Economy Getting Better Or Worse

[Prudent_rabbit]

This week Ive had 5 unsolictered calls from Financial Experts wishing to interest me in their expertise of making me richer, not interested, but if I've had 5 this week, and probaly only 10 calls / emails / Faxes this year does that mean

a) business is booming therfore there are more Financial Experts around to take up the slack?

b ) Business is bad, so they have lowered their criteria and now call me?

Reason for Edit b ) not

Edited March 29, 2007 by Prudent_rabbit

[Gary A]

I have never been able to figure out the financial wizards. If they are so smart, why are they wanting to make me rich. Are they that nice of people or are they just not smart enough to get rich with their own money?

[thaihome]

C. One of your so-called friends gave them your name in an attempt to get some sort of bonus for the plan they signed up for.

TH

[cmsally]

I once got a similar call , the gist was to get me more money by offering me a new credit scheme + card.

I told the girl I already had a credit card , didn't need another one thank you.

She persisted, so I gave her a concise lecture on how it was bad karma to encourage people to overextend their credit.

Never got another call .

[soundman]

This week Ive had 5 unsolictered calls from Financial Experts wishing to interest me in their expertise of making me richer, not interested, but if I've had 5 this week, and probaly only 10 calls / emails / Faxes this year does that mean

a) business is booming therfore there are more Financial Experts around to take up the slack?

b ) Business is bad, so they have lowered their criteria and now call me?

Reason for Edit b ) not

someones put you on a "board" of some description. Happened to me when I was nineteen years old. Nothing for years, all of a sudden 25 "free" credit cards.

Think first....

Soundman.

[Prakanong]

Its almost daily in Singapore - credit cards, financial advisors, headhunters!

One guy from Barclays was bloody persistent and admitted he got my business card of someone - I told him my company pays for onw of the big accounting companies to look after me while here and he still tried to sell me something

[bingobongo]

Economy is getting worse.....

Thai consumer confidence plunges to five-year low

Thailand's consumer confidence plunged to a five-year low in February, hit by an uncertain political outlook and fears over escalating violence in the country's restive south, researchers said Thursday.

http://www.nationmultimedia.com/2007/03/08...es_30028810.php

[bingobongo]

so say i make 100,000 baht, i get a whooping raise of 2000 per month, or $57 USD per month (2000/35), gee, i can almost buy nothing extra BEFORE TAXES

PAY INCREASES

Thais slip behind rest of Southeast Asia

Salaries of region's professionals growing faster than in Europe and N America

However, Thai professionals are expected to lag behind. Pay rises after inflation will range from 1.9-2 per cent, lower than the Philippines' 1.5-2.5 per cent and Hong Kong's 2.2-2.5 per cent.

http://www.nationmultimedia.com/2007/03/16...al_30029439.php

[Heng]

You also have an extra $500 without any extra effort to put into the US stock market or whatever stateside (or wherever you are from).

For me it means XX more kgs. of brine shrimp eggs I can bring in each month from the US (Utah) and China at the same price I was paying when it was 40 Baht to the $1USD. My margins with local shrimp and fish farmers have been constant for these past few months but naturally we'll take a small hit eventually with slowing exports, but luckily for us: 1) locals have to eat as well. 2) our inventory is freeze dried and has a pretty long shelf life.

The economy will always be getting better or worse, depending on your point of view and what you do to adjust to each "situation" or "economic era."

[bingobongo]

Asia's economies

Once bitten

Mar 29th 2007

From The Economist print edition

Countries on the front-line of financial crisis in 1997 are suffering still

The ADB finds the slowdown cannot be satisfactorily explained by demographic changes, by worsening “human capital”, ie, educational shortcomings, or by falling productivity. Rather the cause lies in falling investment rates. These plummeted in the wake of the crisis, and have never returned to pre-crisis levels.

But it suggests that the crisis had a lasting impact on investors' perceptions.

http://www.economist.com/world/asia/displaystory.cfm?story_id=8929269

[sonicdragon]

Asia's economies

Once bitten

Mar 29th 2007

From The Economist print edition

Countries on the front-line of financial crisis in 1997 are suffering still

The ADB finds the slowdown cannot be satisfactorily explained by demographic changes, by worsening "human capital", ie, educational shortcomings, or by falling productivity. Rather the cause lies in falling investment rates. These plummeted in the wake of the crisis, and have never returned to pre-crisis levels.

But it suggests that the crisis had a lasting impact on investors' perceptions.

http://www.economist.com/world/asia/displaystory.cfm?story_id=8929269

"The ADB finds the slowdown cannot be satisfactorily explained by demographic changes, by worsening “human capital”, ie, educational shortcomings, or by falling productivity. Rather the cause lies in falling investment rates. These plummeted in the wake of the crisis, and have never returned to pre-crisis levels."

I haven't read the ADB report, so I may be missing something, but a large part of the reason for the asian financial crisis was large current account deficits caused in turn by unchecked direct foreign investment. Therefore can it be any surprise that post-crisis investment levels remain below pre-crisis ones ? The article seems to implty that domestic investment and foreign investment are 2 seperate independent things, when in reality they are inextricably linked.

[sonicdragon]

The ADB 2007 Outlook report gives a good concise 4 page review of recent economic performance and future outlook of the thai economy. It's available here.

The full 388 page report covering all the asian economies, that also looks at region-wide issues, is available here:

Happy reading.

[samran]

Asia's economies

Once bitten

Mar 29th 2007

From The Economist print edition

Countries on the front-line of financial crisis in 1997 are suffering still

The ADB finds the slowdown cannot be satisfactorily explained by demographic changes, by worsening "human capital", ie, educational shortcomings, or by falling productivity. Rather the cause lies in falling investment rates. These plummeted in the wake of the crisis, and have never returned to pre-crisis levels.

But it suggests that the crisis had a lasting impact on investors' perceptions.

http://www.economist.com/world/asia/displaystory.cfm?story_id=8929269

"The ADB finds the slowdown cannot be satisfactorily explained by demographic changes, by worsening “human capital”, ie, educational shortcomings, or by falling productivity. Rather the cause lies in falling investment rates. These plummeted in the wake of the crisis, and have never returned to pre-crisis levels."

I haven't read the ADB report, so I may be missing something, but a large part of the reason for the asian financial crisis was large current account deficits caused in turn by unchecked direct foreign investment. Therefore can it be any surprise that post-crisis investment levels remain below pre-crisis ones ? The article seems to implty that domestic investment and foreign investment are 2 seperate independent things, when in reality they are inextricably linked.

Maybe I'm taking quite a huge stab here, but one of the reasons for the crisis its severity was that Thai's companies (for instance) were taking loans offshore much lower interest rates than what were available domestically. At their peak, we were talking at least a 10% interest rate differential between Thailand and USD loans. Given that the MOF and BOT had repeatedly assured investors that the baht peg would be kept, people kept on borrowing.

So, even though you are right about the two types of investment being interlinked, maybe (and not having read the report) the ADB were trying to disaggregate what was real FDI versus Thai induced remittences of USD funds for investments?

[Old Man River]

Asia's economies

Once bitten

Mar 29th 2007

From The Economist print edition

Countries on the front-line of financial crisis in 1997 are suffering still

The ADB finds the slowdown cannot be satisfactorily explained by demographic changes, by worsening "human capital", ie, educational shortcomings, or by falling productivity. Rather the cause lies in falling investment rates. These plummeted in the wake of the crisis, and have never returned to pre-crisis levels.

But it suggests that the crisis had a lasting impact on investors' perceptions.

http://www.economist.com/world/asia/displaystory.cfm?story_id=8929269

"The ADB finds the slowdown cannot be satisfactorily explained by demographic changes, by worsening “human capital”, ie, educational shortcomings, or by falling productivity. Rather the cause lies in falling investment rates. These plummeted in the wake of the crisis, and have never returned to pre-crisis levels."

I haven't read the ADB report, so I may be missing something, but a large part of the reason for the asian financial crisis was large current account deficits caused in turn by unchecked direct foreign investment. Therefore can it be any surprise that post-crisis investment levels remain below pre-crisis ones ? The article seems to implty that domestic investment and foreign investment are 2 seperate independent things, when in reality they are inextricably linked.

The 1997 crisis in Thailand was caused by hedge funds attacking the THB with inexperienced central bankers not knowing what to do. The resulting devaluation led to, as Samran has pointed out, large increases in the cost of debt repayment, virtually bankrupting companies over night. Now, the reason the hedge funds attacked the THB may well have been the increasing current account deficits, but these were caused by unproductive, non export related imports (building golf courses etc.), not from foreign direct investments (the MNC's), much of which was used to produce exports.

[sonicdragon]

I haven't read the ADB report, so I may be missing something, but a large part of the reason for the asian financial crisis was large current account deficits caused in turn by unchecked direct foreign investment. Therefore can it be any surprise that post-crisis investment levels remain below pre-crisis ones ? The article seems to implty that domestic investment and foreign investment are 2 seperate independent things, when in reality they are inextricably linked.

The 1997 crisis in Thailand was caused by hedge funds attacking the THB with inexperienced central bankers not knowing what to do. The resulting devaluation led to, as Samran has pointed out, large increases in the cost of debt repayment, virtually bankrupting companies over night. Now, the reason the hedge funds attacked the THB may well have been the increasing current account deficits, but these were caused by unproductive, non export related imports (building golf courses etc.), not from foreign direct investments (the MNC's), much of which was used to produce exports.

Sorry, but I didn't notice the line in the balance of payments accounts called "Unproductive, non export related imports". You can't seperate the productive investments from the unproductive ones. They all contributed to the current account deficit.

Do you expect the level of post-crisis investment to be higher than pre-crisis levels ? My point is that I don't think you can.

Edited March 30, 2007 by sonicdragon

[sonicdragon]

Maybe I'm taking quite a huge stab here, but one of the reasons for the crisis its severity was that Thai's companies (for instance) were taking loans offshore much lower interest rates than what were available domestically. At their peak, we were talking at least a 10% interest rate differential between Thailand and USD loans. Given that the MOF and BOT had repeatedly assured investors that the baht peg would be kept, people kept on borrowing.

I think you are right, that foreign borrowings were another big factor. I didn't say that FDI was the only cause. I'd say that foreign borrowings were indicative of the more general problem of mis-priced risk (see below).

So, even though you are right about the two types of investment being interlinked, maybe (and not having read the report) the ADB were trying to disaggregate what was real FDI versus Thai induced remittences of USD funds for investments?

I don't think that is what the ADB is saying though. I am reading the report at the moment, but it's quite long and detailed so I've been at it for large part of the day and not yet finished, but they are talking more about there having been a post-crisis reduction in public infrastructure projects, poor micromanagement by governments, and increased risk aversion by the private sector all contributing to lower levels of investment. I really don't think this is surprising, in the light of the trauma of the crisis. The Hopewell Don Muang toll road springs to my mind (I seem to recall Sir Gordon saying he would never invest in Thailand again). That's got to be one of the best anecdotal examples of why post-crisis investment in thailand would be lower. Another anectode, which relates back to your comment about borrowing in foreign currencies, is TPI - I had some early involvement in it's restructuring (if you could call it that). Foreign banks had been falling over themselves to lend unsecured money to an already (ie pre-crisis) very leveraged corporation at rates of interest well below where even the thai soveriegn public debt was trading. And this was common among many thai corporates (even weak corporates like Central Pattana were borrowing money in the euro-convertible bond market at ridiculous levels). It was a credit bubble - a mis-pricing of risk, and it is very natural for post-crisis levels of lending and investment to be much lower. And surprise surprise if that doesn't lead to lower growth. Higher risk leads to lower investment, which leads to lower growth.

[bingobongo]

getting worse....

UTTC to lower GDP target: Urges government to stimulate consumption

"In response to discouraging economic indicators, the University of Thai Chamber of Commerce Economic and Business Forecasting Centre expects to lower its GDP growth target."

http://etna.mcot.net/query.php?nid=28701

[sonicdragon]

I expect that a loosening of monetary policy is around the corner.