The Market For East Asian Lemons

In the end, the American markets finished down only modestly after getting punk'd earlier in the day by news of the Thai military coup.  (At the moment, by the way, the Thailand-based half of the Stalwart is sleeping, but promises a full report in the morning, which means you should keep checking the site through the night, if you're interested in what's going on on the ground in Bangkok.)

So why did our market even react as much as it did?   Well, imagine replacing the word Thailand with the word China, and then imagine how much bigger the economic impact would be (orders magnitude as they way).  But it's not that the Thai coup is an incident likely to spread elsewhere.  By all accounts, this is an isolated event.  However, the incident in Thailand is a reminder that if a seemingly stable capitalist democracy can go down, so too can any other country.

It's a market for lemons.  When you get a car that's a lemon, you don't worry about it spreading to other cars.  But you are reminded that lemons are out there.  Today, the American markets were reminded that the budding capitalist economies, with whom trade has grown to be so large, might contain a few lemons -- or at least one. 

Any takers on how big the drop will be in the Thai Market when it opens in a few hours?  Where are the bars in NYC where the news junkies watch CNBC Asia?

Comments

[A Stalwart]

We'd like to note that actually the Thai market was closed today after last night's coup. So we'll see tomorrow how it opens. It might be a tough call actually. If it looks like the coup will go through in a non-violent way then we've actually had a large mass of uncertainty released from the local market. Still, if you put a gun to my head I'd say its down 5-8% when it opens.