BANGKOK — At Ta Pra Chan, an open-air market in the heart of Bangkok near the king's palace, dealers display their wares like diamonds. The glass cases and advanced magnifying devices allow collectors to view the tiniest details of the Buddhist amulets for sale. The sellers are busy, but they take the time to discuss each piece with a buyer, and the atmosphere is calm.
But just a few years ago, mornings at the market were the scene of frenzied haggling. Talismans blessed by esteemed monks sold for as much as 2 million baht ($50,000). The market in amulets became a bubble that was expected to burst. It did.
Today, amid numerous theories explaining Thailand's 1997 financial crisis, a group of economists says the beginning of Asia's meltdown could have been predicted by following one commodity: Buddhist amulets.
Trade in the tiny Buddha images, carried or worn by Thais to ward off malevolent spirits, foreshadowed the economic bust and provides lessons about the economic future, says a recent report by Thai Farmers Bank Research Center, a leading forecasting group.
Historically, amulets were blessed by Buddhist monks and purchased at a modest mark-up by anyone wanting protection from spirits or from their own fears - last fall, the prime minister gave amulets to Thai peacekeeping forces sent to East Timor.
But as Thais gained disposable income, they began to view amulets as not only talismans, but also investments.
Forty periodicals about investing in amulets sprang up in the 1980s and 1990s; and roughly 1 million Thais became involved in the amulet trade, which in the mid-1990s was valued at 5 billion baht ($125 million).
By 1995, many short-term speculators had entered the amulet trade and bid up amulet prices without knowing much about the icons, Thai Farmers' report said.
As short-term capital inflows increased, the amulet market overexpanded, and Thais started to question the value of expensive amulets they had purchased. Speculators sold off amulets in 1995 and 1996, decreasing liquidity in the amulet market. "The prices of amulets fell by more than 70 percent ... [as the market] returned to cold reality," the report said.
Two years later, Thailand's economic meltdown would mirror the "amulet crisis."
"The amulet market, as much as any other indicator, foretold the crisis ... and can give some hints about handling the recovery," says amulet collector and independent banking consultant Narongchai Akersene.
In 1996 and 1997, Thailand's economy overheated as short-term capital inflows - especially in poorly regulated investments in property - increased rapidly. Awash in unregulated investments, Thailand's economy began to collapse. Massive capital outflow triggered speculation against the Thai baht, which led to the Asian financial crisis.
Thailand's economy contracted for the first time in decades - but it is growing again now, at roughly 5 percent this year.
Yet if Thailand is to return to high growth rates, economists should study the lessons of the amulet crash, icon collectors say.
"Well-known and experienced traders have weathered the [amulet] crisis very well thus far," because they have established themselves as responsive to customers and transparent in their dealings, Thai Farmers' report said. "The sellers at Ta Pra Chan today spend a lot of time sitting around and talking with customers, establishing relationships," says anthropologist Steven Carlisle, who is studying Thai amulet trading.
Perhaps most important, amulet enthusiasts now understand that only innovative amulet traders will prosper and that unproductive traders must be allowed to fail, Thai Farmers' report said. And, many amulet enthusiasts believe the amulet crisis was "beneficial to trading as a whole," the report said, since the amulet market crash wiped out unreliable dealers and made amulet traders more creative in selling their wares.
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