It's going on two years for WTO accession in Vietnam, and as a marginal market participant in this country, I'm not convinced that it is, or will be, a good thing for Vietnam going forward.
The WTO meant that Vietnam put itself on the path of competing with the world economically within its own borders, by agreeing to a set of schedules that placed timeframes on this Socialist government dismantling its trade protections.
The January 2007 accession means that the clock started to count down then, and now there are but a few years left till full implementation of the schedules.
In particular, the banking and financial industries thought it had a few years to gird itself from the expected foreign invasion, and in '06 and '07 it was trying. But with the world markets crashing, and the resultant domestic crash, '08 was pretty much a lost year for the domestic players - if they were lucky enough not to implode, that is.
A lost year may be fine and good if you have time on your side, but the WTO clock was not paused. Uh-oh.
There is a line of heterdoxy economics, such as Ha-Joon Chang's work "Kicking Away The Ladder," that argues the neo-lib free trade / WTO / IMF train of thought is designed not to help developing countries, you know, develop, but rather it removes the ladder towards success.
I haven't read Prof. Chang's book yet (waiting to hit my local library to borrow it.. gotta make use of those tax dollars!), but this article provides a short synopsis of his thesis.
As part of Prof. Chang's argument, he notes that places like South Korea and Taiwan have bridged the chasm between the developing and developed world within the past 30 years because of government protectionist and interventionist policies.
Will Vietnam ever become the next South Korea? I have serious doubts.
Besides exploiting its resources (oil, mineral, land for agri- and aquaculture), and its human resources (low wage labor), what the heck is this country good in? In what industries can it become world class?
South Korea is strong in shipping/logistics, pharma, engineering and construction, consumer electronics, and autos, among others. Most, if not all, were the results of government efforts - putting tax payer resources behind the industries as well as protectionist walls during the gestational stages. The government helped to create the chaebols that now run Korea. Sure, concentrated power is not ideal and the corruption in SK is kinda wild, but Korea is owned mostly be Koreans.
I fear that Vietnam was over eager to show the world that it is on its way forward, and in ghetto fab style, joined the WTO before it was ready. Outside of the resources story, there is nothing that it does well. And resources dwindle.
This is not to say there won't be successful companies that break out of its borders and become regional or even international players. But the more you look, the more you see multinationals coming into Vietnam, to buy up and own things, to take over and dominate the local markets. Colonialism without the bullets.
Here's an interesting piece from the Guardian in 2005 contrasting Mexico with Vietnam, titled "Two countries, one booming, one struggling: which one followed the free-trade route?"
How would an update of that piece read today? And how would it read five years from now?
Showing posts with label rant. Show all posts
Showing posts with label rant. Show all posts
Wednesday, November 12, 2008
Saturday, November 01, 2008
Cutting Thru the Communist Red Tape
So recently I had occasion to experience the red tape in this country, and, to be frank, it wasn't so bad.
Above is the view I had for about 1.5 hours, waiting for my number to be called.. but let's start at the beginning.
A few weeks prior to the picture, I submitted paperwork to relevant governmental agencies in order to secure a business license and, more importantly, the right to purchase one of these stamps:
In the U.S., business formalities have moved past the "sign and seal" stage of authenticating signatures. Back in the day when most people were illiterate, the need to sign and seal documents made sense. Now, not so much.
U.S. contracts these days may still say "sign and seal" under the signature, but this is merely an anachronism, as it isn't legally necessary. Even the 'requirement' to notarize signatures are not technically legally necessary - it's just a safe harbor in order to expedite the process if the signature was ever challenged as being authentic.
In Vietnam, and in some parts of Asia, the seal requirement is still paramount. Documents are not legal unless they have a seal - be it from a company, a government agency, or whomever. Documents are never accepted with simple signatures. Everything has to be original documents.. good luck passing off a photocopy of your documents, unless they've been authenticated with a government seal.
Because of this, when you're hanging out at the international departure terminals in Vietnam, you can locate those locals emigrating elsewhere by their dress (Sunday best, naturally) and by the black Samsonite briefcase that they're clutching. In it will be all manners of original, signed and sealed documents that cost a fortune, in terms of man-hours, to procure. My folks still have that black Samsonite filled with yellowed documents in a back closet somewhere.
So here I am, sitting in this government office, to get my own seal. The place is packed, there is no AC and I'm in a coat and tie. Um.. not good.
I snatch a number, like at a deli counter, realize my position in the queue, and then head towards the folks mingling at the doorway. This is Vietnam, there are always alternatives.
After some discussion with a few folks in my limited Vietnamese, I learned that I could outsource the wait on line for between 500-750k, but that I would not be able to get the seal today. If I personally waited, I would get my seal. Needing to mail out an "official" document today, I bit the bullet, rolled up my sleeves and waited it out.
The room is, as mentioned, packed. About a 50/50 mix in terms of sex. Most of the guys are either Korean or Japanese expat business folks. The majority of the women are young sherpas, guiding these guys through this regulatory process. I figured I could do it on my own.
And after about two hours, I was right. There were some missteps along the way - I had to run down the street to get my passport photocopied, then head to the police station to pay 2k VND (that's like 15 cents) to get the photocopy authenticated - but the stern dude, dressed in his pea soup green army uniform, who manned the counter was pretty nice and helpful underneath that fascade.
So it was pretty good, not much different than heading to the DMV or Register of Deeds office in the U.S.
A lot of expats have a fear of the regulatory agencies in Vietnam - so they either hire someone to do this work for them or just straight up avoid it altogether and break the law (like riding around without a license). I met a German expat recently who told me how relatively painless it was for him to get a motobike license in Vietnam.
The assumption amongst expats that nothing gets done in the government, however big or small, without a bribe attached is pervasive. But it is certainly not true. Sure niceties grease the wheels, but the same is true everywhere in the world.
U.S. contracts these days may still say "sign and seal" under the signature, but this is merely an anachronism, as it isn't legally necessary. Even the 'requirement' to notarize signatures are not technically legally necessary - it's just a safe harbor in order to expedite the process if the signature was ever challenged as being authentic.
In Vietnam, and in some parts of Asia, the seal requirement is still paramount. Documents are not legal unless they have a seal - be it from a company, a government agency, or whomever. Documents are never accepted with simple signatures. Everything has to be original documents.. good luck passing off a photocopy of your documents, unless they've been authenticated with a government seal.
Because of this, when you're hanging out at the international departure terminals in Vietnam, you can locate those locals emigrating elsewhere by their dress (Sunday best, naturally) and by the black Samsonite briefcase that they're clutching. In it will be all manners of original, signed and sealed documents that cost a fortune, in terms of man-hours, to procure. My folks still have that black Samsonite filled with yellowed documents in a back closet somewhere.
So here I am, sitting in this government office, to get my own seal. The place is packed, there is no AC and I'm in a coat and tie. Um.. not good.
I snatch a number, like at a deli counter, realize my position in the queue, and then head towards the folks mingling at the doorway. This is Vietnam, there are always alternatives.
After some discussion with a few folks in my limited Vietnamese, I learned that I could outsource the wait on line for between 500-750k, but that I would not be able to get the seal today. If I personally waited, I would get my seal. Needing to mail out an "official" document today, I bit the bullet, rolled up my sleeves and waited it out.
The room is, as mentioned, packed. About a 50/50 mix in terms of sex. Most of the guys are either Korean or Japanese expat business folks. The majority of the women are young sherpas, guiding these guys through this regulatory process. I figured I could do it on my own.
And after about two hours, I was right. There were some missteps along the way - I had to run down the street to get my passport photocopied, then head to the police station to pay 2k VND (that's like 15 cents) to get the photocopy authenticated - but the stern dude, dressed in his pea soup green army uniform, who manned the counter was pretty nice and helpful underneath that fascade.
So it was pretty good, not much different than heading to the DMV or Register of Deeds office in the U.S.
A lot of expats have a fear of the regulatory agencies in Vietnam - so they either hire someone to do this work for them or just straight up avoid it altogether and break the law (like riding around without a license). I met a German expat recently who told me how relatively painless it was for him to get a motobike license in Vietnam.
The assumption amongst expats that nothing gets done in the government, however big or small, without a bribe attached is pervasive. But it is certainly not true. Sure niceties grease the wheels, but the same is true everywhere in the world.
If you've ever had to personally go and file a deed in the U.S., you'll see the runners from the mortgage and title companies plying treats to the filing clerks, who in turn share this corpulence with the rest of their minions, in order to get better service.
It's just that in Vietnam, foreigners have a more limited skill set with respect to 'being nice' to local folks, government clerks or otherwise. For some expats, their toolbox starts and ends with money.
It's just that in Vietnam, foreigners have a more limited skill set with respect to 'being nice' to local folks, government clerks or otherwise. For some expats, their toolbox starts and ends with money.
Thursday, October 23, 2008
Please Dial "3"
This month, the local, which is to say, national, which is to say *only*, landline telephone company, Vietnam Posts and Telecom (VNPT), announced a change in all landline phone numbers.
In HCMC and Hanoi, all landline numbers now grow from 7 digits to 8 digits. Plus the two digit city code. In the outlying provinces that used to have 6 digit numbers, they also grow by one to 7 digits. While provinces that got recently "upgraded" to 7 digits stay at 7.
For all of HCMC and Hanoi numbers, you now add a leading "3" to the old numbers to create the new 8 digit telephone number.
A lot of business here, even more than in the US, is conducted via mobile phones. With no wide acceptance of voicemail, folks carry multiple cell phones. But still a lot of folks, like us for instance, will be affected by this new landline number change.
And this change is idiotic. The more reasonable way to go about things is to add an area code "overlay," and not to simply lengthen numbers. Split HCMC and Hanoi into new area codes, instead of just maintaining one city code. My hometown has four new overlay area codes since the time of my childhood - and my childhood home number didn't change for 25 years until we sold the joint and moved.
This new VNPT edict will just create business for the print shops, because now all our business literature - business cards, letterheads, envelopes, marketing materials, etc., etc. - will need to be redone. Arrgghhh.
And given that short term memory is about 7+/- 2 digits*, as I remember from Psych 101, these new 8-digit phone numbers will start messing with your head. Mobile numbers in Vietnam are at least 8 digits long, plus at least a two digit mobile provider code. No one can remember these long assed numbers, that's why people buy and peddle "so dep" - pretty numbers. One buys a nice and pretty mobile number just to have a number that can be remembered.
After two years, I've finally been able to memorize my own mobile number!
* this magical 7+/- 2 standard was put forth in a 1956 paper, since then, and my time in the lecture hall, new research has suggested that we can remember 2 seconds worth of spoken content. For English speakers, this would be 7 plus or minus 2 digits, depending on how quickly one normally speaks. For Chinese speakers, the number of digits recallable in short term memory is closer to 10, because the words are shorter. My impression is that the Vietnamese speak slowly and they'll be closer to the 7+/-2 measure.
Wednesday, October 22, 2008
Feds in the Money Market
Ok, I am more interested in food, with a side of business/economics, than say, a dude like Tyler Cowen, the George Mason econ professor, with a foodie side. But the current business/economic discourse in the media just seems so wrong that I can't just talk about food here.
So skip this if you're looking for food pictures.
I read this USAToday Op-Ed about the benefits of small banks today. The basic argument is that small banks (whatever that means.. though the authors allude to a George Bailey-esque bank - from A Wonderful Life - as the model) are better than big banks because they make loans that do not default. "Better" loans makes for "better" banks. Small banks can make such better loans because they have an "informational" advantage - they know their customers and know the good credit risk from the bad. For good measure, the Op-Ed proposes some sort of special tax on securitizations.
Wow, what a load of naive crock.
So skip this if you're looking for food pictures.
I read this USAToday Op-Ed about the benefits of small banks today. The basic argument is that small banks (whatever that means.. though the authors allude to a George Bailey-esque bank - from A Wonderful Life - as the model) are better than big banks because they make loans that do not default. "Better" loans makes for "better" banks. Small banks can make such better loans because they have an "informational" advantage - they know their customers and know the good credit risk from the bad. For good measure, the Op-Ed proposes some sort of special tax on securitizations.
Wow, what a load of naive crock.
There are no banks that serves big population centers in America that works this way. The closest thing to a "small" bank that most of us see is our local credit union. Credit unions are not inherently better at assessing risk than my Citibank branch - the only extra information they may have on me is the activity in my accounts. What's my savings history, my checkwriting history, etc. But if you get a regular mortgage (as opposed to those "no-documentation" ones), you've disclosed such account history to Citibank as well.
And what's wrong with making loans to folks with higher credit risks? If there is any failure here in this mortgage business, it is the failure to properly price risk.
Now the momentum has swung the other way. People with money (banks and investors) are charging too much for risk. That is why the markets are stuck - no one is lending at prices that are business appropriate.
And what's wrong with making loans to folks with higher credit risks? If there is any failure here in this mortgage business, it is the failure to properly price risk.
Now the momentum has swung the other way. People with money (banks and investors) are charging too much for risk. That is why the markets are stuck - no one is lending at prices that are business appropriate.
Thankfully, the Feds are stepping in to not only issue commercial paper directly (i.e. short term loans to provide working capital to functioning businesses), it also has just set up a money market facility to buy current commercial paper from financial institutions that are seeing massive redemptions from their money market investors.
If the Feds play their cards right (i.e. pay appropriate prices for the asset purchases), they (or we, as taxpayers) can end up making a killing when markets are talked down from this pricing panic.
Of course, we're talking about the US government here, so the "we" who will end up making money will not be the taxpayers, but political cronies. Sounds like current day Vietnam.
If the Feds play their cards right (i.e. pay appropriate prices for the asset purchases), they (or we, as taxpayers) can end up making a killing when markets are talked down from this pricing panic.
Of course, we're talking about the US government here, so the "we" who will end up making money will not be the taxpayers, but political cronies. Sounds like current day Vietnam.
Sunday, October 19, 2008
Left, Right, Middle and Joe The Plumber
The other day I was invited out to drinks by Kevin and I ended up meeting some new faces as well as reconnecting with some old faces.
You know how it goes at these things: meeting new folks + beer = a dorm room style discussion of politics. People ended up talking like they were in college, except for the fact that everyone engaged in the conversation had actual money that they made (and lost), so it was a bit more personal and vivid.
I ended up between an earnest ultra-lefty and a concerned economic libertarian. Through the conversations, well lubricated with beer, it occurred to me that our discussion distilled the problem with the left-wing of the Democratic party.
I disagreed with both of these guys, for I'm a pragmatist occupying the soft middle politically. It's a difficult position to hold, because you are out-flanked, and you can't rely on stock ideology as a crutch. But it's a reasonable position to me, as life is all about shades of grey.
While I disagreed with both guys, the lefty just sounded flat out crazy - it is hard to be taken seriously when one complains about big business and demonize it all. The percentage of Americans who want to tend to their own subsistence garden, wear burlap and live in a yurt is, shockingly (!!), small. Very small. You people are crazy.
The economic libertarian was of the school of absolute freedom of contract, minimal-to-no government regulations, etc. I was enjoying the beer too much to mount much of a convincing rebuttal, but overall I can see how folks are more easily seduced by this extreme of the political spectrum.
Who doesn't want complete freedom? It's like asking a kid whether the school should get rid of its stern principal - of course! Recess all the time. How cool is that?
But in the end, most so-called libertarians do not really believe in complete freedom of contract. If they did, then they cannot ideologically object to child labor, indentured servitude, organ harvesting, among other things. It is neat and tidy to assume and expect that the free market will, over time, resolve everything in the most efficient means possible, which is the libertarian position. Such ideology denies the humanity in all of us - a humanity that contains faults and inefficiencies that are culturally ingrained and will not disappear over time unless there is a concerted push back against such inefficient culture.
Overall though, the far-right libertarian position is easier to accept than the far left position, because it does not sound nutso. The pinnacle of the far right is a successful business person unencumbered by government regulations. The pinnacle of the left is a person who is self sufficient, unencumbered by the corporation. The choice is between being pampered and being an ascetic. An easy choice to make.
It all goes back to Joe The Plumber - putting aside whether he's a licensed plumber, whether he's a Mccain plant, etc. etc. - his story illustrates the left's problem. The ultra-lefty websites have had a field day mocking the idea of the guy. One line of mockery has to do with his complaints about the Obama tax plan.
In short, the proposed Obama plan would increase taxes only to those who make over $250k. Joe The Plumber admittedly does not make over $250k, but he expressed concerns that Obama would tax him more.
Places like DailyKos rips Joe The Plumber for this - how can you complain about taxes 'that you will not pay, and will likely never have to pay' is the line of inquiry.
What the left does not account for is the nature and ethos of America. We are a country of strivers - we are a country of the "PreRich." Joe is not rich today, but he plans to be rich someday. He doesn't vote his current economic interests, he votes his aspirational economic interests.
Just like the average person thinks that they are better looking than average, the average American thinks that, someday, and soon, they will be richer than average. And so they vote this way.
Is it a bad thing that Americans are a society of PreRich? No, because that's just one expression of our cultural optimism. Meet other folks and you'll quickly learn that Americans are very a optimistic sort. Perhaps socio-economic movement is as stolid in the States as it is in the UK, but the average Briton is less optimistic than the average American about their future prospects.
I've met a few folks from the UK who've expressed to me that they're in Vietnam to, in part, escape the socio-economic situation back home. Every single American I've met here have said that being in Vietnam was about adventure and future possibilities. Not about escaping America.
The left will always lose in America because they do not cater to the PreRich optimism of our culture. IMO, Bill, Hilary, and yes, Barack, are more of the pragmatic centrists type than the Kossacks want. This is why the strident left railed against Hilary. And I suspect that they'll turn on Barack Obama once he's in office (assuming he'll proceed on and win). Or, if we're lucky, they'll grow up a little.
You know how it goes at these things: meeting new folks + beer = a dorm room style discussion of politics. People ended up talking like they were in college, except for the fact that everyone engaged in the conversation had actual money that they made (and lost), so it was a bit more personal and vivid.
I ended up between an earnest ultra-lefty and a concerned economic libertarian. Through the conversations, well lubricated with beer, it occurred to me that our discussion distilled the problem with the left-wing of the Democratic party.
I disagreed with both of these guys, for I'm a pragmatist occupying the soft middle politically. It's a difficult position to hold, because you are out-flanked, and you can't rely on stock ideology as a crutch. But it's a reasonable position to me, as life is all about shades of grey.
While I disagreed with both guys, the lefty just sounded flat out crazy - it is hard to be taken seriously when one complains about big business and demonize it all. The percentage of Americans who want to tend to their own subsistence garden, wear burlap and live in a yurt is, shockingly (!!), small. Very small. You people are crazy.
The economic libertarian was of the school of absolute freedom of contract, minimal-to-no government regulations, etc. I was enjoying the beer too much to mount much of a convincing rebuttal, but overall I can see how folks are more easily seduced by this extreme of the political spectrum.
Who doesn't want complete freedom? It's like asking a kid whether the school should get rid of its stern principal - of course! Recess all the time. How cool is that?
But in the end, most so-called libertarians do not really believe in complete freedom of contract. If they did, then they cannot ideologically object to child labor, indentured servitude, organ harvesting, among other things. It is neat and tidy to assume and expect that the free market will, over time, resolve everything in the most efficient means possible, which is the libertarian position. Such ideology denies the humanity in all of us - a humanity that contains faults and inefficiencies that are culturally ingrained and will not disappear over time unless there is a concerted push back against such inefficient culture.
Overall though, the far-right libertarian position is easier to accept than the far left position, because it does not sound nutso. The pinnacle of the far right is a successful business person unencumbered by government regulations. The pinnacle of the left is a person who is self sufficient, unencumbered by the corporation. The choice is between being pampered and being an ascetic. An easy choice to make.
It all goes back to Joe The Plumber - putting aside whether he's a licensed plumber, whether he's a Mccain plant, etc. etc. - his story illustrates the left's problem. The ultra-lefty websites have had a field day mocking the idea of the guy. One line of mockery has to do with his complaints about the Obama tax plan.
In short, the proposed Obama plan would increase taxes only to those who make over $250k. Joe The Plumber admittedly does not make over $250k, but he expressed concerns that Obama would tax him more.
Places like DailyKos rips Joe The Plumber for this - how can you complain about taxes 'that you will not pay, and will likely never have to pay' is the line of inquiry.
What the left does not account for is the nature and ethos of America. We are a country of strivers - we are a country of the "PreRich." Joe is not rich today, but he plans to be rich someday. He doesn't vote his current economic interests, he votes his aspirational economic interests.
Just like the average person thinks that they are better looking than average, the average American thinks that, someday, and soon, they will be richer than average. And so they vote this way.
Is it a bad thing that Americans are a society of PreRich? No, because that's just one expression of our cultural optimism. Meet other folks and you'll quickly learn that Americans are very a optimistic sort. Perhaps socio-economic movement is as stolid in the States as it is in the UK, but the average Briton is less optimistic than the average American about their future prospects.
I've met a few folks from the UK who've expressed to me that they're in Vietnam to, in part, escape the socio-economic situation back home. Every single American I've met here have said that being in Vietnam was about adventure and future possibilities. Not about escaping America.
The left will always lose in America because they do not cater to the PreRich optimism of our culture. IMO, Bill, Hilary, and yes, Barack, are more of the pragmatic centrists type than the Kossacks want. This is why the strident left railed against Hilary. And I suspect that they'll turn on Barack Obama once he's in office (assuming he'll proceed on and win). Or, if we're lucky, they'll grow up a little.
Thursday, October 16, 2008
9 Things to Do in Vietnam
As any long term (be it two week or two months) blogger in Vietnam is wont to do, here is my obligatory "things to do in Vietnam" post.
1. Go get your hair washed
A lot of guidebooks that write about Vietnam gush about the affordability of it all. I would generally disagree with this - yes, it is easier and cheaper to live comfortably here, but this country is certainly not cheap, but maybe that is because I've been to China a few times and compare Vietnam's prices to there.
Most everything here is cheaper than the US, but also most everything here is more expensive than in China. But that makes sense, for they were all made in China! So you won't find much in the way of inexpensive goods, but you can find mind-blowing deals (if you're used to US prices) on services.
Housework, chauffeur and childcare services are insanely cheap in comparison, and about equal or less than China even. But the average tourist isn't gonna use such services.
Instead, take in the affordable and very Vietnamese luxury of getting your hair washed. The hair salons in Vietnam do more business providing hair washes than they do in actually cutting hair. They'll also provide other expected services, such as mani- and pedicures, Asian style services, such as earwax picking, face washes, and clothed massages. If you look real hard I'm sure you can find places that provide other services, but I'm pretty blind on that account.
A hair wash can be 50k or less. Just remember to tip. If you don't like to get your hair wet then go get a foot massage.
2. Enjoy the herb
I don't me the sticky sorta herb, but rather the panoply of SEAsian herbs that are virtually part of every local meal here. In the US, even at decent Vietnamese restaurants, you're limited to generic things like cilantro, mint and thai basil. Here, there is so much more, half of which I can only identify by smell and taste. Out of all the food products in Vietnam, I think I'll miss the basket of herbs the most. The main reason I like to eat seafood on the streets here is because of the herb mix that comes with it.
3. Go to the beach
I haven't really travelled around all that much in Vietnam, but I've been to some of the beaches here and they're definitely worthwhile. With its long coastline, Vietnam has a whole host of beaches to choose from - some are small and desolate (Sam Son), some are wide, crowded and dirty (Vung Tau), and some are pretty and peaceful (Cua Dai). Sure, it probably doesn't compare to Thailand, but life is pretty good whenever you have sand between your toes while swigging a beer, looking over the sound of crashing waves to the sun peeking over the horizon.
4. Get some clothes made
Before making this recommendation, a few caveats: custom tailored clothing is much cheaper in China (about 50% less), and labor costs here are cheap. Why is the latter a warning? Due to cheap labor, the concept of measure twice, cut once isn't employed here in Vietnam.
In all my dealings with the local labor pool, I find that folks are generally careless and error-prone. At first I attributed this to a lack of work ethic. But I've slowly come around to the thought that such errors are due to cheap labor. It costs so very little to rectify mistakes that it doesn't make sense within the local work culture to spend extra resources upfront to minimize mistakes.
It's sorta like the low-cost manufacturing facilities in China and elsewhere - it is cheaper to make 100 items with a 5% defect rate than 95 items with a 1% defect rate. If you engage in the former, you'll pay less and get more good product.
So, even though you should expect mistakes in your tailored clothing, and even though it isn't the cheapest in the world, why do I suggest getting clothes made here? Because you'll likely end up looking pretty good when all is said and done.
Most Americans, myself include, wear off the rack clothing that is just too big for us. The locals, men and women, almost regardless of age, wear clothes so tight fitting, it would make Fredrick's of Hollywood proud. So the tailors here are geared towards a more fitted, slimmer cut that ends up more flattering, no matter the customer. Just make sure to emphasize that you want a more comfortable fit, or else you'll end up with some nut-hugger pants.
A dress shirt made in D1, depending on the fabric choice, costs between a regular off-the-rack Brooks Brothers shirt and the same shirt on sale. But the fabric and the cut will be much better.
5. Go to the mountains
As a country geographically oriented like Chile, the beaches are on the forefront of a tourists' itinerary. But if you want something slightly different, head to the mountains. Places like Fan Si Pan (the highest point in Vietnam), or Dalat or Tam Dao. One of the best times we've had was when we visited Tam Dao.
Of course there is Sapa also. But be aware of the "Sapa Curse" - it's a relatively well known and well subscribed to phenomena amongst the locals. People say that if you go to Sapa, which is home to the ethnic minorities such as the Hmong and Yao, the women there will put a spell on you and you won't leave until you end up marrying a local ethnic minority and taking them back to the city with you.
It may be an old wives' tale, but I've heard of business colleagues who went to Sapa on vacation, disappeared for months, and returned with a Sapa wife. And I personally know of a long term Hanoi ex-pat who met and married his wife in Sapa.
6. Play some golf
If you're an American golfer, you have got to play some golf when you're in Vietnam. The courses here are generally in very good condition, but besides that, having a caddy is just something that needs to be experienced. Sure, most of the caddies are not the sort that you would rely on for tournament golf, simply because, unlike the States, the average caddy here does not play the game so their knowledge of it is limited. But if you've thanked the inventor of the Izzo dual-strap, then you'll appreciate someone else humping your bag around the course.
Again, remember to tip, because they get very little, if any, part of the "caddy fee" that is on your bill. Locals tip between 100-200k per 18 holes. I find that the local HCMC players tip more generously than their Hanoi brethren, so pay attention to where you're playing.
7. Go nhau
"Nhau" - it's a very Vietnamese word. Loosely translated, it means go out drinking, but it's not really that. "Go out drinking" sounds more like something you do on a Friday, Saturday, Sunday (and Monday, Tuesday, Wednesday, Thursday) night while in college.
1. Go get your hair washed
A lot of guidebooks that write about Vietnam gush about the affordability of it all. I would generally disagree with this - yes, it is easier and cheaper to live comfortably here, but this country is certainly not cheap, but maybe that is because I've been to China a few times and compare Vietnam's prices to there.
Most everything here is cheaper than the US, but also most everything here is more expensive than in China. But that makes sense, for they were all made in China! So you won't find much in the way of inexpensive goods, but you can find mind-blowing deals (if you're used to US prices) on services.
Housework, chauffeur and childcare services are insanely cheap in comparison, and about equal or less than China even. But the average tourist isn't gonna use such services.
Instead, take in the affordable and very Vietnamese luxury of getting your hair washed. The hair salons in Vietnam do more business providing hair washes than they do in actually cutting hair. They'll also provide other expected services, such as mani- and pedicures, Asian style services, such as earwax picking, face washes, and clothed massages. If you look real hard I'm sure you can find places that provide other services, but I'm pretty blind on that account.
A hair wash can be 50k or less. Just remember to tip. If you don't like to get your hair wet then go get a foot massage.
2. Enjoy the herb
I don't me the sticky sorta herb, but rather the panoply of SEAsian herbs that are virtually part of every local meal here. In the US, even at decent Vietnamese restaurants, you're limited to generic things like cilantro, mint and thai basil. Here, there is so much more, half of which I can only identify by smell and taste. Out of all the food products in Vietnam, I think I'll miss the basket of herbs the most. The main reason I like to eat seafood on the streets here is because of the herb mix that comes with it.
3. Go to the beach
I haven't really travelled around all that much in Vietnam, but I've been to some of the beaches here and they're definitely worthwhile. With its long coastline, Vietnam has a whole host of beaches to choose from - some are small and desolate (Sam Son), some are wide, crowded and dirty (Vung Tau), and some are pretty and peaceful (Cua Dai). Sure, it probably doesn't compare to Thailand, but life is pretty good whenever you have sand between your toes while swigging a beer, looking over the sound of crashing waves to the sun peeking over the horizon.
4. Get some clothes made
Before making this recommendation, a few caveats: custom tailored clothing is much cheaper in China (about 50% less), and labor costs here are cheap. Why is the latter a warning? Due to cheap labor, the concept of measure twice, cut once isn't employed here in Vietnam.
In all my dealings with the local labor pool, I find that folks are generally careless and error-prone. At first I attributed this to a lack of work ethic. But I've slowly come around to the thought that such errors are due to cheap labor. It costs so very little to rectify mistakes that it doesn't make sense within the local work culture to spend extra resources upfront to minimize mistakes.
It's sorta like the low-cost manufacturing facilities in China and elsewhere - it is cheaper to make 100 items with a 5% defect rate than 95 items with a 1% defect rate. If you engage in the former, you'll pay less and get more good product.
So, even though you should expect mistakes in your tailored clothing, and even though it isn't the cheapest in the world, why do I suggest getting clothes made here? Because you'll likely end up looking pretty good when all is said and done.
Most Americans, myself include, wear off the rack clothing that is just too big for us. The locals, men and women, almost regardless of age, wear clothes so tight fitting, it would make Fredrick's of Hollywood proud. So the tailors here are geared towards a more fitted, slimmer cut that ends up more flattering, no matter the customer. Just make sure to emphasize that you want a more comfortable fit, or else you'll end up with some nut-hugger pants.
A dress shirt made in D1, depending on the fabric choice, costs between a regular off-the-rack Brooks Brothers shirt and the same shirt on sale. But the fabric and the cut will be much better.
5. Go to the mountains
As a country geographically oriented like Chile, the beaches are on the forefront of a tourists' itinerary. But if you want something slightly different, head to the mountains. Places like Fan Si Pan (the highest point in Vietnam), or Dalat or Tam Dao. One of the best times we've had was when we visited Tam Dao.
Of course there is Sapa also. But be aware of the "Sapa Curse" - it's a relatively well known and well subscribed to phenomena amongst the locals. People say that if you go to Sapa, which is home to the ethnic minorities such as the Hmong and Yao, the women there will put a spell on you and you won't leave until you end up marrying a local ethnic minority and taking them back to the city with you.
It may be an old wives' tale, but I've heard of business colleagues who went to Sapa on vacation, disappeared for months, and returned with a Sapa wife. And I personally know of a long term Hanoi ex-pat who met and married his wife in Sapa.
6. Play some golf
If you're an American golfer, you have got to play some golf when you're in Vietnam. The courses here are generally in very good condition, but besides that, having a caddy is just something that needs to be experienced. Sure, most of the caddies are not the sort that you would rely on for tournament golf, simply because, unlike the States, the average caddy here does not play the game so their knowledge of it is limited. But if you've thanked the inventor of the Izzo dual-strap, then you'll appreciate someone else humping your bag around the course.
Again, remember to tip, because they get very little, if any, part of the "caddy fee" that is on your bill. Locals tip between 100-200k per 18 holes. I find that the local HCMC players tip more generously than their Hanoi brethren, so pay attention to where you're playing.
7. Go nhau
"Nhau" - it's a very Vietnamese word. Loosely translated, it means go out drinking, but it's not really that. "Go out drinking" sounds more like something you do on a Friday, Saturday, Sunday (and Monday, Tuesday, Wednesday, Thursday) night while in college.
It's not really that. It's probably more akin to 'getting a pint' - but I dunno, I'm not from a commonwealth country.
No matter the proper translation, you should go out and nhau, especially with some locals. It's practically a way of life here. It's fun to sit on some plastic stools, grab some peanuts and Vietnamese style bar food (i.e. stir fried stuff that you can share and/or eat with your hands) and drink the local beer. Don't worry about getting too drunk - for all the bravado of the locals, by and large they don't drink all that much. When locals drink, they end up drinking more ice water than actual beer.
8. Slow down and look around
Visitors pretty much hang in the cities of HCMC or Hanoi, and longer term ex-pats definitely count these cities as their main stomping grounds. The only comparison to these places are other Asian cities (well, perhaps S.America, Africa and the Middle East.. but I've never been). It's crowded, it's hectic, and there is so much going on.
But once in a while, just pump your brakes and slow down. Really look at your surroundings, and the people that inhabit it. Take it all in and connect with this time, this place.
I am not talking about observing folks and passing judgments, ascribing some sort of bs quiet nobility to the poor and the working poor.
Unlike most American cities, you can see all of Vietnam from virtually any street corner here. So slow down and breathe in the beauty, the warts, the frustrations, the wealth and poverty, the yearning, and the humanity of it all. This is current day Vietnam looking back at you, so take it all in before looking away.
9. Leave
At the end of it all you should leave. You weren't raised here, you don't have many ties here, you're not really from here. A life spent with an updated passport and a visa needing to be renewed yet again is a life in limbo.
Stay too long and you'll end up like the well-worn caricature - a bitter, whiny, complaining, ugly foreigner. Do yourself a favor and leave. Or marry someone local. I hear the weather is nice this time of year in Sapa.
No matter the proper translation, you should go out and nhau, especially with some locals. It's practically a way of life here. It's fun to sit on some plastic stools, grab some peanuts and Vietnamese style bar food (i.e. stir fried stuff that you can share and/or eat with your hands) and drink the local beer. Don't worry about getting too drunk - for all the bravado of the locals, by and large they don't drink all that much. When locals drink, they end up drinking more ice water than actual beer.
8. Slow down and look around
Visitors pretty much hang in the cities of HCMC or Hanoi, and longer term ex-pats definitely count these cities as their main stomping grounds. The only comparison to these places are other Asian cities (well, perhaps S.America, Africa and the Middle East.. but I've never been). It's crowded, it's hectic, and there is so much going on.
But once in a while, just pump your brakes and slow down. Really look at your surroundings, and the people that inhabit it. Take it all in and connect with this time, this place.
I am not talking about observing folks and passing judgments, ascribing some sort of bs quiet nobility to the poor and the working poor.
Unlike most American cities, you can see all of Vietnam from virtually any street corner here. So slow down and breathe in the beauty, the warts, the frustrations, the wealth and poverty, the yearning, and the humanity of it all. This is current day Vietnam looking back at you, so take it all in before looking away.
9. Leave
At the end of it all you should leave. You weren't raised here, you don't have many ties here, you're not really from here. A life spent with an updated passport and a visa needing to be renewed yet again is a life in limbo.
Stay too long and you'll end up like the well-worn caricature - a bitter, whiny, complaining, ugly foreigner. Do yourself a favor and leave. Or marry someone local. I hear the weather is nice this time of year in Sapa.
Wednesday, October 15, 2008
Subprime Problem in Vietnam?
This blog is mostly about the food that we eat in Vietnam, my quest to find a really decent martini and playing some bad golf in some beautiful settings. To feed all those cravings, in my non-blog life I'm usually thinking about how to make money.
As an inveterate New Yorker, some of those ideas have been of the illegal kind - such as taking advantage of all the young local idiots who have no concept of online fraud and therefore they post their personal information and bank account numbers (!) all over the internet. But thankfully I'm preoccupied with morals to proceed any further.
Given the current world economic climate, I've pondered a bit about the problems in the US (Overselling the Subprime Problem, Market Meltdown Hysteria), which, for all intents and purposes is a confidence issue. Banks do not trust each other, so they do not lend to one another = no money sloshing through the system to lubricate the economic engine. All this talk of doom and gloom in the US is fun and games, sorta like the perverse pleasure of picking at a scab, but optimism will prevail as more people will make more money selling optimism. I'm confident enough to have recently put my 2 cents behind XLF - check back in 6 months to see how that goes.
Spurred on after reading B. Hawkins Pham's post, "The New Look of Saigon," on Saigon Blues, I thought more about why at this point I'm not as optimistic in Vietnam. There are a host of reasons, the main one being that the down global market, and in particular the down US market, makes Vietnam comparatively less compelling. Life is relative, and so are economic opportunities.
As part of the doom-and-gloom trade, business commentators in the US are quick to cite thing such as the WSJ's estimate that 1-in-6 homeowners are underwater (i.e. owe more on the mortgage than the current fair market value of the house). While this is certainly not a good thing, is this really that bad? Surely, housing occupies a certain mindspace for housing consumers - likely a combination of being the largest purchase, the largest asset, the largest debt for the average person - it is still a purchase.
As long as folks can make payments, being underwater affects their psyche, but it does not mean that everyone will suddenly become homeless. "Underwater" - sounds scary and threatening, and meant to evoke the idea of drowning, but for nearly all purchases on credit you will be underwater.
Did you just buy an iPhone with a Visa card, or that shiny new aluminum Macbook? Guess what, you're underwater. Does that matter to you in that setting? No, not really. So too housing.
As an inveterate New Yorker, some of those ideas have been of the illegal kind - such as taking advantage of all the young local idiots who have no concept of online fraud and therefore they post their personal information and bank account numbers (!) all over the internet. But thankfully I'm preoccupied with morals to proceed any further.
Given the current world economic climate, I've pondered a bit about the problems in the US (Overselling the Subprime Problem, Market Meltdown Hysteria), which, for all intents and purposes is a confidence issue. Banks do not trust each other, so they do not lend to one another = no money sloshing through the system to lubricate the economic engine. All this talk of doom and gloom in the US is fun and games, sorta like the perverse pleasure of picking at a scab, but optimism will prevail as more people will make more money selling optimism. I'm confident enough to have recently put my 2 cents behind XLF - check back in 6 months to see how that goes.
Spurred on after reading B. Hawkins Pham's post, "The New Look of Saigon," on Saigon Blues, I thought more about why at this point I'm not as optimistic in Vietnam. There are a host of reasons, the main one being that the down global market, and in particular the down US market, makes Vietnam comparatively less compelling. Life is relative, and so are economic opportunities.
As part of the doom-and-gloom trade, business commentators in the US are quick to cite thing such as the WSJ's estimate that 1-in-6 homeowners are underwater (i.e. owe more on the mortgage than the current fair market value of the house). While this is certainly not a good thing, is this really that bad? Surely, housing occupies a certain mindspace for housing consumers - likely a combination of being the largest purchase, the largest asset, the largest debt for the average person - it is still a purchase.
As long as folks can make payments, being underwater affects their psyche, but it does not mean that everyone will suddenly become homeless. "Underwater" - sounds scary and threatening, and meant to evoke the idea of drowning, but for nearly all purchases on credit you will be underwater.
Did you just buy an iPhone with a Visa card, or that shiny new aluminum Macbook? Guess what, you're underwater. Does that matter to you in that setting? No, not really. So too housing.
Or take a look at most folks' second largest consumer purchase, an automobile. The auto trade is tanking right now, but historically (I'm young and naive enough to mean the past 15 or so years), 90+% of the folks who buy a car finance, and they on average put about 15% down. For the average consumer in the average car, with the well known phenomena of 'drive off the lot depreciation,' that means that the auto is instantly underwater. Where was that doom-and-gloom talk over the past decade? Non-existent.
As a business/investment climate, the worse America gets hammered, the worse Vietnam becomes.
But that's not to say there are no issues here. As a relatively closed economy, Vietnam is not directly affected by the supposed US Subprime issue because banks here did not buy US debt and derivative instruments. The effect is an indirect one, caused by lowered FDI commitments and, more importantly, lowered actual FDI inflows.
But the banks here have a Vietnamese style subprime problem - that of non-performing loans (NPLs). The credit system here is relatively rudimentary and is based more on an antiquated asset-based lending standard than a modern cashflow-based lending standard.
If I was a lender, I would favor the cashflow outlook, because at the end of the day I want to know if you'll have the money to pay me back. I would not want to have an asset-based lending outlook, because I am in the business of making money on interest and fees, not on foreclosures.
Banks here that do asset-based lending typically have the infamous "red book/document" - the red deed book issued by the government and used to confirm use rights or ownership of property - as collateral. With local property price declines, and more importantly, an illiquid market, these asset backed loans quickly devolve into NPLs.
A reason for the rudimentary credit system here is a lack of credit ratings agencies. There is no such thing as a FICO score, so effectively most (all?) individuals and businesses are subprime borrowers. The indifferent legal environment makes it easy for borrowers to stiff the lenders - at worst, the borrower would walk away from an underwater property, and that action has little impact on their ability to get a subsequent loan from another bank using a different piece of collateral.
As the saying goes in the US, 'if you owe the bank a million dollars , it is your problem; if you owe the bank a billion dollars, it is their problem.' The same is true in Vietnam, except you replace "dollars" with "dong" - and a billion dong is low barrier, so the banks are holding a lot of problems.
But I am an optimist, and I see good things going forward for the Vietnamese economy and like elsewhere, as an economy improves the financial sector will lead the gains. It's just that the American financial sector will make more gains in the near future. So why deal with the Vietnamese issues?
But that's not to say there are no issues here. As a relatively closed economy, Vietnam is not directly affected by the supposed US Subprime issue because banks here did not buy US debt and derivative instruments. The effect is an indirect one, caused by lowered FDI commitments and, more importantly, lowered actual FDI inflows.
But the banks here have a Vietnamese style subprime problem - that of non-performing loans (NPLs). The credit system here is relatively rudimentary and is based more on an antiquated asset-based lending standard than a modern cashflow-based lending standard.
If I was a lender, I would favor the cashflow outlook, because at the end of the day I want to know if you'll have the money to pay me back. I would not want to have an asset-based lending outlook, because I am in the business of making money on interest and fees, not on foreclosures.
Banks here that do asset-based lending typically have the infamous "red book/document" - the red deed book issued by the government and used to confirm use rights or ownership of property - as collateral. With local property price declines, and more importantly, an illiquid market, these asset backed loans quickly devolve into NPLs.
A reason for the rudimentary credit system here is a lack of credit ratings agencies. There is no such thing as a FICO score, so effectively most (all?) individuals and businesses are subprime borrowers. The indifferent legal environment makes it easy for borrowers to stiff the lenders - at worst, the borrower would walk away from an underwater property, and that action has little impact on their ability to get a subsequent loan from another bank using a different piece of collateral.
As the saying goes in the US, 'if you owe the bank a million dollars , it is your problem; if you owe the bank a billion dollars, it is their problem.' The same is true in Vietnam, except you replace "dollars" with "dong" - and a billion dong is low barrier, so the banks are holding a lot of problems.
But I am an optimist, and I see good things going forward for the Vietnamese economy and like elsewhere, as an economy improves the financial sector will lead the gains. It's just that the American financial sector will make more gains in the near future. So why deal with the Vietnamese issues?
Thursday, October 09, 2008
Overselling the Subprime Problem
These days the US Presidential race is getting down to the final days - less than a month left. As with most Presidential races, it boils down to 'the economy, stupid.' Two months ago, talking about the indifferent economy mainly dealt with oil prices, and those big, bad guys, the "oil speculators."
That was a joke of a bogeyman, and now, a few months later, when oil is down to less than $90, no one is talking about those speculators - now those folks who bought when oil was $140 are no longer evil speculators, just bad investors. Then, the mainstream business media didn't really explain how oil "speculation" could have a negative long-term impact on things.
These days, the monster under the bed is subprime mortgages. You know, those Wall Streeters and their financial engineering, their "securitizations" - my gosh, what a long word, it must be a complex and difficult to understand concept, I mean, it even has a 10-point Scrabble tile in it, it must be nefarious!
The popular understanding of securitization is some sort of fancy slice-and-dice that turns bad assets (subprime debt) into multiples of good assets, but this understanding is just wrong.
Everyone knows what a mortgage is, and most understand correctly that subprime mortgages means loans to people who, on average, will default on their loans more often than the regular ("prime") market. To offset the fact that they will default more often, you as the bank charge a higher interest rate. Makes sense, and simple enough.
Making a loan and pricing the loan (i.e. setting the level of interest to charge) is a forward looking bet. All else being equal, the price you charge for a loan depends on how likely the borrower will pay you back. So how do you predict whether the borrower will pay you back? You use things such as credit scores, and divide borrowers into subprime and prime markets.
But what if you can make a backwards looking bet? What if you can build a time machine, so you don't need to predict whether someone will pay you back (regardless of their credit score), you'll actually know if they will pay you or not?
If you can know the future, you can make money. This is what securitization tries to do.
A few decades back some financial types and lawyers (I'm assuming) got another simple idea: let's build something close to a time machine.
How do you do this?
First, let us assume that 25% of all subprime loans will default. That sounds bad, but that also means 75% will pay you.
So if you make one loan, you have a 75% chance of getting 100% of your money and a 25% chance of getting 0% of your money back (disregarding partial payments prior to default).
Second, we would quickly realize that if you make 100 loans (or 1,000 or 1M, etc.), then you know that statistically you will get 75% of your money back.
So how do I build this (imperfect) time machine with these realizations? Well, you first bundle up a lot of subprime loans to get statistics on your side (law of large numbers and everything), and then you divide up the loans into discrete packages.
So we bundle up 100 subprime loans and then divide them into four packages, each package having the rights to payments from 25 loans. And now, to sprinkle on the (imperfect) time machine dust, we say that the first package will be entitled to the first 25 loans out of the 100 that gets paid off, the second package will be entitled to the next 25, and so on.
This is the financial engineering magic - instead of having 100 random subprime loans with an expected value of 75%, we can bundle up the loans and then divide them up into smaller packages *with conditions attached* to turn the 100 loans into four packages, the first three having an expected value of 100% and the last package of 25 loans having an expected value of 0%.
If you are an investor buying package 1 or package 2, you'll feel pretty confident of getting repaid. If you are buying package 3, statistics say that you will get repaid 100% but you are a little bit uncomfortable.. so Wall Street gets an insurance company, say AIG, to guarantee that, out of those 25 loans, AIG will pay after the first 5 defaults. The expected default rate for package 3 is 0%, so AIG is comfortable in accepting an insurance premium to write this type of insurance - after all, statistically and if the assumptions hold up, it will never have to pay out on the insurance. Now, with the insurance, the investor is comfortable that it will get repaid and therefore will buy package 3 at a price that makes Wall Street money.
That, simply put, is what securitization does. The idea is that simple. And because the financial and legal types like to think of themselves as geniuses, they call these packages "tranches." So is this creating value out of crap? Financial mumbo-jumbo, a slice-and-dice that ends up shredding investors?
No, it's just unlocking hidden value. 100 random subprime loans can (and are) worth more when you package them into tranches. There are a lot of things in life that are worth less than the sum of its parts. Look at a car junkyard - it's a business only because a car parted out is worth more than the whole car. So too subprime loan, parted out through securitization, are worth more than the original loans.
There is a lot of talk about Wall Street securitizing loans, and making all these fancy and exotic investment vehicles which then turned out to be worthless, but I just don't buy it. No matter how many packages you divide a bundle of loans into, you cannot create more than the original 100 loans, so financial engineering doesn't expand the universe of loans (i.e. doesn't expand the universe of risk), it just divides it up into smaller packages.
So the subprime collapse only happens when reality is different from assumptions. We assumed a 25% default rate. What happens when it is actually 35%? Well, tranche 1 and 2 are still the same (65 loans get repaid, and 1 and 2 "take up" only 50 loans). Tranche 4 is still the same, it's still crap (0 loans get paid).
For tranche 3, the investors expected to get fully repaid (i.e. 25 good loans), but with a 35% default, there are only 15 good loans left (65-50 = 15). AIG, our insurer, also expected 25 good loans remaining when it insured against 5 bad loans.
With a 35% default rate, the tranche 3 investors will collect on the 15 actual good loans and the 5 insured loans from AIG, and will take a loss of 5 loans. AIG will take a loss of 5 loans against their income from the insurance premium.
So is there a subprime problem? Yes and no. Yes, in reality default rates have likely been higher than the assumed rates in the models used to price the tranches, but the failures are not due to problems with black magic. It's a simple error in assuming default rates by investors and insurers.
Investors and insurers only lose more money than expected when the default rates are higher than expected. Outside of "naked" insurance policies (aka naked Credit Default Swaps), there is no expansion of risk in securitization. AIG lost money because it did not assess the risk in providing insurance properly.
And the answer is "No" because, for all the negative press on the subprime market, it is surprisingly not that bad. While the data is dated, as of last year the total dollar amount of outstanding subprime loans is 1.3 trillion, with a default rate of 14.5%, and the average loan amount being $180k.
That means that about $200B worth of loans is in default. So why is there a $700B bailout?
That was a joke of a bogeyman, and now, a few months later, when oil is down to less than $90, no one is talking about those speculators - now those folks who bought when oil was $140 are no longer evil speculators, just bad investors. Then, the mainstream business media didn't really explain how oil "speculation" could have a negative long-term impact on things.
These days, the monster under the bed is subprime mortgages. You know, those Wall Streeters and their financial engineering, their "securitizations" - my gosh, what a long word, it must be a complex and difficult to understand concept, I mean, it even has a 10-point Scrabble tile in it, it must be nefarious!
The popular understanding of securitization is some sort of fancy slice-and-dice that turns bad assets (subprime debt) into multiples of good assets, but this understanding is just wrong.
Everyone knows what a mortgage is, and most understand correctly that subprime mortgages means loans to people who, on average, will default on their loans more often than the regular ("prime") market. To offset the fact that they will default more often, you as the bank charge a higher interest rate. Makes sense, and simple enough.
Making a loan and pricing the loan (i.e. setting the level of interest to charge) is a forward looking bet. All else being equal, the price you charge for a loan depends on how likely the borrower will pay you back. So how do you predict whether the borrower will pay you back? You use things such as credit scores, and divide borrowers into subprime and prime markets.
But what if you can make a backwards looking bet? What if you can build a time machine, so you don't need to predict whether someone will pay you back (regardless of their credit score), you'll actually know if they will pay you or not?
If you can know the future, you can make money. This is what securitization tries to do.
A few decades back some financial types and lawyers (I'm assuming) got another simple idea: let's build something close to a time machine.
How do you do this?
First, let us assume that 25% of all subprime loans will default. That sounds bad, but that also means 75% will pay you.
So if you make one loan, you have a 75% chance of getting 100% of your money and a 25% chance of getting 0% of your money back (disregarding partial payments prior to default).
Second, we would quickly realize that if you make 100 loans (or 1,000 or 1M, etc.), then you know that statistically you will get 75% of your money back.
So how do I build this (imperfect) time machine with these realizations? Well, you first bundle up a lot of subprime loans to get statistics on your side (law of large numbers and everything), and then you divide up the loans into discrete packages.
So we bundle up 100 subprime loans and then divide them into four packages, each package having the rights to payments from 25 loans. And now, to sprinkle on the (imperfect) time machine dust, we say that the first package will be entitled to the first 25 loans out of the 100 that gets paid off, the second package will be entitled to the next 25, and so on.
This is the financial engineering magic - instead of having 100 random subprime loans with an expected value of 75%, we can bundle up the loans and then divide them up into smaller packages *with conditions attached* to turn the 100 loans into four packages, the first three having an expected value of 100% and the last package of 25 loans having an expected value of 0%.
If you are an investor buying package 1 or package 2, you'll feel pretty confident of getting repaid. If you are buying package 3, statistics say that you will get repaid 100% but you are a little bit uncomfortable.. so Wall Street gets an insurance company, say AIG, to guarantee that, out of those 25 loans, AIG will pay after the first 5 defaults. The expected default rate for package 3 is 0%, so AIG is comfortable in accepting an insurance premium to write this type of insurance - after all, statistically and if the assumptions hold up, it will never have to pay out on the insurance. Now, with the insurance, the investor is comfortable that it will get repaid and therefore will buy package 3 at a price that makes Wall Street money.
That, simply put, is what securitization does. The idea is that simple. And because the financial and legal types like to think of themselves as geniuses, they call these packages "tranches." So is this creating value out of crap? Financial mumbo-jumbo, a slice-and-dice that ends up shredding investors?
No, it's just unlocking hidden value. 100 random subprime loans can (and are) worth more when you package them into tranches. There are a lot of things in life that are worth less than the sum of its parts. Look at a car junkyard - it's a business only because a car parted out is worth more than the whole car. So too subprime loan, parted out through securitization, are worth more than the original loans.
There is a lot of talk about Wall Street securitizing loans, and making all these fancy and exotic investment vehicles which then turned out to be worthless, but I just don't buy it. No matter how many packages you divide a bundle of loans into, you cannot create more than the original 100 loans, so financial engineering doesn't expand the universe of loans (i.e. doesn't expand the universe of risk), it just divides it up into smaller packages.
So the subprime collapse only happens when reality is different from assumptions. We assumed a 25% default rate. What happens when it is actually 35%? Well, tranche 1 and 2 are still the same (65 loans get repaid, and 1 and 2 "take up" only 50 loans). Tranche 4 is still the same, it's still crap (0 loans get paid).
For tranche 3, the investors expected to get fully repaid (i.e. 25 good loans), but with a 35% default, there are only 15 good loans left (65-50 = 15). AIG, our insurer, also expected 25 good loans remaining when it insured against 5 bad loans.
With a 35% default rate, the tranche 3 investors will collect on the 15 actual good loans and the 5 insured loans from AIG, and will take a loss of 5 loans. AIG will take a loss of 5 loans against their income from the insurance premium.
So is there a subprime problem? Yes and no. Yes, in reality default rates have likely been higher than the assumed rates in the models used to price the tranches, but the failures are not due to problems with black magic. It's a simple error in assuming default rates by investors and insurers.
Investors and insurers only lose more money than expected when the default rates are higher than expected. Outside of "naked" insurance policies (aka naked Credit Default Swaps), there is no expansion of risk in securitization. AIG lost money because it did not assess the risk in providing insurance properly.
And the answer is "No" because, for all the negative press on the subprime market, it is surprisingly not that bad. While the data is dated, as of last year the total dollar amount of outstanding subprime loans is 1.3 trillion, with a default rate of 14.5%, and the average loan amount being $180k.
That means that about $200B worth of loans is in default. So why is there a $700B bailout?
Market Meltdown Hysteria
As a foreigner in a foreign land, one of the touchstones to home is sports. We don't really get ESPN here, instead we get an ESPN/Starsports hybrid, alongside three other sports channels. There is an African sports channel, an Aussie one and a Thai channel.. it can be interesting at times because you'll see a lot of obscure sports, like deep sea fishing, futsal world cup, all sorts of para-olympic sports, equestrian events, etc. But in the end, I probably watch the ESPN hybrid the most.
So yesterday, the two lead stories on this version of Sportscenter was about soccer and F1 racing. Good enough, because I've grown interested in the former and I've always been a car guy, so the latter is up my alley.
Except that the stories weren't sports stories, but rather they tried to inject the current economic crisis in the stories. For the soccer bit, the reporting was about how much top teams in the English (Barclays') Premier League were paying their players in salary, opinion that given the current world financial situation those salaries may have to go down, and a report about how UEFA is looking into punishing teams that have too much debt. The ESPN dudes go on to make it sound super-ominous that teams have debt and that somehow this was a bad thing for the game.
Ugh. This is like a lot of bad journalism that goes on these days within the business press and in the general press corp. There is all this hysteria about, and frankly it is sickening.
I mean, it's a *good* thing that EPL teams have debt - it shows you that someone must think that the team as a business is a good risk, and that's why they lend the team money.
EPL teams have no salary cap, and undoubtedly more money buys you better players. If I'm a fan of a team, darn it, I want them to spend as much money as possible in buying players. And getting into debt will allow that (just don't raise ticket prices too, too much!).
This shallow sort of reportage is such an affront to my sensibilities. Don't these reporters and editors understand that debt can be a hallmark of a good business?
Just imagine you're Ray Kroc and you opened the first McDonalds' and proved the concept of your business. So how do you expand? You can do a cash-financed expansion, which is basically waiting until you've saved enough profits from the first location in order to pay for opening the second location. Or you can do a debt-financed expansion, which is basically borrowing money (from a bank or your franchisees) to open your second location.
So borrowing money can help businesses become bigger and better businesses. After all, if the business borrows money at 10%, then that business expects to get returns at 10+%. And if a business does not expect to get returns at 10+% and therefore chooses to not borrow money, couldn't an argument be made that such business should just sell itself off and close up shop? Then they can just take that money and loan it to someone else at 10%. You'll make 10% without having to work, isn't that better?
It's frustrating enough these days to watch TV and read the papers, can't I get my sports free from malformed economic thoughts?
So yesterday, the two lead stories on this version of Sportscenter was about soccer and F1 racing. Good enough, because I've grown interested in the former and I've always been a car guy, so the latter is up my alley.
Except that the stories weren't sports stories, but rather they tried to inject the current economic crisis in the stories. For the soccer bit, the reporting was about how much top teams in the English (Barclays') Premier League were paying their players in salary, opinion that given the current world financial situation those salaries may have to go down, and a report about how UEFA is looking into punishing teams that have too much debt. The ESPN dudes go on to make it sound super-ominous that teams have debt and that somehow this was a bad thing for the game.
Ugh. This is like a lot of bad journalism that goes on these days within the business press and in the general press corp. There is all this hysteria about, and frankly it is sickening.
I mean, it's a *good* thing that EPL teams have debt - it shows you that someone must think that the team as a business is a good risk, and that's why they lend the team money.
EPL teams have no salary cap, and undoubtedly more money buys you better players. If I'm a fan of a team, darn it, I want them to spend as much money as possible in buying players. And getting into debt will allow that (just don't raise ticket prices too, too much!).
This shallow sort of reportage is such an affront to my sensibilities. Don't these reporters and editors understand that debt can be a hallmark of a good business?
Just imagine you're Ray Kroc and you opened the first McDonalds' and proved the concept of your business. So how do you expand? You can do a cash-financed expansion, which is basically waiting until you've saved enough profits from the first location in order to pay for opening the second location. Or you can do a debt-financed expansion, which is basically borrowing money (from a bank or your franchisees) to open your second location.
So borrowing money can help businesses become bigger and better businesses. After all, if the business borrows money at 10%, then that business expects to get returns at 10+%. And if a business does not expect to get returns at 10+% and therefore chooses to not borrow money, couldn't an argument be made that such business should just sell itself off and close up shop? Then they can just take that money and loan it to someone else at 10%. You'll make 10% without having to work, isn't that better?
It's frustrating enough these days to watch TV and read the papers, can't I get my sports free from malformed economic thoughts?
Thursday, October 02, 2008
TIps for Vietnam Travel
As my days invariably wind down here, I've accumulated a bunch of (ok, a smidge of) local knowledge, with no avenue to apply it. May as well throw it up on the blog for others to use.
Money/Exchange Rates:
One tip for establishments where they allow you to pay in VND or USD - ask what the exchange rate is. And then decide, 'ok, if I were to sell USD today, would I sell my dollars for that much in VND?' It makes the decision to pay in VND or USD much easier, as I'm generally confused if it is a good thing or a bad thing if the exchange rate is 15,900 versus 17,900 (answer: it depends on what currency you have in your pockets).
Weather:
I know some people say that it actually gets cold in Vietnam, but my experience has not borne it out. Lived in Hanoi for an entire year, and I'm coming up to an entire year in Saigon as well. It does get slightly chilly in the fall/winter in Hanoi, but one can venture about in shorts and tshirts still, even if one does not feature the obligatory Northern American layer of organic insulation.
When folks say that Saigon is rainy, well, that they are correct on. It rained like a mother late summer to early fall this year. I mean, crazy amounts that kept me cooped up inside.
Travel/Immigration/Customs;
The in-bound customs officers are really anal about you bringing in laptops. HCMC's customs folks seem to be more difficult than their Hanoi brethren.
Recently I travelled abroad with two laptops, and then returned with two laptops. And they wanted me to pay customs duties on the second laptop. This is after I had paid fees to bring in these laptops the first time, although those monies didn't end up in the government's coffers, as detailed here.
My obstinance prevailed, and I didn't pay anything; the customs folk made me write onto the customs declaration form that I brought in two computers, and warning me that I will have to take with me two computers when I next leave the country, or else I would have to pay duties then.
Let me back up and explain the customs process. Upon entering Vietnam, the flight attendants will give you a two part white customs form (for foreign passport holders). You declare items you are bringing in and the like, just like other countries. Upon landing, at passport control, they review your customs declaration, stamp one side of the form, keep the stamped part and then return to you the unstamped part. When you collect baggage and leave the airport, the x-ray your baggage, reconfirm the customs form, stamp it and return it to you. When you next leave the country, you are required to submit this customs form that you are required to keep all this time.
So instead of paying more duties, I wrote down that I have two computers on the customs document, and they allowed me to leave. I don't plan to leave with two computers and, because this is Vietnam, I don't plan to be required to pay any duties upon leaving.
First off, the customs guys were lazy and didn't stamp the part I kept. Second, Hanoi is much more lax with the customs procedures than HCMC. When I flew in and out of Hanoi, I never returned the second part of my form upon exit of the country, because I didn't know it was a requirement. They just give you a new form to fill out. These forms are lying around all over the place in Noi Bai airport.
Long story short, I got myself a blank form and will give the customs folks an unadulterated declaration statement upon leaving - if they complain about the lack of an official stamp, well, the explanation that it was never stamped by the lazy customs officers will be readily accepted, because they know that such lack of rigor is common.
The tip is, when you fly into the country, grab extra blank custom forms from the flight crew. Just tell them you made a typo on your form. Then keep it handy, just to have options. You know, just in case you need to forge shit.
If I really wanted to import shit, not get caught by customs and sell under the radar, I would bring in wristwatches. Vietnamese people are bling'n ballers yo, you can easily unload watches costing tens of thousands here. I cannot think of a more gauche manner to launder money in Vietnam.
But before reading the below, head over to Miss.Adventure's Guide to Living in Vietnam. This blogger just recently concluded her time as an expat in Vietnam, but the archives are informative.
Anyhow, here's what I would add:
Money/Exchange Rates:
One tip for establishments where they allow you to pay in VND or USD - ask what the exchange rate is. And then decide, 'ok, if I were to sell USD today, would I sell my dollars for that much in VND?' It makes the decision to pay in VND or USD much easier, as I'm generally confused if it is a good thing or a bad thing if the exchange rate is 15,900 versus 17,900 (answer: it depends on what currency you have in your pockets).
Weather:
I know some people say that it actually gets cold in Vietnam, but my experience has not borne it out. Lived in Hanoi for an entire year, and I'm coming up to an entire year in Saigon as well. It does get slightly chilly in the fall/winter in Hanoi, but one can venture about in shorts and tshirts still, even if one does not feature the obligatory Northern American layer of organic insulation.
When folks say that Saigon is rainy, well, that they are correct on. It rained like a mother late summer to early fall this year. I mean, crazy amounts that kept me cooped up inside.
Travel/Immigration/Customs;
The in-bound customs officers are really anal about you bringing in laptops. HCMC's customs folks seem to be more difficult than their Hanoi brethren.
Recently I travelled abroad with two laptops, and then returned with two laptops. And they wanted me to pay customs duties on the second laptop. This is after I had paid fees to bring in these laptops the first time, although those monies didn't end up in the government's coffers, as detailed here.
My obstinance prevailed, and I didn't pay anything; the customs folk made me write onto the customs declaration form that I brought in two computers, and warning me that I will have to take with me two computers when I next leave the country, or else I would have to pay duties then.
Let me back up and explain the customs process. Upon entering Vietnam, the flight attendants will give you a two part white customs form (for foreign passport holders). You declare items you are bringing in and the like, just like other countries. Upon landing, at passport control, they review your customs declaration, stamp one side of the form, keep the stamped part and then return to you the unstamped part. When you collect baggage and leave the airport, the x-ray your baggage, reconfirm the customs form, stamp it and return it to you. When you next leave the country, you are required to submit this customs form that you are required to keep all this time.
So instead of paying more duties, I wrote down that I have two computers on the customs document, and they allowed me to leave. I don't plan to leave with two computers and, because this is Vietnam, I don't plan to be required to pay any duties upon leaving.
First off, the customs guys were lazy and didn't stamp the part I kept. Second, Hanoi is much more lax with the customs procedures than HCMC. When I flew in and out of Hanoi, I never returned the second part of my form upon exit of the country, because I didn't know it was a requirement. They just give you a new form to fill out. These forms are lying around all over the place in Noi Bai airport.
Long story short, I got myself a blank form and will give the customs folks an unadulterated declaration statement upon leaving - if they complain about the lack of an official stamp, well, the explanation that it was never stamped by the lazy customs officers will be readily accepted, because they know that such lack of rigor is common.
The tip is, when you fly into the country, grab extra blank custom forms from the flight crew. Just tell them you made a typo on your form. Then keep it handy, just to have options. You know, just in case you need to forge shit.
If I really wanted to import shit, not get caught by customs and sell under the radar, I would bring in wristwatches. Vietnamese people are bling'n ballers yo, you can easily unload watches costing tens of thousands here. I cannot think of a more gauche manner to launder money in Vietnam.
Sunday, September 28, 2008
Level 23 at the Sheraton
So I was at Level 23, the bar/club on the 23rd floor (natch) of the Sheraton Hotel off Dong Khoi in District 1. It's one of the few places in town where one can grab drinks in mixed company, out on the town discussing work b.s.
Like all hotel bars around here, the house band is an imported lot. It had been a while since I've been there, so I didn't know that the rather enjoyable American-based cover band, with their Jamaican lead songstress, had finished their 6 month gig.
When I saw the bassist in my local KFC picking up some chicken for lunch, and trying to pick up a fellow customer who was eating with her infant son, I didn't know it was the last time I would see him. I was paying him some attention because there are very few African-Americans in town on business - they're usually here as tourists, while the black business folks are from the UK and its former colonies, or African blue collar workers. Another customer, this one a local dude in his 50s or so, hit on the KFC female staff three decades his junior, and got her number! I didn't know KFC was such a hopping joint.
Anyhow, the new cover band seemed to have hailed out of Europe. One of the guitarist is from Sweden, but he wouldn't play ABBA! They do the same cover songs as the previous band, but they kinda suck at it. It sounded more like an enthusiastic company karaoke night, than a professional cover band. Particularly funny was a rendering of the Nelly Furtado/Timbaland hit, Promiscuous Girl, by a duo that looked more like blond Kelly Clarkson and Moby. The Moby-lookalike doing an Akon song was enjoyable as well.
Too bad that wasn't the highlight of the night.
I left pretty early because I'm not a big fan of American Idol. So I got to the elevator and another guy was leaving as well. As I wait for the elevator, he starts bitching at the Sheraton staff, calling them "dogs" in English and telling them to 'come here like little dogs'.
Alright, I understand that it can be easy for some people to get upset at the local staff, more so at places where they serve you alcohol. But there is appropriate cursing and there is shit that is out of line. I'm a New Yorker, cursing is second nature.
You can throw as many f-bombs and motherfuckers around, but you don't call people certain things unless you want your ass beat. Don't call someone a monkey. And don't call someone a dog, especially an Asian person. The signage referenced below in Bruce Lee's flick may be an anachronism, but, if you are of a certain age, then it's part of your understanding of what's acceptable and what's not acceptable.
You don't call someone a dog in this context without intending to attach its most vile meaning - after all, the reason Dottie Pepper's quote is so funny is because (a) it was an on-air gaffe during the Solheim Cup (women's golf version of the Ryder Cup, for you non-golfers out there) and (b) she's such a goody-too-shoes that she didn't use the term she wanted to use, which was "bitch," to refer to the US women golfers. This dude was not trying to avoid saying bitch.
So I kindly told him to not use such language, and it escalated to me cursing at him. Dude was some American (tourist?) who was upset because he was being kicked out of Level 23. Man, this is Vietnam, it's like 9:30-10pm on a Friday night - what kind of royal asshole must you be to get booted from an expat bar at such time and place?
It was pretty fun cursing at someone on another's behalf. So a fun night all around.
Friday, September 26, 2008
Incompatibility
So it has been about two years plus since the equity market runup here in Vietnam (and twelve months since the tumble).
Recently I headed to my brokerage to see the state of the portfolio, and I come to discover that while this place is owned by a major local bank, it does not have a system in place whereby you can check, in Saigon, the balance of an account that was opened in Hanoi.
So they had to print it out up north and fax it down. Crazy, considering how well capitalized this company continues to be.
Thursday, September 25, 2008
F'in Mets
I can't believe I can be that disgusted 10,000 miles away. As the insufferable Dottie Pepper would say, a 'bunch of choking dogs!'
Tuesday, September 16, 2008
O'Hare Flooding (Again) and United's Red Carpet Club
Here's another picture of the flooding at O'Hare the other day. I'm relatively sure that the loader vehicle there has a set of rear tires obscured by the water.
Saw on the news that evening that Terminal 2 of O'Hare got evacuated due to the rains. In the terminal I was in (1?), there were lots of water-catching pylons made up of those x-ray trays all over. Walking around the terminal to stave off boredom reminded me of those Hertz O.J. Simpson commercials, with the dodging and weaving. Hey, it's football season, and I don't mean EPL. 
This was the scene about an hour before the scheduled departure. Relatively stress-free compared to the scene a few hours later when the flight got cancelled, due in part to the rain/flooding, in part to maintenance issues on the plane.
This is United's Red Carpet Club (or at least one of them) at O'Hare. It's mostly empty because I was practically the last person to get a hotel booking voucher from United. Just imagine a load of passengers on a 747 filling this space. 
I think she *was* the last person to get a hotel. Eating granola bars and drinking tea gets real old, real fast if one is stuck around for 2 hours. Especially if there is no free wifi! (Boingo offers 1 free hour of wifi at ORD, but that runs out in a blink of the eye when your flight gets delayed)
This is the bar. Where you have to pay for a drink. Wha!?! What is the point of an airline membership lounge where one has to fork over money for drinks? And where the drinks cost the same as the bars out in the terminal. There's no point to this lounge business in the US airports with these dumb cutbacks. I think this woman got her hotel and flights rearranged already, but she's a college football fan.
The cancelled flight meant a hotel voucher, a taxi voucher (that only covered about 60% of the taxi ride to West Bumfuck), and a $15 food voucher for use in the airport, all courtesy of the airline. The final poke in the eye by United is that the food voucher cannot be credited towards drinks. In my estimation, a low-fat, carbonated drink filled with carbohydrates counts as food to me. Whatever. Screw the voucher, it's been a long day. Order some tasty dishes and finish it off with a Goose Island brew.
Saturday, September 13, 2008
O'Hare Flooding
the front edge of Hurricane Ike. Wonder how Houston held up.
Flooded gate means that they can't fuel up the plane - kinda important.
The traffic control tower also got flooded, according to the pilot of
my previous flight. And the entire airport is grounded to a halt
because a lot if runways are closed due to the flooding.
Time to hit up the airport's McDonalds.
Sunday, August 31, 2008
Palin Around
So McCain announced a running mate, surprising most by picking Sarah Palin, a first term governor of Alaska.
Interesting choice, and two reactions:
One - just imagine how pissed you would be if you are Hilary Clinton right about now. Here is a lady, Palin, that is vastly, vastly under qualified compared to Hilary, yet she got the repub VP nod while Hilary was snubbed by Obama for an older, male version of herself (who is less qualified electorally, than her). Palin even co-opted some of Hilary's inspiring talking points in her first public speech as the VP candidate. How much does it suck to be on the receiving end of unbridled, and undeserved hate, from one's own political party. I mean, there are folks out there who heartily advocated for Obama because they hated Hilary and now they're undecided in an Obama-McCain matchup. How simply repugnant is that? Sure, Hilary supporters have to be convinced to go Obama now that she's nowhere on the ticket, but they would never have deserted her for McCain. Makes one wonder how much of that Obama support is merely anti-Hilary, and how well that would hold up in November.
Two - the political media are just a nasty, mean, petty bunch of SOBs. I started to care a bit about politics once I moved into the maelstrom that is Washington D.C. I started to pay attention more, and did more than simple cursory reading, after the 2000 election - I mean, who didn't, right?
From 2000 till Obama, or perhaps till Dean's Scream, the views on the lefty press and the lefty blogs probably dovetailed decently with my own. Ok, maybe not dovetailed, but perhaps friction-fit.
But once you're blessed with not agreeing with their viewpoints, you can step back and see the characters on the lefty media, and it's not a pretty picture. I've become tired of Keith Olbermann for more than a year now and wish he would go back to SportsCenter so that I can tune into MSNBC. I used to read the Huffington Post once in a while, less during this Obama-Clinton race, but after today's article by Jane Smiley (about Palin), I'll likely not type the url in ever again.
The early meme talking point on Palin is that she is unqualified to run as VP - and Smiley writes in this vein, offering up as criticism the fact that Palin was a beauty queen and wonders (twice!) if she is breast feeding. That is bordering on (if not) misogyny, whether it's written by a woman or not.
It is base and unbecoming to attack her in this manner. It should be focused on policy and process.. and this kind of attack does not endear the Obama camp with the disaffected Hilary supporters.
Here is something from, of all places, a golf magazine, that, while coming from a totally different direction, is on point - David Feherty, from his piece, the Hypocritical Headache:
It's tough for women to get through that glass ceiling, and if they do, they have to work with men looking up their skirts. Needless to say, the guy beside me didn't have a daughter.
Wednesday, August 20, 2008
No Free Liquor
Just recently discovered that United International flights no longer
serve complimentary alcohol on their flights, as of Aug 1st 2008. I
guess I have to start buying 100ml bottles to smuggle things on board.
serve complimentary alcohol on their flights, as of Aug 1st 2008. I
guess I have to start buying 100ml bottles to smuggle things on board.
From now on bring USD when flying, in increments of $6USD.
Tuesday, August 19, 2008
Laundry Laments
Was packing recently for a trip back to the States. Made sure to pack
a few small gifts for family, but these days they've had their fill of
made-in-China but sold in Vietnam goods.
a few small gifts for family, but these days they've had their fill of
made-in-China but sold in Vietnam goods.
I also made sure to pack my dirty laundry.
When we were in Hanoi, we did our own laundry, with a dryer to boot.
Save for the lack of hot water, clothes came out of the Japanese sized
top load washers pretty decently. Anything that didn't come out that
clean could be pretreated for a second go around.
The biggest laundry hassle then was making sure your clean clothes
didn't touch any surface of the dusty balcony - on its transfer from
washer to dryer to laundry basket. It was Hanoi; every exrerior
exposed surface got dusty in mere hours.
Down here, things are a bit different. I have someone do my laundry
every day, as part of my housing arrangement. You would assume I would
appreciate this more. But of course I don't.
Besides doing a bad ironing job, my clothes do not come out clean. I
don't know if it is because they are sloppy, lack of detergent, or
maybe they hang it outside in the dirty air to dry. I've given up
trying to figure it out.
I'm just packing all the laundry I can so I can give them a good
washing at home.
Friday, August 08, 2008
Brutal Beijing Olympics Crackdown
Oh my god, the brutal detainment! This Reuters clip, courtesy of With Leather.
I just love it when people complain about "abuses" that they have no inkling of. I bet you this is the first time they've been to China. Are places like China, or Vietnam, perfect? Of course not. Could the government do a better job with respect to citizens' rights? Of course it could - but all governments in the world usurp the power of the people. It's about hitting the right balance. Vietnam is not there, but neither is the US.
But, living here, that is hardly my concern. I'm more affected by the economic hardships that I see daily. The other day there was a Bentley Continental Flying Spur parked on the street - and across the street, a grandmother was laying out newspaper on the sidewalk for a kid about 4 or 5 to take a nap. But that's not sexy enough for t-shirts and banners.
Thursday, July 31, 2008
Vietnam Taxicab Confessions
On a good day, riding in the back of a taxi gives me a chance to practice my Vietnamese. I am all about the benjamins, so I usually end up asking them about the economics of driving a cab.
A summary of what I've learned:
- cabbies pay for their gas usage (we'll get back to this in a moment)
- damage to the cab is paid out of pocket, unless the driver can prove the other vehicle is at fault - then the taxi company's insurance will pay
- for Mai Linh, one of the bigger operators, the 7-pax (i.e. the Toyota Innova) are driven solely by those with 1 or more years experience with the company - so the small the smaller the cab, the less experienced the driver
- drivers get 12-hour shifts, and can stake out their own territory
- like most jobs here, it's a 6-day a week gig
- pay is a % of the shift take, depending on the taxi company - it is roughly 45% of the till, but some companies institute a sliding scale, from low 40s to low 50s depending on the total per shift, while others require a minimum take per shift
- I've heard minimums ranging from 250k VND to 400k VND per shift
- I guess if you don't make the minimum, they fire you
- pretty much all the cabs have sensors in them to recognize an empty backseat - so you can't just jump into a cab when the previous fare exits. You have to close the door, have the sensors recognize it is empty, and then open up and get it. Not a big deal until one is hailing a cab in a torrential downpour
- more than 90+% of the cabs have accurate meters; one is more likely to find the 5% of drivers who do not know directions than the small percentage with rigged meters
"It's my cab." (back on the phone)
"I called for a cab."
"I called for it first." (close the door and I'm off)
It was funny as heck, moreso because this dude probably gets waited on hand-and-foot throughout his stay in Vietnam. He seemed flabbergasted that I wouldn't defer to his arse. Hey, if you were nicer I would've split the airport ride wit' ya. Whaddaya expect from a New Yorker in Danang? I ain't giving up my cab, dude.
Back to the gas situation. With the recent cut in gas subsidies to fight inflation, gas prices have gone up roughly by 1/3rd. Fares now have gone up by 2k VND per km, so yesterday I ended up paying about 25% more than usual for a 10km roundtrip.
Some taxi companies haven't instituted price increases as of yet. Drivers at two taxi companies in the north, Hanoi Taxi and Saigon Star Taxi, within the past week, have gone on strike to protest the lack of fare increases.
I'll probably end up walking a bit more than usual now, which is all together a good thing.
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