Flip Flop Economy

[gjones]

I can’t help but noticing how much Thais are borrowing.

The house prices in some area of Bangkok has gone crazy and the appearance factor of being seen in the latest imported vehicle is seen as paramount.

With recent odd Government decisions, bombs and continuing uncertainty, high borrowing by consumers and a strong Baht, the bubble has to burst.

The question is when?

[eljeque]

I go to motorcycle auctions every month, and this last one in Pattaya on the 8th of January had 308 bikes from the general area down to Rayong. There was only one 2004 bike and then 60% were 2006 and the rest were 2005. These take place every month at this location in Pattaya.

One bike had only 388 kilometers. I wonder how the buyer had it repossed so quickly.

I have read that 40% of the pick-ups here are repossessed. That really would not surprise me with the people who I have met, on the salaries that they are on, getting loans for vehicles that they will not be able to afford making payments on for very long. Kind of like some of the USA housing market. I do wonder who appoves the loans.

I am sure that this time, just like the last, there will be a lot of banks and finance companies taking the hits, and keeping quiet about it. That seems to be common here.

[Tony Montana]

I'd say very soon possibly this year.

Lesson's havn't been learnt from 97,we now live in a global economy whether we like it or not but Thailand continue's to isolate it's self from this fact.

The xenophobic behaviour is doing nothing to help the economy,BOT constantly proping up the Baht making harder it for exporter's,you also have place's like Vietnam & China who are now competing with Thailand & even my mum knows that China is the place for everything at the moment.

Banks are next to useless & will never have any global presence,education & law,well lets not even go there.One thing that Thailand does have in its favour is tourism but with bombs exploding & military coup's going on this might soon be in jeopardy.

IMHO if Thailand is not careful it could become 'land time forgot'.

This is not a dig at Thai people but I do wish they would get rid of some of these dinosaur's who make these riduculous decisions.

[Orangutan]

eljeque,

I'm interested in the motorcycle auctions every month in Pattaya. What days are they on, is there a schedule that I can get?

Thanks,

-Orangutan

[steveromagnino]

BOT constantly proping up the Baht making harder it for exporter's,you also have place's like Vietnam & China who are now competing with Thailand & even my mum knows that China is the place for everything at the moment.

Banks are next to useless & will never have any global presence,education & law,well lets not even go there.One thing that Thailand does have in its favour is tourism but with bombs exploding & military coup's going on this might soon be in jeopardy.

Tony, I burying the <deleted> cockaroach. :-)

The BOT is trying to pull the baht down!! not up, they are TRYING to make it easier for exporters and it isn't working! You have it back to front!

Banks? You mean like GE? Standard Chartered? HSBC? UOB?>>

[Barney_the_Dinosaur]

Please note asking prices for houses here signify nothing.

The property market is highly illiquid here and there is no transparency about prices finally PAID.

Some of these houses stay on agents books for years, and when they don't sell, the owners put the prices UP.

[samran]

Please note asking prices for houses here signify nothing.

The property market is highly illiquid here and there is no transparency about prices finally PAID.

Some of these houses stay on agents books for years, and when they don't sell, the owners put the prices UP.

Having dipped my toe into the property market (and the taking it back out quickly..) I get the feeling that the property market here isn't a significant driver of debt levels as say they would be in the UK, OZ or the US.

The reason is, the properties are usually paid for by cashed up rich Thai's, so debt is not a factor for them. The reason they can leave them on the market for so long, without decreasing the rent wanted, is that they really don't care about returns.

At the lower end, for things like mobile phones, motor bikes etc, I think there needs to be a public policy debate here in Thailand about consumer lending practices of the banks. Not that I think all banks are evil (au contraire) but they will get away with what they can think they can get away with, while the government needs to think about the issue from a macro economic stabilty perspective.

[bendix]

BOT constantly proping up the Baht making harder it for exporter's,you also have place's like Vietnam & China who are now competing with Thailand & even my mum knows that China is the place for everything at the moment.

Banks are next to useless & will never have any global presence,education & law,well lets not even go there.One thing that Thailand does have in its favour is tourism but with bombs exploding & military coup's going on this might soon be in jeopardy.

Tony, I burying the <deleted> cockaroach. :-)

The BOT is trying to pull the baht down!! not up, they are TRYING to make it easier for exporters and it isn't working! You have it back to front!

Banks? You mean like GE? Standard Chartered? HSBC? UOB?>>

Steve, please don't use facts and rational arguments to counter the misinformed generalisations that masquerade as intelligent debate here. It upsets the balance too much.

[steveromagnino]

Steve, please don't use facts and rational arguments to counter the misinformed generalisations that masquerade as intelligent debate here. It upsets the balance too much.

Mate, you just get back to your ministry of lies about grain production and sending people off to the Siberian 'amazing salt fun park'.

I'm busy setting up a bank lending money to people to buy motorcycles and mobile phones :-)

After that, I might set up a bank to lend to all the foreigners on this board; here is my ad campaign.

No money? No degree? No work permit?

NO PROBLEM

At the Farang Bank, we love farangs. And that's why we are willing to set up an account, just as you like it, with all the fixin's and we'll even serve up your new account with lashings of buttered bread and as much tomato sauce as you want.

No need to speak Thai, no need to have any evidence of income, and certainly no need to show us any paperwork. We trust you, after all the locals here are a bunch of, well, let's just say it rhymes with Alan Funt and it is plural, compared to them, you and your bar girl partner are an ideal lending risk.

So...when you decide to purchase that 2 bedroom house out in Nakhon Nowhere, be sure to come to us for a loan. We'd love to lend to you with that lack of collateral and flight risk. Other banks talk about ownership, servicing and security, we talk about cricket. And girls.

Our ATM network is second to none. In so far as we don't have any, so it really is an equal first. We'll handwrite you a card though, and you can access your accounts 24 hours per day using our website www.farangbank.co.som

With a registration in the world renowned banking capital of Somalia, you are guaranteed safety, protection and first rate data systems and a legal system that protects all accounts. Our friendly customer service soldiers are waiting for your call.

Call now, and receive a complimentary short time at the Long Gun with every account opened.

[Mid]

Call now, and receive a complimentary short time at the Long Gun with every account opened.

number please .................

[Tony Montana]

I'm talking since 1997,why dont they just use interest rates to control the currency,only recently have they tried to pull the Baht down,with strange methods.

The banks you mention are global banks & none of them are from Thailand.

Maybe I'm wrong & I do apologise if I am.

BOT constantly proping up the Baht making harder it for exporter's,you also have place's like Vietnam & China who are now competing with Thailand & even my mum knows that China is the place for everything at the moment.

Banks are next to useless & will never have any global presence,education & law,well lets not even go there.One thing that Thailand does have in its favour is tourism but with bombs exploding & military coup's going on this might soon be in jeopardy.

Tony, I burying the <deleted> cockaroach. :-)

The BOT is trying to pull the baht down!! not up, they are TRYING to make it easier for exporters and it isn't working! You have it back to front!

Banks? You mean like GE? Standard Chartered? HSBC? UOB?>>

[jumnien]

I'm not sure you can use interest rates to control a currency. The US dollar has dropped dramatically since it began an aggressive rate increase program.

[Heng]

I can’t help but noticing how much Thais are borrowing.

Get to know the other half... or rather... the other 20%.

[jumnien]

Worldwide liquidity is at an all time high. Of course, people are borrowing. Mortgage rates in the US haven't been this low in 39 years! Personally, I don't have any debt and intend to continue that way. But this borrowing thing is nothing endemic to Thailand.

[samran]

I'm talking since 1997,why dont they just use interest rates to control the currency,only recently have they tried to pull the Baht down,with strange methods.

The banks you mention are global banks & none of them are from Thailand.

Maybe I'm wrong & I do apologise if I am.

BOT constantly proping up the Baht making harder it for exporter's,you also have place's like Vietnam & China who are now competing with Thailand & even my mum knows that China is the place for everything at the moment.

Banks are next to useless & will never have any global presence,education & law,well lets not even go there.One thing that Thailand does have in its favour is tourism but with bombs exploding & military coup's going on this might soon be in jeopardy.

Tony, I burying the <deleted> cockaroach. :-)

The BOT is trying to pull the baht down!! not up, they are TRYING to make it easier for exporters and it isn't working! You have it back to front!

Banks? You mean like GE? Standard Chartered? HSBC? UOB?>>

Central banks don't target the currency when the they shift interest rates....they target inflation. Changes to the exchange rates are a resulting bi-product, but good central banks usually control expectations well in advance.

However, Open Market Operations, or internveining in the currency markets is not unknown around the world, but the concensus is that it doesn't work particularly well.

The best way to protect importers and exporters is to encourage a dynamic and flexible economy where exporters are not held hostage to the whims of exchange rates. That means, ecouraging more valuable elaborately transformed exports.

[dobbelinas]

A couple of years ago, it was almost impossible, for a Thai farmer to get a

agricultural bank loan.

Thaksin changed all that.

Now it's very easy for farmers to get a loan.

He spent huge amounts of Thailands budget propping this up.

(popular vote tactic)

The money borrowed from the agricultural bank, is supposed to be used for agricultural purposes.

Now you know why so many thais, drive brand new vehicles...

Offcourse, since Thaksin also opened up many markets for agricultural produce, prices has been dropping.

Many Thais therefore do not have the funds to pay their loans today.

I heard somewhere that Thaksin is also a major shareholder in many

motor vehicle companies....

Not stupid that guy

Edited January 13, 2007 by dobbelinas

[wrecker]

The military junta do not have a clue what they are doing. If they keep on scoffing the provinces there will be trouble. Thai junta's are infamous for the use of force on their own citizens. You always hear the bullocks that a coup was bloodless, the irony is that the violence always starts afterwards. As soon as the shit really hits the fan the bubble will burst. But who cares, at least it makes the baht much cheaper to the dollar and it support the sufficiency economy....

[HenryB]

I can’t help but noticing how much Thais are borrowing.

The house prices in some area of Bangkok has gone crazy and the appearance factor of being seen in the latest imported vehicle is seen as paramount.

With recent odd Government decisions, bombs and continuing uncertainty, high borrowing by consumers and a strong Baht, the bubble has to burst.

The question is when?

People like you are fools Thailand is number one the whole world knowns that just ask a Thai. I having been living in Thailand for 16 years. This is not 1997. I wonder what your problem is always making fun you should go back to where you can from. Are you from India?

[OneeyedJohn]

I can’t help but noticing how much Thais are borrowing.

The house prices in some area of Bangkok has gone crazy and the appearance factor of being seen in the latest imported vehicle is seen as paramount.

With recent odd Government decisions, bombs and continuing uncertainty, high borrowing by consumers and a strong Baht, the bubble has to burst.

The question is when?

People like you are fools Thailand is number one the whole world knowns that just ask a Thai. I having been living in Thailand for 16 years. This is not 1997. I wonder what your problem is always making fun you should go back to where you can from. Are you from India?

Curiosity killed the cat...but do / are you as stupid and ignorant in your native language as you are in English?

[gjones]

I can’t help but noticing how much Thais are borrowing.

The house prices in some area of Bangkok has gone crazy and the appearance factor of being seen in the latest imported vehicle is seen as paramount.

With recent odd Government decisions, bombs and continuing uncertainty, high borrowing by consumers and a strong Baht, the bubble has to burst.

The question is when?

People like you are fools Thailand is number one the whole world knowns that just ask a Thai. I having been living in Thailand for 16 years. This is not 1997. I wonder what your problem is always making fun you should go back to where you can from. Are you from India?

It is a simple questin on economics and does not desrve a racist coment. I love the Thai and the people of India. I am only concerned that personal borrowing is too easy and will eventually damage the country.

However, I am sad that you are unable to conduct a reasonable argument but I wish you a happy new year

[wasabi]

http://www.bloomberg.com/apps/news?pid=206...id=aYh1nlX_jB.8

[longway]

I can’t help but noticing how much Thais are borrowing.

The house prices in some area of Bangkok has gone crazy and the appearance factor of being seen in the latest imported vehicle is seen as paramount.

With recent odd Government decisions, bombs and continuing uncertainty, high borrowing by consumers and a strong Baht, the bubble has to burst.

The question is when?

People like you are fools Thailand is number one the whole world knowns that just ask a Thai. I having been living in Thailand for 16 years. This is not 1997. I wonder what your problem is always making fun you should go back to where you can from. Are you from India?

It is a simple questin on economics and does not desrve a racist coment. I love the Thai and the people of India. I am only concerned that personal borrowing is too easy and will eventually damage the country.

However, I am sad that you are unable to conduct a reasonable argument but I wish you a happy new year

i dont know if it is fair to characterise thailand as a bubble economy. Some of the issues you have highlighted could well spell trouble, but I think its till too early to say for certain.

As for the high borrowing, thais are definitely borrowing more, but as a whole i understand its still not that bad.

In any case thailand´s economy is more export driven, rather than consumer driven (maybe I am wrong but that my impression), so this high borrowing will not in itself bring about a crash.

External factors like investment drying up, or the US consumer stops buying stuff will affect thailand more imho.

[xbusman]

The economy is highly export driven and the fundamental problem is high value of the baht, not in relation to the US dollar but in relation to the Remimbe which is pegged to the dollar. Signs have been there for a year showing exports dramatically reducing and just now showing in the actual numbers. At 35 to 36 there are major alarms ringing and the controlling economists dont know what to do about it. Its going to be a VERY interesting year.

[steveromagnino]

I'm talking since 1997,why dont they just use interest rates to control the currency,only recently have they tried to pull the Baht down,with strange methods.

The banks you mention are global banks & none of them are from Thailand.

Maybe I'm wrong & I do apologise if I am.

Every single bank I named is operating here:

GE Money and also GE Capital is cornerstone investor of Bank of Ayuddha and partner in KCC GE credit cards PLUS Easybuy financing (I think it is easybuy - the biggest high interest legit lender of last resort type operation)

HSBC major bank here with single branch

Standard Chartered owns a share of Standard Chartered NakornThon Bank; also has been here more than 100 years; more than 40 branches AFAIK

UOB owns Bank of Asia; not the biggest player here but certainly one of the most incompetent

Citibank single branch major credit card operation and personal lending (2nd or 3rd biggest CC)

So....when you slag off banks in Thailand, you are also pretty much slagging off the major banking heavyweights.....

They have been trying to hold the baht down with interest rates to some degree, but the main issue is when you let interest rates go down, then everyone goes crazy buying stupid assets like houses and motorcycles as per the easy credit example earlier in the thread; you push them up to control spending a bit, and suddenly speculators are dumping money here like crazy, not helped by some pretty low P/Es and lax controls over recent times. i am sure the BOT are as mystified as everyone else why suddenly despite all their efforts, they can't seem to budge the currency downwards; bigger question would be, why should they be trying that hard? Let the market find the right rate, and concentrate on adding value in the export side of the economy. BUt that takes time.

Everyone is a retrospective financial genius.

[backflip]

"the Remimbe...is pegged to the dollar"

The Renmenbi is not pegged to the US dollar.

[samtam]

Apropos the OP's opening gambit, have you noticed how quiet department stores, restaurants etc are since the new year? Difficult to guage whether this is a reaction to security fears, or to other economic factors. It's obviously too early to say there is a trend, but other economic policy factors, such as the exchange control, the foreign business act etc may be contributing, and these things take time to filter through the system. In the meantime inflation still remains high, (although not according to official figures).

[Mid]

"the Remimbe...is pegged to the dollar"

The Renmenbi is not pegged to the US dollar.

Marcus Wellbe ....................................

for all intents and purposes , it is within a very narrow band .

[The Dan Sai Kid]

Apropos the OP's opening gambit, have you noticed how quiet department stores, restaurants etc are since the new year? Difficult to guage whether this is a reaction to security fears, or to other economic factors. It's obviously too early to say there is a trend, but other economic policy factors, such as the exchange control, the foreign business act etc may be contributing, and these things take time to filter through the system. In the meantime inflation still remains high, (although not according to official figures).

I had noticed that - I had put it down to everyone being skint till the end of the month...

[wasabi]

slightly off topic, but can a Farang work in the money management industry in Thailand or is this a restricted job?

[pap]

I'm not sure you can use interest rates to control a currency. The US dollar has dropped dramatically since it began an aggressive rate increase program.

You definitely do use it. But it definitely is only one factor. The dollar has all kinds of other problems such as its backers owing somewhere around 2000 bucks per person to pay off the debt. That last number is not right but its in the neighborhood.

The dollar would have fallen faster had the rate increases not occured.