Thai FM Korn Backs US Fed's Monetary Easing Plan

[webfact]

Korn backs US Fed's monetary easing plan

By Agencies, The Nation

Finance minister says if measure works, it will be good for global economy

Finance Minister Korn Chatikavanij yesterday supported the US Federal Reserve's plan to inject another $600 billion (Bt1.8 trillion) into the US economy.

"Let's see how that pans out," the finance minister said in an interview with Bloomberg Television ahead of an Asia-Pacific Economic Cooperation (Apec) forum in Kyoto, Japan.

Earlier, China and Brazil sharply criticised the second round of US quantitative easing (QE2) on the grounds that it would lead to further depreciation of the dollar and asset-price bubbles in emerging-market economies.

Howver, Korn, who was in Japan to attend the Apec finance ministers' meeting, said the US plan to inject extra liquidity into its economy should be given time to work.

"If the quantitative easing does result in an economic recovery in the US, and results in an increase in the level of consumption, I think that would be good news for the global economy as a whole," he said.

Korn's stance is seen as a split from that of big emerging-market economies like China and Brazil which said the latest US move would further depreciate the dollar and put pressure on asset prices outside the US.

Korn also said Thailand will have to accept that its currency must appreciate given its relative economic strength.

"The reality is we need to adjust to [the situation of] a stronger currency," said Korn, who previously worked for US investment bank JP Morgan Chase and Co.

"We're also keeping a close eye on the situation to see whether any measures are needed in order to prevent excessive volatility as a result of excessive speculation. And I am willing to take whatever necessary action may be required."

The finance minister also expressed concern about protectionism after US Treasury Secretary Timothy F Geithner had pushed to discuss global imbalances in trade and investment flows.

"What we are concerned about is a rise in trade protectionism as an attempt to correct current-account imbalances," Korn said, adding, "setting the current account as a target may lead to use of the wrong tool in order to achieve that target."

Meanwhile, The Nation's Wichit Chaitrong reported from Kyoto that Korn had a meeting with Wang Jun, China's vice minister of finance, and expressed Asean's concern on the currency issue.

"I told him that we, Asean, have a great interest in the high growth of China's economy, but we could no longer withstand an impact from excessive capital inflows that caused our currencies to appreciate. So, it is time that China adjusts its exchange rate."

When massive capital outflows from the US head towards Asia, much of it is unable to enter China so it floods other emerging markets, especially Asean countries, Korn said.

"We would like the two economic giants to settle their differences on the exchange-rate issue. I think they understand our predicament," said Korn.

The finance minister also suggested that Asean as a regional grouping should play the mediator's role between the US and China in the ongoing currency conflict.

On the one hand, the US dollar has continued to depreciate, while on the other, China has not allowed the yuan to appreciate.

Given the latest US announcement of quantitative easing aimed at stimulating the domestic US economy, several Asian currencies have significantly appreciated against the US dollar, raising concerns about the region's export competitiveness.

-- The Nation 2010-11-07

[Thailand]

The US are simply printing more money to buy up debt if Korn thinks that is a good solution then we can be thankful he is the foreign minister and not the finance minister.

But then perhaps he thinks his job is to fawn all over the US?

[jucel]

yeh great idea to write IOU's to yourself!

[jucel]

yeh great idea to write IOU's to yourself!

[whybother]

The US are simply printing more money to buy up debt if Korn thinks that is a good solution then we can be thankful he is the foreign minister and not the finance minister.

But then perhaps he thinks his job is to fawn all over the US?

Korn is the Finance Minister. Kasit is the Foreign Minister.

The US aren't just printing money to buy up debt. One of the main aims is to get China to change their exchange rate to the $US.

[Robby nz]

"Let's see how that pans out,"

"If the quantitative easing does result in an economic recovery in the US, and results in an increase in the level of consumption, I think that would be good news for the global economy as a whole," he said.

Doesnt sound like support to me, more like cautious optomism, as in 'I hope but wait and see'

[animatic]

Yes, cautious optimism. They are trying something,

rather than doing nothing. And the list of choices is rather small.

They can't lower rates any, and the dollar is tanking,

so maybe jump starting the economy and getting some job creation NOW

rather than later is called for. Of course if this causes a ripple effect with

other nations turning protectionist, this is a bad thing.

But the dollar must come up, and the moribund economy must get moving again.

Interest rates must rise yet again, so there is a way to use them again as the economic relief valve.

They waited till just after the election, but I am sure they wanted to do this sooner,

but didn't want to risk it being a political football.

I see China being rather myopic; profit of your neighbors as much

and as long as possible, never worrying about killing your neighbors

and their ability to buy your products later. Short term thinking from

people who imagine they are long term players.

Edited November 7, 2010 by animatic

[Thailand]

The US are simply printing more money to buy up debt if Korn thinks that is a good solution then we can be thankful he is the foreign minister and not the finance minister.

But then perhaps he thinks his job is to fawn all over the US?

Korn is the Finance Minister. Kasit is the Foreign Minister.

The US aren't just printing money to buy up debt. One of the main aims is to get China to change their exchange rate to the $US.

Oops, my mistake.

Even worse then if he thinks it is a good solution. And as China already owns most of the US debt which will only increase then then the chances of pressure from the US peso is unlikely to be heard or simply ignored as China are doing now.

We are witnessing the demise of a superpower. http://www.disinfo.com/2010/10/its-2030-china-owns-america-because-of-the-health-care-bill-video/

[asiawatcher]

What a crock of... the US still 'enjoys' 17% unemployment so injecting 600Bn on an IOU means nothing. When you have heavy social security payments there is no incentive to 'work'. So let's go make another war, induct those within an age bracket into army, then try explain to the US Public as a necessity and kid yourselves unemployment is dropping. The US is fast disappearing up its own as*hole in a vortex of smoke screens by banks, Govt and the Fed.

[escaped]

Oh I feel very comfortable now that a minister of a country where 99% of the population needs a calculator to deduct 10 from 100 has backed the Fed's plan.

The worldwide economic crisis must be finished soon now.

[pitrevie]

THE US Federal Reserve’s $600 billion injection is “dismal”, “clueless” and doomed to failure, according to German finance minister Wolfgang Schäuble.

[trogers]

The US are simply printing more money to buy up debt if Korn thinks that is a good solution then we can be thankful he is the foreign minister and not the finance minister.

But then perhaps he thinks his job is to fawn all over the US?

Korn is the Finance Minister. Kasit is the Foreign Minister.

The US aren't just printing money to buy up debt. One of the main aims is to get China to change their exchange rate to the $US.

Or to get China to demand payment for exports in their own currency..., else, all those present and future US treasury bonds China holds will be buying peanuts.

[Lancelot]

Or to get China to demand payment for exports in their own currency..., else, all those present and future US treasury bonds China holds will be buying peanuts.

Why not demand gold? Of course then Chinese exports to the US would tank

[Thailand]

Or to get China to demand payment for exports in their own currency..., else, all those present and future US treasury bonds China holds will be buying peanuts.

Why not demand gold? Of course then Chinese exports to the US would tank

I wonder who has been buying up a lot of gold in recent months and pushing up the price. Bet you can see red there!

[whybother]

Or to get China to demand payment for exports in their own currency..., else, all those present and future US treasury bonds China holds will be buying peanuts.

Why not demand gold? Of course then Chinese exports to the US would tank

I wonder who has been buying up a lot of gold in recent months and pushing up the price. Bet you can see red there!

Has the gold price gone up in Baht (not Baht gold, but Baht money) or in $US?

[rreddin]

THE US Federal Reserve’s $600 billion injection is “dismal”, “clueless” and doomed to failure, according to German finance minister Wolfgang Schäuble.

He has a point, but he is talking from the economic moral high ground afforded by mufacturing led growth in the German economy. The US and UK, on the otherhand, oursourced large parts of their manufacturing base to China and some to Thailand. As a consequence, the US and UK economies become over-reliant of the service sector, particularly banking and financial services.

The US is devaluing the dollar, not IMHO, to act as a pressure point on China to revalue its currency, but to make the cost of manufacturing in the US much closer to the cost of doing so in China and South East Asia. This is how the Administration intends to repatriate jobs to the US.

The risk to this plan is that other currencies will also be devalued, thus negating what the Fed is doing.

[cloudhopper]

The US aren't just printing money to buy up debt. One of the main aims is to get China to change their exchange rate to the $US.

China is free to sell their USTs, or 600 billion of it anyway, back to Fed if they really want to make a statement about the US printing too much. They won't. Absolutely everyone is bullshitting each other (or at least their own citizens) in this game.

[mogoso]

Or to get China to demand payment for exports in their own currency..., else, all those present and future US treasury bonds China holds will be buying peanuts.

Why not demand gold? Of course then Chinese exports to the US would tank

I wonder who has been buying up a lot of gold in recent months and pushing up the price. Bet you can see red there!

The Obamas financial backer that wonderful citizen of the world's financial market, George Soros is trading in his dollars for gold. We all know how loved he is in Thailand and the UK for his fiscal responsibility while aiding a country in its economic troubles.

20% of the worlds gold reserves are held by gov'ts the US holds about a third of that, and values its gold at the rate of $42 dollars per ounce. At spot price value that'd be close to $300 billion dollars. If counties started demanding payment in gold then the price would drop.

China has been buying gold and mineral assets through the world, without much public outcry. Imagine the screaming if the US had decided to do that.

The US following the lefts economic hero Keynes is tottering toward an even worse economic future with inflation followed by depression in the forecast. Without gov't intervention and unprecedented spending their would've been a downturn and they would've recovered fairly quickly, A better idea would to have reduced the gov't spending and the gov't workforce as Britain will embark on.

[Thaddeus]

Oh I feel very comfortable now that a minister of a country where 99% of the population needs a calculator to deduct 10 from 100 has backed the Fed's plan.

What do the other 11% do?

[SkyHigh]

If the US cuts spending, it may get worse, economy shrinking, lower consumption etc. All tend to down cycle.

Now if US keeps printing $$ like this, inflation is up ahead. In worst scenario, potential depression is within reach.

Tough choice here.

FYI, if not because of China refusing to lower its currency value, Thailand would be in far worse situation during 1990 crisis.

Most of Asian country remember that well. To blame China as a giant greed is quite not true.

Edited November 7, 2010 by SkyHigh

[MrRichard2009]

The US through fraudulent mislabeling of junk housing assets sent the world into a tailspin ...... a few years later people want to blame China and their exchange rate ...... Classic typical smokescreen nonsense, to divert blame. ......... Who ever told you the US values it's gold at 43$ an ounce was pulling your leg LOL

[gregb]

Yes, cautious optimism. They are trying something,

rather than doing nothing. And the list of choices is rather small.

They can't lower rates any, and the dollar is tanking,

so maybe jump starting the economy and getting some job creation NOW

rather than later is called for. Of course if this causes a ripple effect with

other nations turning protectionist, this is a bad thing.

But the dollar must come up, and the moribund economy must get moving again.

Interest rates must rise yet again, so there is a way to use them again as the economic relief valve.

They waited till just after the election, but I am sure they wanted to do this sooner,

but didn't want to risk it being a political football.

I see China being rather myopic; profit of your neighbors as much

and as long as possible, never worrying about killing your neighbors

and their ability to buy your products later. Short term thinking from

people who imagine they are long term players.

Are you serious here? Come on. There is no justification for cautious optimism here. This is nothing more than an attempt to prolong a completely failed system. The US has only 1 choice, and they are recalcitrantly refusing to do it. They must:

Admit they are a collapsing empire.

Call home the military. Sell off the military bases where they can.

Stop trying to be the reserve currency. Pass that duty off to the IMF.

Tell the American people their way of life *IS* negotiable, and they all have to learn to be poor.

Let the banks fail and default on their debt.

Ask the rest of the developed world for aid.

Start over again from scratch.

Anything else is an illegitimate attempt to maintain the status quo, which has no chance of success.

Korn is a fool for supporting them on this. He should call them on their clearly political machinations. I find his support of this clearly ridiculous attempt to induce loss of confidence and subsequent hyperinflation in the US economy extremely irresponsible.

And yes, as an American, I am allowed to make these statements. It is time to accept collapse. Bring it on. The sooner we accept we are bankrupt, the better off we will all be. There is no chance to get the economy moving again under the current structure. The debt must be absolved first. It will happen either by default or by hyperinflation, but either way it will happen.

And as finance minister, Korn should know this.

[mogoso]

The US through fraudulent mislabeling of junk housing assets sent the world into a tailspin ...... a few years later people want to blame China and their exchange rate ...... Classic typical smokescreen nonsense, to divert blame. ......... Who ever told you the US values it's gold at 43$ an ounce was pulling your leg LOL

Actually I wrote $42 per ounce. The IMF values its gold at $47 per ounce. Perhaps you might wanna check it out before putting typing fingers in gear. Its just an internal accounting thing but true nonetheless.

[smedly]

Korn, who previously worked for US investment bank JP Morgan Chase and Co.

now there is one chap I would trust with nothing, scary stuff, who thinks this guy will have his own interests at heart no matter what the baht does, Thailand flutters in the wind of global currencies, they really need to start looking at the revaluation of the baht before it gets beyond that.