- Opposition politicians being arrested and detained.

- Noticeable restrictions on public freedom of movement and expression.

- Protests are taking place but are being stopped by police.

- It has reached a stage where some taxi drivers are being questioned by police as they move around Taipei.

I am not Taiwanese, but I am concerned to see this happening. Of course, part of me says, ‘well, what did you expect when you voted for these guys? Didn’t you study Taiwan’s history?’.

Here are some articles with more information, from people who are better informed than I am:

Michael Turton’s roundup.
“Are Taiwanese Fed Up Yet?
“Is Taiwan becoming a police state?”
Students protest peacefully at “Freedom Square”. Police remove them. Students re-assemble.

Looking back in history, partly, it was pressure from the USA that lead to Taiwan moving away from a period of repression. Maybe America can exert some useful influence again.

Suffice to say it’s been the most interesting two weeks in finance, of my whole life.

We’ve lost the world’s biggest insurer, and basically all the world’s biggest investment banks are dead or eaten by competitors. Most of this happened in just 10 days.

In the UK, we had about 8 big banks of varying sizes, so far 2 are dead (NRK/BB), 2 have been forced into takeovers (AL, HBOS). That just leaves LLOY, BARC, RBS, and HSBC. It’s exciting stuff.

Meanwhile in the USA, idiot citizens are phoning in to their representatives, trying to stop politicians passing a $700bn financial stability package. This is tremendously short-sighted. What do you think will happen if the banks become paralysed or bankrupt? Hundreds of thousands of businesses will be screwed. Hundreds of millions of individuals will potentially be screwed as the housing market begins a new and steeper nosedive, as their pension funds collapse, and as jobs disappear. John Mauldin has it right - pinch your nose and do the deal, because it’s the least bad of many bad options right now.

Meanwhile, Taiwan has tried to keep it’s housing market and stockmarket afloat by making money cheaper to borrow again, i.e. dropping interest rates. But this is foolish - the banks are paralysed by not knowing what losses they’ve taken and what losses their counterparties are taking. So, it doesn’t matter how low you put interest rates, the banks simply won’t lend. This is a liquidity crunch now, far more than an affordability crunch (though the housing market here is pretty bad in that regard too!)

Check out the Taipei Times. Wow, the media is catching up to the fact that houses are absurdly expensive in Taiwan, particularly Taipei, and it only took them two years to realise that.

““Taiwan’s housing prices are still overpriced,” Chiang Li-wen, manager of Taiwan Cooperative Bank’s (合作金庫銀行) personal banking unit, said by telephone.”

“Taiwan’s top five banks, including Taiwan Cooperative Bank, issued a total of NT$31.97 billion (US$1 billion) in new mortgage loans last month, the lowest since NT$21.19 billion in loans made in February, the central bank said in a statement this week.”

Here is what happened in Japan 18 years ago when the banks realised they had huge losses on their books (just like Taiwan), at a time of ridiculously high house prices (just like Taiwan), and couldn’t lend any more (just like Taiwan). Notice the interest rate graph - dropping interest rates doesn’t save you in a liquidity crunch.

House price declines in Japan, last 18 years. From this article.

Interest rates in Japan, last 18 years. From this article.

Here is what happened in Tokyo and Hong Kong when their property prices zoomed in the way that Taipei’s have. I believe that in ‘house-price-relative-to-earnings’ terms, Taipei has recently exceeded the heights of these graphs.

So, dear reader, I show you a possible - indeed, likely - future.

Click on the pictures to view them fullsize. These pictures are mirrored from reinet’s site.

If you look at the high point on those graphs… well, that’s where I think we are now. And if you look at the low point…. well, that’s where I think we shall swiftly go: 70-80% falls in property prices, and most of it too fast for anyone to hope to escape.

“Taiwan’s housing prices will rise 5-10% annually through 2010 at least, according to construction company and real estate brokerage executives speaking at a “real estate summit meeting” sponsored by the Taiwanese real estate magazine Zhu Zhan in early November. Some even declared this rate of growth would be sustained through the next ten years.”

” Others noted that the Olympics in Beijing in 2008 would not only boost China’s economy, but the economies of other countries in the region as well, and that Taiwan’s real estate market would be among those benefiting.”

Now, let’s take a look at today’s media, too. Bear in mind these journalists can’t be bothered to do their own research, so they’re simply serving up numbers presented to them by estate agents - whose interests are served best if it seems house prices are rocketing up!

With that in mind… take a look here at the China Post (Aug 1, 2008).

First of all, it again mentions the 10% July price drop in Taipei; and 15% drop in transactions.

Secondly, more information about the rest of the island. Taichung sees a drop of 5% in one month, in July alone. Closed deals were down by 30%. 5% a month annualises to… a 46% drop this year, before taking into account inflation… Kaohsiung had flat prices and a slight raise in transactions, but there’s no indication if this is just a normal seasonal ’summer rise’, or a seasonally adjusted figure.

I’d be interested to see if the other figures were seasonally adjusted - if they aren’t, the drop in Taipei and Taichung may be even more steep than the figures suggest!

Apparently there is an additional Autumn pressure on Taiwanese houses that I didn’t know about - Ghost Month! Quoting the China post, “Furthermore, as the Ghost Month has arrived, more sellers are expected to lower prices to attract buyers. In the Chinese culture, Ghost Month is the month of July on the Lunar Calendar, which this year lasts from Aug. 1 to Aug. 30. Most people are hesitant to buy houses during this period.”

Very interesting stuff - but the thing that stands out the most to me, is this quote from an estate agent who is talking about why people are selling, again from the China post article (my own emphasis added):

“most sellers lowered their prices in the hope of getting rid of their property as soon as possible, due to the mounting mortgage pressure“

Mounting mortgage pressure? With interest rates still near historic lows?

How on earth will these people cope if mortgage rates reach levels such as 15-25%, as they have in developed countries across the world in the past?

On the one hand we have the risk of even more price inflation if interest rates stay low and the currency gets weak. On the other, we have this ‘mounting mortgage pressure’ showing up at rates as low as 3%! Something tells me that Taiwan is not in for a good time in the next few years.

p.s. Other news just in. Housing transactions in Taipei are now down by 60% in just 3 months… going into the summer! 60% down in 3 months…blimey!

Finally, it seems like we’re there. The number of house sales is continuing to collapse (minus 15% taipei, minus 30% taichung in just one month) at what should be one of the best times of year for sales in most cultures. In other words, bye-bye buyers.

Of course, this is not even remotely surprising to anyone paying attention to the crashes in America, Australia, the UK, various European countries (Spain, Ireland, Italy), New Zealand, … all of which have followed nearly identical courses in the preceding 12-18 months.

Banks stop lending. Potential buyers stop buying (no ability to borrow). Sellers flood the market as they realise ‘the train has left the platform’. Potential buyers definitely stop buying as they see what’s happening! A two-tier market forms; some people who ‘have to get this money or we’ve lost everything’ with unrealistically high prices and houses that never sell; and some people smart enough to realise that a 20-30% price cut is probably still better than what they’ll get in a year’s time.

International money markets have been messed up for almost 12 months now, so even if people do want to buy, they can’t get the money because the banks can’t get the money. The banks just don’t have any capital left to lend out of their own and there is no willingness from large scale international institutional funds to take on bundles of mortgages.

In 6 months, price drops should be really obvious indeed, as estate agents scream at sellers to drop their prices. According to the article I quoted, prices are already down 10% in one month in Taipei.

Remember, a 50% drop cancels out a 100% rise, so a few 10% monthly drops relative to the peak can quickly become more significant than they first seem. Besides, annualising a 10% monthly drop shows you how serious it is, if it continues for any length in time.

10% monthly drops would turn your 10 million NTD Taipei apartment into a 2.8 million NTD Taipei apartment after 12 months. That might seem too much, but looking at history in a few different countries, you’d reasonably expect a market starting on a HPER of 12 to end up around an HPER of 2.5 or 3 (which is around or slightly below the long term average house price). Again, that represents about an 75-80% drop in prices.

This is extremely unfortunate for my friends in Taiwan who have bought houses in the last two years against my protestations. However, there was plenty of time to get out, and the warning signs that this was not a sane market were very obvious, specifically the crazy average-houseprice-to-average-earnings ratio in Taipei. There is not really any excuse for failing to take a few weeks or months to teach yourself about finance thoroughly, before you undertake what is probably the single most important financial decision of your life.

What happens next, I expect, is that most of the country is trapped ‘where they are’ - unable to change house, or escape debts they have built up. Meanwhile, interest rates rise as the central bank tries to keep inflation under control… gradually, people give up trying to stay current with their mortgage… and lose their house.

The next two to five years will be interesting to observe as a matter of academic curiosity, but for many people, I expect they will be very painful to experience.

A side note: Normally it’s a bit strange to annualise high monthly drops, the way I did above to get large implied annualised drops.

If a large, diversified, well run international company can drop like that; if a house in a US state full of wealthy people can drop like that; then by god, a crappy little Taipei apartment can drop 70-80% too!

She had a great time - all my friends were really nice to her, and helped me to show her some cool places. I saw a few new places myself, too..

Mum, Leila, Ethan, and their children, shopping in a giant mall in Zhongli.

Exploring Taoyuan city centre

Tasting shui jiao (dumplings) for the first time, near Taipei Main Station.

Taipei City Hall area.

Enjoying the view from Taipei 101.

Looking out across Taoyuan city.

Exploring ceramics at Inge with Sean, Kyle and Leila.

The main Taoyuan city temple.

Visiting the Grand Hotel, Taipei.

Enjoying the decor, before lunch.

Travelling to Hualian County.

Discovering that in one Taiwanese hotel, only midgets can use the facilities (look carefully).

Reaching Toroko Gorge, Hualien.

Can you see mum on the bottom right?

Walking through the corridors of the Toroko.
This part of the road is said to be as ‘twisty as a Chinese dragon’.

Mum with Davie (our friendly host in Hualien) and his daughter Tina.

Stopping for a break at a lake near Hualien City.

Late night shopping in Hualien City with Davie, his son and a friend.

Exploring the beach.

First view of the Pacific Ocean

Myself, mum and Tina near “Cow Mountain”.

Exploring a temple on the East coast.

Back to Taipei. Looking from the Chinese Culture University (YangMingShan).

What’s that little building over there on the left?

Exploring the sulphuric geysers of YangMingShan.

Leila and Mum at an organic farm in YangMingShan.

Lots of wildlife…

Strange buildings in the mist…

Say Cheese…(Kyle, Sean, Leila, Mum and myself).

Kyle treating everyone to a healthy organic meal.

Picking Canna Lilies at YangMingShan.

Underground shopping at Taipei City Mall.

Visiting the Maokong Gondola, Taipei.

I’ve been waiting for this exhibition for a month or two, so I went along this week to take a look. At the front door I was welcomed with a free guidebook and several computer games. The exhibition is well staffed, with guides on most exhibits, fluent in Chinese and English. The exhibits themself come from all around the world, from a number of famous digital artists.

Some artists are making a statement; the ‘bingmayong puppets’ for example have an interesting backstory. Others are experimental or geeky, such as HardDisko, the orchestra made from broken hard drives locked into an eternity of spinup cycles, or Khronos, which makes you feel like “Hiro Nakamura” from the TV show “Heroes”. Many exhibits may also look completely different depending on who visited them in the last half hour. You can quite literally leave your own mark on the exhibition - here’s my own brief appearance in one exhibit!

I took along several non-geeky friends, and they had a fun time, so this is definitely suitable for anyone, not just computer geeks. You can find the Red House theater next to the MRT exit (5?), near the ‘Ximen Walker’ statue, on Chengdu Road. I strongly recommend taking advantage of this extremely unusual free exhibition and visiting before it closes on Sunday.

More info here: Taipei Times, Open Play website.

Don’t worry - none of these photos give away the most surprising features of any exhibit.

Although there are a number of Apple stores in Taiwan, most of them do not offer a repair service themselves. Instead, they will accept your damaged Mac or iPod, and post it off to a central repair depot.

If, like me, you instead prefer to take your electronic equipment directly to the people who will be fixing it (perhaps, because you want to explain the problem precisely to the guy that will be repairing it), then there is another nice alternative.

Data Express have just moved their service center from a hidden corner near Shuanglien MRT station, to a nice new easy-to-find place in K-Mall. K-Mall itself can be found directly across the road from Taipei Main Station, and next to the 2nd tallest building in Taipei - the Shin Kong Life Tower. Just walk into K-Mall, take the lift downstairs 1 level, and you will find Data Express’s repair center at the opposite end of the building, on the left hand side.

These guys have given me excellent service since I arrived in Taiwan. They speak great English; they fixed my laptop’s problems correctly and quickly in each case when I had minor problems; and they are super friendly.

I strongly recommend them if your Apple equipment needs servicing.

Map of the UK.

Today’s Lesson: The capital cities of the United Kingdom!

London, the capital of the UK, was built near the demographic center of the UK, so that it could represent Northern Ireland, Scotland and England equally without having a huge political or economic bias towards one area of the country. It’s a very logical place for it to be, and so other countries (such as Australia and the United States) have copied this design.

Cambridge, the capital of England, is home to one of the oldest and most famous universities in the world. It’s hardly surprising that the people of Britain wanted to protect such a valuable place of learning from any natural disaster that might occur. So many hundreds of years ago, the city of Cambridge was built beneath the sea, inside a giant glass bubble. This way, if mankind should ever destroy itself, or civilisation collapse, the sum of human knowledge built over the centuries would be preserved. It also won’t shock you to learn that Cambridge has an incredible marine biology department, being surrounded on all sides by the seabed. Scientists need only walk up to the glass wall to be able to observe an incredible variety of underwater creatures. Cambridge University is currently planning on building a new floating campus to allow the university to expand its student intake.

Edinburgh is the world’s most unusual capital city. Built on an outcrop of rocks in the outer hebrides, and surrounded by vast herds of sheep, this capital city has confused tourists since time immemorial. Why on earth was it built in such a remote location? With a modern population of just 3000, it’s not even clear if Edinburgh will continue to exist in the future, as islanders gradually move away towards Glasgow, in the north of Scotland, seeking jobs. If you should ever visit Edinburgh by aeroplane, be sure to watch out through the windows as you land, for farmers clearing their sheep from the runways before the weekly plane full of tourists arrives. There is a city tour bus operating on a circular route of some 200 meters length. Don’t miss it!

Not many people know this, but Ireland and Northern Ireland are the only two countries in the world that don’t actually have any capital cities! Instead, everyone lives in (roughly) equally spaced-apart houses along three giant streets that stretch the length of the island. In recent years, small villages have been allowed to form, so that people can find the pubs more easily. It’s hard to become lost while on holiday here - just remember which of the three streets you’re currently on, and keep driving until you find a village. Be careful though! There’s a small error in this map. Northern Ireland, through a quirk of history, is in fact located in the very southwest of Ireland, near Dublin.

Wales is famous for the fact that it doesn’t really exist. In fact, “Wales” is just a traditional joke played on tourists by people in the west of England.

Next week: Canada, the 51st state… (of Australia).

Pushed by high-priced apartments and suites, the price of housing in Taipei City has continued to rise, increasing from NT$460,400 per ping (3.3m2) in the first quarter to NT$489,400 per ping in the second quarter, the report said.

You need to read between the lines carefully with housing data, to see what is really being said. Here, the claim is made that the price of housing has ‘continued to rise’ and that the housing market has ‘continued to boom’. But what is really given here?

- Asking price? (initial price sought?)
- Agreed price? (final price negotiated?)
- Achieved price? (the money that ends up in the bank, including transactions that fall apart?)

In fact, it’s the first; and this is often not a reliable measure of what is happening in the market (whether rising, falling, or stagnating). If I told you that X amount of Chinese food went on the ‘market’ today, and that Y of it sold - do you think it would be the ‘average’ priced piece of food that sold? Or probably more of the cheap stuff? It’s very much the same with housing, and in housing markets with low turnover, you often find a ‘two-speed’ market forms. A two-speed market is where high-priced sellers sit and wait for a year at a time, while lower-priced sellers clear their properties in weeks.

Here, we see that the collective value of housing ‘went up’, and also that the number of houses on sale went up too - in fact, considerably more. Let’s do the math:

1st quarter: 19,663 units collectively priced at 214.8 bn = 10.9 million NTD per house on average.
2nd quarter: 25,335 units collectively priced at 248.1 bn = 9.8 million NTD per house on average.

Implied quarterly drop in average asking price: 10%.

Quarterly turnover? Down from 30.14% to 27.43%. Doesn’t sound like much does it? But that means houses have rapidly gone from ‘10 months to sell’ to ‘11 months to sell’. This is particularly interesting, given that the number of estate agents needed to achieve that lower level of turnover was vastly higher than in the first quarter! (see the original article)

Being honest, I don’t think ‘mixed’ quite describes that performance. I don’t think ‘housing boom continues’ quite catches it either. In fact, I think completely frakkin awful far better describes a 10% drop in price and 10% drop in turnover - in just 3 months!

Consider also, this was as we entered the summer - which in almost every country of the world is one of the best times of year to sell a house, as opposed to a bone-chilling winter! Of course, I’m sure someone will write to tell me that Taiwanese people in fact LOVE going out to view houses in the bitterly cold winter weather.

Now, time to get even more skeptical. Did you notice I used the words ‘priced at’, rather than ‘worth’ as the original article did? That’s because the worth of something, contrary to the Taipei Times belief, is not actually defined by its asking price. If I offered you a house for free, would the house be worthless? If I offered you a tasty 12″ pizza for 1 million NTD, is it worth 1 million NTD? Of course not!

There’s a stronger argument that ‘achieved prices’ measure a sense of worth, where worth means ‘what people are prepared to actually pay’. But if some dumb guy pays 1 billion NTD for a Big Mac, does that make all Big Macs worth 1 billion NTD? I say, hell no - of course it doesn’t. And that is as true of houses as it is of Big Macs. There is nothing magical about a collection of bricks and mud, that makes it different to every other type of item in the world.

Instead, I personally prefer (and recommend) a more ‘financially real’ sense of worth which derives from the financial value of a thing. If I buy a house with cash, and it returns me a rent of 10,000 per month, and after costs I am left with 7,000 per month, then I can compare that with putting my cash in the bank; or shares; or I can compare that with the damage done by inflation. This sense of worth is often imprecise and subject to your own beliefs about the risks and alternative returns involved. But, I personally believe it’s probably the most valuable sense of worth that there is. I encourage you to develop your own meaning of worth by thinking about these issues, rather than believing the absolute junk you are normally fed by the mass media about financial assets.

But, we can be more skeptical still. There are other questions we need to ask about housing data. Is it averaged out over several months, or raw data? Are we considering regions or national figures? Are they seasonally adjusted (taking account of the ‘nice weather effect’) or unadjusted? Are the annual figures a 12 month average, since start of year average, or an extrapolation of the current month’s data? Are the figures measuring asked, agreed, or achieved prices? Net of costs, or without costs? Money borrowed or money spent? Who is measuring (estate agents? the government? banks? surveyors?)? Why are they measuring? What are they measuring (sentiment, prices?) How are they measuring?

In fact, it’s fairly trivial to ‘flip’ between 100 different types of housing data, so that house prices can appear to go onwards and upwards continually each month; or to present housing in a negative way continually. It’s worthwhile to watch journalists do this as they are spoonfed ready-made ‘press releases’ by banks and estate agents. Many such press releases are seemingly published without a moment’s critical analysis.

My all time favourite is the simple, ‘declare victory, and retreat!’. We saw this above in the Taipei times article, where they talk as though this news is actually encouraging! They start by saying the news was ‘mixed’, but then we were soon told ‘the market is continuing to boom’, and then we are told about a collection of statistics going up (value of houses on sale, number of houses on sale, number of estate agencies, …). Take a look at the full article online (or in print). Notice how much time was spent talking about the number of real estate salesmen’s offices in Taipei and where they all opened? Notice how little time was spent calculating the average price of a house, or the consequences of a rise in price per ping in a falling market?

No, most houseowners will worry when they see news of a mixed market, but then they will see ‘market continues to boom’, look at numbers going up, and they will feel reassured. The newspaper has succeeded! The scary headline sold the paper, yet the lovely story of the main article made the reader feel warm and happy.

To end this article, let’s look at the claim that the house price measured by ping went up. Intuitively, many people will think - oh ho - houses are becoming more expensive! But in fact, we’ve seen that collectively the ‘asking price per house’ went down by 10%; so if the price ‘per ping’ went up by around 5%, we can conclude that people have given up on selling big houses (generally) and are now selling pishy little apartments that are 15% smaller on average. Since the ‘achieved price’ should be considerably lower than the asking price in a low turnover market, this ‘house shrinkage’ effect may even be much worse.

As housebuyers in Taipei spend the next 30 years of their lives paying off around $10,000,000 NTD of debt - a sum which bought only a smaller-than-ever-before apartment - I wonder if they will question their sanity back in 2007.

But wait! Life will be just fine. Asus has stepped up to fill the gap. What they have produced is not a perfect competitor. The OLPC is aiming for 10-12 hour battery life with a rather slower processor, whereas this new Asus model only aims for 3 hours battery life. However, the EEE has a 900Mhz pentium M, which means it should be rather awesomely fast. It appears to be related to the Intel ‘Classmate’ low-cost subnotebook design, which was bouncing around the interwebs earlier in the year.

You can find information about the EEE PC here, here, here.

Some of the interesting features:

- 900Mhz processor.

- 7″ LCD display.

- 4-16GB solid state hard disk (basically, flash-based, tough as hell, fast, no fragmentation delays, smaller, lighter, lower power than a traditional hard disk).

- built in webcam, VGA out, USB, SD… (ooh, SD! Perfect for ‘on the move’ photo-editing then?)

- 512MB Ram.

- thin + light (0.82in thick, weighs 2 lbs).

- wifi.

- Linux-based operating system included.

Initial reports are that the machine boots up from cold in 10 seconds and shuts down in 5 seconds, so it should be great for ‘writer’s notepad’ type work too as well as the afore-mentioned ‘photo editing on the fly’.

In fact… this could well be the perfect tool for written or photographic blogging. I wonder if they realise that? Heck, dangle a GPS unit off the side, and you have a location-aware uber-blogging platform for less than a normal laptop!

According to Qbit Online, we can expect to see these tasty wee things arriving in late August. If you’re interested in seeing this mini-laptop in the flesh, there should be a demo next week at the Taipei Trade Center, as part of the TICA exhibition.

Point 1: Old people are screwed. Can’t get a good return from the bank on their lifelong savings, because of low interest rates. Can’t effectively invest in assets like housing and stocks (prices are sky high, since people have borrowed money practically for free, driving up prices). Legal restrictions on their investment overseas. Ergo, old people are screwed.

Point 2: Young people are screwed. House prices are absurdly high (10-20 million in Taipei) relative to wages. Take long term (historical) mean interest rates of around 6%, plus bank mortage premium, and you come to the conclusion that either every single guy in Taipei is earning 2-3 million a year to pay for his living costs, or you have a lot of couples working super-hard in normal jobs, just to keep up. How will they save for their middle age and old age? How will they take time off work for kids? How will they pay for kids? What happens if one of them falls ill? What happens if they both fall ill, even for a month or two? How will they cope when interest rates rise beyond the mean, but wages don’t go anywhere at all?

Worse, there is a strong tendency for people to do what their parents tell them. And parents are telling kids to buy houses - many having never seen a really shocking economic crash in action firsthand, unless they were working in Japan 10 years ago. Oops. Practically every 20-something and 30-something in Taiwan has been set up for financial disaster.

Here’s a graph of Taiwan’s historical interest rates. Are we in a ‘normal’ or ‘abnormally cheap’ situation, do you think? How screwed will homeowners be if interest rates go back to 15%?

Point 3: Creative businesspeople are screwed. Yeah, for big companies with huge anti-competitive moats (i.e. the ultra-big fabs, TSMC etc.), life is pretty sweet, you can expand and expand and it costs you no money at all. But for small companies? No sooner do you think of a way to make a profit than 20 other guys are crowding in and destroying the profitability of your business niche! Damn!

Oh look, a street where no-one is running a hotpot store. 4 weeks later, after one guy has taken the risk and tried opening his pet store, everyone else sees the trade he’s getting, and muscles in with cheap loans (or cash from the oldies, who are desperately seeking any kind of return), and BAM!Every businessman in the fight is screwed.

Whether it’s pet monkeys, hotpot dishes, or mass-production of plastic widgets, as a businessman you are still going to get painfully screwed - time after time - in a ‘cheap and easy’ borrowing environment. Of course, everyone dreams of running their own business here… so they sleepwalk into small business failure.

Point 4: Consumers are screwed. Consumers have used up the next 10 years of consumption already. I look at the guys where I live, who struggle to earn a consistent $80-150TWD / hour. They are all driving super-cool cars; cars far, far cooler than those in the UK, supposedly one of the world’s richest economies. How the hell can they possibly afford them?

Of course, they can’t really afford them. It’s the magic of 10-20 year finance and low interest rates allowing a low monthly repayment - for the rest of your life. However, this repayment sucks up all their income each month - and as rates increase, it gets more and more painful. I’d say that most of the shiny, awesome, beautiful, expensive Japanese cars I see round here have bashes and dents somewhere. People can’t afford to have the car *and* get it repaired every time some scooter blasts into it from a blind corner.

But if you spend all your future earnings today - what do you spend next year, or the year after …?

Point 5: Importers are screwed. With the Taiwanese dollar as weak as it’s ever been, you wouldn’t want to be an importer. Hell no.

Point 6: Exporters will be screwed. Whenever the interest rates do go up, and the carry trade in TWD reverses, it will be UGLY for those exporters who have borrowed to their eyeballs to expand. Gearing up heavily is a nice way to set your business up for disaster. The only reason exports are rising in Taiwan so quickly is because Taiwanese Dollars are being handed out like candy to the rest of the world. What’s the good of selling 30% more stuff beyond the growth you’d have normally had, if the money you sell it for is worth 30% less?

Taiwan does more work, but gets the same money, in terms of international buying power. Great for employment numbers. Crap for increasing the wealth of Taiwanese people - which they find out as soon as they try to buy anything from other parts of the world, or go travelling, or pay their electricity bills…

Point 7: Houseowners are screwed. Besides the ongoing agony of mortgage repayments in a low inflation environment with rising interest rates, there’s the simple matter of negative equity. Low inflation means any ‘real’ drop in house prices will be a ‘nominal’ drop in house prices. I.e. prices actually DROP rather than stand still while everything else goes up in price. That means you can’t sell without taking a huge multi-million dollar loss. Which means, you effectively can’t sell. So you had better like the house you buy, people, because you will be living there a very long time.

Oh - and did you know that Taipei is famous for holding world records when it comes to house-price-to-earnings multiples? We’re talking about a earnings multiple of 10-15 in many regions of the city. That makes even America, Ireland, Northern Ireland, Australia, New Zealand and London look cheap. Heck it makes Hong Kong and Shanghai look cheap. Last time this happened in Taiwan was around the mid 90’s, and Taiwan’s housing market went nowhere for the following 8 years.

Point 8: Everyone servicing ‘young industries’ is screwed. Demographic decline. Basically, there was already a trend towards having fewer kids, (and later in life), but my belief is that it’s being accelerated by the ridiculous housing situation. Suffice to say I wouldn’t want to be Toys’R'Us in 5 years time. No money, no kids. Great for business…

Taiwan is also faced with a tough political choice. Either take in immigrants, boost your replacement ratio (number of kids per couple) or go into population decline like Japan. The last of those three options would not be good for house prices or businesses in this country.

Point 9: Energy screwage. Taiwan doesn’t have energy resources. You may have noticed the oil price recently. And last year. It looks like it may be with us to stay. Oh dear.

Und so weiter…

… I could go on. Now of course, there’s always something wrong in the economy. And there’s always something right. I mean, you could point to the superbly low unemployment in Taiwan and say, “hey, that’s pretty awesome”! But my view is that the good vibes of the ‘booming economy’ and ’superb unemployment’ are an accident, caused by people spending 10 years of future earnings, right now.

Analogy.

Imagine a car. What happens when you put your foot down hard on the accelerator all the time? You travel fast, everyone in the car feels pretty good…whee!… but you burn up your ‘future fuel’ early, and not as efficiently as if you’d just driven a little bit more carefully.

That’s what low interest rates do. And the effect is much the same. Then suddenly, and with little warning… you hear a funny noise from the engine and the car starts slowing down. And no matter what you do to the accelerator pedal at that stage… there’s nothing to stop your car grinding to a halt. It’s too late.

Don’t believe me? Look at Japan. They used up their fuel; their economy has stood still for more than a decade. Yet still they stupidly hold their foot down on the economic accelerator of cheap money, when there is clearly no gas in the tank. They need to raise their interest rates, get the old people spending for a while. Put a change of fuel in the engine.

You cannot have your cake, and eat it too. The people in your country either spend their future wages now (by borrowing money), or they spend them in the future (by earning them). But if they spend it now - it’s gone, and the future must go without.

Conclusion.

Will Taiwan take it’s foot off the economic accelerator pedal, and raise interest rates? Or will they hold the accelerator pedal to the floor, even as the car grinds to a halt, and find themselves stuck in the mud with Japan? It will be interesting to watch, either way.

Picture taken from globalpropertyguide.com.

The normal Wii is typically priced at $7999 NTD. If you look around, you should be able to find places selling it with a modchip pre-fitted for $9999 NTD. Haggle, though - there’s no end of stores selling it at this price. The modchips allow you to play ‘backup’ games… err… should your original disk become lost, for example. They also allow you to play homemade games.

There is also a really nice collection of games console shops between Taipei Main Station and the main bus station. Walk from Taipei Main, towards Ximen, down the ‘Taipei City Mall’ under the right hand street. Definitely worth exploring if you’re collecting unusual games for your console. Particularly the ‘old school’ store, which appears to stock games (and consoles?) dating back 15-20 years!

UPDATE: today, I found out one of the stores in Taipei City Mall has Wii’s at $7700. Haggle?

Heck, I’ve even seen people at markets try to charge me the ‘label price’ (anything from 300-2000% of the real price) for delightfully ‘Authentc Italien’ clothes.

This is only the first half of the problem, of course. The second being that no matter what I do, no matter what I say, they will not drop the price. Haggling is right out, apart from a laughable 10 kuai here or there.

Why? My guess is, it’s about losing face. A Taiwanese market trader, being haggled down by a laowei? If there’s anything that would get them laughed at by their fellow traders for the rest of their life, that’s probably it.

Still, no matter how much I grumble ‘tai gui!’ or ‘gui si!’, the price is absolutely not going to be coming down. So off I go, and at the end of the day I don’t have what I want, and they don’t have any of my money. No one wins!

Even on those rare occasions that I do manage to find something resembling what I want, it’s usually a very cheap and nasty alternative rather than the real deal. Why, oh WHY, do Taiwanese computer shops refuse to stock parts from top quality manufacturers? Some of the best electronics in the world is made in Taiwan, but will the manufacturers sell it locally? Hell no! ATP - I’m looking at you, here!

Anyway…I thought I’d look for a mail order online store, so that I could avoid the annoying “Laowei Effect” when I’m shopping. In the UK, we have semi-wonderful stores like Ebuyer,Dabs, Scan, and so on. In Europe, Itbutikken does a great job. And in the US and Canada, BestBuy, NewEgg and others provide the same function.

Where is the Taiwanese equivalent? Amazingly, it seems almost impossible to locate a decent, big online store for mail order shopping here. Fortunately, I recently came across a new site called Q-Bit Online. They have an English language site with a reasonable (though not extensive) choice of parts, and the prices seem pretty good. The customer rep I’ve emailled at the site (Henry) speaks excellent English, replies to emails quickly, and has already gone to a good bit of effort to try to help me find some very specific high-quality parts I’ve been looking for. I thought I’d reward his high level of attention to customers, by linking back to him from this blog. Cheers, Henry!

You can find their website here: http://www.qbitonline.com/. One offer that caught my eye in particular: a 2GB minature USB flash drive @ 410 NTD. Very decent.

For what it’s worth: I have no affiliation to this store. I just like their service.

Banqiao has some reasonable green area nearby the HSR, MRT and train/bus terminals.

(more…)

If you felt like eating Mexican food, Taipei might perhaps not be the first place in the world you’d pick to dine. And rightly so, this meal would unfortunately seem to indicate - the food in Tequila Sunrise felt a bit flat, greasy and uninspiring, and they kept forgetting to bring items that were listed on the menu (yummy, dips with salsa and guacamole and sour cream… only… where is the guacamole and the sour cream???). It took quite a few attempts to persuade them to bring the stuff we’d ordered. Thankfully, a chance to spend some time with my friends more than made up for the not-quite-up-to-par quality of the food that was served.

Annie, Daisy and some reasonably tasty enchiladas.

I particularly recommend against the ‘bargain’ tea+soup+salad deal offered with the main courses for an extra $80 TWD. The soup was ‘Lumpy cream of mushroom, ala floaty things’ - a true Mexican classic, mes amigos! Salad was limp lettuce covered in artery-bursting pink sauce stuff (though to their credit, they did swap it out for a dying lettuce covered in an olive oil vinegarette for me, hurray! :) ).

It tastes as good as it looks.

The worst thing on the menu has to be the ‘crazy chicken’. It’s a pretty dried out chicken - and a damned expensive one at that. Sure, there is a little bit of salsa and a few sad-looking slices of jalapenos that were almost literally screaming out “kill me, end the misery” - but basically, it’s a not-very-tasty chicken. Worse still, it appears this particular chicken may have died from malnutrition long before it reached the kitchen. I decided to make the best I could of it. My friend’s enchiladas were pretty tasty, but a little greasy, and thankfully they shared them with me.

Ambience: The background music was suitably atmospheric, and the walls looked kind of nice particularly as you follow a long and winding path to reach your table - but then you sit down at the table and find it rocks around like Axl Rose on a particularly rockin’ day, while you’re trying to eat your munchies.

Mexican food is not traditionally served on a bouncy castle simulator, to the best of my knowledge. I checked a couple of other nearby tables, and yup, they’re all about as stable as Margaret Thatcher.

Summary: Not a fantastic place to eat; price wasn’t too horrific, but the food and even the tables were definitely not up to par! I’d give it just 4 Speedy Gonzales out of 10 - for the Enchilada, wall decor and olive-oil swapout service, combined with a decent salsa.

Banqiao is an area in the southwest of Taipei. There seems to be a reasonable amount of building work going on there just now, no doubt partly due to the High Speed Rail terminal that opened there, though it was already a major MRT/train/bus terminal anyway.

Why was I there? Well, it turns out there are two main types of train in Taiwan:

• Trains that insist on stopping at a whole bunch of stupid places when you’re in a hurry or needing the toilet.
• Trains that definitely don’t go to the place you want, and that add insult to injury by going past your intended destination really fast and not stopping for a good half hour.

Depending on the kind of inconvenience you’re hoping to have, you may have to pay some extra cash. In my case, I paid for the luxury of being driven past Inge station (my intended destination) at high speed, with no stops for 30-40km, after hopping onto an express train by mistake. Having arrived in Banqiao, I decided I might as well make the most of it and have a look round.

A street near the train station in Banqiao. By the looks of things,
Banqiao has some sort of giant birds that crap onto the road.

Would you like to buy a vulgarness?

How about a remote control?

A treat for your dog?

So THAT’S what JSC stands for.

Getting dark now. Crossing the road is becoming a bit more dangerous.

A groovy walkway right next to the train station.

The following day, I went back to see how Banqiao looked with a bit more light on it. But I’ll leave those photos for another day.