Thais are increasingly in debt, default

[trogers]

It is not just the Thai households having increasing debts. The country itself has a massive increase in government debts incurred by the previous government.

Economic growth then was based on increasing debts, similar to what China did and is still doing, abet on a smaller scale.

Actually debt to gdp was 45 percent last year, and has averaged 45 percent from 1996 until now. Debt has increased as gdp increased, but the ratios do not suggest "massive debt" incurred by the last government.

http://www.tradingeconomics.com/thailand/government-debt-to-gdp

I do recall a State Bank had a run not too long ago which forced it's president to resign. Was the amount of money transacted by this bank included in your charts?

2014 data is not included because the year is not over yet. However, a run on a bank would not impact the overall debt to gdp ratio. Gdp is over 10 trillion baht making the government debt close to 5 trillion. What is the value of the transaction you are referring to and was this a government loan?

Ahh...the US government needs only to set up a number of State banks and transfer the monies shown in Debt Counter displayed at Time Square into their books, and hey presto, 'no debts'.

[brucec64]

It is not just the Thai households having increasing debts. The country itself has a massive increase in government debts incurred by the previous government.

Economic growth then was based on increasing debts, similar to what China did and is still doing, abet on a smaller scale.

Actually debt to gdp was 45 percent last year, and has averaged 45 percent from 1996 until now. Debt has increased as gdp increased, but the ratios do not suggest "massive debt" incurred by the last government.

http://www.tradingeconomics.com/thailand/government-debt-to-gdp

I do recall a State Bank had a run not too long ago which forced it's president to resign. Was the amount of money transacted by this bank included in your charts?

2014 data is not included because the year is not over yet. However, a run on a bank would not impact the overall debt to gdp ratio. Gdp is over 10 trillion baht making the government debt close to 5 trillion. What is the value of the transaction you are referring to and was this a government loan?

Ahh...the US government needs only to set up a number of State banks and transfer the monies shown in Debt Counter displayed at Time Square into their books, and hey presto, 'no debts'.

If you are referring to the plan to move government debt to the BOT this plan was scrapped.

http://mobile.bloomberg.com/news/2011-12-30/thailand-scraps-plan-to-shift-35-billion-asia-crisis-debt-to-central-bank.html

Also, this debt was incurred during the 1997 bank bailout, so cannot be included in the "massive debt incurred by the last goverment" indicated in your post.

[nanapong]

No mention of loan sharks, gold shop loans an other off the books sources?

Loan sharks yes, gold shops no - when folks go the gold shops it is to sell gold at an agreed price albeit it may be capable of being repurchased later at a different price, that's not really a load per se, it's commerce.

When folk go into gold shops they are going in to pay the 25% interest due on the gold they pawned for cash.

Thai people don't sell gold unless they have too.

[HUAHIN62]

It is not just the Thai households having increasing debts. The country itself has a massive increase in government debts incurred by the previous government.

Economic growth then was based on increasing debts, similar to what China did and is still doing, abet on a smaller scale.

If you checked the facts you would know the truth is that private and company debt have increased and that government debt has been stable. The lie that government debt has increased dramaticaly is political noise. What do you think the B 2,5 to B 4 trillion infrastructure spending over the next 8 years will do to government debt?

[SunsetT]

just stop spending money you don't have...

But the simple minded and poorly educated Thais are being bombarded by sophisticated Western advertising tempting them to do the opposite. I feel sorry for them.

[Jonmarleesco]

'... Thai people were increasingly in debt and default ...'

Yet debt suspensions continue. Does the government expect that to reduce the amount of debt, as opposed to those suddenly 'temporarily' freed of debt deciding they can now afford more?

[belg]

can those migrant workers get a hold of a thai loan or credit card ?

blame it on them ?

[trogers]

It is not just the Thai households having increasing debts. The country itself has a massive increase in government debts incurred by the previous government.

Economic growth then was based on increasing debts, similar to what China did and is still doing, abet on a smaller scale.

Actually debt to gdp was 45 percent last year, and has averaged 45 percent from 1996 until now. Debt has increased as gdp increased, but the ratios do not suggest "massive debt" incurred by the last government.

http://www.tradingeconomics.com/thailand/government-debt-to-gdp

I do recall a State Bank had a run not too long ago which forced it's president to resign. Was the amount of money transacted by this bank included in your charts?

2014 data is not included because the year is not over yet. However, a run on a bank would not impact the overall debt to gdp ratio. Gdp is over 10 trillion baht making the government debt close to 5 trillion. What is the value of the transaction you are referring to and was this a government loan?

Ahh...the US government needs only to set up a number of State banks and transfer the monies shown in Debt Counter displayed at Time Square into their books, and hey presto, 'no debts'.

If you are referring to the plan to move government debt to the BOT this plan was scrapped.

http://mobile.bloomberg.com/news/2011-12-30/thailand-scraps-plan-to-shift-35-billion-asia-crisis-debt-to-central-bank.html

Also, this debt was incurred during the 1997 bank bailout, so cannot be included in the "massive debt incurred by the last goverment" indicated in your post.

No, I was not referring to 1997 debt. But interestingly, which government tried to move government debt this way?

[billd766]

And the rest of Mrs CM's family are not too far off, nice people, no drinking/drugs/crime but not bright when it comes to decision making and strategy, but why should they be so, they're country folk, rice farmers.

I think you have to try and pick the winners and support them until you're proven wrong or they simply go bad. The MIL has gone way off course, eight years on and she's not cleaned or repaired any aspect of the home we provided, she doesn't care because nobody ever taught her how to take care of things, we've both given up on her and don't go to visit any more.

Brother is doing OK, at least he's no overhead and seems to be working hard - younger sister can't stop sprogging and passing them over to mum to take care of whilst she finds a new frog.

Mrs CM is the standout, she's got her head screwed on but there again she's lived a different life to her family for the past eleven years.

Big sigh, it keeps coming back to education, it's a slow process.

The two worst things are thatwhen he has no money he leeches off his grandmother and he has no shame in doing so.

I am sure that she still thinks that he is still a little boy in shorts at school and she will hear no bad words about him.

Som Nam Naa is not that far away I feel.

Though my MIL lives in a small house we built a long while ago with my wifes parents in mind (the grandfather still lives in Bang Na in BKK) I rarely see her unless it is at mealtimes. She spends about 60% of her life asleep, 35% lying on the bed watching TV and I have no idea what she does the rest of the time. She rarely walks anywhere and her trips out are just to the hospital once a month.

[emilymat]

If you offer a thai a loan/credit he/she will always accept, regardless of ability or intention to repay.

Yes, but if I (a farang) apply for a credit card, I am rejected because as a retired person, I have no regular income. My savings are good for a couple more years of peaceful life but banks in Thailand don't trust me. So, no credit card for me, at least not from a Thai bank.

TMB actually even told me that they would not accept farangs as clients, no mater how wealthy. (TMB branch in Central World).

Probably because I would not venture into costly loans and pay my credit card every months in full, so not much to profit from a farang, with (still) some marbles in his head.

Dominique.

Why would you want a credit card if you intend to clear it each month?. Serious question as I have always had a Bangkok Bank ATM/Visa card that is accepted almost everywhere. I sympathise with you in respect to the 'attitude' of the banks. No excuse for that by them.

[catweazle]

Banks are after property! They don't want, neither expect to be paid back the loans they give because the seized property turns their fake computer money into real, actually existing assets. The whole monetary system is depending on loans, compound interest (whereas the latter is legal robbery) and people who spend more than they earn, to keep this sucker goin'. And it moves in one direction only - upwards! The money flows from the pockets of the poor into the pockets of the rich.

If any average John or Jane Doe would do what Goldmann Sachs and the rest of the so-called Elite do, he would be serving life in jail or perhaps end up on death row, but the bankers get bonuses for talking the little man into a debt he'll never be able to pay back. This sick system will eventually collapse, the question is not if, but when...

Edited August 26, 2014 by catweazle

[chiang mai]

Banks are after property! They don't want, neither expect to be paid back the loans they give because the seized property turns their fake computer money into real, actually existing assets. The whole monetary system is depending on loans, compound interest (whereas the latter is legal robbery) and people who spend more than they earn, to keep this sucker goin'. And it moves in one direction only - upwards! The money flows from the pockets of the poor into the pockets of the rich.

If any average John or Jane Doe would do what Goldmann Sachs and the rest of the so-called Elite do, he would be serving life in jail or perhaps end up on death row, but the bankers get bonuses for talking the little man into a debt he'll never be able to pay back. This sick system will eventually collapse, the question is not if, but when...

Tell me again what a bank asset is?

[trogers]

If you offer a thai a loan/credit he/she will always accept, regardless of ability or intention to repay.

Yes, but if I (a farang) apply for a credit card, I am rejected because as a retired person, I have no regular income. My savings are good for a couple more years of peaceful life but banks in Thailand don't trust me. So, no credit card for me, at least not from a Thai bank.

TMB actually even told me that they would not accept farangs as clients, no mater how wealthy. (TMB branch in Central World).

Probably because I would not venture into costly loans and pay my credit card every months in full, so not much to profit from a farang, with (still) some marbles in his head.

Dominique.

Why would you want a credit card if you intend to clear it each month?. Serious question as I have always had a Bangkok Bank ATM/Visa card that is accepted almost everywhere. I sympathise with you in respect to the 'attitude' of the banks. No excuse for that by them.

I carry a charge card (no credit) since 1989 that has to be cleared in full each month. Useful when overseas, with no need to carry lots of cash.

[emilymat]

Its a got to have it,got to have it now ,world, thats they keep making

new models cars,tv,phones,and stupid people are drawn in to have

the latest model,even though there is nothing wrong with the one they

already have.

regards worgeordie

Capitalism is dependent on a consumer society and dependent on that society borrowing the money to consume and keep consuming. They hook us and brainwash us through advertising and keep us addicted to shopping and trapped for life through debt. The whole Capitalist system is based on everyone buying shit they dont need. Jobs manufacturing all that stuff is what lifts the masses out of poverty. Trouble is the advance in technology continues to drastically reduce the number of jobs created. Also with more and more countries becoming Western style consumer societies the ever increasing drain on the Earth's finite resources cannot be sustained, not to mention the damage the ever increasing throwaway waste is doing to our environment. Im afraid the whole pack of cards must at some point come tumbling down.

I agree with your sentiments entirely. Mind you, a few years ago you could have been branded as some sort of commie fellow traveller - which of course you are not.

It's the same with 'growth' of economies. 2% here 10% there. I'm no expert but my gut tells me that the economies' of countries cannot grow for ever. They have to stall or crash eventually.

Your sentiments are summed up with my experience in Big C, where I took a VCR back after a few months. It was broken. He said it would cost more to repair than to buy a new one and that the guarantee was only 6 months. When I told him I had a Bose radio/dvd player that was 22 years old and working perfectly, he looked at me as though I had just landed from Venus.

[Local Drunk]

This is not a Thai thing. The same problem exists everywhere.

People are just too greedy, and the financial system is adept in exploiting that greed -- selling unsophisticated folk the story that assets can only go up in value, and making credit cards out to be glamorous, when in fact they are very dangerous.

The only solution to living debt free is to live within your means.

Except, Mrs CM's niece is a very bright girl, top grades year on year. She finally got accepted for medical school and the government will pay for four years of her tuition, the family must find the rest. And the family is as poor as poor can be, the niece started classes with less than a thousand baht in her pocket and no chance of the family finding much more - so I'm doing my subsidy trick, other families don't have a "me" to help out, what are they supposed to do, tell the girl she has to go work in a bar or in Tesco?.

I see this everyday... You're a good man.

[ratcatcher]

just stop spending money you don't have...

But the simple minded and poorly educated Thais are being bombarded by sophisticated Western advertising tempting them to do the opposite. I feel sorry for them.

Sophisticated western advertising that has also been bombarded at simple minded and poorly educated Americans, Canadians, British and Uncle Tom Cobly and All. I also feel sorry for them too. It's a consumer society.

[tubby johnson]

just stop spending money you don't have...

But the simple minded and poorly educated Thais are being bombarded by sophisticated Western advertising tempting them to do the opposite. I feel sorry for them.

Simplistic.

Lots of advertising is done by Thai, Korean and Japanese companies. The spending on these products is done by Thai people, who have done a poor job educating and enlightening themselves.

Don't crave what you can't afford. Choose debt-free over slavery.

[SunsetT]

just stop spending money you don't have...

But the simple minded and poorly educated Thais are being bombarded by sophisticated Western advertising tempting them to do the opposite. I feel sorry for them.

Simplistic.

Lots of advertising is done by Thai, Korean and Japanese companies. The spending on these products is done by Thai people, who have done a poor job educating and enlightening themselves.

Don't crave what you can't afford. Choose debt-free over slavery.

I meant Western 'style' advertising.........highly effective tried and tested techniques developed in the West since the Fifties but now used and further developed internationally.

So you educated yourself did you? You were never taught maths at a good school with teachers who could teach provided by your government and/or paid for by your parents which taught you to think enabling you to understand finance and developp budgeting skills?

[billd766]

No mention of loan sharks, gold shop loans an other off the books sources?

Loan sharks yes, gold shops no - when folks go the gold shops it is to sell gold at an agreed price albeit it may be capable of being repurchased later at a different price, that's not really a load per se, it's commerce.

When folk go into gold shops they are going in to pay the 25% interest due on the gold they pawned for cash.

Thai people don't sell gold unless they have too.

I have just spoken to a couple of Thai friends and they tell me that the interest rate in the pawn shops are regulated by the law to 3% per 1,000 baht per month. The amount you pay the interest on is the value given at the time of pawning and it ignores any prices changes up or down during the pawning period.

If you pawn gold one day and take it back the next you still pay the rate for the whole month.

So if for example you hock 1 baht of gold and get 10,000 baht for it at the end of 3 months you should only pay 927.27 baht in interest.

When I used to drink in the bars in BKK some 10 to 15 years ago the loan shark rate was 20 baht per 1,000 PER DAY. At the end of 30 days the interest owing was 811.36 per month, about 81% PER 1,000 baht per 30 days.

That is 9 times the legal rate. Imagine that you owe 10,000 baht. That would be 8,113 baht in interest alone.

Could this be one reason why the military want to stamp out illegal money lending?

Edited August 27, 2014 by billd766

[rotary]

It is not just the Thai households having increasing debts. The country itself has a massive increase in government debts incurred by the previous government.

Economic growth then was based on increasing debts, similar to what China did and is still doing, abet on a smaller scale.

I do not think Thailand has the debt load that the USA has even if prorated out as debt per person. It is a world wide thing, not just Thailand, and made worse by cheap interest loans and no or low down payments. Bring the minimum down payments on cars & houses to 50% in every country in the world and watch the default rate go down. In the USA it is possible for a 50 year old man to get a 30 year house loan. How does that make any sense.

[rotary]

It is not just the Thai households having increasing debts. The country itself has a massive increase in government debts incurred by the previous government.

Economic growth then was based on increasing debts, similar to what China did and is still doing, abet on a smaller scale.

I do not think Thailand has the debt load that the USA has even if prorated out as debt per person. It is a world wide thing, not just Thailand, and made worse by cheap interest loans and no or low down payments. Bring the minimum down payments on cars & houses to 50% in every country in the world and watch the default rate go down. In the USA it is possible for a 50 year old man to get a 30 year house loan. How does that make any sense.

[ableguy]

If you offer a thai a loan/credit he/she will always accept, regardless of ability or intention to repay.

Yes, but if I (a farang) apply for a credit card, I am rejected because as a retired person, I have no regular income. My savings are good for a couple more years of peaceful life but banks in Thailand don't trust me. So, no credit card for me, at least not from a Thai bank.

TMB actually even told me that they would not accept farangs as clients, no mater how wealthy. (TMB branch in Central World).

Probably because I would not venture into costly loans and pay my credit card every months in full, so not much to profit from a farang, with (still) some marbles in his head.

Bangkok bank will give you one but you have to deposit ex amount of money so in Essenes you borrow your own money , still it works if you need a card.

[NCFC]

Imagine if this happened during Yingluck's tenure. TV would be in meltdown by now.

Sent from my iPhone using Thaivisa Connect Thailand

[German Viking]

The country itself has a massive increase in government debts incurred by the previous government.

Economic growth then was based on increasing debts, similar to what China did and is still doing, abet on a smaller scale.

Not true at all:

http://www.tradingeconomics.com/thailand/external-debt

The debt to GDP ratio remains low.

http://www.tradingeconomics.com/thailand/government-debt-to-gdp

Foreign currency reserves remain stable.

http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=94&language=ENG

THB has strengthened.

http://www.oanda.com/currency/historical-rates/

Exports are growing

http://www.tradingeconomics.com/thailand/exports

Where's the beef?

I believe only in statics I has faked myself ( very old bookholder phrase)

[German Viking]

. The amount of credit card debts outstanding for longer than three months increased by 28.4 per cent. What interest rate 18.5%, it's a world wide disgrace. I see more and more people using credit cards in Big C and other stores to buy groceries. I don't know if they're doing it for rewards, air miles or whether they don't have cash for food. I hope they know what they are doing because banks know no shame. A bank in Canada loaned my 80 year old father $180,000 against his house, the payments ate up his pension and left him in a position where he couldn't go into a retirement home.

I agree with you what banks do specially with elder ppl is a shame they acting like robber barons in the middleage the like to encode their therms that is hard to understand this having a method they are bandits.

To the interest on creditcards debts in Norway is 20 - 25% common and this is a rich country actually the private debts are sky high the ppl using for almost for every simple buy everywhere their ATM cards like there is no tomorrow.

[German Viking]

If you offer a thai a loan/credit he/she will always accept, regardless of ability or intention to repay.

Yes, but if I (a farang) apply for a credit card, I am rejected because as a retired person, I have no regular income. My savings are good for a couple more years of peaceful life but banks in Thailand don't trust me. So, no credit card for me, at least not from a Thai bank.

TMB actually even told me that they would not accept farangs as clients, no mater how wealthy. (TMB branch in Central World).

Probably because I would not venture into costly loans and pay my credit card every months in full, so not much to profit from a farang, with (still) some marbles in his head.

The problem is different branches diff. staff, diff. personally policies and animosities, sometimes you have to deal with stupid stubborn idiots, don't discuss leave the bank and go to the next.

Did you tried bangkok bank?

[German Viking]

No mention of loan sharks, gold shop loans an other off the books sources?

Loan sharks yes, gold shops no - when folks go the gold shops it is to sell gold at an agreed price albeit it may be capable of being repurchased later at a different price, that's not really a load per se, it's commerce.

When folk go into gold shops they are going in to pay the 25% interest due on the gold they pawned for cash.

Thai people don't sell gold unless they have too.

25% per month or year?

[German Viking]

Banks are after property! They don't want, neither expect to be paid back the loans they give because the seized property turns their fake computer money into real, actually existing assets. The whole monetary system is depending on loans, compound interest (whereas the latter is legal robbery) and people who spend more than they earn, to keep this sucker goin'. And it moves in one direction only - upwards! The money flows from the pockets of the poor into the pockets of the rich.

If any average John or Jane Doe would do what Goldmann Sachs and the rest of the so-called Elite do, he would be serving life in jail or perhaps end up on death row, but the bankers get bonuses for talking the little man into a debt he'll never be able to pay back. This sick system will eventually collapse, the question is not if, but when...

Tell me again what a bank asset is?

The best assets in the case of a crash for everybody also for the banks is good mix of properties (for housing, business, and agriculture).

[JohnThailandJohn]

Live within your means.

Spend less than you earn.

Never borrow money.

Borrowing money robs you of your freedom. Don't become a servant.

Tell that to Apple computer ... borrowing money is not in itself a bad thing.

[German Viking]

No mention of loan sharks, gold shop loans an other off the books sources?

Loan sharks yes, gold shops no - when folks go the gold shops it is to sell gold at an agreed price albeit it may be capable of being repurchased later at a different price, that's not really a load per se, it's commerce.

When folk go into gold shops they are going in to pay the 25% interest due on the gold they pawned for cash.

Thai people don't sell gold unless they have too.

I have just spoken to a couple of Thai friends and they tell me that the interest rate in the pawn shops are regulated by the law to 3% per 1,000 baht per month. The amount you pay the interest on is the value given at the time of pawning and it ignores any prices changes up or down during the pawning period.

If you pawn gold one day and take it back the next you still pay the rate for the whole month.

So if for example you hock 1 baht of gold and get 10,000 baht for it at the end of 3 months you should only pay 927.27 baht in interest.

When I used to drink in the bars in BKK some 10 to 15 years ago the loan shark rate was 20 baht per 1,000 PER DAY. At the end of 30 days the interest owing was 811.36 per month, about 81% PER 1,000 baht per 30 days.

That is 9 times the legal rate. Imagine that you owe 10,000 baht. That would be 8,113 baht in interest alone.

Could this be one reason why the military want to stamp out illegal money lending?

I beg your pardon I cannot follow your high math. I have only a simple brain like the most of the ppl, but for me is this after 30 days 600 baht means 60%, caused the credit sharks dealing mostly with simple ppl they have to make it simple.