Extraordinary Genius

Chapter 901 – Many reasons

A country is similar to a company. When the country has limited products, it’s easy to make losses when the economy is not doing well. The Government had to inject funds into the economy to make up for the losses.

This method is not wrong, but there are two crucial factors. First, can the injected fund be sustainable? Secondly, the fund is injected into the economy must increase the country’s exportation abilities and lowered its future losses.

But the Thai Government can only achieve the first point. They could get investments from Japan, but their exportation got lowered.

Thailand’s main exported products are electronics. Most of the electronic components imported by China were from Thailand and other Southeast Asia countries.

But from the start of last year, the global demand for electronic products had dropped significantly. Thailand’s electronics exportation could not maintain even with the increased trade with China. Thailand’s trade dropped from 8.2% to 3%.

That means Thailand’s exports might seem to be doing well, but they are losing money.

Also, most of Thailand’s electronic factories were set up by Japanese companies. The labor cost and land are very cheap in Thailand, and it creates a false impression that Thailand is a world-class electronic component manufacturing country. But these factories are all Japanese electronic companies’ subcontractors.

Even with such high investments, the Thai Government is still making losses every year. The GDP might be high, but the country did not make any money. Most of the money is taken away by foreign investors, especially Japanese companies.

Sony, Panasonic, AIWA, and even the Sixth Sense Company have factories in Thailand. Not only the cost of setting up a factory is low, but the operational cost is also meager, and the Government also offered attractive subsidies.

With more factories, the demand for manpower will increase, and the workers’ salaries will increase. Thailand’s workers’ salaries had increased by more than ten times over the past ten years. When the workers’ salaries increase, companies that require massive manpower will lose its competitiveness.

Shoes, clothing, etc. were formerly Thailand’s main exportation products. But as most of these factories closed down, the export also drops.

This information and data were gathered by Feng Yu’s men, and Feng Yu understand why Thailand’s financial system can collapse so fast.

Thailand’s Government is operating under losses, and the average debt per person is more than 1,500 USD. But the Thais are still spending their money lavishly. European perfume, expensive wine, cars, watches, etc. were imported into Thailand.

Thailand, being the world’s third importer of Mercedes Benz, showed how the Thais spend their money. Fu Guangzheng had thought of selling Songjiang Motors vehicles to Thailand, but the dealers in Thailand were not interested. Only luxury brands can sell well in Thailand. The mid-range segment is taken up by Japanese brands.

The Thais were satisfied with their lives and felt their country is developing fast. They even look down on China, because their average income is higher than the Chinese.

After the Thais become wealthy, they start to spend on luxury items and also invest in the stock market. Most people in Thailand invested in shares. Regardless of teachers, workers, drivers, and even full-time housewives start buying shares. The stock market is rising, and everyone thought they could earn big bucks when they enter the stock market.

The deposits in banks got lesser, and everyone took out their savings to invest in the stock market. Even people even got loans to buy shares, as they felt the returns from the stock market is more than the interest rates.

Thailand’s financial institutes also got loans in large amounts from the banks. The amount they invested in the stock market was so significant that they could manipulate the shares to profit from it.

The banks gave out more and more loans, and people deposited lesser and lesser with the banks. As a result, banks can only increase their loan interest rates. But despite the higher interest rates, it did not stop people from getting loans. Annual interest of 17%? Never mind! I will get that loan!

The returns from investing in properties and shares can cover the interest within a few months! This is no longer investing. It had become speculation!

The interest rates for loans had increased, and some companies could not afford the interest. As a result, their productions were affected and could not export their products overseas, thus, lowering Thailand’s total exportation.

When other countries got wealthy, they will invest in their country’s basic structure, like education. But Thailand’s prosperity is only on the surface. The Government is making losses every year and does not have money for education.

Thailand’s education system and technology are way below the rest of the countries in Southeast Asia. Thailand is in the last position in Asia.

Without technology and a sound education system, the country will not have engineers. The critical high tech industries in Thailand cannot be developed. No country can become dominant if it does not have advance technology. That’s why Thailand’s economy might be doing well, but it is never a stable country.

Simply put it. Thailand is neither here nor there. They do not have hi-tech industries, and their traditional industries are losing competitiveness. It’s unavoidable for their economy to collapse.

The Thai Government is not aware of these problems?

Of course not. The Thai Government is aware of these problems, but they don’t have a solution. Their exportation is getting worse and Thai Baht is facing depreciation. If Thai Baht depreciates, Thailand’s losses will be even greater.

The Thai Government had no choice but to intervene in its financial market. They must stabilize their currency. However, when the Government of a country interferes with its financial market, it means that the country’s financial market has a severe issue. The country’s economy might collapse.

Soros and his gang also noticed this. They still had not to go all out, and the Thai Government had stepped in to interfere. If they attack Thailand’s financial market with their full power, can the Thai Government stop them?

Thailand’s banks do not have money to help the economy as they have too many bad debts.

Most of these bad debts are issued by the bank’s staff to their friends and relatives. These bank staff all felt that investing in shares and properties with the money from loans can get high profits.

Even the commoners on the streets are doing this to make money. How can the staff let their friends and relatives down? Don’t they have anything to mortgage? Never mind. The market is doing well now, how can they fail to repay the loan?

A family of three had to pay the mortgage of 2 houses? Anyway, the houses are not for them to live in. They are investments, and after 1 or 2 years, they can sell it for profits.

Another important reason is that Thai Baht is over valuated. If it weren’t for the fixed exchange rate, Thai Baht would have depreciated a long time ago.

Several reasons resulted in Thailand’s financial crisis. Even if Soros and his gang did not attack Thailand, this financial crisis will also happen. But after Soros and Feng Yu attacked Thailand’s financial market, they will bring forward this crisis!