Thursday, July 28, 2005


Just to take our minds off more serious concerns for once, I thought I might point out something I have noticed that other people might or might not be able to confirm from their own experience. I have noticed that people whom Australians would call "drongoes" (foolish and stupid people) are very prone to wearing woollen hats -- beanies etc. Australians very rarely wear hats of any sort even when they should (given our high incidence of skin cancer) so people wearing warm head-coverings do tend to stand out. And from listening to such people and observing them for many years I am much struck by the low-grade intelligence that seems to prevail among such wearers. No doubt that would not apply in really cold countries such as Russia where furry hats significantly enhance survival but Australia is a generally warm country where few people feel the need for top-deck insulation. So when I see a beanie-clad head in the streets, I immediately identify the person concerned as one best kept away from: as someone with a probably significant tendency to crime and violence. Having been for some years a boarding-house proprietor in a down-market suburb, I am well aware of the fact that crime and violence is a common way for drongoes to cope with life.

So why the association between social pathology and a desire to keep the head warm? I think it is no mystery at all. The brain uses up about 20% of the body's energy. It is a huge consumer of calories in relation to its mass. So the head is normally the last part of the body that feels cold. Having the brain inside the head working is like having a radiator inside it. And as far as I am aware, active brains use up more calories than less active ones. So the people with the relatively inert brains put out less heat from the head and thus feel the cold in their heads more than others do. So an unusual need for warm head-coverings suggests an unusually inactive brain. That's my theory anyway.

Sunday, July 24, 2005

Why I like East Asians

Let me just tell a few little stories: When my son Joey was about 2 he discovered that putting things into rubbish bins was great fun. So once when we were dining in a Chinese restaurant I had used a paper napkin and screwed it up after use. Joey immediately spotted his opportunity and declared loudly “In the Wubbish”. He seized the napkin and trotted towards the back of the restaurant. In their usual observant way, the Chinese staff of course saw within seconds this little blond moppet trotting towards them and by the time Joey got to the back of the restaurant, there were three Chinese staff bending over and giving Joey every attention with huge smiles on their faces. They directed Joey carefully to a bin and shepherded him gently back to us with every sign that they had had as much fun out of the episode as we did. And anybody who knows anything about the Chinese love of children will not be remotely surprised by any of that.

The second story is about the time I took a ride on the Hong Kong Metro (subway, underground railway). It was offpeak and my wife and I were the only occidentals in the carriage. A little Chinese boy came trotting down the carriage and spotted this strange white individual (me). Being just as much a tease then as I am now, I made “big eyes” at him. And of course in Chinese iconography, wide eyes are associated with demons etc. So the dear little boy ran screaming back to his parents. Again in their usual observant way, however, the Chinese in the carriage had observed what went on and saw the joke. They had a great (but of course restrained) laugh. There is nothing wrong with the Cantonese sense of humour!

And there is this Malaysian Chinese restaurant that I go to regularly. And there is one dish that I particularly like and I always order it. So when I walk in, not only am I greeted with a big smile by the receptionist, but the kitchen staff wave to me and smile at me too. And my dinner arrives with express speed. They put it on as soon as they see me.

And my next two stories are about the Japanese. Again when Joey was about 2 we took him to a local Koala sanctuary here in Australia. And the Japanese love Koalas so there were lots of them there. But when they saw this little toddler with golden-blond hair, sky-blue eyes and paper-white skin being wheeled about they were utterly entranced. I think there were as many photos of Joey taken that day as there were of the Koalas!

And finally there is the Sushi Train restaurant that I often dine at. There are Sushi train restaurants everywhere these days so I am sure readers will know what I am talking about. And my local version does seem to be staffed entirely by Japanese—a head chef and two assistants. And the amazing thing about them is that they are utterly silent. If the restaurant were staffed by Cockneys it would be an absolute bedlam of chatter. But the Japanese are so well-organized that they need to say nothing to one another. They just silently and steadily go about their great art of producing the most wonderful fresh Japanese food. And they are totally impassive 99% of the time. I greatly value my British heritage and thoroughly appreciate British reserve. But Japanese impassivity makes British reserve look like emotional outpouring. So the head chef misses nothing but the expression on his face never changes. But guess what? They too have noticed that I am a dedicated customer so I do occasionally get a fleeting smile from the head chef when he sees me there again. And to get a smile from him is an honour indeed.

And with such experiences of these gentle, hard-working, family-oriented and utterly civilized people of Asia, how can I not love them?

In case the major point of the above post is not clear, I will say again what I have said before: Asian culture is NOT a primitive tribal culture. It is culture of reciprocity. And if you treat them with appreciation and respect, you will get the same back. As Solomon said 3,000 years ago: “Cast thy bread upon the waters ....”

I won’t explain that quote from Solomon. If you don’t understand it, it is about time you learnt more about your own Christian culture.

Saturday, July 23, 2005


After having lived for various periods of time in the USA, the UK and India, I am firmly convinced that Australia is the best place in the world in which to live. I imagine that 99% of Australians would agree with that. But I have never been patriotic. I have always seen faults as well as advantages. I am pleased to be an Australian but not proud to be Australian. If I identify with any group at all, it is with the Anglo-Saxon population worldwide. The Anglos versus the non-Anglos seems to me the differentiation that is most useful in identifying locations of civility and moderation.

But I don't see even the Anglos as a whole as being the pinnacle of anything. Most things in this life could be improved (with the exception of J.S. Bach) and I think that applies to populations as well. But how? I see some role for eugenics as long as it is voluntary and the success of the NYC Ashkenazim in almost eliminating Tay-Sachs disease from their community is a shining example of that. And human genetic engineering will undoubtedly in the future be a great boon too.

One thing I would particularly like to see is the minimization of the "Yobbo" or "Chav" component of Anglo-Saxon communities. And I think that SELECTIVE immigration is the only way of doing that which is currently feasible on a large scale. Just because the percentage of "good" genes (however defined) in one population is slightly higher than the average does not mean that there are no similarly "good" genes elsewhere. So a rational immigration program would aim to bring in the bearers of those good genes from wherever they are found and thus dilute the percentage of "bad" genes in the immigration-receiving country. And that I think is broadly what Australia's past immigration policy has done. We have very civilized Asian minorities which greatly enhance the amenity of our country.

The "refugee" component of our immigration program is however a worry. There appears to be some degree of selectivity even in that component of our program but only time will tell if it is sufficient. The disastrous situation in Sudan has led the Australian government into allowing into Australia a considerable number of Sudanese and I see them even in the streets of suburban Brisbane. Given the social pathologies that are uncontrovertibly associated with populations of African origin worldwide, I think it is most likely that the quality of life in Australia will be diminished by the Sudanese presence. I make no apology for predicting that Australian kind-heartedness will have been to our detriment in this instance.

So I am glad Prof. Fraser has raised the issue for debate here in Australia.

In case anybody thinks that I get it wrong above by attributing to genes what should be attributed to culture, I can only say that studies come out almost daily which show that more and more human attributes are genetically determined. Read here and here and here and here and here and here and here and here and here and here just for starters.

Saturday, July 2, 2005

Booms and Busts and how to do well in real estate

I gather that the housing boom is still ongoing in the USA. All such booms come to an end, of course. Australia’s recent boom started earlier but has now well and truly finished. I thought it might be easier to show how these things work by looking back on an earlier boom in Australia:

One thing that seems very hard for most people to assimilate is that the economy goes through cycles of booms and busts. The reason why it is hard to assimilate is presumably that the booms and busts concerned can last quite a few years and their beginnings or endings can never really be predicted. So in a boom, most business people act as if the boom will go on forever. The price for so acting, however, is almost always eventual bankruptcy. The mid to late 80s in Australia were a classic example of this. Both Real-Estate and share values seemed to be constantly rising and fortunes seemed to be there ready for the making in return for only a little risk-taking. So people bought all sorts of property with borrowed funds in the expectation of being able to resell the properties concerned at a very large profit after only a very short time. And many people did just that. They DID make large profits. So then they went out and tried to repeat the trick, didn’t they? Like the gambler who has a big win, they never knew when to quit. And note that even the real smarties came unstuck at that game. Almost ALL the high fliers of the ‘80s lost the lot. Some even ended up in jail over their activities (e.g. George Herscu and Alan Bond). And the not-so-smart went broke at a great rate too. An amazing number of hitherto successful Australian businesses—household names even—went to the wall at the end of the 80s and into the 90s.

{As just some examples that spring to mind, David Jones, Woolworths, A.V. Jennings Homes, L.J. Hooker Real Estate, Budget Rentacar, Tooths Brewery, Castlemaine Perkins Brewery, Swan Brewery, Fosters Brewery, TV Channels 7, 9 & 10, Fairfax Group (publishers of the Sydney Morning Herald and the Melbourne Age) all went broke (or their owners did)}.

Nobody seemed immune. Many businesses (large and small, recently established and of long standing) closed for good. Nobody wanted to take them over at any price. And the banks too lost billions in unrecoverable debts and most were very shaky for a while. And virtually the whole States of Victoria and Western Australia went broke with even banks and other financial institutions failing.

I however, am one of the very few who came out of the 80s much better off than before—perhaps twice as well off as I was in the early 80s. So how did I do it? How did I come out ahead when so many other people lost everything? A major reason is that I managed debt more skeptically. I saw that all bets were off (i.e. norms and customs were being violated) in the business world at that time and was retiring (paying off) debt when other people were increasing their debts.

I sold the last three of my Sydney properties at the height of the boom and used the proceeds to retire debt and buy unencumbered houses in Queensland. What I bought during the boom had to be reasonably priced as I bought it not for speculation but on the criterion of its capacity to generate a good long-term income stream. What I sold during the boom I bought BEFORE the boom and then sold to the boomers at boom prices. For instance, I had two quite comparable properties in Sydney (1/31 Elizabeth Bay Rd., Elizabeth Bay and 4/13 Hughes St., Potts Pt). One I sold before the boom for $28,000 (I bought it many years before that for $7,000). The other I sold during the boom only a year or so later. So how much did I get for the second one? Not $28,000 but $70,000! Do you like it? That is what booms are like. A capital gain like that sure helps pay off your debts. At the beginning of the 90s I was actually totally debt-free and owned income-generating houses outright.

The boomers, by contrast, borrowed heavily on the basis of inflated valuations and had not sold when the crash came. So when their shares or properties were eventually sold, the sales bought in much less than had been borrowed so both the borrower and the lender generally got burnt. Many properties built during the 80s were eventually sold for around half of what it cost to build them {e.g. the Brisbane Myer centre}. That is a bust for you. Even the smarties couldn’t win in that sort of situation. The average Joe and the bit-above-average Joe had no hope, therefore. Lesson? Don’t speculate unless you can afford to lose the lot. Most gamblers end up skint and property speculators are no exception. Most gamblers periodically think that they are on to a “cert” (certainty) and so do property speculators. The reality, however, is that there are NO “certs”.

At rock-bottom the reason why I did so well is simply that I did NOT speculate. I just kept on right through the boom with my normal careful business practices. I followed a long thought-out financial plan throughout the 70s and 80s and benefitted accordingly. Even my big capital gains on the three Sydney properties I sold during the boom were not as great a killing as they seemed. I actually sold twice as many of my Sydney properties BEFORE the boom and on those I sometimes came out only modestly ahead. ON AVERAGE, my real capital gains on my Sydney properties were probably less than 10% p.a. The boom prices I received were, then, in a sense foreseen and budgetted for. They did however take longer to arrive than I foresaw—which is why I benefitted from them in respect of only three property sales. So while everyone else was getting carried away by the boom I just continued to put flesh on my broad financial plan—which in its early stages (from 1971 on—well before SEVERAL booms) was aimed mostly at asset accumulation (using a lot of debt, but debt that was conservatively budgetted for using fixed interest loans) to a final phase aimed mainly at income production (using essentially no debt). In short, I largely IGNORED the 80s boom. Is that wise? I guess I think so—and I can talk, can’t I?

These days, however, I am out of real estate and into the stockmarket—but that is another story.