Thai Economic Crash

[badge]

Its not down to Thai's being 'stoic'.

The world is deep in brown stuff. If you(a country) are involved in any kind of international trade, your by proxy deep in brown stuff too.

Thai banks wont have the same financial issues that have ravaged the West as they don't have sophisticated enough financial markets to be a part of the problem issues, or to get involved in cycle in the first place.

Thailand will suffer economically though, as its export dependant, and unfortunately tourism will decline too.

[VegasVic]

The Thai baht remaining at these levels means just one thing, much higher unemployment coming for Thailand and a further loss of the textile industry to Vietnam, Indonesia and China

[cloudhopper]

If the world economy is indeed on a deflationary spiral then export demand will not significantly improve regardless of mercantilist attempts to manipulate the currency. Perhaps the Thai CB knows this and prefers not to dilute the THB like the USD, GBP, JPY and CHF, and thereby not importing higher energy, drug and tech etc. prices into the domestic economy.

[badge]

If the world economy is indeed on a deflationary spiral then export demand will not significantly improve regardless of mercantilist attempts to manipulate the currency. Perhaps the Thai CB knows this and prefers not to dilute the THB like the USD, GBP, JPY and CHF, and thereby not importing higher energy, drug and tech etc. prices into the domestic economy.

As significant(developed world) demand for energy, drugs and tech shrinks, so will prices. Making imports cheaper is fine, as long as you realise its at the cost of exports, which are where Thailands trade balance leans, and thus growth.

[cloudhopper]

As significant(developed world) demand for energy, drugs and tech shrinks, so will prices. Making imports cheaper is fine, as long as you realise its at the cost of exports, which are where Thailands trade balance leans, and thus growth.

Countries that dilute their currency will see prices for everything imported (e.g. in the US, oil and everything related to oil, like food) rise even in the face of falling demand. Any economy that continues to embrace a model of growth in the face of peak energy is doomed IMO.

[jdrake72]

and in the meanhile the THb is still keep rising like crazy against virtually all currencies in the world.

USD totally collapsed against the THB , having lost almost 3% in just a couple of days, today even euro,yen,pound and other currecines went down against the THB (and the USD keep falling of course).

The USD has declined against the THB in 10 of the last 16 days, losing about 3% in that stretch, but use some perspective -- it doesn't qualify as a "total collapse" given that the USD has strengthened by 21% against the THB over the last 14 months.

The Baht simply retraced some fast and massive gains by the dollar.

Thai government keeps this menthality on having the world most overvalued currency in order to humilate the other countries and show the superiority of Thailand.

But I am afraid hundreds of thousands of new jobless and impoverished people would not agree with this idiotic policy.

What are you talking about? It was only a couple years ago that we had the preferable "onshore" along with the real ("offshore") rates of exchange on the Baht, when the govt was trying to weaken its own currency to help its exports. If politicians did that (so blatantly) in a Western country, they'd have pitchforks in their back.

The Baht is no where near the most overvalued currency on Earth and the Thai government has more history trying to suppress its value than repress it. Recently their central bank has been jacking down interest rates to match all the other fiat currencies and they've been creating stimulus money to spend just like all the other fiat regimes.

of course tHBis the world most overvalued currency.

It was 57 for 1 USD 10 years ago and now it is 30% more expansive this the prices being maybe 300% higher of course.

Look at the other currencies: south korean won, indian rupeehs etc they are all muchb lower than the 1997 lowets peaks, look the eastern european currencies, the south american currencies all down between 20% and 100% against the USD and THB is the only excpetion despite it sterrible political enviroment, one of the most unfriendly laws aginst foreigners, the growth never been minimally comparable with other asian tigers, etc...

THB value is a joke and should be at lower than in 1997 ...this stupid mentality will take Thailand into a disaster,...just wait few more months...

[Naam]

of course tHBis the world most overvalued currency.

It was 57 for 1 USD 10 years ago and now it is 30% more expansive this the prices being maybe 300% higher of course.

Look at the other currencies: south korean won, indian rupeehs etc they are all muchb lower than the 1997 lowets peaks, look the eastern european currencies, the south american currencies all down between 20% and 100% against the USD and THB is the only excpetion despite it sterrible political enviroment, one of the most unfriendly laws aginst foreigners, the growth never been minimally comparable with other asian tigers, etc...

THB value is a joke and should be at lower than in 1997 ...this stupid mentality will take Thailand into a disaster,...just wait few more months...

picking specific time frames to suit ones own opinions is an easy task. for many years (till 1985) one Dollar bought 20 (twenty) Baht, after that for 12 long years one Dollar bought 25 (twenty-five) Baht.

[JimsKnight]

Yes but you got a helluva lot more bang for your buck back then than what you get now

[Naam]

Yes but you got a helluva lot more bang for your buck back then than what you get now

that is correct. i still remember the 70s when i used to visit BKK as a bachelor. each and everything was bloody cheap then. in 1973 a thai friend scolded me for being completely out of bounds when i tipped a waiter who served us a couple of drinks with the 'princely' sum of 20 Baht (1 US-Dollar)

[dclaryjr]

. in 1973 a thai friend scolded me for being completely out of bounds when i tipped a waiter who served us a couple of drinks with the 'princely' sum of 20 Baht (1 US-Dollar)

I got scolded in 1975 for tipping my waitress 5 baht at the NCO club. But it worked out ok--that waitress has been my wife for 33 years!

[Naam]

. in 1973 a thai friend scolded me for being completely out of bounds when i tipped a waiter who served us a couple of drinks with the 'princely' sum of 20 Baht (1 US-Dollar)

I got scolded in 1975 for tipping my waitress 5 baht at the NCO club. But it worked out ok--that waitress has been my wife for 33 years!

three cheers for you and your Mrs!

[badge]

As significant(developed world) demand for energy, drugs and tech shrinks, so will prices. Making imports cheaper is fine, as long as you realise its at the cost of exports, which are where Thailands trade balance leans, and thus growth.

Countries that dilute their currency will see prices for everything imported (e.g. in the US, oil and everything related to oil, like food) rise even in the face of falling demand. Any economy that continues to embrace a model of growth in the face of peak energy is doomed IMO.

Nominal prices do not rise during times of falling demand and excess capacity.

In the last year the($ denominated) CRB Index is down -40%, the USDIndex is up +15%.

Chasing growth is indeed futile right now - China is simply trying to avoid civil unrest. This will prove the THB's managed strength even more foolhardy for its economy.

When Oil breeches $148 its worth considering peak energy, until then, its not.

[jdrake72]

of course tHBis the world most overvalued currency.

It was 57 for 1 USD 10 years ago and now it is 30% more expansive this the prices being maybe 300% higher of course.

Look at the other currencies: south korean won, indian rupeehs etc they are all muchb lower than the 1997 lowets peaks, look the eastern european currencies, the south american currencies all down between 20% and 100% against the USD and THB is the only excpetion despite it sterrible political enviroment, one of the most unfriendly laws aginst foreigners, the growth never been minimally comparable with other asian tigers, etc...

THB value is a joke and should be at lower than in 1997 ...this stupid mentality will take Thailand into a disaster,...just wait few more months...

picking specific time frames to suit ones own opinions is an easy task. for many years (till 1985) one Dollar bought 20 (twenty) Baht, after that for 12 long years one Dollar bought 25 (twenty-five) Baht.

ok, than, pick the frame you want...the last months..

THB rising between 10% and 100% compared to most of the third-world currencies...many of these countries are competitors of Thailand and most of them have their economies in MUCH BETTER shape.

look at south american, african, asian and eastern european currencies.

Thailand economy is collapsing (now the Govt. admits a likely -3% GDP for 2009 and 1 million jobless but it can be even worse) and THB has risen 20-30% compared to currencies like Indian rupiah which economy is rising at 5% even this year.

Compare the THB to 95% of the world currencies in the past months, check one by one and see for yourself if they are higher and lower now. Check Oanda, it is easy.

What has happened in Thai society/economy in the past months to justify that its currency is amongst the world strongest ? Well, I cannot recall anything good : Just problems ! Economically, politically, socially .

Correct me if I am saying something illogical.....

You can say oh well but the Laotian kip is also artificially pegged and it is stable compared to the THB...yes, it is, but what a pity Laos is growing at 8% and Thailand economy will shrink at -3 (?) minus something...

For Laos there is a reason to have a relatively strong kip right now....:booming economy and lots of people pouring money into its fledging economy,,but for a economy on the verge of collapsing like Thai and frozens investments, it makes no sense at all.

Edited March 27, 2009 by jdrake72

[jdrake72]

of course tHBis the world most overvalued currency.

It was 57 for 1 USD 10 years ago and now it is 30% more expansive this the prices being maybe 300% higher of course.

Look at the other currencies: south korean won, indian rupeehs etc they are all muchb lower than the 1997 lowets peaks, look the eastern european currencies, the south american currencies all down between 20% and 100% against the USD and THB is the only excpetion despite it sterrible political enviroment, one of the most unfriendly laws aginst foreigners, the growth never been minimally comparable with other asian tigers, etc...

THB value is a joke and should be at lower than in 1997 ...this stupid mentality will take Thailand into a disaster,...just wait few more months...

picking specific time frames to suit ones own opinions is an easy task. for many years (till 1985) one Dollar bought 20 (twenty) Baht, after that for 12 long years one Dollar bought 25 (twenty-five) Baht.

yes, that s true, but you forget one part of the equation: inflation.

Prices in Thailand have also risen sharply just after the 1997 and also in certain years like 2008.

The total real accumulated inflation in the past 12 years .... and during the long 25THB7$ peg ?

Besides that, Thailand -apart a couple of years- have never had the economy booming so fast (in GDP terms) like the fastest asian tigers...

So, a so-so economy, inflation at times accelerate, a political enviroment amongst the most unstable of the region, and the current economic situation and still the THB is amongst the world strongest currencies ....I cannot find a reason..... maybe the strong banking system and the current high level of reserves,...yes, but these are reasons why Thailand can MANAGE to keep the THb afloat, but they don't justify its value.

My thinking is Thailand will have severe problems in recovering, I mean exports will suffer even more when the other competitors (mostly asians, and some southamerican) will start to recover and their exports rising again; at that moment the overvalued THB will be a hinder for Thailand ....

Japan is paying a terrible price for its strong yen and in few months we will see South Korea start to recover and its exports rising (coz the collapse of the won), but for Japan we know the problem is that yen is an international currency perceived as safe heaven and now lots of capital switching to yen, but THb is NOT a safe heaven of any kind, it is not an international currency, so I cannot see a logical reason to keep it strong. Somebody in the govt or in the BOT is very stubborn but they will regret their policies.... Thailand cannot afford losing competitiviness , now the world is in a deep crisis we don t see the difference between the Thai and Japanese exports (which currencies are strong) and the South Korean or other countries exports (which currencies have plummeted) but we will see the difference in few months .... the first ones will have trouble to recover and the second ones will see a strong jump in their exports and a economy recovery .

Edited March 27, 2009 by jdrake72

[cclub75]

Somebody in the govt or in the BOT is very stubborn but they will regret their policies.... Thailand cannot afford losing competitiviness , now the world is in a deep crisis we don t see the difference between the Thai and Japanese exports (which currencies are strong) and the South Korean or other countries exports (which currencies have plummeted) but we will see the difference in few months .... the first ones will have trouble to recover and the second ones will see a strong jump in their exports and a economy recovery .

Indeed. Sharp increase of BOT's foreign currency reserves last week... +2,44 % compared to the week before (114,08 billions USD versus 111,36). The BOT is buying USD.

Year on year, the increase is 7,6 % but... a few weeks before, we were still at +20%. So it's an up within a down trend.

However, I totally disagree with your views about exports and recovery "in a few months". How ? Where is the (solvent) demand ?

I'd take only one indicator (among dozen).

A total of seven US states have passed the 10% unemployment rate.

Voila. The debate around the "bottom" of the US economy is totally biased (see the so called "up" in the US consumption in february). They want to sell (give ?) the people hope. Illusions.

Unemployed people don't increase their spendings...

The US are among the biggest customers of asian exports... So ? What do we have left ? Europe ? Ah ah ah. South America ? Russia ? Middle East ? Africa perhaps ?

So Japan (exports -49 % in february !!), Thailand, South Korea, Taiwan, China... you name it : they are going south.

Sure, on the road, we will have other "ups". Mere blips on the big recession screen. But nothing substantial...

Edited March 27, 2009 by cclub75

[SoiGirlHunter]

US economy is TOAST and is no where near a bottom, dont listen to the Obama propaganda

[jdrake72]

Somebody in the govt or in the BOT is very stubborn but they will regret their policies.... Thailand cannot afford losing competitiviness , now the world is in a deep crisis we don t see the difference between the Thai and Japanese exports (which currencies are strong) and the South Korean or other countries exports (which currencies have plummeted) but we will see the difference in few months .... the first ones will have trouble to recover and the second ones will see a strong jump in their exports and a economy recovery .

Indeed. Sharp increase of BOT's foreign currency reserves last week... +2,44 % compared to the week before (114,08 billions USD versus 111,36). The BOT is buying USD.

Year on year, the increase is 7,6 % but... a few weeks before, we were still at +20%. So it's an up within a down trend.

However, I totally disagree with your views about exports and recovery "in a few months". How ? Where is the (solvent) demand ?

I'd take only one indicator (among dozen).

A total of seven US states have passed the 10% unemployment rate.

Voila. The debate around the "bottom" of the US economy is totally biased (see the so called "up" in the US consumption in february). They want to sell (give ?) the people hope. Illusions.

Unemployed people don't increase their spendings...

The US are among the biggest customers of asian exports... So ? What do we have left ? Europe ? Ah ah ah. South America ? Russia ? Middle East ? Africa perhaps ?

So Japan (exports -49 % in february !!), Thailand, South Korea, Taiwan, China... you name it : they are going south.

Sure, on the road, we will have other "ups". Mere blips on the big recession screen. But nothing substantial...

why ? Is USA the only countru in the world to buy South Korean cars or ships or TV s ?

http://www.bangkokpost.com/breakingnews/13...ded-for-economy

Read here what is happening to Thailand econoym and the total disaster will occur thanks to strong THB and BOT and Govt idiot policies ....There is the big risk it is gonna be much worse than most western adn asian economies

Edited March 29, 2009 by jdrake72

[apetley]

http://www.nationmultimedia.com/2009/03/30...ss_30099132.php

One of Thailands eminent economists suggesting that the Bht needs to weaken to at least 37 bht or the economy will not recover.

Exports are forecast to weaken by 30% in March and plunge even further in the 2nd and 3rd quarters.

Not good news at all.

[midas]

Read here what is happening to Thailand econoym and the total disaster will occur thanks to strong THB and BOT and Govt idiot policies ....There is the big risk it is gonna be much worse than most western adn asian economies

Amazing Thailand And they havent even paid off more than a small fraction of their debts from the

1997 Asian Economic Crisis yet ?

[JimsKnight]

Hmm, the IMF took back the money (after the Thai's repaid the interest) AFAIK. They did squander some of it but paid their dues back (or rather the IMF took them back!)

So the debts clear in my eyes. Or do you know different?

[midas]

Hmm, the IMF took back the money (after the Thai's repaid the interest) AFAIK. They did squander some of it but paid their dues back (or rather the IMF took them back!)

So the debts clear in my eyes. Or do you know different?

Not according to this article

The central bank's Financial Institutions Development Fund incurred liabilities of 1.4 trillion baht during the crisis for its bailout of creditors and depositors of ailing banks and finance companies.

The liabilities have been split into three lots, with 500 billion baht in the first lot to be paid down from annual profits generated by the central bank. Two other lots, of 112 billion and 776 billion, would be paid through returns from the central bank's general accounts.

From 1997 to 2007, however, the central bank has paid down just 31.6 billion baht for the first lot of 500 billion baht in debt.

http://www.bangkokpost.com/business/econom...-debt-authority

[ourmanflint]

Indeed. Sharp increase of BOT's foreign currency reserves last week... +2,44 % compared to the week before (114,08 billions USD versus 111,36). The BOT is buying USD.

Year on year, the increase is 7,6 % but... a few weeks before, we were still at +20%. So it's an up within a down trend.

Sure, on the road, we will have other "ups". Mere blips on the big recession screen. But nothing substantial...

So the BOT is buying up dollars. Is this so at some point in the very near future it will let the thai baht go into freefall and then sell all those dollars making vast amounts of money for its investors. Surely not. Surely the BOT is responsible to all the citizens of Thailand and not just its investors

[Naam]

Indeed. Sharp increase of BOT's foreign currency reserves last week... +2,44 % compared to the week before (114,08 billions USD versus 111,36). The BOT is buying USD.

Year on year, the increase is 7,6 % but... a few weeks before, we were still at +20%. So it's an up within a down trend.

Sure, on the road, we will have other "ups". Mere blips on the big recession screen. But nothing substantial...

So the BOT is buying up dollars. Is this so at some point in the very near future it will let the thai baht go into freefall and then sell all those dollars making vast amounts of money for its investors. Surely not. Surely the BOT is responsible to all the citizens of Thailand and not just its investors

NO, the BOT is SELLING dollars! and that since quite some time. before making ridiculous comments such as "the BOT is buying dollars" and "making vast amounts of money for its investors" please do your homework first

[BigSnake]

Nay, things will start to bounce back during the Hoilday and after the Red Shirt Boys calm down.

[jimjel]

The US in the past few weeks either loaned or gave Thailand $3.9 billion dollars, probably to keep the boat floating for a while.

[Naam]

The US in the past few weeks either loaned or gave Thailand $3.9 billion dollars, probably to keep the boat floating for a while.

did you read that in the "Delta Quadrant Telgraph" during the time when the aliens abducted you?

[jimjel]

The US in the past few weeks either loaned or gave Thailand $3.9 billion dollars, probably to keep the boat floating for a while.

did you read that in the "Delta Quadrant Telgraph" during the time when the aliens abducted you?

No, it was on the Bloomberg Financial news network, but they might have been mistaken as they couldn't possibly be better informed than you.

[Naam]

The US in the past few weeks either loaned or gave Thailand $3.9 billion dollars, probably to keep the boat floating for a while.

did you read that in the "Delta Quadrant Telgraph" during the time when the aliens abducted you?

No, it was on the Bloomberg Financial news network, but they might have been mistaken as they couldn't possibly be better informed than you.

i referred to the ridiculous assumption "probably to keep the boat floating for a while". which is definitely neither from Bloomberg nor from any other news network. look up the thai dollar reserves and then tell us again something about "keeping the boat afloat"

[ourmanflint]

Indeed. Sharp increase of BOT's foreign currency reserves last week... +2,44 % compared to the week before (114,08 billions USD versus 111,36). The BOT is buying USD.

Year on year, the increase is 7,6 % but... a few weeks before, we were still at +20%. So it's an up within a down trend.

Sure, on the road, we will have other "ups". Mere blips on the big recession screen. But nothing substantial...

So the BOT is buying up dollars. Is this so at some point in the very near future it will let the thai baht go into freefall and then sell all those dollars making vast amounts of money for its investors. Surely not. Surely the BOT is responsible to all the citizens of Thailand and not just its investors

NO, the BOT is SELLING dollars! and that since quite some time. before making ridiculous comments such as "the BOT is buying dollars" and "making vast amounts of money for its investors" please do your homework first

Naam

I was replying to someone else who reported that the BOT were buying up dollars, I'm far too busy to check all these facts for myself, c'mon!

Thinking about it, you're too clever and way too sarcastic to be serious

[cclub75]

NO, the BOT is SELLING dollars! and that since quite some time. before making ridiculous comments such as "the BOT is buying dollars" and "making vast amounts of money for its investors" please do your homework first

Boum. Once again Naam spoke too fast.

Do your homework.

The BOT, right now, is buying USD. Even though from the peak (last march), the BOT has reduced its exposure.

http://thaicrisis.wordpress.com/2009/03/30...o-buy-us-debts/

Weekly positions of the reserves :

http://www.bot.or.th/English/Statistics/Ec...lReserves.aspx#

Edited March 31, 2009 by cclub75