Thailand To Avoid Currency Fight As Shadow Of 1997 Crisis Looms

[Markaew]

Thailand has a tendency to repeat mistakes. If they are not careful, a George Soros or someone similar will rape Thailand again leaving it in shambles.

Edited January 25, 2013 by Markaew

[johnnycthedog]

Thailand has a tendency to repeat mistakes. If they are not careful, a George Soros or someone similar will rape Thailand again leaving it in shambles.

I don't know that one. What is the George Soros story?

[AloisAmrein]

Well IMO a strong currency is a wonderful problem to have. Enjoy lower imported energy, technology and material costs. Invest in improved infrastructure and see a general drop in domestic prices and wage pressures. Weaken the currency only to see the export gains evaporate in high input costs and increasing domestic inflation. Thailand is on track for a very sound economy if Kittiratt is successful resisting populist political pressure to devalue the currency.

Ask Switzerland how wonderful it is to have a strong currency. Many parts of their economy are struggling because of the real strong value of the Swiss Franc against the Euro.

The Swiss Franc is a strong currency and the economy is in good shape, in better shape than in all countries of EU. And the unemployment rate is the lowest in whole Europe.

[stoffel45]

High currency values is the same two sides of a good opportunity and bad opportunity coin.

Normally, and for the past 8 years, three of us would travel to enjoy the three school holidays in Thailand.

That is now cut to one. Not because our income has gone up - but due ONLY to a horrific fall in the mismanaged euro, a significant rise in airlines, partly due to tax, and the accordingly higher baht.

We DID do a cost comparison with all the attractive Mediterranean countries and though the airfares can be very competitive and a lot cheaper than to Thailand from Brussels - the hotel, meal and transport costs - ridiculously - make it that 5 weeks holiday in the summer in Thailand, with car rental, 4 star equivalent hotels, diving (30 dives) all meals - (without having to have the typical European holiday daily buffet in the hotel) and shopping - is STILL CHEAPER than a lesser quality holiday of 20 nights at a resort which charges in euro on the Mediterranean.

Thailand - whether its detractors like it or not is bloody good value for money. Yes Burma is opening up, Vietnam is semi-established and Cambodia offers plenty. But few people go back there two or three times. Thailand enjoys the highest "Returning Visitors" per cent in the World. Must be something being done right.

However, corrupt euro management over here, greedy as in GREEDY taxation (we pay 67% income tax on 46% of income) on us and services - AND - the high value of the Thai baht means that this family can only spend 35 nights holiday per annum - compared to the 71 nights before. Simple arithmetic.

Another horror of the low euro/high baht is when we send money to a Children's Charity. 5,000 euro used to buy 270,000 baht. Now last September 5,000 euro bought 187,000 baht. That difference of 83,000 baht is critical.

[OldgitTom]

No, I'm not rooting for socialism/communism, but the problem is deep. After 150 years, industrial capitalism, the old dog, is tired, geriatric, dying, & can't do any tricks, let alone learn new ones. In the West, it depends on a state life-support machine. Taxpayers keep giving the usual 1% wads of taxpayer cash to prop up their tottering banks. The only answer Wall Street & The City of London have is to keep printing heaps of paper money (quantitative easing). Hence all the loose money circulating the globe, looking for secure investment in solid assets. But there is a lot more paper money than assets. So the local frenzy to invest in real estate projects - yet another bubble being primed to burst. For farangs, the bankers' paper money will rob you of savings & pensions, which is precisely what the 1% intends. If you have spare cash, buy land, or small-denomination gold/silver coins. That will reduce your losses. If/when the bank crash comes, much paper-based wealth will blow away.

Edited January 25, 2013 by metisdead
: Oversized font resized to normal.

[submaniac]

I was in Thailand for and before the 1997 crash. To quote yogi Berra it's déjà voo all over again. I've felt another crash was going to come because they are doing the same thing that happened back in 97. The trigger for 1997 was Japan which trickled to Thailand. What has staved a crash in Thailand is that the economies of the us and Europe where tanking which made Thailand look relatively good for a while. How here's the thing: there's a lot if condos that are sitting empty that are on finance with people who really can't afford it. Like my early 20's cousin bought a condo on finance. He just got out if school. Was looking for a job. For a small down payment he bought a condo. He then found a job and needs to sell said condo cuz it's not near where he works. There is actually a lot of property that people are just sitting on and not using. Before it used to be the thing that the owners of condos that were empty paid cash and were sitting on them. But now it's on finance. People buying houses on credit when they couldn't afford it and increasing the prices for those who could actually afford it is what caused the real estate melt down in the USA. It's only a matter of time that the real estate building boom, easy credit, the car tax rebate, and the 300 baht minimum wage results Ina crash. This is of course IMHO.

[waza]

Comparing 1997 to now is absolutely poles apart.

The 1997 problem was caused my overspending, corruption and miss-management of funds by the private sector. The present problem is caused by overspending, corruption and miss-management by the government. You are correct they are different poles apart.

But dont forget the 1997 debt is still under the carpet.

[robokop]

How quickly people forget their history. George Soros, one of the key men behind Pres Obama rise, was named as the main force that caused the 1997 crisis. Soros’s figured prominently during the Asian financial crisis during the summer of 1997. A full retelling of the crisis is beyond the scope of allowed space, but Soros was publicly named by Malaysian Prime Minister Mahatir Mohamad as a prime cause of the crisis, and Mahatir further alleged that he was attempting to ruin the economies of Southeast Asia through currency speculation. According to Soros, his firm and funds were involved during the crisis, going both long and short Southeast Asian currencies like the Thai baht and Malay ringgit at various points. Soros caused the economic crisis in Thailand and much of Asia. In early 1990's Soros almost brought down the English Pound Sterling with his financial manipulations which would have a major financial crisis in the UK. Oh how people forget ther past and the link of Soros and Obama

[Thai at Heart]

Comparing 1997 to now is absolutely poles apart.

The 1997 problem was caused my overspending, corruption and miss-management of funds by the private sector. The present problem is caused by overspending, corruption and miss-management by the government. You are correct they are different poles apart.

If there was a crisis of confidence in the fiscal situation in Thailand, the Baht would be weakening wouldn't it? The so called crisis right now, is that it is strengthening. In 1997, the baht was managed at a too high a level to facilitate overseas borrowing. The so called problem now is exactly 180 degrees the other way, and by trying to fight the natural appreciation or depreciation of the currency, eventually the string will snap. If the baht strengthens, exports get too expensive, tourists don't come, GDP growth slows, what happens?

Your currency naturally will reduce in value. Is it Thailand's fault that the developed world has dropped itself into virtually a depression, and printed gazzillions to get itself out of the mess they are in. The developed world's currencies are probably to all intents and purposes WAY overvalued, and there is no way Thailand can fight that devaluation, none.

So what is going to happen? The baht will strengthen, margins for exports will get tighter, exports will start to fall away, GDP will reduce, demand for Thai baht will reduce and the baht will cycle back to a marginally weaker value. This strengthening can be also mitigated by the BOT reducing interest rates, but this may spur domestic domestic demand, but if that replaces some of the GDP produced by exports, all well and good. This of course, doesn't allow for the fact, that virtually ALL of the worlds largest customers (US, EU) aren't SPENDING as much as they were.

So what can Thailand do? Use some of its enormous stock of USD to spur domestic demand. Borrow from the rest of the world at all time low interest rates, and develop the country to keep domestic GDP moving, make it as attractive as possible for companies that are looking at SE Asia to invest to come to Thailand, etc until the EU and the US get their houses in order and those economies start moving.

The value of the Thai baht has been returning from crisis levels 15 years ago. What did anyone think? The GBP was going to stay at 70 baht forever?

[manta]

I must be the only selfish farang in Thailand I would to see the baht where it was 72 to £ when i came to Thailand and transfered all my cash here.

sorry but me too

[Baerboxer]

Well IMO a strong currency is a wonderful problem to have. Enjoy lower imported energy, technology and material costs. Invest in improved infrastructure and see a general drop in domestic prices and wage pressures. Weaken the currency only to see the export gains evaporate in high input costs and increasing domestic inflation. Thailand is on track for a very sound economy if Kittiratt is successful resisting populist political pressure to devalue the currency.

Ask Switzerland how wonderful it is to have a strong currency. Many parts of their economy are struggling because of the real strong value of the Swiss Franc against the Euro.

The Swiss Franc is a strong currency and the economy is in good shape, in better shape than in all countries of EU. And the unemployment rate is the lowest in whole Europe.

Built on a "no questions asked, tax evasion friendly" banking sysytem, whose banks are guilty of manipulating Libor to their own profit. Switzerland has survived by helping the rich and powerful hide, protect and grow their wealth - regardless of any moral, ethical or legal issues. Holding them up as a sound economic model is like praising the Mafia's cash flow.

[Thai at Heart]

Thailand has a tendency to repeat mistakes. If they are not careful, a George Soros or someone similar will rape Thailand again leaving it in shambles.

It would appear that the bankers in the US and Europe learnt all their recent lessons from the Thai crisis of 1997. Overly generous lending against property on the basis that values ALWAYS go up. Ironically, this also happened in the UK in the 80's, only to be repeated in the last crisis, and I am absolutely sure it will be repeated in the West again, it just needs somone to come up with a new fancy name for "sub-prime mortgage". Holding Thailand up as the one who hasn't learnt from its mistakes, when property bubbles in the West are precisely what has put the world in this mess, is a little rich I think.

[Baerboxer]

Comparing 1997 to now is absolutely poles apart.

The 1997 problem was caused my overspending, corruption and miss-management of funds by the private sector. The present problem is caused by overspending, corruption and miss-management by the government. You are correct they are different poles apart.

If there was a crisis of confidence in the fiscal situation in Thailand, the Baht would be weakening wouldn't it? The so called crisis right now, is that it is strengthening. In 1997, the baht was managed at a too high a level to facilitate overseas borrowing. The so called problem now is exactly 180 degrees the other way, and by trying to fight the natural appreciation or depreciation of the currency, eventually the string will snap. If the baht strengthens, exports get too expensive, tourists don't come, GDP growth slows, what happens?

Your currency naturally will reduce in value. Is it Thailand's fault that the developed world has dropped itself into virtually a depression, and printed gazzillions to get itself out of the mess they are in. The developed world's currencies are probably to all intents and purposes WAY overvalued, and there is no way Thailand can fight that devaluation, none.

So what is going to happen? The baht will strengthen, margins for exports will get tighter, exports will start to fall away, GDP will reduce, demand for Thai baht will reduce and the baht will cycle back to a marginally weaker value. This strengthening can be also mitigated by the BOT reducing interest rates, but this may spur domestic domestic demand, but if that replaces some of the GDP produced by exports, all well and good. This of course, doesn't allow for the fact, that virtually ALL of the worlds largest customers (US, EU) aren't SPENDING as much as they were.

So what can Thailand do? Use some of its enormous stock of USD to spur domestic demand. Borrow from the rest of the world at all time low interest rates, and develop the country to keep domestic GDP moving, make it as attractive as possible for companies that are looking at SE Asia to invest to come to Thailand, etc until the EU and the US get their houses in order and those economies start moving.

The value of the Thai baht has been returning from crisis levels 15 years ago. What did anyone think? The GBP was going to stay at 70 baht forever?

You are correct. Asian currencies are rising due to the poor economic and financial conditions in the so called developed nations. The US still has to overcome the fiscal cliff. Eurozone issues and the UK looks to be heading for a bad year, with the Yen not particularly attractive. So this is a great opportunity for the Asian governments to invest in long term strategies aimed at developing the economy and attacting the right types of companies for future economic growth and development. It will be interesting to see how the different ASEAN countries gain or loose from the way they handle this current opportunity.

[Melyn]

Thailand currency boat appears to be twixt Scylla and Charybdis - largely as a result of flying themselves into the financial equivalent of coffin corner with maniacal aplomb.

It is spending (2012) around $20B (6% GDP) more on imports than it receives on exports. A stronger currency will help this in theory however the reality is that prices for most imports and exports are not in Baht.

To make the currency weaker, a reduction in interest rates would dampen the markets however the reality is that new loans would become cheaper and personal debt would climb even further. than the record levels it finds itself at.

[how241]

Well IMO a strong currency is a wonderful problem to have. Enjoy lower imported energy, technology and material costs. Invest in improved infrastructure and see a general drop in domestic prices and wage pressures. Weaken the currency only to see the export gains evaporate in high input costs and increasing domestic inflation. Thailand is on track for a very sound economy if Kittiratt is successful resisting populist political pressure to devalue the currency.

+1

[longstebe]

So in a nutshell for us dafty's????

[theajarn]

Is this the same Kittirat Na-Ranong that likes to tell "white lies" ?

Oh sure, everyone is all ears for this buffoon.

[Thai at Heart]

How quickly people forget their history. George Soros, one of the key men behind Pres Obama rise, was named as the main force that caused the 1997 crisis. Soros’s figured prominently during the Asian financial crisis during the summer of 1997. A full retelling of the crisis is beyond the scope of allowed space, but Soros was publicly named by Malaysian Prime Minister Mahatir Mohamad as a prime cause of the crisis, and Mahatir further alleged that he was attempting to ruin the economies of Southeast Asia through currency speculation. According to Soros, his firm and funds were involved during the crisis, going both long and short Southeast Asian currencies like the Thai baht and Malay ringgit at various points. Soros caused the economic crisis in Thailand and much of Asia. In early 1990's Soros almost brought down the English Pound Sterling with his financial manipulations which would have a major financial crisis in the UK. Oh how people forget ther past and the link of Soros and Obama

Of course, it had absolutely nothing to do with the Brits, or the Thai's fixing their currencies are unsustainably high values, spurring the central banks to have to defend the value by ramping up interest rates, to a point where they eventually had to give up and let the currency pegs go? Soros saw a massive economic imbalance to make a massive killing. Nothing he did was part of some huge conspiracy, it was just business.

If someone lends you USD over a 2 year term at 3%, and you turn it into Baht with a term of 10 years, lent at 7%, it can get awfully sticky when the USD lender wants his cash back.

[chiangmaicharlies]

I must be the only selfish farang in Thailand I would to see the baht where it was 72 to £ when i came to Thailand and transfered all my cash here.

Could you please write that again in good English so that we may understand your sentiments

[theajarn]

Thailand has a tendency to repeat mistakes. If they are not careful, a George Soros or someone similar will rape Thailand again leaving it in shambles.

I don't know that one. What is the George Soros story?

Three-finger-tap to see.

[Thai at Heart]

Comparing 1997 to now is absolutely poles apart.

The 1997 problem was caused my overspending, corruption and miss-management of funds by the private sector. The present problem is caused by overspending, corruption and miss-management by the government. You are correct they are different poles apart.

If there was a crisis of confidence in the fiscal situation in Thailand, the Baht would be weakening wouldn't it? The so called crisis right now, is that it is strengthening. In 1997, the baht was managed at a too high a level to facilitate overseas borrowing. The so called problem now is exactly 180 degrees the other way, and by trying to fight the natural appreciation or depreciation of the currency, eventually the string will snap. If the baht strengthens, exports get too expensive, tourists don't come, GDP growth slows, what happens?

Your currency naturally will reduce in value. Is it Thailand's fault that the developed world has dropped itself into virtually a depression, and printed gazzillions to get itself out of the mess they are in. The developed world's currencies are probably to all intents and purposes WAY overvalued, and there is no way Thailand can fight that devaluation, none.

So what is going to happen? The baht will strengthen, margins for exports will get tighter, exports will start to fall away, GDP will reduce, demand for Thai baht will reduce and the baht will cycle back to a marginally weaker value. This strengthening can be also mitigated by the BOT reducing interest rates, but this may spur domestic domestic demand, but if that replaces some of the GDP produced by exports, all well and good. This of course, doesn't allow for the fact, that virtually ALL of the worlds largest customers (US, EU) aren't SPENDING as much as they were.

So what can Thailand do? Use some of its enormous stock of USD to spur domestic demand. Borrow from the rest of the world at all time low interest rates, and develop the country to keep domestic GDP moving, make it as attractive as possible for companies that are looking at SE Asia to invest to come to Thailand, etc until the EU and the US get their houses in order and those economies start moving.

The value of the Thai baht has been returning from crisis levels 15 years ago. What did anyone think? The GBP was going to stay at 70 baht forever?

You are correct. Asian currencies are rising due to the poor economic and financial conditions in the so called developed nations. The US still has to overcome the fiscal cliff. Eurozone issues and the UK looks to be heading for a bad year, with the Yen not particularly attractive. So this is a great opportunity for the Asian governments to invest in long term strategies aimed at developing the economy and attacting the right types of companies for future economic growth and development. It will be interesting to see how the different ASEAN countries gain or loose from the way they handle this current opportunity.

Even getting over the Fiscal cliff isn't going to end the USA's financial woes. The USD will weaken, inevitable. It is irrelevant in terms of exports what your value is, if your customers haven't got any money.

[longstebe]

I must be the only selfish farang in Thailand I would to see the baht where it was 72 to £ when i came to Thailand and transfered all my cash here.

Could you please write that again in good English so that we may understand your sentiments

The words "love"and "should have" are missing.

[caughtintheact]

The main causes of the 1997 crisis weare too much money borrowed from abroad to finance too many projects that did not have adequate collateral (no collateral in some cases, which is pretty inadequate), followed by a bad attempt to prop up the currency. Initially the building boom was based on a legitimate strong demand for offices and condos, etc.. Eventually, however, the demand subsided, but the construction continued. Supply then surpassed demand, and there were no more buyers. No more buyers meant that loans could not be paid. Banks had to stop loaning money, Inability to pay loans decreased the value of the currency, but the Central Bank tried to defend the baht without adequate reserves. It can be summed up as reasonable risk loans turning into high risk loans as a result of what Alan Greenspan called irrational exuberance) and ending with loan defaults. A failure to see supply reaching the demand level, and rather foolish games by the Central bank all worked in tandem to result in the crisis.

I think that we need to keep in mind that generally speaking banks are in business to make loans. When demand for loans is high banks want to compete to give those loans. In fact there are many pressures on banks to make loans in boom times. If banks had stopped lending, their competitors would have gotten the business. In the run-up to 1997, the banks got very careless about loans as if the boom would go on forever. But, as we have all seen in other countries, booms are not forever. Eventually the construction market runs out of buyers as supply starts exceeding demand. I could be wrong but I have seen no indications of a similar situation at present, but the potential is always there when investors see better potential in a foreign country than they see at home.

As for exports and imports, theory has it that exports and imports on a national level should be a zero sum game in terms of currency. After all, when an exporter exports, he gets paid in foreign currency, which he can't conveniently use at home, so he converts it at the bank to local currency that he can use at home. The bank uses that foreign currency to loan to importers so they can pay for imports. In practice it does not work as in theory, mainly because of government market interfering policies.

Probably should have mentioned that Soros took advantage of the situation, but there is no indication that he created the conditions that allowed him to do so.

Edited January 25, 2013 by caughtintheact

[khunken]

The main causes of the 1997 crisis weare too much money borrowed from abroad to finance too many projects that did not have adequate collateral (no collateral in some cases, which is pretty inadequate), followed by a bad attempt to prop up the currency. Initially the building boom was based on a legitimate strong demand for offices and condos, etc.. Eventually, however, the demand subsided, but the construction continued. Supply then surpassed demand, and there were no more buyers. No more buyers meant that loans could not be paid. Banks had to stop loaning money, Inability to pay loans decreased the value of the currency, but the Central Bank tried to defend the baht without adequate reserves. It can be summed up as reasonable risk loans turning into high risk loans as a result of what Alan Greenspan called irrational exuberance) and ending with loan defaults. A failure to see supply reaching the demand level, and rather foolish games by the Central bank all worked in tandem to result in the crisis.

I think that we need to keep in mind that generally speaking banks are in business to make loans. When demand for loans is high banks want to compete to give those loans. In fact there are many pressures on banks to make loans in boom times. If banks had stopped lending, their competitors would have gotten the business. In the run-up to 1997, the banks got very careless about loans as if the boom would go on forever. But, as we have all seen in other countries, booms are not forever. Eventually the construction market runs out of buyers as supply starts exceeding demand. I could be wrong but I have seen no indications of a similar situation at present, but the potential is always there when investors see better potential in a foreign country than they see at home.

As for exports and imports, theory has it that exports and imports on a national level should be a zero sum game in terms of currency. After all, when an exporter exports, he gets paid in foreign currency, which he can't conveniently use at home, so he converts it at the bank to local currency that he can use at home. The bank uses that foreign currency to loan to importers so they can pay for imports. In practice it does not work as in theory, mainly because of government market interfering policies.

Probably should have mentioned that Soros took advantage of the situation, but there is no indication that he created the conditions that allowed him to do so.

I agree with most of what you said (would have looked better in black though). I would add that the finance houses - since morphed & merged into banks - were the main culprits in lending money for property construction without collateral. One that I was involved with had 49% bad debts - totally unsustainable.

The foreign loan aspect was not the cause but, with the strong Baht, an easy way to borrow. Companies that had substantial overseas borrowings crashed. A prime example was TPI - eventually taken over by Thaksin's government at a price below market worth.

Just about every crash is property related so it would be wise to take a good look at the Thai property market to see if a bubble is forming or not. My sense is that it is not.

One final thought. Kittiratt & the PTP are interfering far too much in the BOT. That's a worry because the BOT will take decisions to control the Baht & inflation. The PTP will push for decisions that benefit them, not the country.

Edited January 25, 2013 by khunken

[thaimat]

The main causes of the 1997 crisis weare too much money borrowed from abroad to finance too many projects that did not have adequate collateral (no collateral in some cases, which is pretty inadequate), followed by a bad attempt to prop up the currency. Initially the building boom was based on a legitimate strong demand for offices and condos, etc.. Eventually, however, the demand subsided, but the construction continued. Supply then surpassed demand, and there were no more buyers. No more buyers meant that loans could not be paid. Banks had to stop loaning money, Inability to pay loans decreased the value of the currency, but the Central Bank tried to defend the baht without adequate reserves. It can be summed up as reasonable risk loans turning into high risk loans as a result of what Alan Greenspan called irrational exuberance) and ending with loan defaults. A failure to see supply reaching the demand level, and rather foolish games by the Central bank all worked in tandem to result in the crisis.

I think that we need to keep in mind that generally speaking banks are in business to make loans. When demand for loans is high banks want to compete to give those loans. In fact there are many pressures on banks to make loans in boom times. If banks had stopped lending, their competitors would have gotten the business. In the run-up to 1997, the banks got very careless about loans as if the boom would go on forever. But, as we have all seen in other countries, booms are not forever. Eventually the construction market runs out of buyers as supply starts exceeding demand. I could be wrong but I have seen no indications of a similar situation at present, but the potential is always there when investors see better potential in a foreign country than they see at home.

As for exports and imports, theory has it that exports and imports on a national level should be a zero sum game in terms of currency. After all, when an exporter exports, he gets paid in foreign currency, which he can't conveniently use at home, so he converts it at the bank to local currency that he can use at home. The bank uses that foreign currency to loan to importers so they can pay for imports. In practice it does not work as in theory, mainly because of government market interfering policies.

Probably should have mentioned that Soros took advantage of the situation, but there is no indication that he created the conditions that allowed him to do so.

There are so many empty condos, commercial spaces available here, now, with the owners trying to flip them at exorbitant prices, needing to boost their struggling incomes. Within 15 Kms of me, many whole developments are over 90% empty, yet more are still being built. The condo market in Thailand is way over-speculated, surely a big, fat bubble. So many of the factors from '97 are back, with the addition of a weak west, and a Chinese manufacturing economy with massive surpluses that is gasping for markets. Anyone that says that 97 couldn't happen again is trying to sell you something, imo.

[farang000999]

The amateur economists are out in force.

[thaimat]

The amateur economists are out in force.

Right, we should leave it to the professionals economists, who have done so well warning us of the financial debacles during the last few decades. Use your own brains, and eyes, people.

[jpinx]

They can't do worse than the so-called professionals

[maxman71]

Well IMO a strong currency is a wonderful problem to have. Enjoy lower imported energy, technology and material costs. Invest in improved infrastructure and see a general drop in domestic prices and wage pressures. Weaken the currency only to see the export gains evaporate in high input costs and increasing domestic inflation. Thailand is on track for a very sound economy if Kittiratt is successful resisting populist political pressure to devalue the currency.

I think you are right on the money, so to speak...Thailand has a real economy, unlike the offshore tax havens where many tax scofflaws park their money. Thailand's strong agricultural base not only gives it something to trade that the entire rest of the world needs, and will continue to increasingly need, (FOOD), it also has an abundance of basic resources that will also be in increasingly higher demand, like WATER. Throw in a workforce that is one of the more disciplined and educated compared to many other developing nations + a robust tourism sector, and it all looks very favorable for Thailand. One challenge Thailand needs to keep dealing with is striking a balance between preserving its desirability among the investment class vs. wealth re-distribution. If such wealth re-distribution is engineered towards providing better education and training to its populace as opposed to just throwing money at the less advantaged, it can become a true prosperous economic powerhouse, with the lower classes realizing true opportunities to move up. Demographically speaking, Thailand has a more sensible population age spread compared to most western countries that have an ever-increasing portion of their populations growing older and not enough younger people coming up. Having been based here for going on 8 years now, it's a pretty interesting time for Thailand.

[marchawkes]

There is no single silver bullet to fix the currency situation or answer the concerns of ’97. As a starting point 10 basics were spoken about in 1997. Most of it remains in the “too hard” basket even as Thailand frets about its currency, a slow global economy, rice subsidies, political uncertainty..........The 10 basics for starters are:

1) Discourage inflows of "hot" money. These are chasing yields and move out as quickly and suddenly as the funds move in. Thailand needs sustainable inflows not jockeys of the money market,

2) Govt debt & borrowing needs to be skewered towards improving infrastructure and 'productive-expenditure'. This creates wealth and profit thus leaving enough leftover to service the interest bill and repay principal. Borrowing to meet “consumption-expenditure” or lifestyle choices delivers a Greece or Spain,

3) High productivity is one of the best antidotes to inflation. It means that where people produce 5 widgets for THB 5000- they move to produce 8 or 10 widgets for THB 5,000-. Has the govt. a policy for productivity improvement? How do we improve productivity so that people showing up for a day's work are paid for 8 hours and deliver outcomes which match Spore, HKG, South Korea. Presently in Thailand - on average - workers receiving an 8 hour wage deliver outcomes for just 5 hours,

4) Domestic consumption: Robust exports to overseas markets is great. Not having a strong domestic consumer base is dangerous as the slow-down in Europe and the U.S. has proven. Finding ways to grow domestic consumption delivers insulation to the local economy,

5) Diversify the sources of revenue, job-creation, wealth-creation. Over reliance on tourism is a high risk given neighboring countries previously closed-off are now opening. Also, the very things which tourists come to look at often no longer exist in Thailand like - clean beaches, coral reefs, accessible green corridors etc....Hasty and one-eyed development needs to be managed lest it continue to destroy the natural beauty Thailand once boasted,

6) Make domestic settings attractive to investors. People are uncomfortable investing in a country where laws look good on paper and where the under-the-table laws have strong roots,

7) Attract foreign investors with programs which recognise and reward those who create wealth, jobs and social cohesion. It means a simple attractive tax system and rigour to stamping out corruption. Not easy given corruption is a way-of-life in Thailand. It locks out talent which will not pay or is not well-connected.

Socialism is great until one runs out of other peoples money.

8) Micro economic reform: How do we reform so that 'time taken to set up a business' is reduced to match Spore. How do we reform so that 'tea-money' does not slowdown investor appetite. How do we reform our police, judiciary and regulatory bodies/watchdogs so that the well-earned reputation for ineptitude and corruption are made things of the past,

Micro economic reform needs the brains of policy makers to go down to their spines.

9) Manage inflation, deflation, trade & budget surpluses/deficits and the currency though micro-economic reform rather than relying solely on monetary policy, fiscal policy and Central Bank intervention. All have nasty side effects, sap up resources and only sometimes deliver end-results. An example of fiscal stupidity is the rice-subsidy which is now seeing rice rotting in warehouses as consumers are buying superior quality rice at cheaper prices. The farmers are laughing all the way to the bank whilst tax payers groan from this wasteful handout.

10) Political stability. Investors will exact a price for doing business in countries which have a track-record of political skull-duggery.