KhunPadThai

So now the military dictatorship that failed to appoint a civilian PM after promising to and failed to lift martial law after promising to, is blaming the bombs on their political enemies and creating yet another paramilitary force to control the population. The military, over whome sycophantic expats have been fawning on thaivisa since the coup, is certainly at the head of my list of candidates who could be responsible for the bombs. Shades of the Reichstag fire.

A very interesting topic. I chose the other way. After graduate school I considered moving to France which attracted me for several reasons. Also, the USA repelled me for its own reasons despite the many undeniably good aspects. In the end I didn't go because I thought that what I would lose was coherence. As it is I understand the US deeply. I get all the cultural allusions. I have thought a lot about our history and how it shapes our current experience. I knew if I went to France I would lose that and never regain it. The US would change and eventually become strange while I would probably never achieve the same grasp of French culture. So, in my case, belonging was not an attraction then and is not now. Being an outsider, and exempt from the rules, is certainly an attraction. But the price of coherence seemed too high to me then.

Anway, that was twenty years ago and now I am studying Thai with a thought to the possibility of retiring there.

I will take Mr. Nuamthong's sacrifice at face value until there is solid reason to do otherwise. Undoubtedly he was not directing his gesture at foreign sycophants, who could not comprehend such a gesture. I must say Gen. Chulanont has excellent media advisors. Maybe he will pin a medal on Mr. Nuamthong posthumously.

If you cringe, then why read stickman????

Even though Stick regularly makes grammatical and usage mistakes more appropriate to a student of English than a teacher, I do read him because he talks about aspects of daily life in Thailand that no one else does. This is at least partly due to his having taken the trouble to learn Thai, which is entirely to his credit. For instance, I very much enjoy reading about his visits to his mother-in-law in Korat and her various opinions.

I just cringe when I read a Stickism like "Myself and a friend went..." considering that this man is actually an English teacher.

As for Galt, well, comedy is hard as they say. If he were better at it, Galt would be the best possible thing to happen to Stickie.

In addition to the currency risk, remember there is no deposit insurance in NZ. So, if the bank fails you could lose it all.

Why hasn't Thailand done what Viet Nam did: vaccinate all the chickens in the country? Although Viet Nam has had a high number of deaths (42) it has not had any outbreak this year. Thailand's policy of not preventing, but eradicating after an outbreak is demonstrably less effective. Did TH adopt this policy to save money for Charoen Pokpand and other large poultry producers?

Heng,

As usual you are a font of information with the distinctive ring of authority.

Khun Pad Thai

In addition to the substantial currency risk in NZ already discussed, there is the additional risk of bank failure. There is no depositor's insurance in New Zealand. Bank fails; you lose your money.

I wondered how long it was going to take the criminals to figure out the real money is in the brokerage accounts. If you do not always follow these precautions you are leaving yourself open to a large loss. Unlike the credit card companies, the brokers and banks don't have a policy or a regulation limiting your loss in the event of fraud.

1. Never, ever, under any circumstances, even the most pressing instance of trading inspiration, access a money account from any computer other than your own, at home. Not your friend's or the one you use every day at the office or any other.

2. Make sure that your operating system is always up-to-date with patches.

3. Make sure that your computer always has up-to-date virus protection.

4. Make sure that your computer has a firewall installed and configured for maximum security. Configure the screen saver to lock after ten minutes of inactivity and requre the password to unlock.

5. Never use Internet Explorer. Use the Firefox browser with a java script blocker extension. Do not permit the browser to save passwords to log you in automatically.

6. Stop and restart the browser before going to a financial website.

7. Stop and restart the browser after logging off a financial website.

8. If you have a little computer savvy, download the Knoppix Linux CD and boot from that before accessing your financial website. This method is the gold standard since nothing can be saved and you can be sure that it is not running a keystroke logger. However, rule #1 above still applies.

9. Or use a Macintosh instead of Linux, but all the other rules still apply.

10. Change the passwords to your financial accounts every three months at the longest. Use a unique password for each account. Download a random password generator program to create the passwords which use at least three kinds of characters: lower case, upper case, numerals and punctuation. Don't store them in a file on the computer. Keep them on a piece of paper in your wallet without the url or login id.

12. Reconcile your accounts monthly from a paper statement mailed to your home. Do not download transactions from an online source into your home accounting system since you eliminate even the possibility of doing a reconciliation if you don't maintain your own data. You do have a home accounting system, don't you?

In my opinion, these steps are the minimum to reduce the risk of a thief getting access to your money accounts from you. There still remains the substantial risk that the financial institution will fail to safeguard your money, but there is not much you can do there except choose the company as wisely as you can. If you can find a company that offers two-factor authentication choose that company. Two-factor authentication means you need to have something you know, usually a password, and something you have, usually a one-time password device such as SecuriD, but could also be a biometric device, for instance.

Anyone who does not take these steps is courting ruin, once again in my opinion. Last year, according to the New York Times, two million bank accounts were looted electronically in the US. Those who pay attention and adapt to the ever-changing threats online will have the best chance. Those who suffer losses will be almost entirely from the population of people who can't be bothered trying to keep secure and who couldn't possibly sacrifice the convenience features that pose the threats that he can't see.

Those interested in getting high interest rates in New Zealand should note that there is not depositor's insurance there. If the bank fails, you lose your money. Don't know about Australia.

Excellent post. From my knowledge of the stock market there tends to be a phenomenon whereby the nature of each major recession is different from the previous one. Everybody is running scared with regard to inflation, however I think this is a mirage caused by huge amounts of liquidity bidding up all asset classes. The forces of globalisation are actually deflationary with regard to wages and the cost of manufacture, once liquidity starts to dry up every speculative bubble will be burst and the legacy of it will be a horrific amount of debt. I hope I'm wrong but I see a deflationary depression every bit as severe as 1929. The first signs of turbulence are there to be seen. Some emerging market bourses are down as much as 50% from their peak, Australian and U.S housing are showing signs of topping, the Icelandic Krona was devalued by 30%.

I have been putting my mind to how to best protect my girlfriend and her family. She is taking a fatalistic view stating it is not easy for a Thai to exchange money into other currencies and gambling is not allowed here so how can you hedge against a tumbling Baht? Well 78 was about the best exchange rate I got for my £ but the rate is now 70, what would it be if global trade and tourism dried up? I think 100 would be by no means impossible. I could spread bet the THB/£ or THB/$ exchange rates, however in a deflationary crash the populations with the highest saving rates would imho fare best so a hedge against the Yen, Swiss franc or Singapore dollar would be better.

Is everyone just debating the economic situation or is anybody actually doing anything about it yet?

Inflation is indeed a conundrum. I agree with you that the global liquidity bubble is behind much of the rise over the last ten years in stocks, then housing, and now commodities and bonds. And the East Asian economies have been exporting disinflation as you point out, in wages and manufactured goods. On the other hand, do you think the central banks have foresworn providing liquidity to avoid recessions? What do you think the Bank of Japan will do if when they drop ZIRP over the objections of the politicians, their economy tanks? If the US has a recession next year do you think Bernanke will keep rates high to whip inflation a la Volcker or will he buckle and cut rates to help the Republicans in time for the next presidential election in 2008? It could be that we will continue to have a series of asset bubbles fueled with bouts of cheap money from one central bank or another. The other major source of inflation could be governments' printing money to meet their overwhelming financial obligations.

As to practical steps to protect ourselves, my own steps have so far been to go from real estate and stocks to cash, which unfortunately means USD. I have considered diversifying, perhaps into German or Japanese bonds, but the Euro has its own problems and the Japanese goverment debt of 160% of GDP is the highest ever in the developed world. So, where else to go? Gold is part of the bubble now. CHF? Possibly, but daunting for those of us who lack experience in currency hedging. Buffet lost $900 million at it last year and he is a pretty smart man.

In my mind the short term risk is a recession against which holding cash and avoiding debt seem to be an adequate protection. Against the currency risks beyond that, it is hard to know. Perhaps just spreading it around would be enough since currencies cannot all go down against each other.

The risk to the Thai economy is not a replay of 1997. That crisis was caused by inflows of hot money in the 1985 to 1995 period chasing the high SET growth, rapid credit expansion, excess capacity expansion, notably in building, incurrence of dollar-denominated debt, and failure to float exchange rates before running out of foreign reserves. I believe that the Thais have adequately protected themselves against that scenario by maintaining currency controls and with a buildup of foreign currency reserves amounting to USD 59 billion as of April, 2006 as explained in this BOT report:

http://tinyurl.com/qpoug

However, economic crises are seldom reruns. The current risk to the Thai economy is the general risk to a newly globalized economy: a recession in the US reduces the main source of global demand which is from US consumers. There are numerous threats to the current high-level of US consumer demand: high oil prices, lack of real wage growth over the past five years, bursting of the housing bubble and subsequent loss of mortgage equity withdrawal as a source of fund, negative savings rate which prevents use of savings as a means of defending standard of living, higher interest rates which particularly affect consumer debt, but also ARMs and new mortgage origination, weakening of the dollar, and the prospect of increased taxation to meet the unfunded government liabilities. Thailand was the trigger in 1997, but in the next crisis it will be just a normal participant swept along by the global current between the US and China. Some economists, such as David Rosenburg at Merrill Lynch, put the risk of a US recession next year as high as 40%. Most economists expect a reduction of growth in the US economy from the 5.6% of 1Q06 to 2% in late 06. If an exhausted US consumer does put the US into recession it will spread quickly to all of Asia, including Thailand.

I think it is particularly naive to believe that graft and corruption in Thailand or anywhere else will be the cause of an economic crisis. People who make that argument seem to believe that economies are moral engines punishing the wicked. Not so. Economies don't punish greed; they depend on it as a constant in human affairs. Bad timing is a much more grievous vice than greed. The US economy, after all, carries a high burden of corruption such as in: excessive executive pay, accounting distortions that exaggerated profit growth not only in Enron, Global Crossing, etc. but extensively throughout the S&P 500, corporate reneging on pension and health care liabilities, excessive and non-competititve costs of maintaining the largest war machine in history, etc. Nevertheless, the US economy can support these costs, loathsome though they may be. Graft and corruption are more observable on the ground in Thailand than in the US, but that doesn't mean that the economic burden is either greater or unbearable. What might make a difference is a dramatic increase in the rate and effects of graft and corruption. Transplanted first-worlders are seldom in a position to make a judgment as to changes in the rate of graft and corruption.

Khun Pad Thai

in the condo we own in BKK we have annual meetings to elect managing commitee - any major proposals are always put to a vote - at annual meeting i am usually 1 of only 3 or 4 forangs but i know 10% are owned by foreigners - the thais at meeting are really nice and even translate for me since my thai is quite limited - maybe because most of block is owned by quite wealthy Thais who wither let out, use it for their BKK base or live their - most are proffesionals (doctors etc), some models, some minor film stars etc - maybe thats why it all seems to be quite well managed and run - by cental BKK standards its not an expensive block , condos 65 sq mts go for aorund 3-3.8 million -normal problems exist such as complaints about kids in pool being to noisy etc

having said that i looked at about 100 condo blocks before buying in this block and id say well over 80% are run pathetically - some dont even bother to insure buildings etc - a lot are xxxxxxxxxx

That's pretty interesting. Insurance can be a big problem. You never know if you have enough until you need it and lots of people don't recognize how important it is. When you were evaluating condominiums before buying were you able to see financial statements, minutes of annual meetings, minutes of Board meetings,etc.? I would think it would be pretty hard to evaluate the management of a condo in BKK.

There are plenty of topics here about prices for condos, but I have never read any discusssion about governance for those actually living in a condo. I have lived in a condo here in New York City for the past 15 years and have served on the Board of Managers as Treasurer for most of that time. We have monthly meetings of the Board of Managers and take actions such as: retaining a management agency to handle the day to day functioning such as paying bills, hire and fire staff, undertake projects such as replacing the boiler, make and review budgets, etc. In addition there is an Annual General Meeting of the condominium owners at which they elect new Board members to replace those whose terms have ended or who have vacated their seats by selling out. It may be routine, but it is often not smooth. We have had screeching matches at the annual meeting, threats of lawsuits from one board member to another, loss of bank funds by a management company who stole them, and other more routine complaints and criticisms. How does all this work in a condominium controlled by 51% Thai people. I have a hard time imagining that communication goes smoothly across the cultural gap. In any situation where there money is being handled there is always the opportunity for bad judgment and even corruption, imagined or otherwise. Do I not read of this because it doesn't happen in Thailand or do the condo owners have so little ownership rights as to have no say at all in governance?

Khun Pad Thai

>> If you have been married less then 2 years, your wife will be given a conditional green card on entry, which requires her to apply for “parole” in order to leave US.

This is not correct. A holder of a conditional green card has all the rights and privilegs of permanent residence and is not required to obtain Advance Parole when leaving the country. Advance Parole is required for persons who have a petition for adjustment of status pending with the BCIS and permits them to reenter the country without a visa or a green card. The only condition that applies to a conditional green card is that it expires after two years unless the marriage continues and the immigrant applies for a "permanent" green card within the deadline period.

Khun Pad Thai

Thanks for the input. I am going to use Discover Bank, they are paying about 4.60% on money market accounts, transfers are no problem. I used to work at Citibank, I just can't trust them.

Why not?

Bailey,

Let me chime in here, although I don't live in Thailand, at least, not yet. Speaking of Americans, I think it is a good thing for people to take risks during their twenties to do something they really want to do. You have a considerable advantage in having a portable income along with whatever business or technical talent provided you with it. Living abroad will enlarge your view of the world, even if, in the end, it turns out not to be for you. So, I would say go for it.

However, taking big risks when you are a little kid is not recommended, in my view. The education system alone would argue against growing up in Thailand vs. the US, warts and all.

I pursued other interests during my twenties at the expense of education, job, and career. When I was thirty I decide to get a conventional career together after all. Now I am fiifty-seven, finishing a successful career, married to a Thai woman and studying the Thai language with a view toward resettling there in three to five years. I always wanted to live abroad. Like you I am repelled by much of America, from the thug-in-chief on down. Getting out physically is not enough however. It is important to get into another culture to see the unimaginable ways in which people can live differently. It goes without saying that one wouldn't actually like all of those ways.

One good point to be made for America--it will always give you a second chance, assuming you are white and educated.

Best of luck either way,

Khun Pad Thai

Thanks. Thai Chinese from the US actually. As for those "stumbling" around, I can't say I look at it that way all the time. It's all relative.

Anyway, I'm simply offering a bit of insight, just as you're doing, that's it's not all one way or the other and that gross generalizations for an entire society of credit, drugs, and rock and roll being responsible for this or that leave out large portions of the population where they don't apply. By the way, I know plenty of average middle class folks stateside who do quite a bit of financial planning family wise. Granted, IMO it does seem more common in cultures with more cohesive family structures.... for instance it seemed fairly pervasive in friends/families of Jewish heritage. Indian and Italian friends too now that I think of it... and then of course again common in American families of Eastern Asian descent.

So, let me ask this: what is the view of astute real estate people in Thailand about the current conditions both in Thailand and in other siginigicant markets? Do they have a traditional valuation method against which they measure current opportunities? For example, do they only buy cash-flow positive properties? Is there a property bubble in Thailand now? What about China and the US? Do they time the property market or are they prepared to buy pretty much at any time and hold? How does the US RE market compare to Thailand?

I grew up in an Irish-American family that valued education, but looked a little askance at business. It is only as an adult that I have become interested in economics and investing, probably because I have managed to move up a notch in the economic scale as a benefit of improved educational opportunity and the great rising tide that has lifted so many boats in the US over the last thirty years. At the moment I am most interested in understanding/managing risk and observing financial bubbles.

A lot of revenue and foreign investment (in this case I mean Thais abroad repatriating funds) doesn't make it into 'statistics and figures.' Along the same lines as what you mentioned above, Thais who own businesses abroad send funds home as well, not necessary to literally 'support' their folks or poor relatives as the Issanites do, but to invest in businesses and real estate. I remember doing this on a weekly basis in Chinatown in Houston when I was younger, explained to me when I was around 8 or 9, we'd make a cash deposit in Houston and then the funds would be credited and could be withdrawn by our relatives in Bangkok the next day, less a flat fee. Then whenever we visited, our funds would be ready for purchase of property.... always with the lesson "this is for the future... always plan ahead and you'll always be comfortable, it's what my father did, what his father did, and what you should do as well."

No wire transfer required, just ledger notations. There has always been quite a bit of hand carried cash traffic as well. I can't imagine what the scale must be for China who has more numerous and much larger permanent expatriate colonies worldwide.

Heng,

This glimpse of the business ethic of your Thai family is fascinating. I gather that your family is Thai-Chinese? This kind of planning for the future by the family would seem to provide an enormous advantage over other families who plan very little at all. From within your family culture it must seem that most other families are just stumbling around financially, getting into stupid consumer debt, and failing to get the big picture of accumulating wealth.

I grew up in a typical middle-class family here in the US. Beyond the expectation that we would go to college, my family provided no long-term financial planning. I suppose that is the expected financial horizon of the nuclear family as compared to the extended family.

Would love to hear more from time to time about your family's financial strategies.

Khun Pad Thai

Nonsense?

For someone with a long term investment horizon, equities are a good way to go.

Use the retirement calculator to see if your investment plan would have survived the last 140 years.

With a proposed 70%/30% split, a withdrawal of 4.00% of your starting portfolio, in 100.0% of the years back tested to 1871, the portfolio would have maintained a positive balance.

Your Success Rate is 100.0% for the previous periods tested back to 1871.

Sure, no guarantee of future results, just a good indication how things will most likely turn out.

Do you really not understand the difference between being "a good way to go" and being "safe?"

Here is a good retirement calculator.

http://fireseeker.com/

Invest 70% stocks 30% fixed and safely take 4% / year.

That's about it.

Nonsense. There is nothing safe about 70% in stocks and taking out 4% per year. Studies have shown that , if the future is like the past, this combination would probably enable your funds to outlive you. But the future may not be like the past. In particular, US equities may continue to underperform T-bills as they have since 1998. If you were a university endowment fund you could afford to take a fifty-year horizon, but you are not so you can't.

It irks me when people apply an oversimplified rule-of-thumb which they don't understand and then describe the resulting "plan" as safe. That's like the mantra, "houses only go up in value." Well, houses normally go up in value, but usually not much more than inflation. Then sometimes they go down in value as they are proceeding to do now.

The main tax advantage to living abroad for Americans is avoiding state income tax. Even some US states that don't have an income tax turn around and tax dividends and interest, such as New Hampshire. Here in New York City state and city income tax can easily come to 11% so escaping it could be important. In the absence of state income tax doing a Roth conversion might make more sense as well.

Although health care is much cheaper in Thailand, I don't know how likely it is to get insurance for older people.

Since you admittedly don't know anything about investing, why don't you start reading books and taking courses so that you can eventually make informed and reasoned choices in managing your money?

It looked good so I started to sign up until I got to the part about you must be a US resident with a US address.

I didn't read the part requiring residency as actual physical presence but only as sort of a default location. So as far as a U.S. address, I just used the one they already have which is simply a private P.O. box (rather than a U.S.P.S. one). And the business that gives me that box allows (even encourages) you to format the box address as if it were an apartment residence.

I hope you are doing this in a state without an income tax. Some of the states, like Calif., are very aggressive at claiming tax liabilities.