposed growth we
have seen over the last decade has been done by borrowing and not the usual
method of increasing production. People have gone for the quick buck and tried
to make money via the markets and not the economic foundation that is in reality
their reason d’etre. These days people look for market growth and not the more
basic things like GDP growth or falling unemployment.
What does this mean? Well, the implication is that people feel good when the
markets are up and bad when they are down as this could be affecting their
pockets directly. They do not really mind if an economy is not doing well
providing any downturn does not cause them to lose money.
Now, in the good old days, the health of the stock markets and GDP went up and
down hand in hand. This is not the case now. The new economy which has come
about has seen an increase not only in share and stock prices but in all asset
classes. In many cases more than the economic growth is needed to justify these
rises. Let’s remember it is only less than fifteen years ago that the Dow Jones
was at 4,000. Last year it went over 14,000. Was the production there to justify
this? Obviously, the answer is a deafening NO. If one went with GDP growth as
opposed to market sentiment then the market should be less than 8,000 not over
10,000. As said before, this is not just applicable to equities but also most,
if not all, other asset classes.
If you look back to what has happened since the end of World Was II, you will
see that in the early years it was usually economic growth that led the way and
not increases in the price of assets. We got richer the old fashioned way - by
actually making things.
However, as Reagan and Thatcher came to power, things began to change. With
fancy finance and the use of things like derivatives and leverage assets started
to come to the fore. With the occasional blip, as in the beginning of the 1990s
and 2000s plus last year, put aside the rise in the price of assets has
definitely outstripped manufacturing. Put another way, over the last thirty
years, it would have been better to invest in the markets than it would have
been to put your money into anything that actually produced something or helped
better a child’s education.
Basically, thanks to finding it so easy to borrow, people were able to push up
the price of assets to over one hundred percent of what they should have been.
It is immediately apparent to what this implies. When the Dow Jones is at 14,000
then it should have been half that. It is presently around the 10,000 mark and
the real value should be 5,000. A house worth USD200,000 is actually worth
USD100,000. Commercial real estate should be for the de-leveraging chop as well.
Bonds (high yield and corporate) are not immune either as they were also
This is where the problem starts as those in charge realise that the value of
assets now has to be supported so as to make sure that the GDP results to come
are in positive territory. Unfortunately, the borrowing society that we have
created cannot go away overnight. Therefore we have to support the present
situation which is why we are going to have low interest rates and government
bailouts, in various forms, for the foreseeable future.
PIMCO has calculated that assets in the USA have been overvalued by USD15
trillion but still have to be supported to keep the economy’s head above water.
It is interesting to note that China is also throwing money at its economy but
they are creating more production outlets so that exports will continue to drive
its economy and try to increase its domestic markets at the same time. Luckily
for them, they do not need to maintain a false economy.
The most important thing for the US, though, is that interest rates are kept as
low as possible. Bill Gross believes that, “nominal GDP must show realistic
signs of stabilizing near 4% before the Fed would be willing to risk raising
rates. The current embedded cost of U.S. debt markets is close to 6% and nominal
GDP must grow within reach of that level if policymakers are to avoid continuing
debt deflation in corporate and household balance sheets.” If he is right then
we are going to have these low rates well into 2011 and the Fed will want to see
sustainability and reliability before starting to increase interest rates.
Getting risk spreads back to normal is vital for future growth. However, this
could cause unwanted volatility as without the governmental guarantees and low
interest rates investors would not spend money again. Practically zero rates
forces people to buy.
Is it important for rates to stay low or should the relevant governments let go
of the reins and let nature take over? The latter should have been done when the
present crisis began but it is too late for that now since, as mentioned before,
asset appreciation has been artificially elevated for decades. So as to prevent
prices falling these low interest rates must be maintained for quite some time
Bill Gross reckons a good way of looking at this is by studying the bond
markets. At the moment he believes the total bond market will yield no more than
3.5%. If anyone wants more than that then they will have to take more risk via
equities, distressed mortgages, etc., and hope we are in a V shaped recovery.
This is just not the case. The risks outweigh whatever the rewards may be.
To go with Gross, “Investors must recognize that if assets appreciate with
nominal GDP, a 4-5% return is about all they can expect even with abnormally low
policy rates. Rage, rage, against this conclusion if you wish, but the six-month
rally in risk assets - while still continuously supported by Fed and Treasury
policymakers - is likely at its pinnacle.”
Ever since the recession began and it became clear the authorities answer was
quantitative easing, the Bears have kept reminding us on such facts as continued
debt, massive public spending and rising unemployment. The markets have ignored
this and gone up for the last eight months. Recently though, some indications
have begun to appear which support these arguments. For example, the Vix Index,
which measures volatility in the major equity markets, has gotten worse.
Financial shares have also gone down when compared with the rest of the market.
As a senior economist said last week, “The bears are right and the rush to issue
paper, the higher oil prices and the continuation of contraction in bank
lending, have finally broken the markets’ back.”
Not all is doom and gloom though. Certain asset classes will fare better than
others and by having a liquid, multi-asset allocation portfolio you should
protect yourself against sudden losses and also beat the bank.
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
Art is all around you
Reclining Buddha in Ayuthaya.
Temple sunlight in Chiang Mai.
Orchid in macro by the late Ernie Kuehnelt.
Parasailor’s view in Jomtien.
I am a believer that photography is one of the many ‘art forms’ that we
practice. In the visual arts, everyone thinks of painting on canvas
first, but photography is in there too. In fact I would rate photography
far higher than ‘performance art’ where you slash your wrists in front
of an audience or dismember a cow in the name of vegetarianism, or carry
out certain quasi-medical maneuvers with a speculum like Annie Sprinkle
Now whilst a painter has an idea in his or her head and then laboriously
commits that idea to canvas, with art photography it is usually a very
different process. By the way, under the umbrella of ‘art photography’ I
am not including (for the sake of this exercise) sultry black and white
nude studies which sit astride the border between ‘art’ and ‘porn’. If
you cross your fingers it’s ‘art’, if you cross your legs it’s ‘porn’.
No, the final product in art photography should be one which makes the
viewing audience say, “What is that?” or “How did he get that?” In other
words, the final picture or image brings on a question. In that way, the
viewer will spend more time looking, and the image is now rapidly
However, to produce some ‘art’ with your camera does mean you have to
keep your eyes open and be ready to shoot when something catches those
open eyes! The vines in the first photo were in the car park at work and
were just begging to be taken.
The temple shot was taken in Chiang Mai, and the sunlight filtering
through the smoky atmosphere presented this photo opportunity.
The remarkable shot of a reclining Buddha was taken by amateur
photographer Gary Stubbs and as well as being one of the classic ‘frame
within a frame’ photos, it has the added feature of hiding the main
subject, stimulating the inquisitive nature of mankind.
The parasailing shot was taken in Jomtien, and instead of being the
usual shot of the parasailor from the beach, the photographer took a
camera up with him to get this very different shot from his holiday.
The final photo this week is this surreal image from the late Ernie
Kuehnelt. Taken while experimenting with a macro lens, the full
possibilities of these very different images came to him, and this is
Try something different this weekend. You might just produce your own
work of photo art.
by Dr. Iain Corness, Consultant
Living Wills - have you made yours?
There was a small paragraph in one of the Bangkok English
language daily papers reporting on the fact that Living Wills were now
accepted as being legal in Thailand. I cheered as I read it. It was ‘about
time’, in my opinion.
However, there is confusion in the minds of many people as to what a “Living
Will” actually is and what it covers. Borrowing from the Mayo Clinic in the
US, it states on their website: “This written, legal document spells out the
types of medical treatments and life-sustaining measures you do and don’t
want, such as mechanical breathing (respiration and ventilation), tube
feeding or resuscitation. In some states, living wills may be called health
care declarations or health care directives.”
The important words to note are “life sustaining” and “resuscitation”.
Neither of these concepts imply medically assisted suicide, or euthanasia.
Once again from the Mayo Clinic, “Injury, illness and death aren’t easy
subjects to talk about, but by planning ahead you can ensure that you
receive the type of medical care you want, to take the burden off your
family of trying to guess at what you’d want done.”
Remember that we are talking about terminal situations here. Not situations
from which it would be reasonably expected that you will recover and still
have a good quality of life. A fractured hip when you are 90 is a serious
situation, but provided you are healthy otherwise, then it would be expected
that you would recover. You might need a stick for a while, but you would
still be able to have a beer with your mates or play Scrabble or whatever
your pursuits were before the incident. In other words, the expectancy of a
reasonable quality of life is there.
However, if you are in the terminal phase of metastatic cancer, which has
progressed despite treatment, the future quality of life is not there.
Artificially prolonging life under that situation is then covered by the
As an example, the following is a copy of my own Living Will. Again I ask
you to note the following:
The Living Will is made while in sound mind. It is not something you
scribble out while lying in God’s waiting room.
An example of a Living Will. “Being of sound mind and understanding all the
implications, I ask that this document be brought to the attention of any
medical facility in whose care I happen to be, and to any person who may
become responsible for my affairs.
“This is my ‘Living Will’ stating my wishes in that my life should not be
artificially prolonged, if this sacrifices my Quality of Life.
“If, for any reason, I am diagnosed as being in a terminal condition, I wish
that my treatment be designed to keep me comfortable and to relieve pain,
and allow me to die as naturally as possible, with as much dignity as can be
maintained under the circumstances.
“As well as the situation in which I have been diagnosed as being in a
terminal condition, these instructions will apply to situations of
permanently unconscious states and irreversible brain damage.
“In the case of a life-threatening condition, in which I am unconscious or
otherwise unable to express my wishes, I hereby advise that I do not want to
be kept alive on a life support system, and I do not want resuscitation, nor
do I authorize, or give my consent to procedures being carried out which
would compromise any Quality of Life that I might expect in the future.
“I ask that you are sensitive to and respectful of my wishes; and use the
most appropriate measures that are consistent with my choices and encompass
alleviation of pain and other physical symptoms; without attempting to
“Being of sound mind at the time of making this declaration, I ask that you
will follow my wishes. It is my conviction that Quality of Life must be the
main consideration for all decisions, not length of life.
“In witness hereof, I have signed this document, which has also been signed
by witnesses, who have read and understand my wishes.”
Heart to Heart with Hillary
Happy New Year, Sawasdee pee mai. I have been away from your column for a while
but you’re still as sassy (in a good way) as always, your wit is as sharp as
ever too. Sometimes I don’t think you’re a woman, you’re way too practical. Keep
up your good works and keep these handsome men (that’s what they want to hear)
honest. If I ever happen to be in Pattaya, I will definitely stop by to see you
with a box of chocolate.
Your fan from USA
Dear My fan from USA,
Aren’t you the sweetest one! Flattery will get you everywhere (as always) and
chocolates will get you even further. You did not mention the French champagne,
which was obviously an oversight on your part, but now I’ve reminded you, you
will remember, won’t you, my Petal. (Although I have this preference for French
bubbles, in today’s desperate world, even Napa Valley bubbles are acceptable!) I
hope you have a wonderful year, and don’t worry about the handsome men, they
will still be responding to “Hello handsome man, come in, sit down please (and
give me your wallet)!”
I’ve always take interest in your comment’s re poor spelling and in a recent
issue, a letter was published in ‘Mailbag’ from myself containing the word
‘prostate’ (a male organ) which should have read ‘prostrate’ (lying flat),
possibly because of my often illegible printing or longhand, (I’m now into
computer writing but am dreadfully slow). Whatever the reason for the mistake
“of no matter some will say”, but the enclosed cartoon of mine was published
many years ago using an incorrect spelling thrice (my mistake) and is still an
embarrassment to this very day.
‘Inexplicably’ this particular publication subsequently published little of my
work, which may illustrate another way how poor spelling can be disadvantageous
and supports your view’s, which is why I have addressed my letter and said
cartoon to yourself should you wish to use or find room for it in your column?
‘Check and recheck’ I must reintroduce.
What a tale of woe, but thank you for the mis-spelled cartoon, which I have
printed with your self-flagellating letter, so the embarrassment can continue to
this very day. (Mind you, Dorian, it shows you were into this global warming
malarkey long before Al Gore, so you were a bit of a trendsetter.) But these
days you are a little martyr, aren’t you!
I really must encourage you to use the computer to write your letters, as all
the usual programs will automatically check the spelling for you. This way you
could ‘detach’ yourself from the excruciating embarrassment.
However, these programs would not pick up your random use of the apostrophe.
“Comments”, not “comment’s” and “views” not “view’s”. When you throw an
apostrophe and then an S after it means “belonging to” and you did not mean
“belonging to the comment”, or “belonging to the view” did you Petal.
My Thai boy friend is driving me slowly crazy with his giving in to his family
at all times, and now we are an item, the demands are coming on hot and strong.
Anything they could even possibly want, he will give them, even if it is
personal items of jewelry that I have given him. These items get changed into
folding money, I am sure. They want money and he has any, he will dish it out -
only problem is that it is my money that he is doling out, not his. And it’s not
just a few hundred baht here and there, it’s by the few thousand here and there.
I believe that it is the custom in Thailand that children look after their
parents, as a matter of duty. I did not know that this covers a grasping
avariciousness by the family towards the children. Is this the norm for this
country? It seems that the family condones this behavior, and even encourages
it. If it is, I think I will make some other country my next port of call.
Duty to one’s parents is a well documented part of Thai culture, but how that is
applied is not clearly stated. You are obviously worrying because your finances
are part of all this, so you should perhaps consider that you have a duty to
your bank account, and not to your boyfriend’s parents. However, once you give
something to your boyfriend, it is his decision as to what he does with it. It
is also your prerogative to ignore the begging from your boyfriend, no matter
what the reason for the asked for hand-out. There are many families in Thailand
that are not so avaricious. In all countries there are cultural differences, you
have come across one extreme in this country. There are others in Thailand not
so extreme. The choice is always yours. I think you should seriously review this
relationship. From what you are saying, it all seems a little one-sided to me.
Detatched or Detached?
Let’s go to the movies:
by Mark Gernpy
Now playing in
The Road: US, Adventure/
Drama/ Thriller – A thriller set in a bare, post-apocalyptic America,
where a father and son struggle to survive by any means possible. Plant
and animal life have been wiped out, save for anyone who has managed to
survive. The lack of wildlife makes their struggle to survive much more
difficult since there’s nothing to hunt, eat, or harvest for food, so
they are forced to scavenge for other food sources.
After the Oscar-winning success of
the adaptation of the Cormac McCarthy novel No Country for Old Men,
another of the author’s works arrives on screen. The film’s commitment
to McCarthy’s dark vision may prove too unyielding for some, but the
film benefits from hauntingly powerful performances from Viggo Mortensen
and the boy, Kodi Smit-McPhee. Generally favorable reviews. At Pattaya
Cloudy with a Chance of
Meatballs: US, Animation/ Family – I know it sounds crazy, but I’ve
seen it and it’s quite enjoyable! It has quirky humor, likeable
characters, and solid slapstick. Generally favorable reviews.
The Spy Next Door: US,
Action/ Comedy/ Family – With Jackie Chan. A former CIA spy looks after
his girlfriend’s three kids, but one of them accidentally downloads a
top-secret formula, leading to a run-in with a Russian terrorist.
Generally unfavorable reviews, the consensus being that it lacks a
script funny enough to cover up for Jackie’s fading physical gifts.
Best Supporting Actor /
Yak-Dai-Yin-Wa-Rak-Kan: Thai, Drama/ Romance – Romantic comedy-drama
about two childhood friends, one of whom was always in the shadow of his
better-looking, more-popular friend. And when they grow into adults,
nothing changes. A minor variation on the standard Thai rom/com,
exploiting the inscrutable mysteries of the Thai courtship rituals.
Kru Bann Nok / To Sir With Love:
Thai, Comedy/ Drama – The life of a volunteer teacher determined to
teach children in the Isaan backcountry. This is a remake which
director Surasee Patham has made of his own classic 1978 social drama
Kru Bannok (The Rural Teacher). He was never satisfied with it.
It’s the same story: An idealistic new teacher comes to an impoverished
rural schoolhouse in 1970s Isaan. There, he runs afoul of the local
powers-that-be for being so daring as to try and educate the country
kids. Viewers report that contrary to what’s advertised, there are no
English subtitles. There are, however, Central Thai subtitles, as the
film is in an Isaan dialect unfamiliar to most Thais. In fact, the film
is homage to Isaan life: most of the cast are from Isaan, as is the
director. No relationship to the 1967 Sidney Poitier film, or at least
not without an impossibly long stretch.
Bodyguards and Assassins:
China, Action/ Drama/ History – Dr. Sun Yat-sen, the “father of modern
China,” came to the British colony of Hong Kong at the beginning of the
20th Century for just one morning to meet a dozen revolutionaries from
all over China to plan a major insurgence to overthrow the Qing imperial
dynasty and form the first republic in China. Waiting for him was an
army of assassins deployed from the imperial palace. He needed an hour
with the fellow revolutionaries, and that hour was critical because it
would lay a foundation for a successful revolution. In order to provide
him with the best possible chance of success, the local revolutionaries
set up a decoy with a double going all over town, including visiting his
A meticulously-crafted historical
movie with careful attention to detail. The first 80 minutes set up the
story and establish the characters; the last hour is all gut-spilling
action, featuring an all-star Chinese cast including Donnie Yen, Leon
Lai, and Nicholas Tse. Shown here only in a Thai-dubbed version with no
32 Tan-Wah: Thai, Comedy/
Romance – Tops at the Thai boxoffice, even trouncing Avatar!
It’s yet another Thai “rom/com,” this one taking place on the 32nd of
December. A young man with amnesia has forgotten which of his three
girlfriends he truly loves.
Avatar: US, Action/
Adventure/ Sci-Fi/ Thriller – From director James Cameron, a major
achievement in storytelling, and a technological breakthrough. It’s
about a band of humans pitted in battle against a distant planet’s
indigenous population, and weaves many myths into the story’s fabric.
This is a film of universal appeal that just about everyone who ever
goes to the movies will want to see. In Pattaya, Major Cineplex and
Pattaya Beach have a 2D version, which is in English and Na’vi dialog,
with English and Thai subtitles as needed. Big C has a Thai-dubbed 2D
version, no English subtitles. The only Cineplex to show it in 3D is
Pattaya Beach, and unaccountably the 3D version does not have English
subtitles for the Na’vi language, only Thai, while the 2D version has
English subtitles in a special font and style. Not to have them is a
big mistake. Best choice is to see it in IMAX in Bangkok; the bigger
the screen, the better.
Reviews: Universal acclaim. Highly
recommended; not to be missed.
Sherlock Holmes: US/ UK/
Australia, Action/ Crime/ Thriller – A new take on the Holmes canon.
Once you get over the shock of seeing Sherlock played as an action
figure, it isn’t all that bad. A bit of the old Holmes shows through.
Robert Downey Jr. plays Holmes and Jude Law his stalwart partner
Watson. There are a lot of chases through London, the dirt and squalor
of which is beautifully recreated, and a lot of fighting, and just a bit
of ratiocination. All in all, an enjoyable action flick. Purists
however will not be amused. Mixed or average reviews.
The Storm Warriors: Hong
Kong, Action/ Fantasy – A martial arts film by the twins Oxide Pang Chun
and Danny Pang. Shot entirely in three studios in Bangkok, and really a
special effects movie, such as an army of flying creatures that reminded
me of the flying monkeys in The Wizard of Oz; they’re defeated by
being first changed into what looks like obsidian, and then smashed into
slivers. Very effective. As is the terrific makeup. So, the style is
truly great; the substance questionable. Presented in a Thai-dubbed
version only, with no English subtitles, at Big C only. I loved the
visuals, and the fantasy.
Se-Sing Confirm: Thai,
Action/ Comedy – An unusual foursome teams up to probe into a children’s
kidnapping gang with plans to break the gang and save their kidnapped
friends. Really, it seems to me from the previews to be an outlandishly
violent film. At Major only.
Bang-Ern Rak Mai Sin Sood / As
It Happens: Thai, Drama/ Romance – A romantic comedy about a young
man and woman who keep running into each other in various far-off places
around the world. Likely without English subtitles.
Did You Hear About the Morgans?:
US, Comedy/ Drama/ Romance – Hugh Grant and Sarah Jessica Parker play an
estranged New York couple whisked into the witness protection program
and sent to Wyoming. Nothing much happens. Generally unfavorable
reviews. At Pattaya Beach only.
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