Thailand's bubble economy is heading for a 1997-style crash

[denby45]

Bring on the crash I say. When the money is flooding out of the country and the Baht is crashing I for one will be changing my toilet paper dollars for Baht.

den

[kevinsan]

Relax. Thailand has billions in rice stock. Freely convertible Jasmine Gold.

[Thai at Heart]

All very good analysis.

The one thing I can't find answered, is the fact that in 97, Thailand had enormous overseas borrowings to fund domestic infrastructure. When it couldn't be paid, money flooded out of the country.

so your not aware ot the current deal going through to borrow 2 trillion baht for domestic infrastructure. obviously not!

Well they haven't borrowed it yet have they.....

[Bagwan]

I would think that if the government has 195 million in the bank, the politicians would have looted it long ago. Has anyone checked the vault lately?

Sent from my iPad using Thaivisa Connect Thailand mobile app

My thoughts exactly. Has anybody actually seen this money? If the country is so flush why do they need loans to build a railway?

[Bangkokhatter]

Am not really much of a financial wizard, ( subject of another thread later, so please be nice ) but i don't buy into all this doom and gloom. Surely an economy is not just based on the state of the property sector ?

The company i work for here continue to expand, as do the many other MNC's I regularly come into contact with. The big 2 supermarket chains are currently expanding, with Tesco soon to have a large presence in the North East and probably not stopping there. Big Industry still seems interested in investing in Thailand and their biggest problem it seems is the real lack of quality people to employ.

[Suradit69]

I am an economic analyst and anti-economic bubble activist who was recognized by the London Times for predicting the Global Financial Crisis. I am currently warning about growing bubbles in Canada, Australia, Nordic countries, China, emerging markets, Web 2.0 startups, U.S. higher education, and more. I believe that the popping of these bubbles will cause the next financial crisis.

Jesse Colombo

anti-economic bubble activist

Edited November 5, 2013 by Suradit69

[Asiantravel]

I am an economic analyst and anti-economic bubble activist who was recognized by the London Times for predicting the Global Financial Crisis. I am currently warning about growing bubbles in Canada, Australia, Nordic countries, China, emerging markets, Web 2.0 startups, U.S. higher education, and more. I believe that the popping of these bubbles will cause the next financial crisis.

Jesse Colombo

anti-economic bubble activist

It is no more doom and gloom than if you take the hypodermic syringe away from the heroin addict or you take the dummy out of the baby's mouth. It's reality. The party has to end some time.

Just like Mephistopheles in end came knocking on the door of Faust to claim the soul he was promised we will need to accept that the lifestyle that we have been enjoying for decades has been an illusion based on borrowed money by governments and individuals that we cant pay back.

[cheeryble]

Well I dont have much of an opinion about the numbers and terms bandied around in the article. I have lived here for 12 yrs though. In that time I was returning maybe twice a year to Ireland, where I witnessed a changing society similar to time lapse photography. The property bubble boom in Ireland was in full swing, and every time I went home I saw it advance and I must say the place became less enjoyable to visit. Cars changed from bangers to Mercs and BMs, many people were on their second property and had thousands to burn. It seemed 50 euro was the smallest note. Yet my peers were all still earning far less than me. What were they spending?

I see the same step change in Thailand over the 12 yrs .... my Toyota Sportrider used to be a tasty motor. Now it is but a peasants chariot amongst the Cayennes and Merc clogging up the Phuket roads. The style and mode of marketing for new Condos seems to be on the same level as what was seen by me in Ireland 10-5 yrs ago. "living, dreaming, aspiring" .... and a picture of a chick on a sofa wearing glasses with an apple laptop, as though the laptop is a happiness life support device. Asking prices are sometimes a little eyewatering. And when you go and see what they are building, fark me it is a competition in the corner cutting of bad finishing. All I am saying is it has many of the hallmarks of Ireland only a few years ago.

The bust in Ireland was specifically precipitated by the main banks essentially going bust through appallingly loose practices, overjuicy interest rates offered to raise funds by Anglo Irish for one (from which many posters here benefited), and typified by fraudulent self-lending.

Have we any specific data which predicts this is happening here?……or will e.g. house and condo sales merely stagnate for a while until the slack gets taken up again?

It is no more doom and gloom than if you take the hypodermic syringe away from the heroin addict or you take the dummy out of the baby's mouth. It's reality. The party has to end some time.

Just like Mephistopheles in end came knocking on the door of Faust to claim the soul he was promised we will need to accept that the lifestyle that we have been enjoying for decades has been an illusion based on borrowed money by governments and individuals that we cant pay back.

Has Thailand's soul been sold with a GND of GNP/2?

A Faustian pact? Hardly.

BTW the party often doesn't end it just cycles up and down as growth and inflation reduce effective debt…..the question being are we for some measurable reason going beyond that?

(ps: Don't think for a moment I'm in favour of recent childishly incompetent "schemes" which have brought about the debt.)

Edited November 5, 2013 by cheeryble

[Asiantravel]

Well I dont have much of an opinion about the numbers and terms bandied around in the article. I have lived here for 12 yrs though. In that time I was returning maybe twice a year to Ireland, where I witnessed a changing society similar to time lapse photography. The property bubble boom in Ireland was in full swing, and every time I went home I saw it advance and I must say the place became less enjoyable to visit. Cars changed from bangers to Mercs and BMs, many people were on their second property and had thousands to burn. It seemed 50 euro was the smallest note. Yet my peers were all still earning far less than me. What were they spending?

I see the same step change in Thailand over the 12 yrs .... my Toyota Sportrider used to be a tasty motor. Now it is but a peasants chariot amongst the Cayennes and Merc clogging up the Phuket roads. The style and mode of marketing for new Condos seems to be on the same level as what was seen by me in Ireland 10-5 yrs ago. "living, dreaming, aspiring" .... and a picture of a chick on a sofa wearing glasses with an apple laptop, as though the laptop is a happiness life support device. Asking prices are sometimes a little eyewatering. And when you go and see what they are building, fark me it is a competition in the corner cutting of bad finishing. All I am saying is it has many of the hallmarks of Ireland only a few years ago.

The bust in Ireland was specifically precipitated by the main banks essentially going bust through appallingly loose practices, overjuicy interest rates offered to raise funds by Anglo Irish for one (from which many posters here benefited), and typified by fraudulent self-lending.

Have we any specific data which predicts this is happening here?……or will e.g. house and condo sales merely stagnate for a while until the slack gets taken up again?

It is no more doom and gloom than if you take the hypodermic syringe away from the heroin addict or you take the dummy out of the baby's mouth. It's reality. The party has to end some time.

Just like Mephistopheles in end came knocking on the door of Faust to claim the soul he was promised we will need to accept that the lifestyle that we have been enjoying for decades has been an illusion based on borrowed money by governments and individuals that we cant pay back.

Has Thailand's soul been sold with a GND of GNP/2?

A Faustian pact? Hardly.

BTW the party often doesn't end it just cycles up and down as growth and inflation reduce effective debt…..the question being are we for some measurable reason going beyond that?

(ps: Don't think for a moment I'm in favour of recent childishly incompetent "schemes" which have brought about the debt.)

So the author of the article and the three Thai tycoons are wrong? Let the party continue

[humph]

Forbes' credential are beyond reproach.

The author's however ...

I am an economic analyst and anti-economic bubble activist who was recognized by the London Times for predicting the Global Financial Crisis. I am currently warning about growing bubbles in Canada, Australia, Nordic countries, China, emerging markets, Web 2.0 startups, U.S. higher education, and more. I believe that the popping of these bubbles will cause the next financial crisis. You can learn more about me on my Wikipedia page.

Every recent article written by the Author has the word 'Bubble' in it ...

.

Maybe he should change his job, soap master for dishwasher and detergent compagnies

good idea , Unilever owns half the world!! Ask them

[BillyBobThai]

With the baht at 32 to the dollar, I would love to see 35 to 36 to the US$. I have never seen 45 to the $, but when I moved here in 2003, 42 was surely nice to have. Between my US government and the Thai gov., I really do not which one is more corrupt. Hoping to see 42 again.

[Thai at Heart]

All very good analysis.

The one thing I can't find answered, is the fact that in 97, Thailand had enormous overseas borrowings to fund domestic infrastructure. When it couldn't be paid, money flooded out of the country. This time around, there is less foreign money flooded in, and also not a fixed exchange rate, so how will this equate to a breaking of a pegged exchange rate, and a crash as in 97. The problems are manifestly NOT THE SAME as 97.

The economy may not go so well, the economy might stagnate, there maybe some construction companies going bust, but, the issues with 97 are completely different with today. If Thaiand wanted to negate all hot money removal from the country in one go, they have 190bn USD in the bank with which to act. So, whilst I agree that there maybe problems in the economy, the situation is COMPLETELY different from 1997, and is unlikely to result in a currency crash in the same way as 97. So what if the currency reduces to 35 to 36 to the USD? Is this is a catastrophe? That is just the normal ebb and flow of currencies. Issue is, is there enough bad news stored up in the Thai economy to make it race its way to 45 to the USD? I don't think so.

I think the reference to 97 is a comparison for scale not circumstances. I think Thailand is absolutely heading for a crash as is China.. There are so many properties empty absolutely everywhere and household debt in Thailand has risen rapidly, even in the first half of this year and is still rising.

There are other reasons covered in the article and plenty of data available online,, in short something has to give sooner or later, hence predicted crash.

How China hasn't crashed yet good knows but they have a huge wedge of USD and a control on the currency.

[fasteddie]

I can't wait!

[Thai at Heart]

Forbes' credential are beyond reproach.

The author's however ...

I am an economic analyst and anti-economic bubble activist who was recognized by the London Times for predicting the Global Financial Crisis. I am currently warning about growing bubbles in Canada, Australia, Nordic countries, China, emerging markets, Web 2.0 startups, U.S. higher education, and more. I believe that the popping of these bubbles will cause the next financial crisis. You can learn more about me on my Wikipedia page.

Every recent article written by the Author has the word 'Bubble' in it ...

.

Maybe he should change his job, soap master for dishwasher and detergent compagnies

good idea , Unilever owns half the world!! Ask them

Ah but not all bubbles are created equal either.

Imagine the total loss of 15% on a 1mn baht house or 15% of a 250,000 euro or usd home.

[BruceSmith]

Forbes' credential are beyond reproach.

The author's however ...

I am an economic analyst and anti-economic bubble activist who was recognized by the London Times for predicting the Global Financial Crisis. I am currently warning about growing bubbles in Canada, Australia, Nordic countries, China, emerging markets, Web 2.0 startups, U.S. higher education, and more. I believe that the popping of these bubbles will cause the next financial crisis. You can learn more about me on my Wikipedia page.

Every recent article written by the Author has the word 'Bubble' in it ...

.

"Forbes' credential are beyond reproach"

Similar to:

Chrysler?

Arthur Anderson?

Enron?

CIT Group?

General Motors?

Lehman Brothers?

Etc………………………………………………………………………………………………………………………………………………………?

Just curious :-)

[sustento]

Forbes' credential are beyond reproach.

The author's however ...

I am an economic analyst and anti-economic bubble activist who was recognized by the London Times for predicting the Global Financial Crisis. I am currently warning about growing bubbles in Canada, Australia, Nordic countries, China, emerging markets, Web 2.0 startups, U.S. higher education, and more. I believe that the popping of these bubbles will cause the next financial crisis. You can learn more about me on my Wikipedia page.

Every recent article written by the Author has the word 'Bubble' in it ...

.

He's the hub of bubbles...

[bellboy]

He's has predicted for years, We are going to have a crash.

" I'm sure one year he will get it right "

[Thai at Heart]

Well I dont have much of an opinion about the numbers and terms bandied around in the article. I have lived here for 12 yrs though. In that time I was returning maybe twice a year to Ireland, where I witnessed a changing society similar to time lapse photography. The property bubble boom in Ireland was in full swing, and every time I went home I saw it advance and I must say the place became less enjoyable to visit. Cars changed from bangers to Mercs and BMs, many people were on their second property and had thousands to burn. It seemed 50 euro was the smallest note. Yet my peers were all still earning far less than me. What were they spending?

I see the same step change in Thailand over the 12 yrs .... my Toyota Sportrider used to be a tasty motor. Now it is but a peasants chariot amongst the Cayennes and Merc clogging up the Phuket roads. The style and mode of marketing for new Condos seems to be on the same level as what was seen by me in Ireland 10-5 yrs ago. "living, dreaming, aspiring" .... and a picture of a chick on a sofa wearing glasses with an apple laptop, as though the laptop is a happiness life support device. Asking prices are sometimes a little eyewatering. And when you go and see what they are building, fark me it is a competition in the corner cutting of bad finishing. All I am saying is it has many of the hallmarks of Ireland only a few years ago.

The bust in Ireland was specifically precipitated by the main banks essentially going bust through appallingly loose practices, overjuicy interest rates offered to raise funds by Anglo Irish for one (from which many posters here benefited), and typified by fraudulent self-lending.

Have we any specific data which predicts this is happening here?or will e.g. house and condo sales merely stagnate for a while until the slack gets taken up again?

It is no more doom and gloom than if you take the hypodermic syringe away from the heroin addict or you take the dummy out of the baby's mouth. It's reality. The party has to end some time.

Just like Mephistopheles in end came knocking on the door of Faust to claim the soul he was promised we will need to accept that the lifestyle that we have been enjoying for decades has been an illusion based on borrowed money by governments and individuals that we cant pay back.

Has Thailand's soul been sold with a GND of GNP/2?

A Faustian pact? Hardly.

BTW the party often doesn't end it just cycles up and down as growth and inflation reduce effective debt..the question being are we for some measurable reason going beyond that?

(ps: Don't think for a moment I'm in favour of recent childishly incompetent "schemes" which have brought about the debt.)

So the author of the article and the three Thai tycoons are wrong? Let the party continue

The author isn't necessarily correct and the 3 businessmen disagree with him. So what's your point?

[wooloomooloo]

Doesn't matter if LOS borrows, domestic debt is at tipping point.

Everything appears fine and no panic on the horizon to those concerned. But, the catalyst exists and will come externally. It will come and is now just over the ridge.

When personal debt outstrips income then it's a waiting game. Enjoy it while it lasts and your local friendly bank turns not so friendly.

There's a sting in the tail and it's close.

[Naam]

With the baht at 32 to the dollar, I would love to see 35 to 36 to the US$. I have never seen 45 to the $, but when I moved here in 2003, 42 was surely nice to have. Between my US government and the Thai gov., I really do not which one is more corrupt. Hoping to see 42 again.

please state where i can get 32 Baht for 1 US-Dollar.

[richard10365]

I didn't see anything about ASEAN or the Chiang Mai Initiative. Seems like he forgot a few things to consider in his research.

[ozyjon]

OK so how will this bubble benefit me and my money,, will the baht go up or down ?

Is it better to change my money now or wait for the bubble to burst ?

[cheeryble]

Doesn't matter if LOS borrows, domestic debt is at tipping point.

 

You may be right of course BUT what makes you able to call the tipping point NOW?

It's not like fairly easy household credit has just appeared......it's been around for years.

The fact is if it wasn't being serviced it would not have continued.

So who says it will no longer be serviced.....God?

Sent from my iPad using ThaiVisa app

[Asiantravel]

The bust in Ireland was specifically precipitated by the main banks essentially going bust through appallingly loose practices, overjuicy interest rates offered to raise funds by Anglo Irish for one (from which many posters here benefited), and typified by fraudulent self-lending.

Have we any specific data which predicts this is happening here?or will e.g. house and condo sales merely stagnate for a while until the slack gets taken up again?

It is no more doom and gloom than if you take the hypodermic syringe away from the heroin addict or you take the dummy out of the baby's mouth. It's reality. The party has to end some time.

Just like Mephistopheles in end came knocking on the door of Faust to claim the soul he was promised we will need to accept that the lifestyle that we have been enjoying for decades has been an illusion based on borrowed money by governments and individuals that we cant pay back.

Has Thailand's soul been sold with a GND of GNP/2?

A Faustian pact? Hardly.

BTW the party often doesn't end it just cycles up and down as growth and inflation reduce effective debt..the question being are we for some measurable reason going beyond that?

(ps: Don't think for a moment I'm in favour of recent childishly incompetent "schemes" which have brought about the debt.)

So the author of the article and the three Thai tycoons are wrong? Let the party continue

The author isn't necessarily correct and the 3 businessmen disagree with him. So what's your point?

Aw … I guess my point is that Thailand does not exist within a bubble and there are similar conditions in other parts of the world. If people are now admitting there are even bigger bubbles in some bigger places………. then a number of bubbles bursting simultaneously could lead to an awful mess

Or is the author of EconMatters also " not necessarily correct "

http://www.econmatters.com/2013/11/bubble-that-everyone-admits-is-bubble.html

[cheeryble]

Or is the author of EconMatters also " not necessarily correct "

http://www.econmatters.com/2013/11/bubble-that-everyone-admits-is-bubble.html

Bubble That Everyone Admits is a Bubble

By EconMatters

This is one of the few times where the benefactors or professionals who benefit from the bubbles, in this case created by the Federal Reserve, fully and openly acknowledge that stock prices and certain other asset classes are completely divorced from fundamental valuations.

Fully and openly acknowledge? refs please?

Completely divorced from fundamental valuations?

……..Like price to book?

price to earnings?

so, completely divorced from fundamental valuations?

……judge for yourself.

ps:

1. Note the levels at which the the P/E reversed

2. Note carefully what happened to the market price level after each reversal (clue: $$$)

3. P/E now 19.38

Edited November 6, 2013 by cheeryble

[Kabayo66]

Thugs: (in unison) All bubble-blowing babies will be beaten senseless by every able-bodied patron in the bar.

Victor: That's right! So, who blew it?!

[snooky]

Am not really much of a financial wizard, ( subject of another thread later, so please be nice ) but i don't buy into all this doom and gloom. Surely an economy is not just based on the state of the property sector ?

The company i work for here continue to expand, as do the many other MNC's I regularly come into contact with. The big 2 supermarket chains are currently expanding, with Tesco soon to have a large presence in the North East and probably not stopping there. Big Industry still seems interested in investing in Thailand and their biggest problem it seems is the real lack of quality people to employ.

I am no financial whiz but could the expansion of Tesco and several other 'B'ig chains be the cause of their very steep increase in food and sundry items recently or are they just trying to increase their profits at everybody's expense.? Unfortunately, I still like my Western Food and I know transportation costs have not gone up as much as the price increases within the last year. Whose pockets are all those increases going into?? Or need I ask? Quite a few items, while expensive in the US, are often double or more here and it doesn't take any expert to know it does not cost that much to ship, unless you are doing it by plane - but I doubt that would cost that much of an increase in such a short time. Not to mention it costs about 1/4 to 1/2 the amount in labor to stock supermarkets here due to labor costs.

And the cost of many items sold on some of the TV shows would be laughable if there weren't so many people purchasing these items thinking they are getting a bargain when all they are getting is a hosing...

Edited November 6, 2013 by snooky

[wooloomooloo]

You may be right of course BUT what makes you able to call the tipping point NOW?

Tipping point was intended to express my belief that the scene is set and not as a prediction of right now.

I have little doubt that a small spark will ignite a painful period for the country and will be along sooner rather than later whether it be by political, market or social means.

[brit1984]

Am not really much of a financial wizard, ( subject of another thread later, so please be nice ) but i don't buy into all this doom and gloom. Surely an economy is not just based on the state of the property sector ?

The company i work for here continue to expand, as do the many other MNC's I regularly come into contact with. The big 2 supermarket chains are currently expanding, with Tesco soon to have a large presence in the North East and probably not stopping there. Big Industry still seems interested in investing in Thailand and their biggest problem it seems is the real lack of quality people to employ.

I am no financial whiz but could the expansion of Tesco and several other 'B'ig chains be the cause of their very steep increase in food and sundry items recently or are they just trying to increase their profits at everybody's expense.? Unfortunately, I still like my Western Food and I know transportation costs have not gone up as much as the price increases within the last year. Whose pockets are all those increases going into?? Or need I ask? Quite a few items, while expensive in the US, are often double or more here and it doesn't take any expert to know it does not cost that much to ship, unless you are doing it by plane - but I doubt that would cost that much of an increase in such a short time. Not to mention it costs about 1/4 to 1/2 the amount in labor to stock supermarkets here due to labor costs.

And the cost of many items sold on some of the TV shows would be laughable if there weren't so many people purchasing these items thinking they are getting a bargain when all they are getting is a hosing...

maybe you could import foodstuffs from USA to Thailand and undercut Tesco and keep some of the big profit margin you have identified... let us know how you get on

[Thai at Heart]

The bust in Ireland was specifically precipitated by the main banks essentially going bust through appallingly loose practices, overjuicy interest rates offered to raise funds by Anglo Irish for one (from which many posters here benefited), and typified by fraudulent self-lending.

Have we any specific data which predicts this is happening here?or will e.g. house and condo sales merely stagnate for a while until the slack gets taken up again?

It is no more doom and gloom than if you take the hypodermic syringe away from the heroin addict or you take the dummy out of the baby's mouth. It's reality. The party has to end some time.

Just like Mephistopheles in end came knocking on the door of Faust to claim the soul he was promised we will need to accept that the lifestyle that we have been enjoying for decades has been an illusion based on borrowed money by governments and individuals that we cant pay back.

Has Thailand's soul been sold with a GND of GNP/2?

A Faustian pact? Hardly.

BTW the party often doesn't end it just cycles up and down as growth and inflation reduce effective debt..the question being are we for some measurable reason going beyond that?

(ps: Don't think for a moment I'm in favour of recent childishly incompetent "schemes" which have brought about the debt.)

So the author of the article and the three Thai tycoons are wrong? Let the party continue

The author isn't necessarily correct and the 3 businessmen disagree with him. So what's your point?

Aw I guess my point is that Thailand does not exist within a bubble and there are similar conditions in other parts of the world. If people are now admitting there are even bigger bubbles in some bigger places. then a number of bubbles bursting simultaneously could lead to an awful mess

Or is the author of EconMatters also " not necessarily correct "

http://www.econmatters.com/2013/11/bubble-that-everyone-admits-is-bubble.html

Well the point was it could be a collapse like 97. I disagree that the situation is completely different, as do the businessmen.

If a crisis comes it won't be like 97.

So let's start a new academic thread. "If a crash comes what form will it take", and let's start again.