The Baht Under Red Power

[Jingthing]

I feel the Thaksin economic policies are not based on economic reality. Such as promising raising wages fivefold when the people don't have to education and skills to justify that. Thus, my theory is the baht will crash, maybe 25 percent. Makes sense, or not?

My theory about what will happen -- the high (people celebrating the concept of instant unearned wealth) followed by the misery of the CRASH.

Edited July 3, 2011 by Jingthing

[davejonesbkk]

Can you please give a full and detailed description of how and why you think this will happen.

[Jingthing]

Can you please give a full and detailed description of how and why you think this will happen.

International vote of NO confidence in Thaksin's over the top populist agenda which can't be backed up with actual high skilled human capital OR resources. Sure Thailand has some cards to play, but nothing like endless money tap of OIL that Chavez can work with. The money tap here is very limited and Thailand and it's currency is floating in the INTERNATIONAL market. I feel the world is going to punish Thailand for this irrational political choice.

[PoorSucker]

Jing, isn't the situation you are describing "Such as promising raising wages fivefold when the people don't have to education and skills to justify that', just politicians talking to get votes ?

And everyone knows what happens with Politicians promises after they got elected.

So my wife's little brother is not getting his iPad?

[Jingthing]

Jing, isn't the situation you are describing "Such as promising raising wages fivefold when the people don't have to education and skills to justify that', just politicians talking to get votes ?

And everyone knows what happens with Politicians promises after they got elected.

Here's where I think you are very wrong.

PT promised the moon. Thailand can afford peanuts. The people who "won" today expecting instant riches are going to need to be placated with much more than peanuts. Which Thailand does NOT have the economic fundamentals to really afford. Thus the baht will need to be devalued.

[cloudhopper]

Jing, isn't the situation you are describing "Such as promising raising wages fivefold when the people don't have to education and skills to justify that', just politicians talking to get votes ?

And everyone knows what happens with Politicians promises after they got elected.

Here's where I think you are very wrong.

PT promised the moon. Thailand can afford peanuts. The people who "won" today expecting instant riches are going to need to be placated with much more than peanuts. Which Thailand does NOT have the economic fundamentals to really afford. Thus the baht will need to be devalued.

I doubt that many voted red thinking it would lead to instant riches; that really is naive. As is your assessment of Thai economic fundamentals and the "need" for the baht to be devalued.

[londonthai]

the last time he was around thailand and all thai were doing well. He payed off the international debt, so will have support from everywhere in the world, including IMF.

tomorrow morning I am changing all my currencies into baht, I was holding on them for the last few months, but I don't want to loose

Edited July 3, 2011 by londonthai

[Jingthing]

the last time he was around thailand and all thai were doing well. He payed off the international debt, so will have support from everywhere in the world, including IMF.

tomorrow I am changing all my currencies into baht

The global economy was entirely different back then. Abhisit did amazingly well in the context of global financial meltdown. If you ignore that context, you aren't being honest.

[Jingthing]

I know. Making bold predictions is always going out on a limb.

[RKASA]

http://www.reuters.com/article/2011/07/03/us-thailand-election-analystview-idUSTRE7620P920110703

Many that do this for a living expecting a 1 to 3% rise in the market tomorrow alone. They could be wrong too.

KONGKIAT OPASWONGKARN, CHIEF EXECUTIVE, ASIA PLUS SECURITIES PCL

PARIN KITCHATORNPITAK, SENIOR ANALYST, FAR EAST SECURITIES

CHAKKRIT CHAROENMETACHAI, ANALYST, GLOBLEX SECURITIES

Be the first to scare - is that the new angle

Has a DNC ring to it. Maybe you can talk the market down and buy in cheap.:jap:

[pukka]

scrapping the barrel . Was nothing wrong with the baht when they had power last time but lets not let the facts get in the way of extreme right wing scaremongering.

[Jingthing]

scrapping the barrel . Was nothing wrong with the baht when they had power last time but lets not let the facts get in the way of extreme right wing scaremongering.

Autocrats can be any wing, they are all bad.

[londonthai]

The global economy was entirely different back then. Abhisit did amazingly well in the context of global financial meltdown. If you ignore that context, you aren't being honest.

abhisit did nothing, it was the thai banking system, which learned from the previous crisis.

Forget about abhisit, he is gone for at least 4 years, the majority did not trust him. After this defeat he well might leave politics and do some better job somewhere else. Democrats would never win with him

[Scott]

If you want to discuss the Baht under the PT party, please do so. If you want to discuss politics then do so in one of the political threads.

Keep the discussion of politics limited to its direct effect on the Baht.

[pukka]

scrapping the barrel . Was nothing wrong with the baht when they had power last time but lets not let the facts get in the way of extreme right wing scaremongering.

Autocrats can be any wing, they are all bad.

Now stop trying to get of the hook . You asked the question & I pointed you to the last time they held power now concede or give us some fresh facts for us to debate . Soundbites just will not hack it

[pukka]

Come on JT don't abandon your own topic

[Jingthing]

Different global economic environment last time. When Thaksin rules last time, Donald Duck would have looked good.

[jdinasia]

The THB rapidly strengthened (and other currencies rapidly weakened) over the years. If PTP does get power (and it certainly looks like they will) then I wouldn't expect the baht to change too much BUT if they even try to keep a few of their promises I would expect double digit inflation.

[djayz]

Jing, isn't the situation you are describing "Such as promising raising wages fivefold when the people don't have to education and skills to justify that', just politicians talking to get votes ?

And everyone knows what happens with Politicians promises after they got elected.

Here's where I think you are very wrong.

PT promised the moon. Thailand can afford peanuts. The people who "won" today expecting instant riches are going to need to be placated with much more than peanuts. Which Thailand does NOT have the economic fundamentals to really afford. Thus the baht will need to be devalued.

All they have to do is find more silly farang who'll give their life savings to beautiful, ex-bar ladies... problem solved! Thailand will have money again...

[nong38]

Politicians always promise the earth, so lets see what they deliver. The problem I see and I guess what the world will see and think is what happens when big brother wants to come and not go to jail? How will they get round that? Will that be when then things hit the buffers. I am expecting the baht to fall and am putting off my trip to the bank. This is the expected result in Thailand its not what the international community wanted. To raise the minimum wage 25% in the next 5 years is to be applauded but what to the employers get in return? Nothing? Well then up go prices and unemployment.

[Dirk_brijs]

I dont think that party who won will have any influence on what the Baht will do.

I do think though that the Baht will drop significantly towards other currencies not because of the party who won the election but because of the unstable/uncertain future now of Thailand due to the question "What will the army do now????"

I and I think a lot of International investors dont really believe that the same army who ousted him a few years ago now will sit back and have him come back through the big gate?

Now what a humiliation would that be? And trust me Thaksin will put some extra oil on the fire making sure those who,ousted him WILL be humiliated publicly.

So all us in the hands of what the army will do now.

My prediction herre in Thailand (and I am here now 14 years)The army doesnt take humiliation in pride so well here!!!!!!!!

So I would say hold o to those foreign currencies for now? Or maybe not?

Edited July 3, 2011 by Dirk_brijs

[manarak]

The THB rapidly strengthened (and other currencies rapidly weakened) over the years. If PTP does get power (and it certainly looks like they will) then I wouldn't expect the baht to change too much BUT if they even try to keep a few of their promises I would expect double digit inflation.

I maintain my opinion that the THB didn't move much. It didn't strengthen.

All currencies of countries which stayed out of the global crisis have strenthened or remained stable against the Baht in the last 4-5 years:

Brazil, Switzerland, Australia, Canada, Norway, Japan, etc.

I see a real risk of the Baht falling under Red government.

- there is a high risk of inflation due to higher crop prices and higher wages

- there is a risk of Thaksin being undisciplined with public funds

- there is a risk of people taking their money out of the country to avoid it being taxed

Inflation is the major risk I see.

Prices go up, the Baht goes down.

Edited July 3, 2011 by manarak

[ExpatJ]

This is the best possible outcome for the thai economy- a landslide win for the majority voice who are the red shirts in this country. The huge margin will make it almost impossible for the yellow shirts or other groups to take over through other means, they would have zero legitimacy. Net result -stability which is what the markets want.

First indicator- watch the SET rise big time in the coming week (s) as foreign investors pour money back into thailand ...

[pukka]

Different global economic environment last time. When Thaksin rules last time, Donald Duck would have looked good.

So that is the best you can do ?

Maybe Jing in wonderland

[CWMcMurray]

I agree with Expat J to some extent... I don't think anyone internationally really cares what party wins... they just wanted a clear victor and the election results honored by all.

If that happens, then foreign investors will have confidence that things have 'stabilized' in Thailand and there would then be a significant influx of funds back into the SET by foreign investors.

If this happened, it would actually cause the THB to appreciate as foreign money flows in.

Of course if election results are not honored and there are protests or legal battles or a coup, then it is likely that money will flow out of the country and that could cause the THB to depreciate.

[kuffki]

Different global economic environment last time. When Thaksin rules last time, Donald Duck would have looked good.

You are absolutely correct.

Government does affect the economy, however economy usually goes in 8 year cycles.

It so happened that when Thaksin was the PM economy was in the 8 year uppper cycle, just like the rest of the world. It then hit the low cycle where we are now for another 2-4 years.

Even if dems had the best ever policy's it could not change the situation around the world.

I feel Thailand rather bluffed its way through the crisis.

I also do think baht will start to come down for all the reason you have stated, plus another which is the return of Thaksin, all the money he has is in foreign currency so to make the money, i have a feeling baht will drop.

Also by forcing baht to drop, will increase exports and tourism, hence showing that PTP is doing everything for the people.

[kuffki]

Different global economic environment last time. When Thaksin rules last time, Donald Duck would have looked good.

So that is the best you can do ?

Maybe Jing in wonderland

Actually Jing is correct, i suggest some light reading on economics.

Even a powrhouse like China suffered and you can not even compare Thai economy to Chinese.

[hansnl]

This is the best possible outcome for the thai economy- a landslide win for the majority voice who are the red shirts in this country. The huge margin will make it almost impossible for the yellow shirts or other groups to take over through other means, they would have zero legitimacy. Net result -stability which is what the markets want.

First indicator- watch the SET rise big time in the coming week (s) as foreign investors pour money back into thailand ...

Really?

[rgs2001uk]

The THB rapidly strengthened (and other currencies rapidly weakened) over the years. If PTP does get power (and it certainly looks like they will) then I wouldn't expect the baht to change too much BUT if they even try to keep a few of their promises I would expect double digit inflation.

I maintain my opinion that the THB didn't move much. It didn't strengthen.

All currencies of countries which stayed out of the global crisis have strenthened or remained stable against the Baht in the last 4-5 years:

Brazil, Switzerland, Australia, Canada, Norway, Japan, etc.

I see a real risk of the Baht falling under Red government.

- there is a high risk of inflation due to higher crop prices and higher wages

- there is a risk of Thaksin being undisciplined with public funds

- there is a risk of people taking their money out of the country to avoid it being taxed

Inflation is the major risk I see.

Prices go up, the Baht goes down.

Where I live the locals have been complaining about inflation for the last 2 years at least, and the baht has fared pretty well in those 2 years.

Selling eggs by weight thats the way to go.

[jombom]

My view, is that a rate of 33, 34, or 35 baht to the USD would be better for Thailand, in the medium term.

The tourism sector is a huge employer of labour, which is mostly supplied by the poor people, who voted for PT.

Thailand also needs to make heavy investments in water supply and treatment. This repeating cycle of floods and droughts, is extremely wasteful of national resources. Waste water treatment facilities are also more third world, than first or even second world.

My expectation is that the baht will be allowed to slide slowly downwards, maybe 31 for 3 months, followed by 32 for 3 months etc etc