Are we in for a turbulent year?

[chuckwoww]

You really think they are looking more than 2 weeks ahead?

[Gadfly]

Do they plan 2 weeks ahead? Maybe, but right now they are reeling.

 

Many in the old Bangkok elite do feel that they "unfairly" lost control of a few institutions and assets during the 1997 financial crisis and feel they are now justified in recovering those assets and institutions. In this sense, they do want to essentially expropriate the property of foreigners.

 

Some members of the old elited basically come right out and say it, and you don't even need to read or understand Thai to hear this. A member of the family that owns Bangkok Bank circulates an English language newsletter where she basically telegraphs this message and old elite's myth about what caused the 1997 finanicial meltdown here.

 

But I don't think there is a clever plan to tank the Thai economy and then buy up assets cheap to acheive these goals. Instead, the bizzare economic and anti-foreigner measures of this government are intended to acheive those goals. Pass new laws and regulations that compel foreigners to sell off their holdings here to Thais.

 

To support these measures a mythology about the causes of the 1997 crisis has been created where that crisis was caused by predatory foreigners, generally currency speculators and often Jewish finaniciers, who conspiried together to destroy an otherwise healthy Thai economy. According to this mythology, the "Thais" - meaning members of the old elite - were forced to sell their assets "too cheap" to rapacious foreigners. There are various variations of this myth, but the basic story is the same: predatory foreigners have been taking advantage of Thais and Thailand and its time for this to stop.

 

If you are a foreign business person operating here, you will notice a tremendous gap between (a) this myth and ( the reality of conducting business in Thailand.

 

I have been here since 1994, I saw the end of the good times, the corrupt lending, the financial collapse, the half-hearted and very limited implimentation of IMF and World Bank reforms. The myth is pure BS, but to many members of the old guard oy is now accepted and unquestionable dogma.

 

The old elite thrived on monopolistic measures that required keeping competition out. Corruption, protectionist measures and selective enforcement of Thai laws against foreign competitors had and have been used to keep the competition out. Because questioning these practices requires questioning an unquestionable dogma, these measures are rarely, if ever, really questioned or called what they really are - at least by those in power.

 

But in an economy where 70% of GDP growth is based on exports and a world that is increasingly globalized, these measures are simply not sustainable, and that is reflected in the stagnation of the Thai economy.

 

But this will not stop the old elites from trying. This is why you see the bizarre alliance between (a) these vested and monied elites and ( anti-globalization activists. The latter don't seem to have a clue about the real agenda of the former or how things acutally work here.

 

I never liked Mr. Thaksin, but he was shrewd in the way he identified and took personal advantage of this Thai conundrum. He was elected on a platform of economic nationalism (some of us were posting about this when he was elected), but quickly abandoned that policy and many of his old elite allies after he was elected. It didn't work (we see that now). The old elite will never forgive him for that.

 

By actually doing something for poor, he developed a tremendous power base. This further pissed off the old elite.

 

He was tremendously corrupt, but he kept the spoils for himself and his cronies rather than sharing it with a broader range of vested interests here. That really pissed off the old elite.

 

I don't know all of this will work itself out, but I do expect a turbulet year.

[Old Hippie]

Even the "Big guy" is saying he expects problems...

 

On the punter front...seems more supply of whores, less demand, and yet prices are on the up...just seems to defy logic in many aspects...

[Gadfly]

On the punter front...seems more supply of whores, less demand, and yet prices are on the up...just seems to defy logic in many aspects...

 

I haven't noticed a price increase by the girls (which doesn't mean it hasn't happened), but I have noticed that certain bars in Soi Cowboy are charging more for drinks. I think the increase in the prices for drinks in Soi Cowboy can be attributed to the different policies that apply to NEP and Soi Cowboy.

 

Incidentally, for a Friday (even in low season), NEP seemed very quiet yesterday. Soi Cowboy seemed much busier.

 

In terms of the turbulence, I think we already beginning to see some of the consequences, but then I do have a bias in all of this.

[Neo]

While Cowboy drink prices are sailing up to 140, meanwhile Nana prices are sailing up to 135 (for the longest time Nana seems to have a thing about prices ending in 5 so they can leave a bigger wad of change on the bin, hoping you'll leave it behind--at least that's my theory). Not much difference really and both seem unjustifiably high. Through it all patpong has remained steady at 100, before that patpong was steady at 90 for about 5 years. You can also get 60 baht drafts including Sing and Tiger all night long in patpong beer bars. I definitely notice a difference in my wallet at the end of a night in patpong. Oh, cheaper barfines too at patpong? Yes.

 

[RayRay]

While Cowboy drink prices are sailing up to 140, meanwhile Nana prices are sailing up to 135

 

This is a good point. When you take the time to figure it out, over $4.00 per beer ain't exactly cheap.

 

I have noticed the number of times I go out in a given time frame has dramatically decreased. I feel a lot better not being hung over all the time and my bank balance appreciates it as well.

 

[Flashermac]

<< predatory foreigners have been taking advantage of Thais and Thailand and its time for this to stop. >>

 

 

Kick out the Chinese???

 

[Central Scrutinizer]

Flashermac,

 

Yep, kick them out, all the invading Chinese hordes. :-) Recently reading, 'Taksin: The Business of Politics in Thailand'. Some interesting history of the Chinese immigrations to Thailand over the centuries, and how this was perceived by the native Thai, in this book by Pasuk Phongpaichit and Chris Baker (ISBN 974-9575-55-5). They were not always welcome or liked by the Thais. Many seem to have tried to 'out-Thai' the Thai, and in this case, Thailand, have assimilated themselves very well into the native population, much more so than in other areas of the world where they have spread to. There seems, according to the book, to be many Thai/Chinese who are starting to celebrate their 'Chinese-ness' much more now, after generations of trying to assimilate and step away from their Chinese heritage and culture to be seen as Thai. Now they have Chinese Pride, and many flaunt their heritage, rather than tone it down. Because now, in Thailand, it is seen as cool to have Chinese blood and or be Chinese, and it does not any longer hurt business, but rather can help.

 

Cent

[Central Scrutinizer]

I don't know if we are headed for a turbulent year (but I expect so, given the signs), but, I do think we may well be in for a turbulent week or three starting next week!

 

Cent

[Gadfly]

Recently reading, 'Taksin: The Business of Politics in Thailand'. Some interesting history of the Chinese immigrations to Thailand over the centuries, and how this was perceived by the native Thai, in this book by Pasuk Phongpaichit and Chris Baker (ISBN 974-9575-55-5).

 

This is an excellent book, even though I don't agree with Chris over everything he says in the book or some of his other books. Incidentally, Chris speaks at BCCT (British Chamber of Commerce in Thailand) functions occasionally. Last time I heard him speak at a BCCT function (not so long ago) he was predicting a turbulent year. Actually, everyone on the panel said that things would get worse before they got better (that meets my own definition of a turbulent year).

 

Chris and others have also identified 4-5% GDP growth as a tripping point for likely social problems, such as unemployment (which is underreported in Thailand). That is, if GDP growth rate dips below these levels, unemployment and the risk of polictical and social unrest increases substantially. These are obviously rough figures, but Chris puts the number at 5%, while I have always thought 4% was the more significant number (as unlikely as this may seem, I am actually more optomistic about Thailand's resiliency than some).

 

Most current forecasts put the lower end of the range of forecasted GDP growth below 4%. I think all put it below 5%, and some put the higher end below 5%. Some go down to 3% on the lower end. None of this, of course, is exact, but two things are worth highlighting: (1) they are all below or, at best, within the range of the 4-5% trigger points identified before current events and the current decline (that is, no one is making up these trigger points after the numbers came in to justify concerns about social unrest); (2) the trend in GDP forecasts has been down (that is, each GDP forecast for Thailand has generally been lower than the last, making the most recent forecasts the most pessimistic).

 

If you go to some of the panel discussions (including the FCCT) you will hear another theory about what is happening here vis-a-vis Thailand's acriminous relationship with the foreign business community. I see it as supplementary rather than conflicting with my own views. Basically it goes like this: this government is so focused on making sure Thaksin doesn't come back and establishing its own survival that it hasn't taken other considerations into account; it's too preoccupied with these matters. I think there is some truth to this, but I also think there is a bit more to the anti-foreign business measures.

 

The preoccupation with establishing legitimacy has led to some tremendous blunders. The "if Thaksin was for it, we are against it" approach to policy does explain some of the blunders. But it doesn't explain all the blunders. I suspect the need to gain support from the old Bangkok elite and allowing them to advance their own agenda - even when it is clearly detrimental to the interests of the country as whole - also explains a good deal of what we are seeing.

 

To put this in perspective, ask yourself the following: how many Thais, particularly the farmers but even members of the middle class, make the connection between, say, (a) changing the Foreign Business Act so that it criminalizes structures that are legal under current law and ( the decline in GDP? How many here do?

 

Everyone is pre-occupied with the Baht's appreciation, and they haven't noticed that factory utilization is closing in on full capacity and investment is down, which means that capacity is not expanding. To keep GDP up, Thailand needs more investment, and enacting laws that will essentially require compulsory divestiture of foreign holdings in Thai businesses is not exactly conducive to attracting investment.

 

If you read the local English langauge press, they generally won't make the direct connection, but instead refer to foreign investors "misunderstanding" of the new policies (how many times have we heard this claim about Thai exceptionalism?) or vague references to new policies without any real insight or analysis of those new policies.

 

The best assessment I have seen is in the World Bank report for 2007; the Overview of World Bank 2007 Report on Thailand is only 7 pages long, easy to read and the last few pages do a good job of making the connection that the local press fails to make.

 

Even if you don't like the World Bank or don't like Paul Wolfowitz (really a separate issue, and I didn't like him either, but I do think he was fundamentally right on the corruption issue, which seems a bit ironic now), the report provide an easy to read and good assessment of Thailand's economic predicament.