Financial Crisis Beginning in Thailand

[JaiLai]

On 11/16/2019 at 1:31 AM, White Christmas13 said:

just one picture I don't want to name the hotel.

 

 

That looks like someone has modified a house in a Moo Baan, hardly a hotel....

 

Why not name it to potentially put some clients their way?

[Isaan sailor]

I see we have the usual high Baht defenders/apologists in this subject.  Their feeble reasoning amuses me.

[saengd]

5 minutes ago, Isaan sailor said:

I see we have the usual high Baht defenders/apologists in this subject.  Their feeble reasoning amuses me.

Just trying to add a few facts to the bar stool chatter on economics, not trying to defend anything, people can make their own decisions once they have some facts rather than a bunch of blather and noise.

[AussieBob18]

10 minutes ago, Skallywag said:

This is what I cannot understand economically. 

How do banks or lenders make money if an investment goes bankrupt in thailand?

How do these "builders" , "developers" pay off the loans?

And it seems to still be happening, why do banks keep loaning out money to unprofitable ventures?

How can condos at 30% capacity and malls nearly empty not go bankrupt?

China has many 'Ghost Cities and empty Malls' - so how can all that wasted money/investment not come back and cause problems?  Because the China Govt is 'holding things up' to stop them crashing - much like western countries did after the GFC - they called that 'economic stimulus'.  But it has to be paid for eventually and it will one way or the other.  Look at Japan - it has been stagnant (but OK) for nearly 2 decades - why?  Because the massive debts that were used to slow the economic crash that should have occurred, are still being paid off by the current economic growth. Thailand is 'holding up' the economy similar to China - buildings and constructions and investments - but it all eventually has to be paid for.  Greece comes to mind as well - massive Govt debts eventually come home to roost.  Thailand is on the road to that occuring - and how bad the slowdown/crash will be depends on how long before they take the necessary actions to reduce debt and lower the Baht - me thinks they will refuse to change and it will crash.

 

[metisdead]

Some troll posts and replies have been removed.

 

A post containing a link and content from Bangkok Post has been removed:

 

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[AussieBob18]

Thailand has run a budget deficit since fiscal 1999, except for fiscal 2005 and 2006. The total budget debt is at $154billion USD. Thailand has $200B US in exchange reserves as of 2019, but it is not in the first 10 worldwide as some seem to think.  Any serious external driven financial factor/event will quickly drain what reserves Thailand holds - that will not save the Thai economy if/when an economic/currency squeeze.  What the OP is saying is that things are not as good as they were in the past - and that is true.  And if/when the crisis happens - Thailand is in big trouble.

 

With the Thai Baht out of control (they have been trying to lower it for most of this year), it is just a matter of time before some external factors/events brings this all to account. It may be as bad as it was in 1997, but more likely it will be a 'softer' crash - but crash it will.  And just like before, the wealthy and elites will feel very little of the pain - it will be the middle levels mainly (those with big debts funding their lifestyle).   

 

The 1997 crash in Thailand was caused because the Thai Govt did not have enough reserves to hold its Baht against the USD so it had to float the currency.  This has lead the Thai Govt maintaining a high level or foreign reserves, which has also caused the Baht to grow and grow in value.  But they have also been running a budget deficit over the last decade and there seems to be no slowing down in this - they fear the economy will slow if they do.  They are in a catch 22 situation - either way they go could cause big problems - a self-inflicted problem caused by allowing the baht to increase far too much. 

 

For all those who think the Thai foreign reserves will save them - think again.  The major economies like the USA and Europe dont hold huge exchange reserves, because the US dollar and the Euro are by far the most common reserve currencies used in international transactions and therefore the USA and the EU do not need to hold as many reserves.

[saengd]

10 minutes ago, AussieBob18 said:

China has many 'Ghost Cities and empty Malls' - so how can all that wasted money/investment not come back and cause problems?  Because the China Govt is 'holding things up' to stop them crashing - much like western countries did after the GFC - they called that 'economic stimulus'.  But it has to be paid for eventually and it will one way or the other.  Look at Japan - it has been stagnant (but OK) for nearly 2 decades - why?  Because the massive debts that were used to slow the economic crash that should have occurred, are still being paid off by the current economic growth. Thailand is 'holding up' the economy similar to China - buildings and constructions and investments - but it all eventually has to be paid for.  Greece comes to mind as well - massive Govt debts eventually come home to roost.  Thailand is on the road to that occuring - and how bad the slowdown/crash will be depends on how long before they take the necessary actions to reduce debt and lower the Baht - me thinks they will refuse to change and it will crash.

 

You do understand (I know) that THB is a restricted currency, it is not fully convertible and may be held only in limited quantities by overseas banks. It is therefore almost impossible for non-Thai entities to take a position against THB that would cause it to crash. That said, it could "crash" if all exports ceased and all tourists stopped visiting and all foreign investors stopped investing.....and the chances of those things are close to zero.

[DannyCarlton]

30 minutes ago, JaiLai said:

That looks like someone has modified a house in a Moo Baan, hardly a hotel....

 

Why not name it to potentially put some clients their way?

It's been named and discussed earlier in the thread. Dao Cafe.

[bkk6060]

Jackdd

Chinese people stay maybe 3-5 days in average in Thailand

 

Where did you obtain the above false information?

The average Chinese stays 10 days.

[zhounan]

What concerns the whole globe is not a financial crisis, but an intentional change of economic system. From American-centric capitalism to globalist turbo-capitalism. This is the mechanism well described by Frédéric Bastiat, the elites of each country, who are often cosmopolitan and unrelated to territorial interests, are literally plundering the other social classes, an inexorable transfer of wealth from the many to the few. 

 

Edited November 17, 2019 by zhounan

[AussieBob18]

45 minutes ago, saengd said:

You do understand (I know) that THB is a restricted currency, it is not fully convertible and may be held only in limited quantities by overseas banks. It is therefore almost impossible for non-Thai entities to take a position against THB that would cause it to crash. That said, it could "crash" if all exports ceased and all tourists stopped visiting and all foreign investors stopped investing.....and the chances of those things are close to zero.

Yes all that is correct.  But in response to a financial crisis/problem, the Thai Govt will have to 'sell' their reserves and lower their interest rates (and other things as you know), and the demand for the Thai Baht will plummet and when that happens and the Baht will drop in value - how fast is the issue.  When that happens there will then be a much closer examination of Thailand's economy and its true fundamentals - and that will not be good news for the Baht either. 

[saengd]

6 minutes ago, AussieBob18 said:

Yes all that is correct.  But in response to a financial crisis/problem, the Thai Govt will have to 'sell' their reserves and lower their interest rates (and other things as you know), and the demand for the Thai Baht will plummet and when that happens and the Baht will drop in value - how fast is the issue.  When that happens there will then be a much closer examination of Thailand's economy and its true fundamentals - and that will not be good news for the Baht either. 

Why would BOT have to sell the reserves, what could make that happen, give me a scenario? Demand for THB only falls if tourists stop coming here, exporters stop exporting and investors stop investing.

Edited November 17, 2019 by saengd

[saengd]

57 minutes ago, AussieBob18 said:

Thailand has run a budget deficit since fiscal 1999, except for fiscal 2005 and 2006. The total budget debt is at $154billion USD. Thailand has $200B US in exchange reserves as of 2019, but it is not in the first 10 worldwide as some seem to think.  Any serious external driven financial factor/event will quickly drain what reserves Thailand holds - that will not save the Thai economy if/when an economic/currency squeeze.  What the OP is saying is that things are not as good as they were in the past - and that is true.  And if/when the crisis happens - Thailand is in big trouble.

 

With the Thai Baht out of control (they have been trying to lower it for most of this year), it is just a matter of time before some external factors/events brings this all to account. It may be as bad as it was in 1997, but more likely it will be a 'softer' crash - but crash it will.  And just like before, the wealthy and elites will feel very little of the pain - it will be the middle levels mainly (those with big debts funding their lifestyle).   

 

The 1997 crash in Thailand was caused because the Thai Govt did not have enough reserves to hold its Baht against the USD so it had to float the currency.  This has lead the Thai Govt maintaining a high level or foreign reserves, which has also caused the Baht to grow and grow in value.  But they have also been running a budget deficit over the last decade and there seems to be no slowing down in this - they fear the economy will slow if they do.  They are in a catch 22 situation - either way they go could cause big problems - a self-inflicted problem caused by allowing the baht to increase far too much. 

 

For all those who think the Thai foreign reserves will save them - think again.  The major economies like the USA and Europe dont hold huge exchange reserves, because the US dollar and the Euro are by far the most common reserve currencies used in international transactions and therefore the USA and the EU do not need to hold as many reserves.

Thailand foreign reserves are twelth globally.

[AussieBob18]

59 minutes ago, saengd said:

Why would BOT have to sell the reserves, what could make that happen, give me a scenario? Demand for THB only falls if tourists stop coming here, exporters stop exporting and investors stop investing.

https://www.investopedia.com/ask/answers/06/reserverequirements.asp

 

[Banana7]

51 minutes ago, saengd said:

Why would BOT have to sell the reserves, what could make that happen, give me a scenario? Demand for THB only falls if tourists stop coming here, exporters stop exporting and investors stop investing.

One major factor are the forex futures market and hedge funds. You can lock-in future exchange rates and use leverage to exponentially increase your investment, potentially 10 times to about 100 times or more, based on your initial capital investment.

 

 

 

 

 

[AussieBob18]

57 minutes ago, saengd said:

Thailand foreign reserves are twelth globally.

Thailand foreign reserves are about $200 billion and their Government budget deficit is about $150 billion.

Do the maths if/when a financial crisis hits.

 

[saengd]

1 hour ago, AussieBob18 said:

https://www.investopedia.com/ask/answers/06/reserverequirements.asp

 

You didn't answer my question, not surprisingly!

 

In the wonderful world of TVF economics, posters come up with an answer and then try and support it with rhetoric, any fact that comes along that contradicts the answer is deemed to be false or manipulated, too funny really.

[saengd]

1 hour ago, Banana7 said:

One major factor are the forex futures market and hedge funds. You can lock-in future exchange rates and use leverage to exponentially increase your investment, potentially 10 times to about 100 times or more, based on your initial capital investment.

 

 

 

 

 

THB is restricted currency, it's not full convertible, banks can only hold limited amounts hence nobody outside of Thailand can take a position against the currency. If they tried the best they could hope for is a slight impact in the offshore rate, the onshore rate is under the full control of BOT.

[saengd]

1 hour ago, AussieBob18 said:

Thailand foreign reserves are about $200 billion and their Government budget deficit is about $150 billion.

Do the maths if/when a financial crisis hits.

 

You really don't understand how this works, do you! 

 

Every budget deficit is collateralized by the Treasury and new Treasury bonds are offered to the market, historically these are all oversubscribed and recent sales have been cancelled because of excess demand. BOT pays a coupon rate of around 4% per year on the bonds and in thirty tears time when the bonds are due for redemption, the value of them is a fraction of what they are worth today. So no, having a budget debt of 150 bill would not mean that BOT would sell their reserves, things just don't work that way.

 

Note: all budget deficits have been under 3% except one at 4.7%, compare that to other countries deficits and it's almost microscopic.

 

 

[AussieBob18]

22 minutes ago, saengd said:

You really don't understand how this works, do you! 

Every budget deficit is collateralized by the Treasury and new Treasury bonds are offered to the market, historically these are all oversubscribed and recent sales have been cancelled because of excess demand. BOT pays a coupon rate of around 4% per year on the bonds and in thirty tears time when the bonds are due for redemption, the value of them is a fraction of what they are worth today. So no, having a budget debt of 150 bill would not mean that BOT would sell their reserves, things just don't work that way.

Note: all budget deficits have been under 3% except one at 4.7%, compare that to other countries deficits and it's almost microscopic.

 

Some would say you are delusional and have absolutely no real idea about a real financial downturn and how it would affect the Thai aconomy and the Baht.  Others would say that anyone whose automatic response to someone that disagrees with them, is to insult them and denigrate them, is symptomatic of a fool.  But I choose to say nothing and to ignore you and engage in no further discussion. Goodbye.

 

[meechai]

5 hours ago, neeray said:

What is "jungle mail"?

 

Serious question. (I don't get out much)

Hahah so sorry I should have proof read my post better

 

Jungle is suppose to read jingle

 

In the USA in 2007-2008 banks were receiving mail that jingled because inside were

house keys being returned as folks opted to forfeit their mortgaged homes

https://investinganswers.com/dictionary/j/jingle-mail

 

By the way

The second part of why jingle mail occurred was once a crash starts the opposite of what happened during the boom kicks in.....

 

Meaning during the Boom: Irrational Exuberance housing was selling fast as loans were being made to sell off the over supply (even to folks who should not get a loan) So house prices were going up...fast

 

But once the crash/bust starts house prices fall like lead balloons back to earth

So many folks see they are actually in a home that is now worth way less than the mortgage & that is another reason to opt out & send the jingle mail

 

Edited November 17, 2019 by meechai

[saengd]

3 hours ago, AussieBob18 said:

Some would say you are delusional and have absolutely no real idea about a real financial downturn and how it would affect the Thai aconomy and the Baht.  Others would say that anyone whose automatic response to someone that disagrees with them, is to insult them and denigrate them, is symptomatic of a fool.  But I choose to say nothing and to ignore you and engage in no further discussion. Goodbye.

 

I'm seriously happy to debate Thai economics with you but you have to bring some facts to the table rather than just your ideas that you try to pass off as fact. If you have an idea that the Thai economy is about to fall off a cliff, try supporting that notion with some hard evidence, don't tell us that all the numbers are false and can't be relied upon, if they are false then find the hole in them and expose it. I'm sorry if you find my comments denigrating, there are things in this world that neither one of us knows and I'm happy to admit I don't know when I don't. But I'm 70 years old and I've lived through a number of financial crisis plus I've worked in finance/banking related fields all my career plus I've made a point of studying Thai economics for the past fifteen years, I am not about to suffer fools gladly on this subject. 

[Destiny1990]

23 hours ago, saengd said:

I'm seriously happy to debate Thai economics with you but you have to bring some facts to the table rather than just your ideas that you try to pass off as fact. If you have an idea that the Thai economy is about to fall off a cliff, try supporting that notion with some hard evidence, don't tell us that all the numbers are false and can't be relied upon, if they are false then find the hole in them and expose it. I'm sorry if you find my comments denigrating, there are things in this world that neither one of us knows and I'm happy to admit I don't know when I don't. But I'm 70 years old and I've lived through a number of financial crisis plus I've worked in finance/banking related fields all my career plus I've made a point of studying Thai economics for the past fifteen years, I am not about to suffer fools gladly on this subject. 

 

Yes lots of fools here especially the ones seeing an uphill trend !

Edited November 18, 2019 by Destiny1990

[jeffreysearch]

On 11/16/2019 at 5:36 PM, pookondee said:

ThaiVisa punters been predicting Thailands demise ever since there was a ThaiVisa.

 

Also tourism will tank they said...

since...

well, since tourism was 15mill per year.

lol

 

And as far as economies failing,

Do you guys not think the 1st sign of that happening might be the currency plummeting?

 

That would be when investor confidence in a country is completely shot.

 

Meanwhile in the west...

80% in hopeless debt.

Zero interest rates stealing the interest earnings of the few with money, forcing investors into the scam investment platforms..

Either way they to will eventually be broke and the Elite have EVERYTHING.

 

And now, real unemployment rates are being hidden because governments are controlled by greedy corporations,

who will eventually replace all human labour with Technology and AI.

 

So when NO-ONE can afford to buy the goods, economies REALLY will be crashing.

 

(earning 300baht per day might look good when millions are out of work and governments cant afford welfare)

 

While Thailand still has agriculture, exports, and a cheap labour force,

the baht will keep appreciating.

 

Funny thing, they are actually doing all they can to get the baht lower..

and still cant!!

 

 

(And I dont follow the story of the rich powers keeping it high for their overseas investments...thats just BS!)

 

 

Yes thats true what you say .. but currencies are difficult to control .. and people just put their money where they think it will be safe..  thats why people flock to the USD ..but only bcos its the Reserve currency.. if the keep spending $1T more than tax rev each year.. it will be a different story soon.. without the res currency .. they are just like `Greece..

 

 

 

 

 

[saengd]

On 11/18/2019 at 5:30 PM, Destiny1990 said:

 

Yes lots of fools here especially the ones seeing an uphill trend !

Nobody suggested there is an uphill trend, you are the first to mention it! And if that supports your agenda, try supporting it with fact and evidence rather than evidence of three consecutive quarters of sub-optimal growth.....did anyone mention the implications of the trade war or perhaps you missed that part?!

 

I argue only that the economy is not on the verge of financial crisis and is not ready to fall off the cliff

[Banana7]

I'm not looking at the government stats, but at the real economic activity in real time in different areas of Thailand.

 

2 days ago I went from Bangkok (Ekamai) to Pattaya on the 18:30 bus. During the period 18:05 until 18:30, the bus station only had patrons for the Pattaya bus. There were no patrons at any other platform. I've taken this trip, at this time of day, probably 50 times over the last 5 years and never before has the bus station been so empty.

 

This is highly unusual - normally there are lots of people at other platforms.

[TheAppletons]

There's little doubt that global economic growth has been decelerating over the past 4-6 months.  It isn't limited to Thailand and it's likely to continue in the near term.  

 

Thailand hasn't even technically gone into an economic recession yet so characterizing the current situation as the beginning of a financial crisis is factually incorrect.  

[saengd]

9 hours ago, Banana7 said:

I'm not looking at the government stats, but at the real economic activity in real time in different areas of Thailand.

 

2 days ago I went from Bangkok (Ekamai) to Pattaya on the 18:30 bus. During the period 18:05 until 18:30, the bus station only had patrons for the Pattaya bus. There were no patrons at any other platform. I've taken this trip, at this time of day, probably 50 times over the last 5 years and never before has the bus station been so empty.

 

This is highly unusual - normally there are lots of people at other platforms.

Anecdotal - We've just come back from three nights in Bangkok. The flight from Chiang Mai (both ways) was full, a mix of European, American and Asian tourists, as well as domestic traffic, passenger traffic at Swampy seemed subdued. 

 

IBIS waterfront was full of tourists, the new ICON centre was full of mostly Chinese tourists, Paragon was heaving with all nationalities - not always easy to tell Chinese people from locals until they speak. 

[Chazar]

On 11/16/2019 at 4:37 AM, spidermike007 said:

The service at that higher level is really lacking.

id  say  its  lacking  at many  levels

[saengd]

Back on the subject of debt and a financial crisis:

 

A useful link here showing debt to GDP ratio's globally, Thailand at 41% is low by comparison to most other countries. BUT the nature of the debt is the more interesting part, only a very small percentage of Thailand's debt is foreign, putting it in a similar category to Japan in that.....

 

"But how can a country like Japan sustain debt consistently above 200% of GDP, while in 2015 Ukraine defaulted when its debt was 30% of the GDP? While the size of the debt matters, the ability to make the payments is even more important. Most of Japan's debt is internal: whereas many other countries owe mostly to foreign creditors, the country’s debt is held by its own citizen, diminishing greatly the risk of defaulting". 

 

https://www.gfmag.com/global-data/economic-data/public-debt-percentage-gdp