Thailand crises with Forex :the secret facts

It was very clear that something devastating had happened. I was sitting in a restaurant in Bangkok, Thailand, enjoying a lunch of noodles and gazing at the city skyline. It looked as if it had been ravaged by a plague or war. Towers stood half-built, dark and empty. Cranes were motionless steel skeletons.  Two years before, Bangkok’s skyline was swarming with workers and alive with movement. The Thai economy was growing at torrid rates, and the land was awash with money. Visitors saw scenes of jarring contrasts in the streets of Bangkok, where an ancient culture had entered the modern era at warp speed.  The rich steered sleek Mercedes past street cleaners riding elephants and peasants tugging water buffaloes to market. Shopping malls, shiny with goods, attracted people from the countryside to gawk and marvel. Some could not grasp the concept of private property upon which the new prosperity had been built. They roasted fish over open fires on the mall’s marble floors until they were shooed away by security guards.

Even the seasonal rhythms of nature were blunted and tamed.  In 1997, Bangkok authorities used engineering to divert the brackish waters that flooded the streets every year during the monsoon season—for the first time in the city’s history.  Thailand was riding high atop a financial revolution brought about by a nexus of Internet technology, investing tools, and new attitudes. The Internet had freed the enormous pools of capital in New York, Tokyo, and London. The money burst free, pouring through high-speed fiber-optic cables into the country, where it swelled lines of credit and financed new golf courses, office complexes, and ambitious municipal projects. A German firm was contracted to build a sky train between Bangkok’s downtown and the suburban malls.

Then, abruptly, the boom turned to bust. Creditors grew concerned that the lavish projects were actually money pits and boondoggles.  The Thai economy couldn’t produce enough goods to balance the funds coming into the country, and the currency wobbled under the pressure. Investors were spooked. Just as it had arrived, the money vanished back through the fiber cables, and the financial house of cards it had supported collapsed.  I could still see the effects two years later as I slurped my meal.  Banks failed, credit dried up, and workers walked off multi million dollar construction projects, leaving their tools scattered. There was no money to pay them. The sky tram was almost finished, but one ride was rumored to cost half a day’s salary. It rode back and forth, empty, to malls where no one could afford to shop.  History has many examples of financial catastrophes, but few with the force and speed of the one that hit Thailand. Prosperity had shot the Thai society centuries forward into the modern era and then torn it up by its roots. Laid-off workers, facing unprecedented inflation and lost savings, filled the streets, rocking a stable government.

The power of foreign exchange to build and destroy struck me.  Of course, other markets today create and vaporize wealth all the time. But those losses seemed trivial compared to how the foreign exchange market had devastated Thailand.

The Forex market, however, affects everyone, from the street cleaner to the executive in his palatial suite atop a new office building.  It could literally make and then break a social order.

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