Debt-ridden Thailand being sucked into whirlpool of deflation

[maidee]

i wait for the day the thai home debt is 99.99%

only about 85% right now

[Orac]

To say that one of the problems is weak overseas demand and that there is nothing that can be done about it is not strictly correct.

Because of the coup many of the overseas markets that Thailand depends on are not playing ball. The EU has dropped Thailand from the GSP agreement as it no longer meets the criteria for inclusion but have not progressed a replacement free trade agreement due to the current situation. The TPP agreement includes Thailand's regional competitors - Vietnam, Malaysia, Singapore and rumour possibly China being involved - which will give them a strong advantage.

Global trade has been the biggest driver of growth for centuries and stimulating it through trade agreements is probably the only real game in play to restart growth in many countries which could leave Thailand behind if they are not allowed on the train.

[TechnoCrasy]

Deflation?. The price of Nescafe Expresso Roast cans have gone up from 12.50 to 13.00 bhat.

[Praematura]

To say that one of the problems is weak overseas demand and that there is nothing that can be done about it is not strictly correct.

Because of the coup many of the overseas markets that Thailand depends on are not playing ball. The EU has dropped Thailand from the GSP agreement as it no longer meets the criteria for inclusion but have not progressed a replacement free trade agreement due to the current situation. The TPP agreement includes Thailand's regional competitors - Vietnam, Malaysia, Singapore and rumour possibly China being involved - which will give them a strong advantage.

Global trade has been the biggest driver of growth for centuries and stimulating it through trade agreements is probably the only real game in play to restart growth in many countries which could leave Thailand behind if they are not allowed on the train.

In my reading of TPP one of the points is to provide a trading area that would exclude its advantages from China. Not that China could meet its supposedly rigorous human rights conditions.

Seems like geopolitically in SE Asia you have China with Laos, Cambodia and Thailand in its pocket vs Japan/USA with Vietnam, Philippines and Malaysia. Unless China can alienate more countries with claims in the South China Sea.

[bangkapi]

Central bank issuance of fractional reserve debt based fiat currencies is criminal and has allowed a handful of greedy families to buy and own virtually everything with their soon to be worthless or replaced paper promises.

Unfortunately, they know what is happening and are preparing the replacement currency options which they also will conjure.

The globalists won't be happy until they make slaves or serfs of everyone.

[Godders]

Banks are fattening their pocketbooks at the expense of the general economy and Thai borrowers.

As usual, no mention of the effect on savers. Or is thrift no longer considered a virtue worth encouraging in a world so deep in debt that only three dollars in every hundred is actually backed by a tangible asset?

I love the phrase in the article about Thais having to "leverage the household balance sheet". That's just a fancy way of saying they are spending more they have and borrowing more to sink ever deeper into debt. Why not, one might ask? After all, no government anywhere is encouraging its population to save and at every turn (including Thai Visa) there are advertisements offering a cheap (sic) loan for that latest gizmo you don't really need and, more importantly, can't afford.

You would have thought that one didn't need to be a financial expert to understand that if you continuously spend more than you earn and keep borrowing to stave off the day of reckoning, you are eventually certain to end up in the brown stuff. But that is what is happening across the entire planet, And the outcome is as predictable as night following day.

With a quadrillion-dollar derivatives bubble out there waiting to pop and the banks continuing to play Russian roulette with our money - most of it created out of thin air by central bank computers - another credit crunch is not merely possible but certain. It is not a matter of if, but only when. Many experts (yes, I know, but who else is there?) predict the crunch will come sooner rather than later - and this time around, there will be no taxpayer bailouts. No country can afford them,

Hence one of the latest blood-curdling EU "initiatives" - (the kind that have a nasty habit of mutating into a global pandemic) to make savers and investors, rather than taxpayers stump up if their bank is in danger of going to the wall. As in the notorious Cyprus national bail-out, millions of depositors face losing up to sixty per cent of what is in their accounts.

Is it mere coincidence that the words saver and leper both have two syllables? One can't help wondering, the way savers are treated by the banks - who of course actually control and manage the world's economy - and the political handmaidens their generous funding propels into office.

The other day, discussing the latest rock-bottom interest rates with a banker, I remarked wryly that the way things were going, savers would eventually receive no returns at all on their deposits - and probably end up having to pay banks for the privilege of letting them play lotto with their savings. He shuffled uncomfortably before replying: "I hate to tell you this, but I reckon you may well be right."

Not exactly words of comfort. But indubitably a much-needed wake-up call - not just for me, but everyone sleep-walking through life on the naive expectation that the gigantic financial institutions and political systems on which we rely for survival are actually working in our best interests.

The truth is we all are all living on borrowed money and borrowed time.

Like the Bard said, "Gather ye rosebuds. . . "

[fred Kubasa]

Thailand is in the middle of a field of offensive icebergs and there is no one on deck !

[Orac]

To say that one of the problems is weak overseas demand and that there is nothing that can be done about it is not strictly correct.

Because of the coup many of the overseas markets that Thailand depends on are not playing ball. The EU has dropped Thailand from the GSP agreement as it no longer meets the criteria for inclusion but have not progressed a replacement free trade agreement due to the current situation. The TPP agreement includes Thailand's regional competitors - Vietnam, Malaysia, Singapore and rumour possibly China being involved - which will give them a strong advantage.

Global trade has been the biggest driver of growth for centuries and stimulating it through trade agreements is probably the only real game in play to restart growth in many countries which could leave Thailand behind if they are not allowed on the train.

In my reading of TPP one of the points is to provide a trading area that would exclude its advantages from China. Not that China could meet its supposedly rigorous human rights conditions.

Seems like geopolitically in SE Asia you have China with Laos, Cambodia and Thailand in its pocket vs Japan/USA with Vietnam, Philippines and Malaysia. Unless China can alienate more countries with claims in the South China Sea.

China will gain dominance over the South China Sea at some point - it is key to them gaining regional hegemony similar to the US gaining hegemony over the Caribbean in the 19th century and the Munroe Doctrine. They would rather wait though if it is going to be a military confrontation while the build up and train their navy. Every man and his dog in the region is buying submarines at the moment while China is outbuilding the US at 8 to 1 of them so the longer they have, the better equipped they will be.

[MockingJay]

Experienced economist and not so experienced economist are walking down the road. They come across a pile of horse manure lying on the asphalt.

Experienced economist: "If you eat it I'll give you $20,000!"
Not so experienced economist runs his optimization problem and figures out he's better off eating it so he does and collects money.
Continuing along the same road they come across another pile of horse manure.
Not so experienced economist: "Now, if YOU eat this I’ll give YOU $20,000."
After evaluating the proposal experienced economist eats it and collects the money.
They go on. The not so experienced economist starts thinking: "Listen, we both have the same amount of money we had before, but we both ate horse manure. I don't see us being better off."
The experienced economist replies "Well, that's true, but you overlooked the fact that we've been just involved in $40,000 of trade."

[Thai at Heart]

Oil prices are supply side deflationary, demand side deflation is crippling. This whole entire mess came about over 15 years of China fixing it's exchange rate too low feeding the credit boom too low interest rates and the eventual collapse.

[Thai at Heart]

The writer is an economic illiterate. Japan has unsustainable debt? The 10 year Japanese Treasury bond currenty pays 0.53% interest, which means that bond buyers are quite happy to buy Japanese govt bonds.

lol there is only one buyer left - the BOJ. There are 2 possible outcomes 1) The BOJ keeps printing and buying everything up until the yen becomes worthless or 2) Interests rates are forced up by the market and the state defaults on its bond obligations.

The only way out for all these highly indebted nations is devaluation of their currencies. The one that has been by taking over exports for 30 years with a jigged exchange rate is China.

[Thai at Heart]

A deflationary burst is the inevitable result of irresponsible credit expansion.

Inevitable means there is no way to avoid it - there is nothing that can possibly be done to stop it.

This is global. Have a nice day.

In principle I agree,

In practice...

Stimulate the property market by allowing foreigners to buy land in Thailand.

Vietnam did it, they are booming- as is their educated manufacturing sector (smartphones).

Short term solutions are all tweaks, long term, invest in vocational education for the 1/3 population of functioning illiterates.

Oh yeah, invest in education for a workforce able to keep up with manufacturing global technological advances

Debt pricing is all screwed up. The piper will be paid eventually

[Balance]

If the banks lower borrowing costs more debt would be added. It is unlikely that Thailand consumers have the ability to spend the country out of mess. The same was true of the 2008 disaster in the U.S.; consumer spending tanked and whatever stimulus provided was used to pay down debt.

The sector of the Thai economy that is getting nothing but lip service is the SME's, and they are the source of GDP growth and tax revenue. A couple of years ago there was an announcement of the "strategic" sectors of the economy that would be given additional support. I think it maybe has gotten lost? Thailand may do well to consider a governmental structure based on the model of the U.S. Small Business Administration that offers a variety of services to deserving companies.

[Thai at Heart]

Thai SME pay taxes? Maybe in the form of family Mercedes. Thai SME are largely family businesses that internalise all their living costs into the business to pay little or no tax at all

[ratcatcher]

A deflationary burst is the inevitable result of irresponsible credit expansion.

Inevitable means there is no way to avoid it - there is nothing that can possibly be done to stop it.

This is global. Have a nice day.

In principle I agree,

In practice...

Stimulate the property market by allowing foreigners to buy land in Thailand.

Vietnam did it, they are booming- as is their educated manufacturing sector (smartphones).

Short term solutions are all tweaks, long term, invest in vocational education for the 1/3 population of functioning illiterates.

Oh yeah, invest in education for a workforce able to keep up with manufacturing global technological advances

I agree. They should allow foreign ownership of small second hand housing. The Thai have no interest in purchasing 2nd hand housing. There are now thousands of older homes on the market that do not sell.

The seller's will in turn use that money to purchase new properties. Therefore boosting the new housing projects.

It is a win win.

I would love to sell my property to purchase (2nd hand) in another area at a higher price.

But there is no market for 2nd hand housing in Thailand.

You buy. You stay. No way out.

My wife and i bought a 2nd hand house 6 years ago. Good condition, well maintained. We sold it 3 months ago and made about 30% over what we paid. Enough to build a new home.

Thai family bought it because of it's good clean condition. Many 2nd hand houses are left untended and the owners still expect top baht.

Your point about the surfeit of used housing is very valid. Most Thais want new. It is, of course, just a matter of face.

[Cake Monster]

Many financial institutions around the world are now asking questions of the quality of the Thai banking sectors debts.

Debts on the books for property developements with little, of no uptake over the last 18 months, would surely be pinging up by now. And this is only one of the reasons why the BOT have been reluctant to support the Baht to aid the sinking export sector.

[spidermike007]

It is utterly fascinating to live in a place where deflation is taking place, yet prices seem to be going up weekly.

[MESmith]

A deflationary burst is the inevitable result of irresponsible credit expansion.

Inevitable means there is no way to avoid it - there is nothing that can possibly be done to stop it.

This is global. Have a nice day.

In principle I agree,

In practice...

Stimulate the property market by allowing foreigners to buy land in Thailand.

Vietnam did it, they are booming- as is their educated manufacturing sector (smartphones).

Short term solutions are all tweaks, long term, invest in vocational education for the 1/3 population of functioning illiterates.

Oh yeah, invest in education for a workforce able to keep up with manufacturing global technological advances

I agree. They should allow foreign ownership of small second hand housing. The Thai have no interest in purchasing 2nd hand housing. There are now thousands of older homes on the market that do not sell.

The seller's will in turn use that money to purchase new properties. Therefore boosting the new housing projects.

It is a win win.

I would love to sell my property to purchase (2nd hand) in another area at a higher price.

But there is no market for 2nd hand housing in Thailand.

You buy. You stay. No way out.

My wife and i bought a 2nd hand house 6 years ago. Good condition, well maintained. We sold it 3 months ago and made about 30% over what we paid. Enough to build a new home.

Thai family bought it because of it's good clean condition. Many 2nd hand houses are left untended and the owners still expect top baht.

Your point about the surfeit of used housing is very valid. Most Thais want new. It is, of course, just a matter of face.

Introduce planning laws to protect "green belt" areas around cities, to stop uncontrolled building of new houses. Try to encourage people to buy second hand houses. Suburban sprawl around Chiang Mai is destroying the reason people want to live here. When I visit my home city in UK, very little has changed with regard to new development on green land in donkeys years.

[ScarpoFongness4U]

Thailand is not considered a real economy by US standard and us prefers Vietnam and Cambodia and even Burma over Thailand.

The Thai PM is being shunned in the west.

He ain't the pharoah of Egypt and he has a simmering Muslim problem

Not fun time to be pm

[Peterbkk7]

All these expensive cars, these overpriced condos, and the thais spending like there is no tomorrow...

They are so desperate trying to be someone they are not, trying to appear wealthier than they really are.

It all comes down to appearance. It is as if they are tryign to compensate for something. I dont know... lack of substance maybe?

Something's got to give.

Edited June 11, 2015 by Peterbkk7

[ratcatcher]

All these expensive cars, these overpriced condos, and the thais spending like there is no tomorrow...

They are so desperate trying to be someone they are not, trying to appear wealthier than they really are.

It all comes down to appearance. It is as if they are tryign to compensate for something. I dont know... lack of substance maybe?

Something's got to give.

Yes indeed,. these stupid Thais, when will they wake up and join the real world.

Something will certainly give, but it wont be as serious in this country.

http://news.sky.com/story/1384261/uk-households-spend-more-than-they-earn

http://www.moneytalksnews.com/study-19-percent-of-americans-spend-more-than-they-earn/

http://www.bnn.ca/News/2014/6/30/Households-spend-163-for-every-1-earned-while-assets-soar.aspx

http://www.brokernews.com.au/news/breaking-news/nearly-one-in-five-aussies-spending-more-than-they-earn-189063.aspx

[Anthony5]

For all the 'Contrarians' out there a 'Buyer's Market' is looming on the horizon. Great wealth can be made at these times in the economic cycle for the savvy investor with courage.

A savy investor can make money any time in any given situation.

[Thongkorn]

The Thai Baht has been to strong for a long time. They act like the Greek , if there is a shortage just put the prices up to balance out the loss. which has the opposite effect. then it goes round in a circle, again.

Edited June 11, 2015 by Thongkorn

[coulson]

All these expensive cars, these overpriced condos, and the thais spending like there is no tomorrow...

They are so desperate trying to be someone they are not, trying to appear wealthier than they really are.

It all comes down to appearance. It is as if they are tryign to compensate for something. I dont know... lack of substance maybe?

Something's got to give.

Yes indeed,. these stupid Thais, when will they wake up and join the real world.

Something will certainly give, but it wont be as serious in this country.

http://news.sky.com/story/1384261/uk-households-spend-more-than-they-earn

http://www.moneytalksnews.com/study-19-percent-of-americans-spend-more-than-they-earn/

http://www.bnn.ca/News/2014/6/30/Households-spend-163-for-every-1-earned-while-assets-soar.aspx

http://www.brokernews.com.au/news/breaking-news/nearly-one-in-five-aussies-spending-more-than-they-earn-189063.aspx

Correct.

[coulson]

For all the 'Contrarians' out there a 'Buyer's Market' is looming on the horizon. Great wealth can be made at these times in the economic cycle for the savvy investor with courage.

When all the middle of the road 3-5 million baht condos reduce by one million, where is the long term return? 100m down every soi are still places for 5-10,000 monthly rent, and that is the most sustainable market in a Country going through deflation rates. The money is being made off plans with a quick resell, those who stick around to lick up the dregs will end up paying for it.

If you haven't noticed, there are still good deals everywhere off Sukhumvit, they're just not on t'internet!

[ScarpoFongness4U]

The Thais are victims of western retail marketing, subliminal advertising and some not so subtle

The average Thai girl is being sold her insecurity from the skin industry

If they were to ask the average westerner they would learn that we do not find their attempt to over whiten themselves or have sugeries to look like girls we find unattractive

[coulson]

The Thais are victims of western retail marketing, subliminal advertising and some not so subtle

The average Thai girl is being sold her insecurity from the skin industry

If they were to ask the average westerner they would learn that we do not find their attempt to over whiten themselves or have sugeries to look like girls we find unattractive

Don't forget weight loss, despite obesity not really being an issue.

The average thai woman will be told she needs to lose weight, improve her dark/ blotchy skin and get a nose job within 50m of enetering any central plaza or similar local mall and by the time she gets home she starts to believe it.

[Orac]

The Thais are victims of western retail marketing, subliminal advertising and some not so subtle

The average Thai girl is being sold her insecurity from the skin industry

If they were to ask the average westerner they would learn that we do not find their attempt to over whiten themselves or have sugeries to look like girls we find unattractive

Don't forget weight loss, despite obesity not really being an issue.

The average thai woman will be told she needs to lose weight, improve her dark/ blotchy skin and get a nose job within 50m of enetering any central plaza or similar local mall and by the time she gets home she starts to believe it.

By the time she gets home? My wife must be below average as the reaction to these adverts and sales pitches is pretty much instant. I was taking piss out of some over the top advert for weight loss on one of those dubious digital TV channels the other day only to glance over at my wife to see her keying the number into her phone.

[Jeremy50]

All these expensive cars, these overpriced condos, and the thais spending like there is no tomorrow...

They are so desperate trying to be someone they are not, trying to appear wealthier than they really are.

It all comes down to appearance. It is as if they are tryign to compensate for something. I dont know... lack of substance maybe?

Something's got to give.

Books, learning, knowledge, wisdom, humility VS Gadgets, trinkets, baubles, pride, and face.