Northern Eye: Riding hard times

Bob Kimmins

For us ordinary folk, it's difficult to relate things like trade deficits, balance of payments and GDP directly with everyday life, but inflation, interest rates and currency exchange are more likely to hit home.

After a series of crippling industrial strikes during the 1970s, inflation in Britain topped 20 per cent, with interest rates not far behind. At the end of the decade, the country hit recession and the list of unemployed increased by over 100,000.

The situation prompted a change of government, and new prime minister Margaret Thatcher put popularity low on the agenda. Insisting that foul-tasting medicine was needed to cure a sick economy, her remedy came in the form of pay freezes, hard work and cuts in public spending, and anyone objecting to this very harsh treatment was referred to as a "Moaning Minnie".

As a salesman, that period of time was a hard one for me, with rising prices and growing debts ruining consumer confidence. My market had been declining for years and initially got worse when Maggie took over. I had needed to supplement my income, and with everyone complaining of increasing costs, I dreamt up a way of cutting them.

I bought up bankrupt stock and sold low quantities into small retail outlets below wholesale prices. Everyone was happy. Wholesalers were glad to clear warehouse space without losing money, retailers bought and sold at promotional prices, and I made a bundle from the slimmest of profit margins.

By the mid-1980s, the British economy was booming again, with the property market reaching new heights. And I managed to sell off my house at 70 per cent more than I paid for it.

Welcome to Thailand

I invested my savings and profit from the house in an offshore account and started living off the interest in Thailand.

When I arrived, the country's economic growth rate was well over nine per cent per annum. Stocks and shares were bullish, and exports and tourism looked set to soar for evermore.

Investor confidence was high at this time, and as Thais and foreigners took advantage of a buoyant stock market, I was encouraged to follow suit. But there were too many imponderables - nothing substantial to back up the trend and things just didn't seem to add up.

Thailand's agricultural force seemed sadly neglected in favour of less sustainable interests, with an absence of home-grown heavy industry such as aircraft, automobiles and so on. Furthermore, distribution of wealth and development was extremely poor and the country's infrastructure totally inadequate.

While the property market was also booming, I saw creation of an oversupply: construction outweighed demand and ghost towns began materialising around Chiang Mai. My gut feeling warned me of a bubble economy.

Sure enough, when push came to shove in 1997, the Thai government blasted the baht into oblivion. The stock market collapsed, firms went bankrupt, jobs were lost and the IMF picked up the pieces.

I struck lucky again. The Thai baht exchange rate crashed by more than 100 per cent, and by keeping my capital out of the country, the difference refunded me every satang I'd spent since I got here.

Any answers now?

If people believed that the Thai economy couldn't get worse than it was 10 years ago, just look at today. Four years after "1997" and the initial grind towards economic recovery, an impatient electorate voted Thai Rak Thai into government.

Once in power, it set about saving the Thai economy by taking a different rout to Maggie. Instead of showing restraint and diligence, it put generous populist policies into action.

While the cash handouts and easy credit increased spending power, and stimulated the economy for a while, it later inflicted a record number of household debts. Put that together with rising inflation, and very low interest rates for small investors, and we get reduced consumer confidence and a receding economy.

And of course, little has changed when it comes to any major business and industrial development in the country.

With petrol prices now going through the roof and the cost of food eating up the bank balance, the poor are getting poorer and so too is the middle class. Currently, my monthly supply of petrol costs me very much more than the garage attendant's salary.

I might have been lucky in the 1970s, 1980s and 1990s, but I'm desperately waiting for something to turn up in this decade. If I knew where to find any bankrupt stock, I have no idea where to offload it, and why would anyone buy my house when there's millions to choose from in Chiang Mai?

It might be sinful to wish for another crash in the baht, but that doesn't look likely to happen anyway. So, it seems there's nothing left to do but grin and bear it with the rest of you.