Living In Thailand Blog
Thursday 18th December 2008
Thais tend to have a very insular view of the world. As a percentage of the total population, not many have travelled outside of Thailand. The majority of Thais I know in the south have not only never travelled outside the country, but they have never been to the north of Thailand either.
Their schooling has a strong focus on Thailand with little taught about the outside world. I think this is why some are so fearful and wary of foreigners: because they have absolutely no knowledge of them or where they come from. They're an unknown quantity.
Thais involved in the tourist trade have started to realise that tourist numbers are way down this year. Throughout the December to March farang season the figure could amount to three million.
Whenever I read about this in the Thai press the reasons cited are always internal ones. They blame the political turmoil and insurgency problems in the south, etc.
When the so-called People's Alliance for Democracy blocked the airport recently that really did affect tourism but, apart from that, nothing else has happened. Life goes on the same way in the tourist resorts.
Even when the airport was blocked, people could have flown in to Malaysia or Singapore and got a connecting flight or travelled overland to Phuket.
Don't the Thais realise that the world is facing the biggest set of economic problems since the 1930s? Foreigners are losing their jobs and getting their houses repossessed. I read recently about previously successful Americans who are now jobless, homeless, and living in their cars.
At such times, when people are worried about their survival, luxury items tend to go out the window and holidays to the Far East definitely count as a luxury item for most people. Why is this never cited by the Thai tourist industry?
The Thais suspect that foreign tourist numbers will remain exactly the same as previous years but instead of Thailand people will choose to go to Bali or Malaysia.
I disagree strongly. If people want to come to for a holiday in Thailand - and can afford it - they will still come. Malaysia is not a substitute for Thailand which is why more Malaysians than any other nationality visit Thailand each year. Worldwide I think every country will see less foreign tourists while we go through this recession.
Wednesday 17th December 2008
My thoughts below were either misconstrued or I didn't explain very well. For what it's worth, here is a further attempt at my simplistic view of the complex subject of economics. I have no formal training in economics but as it has become obvious that the 'experts' know nothing either, then what difference does formal training make?
In a healthy society, those who are able to, grow things, make things, or provide real services - doctors, dentists, teachers, technicians, mechanics, electricians, plumbers, etc.
Being civilised societies, we also take care of those who are too old or not well enough to work.
Borrowing and lending money is necessary because there are times when people don't have enough money to buy what they need. Not many of us can afford to buy a property with cash and companies may need to borrow money to start up or expand.
If we lend someone our car to drive, or our house to live in, we expect some remuneration. In the same way, if we lend money we expect something back. There is nothing wrong with this and at different stages of our lives we borrow or lend.
When I bought my first property almost 25 years ago I was a borrower. Interest rates were well into double figures at the time and I paid a lot of interest on my mortgage. As the years passed, I became an investor rather than a borrower.
I could have remained as a borrower but I decided upon a different way to live my life. I didn't want a huge house but wanted freedom later on in life.
When money is borrowed and lent we need people to facilitate that process. That again is quite healthy. However, when - as a society - we start concentrating on borrowing and lending money as a means to drive the economy - and stop making and growing things - that seems slightly unhealthy.
In recent years that is what the UK has done as manufacturing industries have closed and the financial services sector has grown. This is because it is seen as an easier and quicker way to make money.
When I talk about a 'money for nothing' culture I am not referring to people who have saved and invested for many years and now look to get a return on their hard work.
The 'buy to let' property craze that swept the UK a few years ago is a good example. Without lifting a finger or having to earn a penny, this was seen by some as a way to make money for nothing.
Banks were giving away special mortgages just for this purpose. The idea was that you bought a property with borrowed money, rented it out, and the rental income would pay for the mortgage repayments. Meanwhile, the property value would go up and you would make a nice profit - for nothing.
But what's the reality?
This might work for a while but after too many people jump on the 'money for nothing' bandwagon a bubble is created. The property rental market gets over-saturated and owners can't rent their properties.
They fall into arrears with their mortgage repayments and then the banks have a problem with bad loans. If the banks have repackaged these loans up into investment vehicles, then investors catch a cold as well.
It all starts with greed. People see this type of thing as a way to get money for nothing, banks are happy to lend because the interest they receive is easy money, and governments get lots of tax revenues.
Markets are driven by fear and greed, and when the going is good then greed prevails. Regulators turn a blind eye because no one wants to spoil the party. But eventually it all ends in tears, as we have seen recently.
I'm upset because as an investor who had worked hard before investing the system has failed me. The system has succumbed to greed and allowed things to get out of control, thus now I (and many other sensible investors) are suffering.
I have given just one example but the same thing has happened in many areas. When the going was good, investment bankers were making a fortune through mergers and acquisitions without actually doing anything. How can this be healthy?
The welfare system has also been abused. It's great that in a civilised society there is a safety net for those who cannot work but we have allowed far too many people to become dependent on state handouts.
As I said below, the way of thinking in Asia is quite different. Apart from the few Thais who spend their time trying to cheat foreigners, most realise they have to do real work to survive. There is no dependency on the welfare state either, because there isn't really a welfare state.
By decrying the 'money for nothing' culture and then complaining that I am getting less return on my investments I do not regard this as being hypocritical.
As I said above, borrowing and lending is a normal part of the economy and whereas I used to be a borrower, I am now (in the form of an investor) a lender. When people want to take out a mortgage to buy a property the money needs to come from somewhere and that's why investors are needed.
Because the system has been allowed to fail it is now the prudent savers and investors who are being made to suffer. By not being greedy they didn't cause the mess but with falling equity values and low interest rates it is them who have been kicked in the teeth.
Sunday 14th December 2008
As the old year draws to a close, here is a brief personal update and a quick look back at 2008. In a couple of weeks I will be able to say goodbye to 2008, and good riddance. The only good thing about 2008 is that if I am ever asked in future what my worst year was, I will be able to answer easily and quickly.
I am still in Thailand and doing a lot better than I was a few months ago. Let's take a quick look back at the events of the last year.
The year didn't get off to a great start. Following the economic downturn that began halfway through 2007, I was sure that there would be a recovery in January.
September and October are notoriously bad stock market months but January is generally a good one. Not in 2008 though as January proved to be a worse month that anything in 2007 had thrown at us.
It was also in the first few days of January that there was a particularly nasty incident in the apartment building where I live. The room next door was broken into very early one morning and the single girl who stayed there was subjected to a brutal beating, an attempted rape, and theft.
Apart from the physical and psychological damage she suffered, the rapist-thief-thug also stole her laptop on which she was writing her Master's Degree thesis. The police caught him and recovered her laptop. He had reformatted the hard drive but she took it to a specialist who was able to recover some (but not all) of her thesis.
The incident was upsetting but there was another downside. She moved out of the room and shortly afterwards the neighbour from hell arrived.
My new neighbour was a 'Coyote' dancer who arrived home from work between 2am and 3am every morning and consistently woke me up. Sometimes there would be another girl who she would fight with and many times I would wake up feeling awful after yet another broken night's sleep.
In one fight she fell from the balcony and broke her leg. There was also a motley cast of characters using her room, all of whom loved making a lot of noise. She eventually went in August but it was eight months of sheer hell.
It was also in August that I experienced a hard disk failure - the first I had ever had in 25 years of using a computer. It was an external drive and I lost a few months' worth of photos.
Five days later the hard drive in my laptop started making a clacking sound, rendering my laptop useless. After never experiencing a hard drive failure, I had two in less than a week. The second one affected me badly.
Also, around this time I heard that my teaching contract would not be extended for a further year. With my visa and work permit about to expire at the end of September this was not good news.
The economy had only got worse throughout the year. My savings and investments weren't looking good; interest rates had continued to fall; and the pound to Baht exchange rate wasn't looking too healthy.
My first piece of good news in 2008 came in September when I found another job. Unlike my old employer, the new organisation was very familiar with visas and work permits for foreign employees. Not only did they do all the paperwork, they also paid the fees. Previously, I had to do everything myself and I also paid for everything.
They got everything done just before my old visa expired - much to my relief. With my new visa and work permit extension in hand, I headed down to Singapore to catch up with my brother and while there attended the Singapore Grand Prix.
I also used the trip to get all my computer and camera problems sorted out. It was a busy trip - and quite expensive - but very productive.
I felt very different when I came back to Thailand without any problems, having had so many problems the month previously. I had a completely stress-free October, not having to start work until November and having nothing to worry about. It was just like being a tourist in Thailand again.
The new job is great. I am working more hours than I used to but the extra salary means that I can survive without having to use my UK income.
The only downside now is the ongoing economic problems. If I am forced to draw money from the UK, the exchange rate is terrible. At the end of 2004 one UK pound was worth over 73 Baht in ATM transactions but in November 2008 I was getting less than 50.
My equity investments show no signs of recovering and with UK interest rates falling to their lowest level in 57 years, I am getting very little return for my cash savings.
At least I am able to work in Thailand and the state of the economy means that my Thai salary is worth a lot more to me now than it used to be. However, expats living in Thailand who rely only on an income from abroad will no doubt feel a lot worse off now.
What went wrong?
This has been analysed to death in the last year and now - with the benefit of hindsight - there is no shortage of experts. However, the best analysis I think I have seen is from Evelyn de Rothschild who described the problem quite simply as follows.
"Ethics - we have lost sight of an honest day's work for an honest day's pay."
When I think about recent years, so many Westerners have lost sight of this. A few years ago when the corporate world was going mad with mergers and acquisitions, investment banks were making a fortune from this activity but not creating anything of value. Money for nothing. As a result, 2008 saw the end of investment banking as we know it. Only Goldman Sachs and Morgan Stanley survive and they have both changed their status to become bank holding companies.
With the various bubbles that have occurred, people were making money without doing anything or creating anything and they thought it would last forever.
In the UK there was a 'buy-to-let' fad where it became trendy to buy a property using borrowed money and let it out. The idea was that earned income from rent would cover mortgage repayments and as the price of the property went up there would be a fat profit for the owner. Money for nothing.
Some people believed they could live an easy life of hedonism in Thailand or elsewhere and fund their lifestyle just by completing a couple of on-line surveys a day. Con-artists were trying to sell this lie to suckers to make easy money. Money for nothing.
The Internet has played a big part in this idea of 'money for nothing'. Contextual advertising has gone crazy because of the notion that by setting up a web site it is an easy way to make lots of easy money without doing, or making, anything useful.
But Asia is different. The Chinese have continued to manufacture things and Thailand continues to export a huge amount of food. The welfare system is also very different here and Thais don't expect anything for nothing.
Most Thais work because they know they will go hungry if they don't. There are no soft government policies to act as a safety net and Thais tend to do real work instead of trying to get money for nothing.
It's not difficult really to see why the balance of power has shifted eastwards in recent years.
Until Westerners get used to thinking again that they need to do an honest day's work for an honest day's pay, things won't get any better. A few people will always find ways to get rich quick but the economy can't survive if too may people think that way.
Western governments also have to reassess welfare systems - which the UK government is in the process of doing.
So-called 'Political Correctness' is also something that has led to the demise of the Western World. Western governments have just handed out too much money to be seen to be 'Politically Correct'. This is something else that doesn't exist in Asia.
With their protectionist policies, the Asians can sometimes appear to be quite racist but they do what is best for their own countries. Foreigners can't buy land in Thailand and are restricted from entering certain professions because Thailand knows that by allowing these things, it would hurt Thais.
Western countries - especially the UK - should do the same but they don't because such policies would be seen to be racist and not 'Politically Correct'. Be fair when you can but look after your own people first.
The events of the past 18 months have been described variously as 'tumultuous', an 'economic tsunami', and the 'worst set of economic events since the 1930s'.
Few people have been unaffected - including myself - and what has happened has hurt a lot of people. However, it had to happen. Things just couldn't continue as they were. It was crazy.
Many young people now have never experienced real hardship as people did in my parents' generation. When wars were fought 70 years ago there was a real chance that a bomb could land on your house. Now we just watch it on TV. After WW2 Brits had to endure years of rationing as the economy was built up.
When the Internet took off a few years ago people were encouraged to join web sites and leave a motto. We started seeing things such as 'Live your dreams' as if our only responsibility in life was making sure that personally we had a good time. Hedonism was god.
Money? If you didn't have enough money, just borrow it. There was a culture of borrowing that everyone bought in to. The lenders were happy to lend because they made money for nothing through interest, governments were happy because of the tax revenues that came in, and lenders were happy because they could spend and 'live their dreams' without having to work.
We borrowed and borrowed and borrowed as if those debts would never need to be repaid. But when the bubble burst last year the sound it made was an excruciatingly loud bang.
I feel quite angry at what has happened because I have always maintained a sensible fiscal approach yet I have been punished by other people's greed. My savings and investments over the years are worth a lot less now.
It's a difficult call as to whether taxpayers should be made responsible to bail out failed companies. If we want capitalism and free markets then companies should be allowed to fail. But if we don't help then the whole system can collapse.
My own financial circumstances have not actually changed very much this year because since arriving in Thailand I have always lived well below my means. However, what has changed significantly are my plans for the future.
As things were 18 months ago, it would have been very easy for me to cash in all my investments at 50, get interest from that money, and live in Thailand very easily - and very well - forever more. When I get to 50 in just under two years time I'm now not so sure.
When that time comes I will have to reassess the situation based on my company pension, interest rates, exchange rates, and various other factors.
I believe that 2009 will see more turmoil and bad news. Some are saying that a recovery will take place in 2010 but others are saying it won't happen until 2011. Who really knows?
The economic outlook at the beginning of 2007 was that everything would continue to be rosy throughout 2007 and 2008, with a downturn in 2009. Wrong.
At the beginning of 2008, the 'experts' at my stockbrokers were predicting the FTSE index would end up at 6,900 by the end of 2008. Wrong. Very, very wrong. As I said above, who really knows?
I find myself very much in survival mode at the moment, just wanting to get through these difficult times while remaining as unscathed as possible. In 2009 I have no plans other than to continue working in Thailand while trying to survive on my Thai salary.
I had considered reviving this blog but I have enjoyed the freedom of not feeling obliged to write here regularly. One person suggested I had run out of steam but that isn't the case. While living in Thailand there is never any shortage of things to write about.
Thai politics reached an all-time low in 2008. It was difficult to imagine it could sink any lower but it did. I could talk all day about Thai cultural behaviour; and the Thai written and spoken language is another subject I can talk about with great gusto.
I definitely haven't run out of steam but find myself wanting to focus my energy on different things these days. Depending how I feel in 2009, I may start writing here again.
Best wishes for Christmas and the New Year.
Thailand is an incredibly photogenic country, both for its landscapes and its people. Regardless of whether you enjoy large Asian cities, beaches and islands, or rice fields and mountains, Thailand has something for you and it is a dream destination for photographers.
One of the great things about visiting Thailand is that hotels are plentiful and a lot cheaper than in most other countries. Each link on the right will take you to the relevant page on the Agoda website where you can see photos, read reviews, and book on-line. I use Agoda to book all of my own hotels in Thailand and the Southeast Asia region. Agoda hotel rates are usually always the lowest and I have received good customer service, therefore I am happy to recommend the company to other people. Here is some analysis I did regarding booking hotels in Southeast Asia.
Booking.com used to be more expensive than Agoda, but when I have checked hotel prices recently I have found their rates to be quite competitive. Unlike Agoda, you don't need to pay at the time of booking with Booking.com - you can simply pay at the hotel when you check in. Also, Booking.com show you total prices whereas Agoda show you a price and then add on 17% for tax and service charge.
If you want to compare prices between different on-line travel agents (OTAs) for a specific hotel, you can use a company such as HotelsCombined.
Images of Thailand