Wednesday, June 30, 2010

Hawaii Island ranked top island by Islands magazine

The August 2010 issue of Islands magazine gave the  island of Hawaii the top rank based on real estate values, ease of immigration, expat community, and quality of island life. 

We agree that Hawaii  County is the one of the best places to live and vacation in the world. 

The other places ranked in the magazine’s top 20 were not all tropical islands like the Big Island, and it was surprising to see Hawaii island ranked ahead of places like Tokyo and country of New Zealand. 

But, with tourism on the Big Island off so much over the past few years, we are happy to see our island getting rated well.

Surge in Japanese visitors to Hawaii

Japanese visitors to Hawaii surged by 63% this month as compared to the same days in June 2009, according to data from from Hawaii’s Department of Business, Economic Development and Tourism (DBEDT).  DBEDT data showed 117,000 Japanese visitors arrived during the first 28 days of June compared to less than 75,000 in June 2009.  This is the largest number of Japanese arrivals to Hawaii in June since June of 2005.

Since the Yen was at a similarly good exchange rate in June of last year, the end of the flu pandemic is likely the reason for the large increase. The DBEDT already bumped up their arrival estimates this year after a good showing in international arrivals in the first quarter.  This month’s surge in Japanese visitors may foreshadow a great 2010 summer tourist season for Hawaii. 

Wednesday, June 23, 2010

GETTING FIT : Report on our Ten Week Weight Loss Program

Ten weeks ago we started a weight loss program and made exercise and diet our number one priority. Here is a report on our results and some insights we learned along the way.

We were surprised at how few calories we were able to eat each day after subtracting 500 calories a day (the amount needed to lose 1 pound a week) from our scant number of required daily calorie requirements.

We spread our daily calories into 3 meals and 2 snacks each day and included wine each night.  Each meal was in the 300-400 calories range with two 100-200 calorie snacks to make room for 300 calories of dry red wine in the evening.

We added exercise to give us more calories each day.  We did 45 minutes of water aerobics daily (allowing us 200 more calories each day) and 20 minutes of gym time 3 times a week to improve our overall fitness and provide an additional 600 calories each week.

We planned easy to make, repetitive meals so we wouldn’t be tempted to eat more and to keep us from our habit of making elaborate, calorie-rich meals.  Each week we chose organic where possible and ate local fish,  beef, and produce. We are blessed to live in Hawaii County where so many fruits and vegetables are grown. We ate out once in the 10 weeks and the only supplement we took was Malic acid and Magnesium.

The first three weeks we felt very low energy and were extremely sore from the exercise. We woke up hungry and many days went to bed hungry.  

Here are our results after ten weeks of diet and exercise:
We each lost 1 inch off our waist.
We each lost 10 pounds and added some muscle.
We were able to add aerobic and weight lifting intensity to our 20 minute gym workouts.
We starting feeling more energy after 8 weeks.
We learned to drink water, take naps, and distract ourselves when we were hungry instead of eating.

Both of us still have an additional twenty pounds to lose in order to achieve our goal of a BMI under 25. Over the next ten weeks we intend to continue the same diet and exercise plan in hopes of attaining similar results and making more progress toward our goal.

Wednesday, June 16, 2010


The real estate market in Hawaii County is volatile right now so here are some things we think are important to consider before purchasing a property.

Research the Market
  • Use online resources like to see the latest real estate transactions;
  • Subscribe to to track foreclosures and short sales in the area of interest;
  • Set Google alerts for the condo complex name or street names of interest to point to new articles and postings about sales, rentals, and crimes; 
  • Visit the public property auctions in Kona and Hilo;
  • Hawaii County foreclosures have been increasing and many properties are being sold through short sales or warehoused by the banks; realtors usually do not disclose information about foreclosures or pending foreclosures in the areas they are showing.

Learn the Neighborhood
  • Rent in the area for a month or more to find out what the challenges will be living there. If you talk to the residents, within a few months you will start to find out about the issues in the area, accessibility to shopping, crime, and if you feel safe.  Hawaii is very different from area to area and you can’t tell if you will like the neighborhood by touring houses with a realtor;
  • If you are buying a condo make sure you are comfortable with the people that own and rent there.  Talk to the complex manager and the owners running the home owners association and find out what the issues are at the complex;
  • In Hawaii, everyone keeps their windows open and the close proximity living makes it important to one’s quality of life to be able to get along with neighbors; 
  • Law enforcement in Hawaii county is slow to respond and often unable to do anything about a crime. Many crimes are not reported by the police or newspapers. Crime and drug use was up in Hawaii County in 2008 and statistics for 2009 and 2010 are not available by the county or state, so word of mouth is one of the best ways to get information. Neighbors and owners associations are the primary deterrents to crime, so living near people that are looking out for each other makes a big difference in Hawaii.

Research the Hidden Costs
  • Utilities and taxes are much higher in Hawaii than on the mainland. The cost of electricity is high (four times or more than most places on the mainland) and on voggy days you may have to use AC.  Find out what others are really spending on electric.
  • Maintenance fees at condo complexes can be  astronomical and every complex includes different things in the fees, some include cable, electric, hot water, grounds lighting and security while other complexes only include water or grounds upkeep. Fees can also be vastly different from one unit to another in the same complex;
  • Find out if any upgrades are planned for the condo; it is not uncommon for condo complexes to plan major upgrades to the exterior funded by a special assessment on the owners. We know of a condo complex in Kona that assessed their owners $60K for a major upgrade to the building, more than some owners paid for their unit;
  • Even undeveloped property may have mandatory owners fees or road maintenance fees;
  • Check out what your house and car insurance will cost. Don’t assume the insurance company you have had a long relationship with on the mainland will cover real estate, cars, or property in Hawaii. You may have to find new insurance providers and have higher costs due to being in a Tsunami zone, lava flow zone, or being remote from a fire department.

Understand the Property’s Zoning and Owner Rules.
  • Many buyers don’t realize the restrictions (or lack of restrictions) of Hawaii’s property zoning.  Some gated residential complexes are in areas zoned for agriculture and though the owner’s covenants may prohibit agricultural use of the property, there may be no legal way to stop a pig farm from starting up next door. It can be hard to get enforcement of owner’s covenants on agricultural zoned land. Some properties are zoned conservation or have other protected zoning that limit or prohibit building;
  • Condos can be zoned for short term rentals or only allow rentals for 30 days or more.  If you are counting on an income from a short term rental program, make sure it is allowed, and if you are planning quiet days around the pool, make sure the complex isn’t being run like a hotel with a new party showing up each day;
  • Condos rules can include animal restrictions, parking restrictions, plant, noise, BBQ restrictions.  There are usually fines associated with not following the rules depending upon the strictness of the owners association and the manager of the complex.
  • Some complexes use loud blowers, herbicides, pesticides, rodent poisons, and others do very little upkeep.  Hawaii is tropical; bugs and fast growing foliage are a big expense for most homeowners and condos.

Understand the Special Risks of Buying in Hawaii
  • Hawaii’s real estate market is highly volatile and a lot of very smart and wealthy people have lost staggering sums of money investing in it. Hawaii real estate prices were hit hard in the 1980’s when Japan’s economy had a downturn and to this day there are luxury condos that still sell for less than half of what they did in the 1970s;
  • Beware of changes in lending standards which may impact the liquidity of Hawaii real estate.  A large percentage of Hawaii County properties are second homes and vacation rentals, a class of properties that has greatly benefited from liberal lending standards. Returning to the strict lending policies of the past combined with the higher cost of Hawaii’s real estate may make the income qualifications substantially higher;
  • Hawaii County’s remoteness and lack of jobs makes real estate a different proposition than on the mainland where many homes have a basic value due to nearby jobs, schools, and amenities.
  • The current downturn on the mainland is hitting real estate prices in Hawaii County and investment properties and condos are going into foreclosure. It is best not to assume that a property in Hawaii will increase in value or that it will maintain its current price.

It feels odd to offer so many cautions about real estate in Hawaii County because we are very upbeat about the long term value of property on the island. But we have met a lot of people that purchased houses and condos and had buyer’s regret because they felt they overpaid or the living situation wasn’t what they were expecting.  Hawaii county offers a lot more choices in real estate than any other island in Hawaii and the key is to take the time to find the place that is ideal for you.

Saturday, June 12, 2010


The Thirty Meter Telescope (TMT) appears to be going ahead at full speed following the recent approval by the Mauna Kea Management Board and sign off by the Governor of Hawaii of the environmental impact statement (EIS). The $77 million design phase was completed with funding from the Gordon and Betty Moore Foundation and Canada. The early construction phase has begun with $200 million from the Moore Foundation and $50 million each from Caltech and the University of California. Canadian partners have proposed to supply the enclosure, the telescope structure, and the first light adaptive optics.

The construction, which is expected to be complete in 2018, has increased in price to $1 billion, sending TMT staff in search of additional funding. TMT is counting on funding from the University of California, Caltech, and the Association of Canadian Universities for Research in Astronomy. The National Astronomical Observatory of Japan (NAOJ) joined TMT as a Collaborating Institution in 2008. The National Astronomical Observatories of the Chinese Academy of Sciences (NAOC) joined as an Observer in 2009 and this week India also joined as an Observer member.

By the end of this summer the TMT must get over another hurdle when the National Science Foundation (NSF) publishes its Astro2010 Report which recommends the priorities for technical and scientific astronomy activities over the next decade for the NSF, NASA, Department of Energy, and Congress. The stakes are high for the TMT because to maintain momentum in funding their design must be technically desirable and feasible when compared to the competing project the GMT.

The Giant Magellan Telescope (GMT), designed by MIT and Carnegie Mellon University, is a 25.4 meter telescope, 4.6 meters smaller than the TMT. Unlike the TMT which is a new design, the GMT is based on technology developed and validated by their 6.5-meter Magellan telescopes currently operating in Chile. The construction of the new telescope has been endorsed by Carnegie Institution for Science’s board which authorized $59.2 million for the design, construction, and commissioning of the telescope to supplement the $19.9 million they have already committed to the project. The GMT recently signed an agreement with the University of Arizona's Steward Observatory Mirror Lab to produce the first mirror for the new telescope which is planned for completion in 2016 at Carnegie's Las Campanas Observatory in Chile. Other GMT members are Carnegie Observatories, Harvard University, Smithsonian Astrophysical Observatory, University of Arizona, University of Michigan, University of Texas at Austin, Texas A&M University, Australian National University, Astronomy Australia Limited, and South Korea’s Astronomy and Space Science Institute.

The Europeans recently approved their own version of a giant telescope called European Extremely Large Telescope (E-ELT), expected to be complete at the Cerro Armazones site in Chile in 2018. The ELT will have a 40-meter mirror which would make it the largest of all the giant telescopes being planned.

The most prominent optical telescopes today are the Keck on Mauna Kea and the Hubble Telescope floating above the Earth. The Keck has two 10-meter telescopes making it the largest in operation today. The Keck cost over $200 million to design and build. Its annual operational costs of $11 million is covered by Caltech, the University of California, NSF, and NASA, the same funders the TMT is counting on. Hubble has only a 2.5-meter mirror, but is renowned for its price tag. Its original cost estimate of $400 million ballooned to over $2.5 billion due to a flawed mirror and the difficulty of getting to it and maintaining it in space. Hubble's cumulative costs to the US are now estimated at $6 billion and Europe's contribution at 600 million Euros.

The cost of building and maintaining giant optical telescopes is high and the number of funding Universities, Foundations, and Governments in the world are limited. The TMT has a major challenge ahead to promote the design and capabilities of its project while two other prominent optical telescope projects are simultaneously searching for funding and partners.

Thursday, June 3, 2010


The US and European Union (EU) have taken radically different approaches to the financial crises that they are facing. We believe the results of their actions will lead to unique futures for their economies and citizens over the next five years.

In the US, the financial banking crisis started when mortgage based securities became illiquid following the revelation that their purported value was greater than their underlying real estate collateral. As the extent of the overvaluations became known, bank stocks plunged and hundreds of banks went bankrupt and are still going bankrupt as the downturn continues. These bankruptcies eradicate the financial value of the banks, their stock, uninsured accounts, jobs, and the taxes once paid by the corporations and employees.

The dropping prices of real estate in the US has erased equity in the homes of tens of millions of Americans. Banks have cut back on consumer credit removing hundreds of billions of dollars in credit from the economy. Tax revenues have shrunk due to the drop in real estate values lowering spending by cities, counties and states across the US. The combined value losses from bankruptcies, layoffs, lowered real estate valuations, stock value losses, reduced tax revenues, and shrunken lines of credit are in the of trillions of US dollars.

These financial value losses are functionally a destruction of US dollars; less dollars exist in the economy now than five years ago. The disappearance of this value and its underlying dollar amount has had a deflationary effect making a lot of things cheaper in the US.  Though we aren’t getting any interest on our savings right now, our dollars, are buying more house, more shares of stock, more electronics, and a lot of products for substantially less than five years ago. The ongoing shrinking amount of dollar currency available in the US economy should continue to raise the value of the dollar and maintain the deflationary trend.

The European Union’s banking crisis has unfolded differently. Their financial banking crisis started when bonds sold by EU member nations to large European banks became illiquid following the revelation that the EU’s member nations had understated their debts and it became clear that they could not pay off their bond debt or maintain a credit rating to borrow more at low interest rates.  Instead of letting the exposed European banks take their losses from the bad bonds, the European Central Bank (ECB) stepped in and bought the worthless bonds at full price.  This action functionally expanded the Euro currency in circulation.  Euros given to the member nations from bank bonds are still circulating in their economies while the European banks have been “repaid” all the Euros they lent by the ECB. Though the ECB has increased its debt on paper, unlike the US process that destroys functional dollar currency and shrinks the economy, the EU process is increasing their functional Euro currency by creating new Euros to cover bad bond loans.

The EU’s approach seems too good to be true: no loss of capital by their banks, no bankruptcies, no layoffs of bank employees, no restraints for overspending member nations, and no collateral damage to businesses and cities forced to cut back spending.  It looks like a brilliant solution.

But, won’t a surge in the amount of Euros in the Euro zone’s economy cause inflation and result in a huge devaluation of the Euro against the US dollar?
Won’t the member nations maintain their excessive spending because they know the ECB will rescue them from their debts?
Won’t the ECB be expected to cover any other debts of the EU member nations?

Though living in the US’s current trying economic times is not easy, we think that the EU’s approach may cause more problems for Europe than it solves in the long run.