Baht Moving Beyond Fundamentals: Bank Of Thailand

[Oww]

I don't see a writer's credit for that Nation article. What's the point of it? So what if there are a percentage of lower economic class, opinionated foreigners here. Do people on TV really think those type of people represent even 30% to 40% of foreigners here? Probably more like 15%-20%. So what? What percentage of Thais here are clueless about the stock market, have conspiratorial ideas and are unhappy with their financial predicament? (oh and um..drink alcohol and frequent prostitutes).Think its only 15%-20%???

In what way does that article even qualify as journalism?

Even those 'poorest and stupidest' foreigners are spreading more money around

their immediate communities than 50%-75% of the Thais. Constantly parading the worst foreigners

here in the media only develops a stereotype which we all have to eventually contend with.

Crap journalism, spewing nonsense to meet a deadline.

Classic ThaiVisa!

Something flew over your head, 'cocopops'.

Edited April 20, 2013 by Oww

[Locationthailand]

Some interesting posts. It is not the Baht that is stronger by fiscal policy or governance (especially not governance), it is the other currencies weakening. But it will be interesting to see how it all pas out.

[techboy]

Talk, talk, talk, talk, talk, talk, talk, talk, talk .......... where is the action ?

Would the last person out of Thailand, please turn the lights off

The action? The action is on the keyboards of people who criticize and do not know what they are talking about.

[techboy]

It would seem that the baht is strong because of money invested in bonds ie straight forward money from abroad put into interest paying accounts here. So no real help to the domestic economy in fact a burden to it. Exports will go down as already seen in the rice market and so less money for the labour market to earn. It will not be noticed yet but over time manufacturers will move production elsewhere.. It could also happen as a crash with confidence lost in returns here as worties about a downturn fester. So then all monies withdrawn or even lost.. Simple economics yes. But people well banks are looking for gain here and joe blogs has no control as usual. The losers will be at the bottom of the food chain as usual and yes that includes us Expats.. Stickly rice and nam prik macam will taste very nice you will see.

I suspect most Thai's don't give a fig for what is written on here - you think too much !

Then again some people do not think too much.

[MrWorldwide]

Thailand has had it's day. Move to Cambodia

Right, cause there is absolutely no corruption or economic mismanagement in Cambo, right ?

[davejones]

The rich are getting richer by shipping out there baht to overseas banks whilst the poor suffer due to high inflation and increase costs. As an expat yes I to am suffering as my money comes from the UK but hey iot is still a better life over here than back in the UK problem is I do not spend as much as I used to which in turn has an effect on local business where I do my shopping so it is swings and roundabouts !!!!!!!!!

for the record: if the rich would ship out their Baht to overseas banks the Baht would fall, not strengthen.

this lesson is free of charge!

You just spotted another person making a complete fool of themselves. It makes me laugh. The stupid comments on here are so entertaining.

[naboo]

A strong Baht means cheaper fuel and cheaper holidays back home.

All good news for us earning our wedge in Thai Baht.

[Naam]

The rich are getting richer by shipping out there baht to overseas banks whilst the poor suffer due to high inflation and increase costs. As an expat yes I to am suffering as my money comes from the UK but hey iot is still a better life over here than back in the UK problem is I do not spend as much as I used to which in turn has an effect on local business where I do my shopping so it is swings and roundabouts !!!!!!!!!

for the record: if the rich would ship out their Baht to overseas banks the Baht would fall, not strengthen.

this lesson is free of charge!

You just spotted another person making a complete fool of themselves. It makes me laugh. The stupid comments on here are so entertaining.

he did not really make a fool of himself and i do not consider him to be a fool. he just shot from the hip and got it wrong. happens with me all the time when i discuss certain topics with an old friend who is a gynecologist

[me313]

Surely they have to do something soon.

It is not just the expats, just about all nationalities, which are being hit hard but the businesses that trade with overseas companies could find it getting rough with their customers seeking cheaper suppliers.

Inevitably it will hit the tourist areas with people who come here for a holiday and the ex-pat living off his pensions, finding their currency is no longer enough due to a 10 -25% loss in value in the last 6 months. Yes most expatswill stay and touristswill still come to Thailand but less Baht means less goods being bought.

This is made worse by inflation here which has been quite noticeable over the past year.

Will not hold my breath though, the powers that be in the Thai government will continue to do the same as always, talk but no action.

The Banksters are making money hand over fist. The politicians who support them are too.

The hell with everyone else.

Welcome to the New World Order paradigm.

So, then, you can't blame Thaksin for this, since she's one domino in the chain of the NWO policies. You never mentioned Thaksin so I am not referring to your post, but in general if anyone wants to claim that this is due to

Thaksin policies, it might be because she is following the general trend of Thailand being a little emerging Tiger in ASEAN, which is directing this policy.

[cocopops]

I don't see a writer's credit for that Nation article. What's the point of it? So what if there are a percentage of lower economic class, opinionated foreigners here. Do people on TV really think those type of people represent even 30% to 40% of foreigners here? Probably more like 15%-20%. So what? What percentage of Thais here are clueless about the stock market, have conspiratorial ideas and are unhappy with their financial predicament? (oh and um..drink alcohol and frequent prostitutes).Think its only 15%-20%???

In what way does that article even qualify as journalism?

Even those 'poorest and stupidest' foreigners are spreading more money around

their immediate communities than 50%-75% of the Thais. Constantly parading the worst foreigners

here in the media only develops a stereotype which we all have to eventually contend with.

Crap journalism, spewing nonsense to meet a deadline.

Classic ThaiVisa!

Something flew over your head, 'cocopops'.

Edited April 20, 2013 by cocopops

[NeverSure]

I am amused at some of this. Things always cycle and the majority of people, even the experts, get caught in the trap. For instance during the very few years, and right up until the day that the US housing market crashed nearly everyone was saying "buy, buy, buy" because don't you see? Real estate always goes up. It even broke the "experts" on Wall Street and the big bankers and of course the private investors.

Collectively we have tunnel vision. How it is must be the way it is, now and into the future. But if we look back just 15 years what we see are not only cycles, but extreme cycles. In the past 5 years or so, the US stock market fell to 1/2 its value, recovered all of that and set new records, and now has moderated a bit.

Half!!! Housing, the stock market. Half!!!! Yet the lemmings look only at what happened yesterday or today. People hesitate to buy when things are on sale. They must buy when they are high and even their cab driver is telling them to buy!

In around 1980 silver climbed to $50 an ounce, crashed to $5 an ounce and bounced around for decades. Yet just before the crash, the din was horrible saying "buy silver."

People have no clue about history or the big picture. The way it is with the baht today, and the recent trends will have to be the way it always is so get used to it? If interest rates go to 2% on depositor accounts in the West, the baht will crash. If anyone would look at the clear fact that the BOT has 40% of it's fractional banking money in a massively overbuilt real estate market, he might have some pause about the BOT. <deleted> happened to banks in the West that did that in the past few years? Even an insurance and other conglomerate called AIG had to be bailed out and they still haven't paid back their loans.

The auto industry was on a roll and suddenly had to be bailed out.

What really caused this? I mean, what was the one thing that contributed the most? Too much credit put into one thing - all the eggs in one basket so to speak. Banks lending heavily and even crookedly into the real estate bubble. What was perhaps the second most important contributor? Too much private borrowing for not only real estate but cars, credit cards - people also went broke.

<deleted> makes the BOT exempt from the same behavior? <deleted> makes the Thai government exempt as it borrows and borrows, even investing in a rice scam and now wanting B2 tril more?

<deleted> makes the Thai auto manufacturing exempt if there is a downturn caused by the above forces, and hampered by the rising baht?

I will sit this one out and say I told you so.

The last thing I want is Thai real estate, Thai (SET) stocks or baht, long term. Those who think I am crazy get no hard feelings from me. I just lived through what I think I see in Thailand right now, but in the US. Real estate is a hell of a lot better buy in the US right now because it's on sale for 1/2 price, to be purchased with depreciated dollars, and costs less than the components would cost to replace it. Rentals are scarce, priced well and they pencil against the purchase price. If one needs to borrow, interest rates are at historical lows.

But we had to see a crash to get there.

Laugh at me. Call me nuts. It won't be the first time and I have thick skin. Let's meet again in five years and compare notes.

[easybullet3]

Surely they have to do something soon.

It is not just the expats, just about all nationalities, which are being hit hard but the businesses that trade with overseas companies could find it getting rough with their customers seeking cheaper suppliers.

Inevitably it will hit the tourist areas with people who come here for a holiday and the ex-pat living off his pensions, finding their currency is no longer enough due to a 10 -25% loss in value in the last 6 months. Yes most expatswill stay and touristswill still come to Thailand but less Baht means less goods being bought.

This is made worse by inflation here which has been quite noticeable over the past year.

Will not hold my breath though, the powers that be in the Thai government will continue to do the same as always, talk but no action.

Its called "milking people for every cent they have" !!!

if you really believe that a government has the countrys people at the top of their list, then you are mightily wrong!

When people get so much power,, and so much possible money within their grasp, most people go for it!

Dont expect any real help from the Government until that have got what they want.

and dont believe that its only 1 country involved in this!! its an international, multi-level game being played.

if money is being LOST,,, then it is being GAINED elsewhere!!! Remember that!!!

SOMEONE IS GAINING OUT OF YOUR LOSS!!!

- you try and make them stop! its a hard thing to do!

[chiang mai]

I am amused at some of this. Things always cycle and the majority of people, even the experts, get caught in the trap. For instance during the very few years, and right up until the day that the US housing market crashed nearly everyone was saying "buy, buy, buy" because don't you see? Real estate always goes up. It even broke the "experts" on Wall Street and the big bankers and of course the private investors.

Collectively we have tunnel vision. How it is must be the way it is, now and into the future. But if we look back just 15 years what we see are not only cycles, but extreme cycles. In the past 5 years or so, the US stock market fell to 1/2 its value, recovered all of that and set new records, and now has moderated a bit.

Half!!! Housing, the stock market. Half!!!! Yet the lemmings look only at what happened yesterday or today. People hesitate to buy when things are on sale. They must buy when they are high and even their cab driver is telling them to buy!

In around 1980 silver climbed to $50 an ounce, crashed to $5 an ounce and bounced around for decades. Yet just before the crash, the din was horrible saying "buy silver."

People have no clue about history or the big picture. The way it is with the baht today, and the recent trends will have to be the way it always is so get used to it? If interest rates go to 2% on depositor accounts in the West, the baht will crash. If anyone would look at the clear fact that the BOT has 40% of it's fractional banking money in a massively overbuilt real estate market, he might have some pause about the BOT. <deleted> happened to banks in the West that did that in the past few years? Even an insurance and other conglomerate called AIG had to be bailed out and they still haven't paid back their loans.

The auto industry was on a roll and suddenly had to be bailed out.

What really caused this? I mean, what was the one thing that contributed the most? Too much credit put into one thing - all the eggs in one basket so to speak. Banks lending heavily and even crookedly into the real estate bubble. What was perhaps the second most important contributor? Too much private borrowing for not only real estate but cars, credit cards - people also went broke.

<deleted> makes the BOT exempt from the same behavior? <deleted> makes the Thai government exempt as it borrows and borrows, even investing in a rice scam and now wanting B2 tril more?

<deleted> makes the Thai auto manufacturing exempt if there is a downturn caused by the above forces, and hampered by the rising baht?

I will sit this one out and say I told you so.

The last thing I want is Thai real estate, Thai (SET) stocks or baht, long term. Those who think I am crazy get no hard feelings from me. I just lived through what I think I see in Thailand right now, but in the US. Real estate is a hell of a lot better buy in the US right now because it's on sale for 1/2 price, to be purchased with depreciated dollars, and costs less than the components would cost to replace it. Rentals are scarce, priced well and they pencil against the purchase price. If one needs to borrow, interest rates are at historical lows.

But we had to see a crash to get there.

Laugh at me. Call me nuts. It won't be the first time and I have thick skin. Let's meet again in five years and compare notes.

It'd be a brave man who would argue with such meaningful statements as, "The way it is with the baht today, and the recent trends will have to be the way it always is so get used to it" or perhaps, "How it is must be the way it is, now and into the future"! But can I just point out that the Thai Central Bank does not (as you claim) operate a fractional banking system and that even after the current THB 2 trill. loans are made, governement borrowing will still only be 45% of GDP vs in excess of 100% in some Western countries.

Also, you forsee the Thai Baht crashing if interest rates in the West hit 2%, presumably you don't see that happening in the next three years (a rehtorical question). I wonder therefore what your recommendation would be for the Thai governement whilst they are waiting for that to happen, should they slash interest rates to mirror the West or should they raise them to stop inflation?

[NeverSure]

I am amused at some of this. Things always cycle and the majority of people, even the experts, get caught in the trap. For instance during the very few years, and right up until the day that the US housing market crashed nearly everyone was saying "buy, buy, buy" because don't you see? Real estate always goes up. It even broke the "experts" on Wall Street and the big bankers and of course the private investors.

Collectively we have tunnel vision. How it is must be the way it is, now and into the future. But if we look back just 15 years what we see are not only cycles, but extreme cycles. In the past 5 years or so, the US stock market fell to 1/2 its value, recovered all of that and set new records, and now has moderated a bit.

Half!!! Housing, the stock market. Half!!!! Yet the lemmings look only at what happened yesterday or today. People hesitate to buy when things are on sale. They must buy when they are high and even their cab driver is telling them to buy!

In around 1980 silver climbed to $50 an ounce, crashed to $5 an ounce and bounced around for decades. Yet just before the crash, the din was horrible saying "buy silver."

People have no clue about history or the big picture. The way it is with the baht today, and the recent trends will have to be the way it always is so get used to it? If interest rates go to 2% on depositor accounts in the West, the baht will crash. If anyone would look at the clear fact that the BOT has 40% of it's fractional banking money in a massively overbuilt real estate market, he might have some pause about the BOT. <deleted> happened to banks in the West that did that in the past few years? Even an insurance and other conglomerate called AIG had to be bailed out and they still haven't paid back their loans.

The auto industry was on a roll and suddenly had to be bailed out.

What really caused this? I mean, what was the one thing that contributed the most? Too much credit put into one thing - all the eggs in one basket so to speak. Banks lending heavily and even crookedly into the real estate bubble. What was perhaps the second most important contributor? Too much private borrowing for not only real estate but cars, credit cards - people also went broke.

<deleted> makes the BOT exempt from the same behavior? <deleted> makes the Thai government exempt as it borrows and borrows, even investing in a rice scam and now wanting B2 tril more?

<deleted> makes the Thai auto manufacturing exempt if there is a downturn caused by the above forces, and hampered by the rising baht?

I will sit this one out and say I told you so.

The last thing I want is Thai real estate, Thai (SET) stocks or baht, long term. Those who think I am crazy get no hard feelings from me. I just lived through what I think I see in Thailand right now, but in the US. Real estate is a hell of a lot better buy in the US right now because it's on sale for 1/2 price, to be purchased with depreciated dollars, and costs less than the components would cost to replace it. Rentals are scarce, priced well and they pencil against the purchase price. If one needs to borrow, interest rates are at historical lows.

But we had to see a crash to get there.

Laugh at me. Call me nuts. It won't be the first time and I have thick skin. Let's meet again in five years and compare notes.

It'd be a brave man who would argue with such meaningful statements as, "The way it is with the baht today, and the recent trends will have to be the way it always is so get used to it" or perhaps, "How it is must be the way it is, now and into the future"! But can I just point out that the Thai Central Bank does not (as you claim) operate a fractional banking system and that even after the current THB 2 trill. loans are made, governement borrowing will still only be 45% of GDP vs in excess of 100% in some Western countries.

Also, you forsee the Thai Baht crashing if interest rates in the West hit 2%, presumably you don't see that happening in the next three years (a rehtorical question). I wonder therefore what your recommendation would be for the Thai governement whilst they are waiting for that to happen, should they slash interest rates to mirror the West or should they raise them to stop inflation?

"Fractional-reserve banking is the current form of banking in all countries worldwide"

- Frederic S. Mishkin, Economics of Money, Banking and Financial Markets, 10th Edition. Prentice Hall 2012

"Thailand debt-to-GDP ratio may reach 60 per cent due to current stimulus program.

Gambles, managing partner at MBMG International, a Bangkok-based financial advisory company, said that despite the country’s current strong fiscal position, the Yingluck government’s huge spending on infrastructure and car-purchase and rice subsidies would increase the debt-to-GDP ratio to 60 per cent in the next few years." Link

Did you ever wonder why Thailand makes it so hard to remove large sums of money from its banks to over seas locations? Fractional Banking. The BOT is so over leveraged, with 40% of its loans in this real estate bubble, that any "run" on the baht would crash it. I mean, even a small run.

When the Ponzi scheme of fractional reserve banking is building, all looks rosy. But if it starts to unwind, a crash is inevitable. Thailand is in no position to have large amounts of money withdrawn from its Ponzi scheme.

If interest rates in Western countries returned to even normal historical levels, say 5%, people wouldn't be able to get their baht out of Thai banks. BOT would have to freeze the deposits. Shades of the Great Depression in the US. (Well, world wide depression.)

As I said, get back to me in 5 years. The West already crashed. Asia is on a bubble but people can't won't see it.

[chiang mai]

When Gambles quotes 60 per cent he also refers to that being in a few years hence he's builing in a series of assumptions that are not a reality today. The reality today is that the current two trill. borrowing program will amount to 45% of GDP.

Even you will agree that there is a massive difference between borrowings/lending rules applicable to retail/investment banks and to central banks, the former, the architects of fractional lending, are laregly responsible for the real estate problems that you cited earlier. But Cnetral Banks, the likes of the BOT, do not get involved in real estate lending in the same way, certainly BOT borrows more than the current value of it's deposits but that can hardly be termed fractional reserve banking!

[thaibeachlovers]

Surely they have to do something soon.

It is not just the expats, just about all nationalities, which are being hit hard but the businesses that trade with overseas companies could find it getting rough with their customers seeking cheaper suppliers.

Inevitably it will hit the tourist areas with people who come here for a holiday and the ex-pat living off his pensions, finding their currency is no longer enough due to a 10 -25% loss in value in the last 6 months. Yes most expatswill stay and touristswill still come to Thailand but less Baht means less goods being bought.

This is made worse by inflation here which has been quite noticeable over the past year.

Will not hold my breath though, the powers that be in the Thai government will continue to do the same as always, talk but no action.

When you say "inflation", what do you mean? I can buy a meal for 25 baht, which is only 5 baht more than it cost me in 1993, local transport is cheap at 17 baht between Lamphun and Chiang Mai, though it did just go up 2 baht, a hotel room is 300 baht in C M, 200 in Lamphun, and accomodation can be had in Lamphun for 2,000 a month.

What is more expensive is a western lifestyle, imported western food, entertainment ( movie ticket now 170 baht- up nearly 100% ) and definitely "nightlife". If you can live like a Thai, inflation has been minimal.

I also note that the scammers have increased their prices- Tuktuks in C M are now OTT with their rip off prices, but it is still possible to get a red songtheaw for 20 baht, and that's 100% more than in Pattaya ( unless it's gone up recently ).

[chiang mai]

Inflation for a local Thai is one thing, that seems to average around 3% per year and since the price of staple foods such as chicken, pork and eggs seems well managed, the real level of inflation for a local is probably much lower.

But ex-pat inflation is something else entirely, the funds they use to buy THB in the first place have devalued by some 35% on average plus the price inflation on western type goods is likely much higher than 3% and probably closer to 10% per year. So, lots of variables in there and home currency and lifestyle seem to be the two biggest.

[Naam]

Did you ever wonder why Thailand makes it so hard to remove large sums
of money from its banks to over seas locations? Fractional Banking. The
BOT is so over leveraged, with 40% of its loans in this real estate
bubble, that any "run" on the baht would crash it. I mean, even a small
run.

i beg your pardon Sir Never Sure, Esq.?! since when is the Bank of Thailand

in the business of real estate loans?

are you well? how's blood pressure, body temperature and heart rate? i am worried!

[Naam]

When Gambles quotes 60 per cent he also refers to that being in a few years hence he's builing in a series of assumptions that are not a reality today. The reality today is that the current two trill. borrowing program will amount to 45% of GDP.

Even you will agree that there is a massive difference between borrowings/lending rules applicable to retail/investment banks and to central banks, the former, the architects of fractional lending, are laregly responsible for the real estate problems that you cited earlier. But Cnetral Banks, the likes of the BOT, do not get involved in real estate lending in the same way, certainly BOT borrows more than the current value of it's deposits but that can hardly be termed fractional reserve banking!

here we go again. Gambles and debt:gdp

[NeverSure]

When Gambles quotes 60 per cent he also refers to that being in a few years hence he's builing in a series of assumptions that are not a reality today. The reality today is that the current two trill. borrowing program will amount to 45% of GDP.

Even you will agree that there is a massive difference between borrowings/lending rules applicable to retail/investment banks and to central banks, the former, the architects of fractional lending, are laregly responsible for the real estate problems that you cited earlier. But Cnetral Banks, the likes of the BOT, do not get involved in real estate lending in the same way, certainly BOT borrows more than the current value of it's deposits but that can hardly be termed fractional reserve banking!

First do you really believe any figures released by the Thai government? And, if I'm wrong, why did Thailand have to borrow so much money from the IMF to stay afloat in '97?

The BOT is the "federal reserve" bank of Thailand. I concede that "Banks in Thailand" engage in fractional reserve banking which is where the real estate bubble is financed, but it would be up to the BOT to bail them out if they crashed. So in my mind, the BOT is up to its eyeballs in fractional banking, and the Thai government including the BOT cannot afford to allow large money withdrawals from Thailand. There's your signal. You know they don't allow it, but do you know why? Does the "why" make any sense to anyone?

[NeverSure]

Did you ever wonder why Thailand makes it so hard to remove large sums

of money from its banks to over seas locations? Fractional Banking. The

BOT is so over leveraged, with 40% of its loans in this real estate

bubble, that any "run" on the baht would crash it. I mean, even a small

run.

i beg your pardon Sir Never Sure, Esq.?! since when is the Bank of Thailand

in the business of real estate loans?

are you well? how's blood pressure, body temperature and heart rate? i am worried!

Thank you for your concern Mr. Naam. I concede I should have said "Banks in Thailand."

[Naam]

Surely they have to do something soon.

It is not just the expats, just about all nationalities, which are being hit hard but the businesses that trade with overseas companies could find it getting rough with their customers seeking cheaper suppliers.

Inevitably it will hit the tourist areas with people who come here for a holiday and the ex-pat living off his pensions, finding their currency is no longer enough due to a 10 -25% loss in value in the last 6 months. Yes most expatswill stay and touristswill still come to Thailand but less Baht means less goods being bought.

This is made worse by inflation here which has been quite noticeable over the past year.

Will not hold my breath though, the powers that be in the Thai government will continue to do the same as always, talk but no action.

Its called "milking people for every cent they have" !!!

if you really believe that a government has the countrys people at the top of their list, then you are mightily wrong!

When people get so much power,, and so much possible money within their grasp, most people go for it!

Dont expect any real help from the Government until that have got what they want.

and dont believe that its only 1 country involved in this!! its an international, multi-level game being played.

if money is being LOST,,, then it is being GAINED elsewhere!!! Remember that!!!

SOMEONE IS GAINING OUT OF YOUR LOSS!!!

- you try and make them stop! its a hard thing to do!

it's them dàmn aliens from the Alpha Quadrant! they cause our hardship!

[thaibeachlovers]

I am amused at some of this. Things always cycle and the majority of people, even the experts, get caught in the trap. For instance during the very few years, and right up until the day that the US housing market crashed nearly everyone was saying "buy, buy, buy" because don't you see? Real estate always goes up. It even broke the "experts" on Wall Street and the big bankers and of course the private investors.

Collectively we have tunnel vision. How it is must be the way it is, now and into the future. But if we look back just 15 years what we see are not only cycles, but extreme cycles. In the past 5 years or so, the US stock market fell to 1/2 its value, recovered all of that and set new records, and now has moderated a bit.

Half!!! Housing, the stock market. Half!!!! Yet the lemmings look only at what happened yesterday or today. People hesitate to buy when things are on sale. They must buy when they are high and even their cab driver is telling them to buy!

In around 1980 silver climbed to $50 an ounce, crashed to $5 an ounce and bounced around for decades. Yet just before the crash, the din was horrible saying "buy silver."

People have no clue about history or the big picture. The way it is with the baht today, and the recent trends will have to be the way it always is so get used to it? If interest rates go to 2% on depositor accounts in the West, the baht will crash. If anyone would look at the clear fact that the BOT has 40% of it's fractional banking money in a massively overbuilt real estate market, he might have some pause about the BOT. <deleted> happened to banks in the West that did that in the past few years? Even an insurance and other conglomerate called AIG had to be bailed out and they still haven't paid back their loans.

The auto industry was on a roll and suddenly had to be bailed out.

What really caused this? I mean, what was the one thing that contributed the most? Too much credit put into one thing - all the eggs in one basket so to speak. Banks lending heavily and even crookedly into the real estate bubble. What was perhaps the second most important contributor? Too much private borrowing for not only real estate but cars, credit cards - people also went broke.

<deleted> makes the BOT exempt from the same behavior? <deleted> makes the Thai government exempt as it borrows and borrows, even investing in a rice scam and now wanting B2 tril more?

<deleted> makes the Thai auto manufacturing exempt if there is a downturn caused by the above forces, and hampered by the rising baht?

I will sit this one out and say I told you so.

The last thing I want is Thai real estate, Thai (SET) stocks or baht, long term. Those who think I am crazy get no hard feelings from me. I just lived through what I think I see in Thailand right now, but in the US. Real estate is a hell of a lot better buy in the US right now because it's on sale for 1/2 price, to be purchased with depreciated dollars, and costs less than the components would cost to replace it. Rentals are scarce, priced well and they pencil against the purchase price. If one needs to borrow, interest rates are at historical lows.

But we had to see a crash to get there.

Laugh at me. Call me nuts. It won't be the first time and I have thick skin. Let's meet again in five years and compare notes.

<the majority of people, even the experts, get caught in the trap>

Funny that! In 1998 when I arrived in the UK to work, I knew that it was going to turn to poo when every institution was trying to make me borrow large unsecured amounts of money, and foolish people were paying way too much for housing.

Alan Greenspan is on record as saying that he knew it was going to crash, but the politicians wouldn't let him do anything to stop it.

I don't think the "experts" got trapped. I think they knew what was going to happen, but wanted to make their millions before it did, and get out. I don't think they should be called "experts"- crooks is a more accurate description, and it is instructive that none of the bankers engaged in fraud have been sent to jail.

IMO, the whole thing comes down to simple greed.

BTW, I resisted the temptation to just borrow as much as possible and skip the UK for LOS, but as an "honest" worker that played by the rules, I am suffering. My latest Sterling import is now lower than in 1993, and I make ZERO interest on money in my UK a/c ( that is the biggest scam imaginable- once again the bankers rip off the honest depositor ).

[Naam]

Did you ever wonder why Thailand makes it so hard to remove large sums

of money from its banks to over seas locations? Fractional Banking. The

BOT is so over leveraged, with 40% of its loans in this real estate

bubble, that any "run" on the baht would crash it. I mean, even a small

run.

i beg your pardon Sir Never Sure, Esq.?! since when is the Bank of Thailand

in the business of real estate loans?

are you well? how's blood pressure, body temperature and heart rate? i am worried!

Thank you for your concern Mr. Naam. I concede I should have said "Banks in Thailand."

HA! i am feeling much better now

please refrain in future from making similar statements. i'm a heart patient. it could kill me!

Edited April 20, 2013 by Naam

[chiang mai]

When Gambles quotes 60 per cent he also refers to that being in a few years hence he's builing in a series of assumptions that are not a reality today. The reality today is that the current two trill. borrowing program will amount to 45% of GDP.

Even you will agree that there is a massive difference between borrowings/lending rules applicable to retail/investment banks and to central banks, the former, the architects of fractional lending, are laregly responsible for the real estate problems that you cited earlier. But Cnetral Banks, the likes of the BOT, do not get involved in real estate lending in the same way, certainly BOT borrows more than the current value of it's deposits but that can hardly be termed fractional reserve banking!

First do you really believe any figures released by the Thai government? And, if I'm wrong, why did Thailand have to borrow so much money from the IMF to stay afloat in '97?

The BOT is the "federal reserve" bank of Thailand. I concede that "Banks in Thailand" engage in fractional reserve banking which is where the real estate bubble is financed, but it would be up to the BOT to bail them out if they crashed. So in my mind, the BOT is up to its eyeballs in fractional banking, and the Thai government including the BOT cannot afford to allow large money withdrawals from Thailand. There's your signal. You know they don't allow it, but do you know why? Does the "why" make any sense to anyone?

It would be a mistake to confuse the events and the environment of 1997 with that of today, the two are not even closely similar. It would also be a mistake to assume that what happened in the the US banking system six years ago will automatically happen here. And in answer to your question, yes, I do believe the numbers produced by the BOT and given a choice between those numbers and Mr Gambles numbers, the latter doesn't get a look in.

[NeverSure]

Inflation for a local Thai is one thing, that seems to average around 3% per year and since the price of staple foods such as chicken, pork and eggs seems well managed, the real level of inflation for a local is probably much lower.

But ex-pat inflation is something else entirely, the funds they use to buy THB in the first place have devalued by some 35% on average plus the price inflation on western type goods is likely much higher than 3% and probably closer to 10% per year. So, lots of variables in there and home currency and lifestyle seem to be the two biggest.

With all due respect, there is a government program in force for Thais to buy a new home with zero down. Has the price of that new home not skyrocketed recently? What is more important than shelter?

If you are able to buy non-western things for only 3% more than you paid last year, congratulations. I was there last month and found a 25% increase just in a bottle of water in less than a year.

I grant you that your mileage may vary, but I thought most things had increased quite a bit when expressed in baht, except for government subsidized things.

[thaibeachlovers]

Inflation for a local Thai is one thing, that seems to average around 3% per year and since the price of staple foods such as chicken, pork and eggs seems well managed, the real level of inflation for a local is probably much lower.

But ex-pat inflation is something else entirely, the funds they use to buy THB in the first place have devalued by some 35% on average plus the price inflation on western type goods is likely much higher than 3% and probably closer to 10% per year. So, lots of variables in there and home currency and lifestyle seem to be the two biggest.

I agree that the value of western money imported by expats has decreased, but my point was that it is only expensive for an expat to live in LOS if they want to live the western lifestyle. I can live reasonably well here for 20,000 baht a month, and any expat can't afford that is in real trouble. It's only when I want to eat western food and go to the movies that I notice the cost.

It will be interesting to see if the condos empty out and cheap restaurants become full of farangs, or will most farangs simply go back to whatever expensive, PC and cold country they came from.

[chiang mai]

Inflation for a local Thai is one thing, that seems to average around 3% per year and since the price of staple foods such as chicken, pork and eggs seems well managed, the real level of inflation for a local is probably much lower.

But ex-pat inflation is something else entirely, the funds they use to buy THB in the first place have devalued by some 35% on average plus the price inflation on western type goods is likely much higher than 3% and probably closer to 10% per year. So, lots of variables in there and home currency and lifestyle seem to be the two biggest.

With all due respect, there is a government program in force for Thais to buy a new home with zero down. Has the price of that new home not skyrocketed recently? What is more important than shelter?

If you are able to buy non-western things for only 3% more than you paid last year, congratulations. I was there last month and found a 25% increase just in a bottle of water in less than a year.

I grant you that your mileage may vary, but I thought most things had increased quite a bit when expressed in baht, except for government subsidized things.

Shelter is way down the list of priorities, food and health care are higher. Regardless, no the price of housing has not skyrocketed, some of it will have but here in Chiang Mai it's still easily possible to buy an unlimited number of brand new homes for between 1.5 and 3 mill baht.

I didn't say that the 3% anual increase applied to imported goods, quite the opposite, I said that it applied only to Thai domestic goods. And FWIW the cost of a 5 gallon bottle of water from either the reverse osmosis machine next door or from the local supplier who brings it to our door every week, is only 2% higher this year than it was last year.

[chiang mai]

Inflation for a local Thai is one thing, that seems to average around 3% per year and since the price of staple foods such as chicken, pork and eggs seems well managed, the real level of inflation for a local is probably much lower.

But ex-pat inflation is something else entirely, the funds they use to buy THB in the first place have devalued by some 35% on average plus the price inflation on western type goods is likely much higher than 3% and probably closer to 10% per year. So, lots of variables in there and home currency and lifestyle seem to be the two biggest.

I agree that the value of western money imported by expats has decreased, but my point was that it is only expensive for an expat to live in LOS if they want to live the western lifestyle. I can live reasonably well here for 20,000 baht a month, and any expat can't afford that is in real trouble. It's only when I want to eat western food and go to the movies that I notice the cost.

It will be interesting to see if the condos empty out and cheap restaurants become full of farangs, or will most farangs simply go back to whatever expensive, PC and cold country they came from.

I agree with what you wrote, I think what we are witnessing on the ex-pat front is the an enactment of the governments desire to see a better class of tourist/resident in Thailand (albeit it wasn't planned to happen this way).

[NeverSure]

When Gambles quotes 60 per cent he also refers to that being in a few years hence he's builing in a series of assumptions that are not a reality today. The reality today is that the current two trill. borrowing program will amount to 45% of GDP.

Even you will agree that there is a massive difference between borrowings/lending rules applicable to retail/investment banks and to central banks, the former, the architects of fractional lending, are laregly responsible for the real estate problems that you cited earlier. But Cnetral Banks, the likes of the BOT, do not get involved in real estate lending in the same way, certainly BOT borrows more than the current value of it's deposits but that can hardly be termed fractional reserve banking!

First do you really believe any figures released by the Thai government? And, if I'm wrong, why did Thailand have to borrow so much money from the IMF to stay afloat in '97?

The BOT is the "federal reserve" bank of Thailand. I concede that "Banks in Thailand" engage in fractional reserve banking which is where the real estate bubble is financed, but it would be up to the BOT to bail them out if they crashed. So in my mind, the BOT is up to its eyeballs in fractional banking, and the Thai government including the BOT cannot afford to allow large money withdrawals from Thailand. There's your signal. You know they don't allow it, but do you know why? Does the "why" make any sense to anyone?

It would be a mistake to confuse the events and the environment of 1997 with that of today, the two are not even closely similar. It would also be a mistake to assume that what happened in the the US banking system six years ago will automatically happen here. And in answer to your question, yes, I do believe the numbers produced by the BOT and given a choice between those numbers and Mr Gambles numbers, the latter doesn't get a look in.

Thai banks have 40% of their loans as real estate loans. I believe there is a real estate bubble and this overbuilding is going to bite the builders and the banks. You don't have to agree of course. I said let's talk about it again in 5 years.

Yes, the one single thing that contributed most to bringing the Thai economy down in 97 was a real estate bubble bursting. It popped the banks and Thailand had to borrow billions from the IMF to bail them out. Some of those loans are still on the books and some of the buildings are either still empty or have been torn down.

So no, I don't trust any Thai numbers.

My BIGGEST problem with Thailand is corruption. I don't believe a thing they say. My second biggest is what I see with my own two eyes.