Thailand Could Face Double-digit Inflation In 2008

[ray23]

Unless your in Bangkok you will find out about in the news. The world doesn't stop turning relax.

As pointed out inflation isnt only here. Yuo can bet the dollar will go up. If it does that enough oil will come down.

Inflation jumps by biggest amount in 6 months By MARTIN CRUTSINGER, AP Economics Writer

10 minutes ago

WASHINGTON - Inflation shot up in May at the fastest pace in six months, pushed higher by soaring costs for gasoline and other types of energy.

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The Labor Department reported Friday that consumer prices rose by 0.6 percent last month, the biggest one-month increase since last November, as gasoline costs surged by 5.7 percent. Food prices, which have also been rising sharply, were up 0.3 percent as the cost of beef and bakery products showed big gains.

Core inflation, which excludes energy and food, edged up a more moderate 0.2 percent in May. But even there, core prices are up 2.3 percent over the past 12 months, above the Federal Reserve's comfort zone.

The Federal Reserve, which from September through April had been aggressively cutting interest rates to fight a mounting economic slowdown, is now indicating that its biggest concern has changed from the threat of a recession to worries that inflation could get out of control.

In a speech Monday, Fed Chairman Ben Bernanke said that the Fed will "strongly resist an erosion of longer-term inflation expectations." Those comments have raised expectations that the Fed's next move later this year will be to start raising interest rates.

[skooldaze]

i have to say most of the comments on this thread are totally inane and a waste of time. I can't believe I kept reading. Reading them I thought i'd entered a room full of economists, but when reading them closer it's clear none of you have a clue. Inflation is rising all over the world, currency fluctuate and Tarisa is doing a better job than any of you knobs could do in her position. 'nuff said.

[Naam]

So i got all my money out of my bank ,this is no worry any more.

tell us where exactly you keep it

[Naam]

i have to say most of the comments on this thread are totally inane and a waste of time. I can't believe I kept reading. Reading them I thought i'd entered a room full of economists, but when reading them closer it's clear none of you have a clue.

take that back... OR ELSE!

[cclub75]

Regular bullshit from Miss Tarisa.

Since it sounds like you have all the answers, what do you think the BOT should do to stave off inflation in Thailand?

It's not because I'm able to smell the BOT's crap, that I've got solutions...

It's just plain common sense.

The BOT, and all the clowns (government, NESDB, Fiscal Policy Office) were all in DENIAL since last september about inflation.

How I (but not only) knew it ? For a very simple technical point : base effect. H1 of 2007 the CPI was very low... Therefore H1 2008 the CPI would mechanically increase, year on year.

The oil prices started to increase more and more... In january 2007 we were at 50. In september at 80...Plus all the other cost inflation (raw materials).

The inflation pressure was building up. It was obvious. Obvious for smart people.

Then Miss Tarissa supported the stupid "boost" policy of the gvt, the famous "stimulus packages". That was only 3 months ago (march 2008) !!

How can you promote a "stimulus package" and other "mega projects" (you remember ? 1600 billions THB, ah ah ah ah) and then complain about "inflation" ?

And what about the policy to increase civil servants wages (the junta did it last year, plus Samk gvt a few weeks ago) ?

And what about the ... prices control policy ? (you can hold some times, and then, the dam break).

So I ask you : these are not inflationnist policies ??

And now, like Bernanke, they pretend to "wake up" ! It's just amazing !

My point : they did know the truth. They just lied. Because it was more convenient, thai style. They hoped that oil would go down hard. Bad luck : it didn't.

The party is over : you can't have strong growth, but low inflation, low oil prices,cheap commodities, high prices real estate (good for investors) but affordable housing, weak currency to boost exports but strong to cover imports, high wages so people can "consumme" but not too much because it's bad for companies results, low interest rates but not assets bubbles after, cheap credit (good to boost investment) but not too much bad debt etc.

Do you understand ? Choices must be made.

The fiction of those last years is about to end.

As for the possibles "answers" to the crisis : classic. The hard cure, like the FED in the 80's

-say to the people "the party is over, it's going to be painfull"

-high interest rates

-accept a massive deflation of real estate bubble

-accept that a few hundred influental rich thais families would go totally broke

-accept that the rest of the population suffer too

-accept a necessary recession

-make real reforms to open the economy (really) to foreigners, real political reforms etc.

etc etc etc.

But of course, it won't happen.

Edited June 13, 2008 by cclub75

[crazyeddie]

I just LOVE all this good info from the armchair economists. I had it all figured out years ago....I invested most of my money in booze and broads. Then, the rest of it I just wasted, I guess? Made sense to me anyhow....I must be in the right place now?

[ray23]

Look to not putting the lady down I wouldn't have her job at the moment for anything in the world, but the fact is Thai consumers are not causing the problem this is.

"Oil Rally of 697% Surpassed Dot-Com Craze in Speculators' Mania

By Michael Patterson and Elizabeth Stanton

June 13 (Bloomberg) -- The rally that drove oil to a record $139.12 a barrel last week surpassed the gains in Internet stocks that preceded the dot-com crash in 2000.

Crude rose 697 percent since trading at $17.45 a barrel on the New York Mercantile Exchange in November 2001, and reached 28 record highs this year. The last time a similar pattern was seen in equities was eight years ago, when Internet-related stocks sent the Nasdaq Composite Index up 640 percent to its highest level ever, according to data compiled by Bloomberg and Bespoke Investment Group LLC.

The Nasdaq tumbled 78 percent from its March 2000 peak, erasing about $6 trillion of market value, as investors concluded that prices weren't supported by profits at companies such as Broadcom Corp. and Amazon.com Inc. Billionaire investor George Soros and Stephen Schork, president of Schork Group Inc., say oil is ready to tumble because prices aren't justified by supply and demand.

``There's nothing different between this mania, the dot-com mania, the real estate mania, the Dow Jones mania of the 1920s, the South Sea bubble and the Dutch tulip-bulb mania,'' said Schork, whose Villanova, Pennsylvania-based firm advises the Organization of Petroleum Exporting Countries, Wall Street firms and oil companies on the outlook for energy prices. ``History repeats itself over and over and over again.''

Oil climbed on growing demand from China and India, whose economies expanded the past seven years at an average annual pace of 10.2 percent and 7.3 percent, respectively. Supply disruptions in Nigeria and Iraq and declining production in Russia also boosted prices. Investors added about $250 billion to commodity index trading strategies since 2003, according to Mike Masters, president and founder of Masters Capital Management, a St. Croix- based hedge fund.

Money Flow

Money is flowing into oil as the global economy slows. The worst U.S. housing slump since the 1930s and more than $390 billion of writedowns and credit losses at banks will slow global growth to 2.7 percent this year from 3.7 percent in 2007, according to the World Bank.

The U.S. economy's expansion may slow to 1.3 percent this year from 2.2 percent in 2007, dragging down oil demand by 240,000 barrels a day, according to economists surveyed by Bloomberg and Energy Department data. In China, the second- biggest fuel consumer after the U.S., economic growth may fall to 10.1 percent from 11.9 percent, the Bloomberg survey shows.

Supply, Demand

``I don't know if you can classify it as a bubble or not,'' said Masters. ``But there is no question that investor demand is having an effect on price. Very little of it has to do with physical supply and demand of crude oil.'' Masters testified at a Senate hearing in May on the role of speculators in commodities markets.

Gains in oil are the result of a ``bubble'' caused by speculation from index funds and a tight balance between supply and demand, Soros said in testimony before the Senate Committee on Commerce, Science and Transportation on June 3. ``The bubble is superimposed on an upward trend in oil prices that has a strong foundation in reality,'' he said.

Commodity index traders account for about 40 percent of the open interest, or outstanding contracts, in the 12 agricultural commodities for which the Commodity Futures Trading Commission reports data, according to Chicago-based Bianco Research LLC.

Crude futures more than doubled in the past year and surged $10.75 a barrel on June 6, the biggest rise on record and the largest in percentage terms since June 1996. Robert Aliber, a professor of economics emeritus at the University of Chicago Graduate School of Business, says the risk of a ``correction'' has increased because prices climbed so fast.

`Momentum Players'

``You've got speculation in a lot of commodities and that seems to be driving up the price,'' Aliber, co-author of ``Manias, Panics, and Crashes: A History of Financial Crises,'' said in an interview from Hanover, New Hampshire. ``Movements are dominated by momentum players who predict price changes from Wednesday to Friday on the basis of the price change from Monday to Wednesday.''

Burton Malkiel, a Princeton University economics professor and author of ``A Random Walk Down Wall Street,'' says the rise in oil may be justified because supplies are limited and demand in developing economies is increasing. That distinguishes oil from the market for technology stocks in the 1990s, where supply ``could be expanded infinitely'' and new stock issues helped push down prices, he said.

``The picture is fundamentally different than the Internet picture,'' Malkiel said in an interview from Princeton, New Jersey. ``I'm not saying we're running out of oil, but we're clearly supply-constrained. Five and 10 years from now, the price is going to be higher than $134.''

Nasdaq's Rally

The Nasdaq reached a record intraday high of 5,132.52 on March 10, 2000, in a rally that started in June 1994. Investors plowed $199 billion into mutual funds dedicated to U.S. equities during the 10-month stretch leading up to the peak, including $36.5 billion in February of that year, data from TrimTabs Investment Research in Sausalito, California show.

The flood helped boost the price-to-earnings ratio on shares of Irvine, California-based Broadcom to 617 in March 2000, according to Bloomberg data. Shares of the semiconductor maker, which surged 351 percent in 1999, lost 89 percent over the next three years. Broadcom fell 1.1 percent to $25.30 in Nasdaq trading yesterday.

``You can look at the chart and say oil's taking on the characteristics of a bubble,'' said James Bianco, the president of Bianco Research. Still, ``it may have a long way to go before it eventually peaks,'' he said.

To contact the reporters on this story: Michael Patterson in New York at [email protected]; Elizabeth Stanton in New York at [email protected].

Last Updated: June 13, 2008 00:02 EDT "

[bingobongo]

poor som chai, how will he able to keep up the lastest trends when he is essentially broke?

Country Annual inflation

China 7.7%

India 8.2%

Indonesia 10.4%

Malaysia 3.0%

Philippines 9.6%

Singapore 7.5%

South Korea 4.9%

Taiwan 4.1%

Thailand 7.6%

Vietnam 25.0%

Edited June 13, 2008 by bingobongo

[animatic]

I'm a yank and praying for new leaders.

This inflation is all >>>>>> Bush's iraq and a bit of Hugo Chavez too.

If a basic transport commodity goes off the chart expensive like oil has

10% inflation IS logical...

Bush's buddies are making their mother loads before he goes.

Cheney is not of this world.... cold amphibian fits better...

Tarissa is here and now and is making the best

of a pathetic hand to play.

Much of business is perception and national inflation rates

are very perception led. Same with Wall street.

ONE guy predicted $150 a barrel and it jumped to $138

And some of his friends made killings on it of course.

cclub75 nicely put also.

So Tarisa is attempting to make her own perceptions,

but sadly she has not the gravitas or minimalist speak

of Alan Greenspan who truely understood how closely

his words were parsed.

Adding an S or leaving it off could change the markets,

and he used that quite well.

Edited June 13, 2008 by animatic

[cclub75]

poor som chai, how will he able to keep up the lastest trends when he is essentially broke?

Country Annual inflation

China 7.7%

India 8.2%

Indonesia 10.4%

Malaysia 3.0%

Philippines 9.6%

Singapore 7.5%

South Korea 4.9%

Taiwan 4.1%

Thailand 7.6%

Vietnam 25.0%

And.... 4,2 % in the US... (stats just published)

But no problem, Bernanke is going to increase interest rates. Sure. A lot.

[skooldaze]

i have to say most of the comments on this thread are totally inane and a waste of time. I can't believe I kept reading. Reading them I thought i'd entered a room full of economists, but when reading them closer it's clear none of you have a clue.

take that back... OR ELSE!

Since the threat comes from Worf (Sp?) I shiver in fear and apologize

[bombdefuzer]

Today's rate any one please in GBP? Lost the link :-(

Google?

http://coinmill.com/GBP_THB.html#GBP=1

[Scott]

So if a person has about 1 million baht in the bank, what should they do with it? A different currency? Gold?

[cocopops]

she has not the gravitas or minimalist speak

of Alan Greenspan who truely understood how closely

his words were parsed.

Well Greenspan was always great at convincing people he was smart. Right now the prick is on a speaking tour explaining to everybody how this is not his fault and he saw it coming anyway. Ironic that Bernanke might go down in history as a donkey and Greenspan as a genius. Still, you never know, they might turn it around yet...

Bush's contribution - spending money like it's going out of fashion in Iraq - probably hasn't helped. But this is all about negative real interest rates, not yet another American administration that couldn't restrain it's expenditures.

And Chavez? I'm not so sure Chavez is anywhere near as important as Chavez likes to think he is.

[Old Man River]

Regular bullshit from Miss Tarisa.

Since it sounds like you have all the answers, what do you think the BOT should do to stave off inflation in Thailand?

It's not because I'm able to smell the BOT's crap, that I've got solutions...

Then Miss Tarissa supported the stupid "boost" policy of the gvt, the famous "stimulus packages". That was only 3 months ago (march 2008) !!

Unfortunately, these days the BOT no longer operates independently of the Finance Ministry. They may disagree in private, but not publicly. It's just the way it is.

I shudder to think what economic dream team this government may put together.

[Oliver Reed]

So if a person has about 1 million baht in the bank, what should they do with it? A different currency? Gold?

See crazy eddies post for some sound advice on that one, alternately i could send you my bank details

[Steps]

Were there is adversity there is opportunity. Any advice on the property market from the "armchair economists".

From what i understand the property bubble needs to burst and the Baht depreciate for real opportunities to arise for foriegn investors. Is there any pitfalls for investing in such a climate?

[Charleswehner]

Thai central bank chief concerned over rising inflation

BANGKOK:-- Bank of Thailand Governor Tarisa Watanagase on Friday voiced concerns regarding declining returns on savings and faster spending --rather than saving -- by consumers who in anticipation of higher inflation are buying now, stating that such action can push inflation to the double-digit level this year.

"Psychologically, if people think that the inflation rate will increase sharply, they will accelerate their spending. So, it is likely the inflation will surge to a double-digit level this year," she said.

-- TNA 2008-06-13

Bank of Thailand Governor Tarisa Watanagase is TALKING DOWN THE BAHT. She should know better.

In the nineteen-sixties, Harold Wilson in England was doing exactly the same thing - waffling about the future of Sterling. The future has not happened yet, so nobody knows what is going to happen.

However, it becomes a "SELF-FULFILLING PROPHESY" when people in high places chase away confidence in their own currency.

The British would not listen to me, so they wrecked their country. They also got President Carter to promulgate dire warnings about the future of the Dollar.

Then Reagan came into office, and found "on the doormat of the White House" a letter from me, saying he should not talk down the Dollar. He stopped talking down the Dollar, and the strongest period of economic growth for forty years arose in the States.

They called it "REAGANOMICS", but it was MY POLICY.

Then the British economy was collapsing. I wrote to Thatcher, saying that I had left a message with Reagan for her. She flew straight to Reagan. Reagan would not deliver the message. I wrote again, giving a clue what to say. She flew straight back to Reagan. She had got the message. The Pound Sterling DOUBLED in value, just as it was on the point of collapse.

This became known as "THATCHEROMICS", but it was again MY POLICY.

I say that Reagan found the letter, and that Thatcher read my two letters, and that Reagan told Thatcher. In fact this is not quite true. It is a kind of verbal shorthand. In reality, both were just puppets of a terrorist regime, the American terrorists being RIVALS of the British terrorists.

In the invasion of Iraq, for example, they are RELUCTANT ACCOMPLICES. Each gang would really want ALL the oil for itself, but they are afraid of the nuclear bombs of their rivals.

Britain went to war because its TALKING DOWN of the POUND wrecked all its industry. They called it a "POST-INDUSTRIAL SOCIETY", and it has stayed that way to this day. The gang decided to steal oil to try to return to prosperity.

Charles Douglas Wehner

[travelingmike]

one of the problems in thailand is the thai tend to follow like sheep, not unlike the george bush faithful, and as we know the thais can not save money(I tell my wife her brother should never be aloud to get a credit card-he is 20 and of the entitled generation), give it and they will spend it. Of course this is a blanket statement, here in america it is also the same. I watch as people complain about the fuel costs, food costs,etc. as they speed around in their suvs and big trucks, and I ride my bicycle to work, still buying large screen tv's americans think they are doing their part by putting in a fluorescent lightbulb-"I am conserving". Oh the "sacrificing" we are doing. The cost of the Iraq/afghan war is at 600 billion-officially, the unofficial costs- conservatively are 3 trillion, keep printing those bills. The general population does not think to much, I remember those people from the country side who thought Thaksin was so great for giving them cell phones. As a world economy, we are going to pay . I feel for the poorer countries, as food is something they have to sacrifice, here in the united states a sacrifice is keeping your car for an extra year, or holding off on getting the next ipod, or turning off the water while you brush your teeth. Of course this is not everyone. We have the fattest "poor" people here in the united states. People need to be forced into a bit of reality. The people who will do the best will scale back, simplify, conserve. The things we think we need are not needs. Is life actually better with all these "things"? Have we advanced as a society? I live a very good life here in the united states by not being apart of the consumer drive-yes I still buy things, but I think before the purchase. My wife stays home with our 2 children. I have a friend and her husband who make 300,000$ a year together and still have to work overtime to pay their bills. These things are true throughout the world, I just think we in the usa set the bar. I am off topic a bit, these are just observations from an arm chair economist.

[dougieboy]

Today's rate any one please in GBP? Lost the link :-(

GBP United Kingdom Pounds 64.64

[dinom]

Were there is adversity there is opportunity. Any advice on the property market from the "armchair economists".

From what i understand the property bubble needs to burst and the Baht depreciate for real opportunities to arise for foriegn investors. Is there any pitfalls for investing in such a climate?

Not yet time for the bubble to burst but 'coming soon'. Sit back and wait, in a while you might be able to get anything from a nice property, Mercedes, a plane and even a factory for small cash.

And please, some of you guys, not only blame the oil prices for that!! It's just an additional factor, the next crisis is due for a long time, now it's just happening a bit faster.

[markokang]

www.xe.com

easy to remember

[OldgitTom]

Were there is adversity there is opportunity. Any advice on the property market from the "armchair economists".

From what i understand the property bubble needs to burst and the Baht depreciate for real opportunities to arise for foriegn investors. Is there any pitfalls for investing in such a climate?

Not yet time for the bubble to burst but 'coming soon'. Sit back and wait, in a while you might be able to get anything from a nice property, Mercedes, a plane and even a factory for small cash.

And please, some of you guys, not only blame the oil prices for that!! It's just an additional factor, the next crisis is due for a long time, now it's just happening a bit faster.

Yo,

nuggets of wisdom here & there, as mostly folks make the common error of confusing morality with economics. Not your fault, economists are not paid to spread the real secrets – otherwise we’d all be rich, or maybe hanging bankers from the lamp posts along Wall & Threadneedle Street?

Watching the media economists is like seeing a witchdoctor dance around waving a stick with a monkey’s skull on the end. Lesson one, everything is inflationary (Taboo!) except profits. When the rich are making even more money, ‘the economy’ is healthy.

Actually, ballooning profits are inflationary – sooner or later, not enough outlets for sound investments – hence ‘bubble’ schemes (Taboo! Taboo!). Alas, they are only called ‘bubble’ schemes if they collapse, otherwise they are sound get-richer-quicker wheezes.

Us common folk are blamed for inflation. The witchdoctors cunningly conflate personal debt with the inherent indebtedness of the deficit banking system. I.e., capitalism entails inflation like drinking entails intoxication.

All money is debt. Banks have a monopoly to issue money. It enters the merry-go-round as loans to us. To simplify, let’s imagine for every $100 loaned out, we have to pay back with interest $110. So there is never enough money circulating in the economy to clear all debts. That’s why we have to go running around, rarely to make ends meet. That’s why ‘the economy’ always needs more bank loans to keep running.

So the debts to banks are always compounding, mounting, until ‘confidence’ fails – the big boys fear they won’t get their pounds of flesh – so the recessions-cum-depressions.

When your kindly governments borrow money from the banks to re-inflate, they increase the national debt. In effect, your children & grandchildren are sold into debt slavery to solve the banks’ problems.

Small nations like Thailand can do relatively little against the effects of this global scam, only join in, & try to fend off the big sharks. Answer? Govs. only to issue money, & a social wage to one & all. The social wage would at least guarantee everyone had the real income to exist.

That’s the answer. Wouldn’t work, don’t like? No skin off my nose. Enjoy the entropy while you can. Old git Tom

[Jimi007]

HE is actually a SHE...

Rates as of 2008-06-12 19:09:49 UTC (GMT). Base currency is THB.

Currency Unit THB per Unit Units per THB

================================ =================== ===================

USD United States Dollars 33.1978681901 0.0301224161

EUR Euro 51.1917764797 0.0195343875

GBP United Kingdom Pounds 64.6455713348 0.0154689638

CAD Canada Dollars 32.4720629903 0.0307957028

AUD Australia Dollars 31.0171396468 0.0322402392

JPY Japan Yen 0.3076716179 3.2502185503

Where are these rates from? Can you get some baht for me at this rate? According to Bank of Bangkok closing prices this week for buying foriegn currency, which are higher than on the 12th were:

USD1 USD : 1 32.05

USD5 USD : 5-20 32.39

USD50 USD : 50-100 32.81

GBP United Kingdom 63.38

EUR Euro Zone 50.34

http://www.bangkokbank.com/Bangkok+Bank/We...es/FX+Rates.htm

[john b good]

This illustrates one of the fundamental differences in the mindset of the Thai people, from say the Japanese and other Asian nations where there is far more caution and financial prudence when times get tough and there's a financial turnaround. I always argued that Thailand never learned the lessons of the 97 crash, despite loads of articles in the local press claiming it had in the few years after and that there would never be runaway spending like the mid-90's period again. Guess some lessons need to be learned time and again to sink in.

Thai's are very slow learners

It has always been my view that the strengthening of the baht over recent months has been due solely to the weakening of other currencies and absolutely nothing to do with anything that Thailand is doing in the fiscal department.

[ray23]

Where will the opportunities be probably in land you got to find that guy who has some extra that he really isn't using about to lose his pickup. Then you can actually deal on price.

Thats one that has been common in this neck of the woods for years.

[fridgemagnet]

Where will the opportunities be probably in land you got to find that guy who has some extra that he really isn't using about to lose his pickup. Then you can actually deal on price.

Thats one that has been common in this neck of the woods for years.

if Thai were to allow falang to buy land - that would perhaps prevent a property bubble burst and keep the economy rolling....

[krading]

Where will the opportunities be probably in land you got to find that guy who has some extra that he really isn't using about to lose his pickup. Then you can actually deal on price.

Thats one that has been common in this neck of the woods for years.

if Thai were to allow falang to buy land - that would perhaps prevent a property bubble burst and keep the economy rolling....

[krading]

Where will the opportunities be probably in land you got to find that guy who has some extra that he really isn't using about to lose his pickup. Then you can actually deal on price.

Thats one that has been common in this neck of the woods for years.

if Thai were to allow falang to buy land - that would perhaps prevent a property bubble burst and keep the economy rolling....

Give it to me simply, do I buy a house now or wait for a better rate for $AUD?

[SNGLIFE]

Yay! More distress = more foreclosures = better for me and the Mrs. when we buy more land next year! Like the proverbial squirrel, I've been planning and getting prepared to exploit times like these. Tank! Tank! Tank!

Everything is a cycle. I missed out on 1997, but looks like there will be another.

Edited June 14, 2008 by SNGLIFE