I’m sorry to say it’s your logic that is flawed.

“-97 was bad because the crisis started in Thailand
-today it’s going to be okay, because Thailand faces only outside events
-therefore, thailand is insulated”

First of all, look up what ‘insulated’ means. Secondly, you need to understand that the macroeconomic environment is very different this time around compared to the last crisis (this by no mean NECESSARILY implies that it will be less painful for Thailand during this ‘crisis’). I am sure you have sufficient knowledge about the last crisis. As such, surely you must agree with that at present Thailand will be able to withstand the current external shocks better than back in 1997-98 when the local economy was bloated with debt and inefficiencies. For one thing, the baht is not as distorted (if anything it’s the greenback that is overvalued). Negligible foreign-currency-denominated debts means Thailand can afford to let the local currency depreciate.

I am familiar with the book you have suggested. I also agree with you that both PER and profitability are reflections of the past. What you seem to have missed though is that stock markets across the globe have fallen roughly by the same amount (in percentage terms). The question is: why should the value of companies in CONTRACTING economies be falling LESS than companies in expanding economies (this comparison effectively removes the PER discrepancy as the declines are compared in percentage terms)? For that matter, may I remind you that many wise investors including Warren Buffett are of an opinion that investors tend to panic during times of stress just to realize after things have turned all right that they have been mere victims of overreaction. After all, it’s prudent to be cautious. But it’s foolish to panic and jump ship without being sure that the ship is really sinking.

I think you are exaggerating it too much by bringing up the Khmer rouge comment. Introducing such a tragic event to this discussion is not only irrelevant, but also an insult to the Cambodian people. Millions of innocent lives were lost, please do not trivialize it.

Back on unemployment, I agree with you on the willingness part. But consider this:

1) The agricultural sector in Thailand expanded in both absolute and relative terms in 2006 and 2007;

2) Thailand has been experiencing severe labor shortages in various agricultural sectors from seafood to rubber for the last 4 years; and

3) Hundreds of thousands of workers in Bangkok where about 70% of economic output is generated already have second jobs in the agricultural sector. (thus any increase in farm output prices will benefit them directly)

Together they mean that they are 1) the current commodity price levels provide a benign situation (This can be further substantiated by conducting a price analysis on recent statistics); and 2) there are jobs available in the agricultural sector. Granted some of these jobs will disappear in coming months, but the situation now is nowhere as bleak as back in late 1990s.

Having said that, I don’t think I’ve changed her words.

Don’t be panicky: it will not be like that. We experienced a 10 percent economic contraction in 1998, but it will certainly not be like that this time around for many reasons.

The problems did not originate here; we have only been affected [by outside events].

She draws a parallel between 97 and now.

I’m sorry but there aren’t many differents ways to understand this…

-97 was bad because the crisis started in Thailand
-today it’s going to be okay, because Thailand faces only outside events
-therefore, thailand is insulated

It’s a totally flawed logic.

Stock market.
Look at the chart. If you don’t call this a bubble… The SET is at 450.
http://thaicrisis.wordpress.com/2008/10/24/chart-thai-stock-exchange-5-years-wiped-out/

And I’m tired to hear again and again the same argument : PER are so cheap, buy stocks.
PERs are linked to… the past. PERs are a rear-view mirror. It’s meaningless. It’s for the people who believe in constant growth, and reproduction of past events.
You should read the books of Nassim Nicholas Taleb (Black Swan, Fooled by randomness…)

What are you going to do and to say if a company with a PER of 10 today, see its earnings divided by 2 next year ?

Do you believe that the current (starting only) crisis will have no effect on businesses and their bottom lines ?

Profits are going to melt like butter under the sun, it’s plain logic. Therefore, blue chips, small caps are still too expensive.

Read Is The Stock Market Cheap?, a brillant article from Mish.

Unemployment. I understand very well her message, and this is why I’m scared.
Again she’s using a totally idiotic logic : people in the cities loosing their job now could go back up country, it would be easy for them to farm because prices are higher… Sure. Khmer rouge style.

Ask a blue or white collar working since 10 years in Bangkok to go back into the rice fields…

The point is not to know if the market could absorb those new workers thanks to higher commodities prices… but if those workers would be WILLING and ABLE to do a farm job.

This is the only intelligent question to ask. And obviously, Tarisa can’t or doesn’t want to ask it.

For instance “The problem didn’t started in Thailand, therefore the country would be insulated ?”

Nowhere did she say that Thailand would be “insulated” from the current crisis. Being able to “withstand the shock” is very different from being completely protected from it. I hope you can see that the former implies exposure while the latter does not (or, at most, to a very limited extent).

On the stock market, you are utterly mistaken. Just because a stock market’s capitalization goes down does not necessarily imply that there has been a bubble. There is such a thing called ‘overreaction’. At currently levels, for example, Thai–and for that matter many Asian–stocks are pretty cheap considering their multiples and profitability. Yes, they profit levels will go down. But unlike their Western peers, the bulk of them have not been and will not be in the red (at least in the medium run).

On unemployment, it is obvious you have failed to understand her message. What you should have highlighted was this: “Although many farm prices, such as rice, rubber and corn, have declined, they are still higher than in the past.” Her point is that unlike during the last crisis where commodity prices were at low levels, present commodity prices are relatively fine. In case you are about to quote recent price collapses, please keep in mind that these declines were a result of record gains. Prices have merely restored to long-term levels.

I am not denying that the Thai elite has a vested interest in keeping the masses under their jackboots. However, I believe your interpretation of Tarisa’s interview is simply unfair.

I agree that elite are overconfident. but then it is understandable: they main (if not the only) concern was, is and ever will be – to make sure that they stuff their pockets to max while their bunch runs the country, and that all their relatives, “sponsors”, patrons and buddies prosper too, and perhaps even profit on ongoing economic crisis. never mind all those “stupid uneducated rurals” – screw them, let them handle themselves.

it was in 97/98 (and before), and it will be during this crisis too – nothing much changed really.

therefore, those “stupid uneducated” baan nork already take care of themselves – which perhaps is truly an actual ‘Thai model’ (unlike what Tarisa or elite consider as such). and I think it is quite relevant to your this post, especially to this part:

what does “find solutions” mean

apparently, villagers are not that stupid at all – even though they have never studied economics and finance in Oxford as Abhisit and Korn (whatever Tarisa’s education?).

I find it quite interesting. in fact, I recall reading the first mentioning of this “alternative money” phenomena back in 98-99 in newspaper. now apparently this matter surfaces again, and I bet villagers at very least would be able to PROTECT themselves from Thai Baht possible devaluations as well as their savings, however meager those might be (comparing, say, to the assets of Vejajiva family – BP recently posted about Abhisit’s dad Athasit being an independent director of CP )

so, here it is :

When It Comes to Cash,
A Thai Village Says, ‘Baht, Humbug!’
http://online.wsj.com/article/SB123128312320458913.html

One way to beat the world’s credit crisis: Start printing your own money…
The villagers of Santi Suk launched their currency, which they called “bia,” the local dialect word for “seedling,” in the wake of the 1997-98 crisis. At the time, many were struggling with debt problems and were receiving fewer and smaller remittances from relatives working in the Bangkok area because of the financial crisis.

Two young foreigners from international volunteer organizations, Canadian Jeff Powell and Dutchman Menno Salverda, visited the area and suggested the villagers adopt a local currency to better manage their problems.
[woops! again those stupid farangs ! ]

The villagers agreed…

“It was a big coup for us when the local rice mill began accepting it,” says Ms. Buasorn, the hangover expert. “The mill is the focal point of the local economy. It means other people now realize our money is a real alternative.“

meanwhile – let pop-Korn, Abheesit, Tarisa, Virichai (i.e. Tanit of CP) and others continue being in illusion that farmers are “stupid uneducated” buffoons. villagers at least always have something to eat – unlike middle class city dwellers (aka PAD participants and supporters) who will be hit THE MOST by this economic crisis AND by Abheesit & Co government’s policies …

Amazing Thailand indeed!
reconciliation, unity, blah blah blah …