Thais Must Prepare For 'downturn Like 1997'

[usatrader]

Good point, the US is the worlds biggest consumer and drives the economies of places like China and Russia. However Bush is trying to sort that out by bankrupting the country.

Lamphun, the city, or, Lampoon, the demeanor, as the case may be.

A counter opine, if I may.

In life, opinions are like aholes. The former, opinions, are measured by either their informed efforts in supplying contextual factual knowledge or their lack therof. While the latter, aholes, suffer equally with the same afflictions, in effort and knowledge or lack thereof, as the case maybe.

At least have the intellectual curiosity in taking a mere minute of effort to inform yourself factual of that which you opine as if fact. It is like not wiping yourself and wonder what the smell is.

To clarify for you contextual the error of your opine, I submit some minor matters, such as facts and realities.

In the 218 years since the US constitution became officially effective, NO President of the United States has ever been able to authorize nor spend a dime of money that the now 535 Elected representatives in both houses of Congress has not approved.

That is Per se, under their exclusive Constructional authority that sets forth that they are solely responsible for appropriating every cent of money spent by the US government and the President as the executive administrator of the Government, merely oversees authorized money expenditures and is accountable to Congress in doing that.

Though, as the CEO, so to speak, the President can manipulate authorized expenditures within minor venues of authority and very narrow allowable ways but ALWAYS only money authorized by Congress that authorizes it, in full accountability, of its sources of creation whether that be via debt or income or both.

Congress alone, as the elected representatives of the people, is solely and completely accountable to the penny, for ever cent of the money the US government spends and equally on where that money comes from, be it either from Congressional authorized revenues or Congressional authorized accumulations of Debt.

What really raises one's indignation against senselessness is not senselessness intrinsically, but the suffering in enduring senselessness.-Trader

Now that is all I have to say about that!

TUM DII DAI DII, TUM CHUA DAI CHUA!

THAT IS ALL!!

[david96]

The problem is in the consumer credit and residential housing markets, no deposit loans,interest only loans, loans based on the equity in a property based on the current valuations in other words valuations are based on future capital gains easy money and in Australia negative gearing for tax advantages.

The other day I was asked by my bank if I wanted more credit on my credit card,I declined, but it was there if I wanted it!

[LivinLOS]

Good point, the US is the worlds biggest consumer and drives the economies of places like China and Russia. However Bush is trying to sort that out by bankrupting the country.

In the 218 years since the US constitution became officially effective, NO President of the United States has ever been able to authorize nor spend a dime of money that the now 535 Elected representatives in both houses of Congress has not approved.

And what congressman can buck the trend and so no to military spending (depriving our good troops) tax breaks (helping the common man) or other guns and butter / panem et circenses policy ?? And still get elected ??

This is the real world and the choices of the American Gov and Fed actions and refusal to take the punchbowl away from the party will result in a hel_l of a hangover.

[Totster]

Why are people discussing the US... ???

totster

[Martin]

I think the point is that "If the US economy sneezes, every other economy catches a cold".

Certainly, the dollar crashing would pretty well stop the orders coming in from abroad for the output from Thailand's automotive assembly plants, with knock-on effects throughout the automotive component industry.

Also textile factories would suffer. When times are hard, the "Wear once, and throw away" mentality of the times of over-confidence disappears.

Also consumption of luxury foods, like shellfish, reduces.

Demand for rice should hold up however.

And the cost of rice production is not very dependant on the price of oil, if plenty of labour is available.

It is noticeable that there are more young buffalos around this year. I think it indicates that a lot of famers are preparing to go back to using buffalos and not to replace their walking tractors when they wear out.

Somebody mentioned 1929. And there are some worrying parallels, paricularly in that a sudden end to the over-confidence (that has led to personal over-borrowing) turns recession into depression.

[chownah]

I don't think farmers are thinking they'll be using water buffalo for farming...of course there are always a few. Even at double or triple the price today I doubt that there would be much serious consideration of using water buffalo. For small farmers the cost of fuel is not that important...a couple hundred baht of fuel will plow alot of paddy in the hands of a good farmer with a two wheel tractor....for big farmers their land holdings are just too big to consider water buffalo....in my opinion.

[Phil Conners]

Why are people discussing the US... ???

totster

Makes a nice change from always discussing UK

[plachon]

I don't think farmers are thinking they'll be using water buffalo for farming...of course there are always a few. Even at double or triple the price today I doubt that there would be much serious consideration of using water buffalo. For small farmers the cost of fuel is not that important...a couple hundred baht of fuel will plow alot of paddy in the hands of a good farmer with a two wheel tractor....for big farmers their land holdings are just too big to consider water buffalo....in my opinion.

Exactly........ Farmers in Isaan are not logical economic beings in my experience. They actually increased their rice farming rai-age last dry season just when the price of fuel went through the roof. They certainly didn't move over to buffalos to accomodate increased costs, but just did more planting, thus increasing up-front expenses even more. In fact, more ceased using their iron buffaoes and left them to rust under the house, but hired a Ford tractor to do the ploughing. It appears that most of the costs are paid for by off-farm income, like sons and daughters sending home monthly postal orders, and the parents couldn't care less how much fuel costs. Asked one famer what he'd do if price of diesel increased to 30 B/litre and he said he'd still carrying on doing rice. 40 B/l? The same answer. 50 B/l - the same answer! The only thing that would stop him planting rice was the flow of money from kids drying up. In other words, even though the price of paddy rice has basically been stationary for the past 2 decades, rice planting areas have increased due to more off-farm income supporting its continuation. However, this cannot go on for much longer as Mom and Pop are now 50 + and not getting any younger, while luk chai/sow have no intention of going back to rice farming!

[Martin]

'Luk chai/sow' will come back to rice-farming fast, if the factory or office they are working in closes down.

Remember 1997? Thailand coped, because 'ban nork' acts as a huge shock absorber to the economy.

When industrial/construction jobs are available in the Greater Bangkok area, the remittances to parents in 'ban nork', who are often taking care of the children, is a big factor for providing the necessary cash for the grandchildren to go to school, and for a little 'luxury', additional to food and shelter.

But if an economic 'crash' wipes out a lot of those jobs, there is food and shelter available back with the older and younger generations.

Paradoxically, though, this innate economic strength of security against economic disaster has caused a political 'fault line', in that Thailand has ended up its industrialising-era with the great majority of the money in the middle-class in Bangkok, and still the great majority of the votes in the provinces.

Thailand is fortunate in being able to feed itself and have some extra to export, as well as being able to release some of its population from the agriculture and agriculture-service sector to provide an industrial labour force in good times.

But if the 'good times' bubble bursts, Thailand is the only major or medium-sized non-oil-exporting country that I can think of that can cope reasonably easily. And which might actually strengthen from it.

[Minburi]

More empty buildings that are just outer shells? Half finished condo`s, Overpasses that just end?

[TokyoT]

More empty buildings that are just outer shells? Half finished condo`s, Overpasses that just end?

Nearly finished airport, support piers for never completed rail link to never opened airport?

[chownah]

I don't think farmers are thinking they'll be using water buffalo for farming...of course there are always a few. Even at double or triple the price today I doubt that there would be much serious consideration of using water buffalo. For small farmers the cost of fuel is not that important...a couple hundred baht of fuel will plow alot of paddy in the hands of a good farmer with a two wheel tractor....for big farmers their land holdings are just too big to consider water buffalo....in my opinion.

Exactly........ Farmers in Isaan are not logical economic beings in my experience. They actually increased their rice farming rai-age last dry season just when the price of fuel went through the roof. They certainly didn't move over to buffalos to accomodate increased costs, but just did more planting, thus increasing up-front expenses even more. In fact, more ceased using their iron buffaoes and left them to rust under the house, but hired a Ford tractor to do the ploughing. It appears that most of the costs are paid for by off-farm income, like sons and daughters sending home monthly postal orders, and the parents couldn't care less how much fuel costs. Asked one famer what he'd do if price of diesel increased to 30 B/litre and he said he'd still carrying on doing rice. 40 B/l? The same answer. 50 B/l - the same answer! The only thing that would stop him planting rice was the flow of money from kids drying up. In other words, even though the price of paddy rice has basically been stationary for the past 2 decades, rice planting areas have increased due to more off-farm income supporting its continuation. However, this cannot go on for much longer as Mom and Pop are now 50 + and not getting any younger, while luk chai/sow have no intention of going back to rice farming!

Around where I live (in the North) rice farming makes a small profit(equivalent to making better wages than they can often find in the off season) for the farmer and does not need to be subsidised. It costs about 70baht for all of the fuel needed for one rai at present prices...this depends on the skill of the farmer...it costs me more because I'm inefficient and still learning. The cost for artificial fertilizer at last years prices was between 300baht and 500baht per rai depending on how much you use. Producing artificial fertilizer of the type used for rice is very energy intensive and I expect prices will go up this year. The vast majority of farmers in the world who raise rice rely just as heavily on these inputs so the price of rice is likely to rise and it is not unlikely that the increased price will cover the cost of the fuel....whether if it will cover the cost of the fertilizer remains to be seen but it is likely that it will...of course the increased expense will encourage farmers everywhere to be more efficient with the use of these inputs. The price of paddy was up last year compared to the year before...so we'll see. The small farmer with good skills should actually gain competitiveness because the small tractors are more fuel efficient than the big ones and a smaller farmholder can spend more time optimizing water and fertilizer usage. This theoretic advantage to farmers might not be realized by many farmers because farmers are very conservative and very slow to change their methods.....they tend to stick with what works...we'll see.

Chownah

[Johpa]

Oh lord, I feel like I am back in my undergrad classes listening to stduents debating the likes of James Scott and Samuel Popkin.

Be that as it may, my fear is that the knowledge of tilling the soil using buffalo is slowly being lost. Apart from some of the more isolated valleys up in the hills of Chiang Mai, I can't remember seeing too many water buffalo at work prior to planting over the past, say, 15 years. On the other hand, many of the mechanical tillers seem to be on their last legs, so to speak.

If the doggy doo doo hits the fan, then many of the rural poor become cash starved. It doesn't matter whether gas is 30, 40, or 50 baat per litre. There may be little enough money for more basic needs. What little cash is available will be spent on food or perhaps on gas for the motorbike for the family member that does have a job nearby. They may spend the cash on propane for their stoves or on charcoal (the making of which on a local level has also become a rarity compared to a few deacdes ago and I fear another item of local knowledge lost that would normally aid in self-sufficiency during tough times). If a family member becomes ill or injured, there goes what little cash was available. And although many rural families depend upon income sent from members working (usually in prostitution) in the larger cities, family planning has been successful in Thailand and it may only take one family member losing a job to stop the modest flow of cash back to the village. The common consequence of all of this is that if the family is fortunate to own land, then they end up selling the land and join the ranks of the landless peasantry.

The bottom line methinks is that the ability of the countryside to absorb those displaced by a major economic downturn is slowly diminishing over time as a conseqeunce of "patana chareon".

[Martin]

'johpa', in post #43, said:

".....charcoal (the making of which on a local level has also become a rarity compared to a few deacdes ago and I fear another item of local knowledge lost that would normally aid in self-sufficiency during tough times). "

Up here in Isaan there is still a lot of charcoal made locally, a few bags at a time.

We buy ours from people who have produced it and then are standing by the highway waiting to sell it, choosing the poorest-looking ones to buy from, as they most need the bit of cash.

Likewise, there are still some buffalo being used for ploughing.

I haven't done any counting, but even if it is as low as 1 in 30 farmers still using a buffalo, it means that the knowledge and skill hasn't been lost.

Isaan, with less rainfall, poorer land, and more difficult transportation, has always lagged well behind Northern Thailand.

I enjoyed the reference to "...debating the likes of James Scott and Samuel Popkin."

For our UK readers, we could throw in a reference to Seymour's "Self Sufficiency".

The reason for these topics keeping coming up periodically is, I think, twofold.

First, there is the uneasy feeling that industrialised, high-capital, economies fed by (and dependent on) supplies of cheap bulk energy are not sustainable in the long term. So what happens as less and less cheap sources are to be found?

Second, there is a lot of underlying atavism in so many of us. We have the gut instincts of our remote ancestors, who were self-sufficient peasantry for dozens of generations. So our following of our parents and grandparents in urban lifestyle is something that is only 'skin deep'.

Personally, I am convinced that if rural villages could develop so that it was attractive for a good proportion of their brightest youngsters to stay in them, rather than migrating to the 'bright lights' of the cities, they would flourish.

But at present the 'pull' of the cities (better wages and more entertainment) wins hands-down.

[Galong]

Gumball, I don't know if an economically destroyed Thailand of the future would be such a safe place to live for us cashed up farang. We might see crimes like kidnappings and carjackings become everyday occurrences with the cops and security forces living off the spoils. We might have to move into compounds like the wealthy of Brazil for example, for whom a latenight breakdown on the highway can easily mean death at the hands of marauding predators. What do you think about that eh?

Would n't mind 80 baht to the dollar though.

You might just be onto something Ned. There certainly seems to be an increase in crimes against foreigners lately. As there is virtually no law enforcement here, this could get real ugly real quick.

I'm sure the baht will do a nose dive just as soon as I decide to cash in some of my US$$.

[Heng]

'Luk chai/sow' will come back to rice-farming fast, if the factory or office they are working in closes down.

Remember 1997? Thailand coped, because 'ban nork' acts as a huge shock absorber to the economy.

Many employers also help out by not firing anyone either. Outside of the finance industry, I don't recall any friends or relatives firing anyone. Our own plastics injection factory, 110+ semi skilled labour, all we did was reduce three shifts to two shifts.

[ray23]

not just thailand but world wide problems

in the uk remember the crash of the seventies

housing boom, unbelievable credit lending limits for that time and a bull market in oil and gold.

this is what happened before inflation grew to 27% and the stock market plummetted by more than 60%

we are now in 2006 with a housing boom, massive and unsustainable credit limits, and we have a major bull market in oil and gold.

unless the governments can learn from previous mistakes could we see history repeat itself not just in los but in all the major western economies ???

This really brought a question to mind about 97, what was the US economy like in that period. I was involved a devoirce at the time and only remember working a lot. I was earning good money. But I do remember things being very expensive. Anyone know?

Sorry that the question isn't about Thailand, but it seems world forces are in play here not just one country.

[Scott]

I wish there were more information about what exactly the threats to the economy are.

[chownah]

Johpa wrote:

"Be that as it may, my fear is that the knowledge of tilling the soil using buffalo is slowly being lost. Apart from some of the more isolated valleys up in the hills of Chiang Mai, I can't remember seeing too many water buffalo at work prior to planting over the past, say, 15 years. On the other hand, many of the mechanical tillers seem to be on their last legs, so to speak."

and

"charcoal (the making of which on a local level has also become a rarity compared to a few deacdes ago and I fear another item of local knowledge lost that would normally aid in self-sufficiency during tough times). "

There will always be enough hobbyists interested in using water buffalo for tilling that the methods willl never be lost...or at least not for a long long long time. In the US the knowledge of using draft horses has not been lost for instance. Also, using draught animals is really time consuming...not only do they work slower than even the smallest tractor but you must invest time and resources in their maintenance. My wife and I farm some rice each year and it is time consuming hard work....if you think a farmer should use draught animals then I suggest that you go farm some rice first and get some idea of what its all about...I think if you did then your attitude would change. I think that those who have the inclination to use animals for farm work are great people and should be encouraged and even subsidised somewhat but I dont' think that it is a viable method for agriculture in general....if you think I'm wrong then just go get yourself a couple of kwai and show me.

The two wheeled diesel tractor is a very simple, rugged, and long lasting tool....they will almost run forever and they are completely rebuildable at the local level....I've got a relatively new one but sort of wish I had a really ugly one looking like its on its last legs and ancient!!! (There is no accounting for some people's sense of style!!)

Making charcoal is not rocket science. Anyone can learn how to do it in about half an hour. It is a really nasty practise when done Thai style and creates alot of carcinogenic gases. We have finally persuaded our uncle to stop making charcoal in his back yard because it is obnoxious and a health hazard. Making charcoal is one of the things that has created deforestation....it is the coming of widely avaiilable cheap cooking gas that has eased this pressure on the forests....and....the bottom line is that if times get so tough that you can't buy cooking gas then you can burn the wood without converting it to charcoal first. Charcoal is a luxury in some cultures. In the hills in Laos in some places you don't see much use of charcoal and everyone just uses wood.