Thai Baht: Tempers Rise Over B O T Rate Policy

[Tep]

The useful stuff is the update on what has been happening to the two banks in question. As I observed earlier I don't think it should be dismissed out of hand and is a warning sign of clouds up ahead. Worth further investigation. However it is all trashed by the surrounding voodoo theories of finance and a simplistic understanding of economics from someone unlikely (but hey! not impossible...) to have studied the subject. I think the Mr Angry blasts comes with the territory.

I would be more keen to see the NPL ratios of the other retail banks and to see if other analysts view any asset bubble developing. Also important will be the decisions of the Monetary Policy Committee at BOT if they can make independent decisions unclouded by pressures due to other non related issues. Then there are other indicators from the real economy.

For the two banks in question, I still believe that as state entities they will be protected. There will be some changes in personnel. Apparently there is some rogue executive. But while they serve a policy role, they will continue to operate under different financial criteria. So the lessons from them will be harder to interpret.

[chiang mai]

You haven't read this read (and the others), I can tell.

The issue with you is that you don't have the knowledge or the background to be in this discussion as a debater. You should be in it as a learner.

But you keep imposing yourself as knowledgeable, and getting your azz kicked. You are about as stubborn as it gets in proving your lack of experience and education.

Instead of making it personal, and continually coming back with nonsense attacks, why don't you pay attention and see if there's something here that you hadn't thought of?

Am off to the market now to buy Learner plates and shall return shortly, I priomise to wear them at all times, grovel grovel burp!

But more seriously NS, you've given us all your theory and projections, what's your time frame? Or are you planning on leaving this open ended that this Thai financial armagedon will happen at some point?

I've never met anyone who could truly time things without a lot of inside information we don't have.

Last month, during these "discussions," I said something like "let's meet in five years and discuss this again."

Now that I see the Thai government's actions and lack of actions, condo and bank failures in my face, and know that Thai banks have 40% of their assets tied up in high yield but illiquid real estate loans, I'd say a lot sooner. It could break at any time, or hold off a couple of years. As soon as one major domino falls, the rest will fall fast.

I hope expats are diversified. I hope they aren't betting the farm on Thailand, as in having interest bearing accounts plus big investments in the SET plus big investments in condos. I hope they have that money scattered around the world and diversified. The ones who are the most smug about how much they've made in this overheated Thai economy and who think the past few years is a guarantee of the next few years may find themselves back home on the streets.

The ones who are diversified will be able to bring their foreign investment money back at far, far better exchange rates, and they'll have (maybe) something to show for it.

OK, so the Thai financial system is going to suffer some form of collapse within five years you say, let's be charitable and say that if not a total collapse, significant degredation will take place. It seems to me that you could pick just about any economy in any country on the planet that's been in decent shape/growth mode for the past ten years and say the same thing, that within five years it will degrade significantly simply because that's what happens to growth cycles, they end at some point! So, all of your panic about the Thai economy is centered around normal economic cycles and if the truth be known, there's not much different about what's happening currently in Thailand and it may continue to be business as usual for several more years, correct?

[NeverSure]

You haven't read this read (and the others), I can tell.

The issue with you is that you don't have the knowledge or the background to be in this discussion as a debater. You should be in it as a learner.

But you keep imposing yourself as knowledgeable, and getting your azz kicked. You are about as stubborn as it gets in proving your lack of experience and education.

Instead of making it personal, and continually coming back with nonsense attacks, why don't you pay attention and see if there's something here that you hadn't thought of?

Am off to the market now to buy Learner plates and shall return shortly, I priomise to wear them at all times, grovel grovel burp!

But more seriously NS, you've given us all your theory and projections, what's your time frame? Or are you planning on leaving this open ended that this Thai financial armagedon will happen at some point?

I've never met anyone who could truly time things without a lot of inside information we don't have.

Last month, during these "discussions," I said something like "let's meet in five years and discuss this again."

Now that I see the Thai government's actions and lack of actions, condo and bank failures in my face, and know that Thai banks have 40% of their assets tied up in high yield but illiquid real estate loans, I'd say a lot sooner. It could break at any time, or hold off a couple of years. As soon as one major domino falls, the rest will fall fast.

I hope expats are diversified. I hope they aren't betting the farm on Thailand, as in having interest bearing accounts plus big investments in the SET plus big investments in condos. I hope they have that money scattered around the world and diversified. The ones who are the most smug about how much they've made in this overheated Thai economy and who think the past few years is a guarantee of the next few years may find themselves back home on the streets.

The ones who are diversified will be able to bring their foreign investment money back at far, far better exchange rates, and they'll have (maybe) something to show for it.

OK, so the Thai financial system is going to suffer some form of collapse within five years you say, let's be charitable and say that if not a total collapse, significant degredation will take place. It seems to me that you could pick just about any economy in any country on the planet that's been in decent shape/growth mode for the past ten years and say the same thing, that within five years it will degrade significantly simply because that's what happens to growth cycles, they end at some point! So, all of your panic about the Thai economy is centered around normal economic cycles and if the truth be known, there's not much different about what's happening currently in Thailand and it may continue to be business as usual for several more years, correct?

I love the way you grasp at straws.

No, the Thai banks are up to their necks in huge real estate loans in the middle of a real estate bubble. It will bring them down.

Credit is booming everywhere. The government is borrowing huge amounts of money to finance ordinary budget items.

Thailand has kissed off its role as a rice exporter. Don't bother telling me that's a small part of the economy. What it is, is Exhibit "A" of the Thai government's idea of how to run a country with sheer stupidity and graft. It's an IQ test they failed, and they are in charge of the country.

Thai's are being encouraged to buy new cars with easy financing. Two problems. One, many can't afford it and two, when you push sales ahead like that, when the tax rebates stop, there will be a dry spell for manufacturing due to a lack of demand. It just pushes the sales ahead while depriving the government of the revenue.

Thais are being encouraged to buy new homes with nothing down. They can't even tell you what interest rate they are paying.

Cell phones, internet, credit cards... Thais are going up to their butts in debt.

There's the new minimum wage and a high baht which will hurt exports, make Thailand less competitive, and slow growth.

But the thing that will get them is the first one. Thai banks have 40% of their assets in real estate loans and that bubble will burst and break the banks.

I saw the same excuses and euphoria just before the crash in the US. I called a crash when Wall Street and main street and the banks were flooring the accelerator. I bailed out.

I've been called crazy before. What's crazy is what's happening in Thailand.

Oh, did I mention political instability and graft?

[kblaze]

NEVERSURE;

You said you posted a link that shows your "Thai banks have 40% of equity in real estate loans, on average" claim. I just went back over the pages of this thread and found no such link.

This claim seems to be underpinning your entire argument, so lets see the link.

(hint; you wont be able to find one, because its not true)

[chiang mai]

I love the way you grasp at straws.

No, the Thai banks are up to their necks in huge real estate loans in the middle of a real estate bubble. It will bring them down.

Credit is booming everywhere. The government is borrowing huge amounts of money to finance ordinary budget items.

Thailand has kissed off its role as a rice exporter. Don't bother telling me that's a small part of the economy. What it is, is Exhibit "A" of the Thai government's idea of how to run a country with sheer stupidity and graft. It's an IQ test they failed, and they are in charge of the country.

Thai's are being encouraged to buy new cars with easy financing. Two problems. One, many can't afford it and two, when you push sales ahead like that, when the tax rebates stop, there will be a dry spell for manufacturing due to a lack of demand. It just pushes the sales ahead while depriving the government of the revenue.

Thais are being encouraged to buy new homes with nothing down. They can't even tell you what interest rate they are paying.

Cell phones, internet, credit cards... Thais are going up to their butts in debt.

There's the new minimum wage and a high baht which will hurt exports, make Thailand less competitive, and slow growth.

But the thing that will get them is the first one. Thai banks have 40% of their assets in real estate loans and that bubble will burst and break the banks.

I saw the same excuses and euphoria just before the crash in the US. I called a crash when Wall Street and main street and the banks were flooring the accelerator. I bailed out.

I've been called crazy before. What's crazy is what's happening in Thailand.

Oh, did I mention political instability and graft?

What do you mean NO, either the Thai economy is or it is not going to fail within five years which is it?

[NeverSure]

I love the way you grasp at straws.

No, the Thai banks are up to their necks in huge real estate loans in the middle of a real estate bubble. It will bring them down.

Credit is booming everywhere. The government is borrowing huge amounts of money to finance ordinary budget items.

Thailand has kissed off its role as a rice exporter. Don't bother telling me that's a small part of the economy. What it is, is Exhibit "A" of the Thai government's idea of how to run a country with sheer stupidity and graft. It's an IQ test they failed, and they are in charge of the country.

Thai's are being encouraged to buy new cars with easy financing. Two problems. One, many can't afford it and two, when you push sales ahead like that, when the tax rebates stop, there will be a dry spell for manufacturing due to a lack of demand. It just pushes the sales ahead while depriving the government of the revenue.

Thais are being encouraged to buy new homes with nothing down. They can't even tell you what interest rate they are paying.

Cell phones, internet, credit cards... Thais are going up to their butts in debt.

There's the new minimum wage and a high baht which will hurt exports, make Thailand less competitive, and slow growth.

But the thing that will get them is the first one. Thai banks have 40% of their assets in real estate loans and that bubble will burst and break the banks.

I saw the same excuses and euphoria just before the crash in the US. I called a crash when Wall Street and main street and the banks were flooring the accelerator. I bailed out.

I've been called crazy before. What's crazy is what's happening in Thailand.

Oh, did I mention political instability and graft?

What do you mean NO, either the Thai economy is or it is not going to fail within five years which is it?

Yes it is.

[NeverSure]

NEVERSURE;

You said you posted a link that shows your "Thai banks have 40% of equity in real estate loans, on average" claim. I just went back over the pages of this thread and found no such link.

This claim seems to be underpinning your entire argument, so lets see the link.

(hint; you wont be able to find one, because its not true)

There are at least 3 threads running similar to this. I'll have to look.

[samran]

- deleted post -

Edited April 29, 2013 by samran

[chiang mai]

I love the way you grasp at straws.

No, the Thai banks are up to their necks in huge real estate loans in the middle of a real estate bubble. It will bring them down.

Credit is booming everywhere. The government is borrowing huge amounts of money to finance ordinary budget items.

Thailand has kissed off its role as a rice exporter. Don't bother telling me that's a small part of the economy. What it is, is Exhibit "A" of the Thai government's idea of how to run a country with sheer stupidity and graft. It's an IQ test they failed, and they are in charge of the country.

Thai's are being encouraged to buy new cars with easy financing. Two problems. One, many can't afford it and two, when you push sales ahead like that, when the tax rebates stop, there will be a dry spell for manufacturing due to a lack of demand. It just pushes the sales ahead while depriving the government of the revenue.

Thais are being encouraged to buy new homes with nothing down. They can't even tell you what interest rate they are paying.

Cell phones, internet, credit cards... Thais are going up to their butts in debt.

There's the new minimum wage and a high baht which will hurt exports, make Thailand less competitive, and slow growth.

But the thing that will get them is the first one. Thai banks have 40% of their assets in real estate loans and that bubble will burst and break the banks.

I saw the same excuses and euphoria just before the crash in the US. I called a crash when Wall Street and main street and the banks were flooring the accelerator. I bailed out.

I've been called crazy before. What's crazy is what's happening in Thailand.

Oh, did I mention political instability and graft?

What do you mean NO, either the Thai economy is or it is not going to fail within five years which is it?

Yes it is.

Cool, so given that the Thai economy has been in growth mode since at least 2003 and given that it has up to another five years to go before it runs out of steam, that seems perfectly reasonable to me and to be expected.

"Economic cycle. An economic cycle is a period during which a country's economy moves from strength to weakness and back to strength. This

pattern repeats itself regularly, though not on a fixed schedule. The length of the cycle isn't predictable either and may be measured in

months or in years".

[NeverSure]

NEVERSURE;

You said you posted a link that shows your "Thai banks have 40% of equity in real estate loans, on average" claim. I just went back over the pages of this thread and found no such link.

This claim seems to be underpinning your entire argument, so lets see the link.

(hint; you wont be able to find one, because its not true)

It's after midnight here and I have to quit for now. I know I posted it somewhere.

Here's some really good reading that tracks what we've been talking about, showing explosive growth (53%) in real estate, and 32% in mortgage lending, but not naming a number. I'll get this tomorrow.

Link - The Nation

Economic bubbles are back to haunt Thailand

Thanong Khanthong

[email protected] December 28, 2012 1:00 am

The government is deliberately building up

economic bubbles. The aim is to win nationwide popular support ahead of a

grand design for national reconciliation and a wholesale rewrite of the

Constitution. A combination of debt-based consumption and populist

economic programmes is designed to prop up the economy, hard hit by the

deteriorating external account as a result of dwindling exports. But the

whole plan will also lead to bubbles that pose great danger to the Thai

economy in the years ahead.

Let's examine the bubbles that are now prevailing throughout the economy. The spending binge goes crazy:

****Read more at the link provided above.****

Edited April 29, 2013 by metisdead
Edited as per fair use policy.

[chiang mai]

That's just another persons opinion that proves nothing.

[NeverSure]

That's just another persons opinion that proves nothing.

You're impossible. A reporter goes to the trouble to dig up all of that information and hand it to you on a silver platter.

What he's saying tracks what I've been saying and will say because it's true.

Now, I can't help you any more. You have enough information, including the old adage don't put all of your eggs in one basket, to protect yourself against even a possible collapse in Thailand.

If you don't, I'll be happy to tell you I told you so.

In the meantime, it's your life and you will do as you please. So it should be.

[metisdead]

A post has been as per fair use policy.It is generally accepted, but not written into law, that quoting the first two or three sentences of an article and giving a link to the source is considered “fair use” and not a violation of copyright.

Thai Baht: Tempers Rise

Some tempers by some on this topic need to settle down.

[chiang mai]

A retired bank examiner in the US and a newspaper reporter for a Thai newpaper both believe that the Thai economy is in serious trouble and will crash soon, yup, that sounds convincing!

How about we start with the banks NPL numbers, the last time I saw anything reported on that subject the figures were extremely low, anyone?

In the meantime perhaps you can dig out the banks 40% equity on real estate loans data (real data from a valid source please) so that we can conclude on that aspect?

Edit: Here's some data on Thai banks NPL's, for 2012 it seems to average 2.7%, that seems like a pretty good number I reckon.

http://data.worldbank.org/indicator/FB.AST.NPER.ZS

Edited April 29, 2013 by chiang mai

[kblaze]

Yes, NPLs are actually getting better and Bank's loan loss reserves are rising.

[Tep]

Even nicer diagrams at http://www.bot.or.th/English/Statistics/Graph/Pages/NPL.aspx

I have looked at the quarterly reviews for a few SFI's that are at www.sepo.go.th. They have a complete set for 3Q2012. Some NPL's are increasing (SME Bank), some are unchanged (KTB) and others insignificant (GSB) compared with deposits. As usual, different SFI's are facing different circumstances due to their differing functions. No systemic conclusions should be drawn from the SFI's, perhaps only KTB and GSB are in a position to manage the policy relationship effectively (commercially). It also seems like a system wide accounting change for employee benefits has resulted in poorer numbers for that year.

There are no indicators of system wide collapse as foretold by some. This remains an idealogical tea bag fantasy that confuses one person's negative view of a selection of current government policy initiatives with the management of the financial system by respected and skilled technocrats. I think until some real, verifiable and relevant numbers are provided by this person and his few fellow travellers, his 'advice' and insults can be safely ignored.

[chiang mai]

Excellent, although we will doubtless be told later that the numbers are not to be trusted, I think we can safetly check and pass on that item. Now, hows about real estate lending numbers as a percentage of overall bank lending?

[chiang mai]

Just as an aside: I came across this thread from 2010 where a "financial guru" was predicting bubbles that were about to burst:

http://www.thaivisa.com/forum/topic/413454-economic-guru-warns-of-bubble-burst-in-thailands-property-and-stock-markets/

[NeverSure]

NEVERSURE;

You said you posted a link that shows your "Thai banks have 40% of equity in real estate loans, on average" claim. I just went back over the pages of this thread and found no such link.

This claim seems to be underpinning your entire argument, so lets see the link.

(hint; you wont be able to find one, because its not true)

I posted a lot of links to several threads here, and to a couple of other forums yesterday. I just spent more time than I'm willing trying to find that one.

No, the percentage of real estate loans doesn't "underpin" my entire argument. We have talked about massive numbers of empty condos and new starts. We have talked about corruption with developers meeting the 50% pre-sale requirement. We have talked about speculators buying many of the new housing starts to flip them.

I posted this link which covers a multitude of serious problems, all of which I had mentioned before I found the article. It is outrageous that Thai household debt for instalment loans (up 39% in one year) and condos (up 24%), has risen so much, and we know they are also getting credit cards, cell phones, etc. Link

In hunting for that link, and even trying to analyze some bank financial statements, I found three things that shocked me. (Not to mention that I don't rule out corruption in the figures, which is another reason I don't trust Thailand.)

1. I found no bank which does break it's loans down into categories. This is major because real estate loans are slow moving, long term loans, while autos are shorter term loans and the collateral is more liquid. At worst you can wholesale it to a dealer. One really can't analyze these "financial statements" and I have to wonder if they don't want them analyzed. No one can estimate their liquidity from those statements. At the least, I wouldn't put much money in one.

2. I found that The Bangkok Bank has 88% of its deposits loaned out. That's outrageous. That's a total lack of liquidity in itself. Link.

3. According to the link above, The Bangkok Bank's gross income increased about 35% in the past two years. That's a red flag because income comes from loans. This is a number far higher than any in the general economy. Usually when you see this, someone is taking big risks on big loans. In a real audit, someone would dig a lot deeper into that.

We have talked about Thailand's deficit spending and borrowing to pay its bills and its increasing debt, the failed rice scheme which is an indication of the IQ of the people running the country, and many other things.

I've said my piece about all of this and I'm out of here. Some agree and some don't. Each has his own money to manage. Some will do one thing and some another. I leave, and I leave you with just this one repeated thought:

The idea is to buy low and sell high. Right now everything in Thailand from the baht to the SET to real estate is high, and has climbed high very, very steeply. I am a seller high, not a buyer. I have sold.

[chiang mai]

You're a funny guy, your first link from above shows the following statement yet you refer to it as a link that, "covers a multitude of serious problems":

"We don't have much concern yet. However, we are emphasising the monitoring of loans for cars and condominiums. But our close monitoring
does not mean these loans were not good. There are many methods of monitoring, including discussions with commercial banks or operators. We
have to monitor in several aspects for various information for analysis," Anupap said.

Most people will read that article and say yes, that's BOT doing it's job as it's supposed to be doing and reporting that all is well, you however seem to be able to read between the lines and see sinister things!

The remainder of your post doesn't actually say much of any substance, you make the same claims and wild statements over and over again but still without any independant proof or statistics from an independant and reliable source - talking of which, how do you like the NPL figures, verifable proof that picture is not what you claim!

I'm going to repeat that where I think we are with this entire subject is in the middle of an economic boom that is part of a normal economic cycle, it wont last for ever because nothing ever does. But your fear and emotion is generated by what happened in the US markets, you see similaraties between the US before and Thailand now and you've concluded that this must be history repeating itself, unfortunately for your theory, anything other than anecdotal proof that is so, is simply not there.

[yoshiwara]

That's just another persons opinion that proves nothing.

You're impossible. A reporter goes to the trouble to dig up all of that information and hand it to you on a silver platter.

What he's saying tracks what I've been saying and will say because it's true.

Now, I can't help you any more. You have enough information, including the old adage don't put all of your eggs in one basket, to protect yourself against even a possible collapse in Thailand.

If you don't, I'll be happy to tell you I told you so.

In the meantime, it's your life and you will do as you please. So it should be.

You didn't provide anything very much except yet another opinion piece from the confirmed gold bug Thanong Khanthong the managing editor of The Nation who churns these pieces out ad infinitum.

[midas]

That's just another persons opinion that proves nothing.

You're impossible. A reporter goes to the trouble to dig up all of that information and hand it to you on a silver platter.

What he's saying tracks what I've been saying and will say because it's true.

Now, I can't help you any more. You have enough information, including the old adage don't put all of your eggs in one basket, to protect yourself against even a possible collapse in Thailand.

If you don't, I'll be happy to tell you I told you so.

In the meantime, it's your life and you will do as you please. So it should be.

You didn't provide anything very much except yet another opinion piece from the confirmed gold bug Thanong Khanthong the managing editor of The Nation who churns these pieces out ad infinitum.

And you didn't provide anything at all except yet another of your incessant bashing of gold bugs

you need psychiatric help

[chiang mai]

That's just another persons opinion that proves nothing.

You're impossible. A reporter goes to the trouble to dig up all of that information and hand it to you on a silver platter.

What he's saying tracks what I've been saying and will say because it's true.

Now, I can't help you any more. You have enough information, including the old adage don't put all of your eggs in one basket, to protect yourself against even a possible collapse in Thailand.

If you don't, I'll be happy to tell you I told you so.

In the meantime, it's your life and you will do as you please. So it should be.

You didn't provide anything very much except yet another opinion piece from the confirmed gold bug Thanong Khanthong the managing editor of The Nation who churns these pieces out ad infinitum.

And you didn't provide anything at all except yet another of your incessant bashing of gold bugs

you need psychiatric help

Except in this particular case (and I'm unaware of the history) Yoshiwara was entirely correct to post his comments on that article because it was being used as evidence of the Baht's impending collapse - the fact that we now know the author is also a gold bug makes the article even less appropriate.