The results show that a significant part of the debt is accounted for by households that have both substantial assets and fairly sizable margins; not even a sharp increase in interest rates or unemployment would affect their ability to service debt to an extent where it would seriously increase the risks in lending to Swedish households. The risks in lending to the household sector therefore remain small, even when individual households are studied. Here it can be added that it was not the household sector that caused problems for the banks during the financial crisis of the early 1990s; despite the fact that the interest ratio rose to 11 per cent in 1991 and unemployment peaked during 1993 at 8.5 per cent. With regard to developments in house prices, the assessment is still that Swedish house valuations are relatively reasonable. Fundamentals such as rising disposable incomes and falling interest costs could to a large extent explain the observed price trend. The demand for housing is expected to grow more rapidly than the supply. However, developments in house prices in Sweden vary considerably from region to region. Prices in metropolitan regions have risen by a significantly larger amount than for the country as a whole, although prices in the Stockholm region have stagnated over the past two years. There has also been a steeper price rise for tenant-owned apartments than for single-family dwellings. It is difficult, at present, to envisage any tendencies towards imbalances that could lead to a substantial fall in prices.
A more recent story that comes to mind involves two factory workers who earn approximately 6,000 baht per month. Both were invited to apply for a credit card but only one signed up for the offer. This worker first used his credit card to purchase a TV set, which he could easily finance with his salary. Nevertheless, the TV was followed by a washing machine and a motorcycle, which eventually pushed his monthly debt payment to exceed his income. As he exhausted all of his savings, and could no longer borrow from family and friends, his belongings were repossessed by the creditors, and finally he had to quit his job in hopes of running away from his remaining creditors. The story highlights a dangerous combination in the fabric of Thai society and that is low-income earners who lack financial literacy, or the ability to effectively manage their finances, but yet have very high marginal propensity consume. They in turn are more susceptible to unknowingly consume beyond their means, and like my previous story, become a burden an society. That burden is further intensified by the difficulty in finding and obtaining new employment. This probable risk demands that stakeholders take a more cautious approach to ensure quality growth in Thailand’s consumer finance market. Ladies and Gentleman, In reality there are more than one type of savings behavior in the world, but most importantly the savings behavior should be appropriate for the developmental needs of each country.