May 17, 2010
Undisclosed location
You’ve probably seen some clips on the news about the political current unrest in Thailand, and some headlines like “CHAOS IN THAILAND!”
These headlines are inaccurate. Thailand, the country, is not in chaos. The political unrest is taking place in a small section of Bangkok, and this is where the chaos is… actually, it’s more like a war zone.
In the rest of the country, though, it’s business as usual.
I’ve been talking to a lot of my friends and business partners fairly regularly who live in Thailand. Most of them have noticed no changes at all– they’re still sitting on the beach in Koh Samui or drinking beer with the bar girls in Pattaya.
Even some friends who live in Bangkok are going on about their normal lives.
One close friend of mine, though, is living quite literally in the middle of the kill zone. He tells me about how he can hear gunfire and explosions from his living room window… and as a young, brand new father, he’s nervous.
Rightfully so, I’d say.
He went on to describe the ‘business as usual’ attitude in Thailand– “hey look, this is the Land of Smiles. They treat conflict with passivity… just ignore it with a smile and hope that it goes away. That may be beneficial for small conflicts, but in this case, it’s gotten out of hand.”
To be clear, political tension is normal for Thailand– coups are frequent, corruption is pervasive, and demonstrations are commonplace. You can see this in the market as investors have shrugged off the turmoil; the Thai baht and stock exchange are both largely unchanged over the last 3 months.
This latest conflict, however, seems to be something entirely different. Local Thais are now starting to take notice and say “this is unlike anything we’ve seen before,” and their anxity level is starting to rise.
The seeds of revolution were planted in September 2006 when “democratically elected” Prime Minister Thaksin Shinawatra was ousted, in absentia, by a military coup. It appears now that a civil war has been brewing ever since.
Thai protestors are demanding that the current, ‘illegitimate’ government step down and hold new elections. They don’t seem to be going anywhere until they get their way.
The government has rolled out the military to contain the protests… but as it turns out, the protesters are well armed and equally willing to shoot, and kill.
Jean-Jacques Rousseau once wrote in his treatise The Social Contract, “as long as a people is compelled to obey and does so, it does so well; as soon as it is able to throw off its yoke and does so, it does so even better…”
True believers are skilled at insurrection, and for this reason, the conflict could go either way. The protestors could be overpowered by government forces, or the government could finally be compelled (with support from the international community) to hold new elections.
Here’s what really scares me, though…
The King of Thailand is old. He’ll be 83 this year and has reigned for nearly 64 years. This longevity has created an overwhelming sense of respect and adoration for him among all Thais– the monks, the military, and the people.
In this conflict, he wields power over both sides… and while he has a history of staying out of political maneuvering in Thailand, the few times he has used his authority to step in has immediately ended the conflict.
If things truly get out of hand in Thailand in the coming weeks and months, the King could put a stop to it all by wagging his little finger.
But if something should happen to the king during this conflict, I’m concerned that the country could descend into major turmoil. At best, Thailand would have another military governorship. At worst, the present quagmire could persist for years.
In the long run, Thailand will pull through just fine, as it always does. It will remain an international hedonist’s and retiree’s paradise, full of cheap living, wild nightlife, and accommodating locals.
But Thailand could be in for a rough couple of months… especially if something does happen to the king.
In that case, I would expect that the price of rice (of which Thailand is a major supplier) would go through the roof, and both the Thai baht and stock exchange would take a major beating.
You can invest in rice futures (either going long in expectation of conflict, or shorting at the peak) with any commodities broker, or an Interactive Brokers account. You can take a position in the Thai baht and stock market through a brokerage like Boom Securities, based in Hong Kong.
