Devaluation

[12DrinkMore]

There have been numerous posts going on about how the Thai government should devalue the THB to increase exports and tourism (and as a side effect help the Brits...).

Is this really an option? If so, by how much?

But more importantly how do you think the Thai government can simply say, "right, let's knock 10% of the value of the Baht".

Well, it won't work. At least not that precisely and certainly not that easily.

Ever since the peg against the USD was dropped the THB floats around in the huge pond of international currencies. Its value is determined by the demand for it, which is influenced by controllable factors, business factors and speculators.

If there is NO pressure in the markets selling the THB, the Thai government can only drop the interest rate and/or sell THB into the markets against foreign exchange provided they can find buyers (which would also perversely tend to make the THB stronger as the reserves built up), or just print loads of THB and spread them around the rice fields, as indeed that moron Brown is about to do with the GBP. They can also influence the markets to an extent by their statements.

But the effect of devaluing the currency is to increase the price of imports, so then the price of oil etc feeds through and increases inflation. So the benefits seen by increased exports are offset by increased inflation.

But a beggar-the-neighbour approach will then pi55 off other competing Asian countries, as they will suffer more than Thailand if the devaluation diverts more of the "pot" to Thailand. The Eurozone is already well pi55ed off with Brown due to his policies. And then, if the other countries start to do the same, the overall effect is that ALL will be worse of as the imports of essentials, particularly oil, will be more expensive for everybody and the "pot" will return to its previous balance based on perceived competitive value, BUT with HIGHER inflation. So ALL THE COUNTRIES LOSE OUT.

In the current world depression the "pot" has been substantially reduced. I would argue that the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation. This is in any case the only way that has a future in the global competition for a market share. Yes, the world will suffer, but any attempt by one country to go it alone will only make it worse for everybody.

In the same way Brown's stupid and selfish policy of devaluing the GBP may have produced results in the past when there was a UK manufacturing industry to support and globalisation was not a consideration. But he has screwed up and the UK will now suffer worse than anywhere else.

Anybody care to take up the argument?

Edited February 25, 2009 by 12DrinkMore

[mommysboy]

There have been numerous posts going on about how the Thai government should devalue the THB to increase exports and tourism (and as a side effect help the Brits...).

Is this really an option? If so, by how much?

But more importantly how do you think the Thai government can simply say, "right, let's knock 10% of the value of the Baht".

Well, it won't work. At least not that precisely and certainly not that easily.

Ever since the peg against the USD was dropped the THB floats around in the huge pond of international currencies. Its value is determined by the demand for it, which is influenced by controllable factors, business factors and speculators.

If there is NO pressure in the markets selling the THB, the Thai government can only drop the interest rate and/or sell THB into the markets against foreign exchange provided they can find buyers (which would also perversely tend to make the THB stronger as the reserves built up), or just print loads of THB and spread them around the rice fields, as indeed that moron Brown is about to do with the GBP. They can also influence the markets to an extent by their statements.

But the effect of devaluing the currency is to increase the price of imports, so then the price of oil etc feeds through and increases inflation. So the benefits seen by increased exports are offset by increased inflation.

But a beggar-the-neighbour approach will then pi55 off other competing Asian countries, as they will suffer more than Thailand if the devaluation diverts more of the "pot" to Thailand. The Eurozone is already well pi55ed off with Brown due to his policies. And then, if the other countries start to do the same, the overall effect is that ALL will be worse of as the imports of essentials, particularly oil, will be more expensive for everybody and the "pot" will return to its previous balance based on perceived competitive value, BUT with HIGHER inflation. So ALL THE COUNTRIES LOSE OUT.

In the current world depression the "pot" has been substantially reduced. I would argue that the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation. This is in any case the only way that has a future in the global competition for a market share. Yes, the world will suffer, but any attempt by one country to go it alone will only make it worse for everybody.

In the same way Brown's stupid and selfish policy of devaluing the GBP may have produced results in the past when there was a UK manufacturing industry to support and globalisation was not a consideration. But he has screwed up and the UK will now suffer worse than anywhere else.

Anybody care to take up the argument?

Well, last I heard the UK was set to defy earlier forecasts and Germany looked set for a clobbering. Why not keep UK out of the argument as you are clearly biased.

A strong bt is the last thing Thailand wants, but IMHO a devaluation wouldn't solve much as there is a catastrophic drop in demand. It might help tourism, but again this is about not being able to afford a holiday full stop.

I don't know how it could be achieved anyway as you point out.

Most likely an overstrong Thai bt would attract the attention of speculators who would sell it short. That's the most likely scenario. if it doesn't happen it might indicate that the bt isn't so highly priced after all.

I personally think Thailand's problems are more fundamental anyway.

[Merangue]

I would argue that the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation.

Errr if that is what you argue i think you must be insane.

How can Thailand compete against the likes of Japan and Korea on Quality, pricing or reputation? They are not even in the same league.

The only thing Thailand have as an advantage against these two is costs and due to the strong Baht that advantage is lost.

Devalue the baht and there is a small chance some of the factories won't have to completely close. Fail to do so and i suspect that the 1.5 million unemployed forecast will be a nice dream in a few months time.

[Chaimai]

I would argue that the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation.

Errr if that is what you argue i think you must be insane.

How can Thailand compete against the likes of Japan and Korea on Quality, pricing or reputation? They are not even in the same league.

The only thing Thailand have as an advantage against these two is costs and due to the strong Baht that advantage is lost.

Devalue the baht and there is a small chance some of the factories won't have to completely close. Fail to do so and i suspect that the 1.5 million unemployed forecast will be a nice dream in a few months time.

I have to agree. History is against Thailand having proved themselves on quality and reputation. There are many areas where they are not even competing on price. They have to be a low-cost producer to compete and any advantage there is lost if the Baht is strong relative to it's Asian neighbours.

Tourism is a different story. Remarkably, many headline costs (hotels) have not come down despite market conditions and a weakening of the Baht will only really benefit those already committed to Thailand - OK, it would increase their spending power and put more Baht into the economy. For potential new visitors any currency devaluation/depreciation is likely to be out-weighed by the fact that many Westerners cannot afford to come anyway - the strong Baht (weak Sterling etc) is just the nail in the coffin.

[cclub75]

the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation.

Overall I agree with you. But you're too optimistic.

When the house is burning, plus the city around, you don't care about "quality, pricing and reputation".

Have you seen the figures for exports in january in Japan ? -45,7 %. I repeat : -45,7 % compared to january 2008.

Half gone !

Unemployement figures in France for january were published today : + 90 000 people. It's unprecedented. Even in the dark days of 81 and the first socialist+communist government France never had + 90 000 unemployed people in one month...

Peruse the daily news feed... it's an horror. Everywhere.

My point : when the panic is growing, you can be sure that the politicians and the bureaucrats will do whatever they can to fxxx up more.

And at one point the beggar-thy-neighbour will prevail... Because it's easy. And it's the best way indeed to fxxx up a little bit more the situation.

Edited February 25, 2009 by cclub75

[midas]

In the current world depression the "pot" has been substantially reduced. I would argue that the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation. This is in any case the only way that has a future in the global competition for a market share. Yes, the world will suffer, but any attempt by one country to go it alone will only make it worse for everybody.

Anybody care to take up the argument?

I have lived here for six years and in so many ways a really great place .

But one thing I have learnt is that Thai's in general are not adaptable

enough to compete with other Asians economies. Justifiably perhaps because they

are one of the few countries in this region never to have been colonised,

their national pride can sometimes mask a more serious unwillingness to listen

to the ideas of others and in some instances their outlook is arrogant.

They believie they can be the " hub " of this and the " hub " of that

instead of concentrating on what they can be good at.

I have seen so many instances over the last 6 years

where they never seem to learn from making a mistake.

Quality ? You have to be joking -do you see quality in building construction? Can you honestly say

the new international airport is anywhere near the standard of those in places like Seoul, Hong Kong,

Singapore? Yes they can produce good quality foodstuff but does quality come to mind

when you look up and you see those hideous overhead cables in every street and soi?

Pricing -are you talking about the unique Thai perspective of economics where it's

something doesn't successfully sell -their answer is to increase the price ?

Reputation -with the disruption that occurred at the international airport and with more disruption likely

until the red and yellow shirts sort things out permanently- I suggest their reputation will be very much on hold.

Fifteen years ago, the world didn't even have access to some of Thailand's neighbouring countries e.g. China,

Cambodia, Vietnam, Laos and even Burma. Now that people can visit these places and even start up business

enterprises in these countries, theymay find these other locations offer something completely different to Thailand.

Trying to endlessly prop up the Thai baht would just be another example of its futile attempt to look better

than its neighbours and while in reality yes Thailand is very unique.................but so are the all others

[gregb]

It doesn't take a PhD to recognize that export based economies are going to be in real trouble in the future. Devaluing the Baht to try and remain competitive in a dying industry isn't the answer. It's time to take a hard look at the fundamentals and change perspectives. The whole world is going through a consumption crisis, and Thailand will be no exception.

The long term solution is to try and decouple as much as possible from the rest of the world, and stop trying to grow. Growth as an economic paradigm is finished for a few decades anyway. Concentrate on sufficiency and conservation. Thailand's biggest problem will be energy. So actions right now should focus on modifying the economy to free themselves from energy imports. The way to do this is to raise oil prices to encourage alternatives. The primary method for this would be done through taxes, the proceeds of which are then invested in R&D for alternative energy and infrastructure projects such as improved interprovincial rail systems and metropolitan mass transit. People will never adapt until they are forced to. Taxes are a strong weapon that can be used to prematurely force adaptation.

Many people are currently arguing against protectionism and trade barriers, and they can probably make a valid argument in the short term...but only the very short term. When the whole world is in turmoil your best options are to insulate yourself as much as possible and try to ride out the storm. It seems to me that a controlled weakening of the Baht would accomplish several things, namely providing a smoothing period for phasing out exports as a key part of the economy, similarly allowing tourism a soft landing vs. a hard crash, and finally raising the prices of imports, particularly energy, to encourage domestic production and adaptation. The eventual goal being the sufficiency economy, with little to no dependence on external trade.

So I'm going to argue the counter position, but not for the reasons you traditionally hear. Yes, weaken the Baht, but do so in the context of an entire policy to roll back globalization, and use the weakening currency only to smooth the harmful, transient effects of that policy. Do not try and compete against other Asian countries. Thailand can never win that race. The proper strategy is to drop out entirely when you realize you're outmatched. Interestingly, you wouldn't even have to print money to make this policy happen. Just announcing it would start the foreign investors withdrawing their money, and then you just have to manage the fall, which is always easier than an active devaluation. This would take courage and enlightened leadership however, neither of which are prevalent in the Thai government today.

And I can already anticipate the arguments coming. Cuba! North Korea! Hey...Cuba and North Korea might look pretty good before this crisis is over. The biggest mistake will be in underestimating how bad this is going to get.

[thaihome]

...

Anybody care to take up the argument?

I won't take up the argument because I agree with, especially the part about hurting the economy due to the increased cost of imports that are almost all denominated in USD.

The other reason is people seemed to have failed to realize that the baht is weakening, and it is at it lowest point in over year. (see graph below)

That is of course against the USD, which is all that counts for Thailand. I assume the people that are upset and convinced the baht is too strong are those people denominated in Sterling or Euros, which have lost a lot against the USD over the past few months.

The USD, of course, being the currency that was proclaimed dead in many threads on this very forum in the not too distant past.

TH

[mommysboy]

...

Anybody care to take up the argument?

I won't take up the argument because I agree with, especially the part about hurting the economy due to the increased cost of imports that are almost all denominated in USD.

The other reason is people seemed to have failed to realize that the baht is weakening, and it is at it lowest point in over year. (see graph below)

That is of course against the USD, which is all that counts for Thailand. I assume the people that are upset and convinced the baht is too strong are those people denominated in Sterling or Euros, which have lost a lot against the USD over the past few months.

The USD, of course, being the currency that was proclaimed dead in many threads on this very forum in the not too distant past.

TH

But your graph is over a very short time period. Sure, the dollar has strengthened this year. In my mind 40bt to the dollar is about the norm, and as you point out the dollar is strong at the moment too.

It's not just the pound too, most national currencies of note are well down save the Yen.

I still don't think a devaluation will do any good anyway. Even the competitive economies, who produce good quality and have a good reputation can't cushion the depression. What chance Thailand?

The only thing it could clear up on is tourism, but we're told this only accounts for 6% of GDP so again what's the point.

I think Thailand is going to suffer extremely badly, the only option is a return to farming which will at least keep people fed and active, but I'd expect to see the economy contract markedly for quite sometime.

Even after all this time, I'm so surprised that tourism isn't worth more to Thailand, and I still can't help thinking the full scale of it's benefit is not known. If the figures are being masked for some obscure reason, then Thailand really needs to promote tourism, perhaps subsidise it a little in the short term, and yes devalue pretty smartish if possible.

[thaihome]

But your graph is over a very short time period. Sure, the dollar has strengthened this year. In my mind 40bt to the dollar is about the norm, and as you point out the dollar is strong at the moment too.

It's not just the pound too, most national currencies of note are well down save the Yen.

I still don't think a devaluation will do any good anyway. Even the competitive economies, who produce good quality and have a good reputation can't cushion the depression. What chance Thailand?

The only thing it could clear up on is tourism, but we're told this only accounts for 6% of GDP so again what's the point.

I think Thailand is going to suffer extremely badly, the only option is a return to farming which will at least keep people fed and active, but I'd expect to see the economy contract markedly for quite sometime.

Even after all this time, I'm so surprised that tourism isn't worth more to Thailand, and I still can't help thinking the full scale of it's benefit is not known. If the figures are being masked for some obscure reason, then Thailand really needs to promote tourism, perhaps subsidise it a little in the short term, and yes devalue pretty smartish if possible.

My graph is over the past year, and my point was that exports increased by some 20% in the first three quarters of 2008 when the baht was even stronger then it is today and it is only the world wide reduction in demand that has caused the drop, not the value of the baht. Thailand is going to suffer through this, just like every other export dependent economy in Asia.

Tourism is important, but just like the demand for exports, dependent on the demand outside Thailand. I’m sure you think it more important because that is part of Thailand you see and you don’t have much exposure to the other 95% of it.

I don’t understand the comments about quality of exports, sure Thailand is not in the same league for many products as Japan, but many manufacturers are located and do final assembly here, especially in the electronics/computer parts sector, because the quality is higher here then say China. Open your computer and there is a better then 50% chance the hard drive in it is assembled in Thailand.

TH

[Naam]

My graph is over the past year, and my point was that exports increased by some 20% in the first three quarters of 2008 when the baht was even stronger then it is today and it is only the world wide reduction in demand that has caused the drop, not the value of the baht. Thailand is going to suffer through this, just like every other export dependent economy in Asia.

even if you stress that fact on your knees for 25 hours a day (skipping lunch) you will not change the mind of the wishful thinkers who go on raving and ranting about the strong Baht which kills tourism, might push the country into bankruptcy and to prevent this the Baht should be devalued.

Mommysboy has a point however!

"Even after all this time, I'm so surprised that tourism isn't worth more to Thailand, and I still can't help thinking the full scale of it's benefit is not known."

inspite of the fact that tourism represents only 6% of GDP it counts much more as far as employment, respectively unemployment is concerned. simple reason: tourism provides a relatively higher number of jobs then a lot of other industries.

Edited February 26, 2009 by Naam

[thaihome]

But did you like my graph that should a weakening baht as a downward line?

TH

[Naam]

But did you like my graph that should a weakening baht as a downward line?

TH

very much

[mommysboy]

...

Anybody care to take up the argument?

I won't take up the argument because I agree with, especially the part about hurting the economy due to the increased cost of imports that are almost all denominated in USD.

The other reason is people seemed to have failed to realize that the baht is weakening, and it is at it lowest point in over year. (see graph below)

That is of course against the USD, which is all that counts for Thailand. I assume the people that are upset and convinced the baht is too strong are those people denominated in Sterling or Euros, which have lost a lot against the USD over the past few months.

The USD, of course, being the currency that was proclaimed dead in many threads on this very forum in the not too distant past.

TH

But your graph is over a very short time period. Sure, the dollar has strengthened this year. In my mind 40bt to the dollar is about the norm, and as you point out the dollar is strong at the moment too.

It's not just the pound too, most national currencies of note are well down save the Yen.

I still don't think a devaluation will do any good anyway. Even the competitive economies, who produce good quality and have a good reputation can't cushion the depression. What chance Thailand?

The only thing it could clear up on is tourism, but we're told this only accounts for 6% of GDP so again what's the point.

I think Thailand is going to suffer extremely badly, the only option is a return to farming which will at least keep people fed and active, but I'd expect to see the economy contract markedly for quite sometime.

Even after all this time, I'm so surprised that tourism isn't worth more to Thailand, and I still can't help thinking the full scale of it's benefit is not known. If the figures are being masked for some obscure reason, then Thailand really needs to promote tourism, perhaps subsidise it a little in the short term, and yes devalue pretty smartish if possible.

It's still over a short time though and still negates what went b4. I seem to remember the dollar plummeting from near 40bt to around 30, and as many have commented the dollar is very strong against most currencies. In any case I'm sure it's not my imagination that I've seen the pound level or even up against the dollar and still fall against the bt. I do agree with naam however that most indulge in wishful thinking, and think a fall is only deserved if there is a strong economic case. Also ultimately if the Govt does not call the case right, then shorters will, and that hasn't happened yet.

You may have a point about the quality of Thai goods, but unfortunately that is the perception. I guess it's a perception that tourists pick up when buying clothes, souvenirs and the like, but it's not just about the product, its about service, language, and general attitude.

The main point though: would it do any good ?. No the game is lost in my view, though that is a view only (with my proviso about tourism).

[mommysboy]

My graph is over the past year, and my point was that exports increased by some 20% in the first three quarters of 2008 when the baht was even stronger then it is today and it is only the world wide reduction in demand that has caused the drop, not the value of the baht. Thailand is going to suffer through this, just like every other export dependent economy in Asia.

even if you stress that fact on your knees for 25 hours a day (skipping lunch) you will not change the mind of the wishful thinkers who go on raving and ranting about the strong Baht which kills tourism, might push the country into bankruptcy and to prevent this the Baht should be devalued.

Mommysboy has a point however!

"Even after all this time, I'm so surprised that tourism isn't worth more to Thailand, and I still can't help thinking the full scale of it's benefit is not known."

inspite of the fact that tourism represents only 6% of GDP it counts much more as far as employment, respectively unemployment is concerned. simple reason: tourism provides a relatively higher number of jobs then a lot of other industries.

Naam and TB

A few months ago it was ok for everything to be overvalued without consequence, since then the world's assets have dropped in price, but not the Thai bt. It may be that investigation proves that to be merited, but the argument simply placed as it is does not stand good.

[Naam]

My graph is over the past year, and my point was that exports increased by some 20% in the first three quarters of 2008 when the baht was even stronger then it is today and it is only the world wide reduction in demand that has caused the drop, not the value of the baht. Thailand is going to suffer through this, just like every other export dependent economy in Asia.

even if you stress that fact on your knees for 25 hours a day (skipping lunch) you will not change the mind of the wishful thinkers who go on raving and ranting about the strong Baht which kills tourism, might push the country into bankruptcy and to prevent this the Baht should be devalued.

Mommysboy has a point however!

"Even after all this time, I'm so surprised that tourism isn't worth more to Thailand, and I still can't help thinking the full scale of it's benefit is not known."

inspite of the fact that tourism represents only 6% of GDP it counts much more as far as employment, respectively unemployment is concerned. simple reason: tourism provides a relatively higher number of jobs then a lot of other industries.

Naam and TB

A few months ago it was ok for everything to be overvalued without consequence, since then the world's assets have dropped in price, but not the Thai bt. It may be that investigation proves that to be merited, but the argument simply placed as it is does not stand good.

i think the argument or rather conclusion is a very logical one. take a look at industrialised or emerging nations who's currencies have depreciated and compare their reduction of GDP to the one of Thailand. result = same, same or not much different. in this respect i am not referring to tourism.

looking at tourism in Thailand and the official GDP numbers only one should of course also consider (though difficult to estimate) the inofficial side business which adds an unknown percentage to GDP such as the "horizontal industry" which earns and pumps money into the economy.

[mommysboy]

My graph is over the past year, and my point was that exports increased by some 20% in the first three quarters of 2008 when the baht was even stronger then it is today and it is only the world wide reduction in demand that has caused the drop, not the value of the baht. Thailand is going to suffer through this, just like every other export dependent economy in Asia.

even if you stress that fact on your knees for 25 hours a day (skipping lunch) you will not change the mind of the wishful thinkers who go on raving and ranting about the strong Baht which kills tourism, might push the country into bankruptcy and to prevent this the Baht should be devalued.

Mommysboy has a point however!

"Even after all this time, I'm so surprised that tourism isn't worth more to Thailand, and I still can't help thinking the full scale of it's benefit is not known."

inspite of the fact that tourism represents only 6% of GDP it counts much more as far as employment, respectively unemployment is concerned. simple reason: tourism provides a relatively higher number of jobs then a lot of other industries.

Naam and TB

A few months ago it was ok for everything to be overvalued without consequence, since then the world's assets have dropped in price, but not the Thai bt. It may be that investigation proves that to be merited, but the argument simply placed as it is does not stand good.

i think the argument or rather conclusion is a very logical one. take a look at industrialised or emerging nations who's currencies have depreciated and compare their reduction of GDP to the one of Thailand. result = same, same or not much different. in this respect i am not referring to tourism.

looking at tourism in Thailand and the official GDP numbers only one should of course also consider (though difficult to estimate) the inofficial side business which adds an unknown percentage to GDP such as the "horizontal industry" which earns and pumps money into the economy.

It's a complex area for sure. Personally, I'm not convinced that the bt needs to devalue much but that may change as debt mounts.

There's ceratinly more than enough horizontal and pumping going on in Thailand, and as we all know initial fees can subsequently lead to large retainers.

How is this accounted for I wonder.

[sanmiguel]

In the same way Brown's stupid and selfish policy of devaluing the GBP may have produced results in the past when there was a UK manufacturing industry to support and globalisation was not a consideration. But he has screwed up and the UK will now suffer worse than anywhere else.

Anybody care to take up the argument?

Yes i'll argue that Gordon Brown didnt knowingly devalue the Pound, that would involve a plan which as he's show in 12 yrs in charge of the economy he doesnt have other then to create more debt.

The reason the Pound is devalued is because our economy in the last 10 years has been reliant on the property and the banking industries both of which have have far bigger burst bubbles then any other sector, these are 2 major reasons why Sterling and the UK economy is in the state it is. Oh yes and the fact British people are more indebted then any other nation.

As your figures of nations such as Japan who are reliant on exports of goods show they are going to suffer more in the short term then a country which isnt over reliant on exports such as Britain, as for no other reason people just arent buying goods in the way they were.

Also its a myth that Britain doesnt have an export industry, we are the 7th largest exporter in the world, but not too high per capita - http://en.wikipedia.org/wiki/List_of_countries_by_exports

One plus point for Britain is that the now almost nationallised banking industry will be nationalistic in its approach to lending hence in the mid term will be an asset to us, well should the global economy not go totally t7ts up, in which case British taxpayers will be up sh7t street for many many years.

As for the BHT market forces will sooner or later decide where it should be if it is artificially high at present, IMO the BHT is probably not too overvalued V's the GBP and USD as our economies have serious debt issues that will take years to resolve.

Edited February 27, 2009 by sanmiguel

[bonzor]

In the current world depression the "pot" has been substantially reduced. I would argue that the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation. This is in any case the only way that has a future in the global competition for a market share. Yes, the world will suffer, but any attempt by one country to go it alone will only make it worse for everybody.

Anybody care to take up the argument?

I have lived here for six years and in so many ways a really great place .

But one thing I have learnt is that Thai's in general are not adaptable

enough to compete with other Asians economies. Justifiably perhaps because they

are one of the few countries in this region never to have been colonised,

their national pride can sometimes mask a more serious unwillingness to listen

to the ideas of others and in some instances their outlook is arrogant.

They believie they can be the " hub " of this and the " hub " of that

instead of concentrating on what they can be good at.

I have seen so many instances over the last 6 years

where they never seem to learn from making a mistake.

Quality ? You have to be joking -do you see quality in building construction? Can you honestly say

the new international airport is anywhere near the standard of those in places like Seoul, Hong Kong,

Singapore? Yes they can produce good quality foodstuff but does quality come to mind

when you look up and you see those hideous overhead cables in every street and soi?

Pricing -are you talking about the unique Thai perspective of economics where it's

something doesn't successfully sell -their answer is to increase the price ?

Reputation -with the disruption that occurred at the international airport and with more disruption likely

until the red and yellow shirts sort things out permanently- I suggest their reputation will be very much on hold.

Fifteen years ago, the world didn't even have access to some of Thailand's neighbouring countries e.g. China,

Cambodia, Vietnam, Laos and even Burma. Now that people can visit these places and even start up business

enterprises in these countries, theymay find these other locations offer something completely different to Thailand.

Trying to endlessly prop up the Thai baht would just be another example of its futile attempt to look better

than its neighbours and while in reality yes Thailand is very unique.................but so are the all others

You are wrong. Your diatribe is racism disguised as analysis. Of course they compete look at the export figures. Look at growth over the last few years.

China is the worlds factory and that was built without any reputation at all for quality, even if quality is dubious, which in many areas it isnt you can still build exports at the right price.

They build crap houses because people pay for them. Including Falangs. Thats smart marketing. Just because you offer some anecdotal evidence about thais unwilling to accept lower prices, you draw negative conclusions about Thais grasp of economics. You really think thats unique to Thais? Take a look at housing markets around the world. Take a look at your own flawed analysis of Thais aboilty to compete.

Thais are world players in some major areas and they didn't get there because they dont understand economics.

As for propping up the baht. No government like to devalue where there is a viable opposition. Tha's because like it or not strength of currency relates to other countries appraisal of economic fundamentals. If you can have healthy exports despite a strong currency where's the problem? If you can't manage that the opposition call it mismanagement. Given the state of flux in Thai politics that is a charge the government are wary of. The opposition will attack with the proposition that it was the government mismanagement that lead to a fall in strength after a fall in exports. The government are damned if they do and damned if they don't.

As for increasing prices, if you knew anything about economics you would know that in some circumstances that is exactly the right response to a fall in demand. It doens't mean that's the situation now, but it does mean as a blanket criticism its nonsense.

Edited February 27, 2009 by bonzor

[Chaimai]

In the current world depression the "pot" has been substantially reduced. I would argue that the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation. This is in any case the only way that has a future in the global competition for a market share. Yes, the world will suffer, but any attempt by one country to go it alone will only make it worse for everybody.

Anybody care to take up the argument?

I have lived here for six years and in so many ways a really great place .

But one thing I have learnt is that Thai's in general are not adaptable

enough to compete with other Asians economies. Justifiably perhaps because they

are one of the few countries in this region never to have been colonised,

their national pride can sometimes mask a more serious unwillingness to listen

to the ideas of others and in some instances their outlook is arrogant.

They believie they can be the " hub " of this and the " hub " of that

instead of concentrating on what they can be good at.

I have seen so many instances over the last 6 years

where they never seem to learn from making a mistake.

Quality ? You have to be joking -do you see quality in building construction? Can you honestly say

the new international airport is anywhere near the standard of those in places like Seoul, Hong Kong,

Singapore? Yes they can produce good quality foodstuff but does quality come to mind

when you look up and you see those hideous overhead cables in every street and soi?

Pricing -are you talking about the unique Thai perspective of economics where it's

something doesn't successfully sell -their answer is to increase the price ?

Reputation -with the disruption that occurred at the international airport and with more disruption likely

until the red and yellow shirts sort things out permanently- I suggest their reputation will be very much on hold.

Fifteen years ago, the world didn't even have access to some of Thailand's neighbouring countries e.g. China,

Cambodia, Vietnam, Laos and even Burma. Now that people can visit these places and even start up business

enterprises in these countries, theymay find these other locations offer something completely different to Thailand.

Trying to endlessly prop up the Thai baht would just be another example of its futile attempt to look better

than its neighbours and while in reality yes Thailand is very unique.................but so are the all others

You are wrong. Your diatribe is racism disguised as analysis. Of course they compete look at the export figures. Look at growth over the last few years.

They don't compete on quality, they are not adaptable and midas is anything but a racist. I disagree with midas on many economic views but racist ? Never ! His assessment looked close to spot on to me - you have 3 years advantage on me, but that does not necessarily make you right and me wrong.

Thailand's best hope is to compete on price and whilst Cambodia and Vietnam might beat them on that, they must just edge it on reputation.

[bonzor]

It doesn't take a PhD to recognize that export based economies are going to be in real trouble in the future. Devaluing the Baht to try and remain competitive in a dying industry isn't the answer. It's time to take a hard look at the fundamentals and change perspectives. The whole world is going through a consumption crisis, and Thailand will be no exception.

The long term solution is to try and decouple as much as possible from the rest of the world, and stop trying to grow. Growth as an economic paradigm is finished for a few decades anyway. Concentrate on sufficiency and conservation. Thailand's biggest problem will be energy. So actions right now should focus on modifying the economy to free themselves from energy imports. The way to do this is to raise oil prices to encourage alternatives. The primary method for this would be done through taxes, the proceeds of which are then invested in R&D for alternative energy and infrastructure projects such as improved interprovincial rail systems and metropolitan mass transit. People will never adapt until they are forced to. Taxes are a strong weapon that can be used to prematurely force adaptation.

Many people are currently arguing against protectionism and trade barriers, and they can probably make a valid argument in the short term...but only the very short term. When the whole world is in turmoil your best options are to insulate yourself as much as possible and try to ride out the storm. It seems to me that a controlled weakening of the Baht would accomplish several things, namely providing a smoothing period for phasing out exports as a key part of the economy, similarly allowing tourism a soft landing vs. a hard crash, and finally raising the prices of imports, particularly energy, to encourage domestic production and adaptation. The eventual goal being the sufficiency economy, with little to no dependence on external trade.

So I'm going to argue the counter position, but not for the reasons you traditionally hear. Yes, weaken the Baht, but do so in the context of an entire policy to roll back globalization, and use the weakening currency only to smooth the harmful, transient effects of that policy. Do not try and compete against other Asian countries. Thailand can never win that race. The proper strategy is to drop out entirely when you realize you're outmatched. Interestingly, you wouldn't even have to print money to make this policy happen. Just announcing it would start the foreign investors withdrawing their money, and then you just have to manage the fall, which is always easier than an active devaluation. This would take courage and enlightened leadership however, neither of which are prevalent in the Thai government today.

And I can already anticipate the arguments coming. Cuba! North Korea! Hey...Cuba and North Korea might look pretty good before this crisis is over. The biggest mistake will be in underestimating how bad this is going to get.

Encouraging a self sufficiency economy in a world wide recession is like throwing petrol on a fire. What pray, are the poor countries that rely on a meagre export trade with the developed countries to do in your sufficiency paradise...starve to death of course. You presumably think Americas discredited buy American policy is a good thing. What do you think the effect of that if replicated around the world would be on Thailands exports? You are advocating exporting ruination around the world. Economics of the madhouse.

[bonzor]

In the current world depression the "pot" has been substantially reduced. I would argue that the best approach for Thailand is to maintain the current policy and NOT devalue against the other Asians, but to compete on quality, pricing and reputation. This is in any case the only way that has a future in the global competition for a market share. Yes, the world will suffer, but any attempt by one country to go it alone will only make it worse for everybody.

Anybody care to take up the argument?

I have lived here for six years and in so many ways a really great place .

But one thing I have learnt is that Thai's in general are not adaptable

enough to compete with other Asians economies. Justifiably perhaps because they

are one of the few countries in this region never to have been colonised,

their national pride can sometimes mask a more serious unwillingness to listen

to the ideas of others and in some instances their outlook is arrogant.

They believie they can be the " hub " of this and the " hub " of that

instead of concentrating on what they can be good at.

I have seen so many instances over the last 6 years

where they never seem to learn from making a mistake.

Quality ? You have to be joking -do you see quality in building construction? Can you honestly say

the new international airport is anywhere near the standard of those in places like Seoul, Hong Kong,

Singapore? Yes they can produce good quality foodstuff but does quality come to mind

when you look up and you see those hideous overhead cables in every street and soi?

Pricing -are you talking about the unique Thai perspective of economics where it's

something doesn't successfully sell -their answer is to increase the price ?

Reputation -with the disruption that occurred at the international airport and with more disruption likely

until the red and yellow shirts sort things out permanently- I suggest their reputation will be very much on hold.

Fifteen years ago, the world didn't even have access to some of Thailand's neighbouring countries e.g. China,

Cambodia, Vietnam, Laos and even Burma. Now that people can visit these places and even start up business

enterprises in these countries, theymay find these other locations offer something completely different to Thailand.

Trying to endlessly prop up the Thai baht would just be another example of its futile attempt to look better

than its neighbours and while in reality yes Thailand is very unique.................but so are the all others

You are wrong. Your diatribe is racism disguised as analysis. Of course they compete look at the export figures. Look at growth over the last few years.

They don't compete on quality, they are not adaptable and midas is anything but a racist. I disagree with midas on many economic views but racist ? Never ! His assessment looked close to spot on to me - you have 3 years advantage on me, but that does not necessarily make you right and me wrong.

Thailand's best hope is to compete on price and whilst Cambodia and Vietnam might beat them on that, they must just edge it on reputation.

Mitsubishi Thailand in 2007 announced it had exported its millionth pick up truck. According to you they don't compete on quality. Thailand are the worlds largest exporter of pickups. You know, those big things eulogised and drooled over by the same dumb falangs who post about crap quality. You are living in the past. If you condemn a whole nation as economically illiterate and in flexible and incapable of producing quality I cannot think of a better definition of racism, even if unwitting. Any country that has developed and grown as fast as thailand is flexible and adaptable. Dont make the mistake of projecting upon a nation the difficulties you...a falang have with Thais on an everyday level. Every immigrant makes the same charges against a host nation because it does not do things the way the immigrant is used to. You can find postings about inflexibilty on every expat site in every country. I've lived in six and heard it all before. And each disgruntled expat thinks they are saying something profound and deep about their host country. All they are doing is highlighting the problems immigrants have.

[Naam]

Mitsubishi Thailand in 2007 announced it had exported its millionth pick up truck. According to you they don't compete on quality. Thailand are the worlds largest exporter of pickups. You know, those big things eulogised and drooled over by the same dumb falangs who post about crap quality. You are living in the past. If you condemn a whole nation as economically illiterate and in flexible and incapable of producing quality I cannot think of a better definition of racism, even if unwitting. Any country that has developed and grown as fast as thailand is flexible and adaptable. Dont make the mistake of projecting upon a nation the difficulties you... a falang have with Thais on an everyday level. Every immigrant makes the same charges against a host nation because it does not do things the way the immigrant is used to. You can find postings about inflexibilty on every expat site in every country. I've lived in six and heard it all before. And each disgruntled expat thinks they are saying something profound and deep about their host country. All they are doing is highlighting the problems immigrants have.

would somebody please explain why i fully agree with Bonzor? should i worry or is it something that can be cured with over-the-counter drugs?

[Ricardo]

Tourism is a different story. Remarkably, many headline costs (hotels) have not come down despite market conditions and a weakening of the Baht will only really benefit those already committed to Thailand - OK, it would increase their spending power and put more Baht into the economy. For potential new visitors any currency devaluation/depreciation is likely to be out-weighed by the fact that many Westerners cannot afford to come anyway - the strong Baht (weak Sterling etc) is just the nail in the coffin.

The many Westerners who cannot afford to come anyway, are already lost to Thailand's tourist-industry, at least for the next few years. But for those who can still afford to come, if they find a weaker Baht when they change their money, they will hopefully spend those extra Baht and this will boost the Thai economy, a bit.

Same for long-term residents, if they get a few more Baht for their pounds or dollars, they're likely to spend them, which boosts the Thai economy just a little.

Ditto the farmer who gets a few extra Baht, for his lower-priced sack of rice (if the middle-man doesn't grab it first !), may spend them, and boost the domestic economy just a bit. Remember when Khun Tarisa was claiming, about 8 months ago, that the saviour of the Thai economy in 2009 was going to be domestic-consumption ? This is it.

The closed export-factories are gone, history, won't come back in a hurry. The ones on a 4-day-week, cutting their overheads and workers' pay, might survive. But anything which helps Thailand to compete, for those exports remaining, has to be better than just sitting frozen in the headlights. When Vietnam devalued by 16% (?) in the autumn, Thailand should have been competing by following them, it's all about minimising the damage from the global slowdown.

OK the cost of imports, raw-materials or parts-for-assembly or luxury-goods, will go up in Baht-terms. But isn't the best time to do this, when global commodity-prices are falling, or have just fallen ? And so long as Thailand adds value to materials or parts, before it re-exports them, then there is still a net-benefit, especially if the alternative is to lose the exports completely by pricing yourself out of business.

[gregb]

Encouraging a self sufficiency economy in a world wide recession is like throwing petrol on a fire

No, trying dig yourself out of a debt crisis by bailing out banks with more taxpayer debt is like throwing petrol on a fire. Decoupling from the modern global economy to become self sufficient is just plain common sense.

What we all need now is to accept that bad times are here and we will all suffer for the next few generations. Yes people will starve, but fewer people will starve if we take the sufficiency route than if we try and postpone the day of reckoning by continuing the voodoo economics being employed by today's financial community.

Globalization is the failure, not protectionist policies. Protectionism will naturally arise again over the next few decades. You don't have to believe me. History bears this out and so will time. Trying to keep the party going will be a clear disaster. Prepare to work extremely hard and be extremely poor. Be as self sufficient as you can to insulate yourself from the crisis as much as possible. The quicker you make a population realize the party has ended, the quicker you will start to build alternatives that are sustainable. That's the optimum strategy.

So I would say again, that there is merit in devaluing a currency, if that devaluation is also coupled with a plan to disengage from the carnage wrought by globalization.

[473geo]

Mitsubishi Thailand in 2007 announced it had exported its millionth pick up truck. According to you they don't compete on quality. Thailand are the worlds largest exporter of pickups. You know, those big things eulogised and drooled over by the same dumb falangs who post about crap quality. You are living in the past. If you condemn a whole nation as economically illiterate and in flexible and incapable of producing quality I cannot think of a better definition of racism, even if unwitting. Any country that has developed and grown as fast as thailand is flexible and adaptable. Dont make the mistake of projecting upon a nation the difficulties you... a falang have with Thais on an everyday level. Every immigrant makes the same charges against a host nation because it does not do things the way the immigrant is used to. You can find postings about inflexibilty on every expat site in every country. I've lived in six and heard it all before. And each disgruntled expat thinks they are saying something profound and deep about their host country. All they are doing is highlighting the problems immigrants have.

would somebody please explain why i fully agree with Bonzor? should i worry or is it something that can be cured with over-the-counter drugs?

I agree with the astounding inflexible approach of many ex-pats....people unwilling to accept change....thus spouting accordingly...

Naam...I think you need the tablets if you agree with.... "Every immigrant"...."racism"....well.... a bit strong don't you think?

I apologise in advance if you are referring only to the highlighted sections.....then you do not require medication.....you are clearly already taking your 'reality tablets'.....

I just don't understand why the clamour for a collapse of Thai economy devalued baht.....other than for personal gain/benefit.......just adapt to changing situations.....make the best of what you have!

[Naam]

Encouraging a self sufficiency economy in a world wide recession is like throwing petrol on a fire

No, trying dig yourself out of a debt crisis by bailing out banks with more taxpayer debt is like throwing petrol on a fire. Decoupling from the modern global economy to become self sufficient is just plain common sense.

What we all need now is to accept that bad times are here and we will all suffer for the next few generations. Yes people will starve, but fewer people will starve if we take the sufficiency route than if we try and postpone the day of reckoning by continuing the voodoo economics being employed by today's financial community.

Globalization is the failure, not protectionist policies. Protectionism will naturally arise again over the next few decades. You don't have to believe me. History bears this out and so will time. Trying to keep the party going will be a clear disaster. Prepare to work extremely hard and be extremely poor. Be as self sufficient as you can to insulate yourself from the crisis as much as possible. The quicker you make a population realize the party has ended, the quicker you will start to build alternatives that are sustainable. That's the optimum strategy.

So I would say again, that there is merit in devaluing a currency, if that devaluation is also coupled with a plan to disengage from the carnage wrought by globalization.

you are trying to simplify an extremely complex switch from globalisation to subsistence level à la Khmer Rouge but without the killings. establishing industries and taking part in globalisation was the reason which took Thailand from the level of economic middle ages (the first time i visited the country was 36 years ago) to its present position. talking about "carnage" caused by globalisation is not warranted at all as no carnage exists nor is one felt presently. Thailand's position is not too bad looked at it singly and especially not bad when compared to other countries facing the same difficulties.

i have laid down facts, you are forecasting a gloomy future "for generations" to which i can't agree. that we are all entitled to our individual thinking and perception goes of course without saying.

[gregb]

[establishing industries and taking part in globalisation was the reason which took Thailand from the level of economic middle ages (the first time i visited the country was 36 years ago) to its present position.

So you're implying we have at least 36 years of mistakes to clean up for? Alright, that's a good start on generations. Cleaning up a mess usually takes longer than creating it in the first place.

i have laid down facts, you are forecasting a gloomy future "for generations" to which i can't agree. that we are all entitled to our individual thinking and perception goes of course without saying.

Nobody said it was gloomy. I said it was going to be hard work, and we will all be poor. You are the one assuming this means gloom and doom. In fact, people lived like this for centuries prior to the industrial revolution, and will live like this again. Based on history, it is the standard state of the human condition. If you wish to associate this with gloom and doom that is your prerogative of course.

Where we seem to differ Naam is that your writing implies that you believe the system we have today is desirable if we could clean up some of the financial issues. I believe it is an incredible waste of resources, and simply can't continue no matter how comfortable we all find it. The financial problems we are experiencing are just one of the symptoms. The sooner we pull our collectives heads out of the sand and get down to business the better off we'll all be for it. And, yes, there will be an awful lot of pain to go around during that process.

BTW, what facts did you lay down? I don't see any in your post. Are you referring to a different thread? If you want to talk about facts that convinced me we are a civilization in decline, well, that is definitely another thread, and quite possibly a PhD thesis.

For this thread, I will state again that devaluation of the currency under a larger plan to disengage from globalization and move towards self sufficiency and protectionist policies could be a reasonable choice of action for reasons I explained earlier.

[Naam]

[establishing industries and taking part in globalisation was the reason which took Thailand from the level of economic middle ages (the first time i visited the country was 36 years ago) to its present position.

So you're implying we have at least 36 years of mistakes to clean up for? Alright, that's a good start on generations. Cleaning up a mess usually takes longer than creating it in the first place.

mistakes, like shit, happen all over the world at all times. i don't see those mistakes you are referring to as you don't specify them.

i have laid down facts, you are forecasting a gloomy future "for generations" to which i can't agree. that we are all entitled to our individual thinking and perception goes of course without saying.

Nobody said it was gloomy. I said it was going to be hard work, and we will all be poor. You are the one assuming this means gloom and doom. In fact, people lived like this for centuries prior to the industrial revolution, and will live like this again. Based on history, it is the standard state of the human condition. If you wish to associate this with gloom and doom that is your prerogative of course.

that's all a matter of perception and my perception differs from yours (very much). not only me but the majority of people in many countries abhor your "standard state of human condition" and call it doom and gloom. "standard state" was also that people lived for centuries suffering from horrible and incurable diseases. your statement referring to history is not a valid yardstick (except perhaps for you).

Where we seem to differ Naam is that your writing implies that you believe the system we have today is desirable if we could clean up some of the financial issues. I believe it is an incredible waste of resources, and simply can't continue no matter how comfortable we all find it. The financial problems we are experiencing are just one of the symptoms. The sooner we pull our collectives heads out of the sand and get down to business the better off we'll all be for it. And, yes, there will be an awful lot of pain to go around during that process.

i didn't mention any "system of today" and definitely not that our present system is desirable. polemic or putting words in my mouth which i didn't say do not work with me

by calling the present efforts a waste of resources you are contradicting one of your own theories, i.e. "fiat money will become obsolete et al". the efforts nowadays are not efforts but just cheap promises.

BTW, what facts did you lay down? I don't see any in your post. Are you referring to a different thread? If you want to talk about facts that convinced me we are a civilization in decline, well, that is definitely another thread, and quite possibly a PhD thesis.

fact is that there is no carnage to be seen anywhere. if you know where carnage happened/happens please enlighten me.

For this thread, I will state again that devaluation of the currency under a larger plan to disengage from globalization and move towards self sufficiency and protectionist policies could be a reasonable choice of action for reasons I explained earlier.

quite a strange logic as a disengagement from globalisation, self sufficiency and establishing protectionistic measures makes any devaluation or revaluation totally irrelevant except if it is done in stages. but i consider both academic. no country will go back to subsistence level.

[lannarebirth]

[establishing industries and taking part in globalisation was the reason which took Thailand from the level of economic middle ages (the first time i visited the country was 36 years ago) to its present position.

So you're implying we have at least 36 years of mistakes to clean up for? Alright, that's a good start on generations. Cleaning up a mess usually takes longer than creating it in the first place.

i have laid down facts, you are forecasting a gloomy future "for generations" to which i can't agree. that we are all entitled to our individual thinking and perception goes of course without saying.

Nobody said it was gloomy. I said it was going to be hard work, and we will all be poor. You are the one assuming this means gloom and doom. In fact, people lived like this for centuries prior to the industrial revolution, and will live like this again. Based on history, it is the standard state of the human condition. If you wish to associate this with gloom and doom that is your prerogative of course.

Where we seem to differ Naam is that your writing implies that you believe the system we have today is desirable if we could clean up some of the financial issues. I believe it is an incredible waste of resources, and simply can't continue no matter how comfortable we all find it. The financial problems we are experiencing are just one of the symptoms. The sooner we pull our collectives heads out of the sand and get down to business the better off we'll all be for it. And, yes, there will be an awful lot of pain to go around during that process.

BTW, what facts did you lay down? I don't see any in your post. Are you referring to a different thread? If you want to talk about facts that convinced me we are a civilization in decline, well, that is definitely another thread, and quite possibly a PhD thesis.

For this thread, I will state again that devaluation of the currency under a larger plan to disengage from globalization and move towards self sufficiency and protectionist policies could be a reasonable choice of action for reasons I explained earlier.

Hry greg,

You reminded me of a quote I read once:

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded---here and there, now and then---are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as "bad luck." (Robert A. Heinlein)