The World's Debt Crisis Is Leading Thailand To Economic Ruin

[webfact]

EDITORIAL

The debt crisis is leading us to economic ruin

By The Nation

Massive, unprecedented debt in the developed economies could cause economic stagnation the world over

The world's financial and economic systems are now flooded with debt. In fact, we are witnessing the biggest debt balloon ever, with debt around the world inflating to a quadrillion US dollars. Yes, that's a staggering US$1,000,000,000,000,000.

How can this huge debt, unprecedented in the history of mankind, be paid off? It can't be forgiven or swept under the carpet. It can only be serviced by further economic growth. But it appears that the world's growth engine has stalled. As a result, we are seeing deflationary pressure in the developed world. The result is likely to be a deflationary depression that could result in further geopolitical dislocations.

Most of the media headlines on this subject go to describe the debt problems in Greece, Portugal and Italy. But Japan's sovereign debt problem is most acute and the highest in the world, equivalent to 219 per cent of the country's gross domestic product. Japan is now serving its debt at a rate of 1.50 per cent. If the interest rate were to rise to 3.50 per cent, Japan would not be able to service the interest alone.

Robert Prechter wrote on the Elliott Wave International website: "British banks have amassed $4.4 trillion worth of foreign liabilities, twice Britain's annual GDP. England, moreover, has not defaulted since the Middle Ages."

Strangely enough, bankers still rule the world. The latest efforts to reform the global banking system are not gaining any significant ground. The bankers now have an even bigger say in the regulations designed by the Basel Rules of the Bank for International Settlements.

"The world's banks appear to be winning a reprieve from tough new capital requirements and curbs on risk-taking, as regulators and central bankers are moving toward less stringent rules than initially proposed," according to an article in the Wall Street Journal yesterday.

In the US, attempts to tame the banking system have also been watered down. The historic finance bill, which is about to be signed into law, is a compromise in favour of the big banks. President Barack Obama said he hopes to sign the bill next week.

The US debt is also approaching 100 per cent of GDP. We are now talking about the massive indebtedness of the US, the world's largest economy, of Japan, the second largest economy, and the UK, the sixth largest economy. The deflationary pressure in the developed economies could lead to a day of reckoning or a deflationary crash.

Although China has just racked up about 10-per-cent growth in the first half of this year, it can't pull the global economy along with it. China still depends largely on the US and the developed markets for its export products. Its factories could end up with huge overcapacity and inventory overhang.

Thailand's finances remain largely sound. But we should heed the warnings. Debt creation in the face of a global slump is a very risky business. Although the Bank of Thailand has raised its benchmark rate by 25 basis points to 1.50 per cent, it is not time to celebrate victory and recovery from the financial crisis and global recession. We also cannot exclude the damage caused by the political turmoil in April and May - a problem that could resurface here soon.

As the deflationary pressure is likely to worsen, it is time for us to adopt policy prudence - less debt and more hard work.

-- The Nation 2010-07-17

[apetley]

Headline, "The World's Debt Crisis is leading Thailand to Economic Ruin"

At the end of the article we read, "Thailand's finances remain largely sound."

Who writes this crap?

[siddv]

More hard work? I don't think its the hard working people of the world that are leading the world into economic ruin. More like the guys who get the annual $500 million dollar bonuses for losing money. Yea more hard work? That will do it!!!

[Aikido]

I think Ron paul was right when he said get rid of the fed, only problem is when the real powers that be heard that they froze him out of the race, no more was heard about him the news media didnt report on him after that funny hey?

[cloudhopper]

The drop in demand from all those debt-laden countries Thailand exports to will be a more important factor IMO.

That said, Thailand is fairly well positioned globally with relatively better prospects for self sufficiency than many of the (over)developed countries. Now that we have just passed peak oil and peak credit globally, this will become more apparent as the difference between real wealth and money/credit becomes ever more stark.

[noel2499rk]

Ron Paul is an advocate of small government, which is an another way of saying de-regulation. The lack of regulation directly led us into this financial crisis. How would less regulation have prevented Morgan Stanley and Goldman Sachs from creating synthetic sub prime CDO's, that they knew contained the worst of sub prime loans in the US and then telling people to invest in them. This financial catastrophe the bankers have inflicted on us, has proven that markets if left to their own devices will inevitably fall into deception and fraud. Adam smith's invisible hand is invisible because it doesn't exist.

The same principle applies to the gulf oil spill, when you leave oil and gas companies to self regulate that is without central government oversight, they cut corners and take risks to maximise profits. Self regulation is to regulation as self importance is to importance.

[Dakhar]

"More hard work" = in addition too.....

Does this mean less hammock time?

Edited July 17, 2010 by Dakhar

[geriatrickid]

I think Ron paul was right when he said get rid of the fed, only problem is when the real powers that be heard that they froze him out of the race, no more was heard about him the news media didnt report on him after that funny hey?

Ron Paul? He's a bigoted ignorant U.S. congressman that knows nothing about real world finance. Although local medical care probably benefited when he went into politics, he has not been able to demonstrate the validity of his harebrained schemes. Have you ever noticed that the biggest proponents of his financial schemes don't have a pot to piss in? How many of the supporters of his economic theories have ever built a company from ground up? I'm not talking about the local Kwikee Mart. Running the U.S. economy, or the Thai economy for that matter has more in common with running a massive multinational that a small business, National economies are a cross between a charity that turns no one away, and a large multinational that has feuding stockholders.

The news media did not ignore him. What happened was that his association with white supremacists made even die hard supporters cringe. If Ron Paul's ideas were applied in Thailand, the country would collapse. There is a reason most people ignore him: He doesn't make sense and the ultimate premise of his position is that despite preaching small government, his view of government would exclude most of the population and would mandate by direct order. Sound familiar? It's the Thai approach during the recent clashes. It doesn't work.

[midas]

The drop in demand from all those debt-laden countries Thailand exports to will be a more important factor IMO.

That said, Thailand is fairly well positioned globally with relatively better prospects for self sufficiency than many of the (over)developed countries. Now that we have just passed peak oil and peak credit globally, this will become more apparent as the difference between real wealth and money/credit becomes ever more stark.

Agreed

And i just hope their incomes can sustain all these new shiny pickup trucks they buying on HP

" According to Toyota Motor (Thailand), new automobile sales inJune totaled 70,557 units, up a spectacular 63% YoY and 13% MoM. Sales ofpassenger cars rose by 76% YoY to 32,946 units and commercial vehicles by53% YoY to 37,611 units. That brought 1H10 sales to 356,692 units, up 54%YoY."

[luangtom]

Maybe Khun Thaksin can lead the world out of this dilemma. Bring him home now!

[midas]

I think Ron paul was right when he said get rid of the fed, only problem is when the real powers that be heard that they froze him out of the race, no more was heard about him the news media didnt report on him after that funny hey?

Ron Paul? He's a bigoted ignorant U.S. congressman that knows nothing about real world finance. Although local medical care probably benefited when he went into politics, he has not been able to demonstrate the validity of his harebrained schemes. Have you ever noticed that the biggest proponents of his financial schemes don't have a pot to piss in? How many of the supporters of his economic theories have ever built a company from ground up? I'm not talking about the local Kwikee Mart. Running the U.S. economy, or the Thai economy for that matter has more in common with running a massive multinational that a small business, National economies are a cross between a charity that turns no one away, and a large multinational that has feuding stockholders.

The news media did not ignore him. What happened was that his association with white supremacists made even die hard supporters cringe. If Ron Paul's ideas were applied in Thailand, the country would collapse. There is a reason most people ignore him: He doesn't make sense and the ultimate premise of his position is that despite preaching small government, his view of government would exclude most of the population and would mandate by direct order. Sound familiar? It's the Thai approach during the recent clashes. It doesn't work.

I hardly think that demanding an investigation into the activities of the US Federal Reserve ( probably

one of the most corrupt institutions on this planet ) consitutues a " harebrained scheme " ?

AUDIT THE FED !

[slapout]

Financial geniuses seem to have fleeting fame, no matter their nationality or country of residence. Even the success stories seem to have gone thru periods of financial setbacks. This probably would not apply to those born with the golden spoon or family/national income at their disposal. Those who set back on the lariats for even a relatively short time, seem to fall victim to conditions changing faster than they can come up with solutions. Just my observations and I certainly will not be a forecaster of doom until I know the plan of attack and can provide a better plan, after showing what is proposed will not work.

[yesdavy]

Ron Paul is an advocate of small government, which is an another way of saying de-regulation. The lack of regulation directly led us into this financial crisis. How would less regulation have prevented Morgan Stanley and Goldman Sachs from creating synthetic sub prime CDO's, that they knew contained the worst of sub prime loans in the US and then telling people to invest in them. This financial catastrophe the bankers have inflicted on us, has proven that markets if left to their own devices will inevitably fall into deception and fraud. Adam smith's invisible hand is invisible because it doesn't exist.

The same principle applies to the gulf oil spill, when you leave oil and gas companies to self regulate that is without central government oversight, they cut corners and take risks to maximise profits. Self regulation is to regulation as self importance is to importance.

Only thing missing is a smiley face because this is a joke, right? It was the government, starting during Carter's administration, that regulated an end to redlining and for lending institutions to allow unemployment and welfare income to be included in qualifying unqualified, mostly minority, home buyers.

"Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

"....mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else." (source)

[kuffki]

Perhaps Government has started its preparation for the economic crash.

During USA economic crises when the entire world was hit, Thailand remained untouched because apparently Thai Banks were not exposed to US markets according to BOT

Just recent European crisis, when again the rest of the world was hit, Thailand remained untouched because apparently Thai Banks are not exposed to EU markets according to BOT

Funny enough though that even worlds strongest economy's were affected. Surely China and India has much bigger and stronger economy then Thai yet China and India was hit

Then the riots hit the country and yet again Thailand economy remained untouched

Strangely enough though, shortly after and just recently Thai Gov employed US firm to help boost its economy and now this article.

I have a feeling that the bluff is over and the crash is coming, but they will try to ease into it to avoid public disapproval and yet to keep "the face"

[noel2499rk]

Ron Paul is an advocate of small government, which is an another way of saying de-regulation. The lack of regulation directly led us into this financial crisis. How would less regulation have prevented Morgan Stanley and Goldman Sachs from creating synthetic sub prime CDO's, that they knew contained the worst of sub prime loans in the US and then telling people to invest in them. This financial catastrophe the bankers have inflicted on us, has proven that markets if left to their own devices will inevitably fall into deception and fraud. Adam smith's invisible hand is invisible because it doesn't exist.

The same principle applies to the gulf oil spill, when you leave oil and gas companies to self regulate that is without central government oversight, they cut corners and take risks to maximise profits. Self regulation is to regulation as self importance is to importance.

Only thing missing is a smiley face because this is a joke, right? It was the government, starting during Carter's administration, that regulated an end to redlining and for lending institutions to allow unemployment and welfare income to be included in qualifying unqualified, mostly minority, home buyers.

"Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

"....mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else." (source)

I suppose you blame the government for Howie Hubler, infamously known as the person who lost $9 billion in one trade, the largest single loss in history or Joseph Cassano's of AIG Financial Products, which suffered over $99 billion in losses. Howie and Joe are the guys our financial system rests on , we are told these are super brilliant people and that's why they need such huge salaries. Both very nearly destroyed their companies Morgan Stanley and AIG, yet both walked away from the financial crisis as multi millionaires.

"What does it mean when Boston banks start making many more loans to minorities?" I asked in this space in 1995. "Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs"

Its amazing how people can find the most roundabout way of blaming minorities for all their problems. The mortgage companies were not lending to those unable to pay back because the government was forcing them to, do you really think independent financial institutions would make risky loans because they were under pressure from activists. Mortgage companies could make risky loans because they now had the ability to transfer the risk, package the loans and sell them to someone else wiping their own hands of the crappy loans.

"Financial Deregulation and Unchecked Financial "Innovation." A key reason that mortgages were made available so widely and with such little review of recipients' qualifications was a shift in which institutions hold the mortgages. Traditionally, banks made mortgages and held them. In the new era, banks and non-bank mortgage lenders made loans, but then sold the loans to others. Investment banks packaged lots of mortgage loans into "Collateralized Debt Obligations" (CDOs) and then sold them on Wall Street, with a promise of a steady stream of revenue from interest payments. These operations were pretty much unregulated. Despite the supposed sophistication of the investors involved, no one took account of how shoddy the loans were or -- more fundamentally -- the certainty that huge numbers would go bad if and when the housing bubble popped."

http://www.huffingtonpost.com/robert-weissman/deregulation-and-the-fina_b_82639.html

[PETERTHEEATER]

England, moreover, has not defaulted since the Middle Ages."

But Wales, Scotland and N.Ireland have?

[elkangorito]

I rather like this short video:

http://video.google.com/videoplay?docid=-2550156453790090544#

[ianwuk]

Thailand is doing a great job of its own economic ruin. But, typically Thailand, the blame is passed on to save face.

[Benjie]

Thailand is doing a great job of its own economic ruin. But, typically Thailand, the blame is passed on to save face.

What?

The IMF has just stated that it expects Thai growth to be 7.5% this year, how is that economic ruin exactly.

[Thailand]

Thailand hardly needs the rest of the world to lead it to economic ruin, they are quite capable of doing it to themselves if they wish.

[Chiangmai1st]

The drop in demand from all those debt-laden countries Thailand exports to will be a more important factor IMO.

That said, Thailand is fairly well positioned globally with relatively better prospects for self sufficiency than many of the (over)developed countries. Now that we have just passed peak oil and peak credit globally, this will become more apparent as the difference between real wealth and money/credit becomes ever more stark.

Agreed

And i just hope their incomes can sustain all these new shiny pickup trucks they buying on HP

" According to Toyota Motor (Thailand), new automobile sales inJune totaled 70,557 units, up a spectacular 63% YoY and 13% MoM. Sales ofpassenger cars rose by 76% YoY to 32,946 units and commercial vehicles by53% YoY to 37,611 units. That brought 1H10 sales to 356,692 units, up 54%YoY."

But the problem is not how many cars you sell its the financing how many of the customers will default on payments and the same in the housing sector 100% loans are still being given this bubble has yet to break

[chainarong]

Thailand really does not need a world debt crisis for ruin, its already 75% in ruin, what a crazy piece of literature.

[yabaaaa]

Headline, "The World's Debt Crisis is leading Thailand to Economic Ruin"

At the end of the article we read, "Thailand's finances remain largely sound."

Who writes this crap?

Have they paid off the 97 crash they had yet??

[yabaaaa]

I rather like this short video:

http://video.google.com/videoplay?docid=-2550156453790090544#

Thanks Kango that was fascinating and nice and simple for me

They should make it compulsory at all schools

[roamer]

Its known that one of the oft discussed topics amongst EU finance ministers, privately at least, is the huge trade imbalance between the EU and Asia. The austerity programs that will bite in the EU will certainly have an effect on the imbalance but there is much more to come. There is no other choice. The EU can no longer continue to buy from Asia at anywhere near what it has done in the past or it has no hope of economic recovery.

Tariff changes and other measures are inevitable despite the howls of protest it will bring. Tax incentives for EU companies to bring manufacture home etc.

Present system unsustainable.

[midas]

Headline, "The World's Debt Crisis is leading Thailand to Economic Ruin"

At the end of the article we read, "Thailand's finances remain largely sound."

Who writes this crap?

Have they paid off the 97 crash they had yet??

Good point !

Thailand introduced the concept of " extend and pretend "

Ghost of 13 years past -The forgotten debt of the 1997 Asian Financial Crisis

" Most people have long forgotten the 1997 Asian Financial Crisis of 13 years ago.

The debt incurred by the Thai government to fix the broken financial system back in 1997, however, still exists.

This huge, but not much talked about debt, is currently managed by the FIDF, an organisation belonging to the Bank of Thailand. "

FULL ARTICLE HERE :- http://www.readbangkokpost.com/easybusinessnews/financial_markets/ghost_of_13_years_past_the_for.php

Edited July 17, 2010 by midas

[garrfeild]

Well Thailand won't be sitting pretty if the global economy collapses, I think the reporter is living in the past, this might of had some validity if it were written in 2007, but to come up with this now??? It's just another example of how insulated Thailand is form the rest of the world.

[jayjay0]

I think Ron paul was right when he said get rid of the fed, only problem is when the real powers that be heard that they froze him out of the race, no more was heard about him the news media didnt report on him after that funny hey?

Ron Paul? He's a bigoted ignorant U.S. congressman that knows nothing about real world finance. Although local medical care probably benefited when he went into politics, he has not been able to demonstrate the validity of his harebrained schemes. Have you ever noticed that the biggest proponents of his financial schemes don't have a pot to piss in? How many of the supporters of his economic theories have ever built a company from ground up? I'm not talking about the local Kwikee Mart. Running the U.S. economy, or the Thai economy for that matter has more in common with running a massive multinational that a small business, National economies are a cross between a charity that turns no one away, and a large multinational that has feuding stockholders.

The news media did not ignore him. What happened was that his association with white supremacists made even die hard supporters cringe. If Ron Paul's ideas were applied in Thailand, the country would collapse. There is a reason most people ignore him: He doesn't make sense and the ultimate premise of his position is that despite preaching small government, his view of government would exclude most of the population and would mandate by direct order. Sound familiar? It's the Thai approach during the recent clashes. It doesn't work.

<br><br> I surrender. I have read this post twice and no where does Ron Paul's name show up. What are you two on about?Who is he? Sounds like an American what does he have to do with Thailand? Do you agree or disagree with the article?<br> Edited July 17, 2010 by jayjay0

[geriatrickid]

I hardly think that demanding an investigation into the activities of the US Federal Reserve ( probably

one of the most corrupt institutions on this planet ) consitutues a " harebrained scheme " ?

AUDIT THE FED !

The constant repetition of falsehoods encourages the simple minded to accept those falsehoods as fact. Mr. Paul isn't calling for an investigation,He wants to have an "audit". It has been described as pandering to populism, much as people in Thailand blame economic problems on Burmese refugees or some Americans blame their problems on llegal immigration. The Paul demand isn't about the GAO auditing the operational aspects of the programs and the details of the programs. Paul wants to make judgments about policy decisions. This would violate the current rules in place regarding the integrity of the Federal Reserve. It would lead to a situation like Greece where the government interfered with the orderly management of national reserves. The end result would be a quick destabilization of the financial system, and the entire US economic system.

It's a cheap way to get your name in the news and to build support because the people that are going to buy into the position are not going to be educated nor overly intelligent. Senator Judd Gregg said it best; "It's great PR; you go home and beat up the Fed." People make no effort to read the bylaws that govern the Fed, nor do they read congessional transcripts. Instead they rely on wacko radio commentators and fanciful youtube infomercials to come up with their unbalanced conspiracy theories.

Why don't you take the time to read the audits and the reports to Congress first.

http://www.federalre...mpr_default.htm

http://www.federalre...cs/rptcongress/

And read this;

The Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review. Under the Federal Banking Agency Audit Act (enacted in 1978 as Public Law 95-320), which authorizes the Comptroller General of the United States to audit the Federal Reserve System, the Government Accountability Office (GAO) has conducted numerous reviews of Federal Reserve activities. In addition, the Board's Office of Inspector General (OIG) audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks. Completed and active GAO reviews and completed OIG audits, reviews, and assessments are listed in the Board's Annual Report (before 2002, the reviews were listed in the Board's Annual Report: Budget Review).

The Board's financial statements, and its compliance with laws and regulations affecting those statements, are audited annually by an outside auditor retained by the OIG. The financial statements of the Reserve Banks are also audited annually by an independent outside auditor. In addition, the Reserve Banks are subject to annual examination by the Board. The Board's financial statements and the combined financial statements for the Reserve Banks are published in the Board's Annual Report

What more do you you people want? You don't even bother to understand what the situation is. Instead you just invent imaginary conspiracies and feed into each others fears. Its a culture of ignorance and laziness. Do your research first. Read the reports to Congress.

Edited July 17, 2010 by geriatrickid

[mommysboy]

It really depends on whether this recent leap in GDP is sustainable without demand from the west. My guess is we were just seeing the Asian economies restocking in anticipation of a global recovery. That won't be coming any time soon in my view as USA gambled and failed in its bid to spend its way out of recession. So we're going to have Euroland and USA in the doldrums for a very, very long time to come as they seek to pay down debt. Less demand all round is a very bad situation for Thailand and too much is made of their healthy public finances which amassed in part because successive govts seemed to have done little to aid Thailand's progresssion-they simply did not spend enough. When income streams dry up debt is sure to follow. It's not exactly a debt less society anyway far from it, just not as bad as USA for instance, and I'm sure the recent mini consumer boom was not financed with hard cash.

It looks like we may be in for a weakening of the dollar again, that makes Thailand still less competitive and as one poster pointed out, there's no way the west will be so tolerant of protectionism and unfair competition, and in any case with Asian currencies still set to appreciate it seems, imports will seem less attractive.

For sure Thaland's under investment and huge socio economic divisions swing it for me, there could be severe problems ahead.