Tied up in Thailand

What another mess. Thailand is undergoing political upheaval and political protestors have brought the two airports in Bankok to a standstill. Link

Thousands of travels have been stuck there for over a week. Options are travel to another country such as Malaysia but trains going there are full.

Foreign embassies complain but nothing is happening. The Thai government is in weak position and unwilling to send in force to resolve it. So far, passengers are not in any threat but the situation has led to gridlock to all flights in and out of the country.

What is disturbing is this seems to be a clash between urban vs. rural voters. Bloomberg.

With a recent grenade attack that injured 51 protestors, I hope this is not the opening positions to a civil war.

This situation is a PR disaster for Thailand and it's dependance on tourism. Like the Hotel California, you can check any time but you can nevel leave..

P.F. (Not about to Visit Thailand soon but someday would like to)

Houston, Texas

30th November 2008.

Ice Age in Iceland

What a mess. Iceland's banks have f*cked up their country big time. A country of 300,000 people face a troubled future.

From #1 place to live in Europe, they are facing financial meltdown where the value of the Krona has nosedived. It has halved against the dollar due to bankers gone wild. From the Dallas News Article who got it from Washington post:

"Our Loss – Your Gain ... Devaluation Is Silver Lining for Americans," entreated a page on the official Iceland tourism Web site (www.icelandtouristboard.com). They aren't kidding.

The financial crisis may be worldwide, but nowhere have things turned so serious so fast as in this once-expensive island nation of 304,000. With Iceland facing national
bankruptcy, as its prime minister recently said, the entire country is on sale.

Three-course meals at Reykjavik's Lobster House (www.humarhusid.is) are going for $26, the four-star Hilton Nordica is offering $114 rooms on Expedia.com, and a relaxing dip at the Blue Lagoon geothermal spa costs just $20 (http://www.bluelagoon.com/).

It's a beleaguered American tourist's dream, right? Especially with flights on Icelandair running as low as $476 round rip from New York, taxes included.

And so, "it's business as usual in Reykjavik," according to the city's tourism board (http://www.visitreykjavik.com/).

Take plenty of cash. With the Icelandic krona in free fall, most businesses are accepting foreign currencies. Moreover, tourists have reported trouble when trying to withdraw money from ATMs.

I've always wanted to visit Iceland and have toyed with idea of going there as a few days stopover to London.

However, I can't say a winter visit temps me even at these so called bargain basements. My guess is that prices were already sky high so halving it is relative.

With so little hours per day, you wouldn't see much scenery in the winter. I guess if you wanted to hang out in the thermally heated swimming pools it would be good but as for attraction of shipping, it isn't for me. So what if those Gucci bags are cheap here.

As their crisis deepens, I don't see this needing such a rush to visit. I may wait until more light.

On the otherhand, I've always wanted to see the Northern Lights but since I'd have to do a complex flight pattern to get there from Houston to London via Iceland, I think I'll skip it this time.

Sorry Reykjavik. I know you need some hard currency and support from the outside world at the moment. I just hope IcelandAir stays in business.

Phil Fogg

Houston, Texas

9th Nov 08.

If you can't say anything nice, type it instead.

Jan 5th 2008, I blogged some projections for 2008 in "The housing bubble: a travel outlook" :-

• 1) 'Discretionary vacation trips will be cut back. ..Vegas will be especially vulnerable.' NOV 08 CHECK : See 1 , 2 or 3

2) 'In 2008, I expect the UK to be more slightly more attractive as a destination as the pound decreases. Since Nov 07, pound peaked at 2.11 to the greenback. It is now 1.967: a 7.5% decline in just 2 months!It is still not a steal as I remember it at 1.5 but for a frequent visitor to UK, I like the trend.' NOV 08 CHECK British pound is around 1.60 having dropped to 1.52.

3) 'I also predict the the Euro to decline in 2008 as ECB caves under pressure to help it's exporters and drop interest rates'. NOV 08 CHECK . Though Euro has dropped for different reasons and may go lower. It is now 1.27 from a high of 1.6.

4) 'Ben Bernanke in attempt to protect economy will likely drop interest rates again'. NOV 08 CHECK We are now at Greenspan post-911 rates and possibly go lower.

Seeing 4/4 predictions come true, do I consider myself a Nostrodamus ? Nope. I predicted a run up in commodities but didn't see it's decline. With hindsight, perhaps it was obvious. Commodities were just another trading vehicle and they are base inputs to an economy. Cut back on the ecomony, cut back on commodities. China's fantastic GDP rise was biased by spending on new factories, buildings etc. Things geared towards capacity increase which we may not need afterall.

So what does the future look like now 'Mr. Know it all Smarty Pants'?

I believe it is one of a DEFLATION spiral.

For the 1st world consumer driven economies, this will be a disaster. Consumers will not be consuming as credit dries up. This 'miraculous economy' was facilitated by credit. Turn off the credit faucet and we go back to a savings or cash economy. That is turn leads to less demand , less production and more unemployment which in turn leads leads to less demand.

Deflation means that all assett prices will decrease. Real Estate will go down, Stocks will go down and possibly commodities (I say possibly as they've had such a dramatic drop). Finish goods that you want but not necessarily need, will decline.

In this world, Cash will be king. If you have it, you'll hang onto it. You'll realize how difficult it will be to earn more. No more buy and hold in the stock exchange.

Open for a future next shoe to drop is Government bonds and the dollar. Asia has been a big consumer of Goverment bonds and if they go into recession, will they be able to continue to buy them? If no, look out US and the dollar.

So to come back to travel. Short term future as we knew it, will change. Oil is unlikely to spike up but less people and companies will have the disposible income to travel. If your future income stream is also potentially affected, then why would you consider a 2 week vacation?

Future bargains ? If you are financially secure for the intermediate term, you bet. Just look at Iceland. Hungary, Poland, NZ and Russia ? Add any other country to that list. All are welcoming hard currency which today is the dollar.

So according to our lame duck Nero-esque leader of the free world, the economy is strong. However, my take is that the light on the horizon is the economic future burning down.

Phileas Fogg,
(Trying to engjoy that nice sunny day in)Houston, Texas
Nov 2nd, 2008.