Family Money: Understanding guaranteed products
Managing director of Westminster Portfolio Services (Thailand) Ltd.
Every financial trade paper nowadays carries
advertisements for, and reviews of, so-called "guaranteed
products". In most cases the key features are a guarantee of your
original capital being returned to you at the end of the product’s term
and the possibility of earning a return. The latter is usually linked to a
stock market or basket of funds, and would be in excess of what you could
reasonably expect from a straightforward deposit account. But do the facts
bear out the advertising claims?
Any discussion of guaranteed products must start by
considering how they are constructed. There are essentially two phases.
First the capital element is guaranteed through buying a zero coupon
deposit. (One that will give a pre-determined return at maturity, rather
than regular dividends throughout the term.) The price varies in
accordance with prevailing interest rates and the currency being used.
What remains after the purchase of the zero coupon is available for
pursuing the return.
The return to the depositor is based on underlying
assets as described in the product literature. Access to these assets is
gained through buying one or several Call options. These are financial
instruments which provide the right to purchase an underlying asset in the
future at a rate agreed at the start of the product. The Call options used
in the construction of many of the guaranteed products seen in the
offshore retail marketplace to date have been based upon the performance
of stock market indices such as the FTSE 100, S&W 500, Nasdaq 100 or
Dow Jones STOXX.
By way of an example, take an investment of £1,000, of
which £800 is used to purchase the capital guarantee. Of the remaining
£200, fees to the banks constructing the product and the stock market
index owner are normally deducted: the banks have to pay for the usage of
the index name. Let’s say these fees amount to £25 leaving £175 to
spend on achieving the return. Typically the price of buying the necessary
Call options is higher than the £175 we have available, which is why the
potential return that you will have seen in the advertisements tends to be
lower than 100%. In our theoretical example we are offered 75% of the
return on the product.
After five years, this is what happens. The initial
£1,000 was deposited with its return linked to a particular index. The
return is based on taking the difference between what the starting level
for the index was five years ago and the level it reached on maturity.
Often the closing figure is averaged over the last 12 months of the life
of the product to provide a fairer closing figure than the position on
just one day. So if the starting figure of the index was, say, 3000, and
the closing figure is 6000, the return to the depositor is 100% multiplied
by 75% (depositor participation) multiplied by the initial £1,000
deposit. This equals £750.
The depositor receives this £750 and the full return
of the initial £1,000. It is important that the product is held to
maturity as the capital guarantee will normally only hold good on this
Guaranteed products have existed offshore for almost a
decade. Whilst most were originally based on the model described above, in
the past two years we have seen a much broader range of products with
differing terms, including the opportunity to guarantee an income as well
as capital. It is also possible to have the income distributed during the
life of some products, though this often dampens the overall return.
Interestingly, the range of underlying assets on which
the return is dependent has flourished, with several products looking at
baskets of funds and some at the UK housing market as their source of
potential return. This approach is being adopted to try and maximise the
chance of making gains during flat equity markets.
These new products are clearly established as an asset
class in their own right and demand continues to be strong while
traditional markets are deemed too weak or risky. These products tend to
appeal to that large swathe of people who don’t want to risk their
capital but are looking for a better return in a low interest rate
environment and are prepared to trade some of the potential gain in a pure
investment for this security. The innovation in product construction, for
example, basing returns on funds, is key to their continuing success - but
potential investors need to be sure they understand what the underlying
gain is linked to for each specific product.
These products have a place in many investors’ portfolios but the
individual must clearly establish their objectives, focus on what the
underlying gain is linked to, look at the participation rate and ensure
that they are dealing with a credible institution based in a
well-regulated environment. This last point is important for the security
of the capital guarantee: the bank offering the product assumes the risk.
As the depositor you should be viewing the security of your capital in
such products in the same way as you would when deciding whether to place
an ordinary deposit. The banking institution with which you are placing
your capital is the institution responsible for repaying you at maturity,
so make sure you check its credit rating.
Personal Directions: Happiness is the best destination in the world
By Christina Dodd,
founder and managing director of Asia Training Associates
Have you ever had such a great time around people that you
come away from being with them with a sore throat and a stitch in your side
purely from laughing so much? It happens sometimes - and when it does - it
really feels good doesn’t it? It’s a good feeling to feel this way. It
somehow restores your faith in human nature and makes everything worthwhile.
People have a natural ability to recognize positive (happy)
people and they want to be around them. Happiness is tremendously infectious
and attractive. It’s a comfortable and pleasurable "place to be"
and even if it’s only for a short while, it brings joy and laughter. The
state of happiness is a destination - some say it’s the best destination in
the world! And if you are happy, chances are that the people around you will
become happy too.
It’s quite amazing how we mirror the behaviour of those
around us. Our attitudes - either positive or negative - are infectious and
lead to positive or negative outcomes and behaviour in others.
Last year I wrote an article and I titled it,
"Happiness is Contagious". I would like to share part of it with you
to stress the point that this sate of mind is perhaps the most important to
all of us - far more than any other we care to think about or we are able to
There are constructive and positive ways to look at life
and to deal with all its problems that confront us. Worrying, it could be
said, is thinking about what could go wrong. The antidote to this is therefore
to consciously dwell on what could go right! I think it makes good sense and
for far more promising results.
This subject reminds me of a workshop I ran where we
focused on "laughter" as one of the modules of the second training
day. Everyone had been quite tense during the first day’s program due to
certain expectations placed upon them and in order to relieve the underlying
tension we did a simple exercise together which showed how powerful and
beneficial laughter (happiness) can be.
Each person was given a mirror to hold in front of them and
to look at. They had to look at themselves and smile and then begin to laugh.
At first this was a little awkward, but as minutes went by, one by one they
began to smile and then giggle and laugh. In a matter of what seemed to be no
time at all the whole room of thirty people was suddenly bubbling and bursting
with noise and energy and sounds of enthusiastic laughter - and all the
positive aspects that go hand in hand with it. The smiles were wide and
beaming after that and the workshop moved along at a roaring pace!
There’s a lot to be said for having a good laugh.
Laughter is like having a good dose of medicine. We as humans like to laugh as
we know we can receive immediate gratification in the way it makes us feel. It
feels great doesn’t it! When we have a real hearty laugh then it feels ten
times better! And if we are with others all having a good old laugh together -
then we are in trouble because we can’t stop and start gasping for air until
we exhaust ourselves and begin to double over and roll onto the floor. Yes -
laughter is good medicine.
When parents are around a baby and it begins to giggle and
gooh and make all those sounds babies make - just watch their behaviour. They
make faces and emit the most extraordinary noises and do the silliest things.
They mirror the baby’s behaviour just as we all mirror the behaviour of
people around us.
When we are happy - we do things differently. We act
differently. We walk and talk differently. We think differently. We influence
others to behave differently and in a positive way. Even though we may be
carrying enormous problems on our shoulders, the act and state of being happy
is a tremendous motivator, encouraging us to continue on and to overcome
obstacles that come our way every day of our lives.
In almost every training program I run, when the question
of what is most cherished and valuable to people in their lives comes up,
nearly everyone gives the same answer - happiness!
If this is the case then, is it reasonable to say that
happiness is something that is desperately lacking - in abundance - in peoples’
When we are happy, we are capable of achieving a great many
things. With this state of mind come all the positive emotions with double and
sometimes triple strength. Happiness increases and boosts confidence and
empowers us to go that extra mile in whatever we are doing. It is like having
blood in our veins as it brings us life and helps us to reach out to others.
Happiness is contagious! I have often found myself smiling
and feeling happy when I see a lovely sight such as people sharing an embrace
when they greet each other at the airport or puppies playing together. Their
feelings (from the puppies as well) radiate feelings, and we are affected by
them and catch those feelings. Have you at sometime been in this same
situation and found you have a great big grin on your face just sharing a
special moment like this? The nice thing about all this is that if we care to
take a close look around us, we would probably see a whole lot of other great
Have a wonderful week and should you wish to contact me
please do so at christina.dodd @asiatrainingassociates.com Our programs are
aimed at developing the personal, interpersonal and professional skills of
people in order that they may live productive and meaningful lives.
The Doctor's Consultation by Dr. Iain
Corness: Turn off your mobile phone! Before it kills me!
by Dr. Iain Corness
These days, my routine includes much travel on commercial
flights, and as well as being shown, by the "Safety Demonstration"
film, how to put on my life vest (which is under your seat and the light comes
on automatically when you hit the water), I am told to turn off my mobile
phone for navigation safety reasons. I take it that this means my 3,000 baht
cell phone can upset the navigation equipment on the 30 billion baht aeroplane.
I hadn’t realised I had such powerful technology in my pocket. Or do I?
A few years ago there was much bru-ha-ha over the use of
cell phones, with claims that mobile phones produced brain cancer. By holding
the mobile to your ear, the death-dealing atomic waves penetrated your skull
and a cancer was formed. Fortunately, some scientific souls with more time on
their hands than others, investigated these claims and managed to demonstrate
that this was palpable rubbish. Mobile phone users had no greater incidence of
cancer of the brain than did people who communicated by only using semaphore
flags or pushing notes in forked sticks carried by native runners.
However, the world at large is still cautious about these
electronic miracles. Hospitals in the UK even ban the use of them, and doctors
and nurses have to carry the old-fashioned ‘bleepers’ to summons them to
emergencies. Again the worry is that there are multi-million baht monitors
being stymied by mobile phones. A recent editorial in the British Medical
Journal even said, "Their use in hospitals, however, is mostly banned as
they are considered potentially hazardous in medical environments."
So how dangerous or hazardous are they? The study carried
out by the Medical Devices Agency in the United Kingdom showed that 4% of
medical devices suffered from electromagnetic interference from digital mobile
phones at a distance of 1 metre. Woo-hoo! This compared with 41% from
emergency services’ bleepers and 35% from porters’ pagers. Most of the
interference related to disturbance of the signal on monitors, such as
electrocardiographs, which was also confirmed by data from the United States.
Other effects were on pacemakers, which could incorrectly interpret the mobile’s
signal as being erratic heart rate.
So are the bans justified? Not in my books, as the effects
were momentary and only occurred at close range. When the emergency bleepers
are shown to have a much greater effect, but are considered to be
"safe" to be used, how can you justify the ban on mobiles on
scientific grounds? In the pacemaker situation, the mobile even has to be
within 10 cm of the device! Are patients with pacemakers not allowed to use
mobiles? Not at all - the advice to patients who have a permanent pacemaker is
to use the phone in the hand opposite to the site of implantation of the
device and to avoid placing the phone in a breast pocket over the pacemaker.
I had a relative who was convinced that this new fangled
electricity stuff would leak out of the power point and discolour her
wallpaper, so she placed a band-aid over the socket. Her ‘scientific’
thinking is still at large in the world, and until someone thinks it through a
little more, you will still be told to turn off your mobile in the plane (it’s
OK in the airport, however) and in the UK hospitals you will get hissed at for
carrying a cell phone.
I have discovered that ‘small’ is not necessarily
‘beautiful’ e.g. ‘Hilary’ as opposed to ‘Hillary’. Wee Nit, my
adorable Buttercup, finds that Mars Bars of sizes generally available in
Pattaya do not completely satisfy her. What can I do? Import a gross of
king-size choccy bars to Thailand on my next visit? There could be one in
it for you!
Hoping your Petals have been well and truly watered
A Mars Bar problem! I can tell you what to do. Why
wait till your next visit? I suggest that you send choccy bars by the
gross to me, c/- the newspaper, and I will ensure that your chocaholic Nit
gets 143 bars (or thereabouts) as soon as I have unwrapped them all and
had a wee bite, just to check there is nothing untoward in the shipment,
of course. You do trust me, don’t you Petal?
I’ve always been wondering why, after all these years
as an "agony aunt", you’re still holding on to referring to
bargirls as "Thai ladies" rather than the more accurate (if less
flattering) "bargirl" or "prostitute". I mean you won’t
do any service to those men who write to you because they have (once
again?) been screwed (literally and figuratively) by a bargirl. By
indoctrinating already gullible and naïve guys with the putrid idea that
prostitutes are "ladies" you’re potentially sending them right
into the next emotionally and financially draining situation. A
"lady", my dear, is usually well educated, has a socially
acceptable job, is faithful to her beau and behaves in a decent,
respectable manner. Hookers generally display none of these qualities. So,
why don’t you just call the horse by its name? Furthermore, you’re
regularly suggesting to horned men that they must try to understand Thai
culture and change their attitudes to accommodate the expectations of
hookers. I always thought in a romantic relationship both parties had to
try to accommodate each other, meeting somewhere in the middle. This seems
particularly important when two different cultures are involved. Proposing
that only the foreigner must completely adopt Thai attitudes spells doom.
On the other hand, a Thai hooker’s one and only obligation is to her
family and she is generally unwilling to submit to any foreign patterns.
Just as everywhere else in the world, prostitutes in Thailand are also
potential cheaters, notorious liars and pretenders and, in the vast
majority of cases, do not make for trustworthy life companions. THAT’S
the advice you should disseminate so guys can be on their guard and
hopefully won’t fall into the trap disguised with a beautiful smile and
oaths of "unending, true love". No chocolates for you, puppet,
until you change your stance on this issue. And no, I am not another hurt
gentleman who’s fallen prey to a "Thai lady". I’m just
I remember this is not the first time you have
written to me, so it is interesting that you continue to persist in
flogging this "horse", which by now is a well-worn and done to
death donkey. In your anxious scanning of the column each week, looking
for the offending words "Thai ladies", you have obviously not
been fully comprehending the advice I have been giving out. Let me take
you by the hand, Poppet, and now read the following extracts. In response
to one reader who was bemoaning the fact that he was being continually
ripped off, I wrote, "Stop looking in the entertainment industry and
look for professional women who work in the same field as yourself. If
your profession is propping up a bar, then you’re already in the right
place for the sort of mate you need, but if you are a professional join
the necessary chambers of commerce, service organizations and the like.
Your princess is out there, it’s just that you have to kiss a lot of
toads if you are not looking in the right place." Does that advice
fit your description of my words of wisdom? Or what about this one?
"There are many reasons that some farang have problems in Thailand,
and generally it is one of rushing in where more than angels fear to tread
variety. Unfortunately, it is now a path that is so well trodden, many
first timers think it is the Super Highway! How many foreign men would
fall in love with a girl they picked up in a bar on their first night in
one of their own cities? Not only fall ‘in love’ but then plonk down
oodles of cash, buy her a house, supply the family with enough readies to
change their lifestyle and all because of one sweaty week with a lady
whose job it is to provide entertainment for unattached foreigners. It all
sounds a little silly to me, and one that if it occurred in the UK or USA
would make people laugh in disbelief. Yet it happens here and the ‘suffering’
foreigner has the gall to complain! The only person that should be
complaining is Hillary - I have to read all this nonsense!"
Unfortunately, Careful, I have to place your letter in the same basket.
Please read more "carefully" in future.
Camera Class: Photographing people - making the most of opportunities
In the public relations business, the time allotted to
photographing an important person is generally referred to as a ‘photo
opportunity’ - but for all photographers, when you think about snapping any
particular subject, you should be thinking ‘opportunity’.
How many times have you wished you had your camera with you,
when something (or someone) strikingly photogenic appeared? How many times have
you got your photos back and wished you had just taken another shot, because the
subject did not turn out as well as you hoped? If the answer to these questions
is ‘more than once’ then read on!
Look at the three photographs with this week’s article. The
shots are all of an Akha hill tribe woman, in the full regalia. To come across
someone dressed like this is a real ‘photo opportunity’ so it was important
to me not to waste that opportunity.
I knew that I had probably only about ten minutes to capture
the spirit of the Akha hill tribe person, so the first important factor was to
position her somewhere that did not distract from the overall photograph. To
have a tour bus in the background would be a real letdown and spoil the shot,
In front of the bamboo fence looked to be the ideal spot, to
give a ‘nothing’ background, so that the subject could be the sole important
visual feature. It was around 10.30 in the morning, so the light was not totally
overhead, so I positioned her so that some of the light was coming from behind
her, and she was not left squinting into the sun.
The hill tribe outfit included leggings as well as the jacket
and headgear, so I decided that three different views were needed to do justice
to the photo opportunity - full length, a torso and a headshot. This is where
having a choice of lenses helped. I selected the 24 mm wide-angle for the full
length shot, a ‘standard’ 50 mm lens for the torso and a 135 mm for the
portrait. If you have a zoom lens, then selecting around those focal lengths
will be quite satisfactory. A point and shooter? Just go for it, but be prepared
to move in and out to get the desired shot.
I also attached the flash, not even as a ‘fill’, but just
to add a little highlight to the eyes. A sparkle there always lifts any shot.
To photograph a whole person, you should position the camera
at the height of the subject’s waist, otherwise you get a very strange
perspective effect. She was a small lady, so I had to bend right down, but the
shot was worth it. I did have to show her how I wanted her to stand, the ‘full
square-on, standing to attention’ pose that all amateurs take is not the most
flattering. I took about 6 shots.
Now the waist up shots. The lens was changed quickly and
again I repositioned the camera to be at around her shoulder level. Speaking to
her all the time, I got her to turn both ways, while firing the shutter. Another
6 shots there.
Now it was time for the portrait and the longer lens. This
works well for two reasons. The longer lens is more flattering to faces as it
stops optical distortions, and secondly, you can get close-ups without being ‘in
the face’ of your subject. 6 more shots here.
The photo opportunity was over in under 10 minutes from go to whoa. 18 shots
were taken, and there were at least three in each group that were worth
enlarging. Not bad! But results that you can duplicate as well. Look at the
background, select the lens, use a flash if you can, and direct the subject on
how to pose. Look for the next opportunity.
Recipes from Rattana: Japanese prawn soup
This recipe is based on the traditional Sumashi Wan, but has
been simplified, taking into account the availability of various ingredients.
The original version calls for a stock known as Dashi which is prepared using
cubed dried seaweed (kombu) and shredded dried bonito (katsuobushi). For anyone
other than diehard Japanese cuisine experts, the simpler version here, using
chicken stock is quite satisfactory. If you can obtain some mirin sake, this
can be used in place of the dry sherry. Do not overcook prawns or they will
become hard and rubbery!
Ingredients Serves 4
Prawns, large 4
Tofu (bean curd) 2.5 cm cube
Chicken stock 1 litre
Dry sherry 4 tbspns
Salt to taste
Peel the prawns, remove heads and tails and slice down the
back to remove the vein and rinse under running water. Cut the carrot into very
fine strips and then cut the tofu into thin slices.
Add the dry sherry to the chicken stock and then bring to
the boil, adding salt to taste. Now add the prawns, tofu and carrot and reduce
heat to allow the soup to simmer for two minutes.
Pour the soup into four bowls and sprinkle a little garnish on top (parsley,
cress or coriander leaf) and serve immediately.
Wine Column: Katnook: The Language
By Ranjith Chandrasiri
How does one convey something as personal as a taste
impression; not the chemical content of a substance, but the flavours and
sensations that the taster is reminded of? Many wine tasters have resorted
to using anthropomorphic terms such as aggressive, clumsy, gutsy and
While it is tempting to use such terms, if for no other
reason than they are comfortably familiar, they assign qualities to wine
that it can not possess, and so they are vague, meaningless words.
In fact, the struggle to develop a lucid and coherent
vocabulary for wine tasting has been going on for centuries. Ancient Greeks
and Romans wrote about wine, and even in the 15th century there were
references to wines such as "good, clean, honest and commercial."
But the true taster’s vocabulary really began in the 18th century, when
Bordeaux wines such as Haut-Brion and Lafite began to be sold at four to
five times the price of ordinary claret, so it became necessary to find
words to describe and justify the difference.
Many wine tasters use wonderfully poetic but difficult to
observe adjectives, listing a multitude of fruits and flowers. Unfortunately
these trace sensations in wine are always subjective and any two tasters may
not agree on their presence.
The "fruit basket syndrome" is very common.
Many wine writers like to evoke the names of specific fruits, where as I
prefer to be vague. Instead of raspberries and blackberries, I just say
berries. I take this approach so that my readers don’t feel inadequate for
tasting something that may never have been there.
A great example is the banana vs. strawberry debate. Some
people smell bananas in Beaujolais, some smell strawberries. It turns out
that the scents are not as dissimilar as you might think. There are only a
few compounds that are different at the molecular level, and blindfolded
some people can’t tell them apart.
Another instance to mention a specific scent or flavour
is when there is wide spread agreement on the term. Currants in Cabernet
Sauvignon, and cherries in Pinot Noir come to mind.
Some specific terms such as "buttery" pose
their own problems. The butter taste and smell in wine is directly
attributed to the presence of diacetyl. Diacetyl is a by-product of the
malolactic fermentation, and as such its presence relates to a very specific
technical process. To say diacetyl is much more exact, and it speaks of the
process that the wine was made by; however the average consumer would much
rather think that there is butter in his wine than some chemical.
What then is the best approach to choosing words to
describe wines? The French, to no one’s surprise, tend towards the poetic.
Peynaud the famous French Enologist says, "There are hundreds of ...
possible images, depending on the poetic ability of the taster". He
also says, "There are circumstances where a little fantasy is
appropriate". Not to give the impression that Peynaud does not have a
pragmatic side, he follows his fantasy statement with "Do not over do
As can further be surmised the American Enologist Amerine
is almost completely pragmatic. His approach dictates that no word should be
used that does not directly correspond to a chemical compound. Amerine
writes, "... we would make a plea for less fanciful terms than those so
often found in the popular and trade press". He continues,
"Unfortunately, existing wine terminology abounds in words and phrases
that have little or no clearly definable meaning with respect to the sensory
evaluation of wines." Amerine, along with Roessler, go on to list an
invaluable collection of wine words and their meanings (including their
chemical equivalents). They also list over 200 words not to use.
I personally try to strike a balance between these two
approaches. I do not use flowery language that may not represent universal
interpretations. I keep my stable of wine terms to a minimum, and with any
luck at all I convey the sense of the wine without getting caught in the
trap of describing the taste of the wine.
My own vocabulary evolves, and so should yours. We all
start out using the simplest expressions and watch our phrases become
increasingly more precise. I went through a period where, like Amerine, I
would only use the most exacting words. No doubt many of you will sympathize
with this. Coming full circle I now try to use only those expressions that
are truly common denominators that we can all relate to.
Rich, light, heavy, thin and a score of others relate to
the body of wine instead of tastes and smells. These impressions are much
easier to share. Most of us would agree that a wine is heavy, or it is
light. Therefore I try to use these more common images whenever possible.
When a wine critic writes a tasting note he usually
accompanies it with a point score, a judgement of the wine’s quality on a
scale of 20 or 100. Because words are such a difficult medium for describing
wine, the popularity of number ratings has spread like wildfire. Numbers do
provide a convenient shorthand for communicating a critic’s opinion of a
wine’s quality and we tend to remember the numbers more than the
descriptions. The problem I have with the ratings is that they don’t tell
you anything at all about what the wine tastes like. A wine that is highly
rated might not be your style.
Despite the pitfalls of number ratings you might be
inclined to score wines yourself when you taste and I encourage you to do
that. Numbers can be very meaningful to the person assigning them. Just
remember that like every other critic, you have your own taste preferences
that inevitably influence your scores. Don’t fall into the trap of
thinking that others should agree with you.
Ranjith Chandrasiri is the resident manager of Royal
Cliff Grand and founder of the Royal Cliff Wine Club, Royal Cliff Beach
Resort, Pattaya, Thailand. Email: [email protected] or [email protected]
Website: http://www.royal cliff.com/rcwineclub.htm
Ask your local US Consul
My girlfriend got a U.S. visa yesterday - yay - but why
did we have to pay a hundred bucks for a two-minute interview?
- Also in Need of Beer Money
Dear Mr. (I presume) Money II,
I never really pondered the correlation between visa
services and expat sobriety in Chiang Mai, but it’s an interesting one.
What on earth was this town like when visa interviews were free?
I suspect the more interesting question for you, Mr.
Money II, is "What? Interviews were free? When? Why didn’t she apply
then?" At the risk of sounding cynical, I suspect your girlfriend didn’t
apply at the time because she couldn’t have reached the counter.
Interviews haven’t been free for about a decade. Of course, it’s only
within the last year that the fee has really caught applicants’ attention,
jumping from $40 to $65 on June 1, 2002, and then to $100 on November 1 of
the same year.
What’s with the hyperinflation? In a word, security.
Both the need for more of it, and the perceived lack of it by potential
applicants, causing them to contemplate taking their vacations in Hua Hin,
rather than with Holiday Inn.
It isn’t the interview you’re paying for, Mr. Money
II, but the whole visa adjudication process, which each application goes
through, regardless of the final decision. Visa application adjudication is
one of a long list of services that are funded by the service users, rather
than the American taxpayer, that irascible creature that wants free
notarials and a smaller check to write on April 15. After September 11, the
cost of visa processing soared, due to new security requirements, and
restrictions on having non-U.S. staff perform visa functions. At the same
time, visa demand (locally and globally) dropped by about one-third.
Thus, the counterintuitive solution for lower demand:
raising prices. Admittedly, you won’t find this answer in the back of an
Econ textbook. But in this case, it’s the only way to keep issuing visas
overseas: security checks must be done for all applicants, whether
ultimately refused or not, and must be funded. Congress decided that
taxpayers wouldn’t be footing the bill. I suppose if world tensions were
to abate, other options might be viable, but for the foreseeable future,
applicants find themselves subject to a visa policy that’s, forgive me,
caught between Iraq and a hard place.
In many countries, the total U.S. visa fee didn’t
change, because the increase in application fee was offset by a negotiated
reduction in the reciprocity fee - the fee that the U.S. charges some
nationals whose governments, in turn, charge U.S. nationals for their visas.
If you held a passport from Kazakhstan, for example, your visa would cost
not only the $100 application fee, but an additional $115 reciprocity fee.
The good news is that few in Thailand hold Kazakhstan passports. The bad
news is that there is no reciprocity fee for holders of Thai passports, so
there was no reduction to be negotiated.
I caught the whiff of a subtext in your letter, Mr. Money
II, about some level of discontent with interview length. I’m out of space
for this week, but I’ll be happy to take that up in a future column. In
the meantime, I can only conclude by noting it might help to take a
historical view: as an update of eighteenth-century State Department policy
- the price of freedom now being eternal vigilance, plus a hundred bucks -
the increase only works out to about forty-nine cents per year.
Yours in promotion of the broader perspective,
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