20 years ago

[reader]

Japan's NHK network remembers the Thai financial crisis:

 

https://www3.nhk.or.jp/nhkworld/en/news/videos/20170721201747589/

[vinapu]

Sathorn Unique shell prominently featured in video can be seen just beside Saphai Taksin BTS station  and is famous as a place ChristianPFC climbed and got bitten by the wasps in the process .

 

Now after Swedish expat hanged himself there in end of 2014 building is apparently inaccessible, bribes or not 

[PeterRS]

I doubt if anyone who lived through that particular crash can ever forget it. For years Asia had led an almost miraculous economic boom. When criticised about the regions crony capitalism, Singapores founding Prime Minister had been fond of admonishing the west for not recognising that democracies  are not all the same. Asia adopts capitalism with Asian characteristics, he was fond of saying.

 

When boom turned to bust he was forced to eat his words. When the Thai economy crashed it had been a disaster waiting to happen. Asian economies were propped up greatly by crony capitalism, property bubbles and unhedged low interest foreign currency borrowings to avoid high interest rates at home. I met one Thai in 1991 who had been a bar boy in the mid 1980s. By the early 1990s he owned three condos, all with borrowed money. The baht was fixed to the US$ at 25:1 but interest rates were high. So major Thai corporations and most wealthy individuals borrowed massive amounts of dollars and Swiss francs at something like 2% instead of the much higher baht rate. 

 

The Thai government could have stepped in to lower its rate or reduce the dollar peg. Crony capitalism meant that would not be allowed to happen.Those same government ministers were on boards of companies and had themselves substantial overseas borrowings as had their friends. So those idiots who should have been jailed opted to spend the countrys foreign exchange reserves to prop up the baht. George Soros and his colleagues had mounted an attack on the baht in the spring of 1997 which the Thais had managed to fend off. With almost no money in the kitty, when the next wave of attacks came at the end of June, there was no money left. In all 90% of the countrys foreign exchange was wiped out.

 

The Thais were in shock. Few realized the austerity measures that were to come after the IMF loan was approved. Few realized the baht would lose 50% of its value in less than six months. With the exception of China every other Asian country devalued their currencies by more than 20%. Banks and finance companies around the region collapsed, property companies went bust by the truckload, stock markets collapsed, the government in Hong Kong at one time raised bank lending rates to 300% to fend of speculative attacks and would later spend over $100 billion purchasing its own shares when speculators went on a short-selling spree. The speculators retired bruised and very much out of pocket.

 

What happened should have ben a wake-up call to the west. It remained asleep. So the 2008 world crisis occurred and many are still suffering. It is an absolute certainty it will happen again. Greed is universal.

[vinapu]

 

. Few realized the baht would lose 50% of its value in less than six months.....

.....leaving lots of tourist happy in it's wake as Patpong's girls and boys all of the sudden being 50 % more affordable ?

 

I guess it took a while before tips started creeping up 

[Guest]

Economic crises will continue to happen every few years. 

However, the most severely affected countries & regions may vary. 

 

One thing is clear, any one investing in Asia after this would have made a fortune.

[Alexx]

Right. Let's hope the next investment opportunity will open up soon.