Thailand Safe From Property Bubble, Says Banker

[manstr23]

New house sales and prices are not a good indicator. There are to easy to manipulate. The real indicator of how the Real estate market is doing are resales and they have gone nowhere in the last 5 years. The locals do not like resales and usually treat their home badly. Where in the world is a house less expensive than a car only in amazing Thailand.

[jbrain]

But the recent problems in the US, UK and Europe appear to have been caused by excessive home loans to people with little chance of repaying.

So Thailand will soon be facing the same result, but from a different problem to the 90s crash.

Who says it's excessive lending, it's a very active and very bouyant credit market but it started froma very low base, nobody has said it's excessive lending. Also, the non-performing loans all point to a very stable lending environment, regardless of what you might think when you see the odd developer offering 110% loans. I mean really, if things were as bad as NS paints the symptoms would show uo somewhere in the statistics (not the opinion by nobody writers) but instead what we see articles such as the one at the start of this thread and others, telling us that NPL's are actually reducing!

So, you're completely content to blindly follow the "article at the start of this thread" which is quoting a Thai banker, rather than look at what's under your nose.

If you have that much faith in the banksters, you can stay on the sinking ship.

Thai banker as the unimpeachable source.

But you're a career banker (now retired) and you're asking this forum to view you as an unimpeachable source!

I thought in an other thread he wrote he was a driving instructor

[rubl]

In this topic may I wonder about the 1.14 trillion Baht NPLs left over from 1997 which the current government conveniently 'parked' at the BoT so as not to effect their credit rating when borrowing a few trillion more?

[chiang mai]

Who says it's excessive lending, it's a very active and very bouyant credit market but it started froma very low base, nobody has said it's excessive lending. Also, the non-performing loans all point to a very stable lending environment, regardless of what you might think when you see the odd developer offering 110% loans. I mean really, if things were as bad as NS paints the symptoms would show uo somewhere in the statistics (not the opinion by nobody writers) but instead what we see articles such as the one at the start of this thread and others, telling us that NPL's are actually reducing!

But the recent problems in the US, UK and Europe appear to have been caused by excessive home loans to people with little chance of repaying.

So Thailand will soon be facing the same result, but from a different problem to the 90s crash.

So, you're completely content to blindly follow the "article at the start of this thread" which is quoting a Thai banker, rather than look at what's under your nose.

If you have that much faith in the banksters, you can stay on the sinking ship.

Thai banker as the unimpeachable source.

But you're a career banker (now retired) and you're asking this forum to view you as an unimpeachable source!

I thought in an other thread he wrote he was a driving instructor

If I am wrong and you are right, that would explain many things, oh Lord, let you be right!

[bkk_mike]

From above:

"Important to note for foreign investors is that the Real Estate market is showing signs of price bubbles. Since 2009 real estate prices have surged 36% – ahead of a cumulative inflation rate of 15% over the same period. The middle classes and low income families will have a more difficult time owning homes if land and real estate prices continue this trend."

This is EXACTLY what happened in the US before the crash. Speculators drove the price of housing beyond the ability of the real homeowners to purchase. When there was no last fool able to buy, it collapsed.

If the average Thai can't buy, it bursts. And it will.

Actually - that isn't what happened in the US.

What happened in the US was that banks and finance companies sold on their loans to investment banks that bundled them up into securities, and because they were no longer holding the loans themselves, some of them virtually stopped checking if people were actually able to pay the mortgages they were taking out.

The speculation came along with people buying property they couldn't afford to make the payments on, where they were assuming that prices would continue to rise, so they could sell at a profit in the future.

In Thailand - the banks hold on to the loans themselves, I thought. Add in that interest rates are quite high and that "used" properties sell for less than new ones and speculating here doesn't really work. (I'm not saying it's impossible - but it's nowhere near the "no money down" buy-to-let market that the

States built up in the early noughties.)

As for 100% mortgages - my first mortgage (back in 1993) was over 98%. They have a place (specifically in relation to first time buyers. buying a place to live in where the mortgage payment is replacing a rental payment). But they should not be the norm, and the banks should be extremely careful regarding affordability..

Edited May 8, 2013 by bkk_mike

[AnotherOneAmerican]

In Thailand - the banks hold on to the loans themselves, I thought. Add in that interest rates are quite high and that "used" properties sell for less than new ones and speculating here doesn't really work. (I'm not saying it's impossible - but it's nowhere near the "no money down" buy-to-let market that the

States built up in the early noughties.)

And yet, there are all those empty houses and condos. Everywhere you look.

[bkkgriz]

Oh, a banker says we are safe. I am totally not worried about this situation at all now. Bankers have done a fine job in the US the last decade. Oh crap.

[PoodMaiDai]

One thing everyone knows by now is that is when they start saying there is not a problem with something, there is a huge problem looming. Happens every time.

[PoodMaiDai]

In Thailand - the banks hold on to the loans themselves, I thought. Add in that interest rates are quite high and that "used" properties sell for less than new ones and speculating here doesn't really work. (I'm not saying it's impossible - but it's nowhere near the "no money down" buy-to-let market that the

States built up in the early noughties.)

And yet, there are all those empty houses and condos. Everywhere you look.

That is the mind scrambler about the whole thing. Besides in China, I have never seen so many empty homes and condos in my life. Why do they keep building when so many sit empty?

[blazes]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

Naam you are as blind as a bat while pompously leading people astray. Who appointed you the guru of finances for the financial forums, when you know nothing of macroeconomics?

Just LOOK at your posts. They are smart ass remarks, not real information backed by facts. You think you are the master of the one-liner, but you actually say nothing beyond attempting to make yourself sound important.

You are also dead wrong. You should go hide somewhere before you cost some poor blokes their life savings.

How about some facts instead of pompous one-liners?

Link March 9, 2013 Emphasis mine.

"...Thai state controlled banks are in trouble. The SME Bank and IslamBank have combined bad debt of nearly Bt80 billion. If privately owned they would already be bust! Krung Thai Bank’s lending portfolio has high exposure to government-related projects, The government Housing Bank is lending to subprime homeowners, similar to the US subprime home market.

But the real story is the Bank for Agriculture and Agricultural Cooperatives (BAAC). The debt incurred by the rice and other crop intervention schemes now stands at a whopping Bt601,072 billion – and that’s not a typing error. Equal to 0.5% of Thailand’s GDP!

In the end the government will have to fiscalise the debt of the state-owned banks. Fresh figures indicate Bt700 billion already.

Unfortunately the monetary policy is focusing on boosting growth rather than safeguarding price stability. Incredibly, the government sees little risk in asset price bubbles?

In the “Keeping an eye on Excesses” report (27.02.12) asset prices in Thailand are growing to create financial imbalances. The BOT still keeps the interst rate below inflation, yielding a negative rate of 0.85%. Between 2005 and present the BOT has maintained, on average, a negative interest rate of 0.35%. This reflects the governments pro-growth policy and has forced money into speculative investments.The Thai rate is already one of the lowest in the region and asset price bubbles are forming, yet FInance Minister Kittiratt Na Ranong still favours further rate cuts.

The Stock Exchange of Thailand (SET) has twice doubled since 2009, rising from 400 in 2009 at the height of the US financial crisis, to 800 in mid-2011. Now it has almost doubled itself again by passing the 1,500 mark. Jarumporn Chotkiasathira has come out to warn of at least 120 stocks whose prices and valuations indicate a ‘bubble’.

Banking authorities are ignoring this and doing nothing to stem inflows into the market.

Important to note for foreign investors is that the Real Estate market is showing signs of price bubbles. Since 2009 real estate prices have surged 36% – ahead of a cumulative inflation rate of 15% over the same period. The middle classes and low income families will have a more difficult time owning homes if land and real estate prices continue this trend.

Bank loans to individuals have been jumping sharply from 15% in 2005 to almost 25% presently. As a result, Thai household debt is rising at an alarming rate. The National Economic and Social Development Board has come up with an outstanding household debt figure of Bt2.9 trillion:

21% Car loans

33% Motorcycle loans

29% Personal loans

The asset price bubbles and financial imbalances in the private and public sectors are worrying signs that should be dealt with early. Global economic recovery is slim, as evidenced by negative growth rates in the US, EU and Japan int he last quarter of 2012.

The Thai government should cut its populist and mega-project spending. The BOT must take the punch bowl away instead of waiting for the party to be over.

These inflated prices cannot be maintained. Better investment value can be found easily in other parts of Asia."

This string of quotations is from a link to what appears to be someone's personal blog (please correct me if I am wrong). The figures quoted may or may not be "factual" but even if we allow that all the figures are correct, the contribution by NS is full of mere opinions. (Many of us may agree with the opinions, but let's face it: opinions are not facts).

If we follow him back to his blog link we read this:

Government debt inside and outside the budget is burgeoning. The

government continues to run a deficit of Bt300 billion this fiscal year,

after a Bt400 billion deficit in the last fiscal year. Additionally,

the government plans to invest Bt2.2 trillion until 2020 to improve

infrastructure. Most of this will come from borrowing.

Unless there is 6% GDP growth in the next seven years, the public

debt to GDP ratio is certain to exceed 50%. In 2018 the debt ratio is

expected to peak at 55% (TISCO).

A deficit of approx. US$30 billion is a deficit most western governments would give their back teeth for. Also, most western governments have a public debt to GDP ratio of well over 100%. So, Thailand ain't doing so badly. (I believe the ratio in Japan is somewhere near 230%.)

There are two conflicting ideas in world economics at the moment.

1. Severe budget austerity is "good for you" and the only way to escape from the debt mess.

2. Infrastructure spending (via borrowing) is necessary to promote growth and create jobs. Without growth, all economies will stagnate.

I personally believe that there is indeed an asset bubble in Thai property, but I don't see the average Thai being greatly affected, since he couldn't afford to buy the property in the first place.

[NeverSure]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

Naam you are as blind as a bat while pompously leading people astray. Who appointed you the guru of finances for the financial forums, when you know nothing of macroeconomics?

Just LOOK at your posts. They are smart ass remarks, not real information backed by facts. You think you are the master of the one-liner, but you actually say nothing beyond attempting to make yourself sound important.

You are also dead wrong. You should go hide somewhere before you cost some poor blokes their life savings.

How about some facts instead of pompous one-liners?

Link March 9, 2013 Emphasis mine.

"...Thai state controlled banks are in trouble. The SME Bank and IslamBank have combined bad debt of nearly Bt80 billion. If privately owned they would already be bust! Krung Thai Bank’s lending portfolio has high exposure to government-related projects, The government Housing Bank is lending to subprime homeowners, similar to the US subprime home market.

But the real story is the Bank for Agriculture and Agricultural Cooperatives (BAAC). The debt incurred by the rice and other crop intervention schemes now stands at a whopping Bt601,072 billion – and that’s not a typing error. Equal to 0.5% of Thailand’s GDP!

In the end the government will have to fiscalise the debt of the state-owned banks. Fresh figures indicate Bt700 billion already.

Unfortunately the monetary policy is focusing on boosting growth rather than safeguarding price stability. Incredibly, the government sees little risk in asset price bubbles?

In the “Keeping an eye on Excesses” report (27.02.12) asset prices in Thailand are growing to create financial imbalances. The BOT still keeps the interst rate below inflation, yielding a negative rate of 0.85%. Between 2005 and present the BOT has maintained, on average, a negative interest rate of 0.35%. This reflects the governments pro-growth policy and has forced money into speculative investments.The Thai rate is already one of the lowest in the region and asset price bubbles are forming, yet FInance Minister Kittiratt Na Ranong still favours further rate cuts.

The Stock Exchange of Thailand (SET) has twice doubled since 2009, rising from 400 in 2009 at the height of the US financial crisis, to 800 in mid-2011. Now it has almost doubled itself again by passing the 1,500 mark. Jarumporn Chotkiasathira has come out to warn of at least 120 stocks whose prices and valuations indicate a ‘bubble’.

Banking authorities are ignoring this and doing nothing to stem inflows into the market.

Important to note for foreign investors is that the Real Estate market is showing signs of price bubbles. Since 2009 real estate prices have surged 36% – ahead of a cumulative inflation rate of 15% over the same period. The middle classes and low income families will have a more difficult time owning homes if land and real estate prices continue this trend.

Bank loans to individuals have been jumping sharply from 15% in 2005 to almost 25% presently. As a result, Thai household debt is rising at an alarming rate. The National Economic and Social Development Board has come up with an outstanding household debt figure of Bt2.9 trillion:

21% Car loans

33% Motorcycle loans

29% Personal loans

The asset price bubbles and financial imbalances in the private and public sectors are worrying signs that should be dealt with early. Global economic recovery is slim, as evidenced by negative growth rates in the US, EU and Japan int he last quarter of 2012.

The Thai government should cut its populist and mega-project spending. The BOT must take the punch bowl away instead of waiting for the party to be over.

These inflated prices cannot be maintained. Better investment value can be found easily in other parts of Asia."

This string of quotations is from a link to what appears to be someone's personal blog (please correct me if I am wrong). The figures quoted may or may not be "factual" but even if we allow that all the figures are correct, the contribution by NS is full of mere opinions. (Many of us may agree with the opinions, but let's face it: opinions are not facts).

If we follow him back to his blog link we read this:

Government debt inside and outside the budget is burgeoning. The

government continues to run a deficit of Bt300 billion this fiscal year,

after a Bt400 billion deficit in the last fiscal year. Additionally,

the government plans to invest Bt2.2 trillion until 2020 to improve

infrastructure. Most of this will come from borrowing.

Unless there is 6% GDP growth in the next seven years, the public

debt to GDP ratio is certain to exceed 50%. In 2018 the debt ratio is

expected to peak at 55% (TISCO).

A deficit of approx. US$30 billion is a deficit most western governments would give their back teeth for. Also, most western governments have a public debt to GDP ratio of well over 100%. So, Thailand ain't doing so badly. (I believe the ratio in Japan is somewhere near 230%.)

There are two conflicting ideas in world economics at the moment.

1. Severe budget austerity is "good for you" and the only way to escape from the debt mess.

2. Infrastructure spending (via borrowing) is necessary to promote growth and create jobs. Without growth, all economies will stagnate.

I personally believe that there is indeed an asset bubble in Thai property, but I don't see the average Thai being greatly affected, since he couldn't afford to buy the property in the first place.

"I personally believe that there is indeed an asset bubble in Thai property, but I don't see the average Thai being greatly affected, since he couldn't afford to buy the property in the first place."

It doesn't have to affect the average Thai first. Look what happened in the US. The "average person" was the last to know. President Bush appeared at the White House with the chairman of the Fed and announced a big problem. There would be bailouts. There would be $700 billion in TARP (troubled asset relief program.)

What had happened is that suddenly it had come to light that the banks were broke. Wall Street was broke. As time went on, more and more came to light. AIG was broke. General Motors and Chrysler were broke.

It was a debt bubble that got to the financial institutions and that's what I'm hammering on. Thailand's banks are sitting on a credit bubble while the government has debt and deficits that show, and some that don't show.

What is the Agriculture Bank going to do with the losses it has of 700 billion baht for the rice scheme, with more to come in a multi-year program?

Banks, who are still sitting on mega amounts of bad loans from 1997 are doing the same damn thing again.

"The people" will be the last to know, including apparently, some expats.

[wooloomooloo]

i only can say that the banks here are very realistic.they make business without risk and i agree with this kind of politic.

I've read some statements in my time.

Business without risk? My brain is suffering to cope with the logic of this most amazing business model.

[chiang mai]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

Naam you are as blind as a bat while pompously leading people astray. Who appointed you the guru of finances for the financial forums, when you know nothing of macroeconomics?

Just LOOK at your posts. They are smart ass remarks, not real information backed by facts. You think you are the master of the one-liner, but you actually say nothing beyond attempting to make yourself sound important.

You are also dead wrong. You should go hide somewhere before you cost some poor blokes their life savings.

How about some facts instead of pompous one-liners?

Link March 9, 2013 Emphasis mine.

"...Thai state controlled banks are in trouble. The SME Bank and IslamBank have combined bad debt of nearly Bt80 billion. If privately owned they would already be bust! Krung Thai Bank’s lending portfolio has high exposure to government-related projects, The government Housing Bank is lending to subprime homeowners, similar to the US subprime home market.

But the real story is the Bank for Agriculture and Agricultural Cooperatives (BAAC). The debt incurred by the rice and other crop intervention schemes now stands at a whopping Bt601,072 billion – and that’s not a typing error. Equal to 0.5% of Thailand’s GDP!

In the end the government will have to fiscalise the debt of the state-owned banks. Fresh figures indicate Bt700 billion already.

Unfortunately the monetary policy is focusing on boosting growth rather than safeguarding price stability. Incredibly, the government sees little risk in asset price bubbles?

In the “Keeping an eye on Excesses” report (27.02.12) asset prices in Thailand are growing to create financial imbalances. The BOT still keeps the interst rate below inflation, yielding a negative rate of 0.85%. Between 2005 and present the BOT has maintained, on average, a negative interest rate of 0.35%. This reflects the governments pro-growth policy and has forced money into speculative investments.The Thai rate is already one of the lowest in the region and asset price bubbles are forming, yet FInance Minister Kittiratt Na Ranong still favours further rate cuts.

The Stock Exchange of Thailand (SET) has twice doubled since 2009, rising from 400 in 2009 at the height of the US financial crisis, to 800 in mid-2011. Now it has almost doubled itself again by passing the 1,500 mark. Jarumporn Chotkiasathira has come out to warn of at least 120 stocks whose prices and valuations indicate a ‘bubble’.

Banking authorities are ignoring this and doing nothing to stem inflows into the market.

Important to note for foreign investors is that the Real Estate market is showing signs of price bubbles. Since 2009 real estate prices have surged 36% – ahead of a cumulative inflation rate of 15% over the same period. The middle classes and low income families will have a more difficult time owning homes if land and real estate prices continue this trend.

Bank loans to individuals have been jumping sharply from 15% in 2005 to almost 25% presently. As a result, Thai household debt is rising at an alarming rate. The National Economic and Social Development Board has come up with an outstanding household debt figure of Bt2.9 trillion:

21% Car loans

33% Motorcycle loans

29% Personal loans

The asset price bubbles and financial imbalances in the private and public sectors are worrying signs that should be dealt with early. Global economic recovery is slim, as evidenced by negative growth rates in the US, EU and Japan int he last quarter of 2012.

The Thai government should cut its populist and mega-project spending. The BOT must take the punch bowl away instead of waiting for the party to be over.

These inflated prices cannot be maintained. Better investment value can be found easily in other parts of Asia."

This string of quotations is from a link to what appears to be someone's personal blog (please correct me if I am wrong). The figures quoted may or may not be "factual" but even if we allow that all the figures are correct, the contribution by NS is full of mere opinions. (Many of us may agree with the opinions, but let's face it: opinions are not facts).

If we follow him back to his blog link we read this:

Government debt inside and outside the budget is burgeoning. The

government continues to run a deficit of Bt300 billion this fiscal year,

after a Bt400 billion deficit in the last fiscal year. Additionally,

the government plans to invest Bt2.2 trillion until 2020 to improve

infrastructure. Most of this will come from borrowing.

Unless there is 6% GDP growth in the next seven years, the public

debt to GDP ratio is certain to exceed 50%. In 2018 the debt ratio is

expected to peak at 55% (TISCO).

A deficit of approx. US$30 billion is a deficit most western governments would give their back teeth for. Also, most western governments have a public debt to GDP ratio of well over 100%. So, Thailand ain't doing so badly. (I believe the ratio in Japan is somewhere near 230%.)

There are two conflicting ideas in world economics at the moment.

1. Severe budget austerity is "good for you" and the only way to escape from the debt mess.

2. Infrastructure spending (via borrowing) is necessary to promote growth and create jobs. Without growth, all economies will stagnate.

I personally believe that there is indeed an asset bubble in Thai property, but I don't see the average Thai being greatly affected, since he couldn't afford to buy the property in the first place.

"I personally believe that there is indeed an asset bubble in Thai property, but I don't see the average Thai being greatly affected, since he couldn't afford to buy the property in the first place."

It doesn't have to affect the average Thai first. Look what happened in the US. The "average person" was the last to know. President Bush appeared at the White House with the chairman of the Fed and announced a big problem. There would be bailouts. There would be $700 billion in TARP (troubled asset relief program.)

What had happened is that suddenly it had come to light that the banks were broke. Wall Street was broke. As time went on, more and more came to light. AIG was broke. General Motors and Chrysler were broke.

It was a debt bubble that got to the financial institutions and that's what I'm hammering on. Thailand's banks are sitting on a credit bubble while the government has debt and deficits that show, and some that don't show.

What is the Agriculture Bank going to do with the losses it has of 700 billion baht for the rice scheme, with more to come in a multi-year program?

Banks, who are still sitting on mega amounts of bad loans from 1997 are doing the same damn thing again.

"The people" will be the last to know, including apparently, some expats.

The things you're posting NS, they are indeed extracts from somebody's blog, how do you ever expect people to take you seriously when you post the same thing over and over supported only by other peoples opinions in newspaper and magazine articles.

[NeverSure]

"The things you're posting NS, they are indeed extracts from somebody's blog, how do you ever expect people to take you seriously when you post the same thing over and over supported only by other peoples opinions in newspaper and magazine articles."

I keep challenging people to come up with their own "superior" links to prove those facts wrong but what do they do?

Of course they attack the messenger. That's what losers always do when they don't have a good argument.

You've already lost the debate.

Insults and wisecracks won't get you back in the game.

Debate the facts. Prove me wrong. Find your own links, or get lost.

[Payboy]

Yea, lets believe a Thai banker.

And why not? Most have probably put tremendous effort to be born in the right family.

[chiang mai]

"The things you're posting NS, they are indeed extracts from somebody's blog, how do you ever expect people to take you seriously when you post the same thing over and over supported only by other peoples opinions in newspaper and magazine articles."

I keep challenging people to come up with their own "superior" links to prove those facts wrong but what do they do?

Of course they attack the messenger. That's what losers always do when they don't have a good argument.

You've already lost the debate.

Insults and wisecracks won't get you back in the game.

Debate the facts. Prove me wrong. Find your own links, or get lost.

I found this link where you said (in response to my claim that you're just a Thai basher):

I do have a legitimate economic theory and I've said much of it many times. The baht is strong only when measured against major currencies which are deliberately being devalued. This, and the new minimum wage is severely hurting Thai exports. In a sister thread here, it mentions some industries losing as much as 40% of exports, and Thailand trying to substitute that loss with border trades. That's an admission that they can't compete in exporting to the West and they as much as say so.

I have posted and posted and frankly I'm tired of doing it, to have people miss it. Thailand has too strong of a baht and they can't do anything about it without hurting the economy one way or the other. They also ruined their rice export business and lost their customers. They also introduced a minimum wage which isn't competitive with other

emerging economies.

To Which I Replied:

1. "the Baht is only strong when measured against major currencies which are deliberatly being devalued"

True, but it's also strong when compared against regional currencies in ASEAN!

2. "the new minimum wage is hurting exports - some industries have lost 40% of their market".

I'd be keen to see a link that confirms the above is true, personally I do not believe it is other than in a handful of extreme cases. My experience of the 300 baht minimum wage is that this has not been an issue in companies where business is brisk, where it is not, many companies have found ways to give with one hand and take back with the

other, typically in the form of reducing bonuses. And from a socio-economic point of view, I personally think that the minimum wage initiative was one of the more useful ones to deploy in a country such as Thailand where the vast majoirty of people are employed in menial and manual work.

3. "Substituuting border trades to compensate for lost trade to the West".

If you look at the numbers month on month for the past few years you'll see that there has not been any meanignful decline in the value of exports, what you don't see in those numbers however is that the value of exports to China have increased and if this is the cross border trade you refer to, that is certainly very desirable. As far as the

financial impact of that trade is concerned: all export bills are settled in USD so it really doesn't matter whether the trade is to the US, Europe, Japan or China, the currency used is the same (albeit recent initiatives/agreements with China allow for non-USD settlement). It's also worth pointing out here that whilst the US is technically the largest Thai export market at 10.9%, China dn Jaoan fall very close behind at 10.3% and 10.6% respectively.

4. "Strong baht hurts the economy and can't do anything about it"

Yes, the THB has got a lot stronger but that is mostly a function of point 3 above so it's not as though this was an unanticipated event! But I wholly disagree that the BOT can't do anything about it, in the comming weeks and days you'll see that come true as BOT moves to protect its markets and drive the value of THB lower, that has started to

happen already this week.

5. "The rice scheme".

A failed popularist policy, don't tell me that you've never seen one of those before back home.

The rest of what you've written NS is all about the sky is falling and the associated panic and alarm, but the existence of the rice scheme and the minimum wage are not quite enough to justify your anxiety.

http://www.tradingec...hailand/exports

http://www.economywa...ort-import.html

http://www.thaivisa.com/forum/topic/635107-thai-baht-tempers-rise-over-b-o-t-rate-policy/page-2

And then there was the Iceland thingy but we wont talk about that one!

And then there's this link to the World Bank on NPL's whch you chose to ignore:

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

And so on, and so on, but hey, feel free to bash away regardless!

[Joe Mamma]

So they said in California, as the speculators and under-funded bought up the market to its crash. No govvie sweetheart forgiveness here though.

[NeverSure]

"The things you're posting NS, they are indeed extracts from somebody's blog, how do you ever expect people to take you seriously when you post the same thing over and over supported only by other peoples opinions in newspaper and magazine articles."

I keep challenging people to come up with their own "superior" links to prove those facts wrong but what do they do?

Of course they attack the messenger. That's what losers always do when they don't have a good argument.

You've already lost the debate.

Insults and wisecracks won't get you back in the game.

Debate the facts. Prove me wrong. Find your own links, or get lost.

I found this link where you said (in response to my claim that you're just a Thai basher):

I do have a legitimate economic theory and I've said much of it many times. The baht is strong only when measured against major currencies which are deliberately being devalued. This, and the new minimum wage is severely hurting Thai exports. In a sister thread here, it mentions some industries losing as much as 40% of exports, and Thailand trying to substitute that loss with border trades. That's an admission that they can't compete in exporting to the West and they as much as say so.

I have posted and posted and frankly I'm tired of doing it, to have people miss it. Thailand has too strong of a baht and they can't do anything about it without hurting the economy one way or the other. They also ruined their rice export business and lost their customers. They also introduced a minimum wage which isn't competitive with other

emerging economies.

To Which I Replied:

1. "the Baht is only strong when measured against major currencies which are deliberatly being devalued"

True, but it's also strong when compared against regional currencies in ASEAN!

2. "the new minimum wage is hurting exports - some industries have lost 40% of their market".

I'd be keen to see a link that confirms the above is true, personally I do not believe it is other than in a handful of extreme cases. My experience of the 300 baht minimum wage is that this has not been an issue in companies where business is brisk, where it is not, many companies have found ways to give with one hand and take back with the

other, typically in the form of reducing bonuses. And from a socio-economic point of view, I personally think that the minimum wage initiative was one of the more useful ones to deploy in a country such as Thailand where the vast majoirty of people are employed in menial and manual work.

3. "Substituuting border trades to compensate for lost trade to the West".

If you look at the numbers month on month for the past few years you'll see that there has not been any meanignful decline in the value of exports, what you don't see in those numbers however is that the value of exports to China have increased and if this is the cross border trade you refer to, that is certainly very desirable. As far as the

financial impact of that trade is concerned: all export bills are settled in USD so it really doesn't matter whether the trade is to the US, Europe, Japan or China, the currency used is the same (albeit recent initiatives/agreements with China allow for non-USD settlement). It's also worth pointing out here that whilst the US is technically the largest Thai export market at 10.9%, China dn Jaoan fall very close behind at 10.3% and 10.6% respectively.

4. "Strong baht hurts the economy and can't do anything about it"

Yes, the THB has got a lot stronger but that is mostly a function of point 3 above so it's not as though this was an unanticipated event! But I wholly disagree that the BOT can't do anything about it, in the comming weeks and days you'll see that come true as BOT moves to protect its markets and drive the value of THB lower, that has started to

happen already this week.

5. "The rice scheme".

A failed popularist policy, don't tell me that you've never seen one of those before back home.

The rest of what you've written NS is all about the sky is falling and the associated panic and alarm, but the existence of the rice scheme and the minimum wage are not quite enough to justify your anxiety.

http://www.tradingec...hailand/exports

http://www.economywa...ort-import.html

http://www.thaivisa.com/forum/topic/635107-thai-baht-tempers-rise-over-b-o-t-rate-policy/page-2

And then there was the Iceland thingy but we wont talk about that one!

And then there's this link to the World Bank on NPL's whch you chose to ignore:

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

And so on, and so on, but hey, feel free to bash away regardless!

First, yes the minimum wage will hurt. A rising tide lifts all boats. We're already seeing it as businesses close. There is another thread asking Thai vendors to not raise prices. Well, what are they supposed to do if their costs rise? Transport of goods, handling of goods, all adds to cost. In the end the people on the bottom will still be on the bottom with higher prices offsetting their raises. When you lift a ladder, the bottom rung rises too, but it's still the bottom rung. You will always have people on the bottom. All the minimum wage does is cause inflation and drive some companies out of business.

Please post snippets from you links. I don't want to dig through all of them. If there's something salient, quote it. I'm not doing your work for you.

The important things, you haven't answered. I have posted them too many times about the 700 billion dollar loss to the Bank of Agriculture for the rice scheme, and the loss of market share for rice, and the cost of storing the rice.

I've posted before that if you make a $10 mistake in your checkbook by entering a check as a deposit, you will be off $20. If you start with $100, and write a check for $10 but put it in the deposit column, you show $110 balance when you should show $90. $20 off. This is happening in the rice scheme which is, by various figures about 5% of gdp. So instead of selling x amount of rice, the government is paying to store the rice, and paying farmers for it. The net loss is double, or 10% of gdp. Instead of getting x for the rice, they lost the one x, and spent another x paying farmers and storing it. So they are off xx and that's 10%. It's a disaster and has the bank in big trouble.

Just remember one thing. The same politicians who developed the disastrous rice scheme are running the whole economy. They are arrogant enough to think they could control the world rice price but lost their ass on it, and they are arrogant enough to think that this bubble of bank loans for overbuilt real estate won't also get their banks. They are also arrogant enough to think that the new car scheme is beneficial. it isn't. It not only puts Thais in debt they can't afford, but it borrows sales from future years.

The baht i tend to agree with you on. The major economies are deliberately driving the value of their currencies down, leaving Thailand high and dry. But there's another reason. Thailand's credit rating is bad and they have to pay a premium in interest rates to pay for their massive deficits and borrowing.

How do they lower interest rates to calm the value of the baht when they need to borrow so much money, and the market decides what they have to pay to attract the bond buyers? Also, they are struggling with inflation and lowering rates would accelerate it.

We get our figures about bank strength from Thailand, as does the IMF. So those figures can be discounted by whatever level of corruption you imagine resides in the government and the banks. That's up to you to decide if you trust them. I don't. They aren't adding in the 700 billion baht for losses on the rice scheme by the Agricultural Bank, so what else aren't they telling us? We know they are carrying unrealized losses clear back to 1997, but what unrealized losses are occurring on non performing condo loans and other developments? How can all of these new businesses for Tescos to 7-ll's to major shopping malls survive when I see more employees than shoppers in them? Who takes the hit if they fail?

If you trust the Thai government's figures, and think the massive overbuilding of condos with few purchases going to end users, and vast numbers sitting empty jives with what we're being told, then that's up to you.

As for trading with China, it's no secret that China is in trouble, and that their profits are way down in spite of growth. Their growth isn't in large ticket and profitable items. It's in crap sold to Walmart, etc. where the profits are very low. The huge and many ghost towns in China are no joke. They are in the middle of nowhere, where few would want to be. China's banks are on the hook for that and no one knows where they stand because China is communist and it all belongs to the government (for the most part.) China has 1.3 people to feed and house and they are really hurting. Expect more bad news. China is also in the war to the bottom to reduce the value of its currency which would hurt Thailand in any deals it tried to make.

I can see you are a great supporter of Thailand and I respect the loyalty. But the facts just aren't there. The boom is debt driven and that can go on for only so long. There are constant article in the news on this site about how Thailand's exports are hurting, and how businesses are shutting down in significant numbers. This is a really big issue for an export driven economy. Some of it has to do with the new minimum wage, and some has to do with the value of the baht. Much of it has to do with the world economy where other countries simply aren't buying.

I could go on and on. I've posted links which parrot this. They aren't refuted. Don't get caught up in figures like GDP only. It has to balance with deficit spending and debt from the construction and farming sectors, and many other things. It's just one nail in the building.

This isn't proof read so please forgive errors in typing.

[metisdead]

Please post snippets from you links. I don't want to dig through all of them.

Links have been asked for, links have been provided, calm down, take the time to read the links and stop the incessant inflammatory baiting posts.

[AnotherOneAmerican]

Here we go, sign near my place offering 110% home loan.

Edited May 9, 2013 by AnotherOneAmerican

[chiang mai]

Neversure: You wrote: "I can see you are a great supporter of Thailand"..

Yes I am a supporter to a degree but I'm not passionate - but that is not what drives me to challenge many of things that you have written, my motivation comes from wanting to see a balanced intelligent debate (on any subject), one that supports its theories with statistics from reliable and prestigous sources and one that does not unfairly denegrade it's topic based solely on overzealous opinion.

I think posters on forums such as these have got a repsonsibility to bottom the facts, if for no other reason than for the benefit of those readers who truly do not have a clue and who can be easily influenced and perhaps have to make life changing decisions as a result. Now, I don't want to come across as some kind of boyscout so I'll add that, I also can't stand too much bullsh*t either.

[chiang mai]

Here we go, sign near my place offering 110% home loan at 0% for x months.

WP_20130509_002.jpg

So?

[Naam]

Here we go, sign near my place offering 110% home loan at 0% for x months.

WP_20130509_002.jpg

So?

bubble, gloom and finally doom.

GHB = Government Housing Bank

[chiang mai]

Here we go, sign near my place offering 110% home loan at 0% for x months.

WP_20130509_002.jpg

So?

bubble, gloom and finally doom.

GHB = Government Housing Bank

Yes I understand that part and I agree it's a silly thing for any bank to do but it's hardly widespread and is not exactly a common standard for mortgages.

[chiangmaikelly]

"The things you're posting NS, they are indeed extracts from somebody's blog, how do you ever expect people to take you seriously when you post the same thing over and over supported only by other peoples opinions in newspaper and magazine articles."

I keep challenging people to come up with their own "superior" links to prove those facts wrong but what do they do?

Of course they attack the messenger. That's what losers always do when they don't have a good argument.

You've already lost the debate.

Insults and wisecracks won't get you back in the game.

Debate the facts. Prove me wrong. Find your own links, or get lost.

I found this link where you said (in response to my claim that you're just a Thai basher):

I do have a legitimate economic theory and I've said much of it many times. The baht is strong only when measured against major currencies which are deliberately being devalued. This, and the new minimum wage is severely hurting Thai exports. In a sister thread here, it mentions some industries losing as much as 40% of exports, and Thailand trying to substitute that loss with border trades. That's an admission that they can't compete in exporting to the West and they as much as say so.

I have posted and posted and frankly I'm tired of doing it, to have people miss it. Thailand has too strong of a baht and they can't do anything about it without hurting the economy one way or the other. They also ruined their rice export business and lost their customers. They also introduced a minimum wage which isn't competitive with other

emerging economies.

To Which I Replied:

1. "the Baht is only strong when measured against major currencies which are deliberatly being devalued"

True, but it's also strong when compared against regional currencies in ASEAN!

2. "the new minimum wage is hurting exports - some industries have lost 40% of their market".

I'd be keen to see a link that confirms the above is true, personally I do not believe it is other than in a handful of extreme cases. My experience of the 300 baht minimum wage is that this has not been an issue in companies where business is brisk, where it is not, many companies have found ways to give with one hand and take back with the

other, typically in the form of reducing bonuses. And from a socio-economic point of view, I personally think that the minimum wage initiative was one of the more useful ones to deploy in a country such as Thailand where the vast majoirty of people are employed in menial and manual work.

3. "Substituuting border trades to compensate for lost trade to the West".

If you look at the numbers month on month for the past few years you'll see that there has not been any meanignful decline in the value of exports, what you don't see in those numbers however is that the value of exports to China have increased and if this is the cross border trade you refer to, that is certainly very desirable. As far as the

financial impact of that trade is concerned: all export bills are settled in USD so it really doesn't matter whether the trade is to the US, Europe, Japan or China, the currency used is the same (albeit recent initiatives/agreements with China allow for non-USD settlement). It's also worth pointing out here that whilst the US is technically the largest Thai export market at 10.9%, China dn Jaoan fall very close behind at 10.3% and 10.6% respectively.

4. "Strong baht hurts the economy and can't do anything about it"

Yes, the THB has got a lot stronger but that is mostly a function of point 3 above so it's not as though this was an unanticipated event! But I wholly disagree that the BOT can't do anything about it, in the comming weeks and days you'll see that come true as BOT moves to protect its markets and drive the value of THB lower, that has started to

happen already this week.

5. "The rice scheme".

A failed popularist policy, don't tell me that you've never seen one of those before back home.

The rest of what you've written NS is all about the sky is falling and the associated panic and alarm, but the existence of the rice scheme and the minimum wage are not quite enough to justify your anxiety.

http://www.tradingec...hailand/exports

http://www.economywa...ort-import.html

http://www.thaivisa.com/forum/topic/635107-thai-baht-tempers-rise-over-b-o-t-rate-policy/page-2

And then there was the Iceland thingy but we wont talk about that one!

And then there's this link to the World Bank on NPL's whch you chose to ignore:

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

And so on, and so on, but hey, feel free to bash away regardless!

First, yes the minimum wage will hurt. A rising tide lifts all boats. We're already seeing it as businesses close. There is another thread asking Thai vendors to not raise prices. Well, what are they supposed to do if their costs rise? Transport of goods, handling of goods, all adds to cost. In the end the people on the bottom will still be on the bottom with higher prices offsetting their raises. When you lift a ladder, the bottom rung rises too, but it's still the bottom rung. You will always have people on the bottom. All the minimum wage does is cause inflation and drive some companies out of business.

Please post snippets from you links. I don't want to dig through all of them. If there's something salient, quote it. I'm not doing your work for you.

The important things, you haven't answered. I have posted them too many times about the 700 billion dollar loss to the Bank of Agriculture for the rice scheme, and the loss of market share for rice, and the cost of storing the rice.

I've posted before that if you make a $10 mistake in your checkbook by entering a check as a deposit, you will be off $20. If you start with $100, and write a check for $10 but put it in the deposit column, you show $110 balance when you should show $90. $20 off. This is happening in the rice scheme which is, by various figures about 5% of gdp. So instead of selling x amount of rice, the government is paying to store the rice, and paying farmers for it. The net loss is double, or 10% of gdp. Instead of getting x for the rice, they lost the one x, and spent another x paying farmers and storing it. So they are off xx and that's 10%. It's a disaster and has the bank in big trouble.

Just remember one thing. The same politicians who developed the disastrous rice scheme are running the whole economy. They are arrogant enough to think they could control the world rice price but lost their ass on it, and they are arrogant enough to think that this bubble of bank loans for overbuilt real estate won't also get their banks. They are also arrogant enough to think that the new car scheme is beneficial. it isn't. It not only puts Thais in debt they can't afford, but it borrows sales from future years.

The baht i tend to agree with you on. The major economies are deliberately driving the value of their currencies down, leaving Thailand high and dry. But there's another reason. Thailand's credit rating is bad and they have to pay a premium in interest rates to pay for their massive deficits and borrowing.

How do they lower interest rates to calm the value of the baht when they need to borrow so much money, and the market decides what they have to pay to attract the bond buyers? Also, they are struggling with inflation and lowering rates would accelerate it.

We get our figures about bank strength from Thailand, as does the IMF. So those figures can be discounted by whatever level of corruption you imagine resides in the government and the banks. That's up to you to decide if you trust them. I don't. They aren't adding in the 700 billion baht for losses on the rice scheme by the Agricultural Bank, so what else aren't they telling us? We know they are carrying unrealized losses clear back to 1997, but what unrealized losses are occurring on non performing condo loans and other developments? How can all of these new businesses for Tescos to 7-ll's to major shopping malls survive when I see more employees than shoppers in them? Who takes the hit if they fail?

If you trust the Thai government's figures, and think the massive overbuilding of condos with few purchases going to end users, and vast numbers sitting empty jives with what we're being told, then that's up to you.

As for trading with China, it's no secret that China is in trouble, and that their profits are way down in spite of growth. Their growth isn't in large ticket and profitable items. It's in crap sold to Walmart, etc. where the profits are very low. The huge and many ghost towns in China are no joke. They are in the middle of nowhere, where few would want to be. China's banks are on the hook for that and no one knows where they stand because China is communist and it all belongs to the government (for the most part.) China has 1.3 people to feed and house and they are really hurting. Expect more bad news. China is also in the war to the bottom to reduce the value of its currency which would hurt Thailand in any deals it tried to make.

I can see you are a great supporter of Thailand and I respect the loyalty. But the facts just aren't there. The boom is debt driven and that can go on for only so long. There are constant article in the news on this site about how Thailand's exports are hurting, and how businesses are shutting down in significant numbers. This is a really big issue for an export driven economy. Some of it has to do with the new minimum wage, and some has to do with the value of the baht. Much of it has to do with the world economy where other countries simply aren't buying.

I could go on and on. I've posted links which parrot this. They aren't refuted. Don't get caught up in figures like GDP only. It has to balance with deficit spending and debt from the construction and farming sectors, and many other things. It's just one nail in the building.

This isn't proof read so please forgive errors in typing.

The links you are posting are from an opinion piece in the nationmultimedia and are written by Thanong Khanthong who went to college for 3 years in Thailand. Google the following to confirm this, "...Thai state controlled banks are in trouble. The SME Bank and IslamBank have combined bad debt of nearly Bt80 billion. If privately owned they would already be bust! Krung Thai Bank’s lending portfolio has high exposure to government-related projects, The government Housing Bank is lending to subprime homeowners, similar to the US subprime home market."

I don't know that it is necessary to refute the links as they are not reliable to begin with. http://www.nationmultimedia.com/opinion/Rectify-financial-imbalances-before-its-too-late-30200937.html

It is an interesting opinion piece but I don't think anyone would base investment decisions on it.

As for your other facts simply not true. Minimum wage was already above 300 baht, China is not in trouble and the other stuff is just sky is falling stuff.

[AnotherOneAmerican]

Here we go, sign near my place offering 110% home loan at 0% for x months.

WP_20130509_002.jpg

So?

bubble, gloom and finally doom.

GHB = Government Housing Bank

Yes I understand that part and I agree it's a silly thing for any bank to do but it's hardly widespread and is not exactly a common standard for mortgages.

A bit earlier in the thread someone posted, "No 110% home loans, like in the west, only prudent loans"

Then I posted, "I have seen 110% home loans offered"

Then they posted, "I'm sure you are mistaken"

Then I posted the photo for 110% home loan and you posted, "It's hardly widespread"

Can you see a trend here?

How do you know it isn't widespread?

Have you actually asked about home loans (in Thai, cos all the best offers are for Thai people, not for foreigners)?

As a Thai person it is really, really easy to get a large percentage home loan, way beyond any ability to repay.

No real employment, income or salary checks, no real valuation of the property, no collateral required beyond the actual home to be purchased.

Bangkok Bank will offer a 900,000bht home loan (95%) over 30 years on an income of 15,000bht a month, unbelievable IMHO.

Check for yourself here http://www.bangkokbank.com/BangkokBank/WebServices/Rates/Pages/LoanInterestRates.aspx Calculator top right.

Edited May 9, 2013 by AnotherOneAmerican

[JeffreyWitty]

We should all be thankful that there are so many real bankers and economists on this forum ready to ridicule the opinion of others probably in a better position to give an opinion.

It doesn't take a "real" banker or economist to spot CRIMINAL bankers (and economists).

[stoli]

This genteman will change his mind after his rental properties that he has listed will be sold. You have to keep the market up to benefit. The banks in the states were surely correct in that you can continue to have 45% annual increases in condo prices. LOL That is why we bailed them out. Maybe a bailout for the banks when the bubble bursts here will be 25 kilos of stored rice?

[chiang mai]

So?

Here we go, sign near my place offering 110% home loan at 0% for x months.

WP_20130509_002.jpg

bubble, gloom and finally doom.

GHB = Government Housing Bank

Yes I understand that part and I agree it's a silly thing for any bank to do but it's hardly widespread and is not exactly a common standard for mortgages.

A bit earlier in the thread someone posted, "No 110% home loans, like in the west, only prudent loans"

Then I posted, "I have seen 110% home loans offered"

Then they posted, "I'm sure you are mistaken"

Then I posted the photo for 110% home loan and you posted, "It's hardly widespread"

Can you see a trend here?

How do you know it isn't widespread?

Have you actually asked about home loans (in Thai, cos all the best offers are for Thai people, not for foreigners)?

As a Thai person it is really, really easy to get a large percentage home loan, way beyond any ability to repay.

No real employment, income or salary checks, no real valuation of the property, no collateral required beyond the actual home to be purchased.

Bangkok Bank will offer a 900,000bht home loan (95%) over 30 years on an income of 15,000bht a month, unbelievable IMHO.

Check for yourself here http://www.bangkokbank.com/BangkokBank/WebServices/Rates/Pages/LoanInterestRates.aspx Calculator top right.

I'm pretty sure it isn't widespread because a family member recently went chasing for a mortgage and my wife was helping with much of it, and whilst she tells me that she didn't check GHB she did see all the majors and eventually ended up with an 80% deal that she thought was attractive - my wife tells me that was not aware of the 110% mortgages.

On a slightly separate but related topic: my wife applied for a credit card and was turned down by three Thai banks beofre she was finally accepted by Bangkok Bank, I stayed out of the entire business. But Mrs CM earns around THB 28k a month and I supply housing and living costs hence the money she earns is hers to do with pretty much as she wants and this was reflected in the credit card application. Now it would seem to me that Mrs CM is a pretty good credit risk, she's been in her employment with Chedi Hotels for three years, she has a stable work history prior, she has no bad credit marks anywhere and she has borrowed previously for a car loan which was subsequently repaid - MRs CM also has my financial backing so I would have expected the banks to jump at the chance of giving her a credit card, but not so, it was actually quite hard for her to get one bevause she'd never had one before. So when I see that kind of behaviour out of the banks and someone tells me that easy credit is in abundance, I have to stop and look at the gap between our views, my view, based on first hand evidence is that credit is available but it's not exactly being handed out free of charge on every street corner, the banks are doing due diliigence.

[Krataiboy]

Thailand safe from property bubble, says banker

That's it then. We're xxxxxx.

Edited May 9, 2013 by metisdead
Bold font removed, profanity edited.