saengd

Sorry, I'd love to banter with you but I have to go clean out the gutters, I'll respond to whatever you post later.

7 minutes ago, Brunolem said:

 

A budget issue, you say, and who do you think is going to end up buying the bills or bonds issued to finance this budget?

 

The primary dealers, who will then run to the Federal Reserve window and use these bills and bonds as collateral in exchange for freshly created cash.

 

This is called (indirectly) monetizing the debt, and this has often led to hyperinflation.

 

The Fed is also directly buying (older) bonds on the market, by means of its quantitative easing (QE = money creation) program.

 

Even before the virus crisis, QE was running at 60 billions a month (only for the US), and these days it is difficult to keep track since new intervention programs are launched on a daily basis.

 

Germany, which is not Zimbabwe, had hyperinflation, and any country could have it, given the right conditions...no country is immune, including the mighty USA.

 

Of course, hyperinflation is only one scenario among many others, none of them good...

 

Bonds do not finance budgets, bonds finance debt, debt is only incurred  when the budget year has ended and the deficit is known.

Who will buy those Treasuries? All things being equal, Japan, China and the UK, none of whom will go running to any part of the US Gov.

The Fed is also buying older bonds as part of its ongoing market operations to buy bank bonds issued with higher coupon rates and to replace them with bonds with lower coupon rates. That's a bit like paying off your old mortgage because it was at 5% and getting a new one at 2.5%, prudent I would suggest.

Yes, Germany had hyperinflation in 1923, do we really want or need to talk about that even a little bit other than to say the Deutchmark was never the worlds reserve currency!

A couple of points to be made here:

One is that posters are using terms across the board that they don't really understand, they are fashionable terms that are being used and not much more.

Another is that  handing every person $1,000 is a budget issue, not a Fed issue, that money will become a budget deficit and then debt that must then be securitised and sold in the form of Treasury bills.

Hyperinflation is another term that is bandied around but means exactly what, the same as Zimbabwe perhaps? I really don't think so, do you, the idea that inflation in the USA could reach 1,000% is pure nonsense.

I'm not trying to attack anyone here but I do want to make the point that if folks are going to use these terms and base their arguments on them they better understand what they mean because people use these posts as a means of learning. 

Just now, Brunolem said:

Have you heard about QE?

 

Have you seen the US Fed balance sheet lately?

 

And where exactly is the money going to come from to finance these hundreds of billions in rescue programs in Western countries?

You didn't answer the question which was very specific and clear, I presume that means you don't know the answer and it's too late to say, I knew that or that's what I meant by QE! 

Mostly for others, it doesn't mean printing currency, this is what it means:  https://www.thebalance.com/is-the-federal-reserve-printing-money-3305842

Just now, Brunolem said:

I have been buying gold, mostly last year.

 

I buy as an insurance and not to try to make a profit.

 

My fear is hyperinflation, because the central banks are going to create money like mad, the governments are going to freely hand it ($ 1,000 per adult per month in the US), but mostly because hyperinflation is the most convenient way to get rid of the mountains of debt that are smothering the world economy.

What do YOU mean when you write that the Central Banks are going to create money?

Just now, vogie said:

vogie did not say this.????

Well he should have........I'm sure you may have thought it perhaps.  

Brain fart, sorry Vogie, it happens sometimes.

12 hours ago, nauseus said:

On the way up again already. Damn, I missed it again!

Maybe not Vogie. The Dollar Index has weakened very slightly, the VIX is down and gold is off its high but equities are still falling, the game has further to play out yet, think of this as a time out rather than game over.

40 minutes ago, pacovl46 said:

What seems to be the problem? The article was about the Great British Pound, and it mentioned the value of the GDP in comparison to the Euro. I just pointed out how much it lost in comparison to the Baht, too, since this is the THAI-visa.com forum. 
 

But if it makes you happy the Euro was 54 Baht in 2003 and not it’s at 35. Happy now? 

I thought your remark about Pound/Baht values since 2003 were erroneous and not well researched. Yes GBP weakened as it has been doing ever since WWII but that's a long term gradual decline. THB on the other strengthened quite massively in its own right as the economy got stronger and as the currency emerged from the crash of 1997. That accounts for 95% of what you see by looking at things strictly on a numerical basis..

Commiserations, you are not alone, been there done that, several times.

18 minutes ago, timendres said:

This is along the lines of what I was thinking. Any idea the last time this was required?

I don't know, sorry. I understand why foreign investors have bailed out into USD cash but it looks as though domestic buyers may have done similar, especially since they have abandoned the SET as well. I guess some domestic bond holders may have been forced to sell to meet SET margin calls.

4 minutes ago, timendres said:

Does anyone know - is this normal? If not, when was the last time the BOT has to add liquidity to the bond market?

Bond auctions are usually oversubscribed every time but most recently BOT has cancelled them in order to lower FDI and to weaken THB. In the present environment I imagine there will be a near total absence of foreign buyers so I guess BOT will have stepped into the frame. The purchase was of government bonds which is the vast majority, as I recall foreign buyers represent 17% of total bond holdings so it looks like domestic buyers are not buying either.

1 minute ago, BillStrangeOgre said:

Yes, high inflation is not desirable and around 2% is the benchmark for central banks. I'm not an economist, but surely you cannot claim that huge debt levels cannot simply be inflated away with annual rates of 2%? And I understand how that debt can be structured to make it affordable.

Also, debt levels have risen to unusually high level over the past decade through multiple tranches of QE. That's why the word trillion has entered the lexicon of every day speech, not because it has been deflated. A trillion today is pretty much what a trillion was 10 years ago and with low rates of inflation...what it will be in 10 years hence

No I'm not suggesting that 2% can inflate away the debt, I'm suggesting the debt will continue to grow. Affordability is one of the issues and that's manageable, being accustomed to the new norms is another factor, it's a question of whether in ten years time we will continue to think that a trillion is that huge, I suggest we will not. In basic mathematical terms there is no solution to the problem other than perhaps debt forgiveness at some point which I think is very probable.

4 minutes ago, BillStrangeOgre said:

Gotta jump in here...true, debt gets inflated away over time but you need a high rate of inflation to make any real dent in a trillions dollars over ten years.

40 years ago inflation was running considerable higher than it is now. Some people will argue though that with all this QE inflation will rise, perhaps hyperinflation...remember they were saying that back in the last crisis. Didn't happen 

We're usually happy in economics terms if inflation is at 2%, that represents growth, if debt increases at a faster pace then issue more bonds with longer maturity dates, mortgages for life, multi-century debt, nobody said it had to make sense, it just has to be dooable. And in a decade from now, the word trillion will not raise eyebrows or cause panic, it will be the norm.

31 minutes ago, christophe75 said:

 

The answer is obvious : the central banks !

FED, BCE BOJ, BOE etc. It's a festival of "QE" (the nice letters for the bad word "printing-money-until-it-blows-in-supernova")

It's even difficult to follow the additions of.... trillions.

And let's be clear.... This is not new.

But they can't do anything else. They can only continue to accelerate. That's the way the system is wired.

It's Star Trek : "To infinity and beyond"????

This is why, incidentally , the people who bet on "bankruptcies" (big banks, and big "friend" companies) are totally mistaken.

The one who will loose everything are... the little ones. As usual.

The Joe Blows.

For them no bailout, no QEs...

Too funny, your last line.

Have you ever stopped to wonder what would happen to the Joe Blows if the Central Banks didn't do QE?

Sorry but name dropping Buffet and Reinhart and Rogoff doesn't do anything for me, there's nothing constructive or useful in those things, unless you're writing a thesis and trying to impress tutors.

Fact is that a trillion in debt today may seem high now but in ten years time it will have been inflated away and will seem like peanuts, ditto over-valuations. My first mortgage was for 40k but that was 40 years ago, we thought that was a lot back then, my dad borrowed 5k for his last mortgage in 1963 and that was big also. And then in 1990 I borrowed 500k for a Cotswolds pile, we thought that was huge. It's all a matter of time and of perspective.

Why you ask would stock markets go up by 20% per year whilst economies increase by only 2%.

Because countries economies are not company balance sheets and because they can!

Each to their own. I don't care too much about USD at 1.14 but I do think GBP/.THB at 35 would be very interesting and could be profitable. But it's only a safe bet if you need and spend both currencies and since I have homes, cash holdings and spend time in both countries each year, it fits well.

To be clear, I earlier suggested that expat Brits in Thailand may wish to sell THB and buy the Pound, that was because GBP/USD at 1.14 is not sustainable. So waiting for GBP/THB to hit 35 before buying and then later reversing the trade later could be profitable, I've done that a few times over the years and sometimes it pays off really well. I am not suggesting a long term or indefinite hold of GBP, unless you intend to live in the UK.

4 minutes ago, Brunolem said:

This is your opinion and you are perfectly entitled to it.

 

Now why don't you bring up some facts supporting this opinion, and contradicting mine?

 

I am a numbers person, as cold blooded as a computer, contrary to what my writings may suggest.

 

Along with a number of others, I have seen this economic crisis coming for many years (the virus is only the catalyst...without it, it would have been something else), and it is unfolding right as it should.

 

Hope or despair, and chilling out, won't change anything to it...in the end, numbers always win...and gravity reasserts itself...

 

 

 

 

 

Well actually that's my problem, you have presented zero facts to support your rhetoric, for example, you wrote:

"Stocks are still valued at over 100% of GDP and have only gone back to their level of 2017!

The bottom is very very far from near..."

Many countries in the world have borrowings that are greater than their GDP, is there a rule that says this cannot be so and why should stocks values be any different. Bretton Woods did away with the gold standard, since then economies play by different rules.

1 minute ago, Brunolem said:

Stocks are still valued at over 100% of GDP and have only gone back to their level of 2017!

 

The bottom is very very far from near...

 

Yet some individual stocks, having already lost more than 80% of their former price, may be close to the bottom because there is not much left to lose...but would you invest in airline or cruise business now, or in Deutsche Bank?

 

Bruno, you're a doom and gloom merchant, a worst case scenario man, I just don't think this is going to pan out anything like the Armageddon you think, chill out a bit.

If there's any Brits out there looking for investments and they've got THB in Thailand, buying UK Pounds is not a far fetched idea if you can get the timing right. 

I've done that on a couple of occasions and it can work out well, I hold Pounds Baht in varying ratio's and I'm beginning to think that buying back Pounds if we can see 35 or below, might be smart. That's not because I believe the Baht is going to weaken, it's because I think the Pound is becoming unnaturally weak and sub $1.15 is not sustainable.

4 hours ago, Airalee said:

You seem to be the one who resorts to personal attacks.  First I was an alcoholic, now I’m a man child.  I don’t see that you try to educate people as much as you try to spin things and grasp at straws to promote some sort of agenda.  What that agenda is, I do not know, but your arguments are quite disingenuous.

Dude, I want to pass along my knowledge and observations regarding Thai economics and in the process of doing so I will also learn. I want to do that without being followed around by you everywhere I go and without having thread participants being told by you to ignore my remarks or by you telling everyone you think I have an agenda. If you or anyone else ever has a sustainable intelligent challenge to any of the material or opinions I post I will be happy to engage in constructive debate, anything less than those things will be ignored, as will you, anything along the lines of stalking will be reported. You took issue over something I wrote regarding a Thai mortgage amount and you said it was impossible, "calculators don't lie". Other posters supported what I said with personal case histories, get over it and move on, go find somebody else to hound and annoy.

2 hours ago, Airalee said:

Exactly...which is why so many of the most vocal contributors to the “all is well in Thailand” chorus should be summarily discounted.

 

https://www.reuters.com/article/us-ratings-lawsuit/moodys-sp-and-fitch-sued-over-failed-bear-stearns-funds-idUSBRE9AA0QF20131111

The man child is so keen to see anything I have to say be refuted that he follows me around and reads microscopically everything I write, advising everybody to disregard every  word on any subject , too funny but the mortgage expert needs to grow up and get a life!

Credit bureau reports and credit ratings represent just another piece of the jigsaw puzzle, it's more data to be considered, a plus in one column to be added to many other pluses or minuses. They are NOT the definitive stand alone answer but sensible people already know that. 

I know a little bit about BBofC, Saxena was a client for a few months, that was plain and simple crooked dealings. And there have been other bank failures of course, it might surprise you to learn that over 4,000 financial institutions have failed in the US in the past 50 years. So what, banks fail, the important thing is that banks in Thailand haven't failed since a revamped BOT took charge after the '97 crash.

Deutsche Bank is not a typical example of anything really, their role in the GFC was key to their downfall, it is a lesson in how not to run a bank.

If you're going to look at Thai banks history you really have to look at the time since 1997 because their performance and stability have been usually strong and robust since that time, Bank of Ayudhya (sp) for example is owned by bank Mitusbishi and has assets of over USD 2.5 trill. The revamped BOT has taken their governance and oversight role seriously since the crash, there is no doubt at all the central bank is going to make absolutely certain there are no failures on its watch. And the credit bureaus agree, last year Moody's and S&P upgraded all of them.

Just now, Omnipotent said:

I understand that the country has an over inflated Baht which has ruined exports and I feel it’s only held up on the word of people in “High” government positions.It doesn’t hurt me one bit to liquidate , but if it is a failing system it could hurt me a lot through failure.

THB was about 4% over valued, today it is fair value, its forecast by all and any measures is that it will strengthen against USD to 25  within five to seven years.

The value of THB has played a role in reducing the volume of exports but only in the context of the trade war between the US and China and an embargo by the EU because of fisheries employment laws, it is inaccurate to suggest the value of THB has ruined exports. Thai exports reached a high of USD 22.5 Bill. in July 2020, in January they dropped to USD 19 billion, a level last seen in 2016 and an increase of 3.25% over the previous month, January is the latest official set of trade figures. The rate of growth of Thai exports rose at at a rapid pace between 2015 and 2020, a pace that most economists and observers knew was not sustainable, it's fall to USD 19 bill. was not a surprise to anyone apart from those who merely looked at two sets of comparative numbers.