Impending World Wide Economic Depression,

[jaideeguy]

After a recent conversation with my wise old [89 yrs] father who survived the 'Great American Depression' of the 30's.....it left some lasting scars and he learned some harsh lessons, so I respect his advise and experience. Then, he went on to investing conservatively so he has a nice retirement nest egg.

He claims that we may be in for another 'Big One' and from what I read and see on the news, he could be right. Not looking too good for the American economy [and with the world], especially since we are so global now. We witness the ripple effect of the Dow Jones daily.

Most of my assets are in the US stock exchange, which leaves me quite vulnerable, IF the s**t hits the fan and with the falling dollar and stronger baht, I feel the pinch already. His words have been keeping me awake thinking of the best way to survive over here in LOS, as this is my home now with a family, property and I personally think that Thailand will always be able to feed herself.

How did Thailand fare during the 'Great depression' ?? My guess is that they were not greatly affected as they have always been agriculturally based and independent, and probably mostly barter trade.... but what about this [possible] next one?? Now that the Thai economy is much more dependant on exports, tourism, etc....more global, for better [during good times] and worse [during bad times].

My thoughts on survival here as a retired/married falang are:

#1] bite the bullet and deposit the 800,000THB in the bank, so I don't have to pay immigration sharks on a monthly basis

#2] get out of debt!!

#3] sell my house with swimming pool and too much $ maintenance

#4] buy some farm land, enough to be self sufficient and possibly make a few baht on farm products

#5] live more like a Thai

any other thoughts on how to survive a depression here in LOS??

or am I just being paranoid??

[misterman21]

Your not paranoid - your just waking up to reality. Most people prefer to avoid it.

I wouldnt sell your property unless you know a sound fiat currency? I would also buy some gold - even at this unprecidented high price.

Dont panic you have a few months to get organized. Dont be dismayed by those who call you chicken little.

[Neeranam]

Get a job.

[garro]

Living on the streets for a while is a great way to rid your fear of losing everything.

[mellow1]

I would advise getting out of debt.

[meadish_sweetball]

Even the best economists do not truly know what the effects will be if/when the shit hits the fan in the US.

Thailand may not be as affected by such a depression as for example Europe, Japan or the US.

Getting out of debt is probably a good idea in any case.

[Prakanong]

Even the best economists do not truly know what the effects will be if/when the shit hits the fan in the US.

Thailand may not be as affected by such a depression as for example Europe, Japan or the US.

Getting out of debt is probably a good idea in any case.

Agree - we do not know the extent of how it will hit the USA or how much de-coupling there has been with regard to other economies.

Singapore might be hit hardest in the region for example as it has a lot of trade with the USA plus its finance sector is large - however they have been trying to refocus in the past few years.

Then again just like with globalization there will be winners and losers - spikes and troughs everywhere.

[Samuian]

I remember an article that was written by Paul Krugmann after the events of 1997/98... it gave a ten years time cycle and had 4 major points, if this and that isn't implemented and so on... as well as a prediction that a bubble forming on the us market could very well trigger a finance crisis again, an oversupplied market in asia/thailand - look around... much, much on the market and much of this is build on credit...!

Time will show...

[jaideeguy]

Actually, my debts are minimal and can be settled quite painlessly....without selling the house.

As for 'getting a job'........too late for that @ 60+ yrs and what jobs are available here?? Tried the business thing here with wife and restaurant and lost, but learned a valuable lesson....you are lucky if you make small baht in the food business in LOS.

Any other ideas???

[Heng]

Not getting into debt in the first place and maintaining a healthy capital surplus to take advantage of a downturn is not just 'probably' a good idea, it IS a good idea. The best time to buy is when most folks are stretched to the limit.

[Jingthing]

There is no depression coming soon. We may not even be having a US recession. But if there was a worldwide depression soon, of course, expats here would mostly be hit hard just like people all over the world. If you truly believe there is a depression coming soon, and I think such people are very foolish but up to you, wouldn't selling everything and putting it all into gold and silver be the thing to do?

The advice of living within your means and not over-extending yourself is good advise in any economic environment. It pays to be at least a little paranoid.

Edited March 19, 2008 by Jingthing

[misterman21]

For the non economists (me included) the best way to understand what our friends in the great US of A have been up to read below:

Lets say there (for simpicity sake) was 1 million dollars in circulation on a small island and the islanders produced 1 million sacks of rice per annum - consequently the cost of a sack of rice was 1 dollar (ok so far).

Now lets say that because of debt to othere islands, the chief guy - in his wisdom - decides to print another 1 million dollars, however the actual production of rice has fallen from 1 million sacks to 500 thousand sacks. So the obvious consequence is the rice per sack is now priced at 4 dollars - simple! To maintain the same cost per sack, production must rise when more dollars are printed.

The americans have been printing (the FED) trillions of dollars yet producing lesss rice!

everytime the fed pumps billions into the economy the dollar in your pocket is diluted

[bendix]

Completely agree with Jingthing. There is no worldwide depression coming. In the 30s, the US was a major world economy - the rest of the world relied on it. Today, it's being replaced by China, India and the EU. The global world economy no longer relies entirely on one key market - it's much more balanced now.

Economic downturn yes. Zero to low growth rates in the US. Slower growth rates in Asia (but, let's face it, that's not a bad thing really).

And let's get some perspective. This is a financial crisis, not a fundamental economic crisis. It will have an economic impact, but nothing like 29.

[mellow1]

Hope Thailand won't get affected, that the Thais prosper, and buy my house. Then I can make a killing on its appreciated value over the last 6 years, trade the strong Baht for the weak dollar, purchase a beautiful depreciated house in the US, and reverse the procedure down the road, when the bubble gets pricked here again. Doubt we will starve in the USA.

[Prakanong]

Completely agree with Jingthing. There is no worldwide depression coming. In the 30s, the US was a major world economy - the rest of the world relied on it. Today, it's being replaced by China, India and the EU. The global world economy no longer relies entirely on one key market - it's much more balanced now.

Economic downturn yes. Zero to low growth rates in the US. Slower growth rates in Asia (but, let's face it, that's not a bad thing really).

And let's get some perspective. This is a financial crisis, not a fundamental economic crisis. It will have an economic impact, but nothing like 29.

I tend to agree with you but would not bet anything big on it just yet - markets have a lot of the psychological in them and not just fundamentals.

If it forces down the rents in Singapore for my upcoming renewal I will be happy though - just glad I did not have to renew in the bubble here last year. Funny though the property people are still saying fundamentals OK - even when they just had the worst quarter since both the 97 crash and SARS.

[plachon]

After a recent conversation with my wise old [89 yrs] father who survived the 'Great American Depression' of the 30's.....it left some lasting scars and he learned some harsh lessons, so I respect his advise and experience. Then, he went on to investing conservatively so he has a nice retirement nest egg.

He claims that we may be in for another 'Big One' and from what I read and see on the news, he could be right. Not looking too good for the American economy [and with the world], especially since we are so global now. We witness the ripple effect of the Dow Jones daily.

Most of my assets are in the US stock exchange, which leaves me quite vulnerable, IF the s**t hits the fan and with the falling dollar and stronger baht, I feel the pinch already. His words have been keeping me awake thinking of the best way to survive over here in LOS, as this is my home now with a family, property and I personally think that Thailand will always be able to feed herself.

How did Thailand fare during the 'Great depression' ?? My guess is that they were not greatly affected as they have always been agriculturally based and independent, and probably mostly barter trade.... but what about this [possible] next one?? Now that the Thai economy is much more dependant on exports, tourism, etc....more global, for better [during good times] and worse [during bad times].

My thoughts on survival here as a retired/married falang are:

#1] bite the bullet and deposit the 800,000THB in the bank, so I don't have to pay immigration sharks on a monthly basis Good idea.#2] get out of debt!! Good idea.#3] sell my house with swimming pool and too much $ maintenance. Why not convert the pool to a fish pond and get food from it rather than costs?#4] buy some farm land, enough to be self sufficient and possibly make a few baht on farm products. Again, maybe not selling the house, but turning the lawns into a veg patch might cut the costs and turn them into food/income.#5] live more like a Thai. Good idea, if you mean the rural, self-sufficient ones, rather than those that aspire to living like farang! any other thoughts on how to survive a depression here in LOS??

or am I just being paranoid??

[GuestHouse]

I've always argued that if your retirement is based on 'growth in your capital' then you are not really retired - Your money is working for you and to be working it must be exposed to some level of risk.

Recession fears are simply reminding people of the fact that this risk exists and it's beginning to dawn on a few that perhaps they are investing money they cannot afford to loose.

--

Get out of debt is the first good bit of advice, review and revise your spending patterns (short term, mid term and long term) is another.

But to be honest if there is a globaly ecconomic crash and Thailand is hit hard, then finances are going to be the least of the worries foreigners will have to contend with - The consequences of generations of nationlist brain washing are, I believe, far more likely to affect foreigners if all of a sudden Thais haven't enough money to buy food/keep a roof over their head.

[BigSnake]

Not going to be easy anywhere, we might stand a fighting chance in LOS. Good luck all I think the worse is yet to come, weak dollar, strong baht.

[SoCal]

Dont panic you have a few months to get organized.

[GuestHouse]

Good luck all I think the worse is yet to come, weak dollar, strong baht.

And the basis of the strong Bht is?

[jaideeguy]

"But to be honest if there is a globaly ecconomic crash and Thailand is hit hard, then finances are going to be the least of the worries foreigners will have to contend with - The consequences of generations of nationlist brain washing are, I believe, far more likely to affect foreigners if all of a sudden Thais haven't enough money to buy food/keep a roof over their head."

So, what do you mean by that guest house? I would think that Thai's would appreciate any help from abroad or anywhere....why do you think they love us so much now?? and, IF there is a money crisis, they will love u$ even more....

right??

[Prakanong]

"But to be honest if there is a globaly ecconomic crash and Thailand is hit hard, then finances are going to be the least of the worries foreigners will have to contend with - The consequences of generations of nationlist brain washing are, I believe, far more likely to affect foreigners if all of a sudden Thais haven't enough money to buy food/keep a roof over their head."

So, what do you mean by that guest house? I would think that Thai's would appreciate any help from abroad or anywhere....why do you think they love us so much now?? and, IF there is a money crisis, they will love u$ even more....

right??

What he means is Thai's will blame foreigners for all their ills if their economy tanked - they did it before - it can never be the thai's fault.

[plachon]

"But to be honest if there is a globaly ecconomic crash and Thailand is hit hard, then finances are going to be the least of the worries foreigners will have to contend with - The consequences of generations of nationlist brain washing are, I believe, far more likely to affect foreigners if all of a sudden Thais haven't enough money to buy food/keep a roof over their head."

So, what do you mean by that guest house? I would think that Thai's would appreciate any help from abroad or anywhere....why do you think they love us so much now?? and, IF there is a money crisis, they will love u$ even more....

right??

I don't want to pre-empt GH's reply, as he always writes lots of sense, but I would be thinking something along the lines of lots of dispossessed and hard-up locals, pumped up with politician's nationalist slogans and years of priming, looking for an easy scapegoat for their economic ills, and it wouldn't take a whole leap of imagination to see in many places who those scapegoats may be.

But GH could elaborate far better than I...........

[jaideeguy]

So, please elaborate GH....do you think they will be after our blood or what few $$$'s we still bring into the Kingdom?

Thais love to blame, but they still have their hand out and why would they kill the geese that are still laying golden eggs??

[tominchaam]

A recession creates difficulties as well as possibilities while a depression creates few possibilities. A depression might get many of the financial institutions out of business and it includes those “institutions” supposed to pay out pensions to retired people. A lot of unemployed people mean less tax to the government and hereby the various pension systems in many countries will be dramatically reduced. So in a depression everybody will suffer but the poor most of all. In a recession most are likely to come out of it ok after some years to come.

This is a US problem at the moment but their way of tackle it with a weak dollar and huge budget deficit is likely to cause a real slow down in the rest of the world. With the Euro stronger than it fundamentally should be Europe is likely to suffer a lot in the years to come. How the Thai economy will do is to me more a result of how the Thais handle their domestic problems where a lot has to be done if the country ever will be competitive on an international level.

Do I feel insecure? Not for the next ten years to come. I think the politicians will cure the problems we have just now. But they do it in a way that scares me a lot. The likelihood might be their short sighted solutions to the problems of today one day will be seen as the real reason for a world mega depression !

Cash is king as long as it is 100% protected and there is nothing like that in a real depression. Gold is gold but very hard to sell in a depression as well.

Edited March 19, 2008 by tominchaam

[plachon]

A recession creates difficulties as well as possibilities while a depression creates few possibilities. A depression might get many of the financial institutions out of business and it includes those “institutions” supposed to pay out pensions to retired people. A lot of unemployed people mean less tax to the government and hereby the various pension systems in many countries will be dramatically reduced. So in a depression everybody will suffer but the poor most of all. In a recession most are likely to come out of it ok after some years to come.

This is a US problem at the moment but their way of tackle it with a weak dollar and huge budget deficit is likely to cause a real slow down in the rest of the world. With the Euro stronger than it fundamentally should be Europe is likely to suffer a lot in the years to come. How the Thai economy will do is to me more a result of how the Thais handle their domestic problems where a lot has to be done if the country ever will be competitive on an international level.

Do I feel insecure? Not for the next ten years to come. I think the politicians will cure the problems we have just now. But they do it in a way that scares me a lot. The likelihood their short sighted solutions to the problems of today might one day be seen as the real reason for a world mega depression!

Cash is king as long as it is 100% protected and there is nothing like that in a real depression.

Try telling people in country's with super-inflation that "cash is king"! They'll probably lynch you. Gold, property, bonds, maybe, but not CASH!

Give you an example - I have a tenant - economic immigrant from Zimbabwe - where inflation runs in the tens of thousands of per cent. Told me yesterday that his daughter's school fees would be 22 billion dollars/shillings (or whatver the currency is there!). Interesting comparison actually Zimbabwe, of what to avoid in one person manangement of a country and whipped-up racial xenophobia.

[tominchaam]

Plachon - read what I wrote one more time and think about it. I see no way how you can protect cash in a depression which was part of my message as well.

[SoCal]

I don't look at it like someone to blame. Although very possible. I do however know that foreignors are often thought of as having more, and are often targeted for this reason. Imagine how it might be if things were truly desperate, you are not able to blend in, and everyone thinks you have somehing that they not only want but need.

As for me, I am not woried about this scenario. If it did happen, all things being equal I would without a doubt go back to the US.

[misterman21]

Dont panic you have a few months to get organized.

Many experts forcast crash in September

[ratcatcher]

Hope Thailand won't get affected, that the Thais prosper, and buy my house. Then I can make a killing on its appreciated value over the last 6 years, trade the strong Baht for the weak dollar, purchase a beautiful depreciated house in the US, and reverse the procedure down the road, when the bubble gets pricked here again. Doubt we will starve in the USA.

I doubt people will starve in Thailand either.