1997 Style Thai (And Asean) Economic Meltdown Warned About

[nidieunimaitre]

Raising interest rates would stoke inflation?

That's a new one for me.

After a lifetime of teaching macro economics.

Money in low interest rate countries is used to purchase money in high interest rate countries. This is called the carry trade. If everyone wants to buy baht the value of the currency goes up. If the value of the baht goes up then it costs more to buy things in Thailand. That is inflation. Where did you teach econ?

"Where did you teach econ?" is not a question that invites a serious discussion.

I think if you will look back at the posts you will discover that it was you and not I who said he taught Econ. Although I am used to people not responding to the information I post opting rather for personal shots. If you would rather not tackle the information I postged OK by me. It's not really on topic anyway. Although who can tell eh?

OK.

When the price of thai products goes up for importers in the rest of the world, because of a stronger baht, then that is NOT inflation. Not in Thailand, perhaps (but unlikely) fuelling inflation in other countries.

When interest rates are raised, 2 things happen:

1. borrowing becomes more expensive, therefore less borowing by companies and consumers, therefore less money in circulation, therefore less inflation

2. influx of foreign money - but this does not fuel inflation, as it does (almost) not enter the real economy, and besides, this effect is much smaller then 1.

And yes, your source Wiki is correct, only it has nothing to do with your opinion.

You say you are used to posters taking a shot at you personally, without replying to your arguments? I believe you. Now why would that be? Could it have something to do with your style?

[jamescollister]

Haven't read the whole thread, but many years ago they used to publish financial predictions for the coming year, UK.

Money people working in the city.

Garbage collector and a parrot with ink on it's feet

Parrot beat the garbage collectors, who beat the bankers and stock brokers.

Get a parrot. Jim

Silly waste of time that thar London School of Economics.

Yep, all those super smart, well educated people running your pension funds and investments didn't know when you spend more than you earn it will come back to bite you.

Bin collectors know, borrow more than you earn and you can't make the payments.

Parrot knows nothing, just luck, markets are really just luck or good timing. No one can predict what tomorrow will bring. Wars, famines, drought, etc, but most people know you can not borrow your way out of debt.

Banks etc created money that did not exist [credit] lucky the whole system didn't implode.

Governments, who preach free enterprise and capitalism step in and left the bill for your children and perhaps their children to pay. Jim

Edited February 23, 2013 by jamescollister

[chiangmaikelly]

Haven't read the whole thread, but many years ago they used to publish financial predictions for the coming year, UK.

Money people working in the city.

Garbage collector and a parrot with ink on it's feet

Parrot beat the garbage collectors, who beat the bankers and stock brokers.

Get a parrot. Jim

Silly waste of time that thar London School of Economics.

Yep, all those super smart, well educated people running your pension funds and investments didn't know when you spend more than you earn it will come back to bite you.

Bin collectors know, borrow more than you earn and you can't make the payments.

Parrot knows nothing, just luck, markets are really just luck or good timing. No one can predict what tomorrow will bring. Wars, famines, drought, etc, but most people know you can not borrow your way out of debt.

Banks etc created money that did not exist [credit] lucky the whole system didn't implode.

Governments, who preach free enterprise and capitalism step in and left the bill for your children and perhaps their children to pay. Jim

I take it you are against super smart educated people. What do you do when you need a doctor for a complicated operation or engineer to build a computer or machine?

[chiangmaikelly]

Money in low interest rate countries is used to purchase money in high interest rate countries. This is called the carry trade. If everyone wants to buy baht the value of the currency goes up. If the value of the baht goes up then it costs more to buy things in Thailand. That is inflation. Where did you teach econ?

"Where did you teach econ?" is not a question that invites a serious discussion.

I think if you will look back at the posts you will discover that it was you and not I who said he taught Econ. Although I am used to people not responding to the information I post opting rather for personal shots. If you would rather not tackle the information I postged OK by me. It's not really on topic anyway. Although who can tell eh?

OK.

When the price of thai products goes up for importers in the rest of the world, because of a stronger baht, then that is NOT inflation. Not in Thailand, perhaps (but unlikely) fuelling inflation in other countries.

When interest rates are raised, 2 things happen:

1. borrowing becomes more expensive, therefore less borowing by companies and consumers, therefore less money in circulation, therefore less inflation

2. influx of foreign money - but this does not fuel inflation, as it does (almost) not enter the real economy, and besides, this effect is much smaller then 1.

And yes, your source Wiki is correct, only it has nothing to do with your opinion.

You say you are used to posters taking a shot at you personally, without replying to your arguments? I believe you. Now why would that be? Could it have something to do with your style?

You missed my point I was writing about the carry trade.

[jamescollister]

Haven't read the whole thread, but many years ago they used to publish financial predictions for the coming year, UK.

Money people working in the city.

Garbage collector and a parrot with ink on it's feet

Parrot beat the garbage collectors, who beat the bankers and stock brokers.

Get a parrot. Jim

Silly waste of time that thar London School of Economics.

Yep, all those super smart, well educated people running your pension funds and investments didn't know when you spend more than you earn it will come back to bite you.

Bin collectors know, borrow more than you earn and you can't make the payments.

Parrot knows nothing, just luck, markets are really just luck or good timing. No one can predict what tomorrow will bring. Wars, famines, drought, etc, but most people know you can not borrow your way out of debt.

Banks etc created money that did not exist [credit] lucky the whole system didn't implode.

Governments, who preach free enterprise and capitalism step in and left the bill for your children and perhaps their children to pay. Jim

I take it you are against super smart educated people. What do you do when you need a doctor for a complicated operation or engineer to build a computer or machine?

That's called science. Jim Edited February 23, 2013 by jamescollister

[chiangmaikelly]

Silly waste of time that thar London School of Economics.

Yep, all those super smart, well educated people running your pension funds and investments didn't know when you spend more than you earn it will come back to bite you.

Bin collectors know, borrow more than you earn and you can't make the payments.

Parrot knows nothing, just luck, markets are really just luck or good timing. No one can predict what tomorrow will bring. Wars, famines, drought, etc, but most people know you can not borrow your way out of debt.

Banks etc created money that did not exist [credit] lucky the whole system didn't implode.

Governments, who preach free enterprise and capitalism step in and left the bill for your children and perhaps their children to pay. Jim

I take it you are against super smart educated people. What do you do when you need a doctor for a complicated operation or engineer to build a computer or machine?

That's called science. Jim

Economics is the social science that analyzes the production, distribution, and consumption of goods and services.

[nidieunimaitre]

Chiangmaikelly, replying to #35.

I got it all wrong indeed.

Now your FACE is saved, and as for myself, I do not care about face, so it is a win win situation, right?

[chiangmaikelly]

It's not really about me and losing face. I remember reading somewhere that Thailand was concerned about becoming a center for carry trades if they raised interest rates as the only real risk in a carry trade is the currency losing value and the state of the Thai economy is not in doubt by the reputable economic sources so no fear of the Baht losing ground. The reason given for the Thai economists not wanting to become a carry trade hub was the increase in the money supply. I gave a few examples above about situations when the increase in the money supply could lead to inflation.

We can take it on side issues all day long but the overwhelming opinion is that a 1997 style economic meltdown is nothing to worry about unless you are getting information from parrots or garbage men or 6th graders .....

Edited February 24, 2013 by chiangmaikelly

[samran]

Australia has been at the receiving end of the carry trade for years now. The result? Inflation in normal bounds and interest rates going down.

Money supply does not increase when people buy your currency, it just becomes more valuable cet.par. Higher exchange rate makes imported good cheaper, helping to reduce inflation. Traded exporters either become more efficient, or go out of business to deal with the higher exchange rate. None of these things is likely to add to inflation.

Any inflationary pressures in Australia have come from the huge demand for labour and other resources to feed the resource boom. But that is about it. In built budget stabilisers help out elsewhere. More importantly, no one is printing money and no one is trying to constrain markets - the real causes of inflation.

As for Thailand, no one is going offshore to borrow at 5% when onshore the rates are 18%. Nor is a fixed exchange rate which is benefiting locals who want to do that. Capital requirements are better, and people aren't speculating by selling on down payments rights of luxury cars - a real sign of stupidity.

[chainarong]

And before the financial collapse of 2008, all experts were saying how great things were, and there was no danger ahead, only more good times. The vast majority of so-called financial experts have no idea whatsoever what is going to happen. Yes, there'll be a recession sometime in the future, and after that there'll be more growth. But we don't know when. These experts can't even accurately predict what will happen in the next 3 months. They even get wrong what happened in the last three months. They are totally hopeless, so you may as well ignore them.

I remember a television show many many years ago. They had a group of 6th grade students, and group of stock analysts, and a group of monkeys pick some stocks. The monkeys won with the highest returns, followed by the 6th grade students.

Something similar in the UK between three ex finance ministers, three top economists and three rubbish collectors aka heath and hygiene persons, they had to predict the inflation rate at the years end , no surprises who won, the economists came last.

[mccw]

Nid and Samaran are correct

[samran]

Of course we are

555

[chiangmaikelly]

Nid and Samaran are correct

Mccw, nid and Samaran are wrong. I just asked the local garbage collector. Thai bashing points - 0 Attempts 6 don't count.

[chiangmaikelly]

Australia has been at the receiving end of the carry trade for years now. The result? Inflation in normal bounds and interest rates going down.

Money supply does not increase when people buy your currency, it just becomes more valuable cet.par. Higher exchange rate makes imported good cheaper, helping to reduce inflation. Traded exporters either become more efficient, or go out of business to deal with the higher exchange rate. None of these things is likely to add to inflation.

Any inflationary pressures in Australia have come from the huge demand for labour and other resources to feed the resource boom. But that is about it. In built budget stabilisers help out elsewhere. More importantly, no one is printing money and no one is trying to constrain markets - the real causes of inflation.

As for Thailand, no one is going offshore to borrow at 5% when onshore the rates are 18%. Nor is a fixed exchange rate which is benefiting locals who want to do that. Capital requirements are better, and people aren't speculating by selling on down payments rights of luxury cars - a real sign of stupidity.

What rates are 18%. I borrow at 1%. What fixed exchange rate? What luxury cars? This is of course all on topic that the only place a 1997 meltdown is possible is in the minds of Thai Visa posters.

[waza]

Australia has been at the receiving end of the carry trade for years now. The result? Inflation in normal bounds and interest rates going down.

Money supply does not increase when people buy your currency, it just becomes more valuable cet.par. Higher exchange rate makes imported good cheaper, helping to reduce inflation. Traded exporters either become more efficient, or go out of business to deal with the higher exchange rate. None of these things is likely to add to inflation.

Any inflationary pressures in Australia have come from the huge demand for labour and other resources to feed the resource boom. But that is about it. In built budget stabilisers help out elsewhere. More importantly, no one is printing money and no one is trying to constrain markets - the real causes of inflation.

As for Thailand, no one is going offshore to borrow at 5% when onshore the rates are 18%. Nor is a fixed exchange rate which is benefiting locals who want to do that. Capital requirements are better, and people aren't speculating by selling on down payments rights of luxury cars - a real sign of stupidity.

What rates are 18%. I borrow at 1%. What fixed exchange rate? What luxury cars? This is of course all on topic that the only place a 1997 meltdown is possible is in the minds of Thai Visa posters.

Is that the opinion of the 6th grader?

[samran]

Australia has been at the receiving end of the carry trade for years now. The result? Inflation in normal bounds and interest rates going down.

Money supply does not increase when people buy your currency, it just becomes more valuable cet.par. Higher exchange rate makes imported good cheaper, helping to reduce inflation. Traded exporters either become more efficient, or go out of business to deal with the higher exchange rate. None of these things is likely to add to inflation.

Any inflationary pressures in Australia have come from the huge demand for labour and other resources to feed the resource boom. But that is about it. In built budget stabilisers help out elsewhere. More importantly, no one is printing money and no one is trying to constrain markets - the real causes of inflation.

As for Thailand, no one is going offshore to borrow at 5% when onshore the rates are 18%. Nor is a fixed exchange rate which is benefiting locals who want to do that. Capital requirements are better, and people aren't speculating by selling on down payments rights of luxury cars - a real sign of stupidity.

What rates are 18%. I borrow at 1%. What fixed exchange rate? What luxury cars? This is of course all on topic that the only place a 1997 meltdown is possible is in the minds of Thai Visa posters.

um, I'm describing the environment and policy settings as they were in 1997 pre melt down mode. Nothing more.

You gave a wikipedia link which talked about sterilisation, which is a pretty discredited piece of policy making.

[chiangmaikelly]

Australia has been at the receiving end of the carry trade for years now. The result? Inflation in normal bounds and interest rates going down.

Money supply does not increase when people buy your currency, it just becomes more valuable cet.par. Higher exchange rate makes imported good cheaper, helping to reduce inflation. Traded exporters either become more efficient, or go out of business to deal with the higher exchange rate. None of these things is likely to add to inflation.

Any inflationary pressures in Australia have come from the huge demand for labour and other resources to feed the resource boom. But that is about it. In built budget stabilisers help out elsewhere. More importantly, no one is printing money and no one is trying to constrain markets - the real causes of inflation.

As for Thailand, no one is going offshore to borrow at 5% when onshore the rates are 18%. Nor is a fixed exchange rate which is benefiting locals who want to do that. Capital requirements are better, and people aren't speculating by selling on down payments rights of luxury cars - a real sign of stupidity.

What rates are 18%. I borrow at 1%. What fixed exchange rate? What luxury cars? This is of course all on topic that the only place a 1997 meltdown is possible is in the minds of Thai Visa posters.

um, I'm describing the environment and policy settings as they were in 1997 pre melt down mode. Nothing more.

You gave a wikipedia link which talked about sterilisation, which is a pretty discredited piece of policy making.

Back on topic do you think a 1997 sytle economic meltdown is possible?

[samran]

Australia has been at the receiving end of the carry trade for years now. The result? Inflation in normal bounds and interest rates going down.

Money supply does not increase when people buy your currency, it just becomes more valuable cet.par. Higher exchange rate makes imported good cheaper, helping to reduce inflation. Traded exporters either become more efficient, or go out of business to deal with the higher exchange rate. None of these things is likely to add to inflation.

Any inflationary pressures in Australia have come from the huge demand for labour and other resources to feed the resource boom. But that is about it. In built budget stabilisers help out elsewhere. More importantly, no one is printing money and no one is trying to constrain markets - the real causes of inflation.

As for Thailand, no one is going offshore to borrow at 5% when onshore the rates are 18%. Nor is a fixed exchange rate which is benefiting locals who want to do that. Capital requirements are better, and people aren't speculating by selling on down payments rights of luxury cars - a real sign of stupidity.

What rates are 18%. I borrow at 1%. What fixed exchange rate? What luxury cars? This is of course all on topic that the only place a 1997 meltdown is possible is in the minds of Thai Visa posters.

um, I'm describing the environment and policy settings as they were in 1997 pre melt down mode. Nothing more.

You gave a wikipedia link which talked about sterilisation, which is a pretty discredited piece of policy making.

Back on topic do you think a 1997 sytle economic meltdown is possible?

I thought I was on topic.

Answer: With the current policy settings, no.

Don't know what the rice subsidy scheme is doing to the budget bottom line though.

[waza]

“Thailand always amazes you” proclaims the Southeast Asian nation’s tourism
body, and with an 18.9 percent rise in gross domestic product last quarter
economists were suitably impressed.

[chiangmaikelly]

“Thailand always amazes you” proclaims the Southeast Asian nation’s tourism

body, and with an 18.9 percent rise in gross domestic product last quarter

economists were suitably impressed.

And this has to do with the 1997 economic meltdown how? You would do better to inlude the whole quote above if you want to understand it. It makes perfect sense of you know what quarter it is being compared to. No TB points, sorry.

[samran]

“Thailand always amazes you” proclaims the Southeast Asian nation’s tourism

body, and with an 18.9 percent rise in gross domestic product last quarter

economists were suitably impressed.

And this has to do with the 1997 economic meltdown how? You would do better to inlude the whole quote above if you want to understand it. It makes perfect sense of you know what quarter it is being compared to. No TB points, sorry.

Don't think Waza was looking for a gold star from you CMK.

[waza]

Thailand:18.9% GDP Growth Last Quarter

February 22, 2013

"Thailand always amazes you” proclaims the Southeast Asian nation’s tourism
body, and with an 18.9 percent rise in gross domestic product last quarter
economists were suitably impressed.

While the eye-popping growth figure reflected
the impact of devastating floods in the prior year, economists were
reportedly surprised by the growth performance, which was above the consensus
estimate of 15 percent and even the highest forecast of 17 percent.

The economic expansion was aided by a 31 percent rise in public investment, a
22 percent increase in private investment and a 12 percent gain in household
consumption and government spending. Manufacturing output surged 37 percent,
aided by record car production, while the tourism industry enjoyed a near 40
percent increase in arrivals.

"The economy has recovered fully from the flood
disaster," Arkhom Termpittayapaisith, secretary general of Thailand’s National
Economic and Social Development Board (NESDB), told
Thai daily The Nation.

How can you take distorted information like this and make an educated opinion? The Thai government employ the mushroom economic strategy, keep them in the dark and feed them on kwai shit.

But when you read between the lines its evident that the growth is all down to Government spending, or an increase in public debt. We are already seeing evidence of bank stress due to non performing loans, manufacturing has hit a labour shortage wall, the realestate market is in a bubble and the argicultural industry is rotting in warehouses. The economy is ready to stall.

In conclusion, it does have the smell of 1997.

Edited February 24, 2013 by waza

[chiangmaikelly]

What rates are 18%. I borrow at 1%. What fixed exchange rate? What luxury cars? This is of course all on topic that the only place a 1997 meltdown is possible is in the minds of Thai Visa posters.

um, I'm describing the environment and policy settings as they were in 1997 pre melt down mode. Nothing more.

You gave a wikipedia link which talked about sterilisation, which is a pretty discredited piece of policy making.

Back on topic do you think a 1997 sytle economic meltdown is possible?

I thought I was on topic.

Answer: With the current policy settings, no.

Don't know what the rice subsidy scheme is doing to the budget bottom line though.

I believe if you check the amount given away it will come out to less than 1% of the GDP. I seem to remember that being the number per year.

[chiangmaikelly]

Thailand:18.9% GDP Growth Last Quarter

February 22, 2013

"Thailand always amazes you” proclaims the Southeast Asian nation’s tourism

body, and with an 18.9 percent rise in gross domestic product last quarter

economists were suitably impressed.

While the eye-popping growth figure reflected

the impact of devastating floods in the prior year, economists were

reportedly surprised by the growth performance, which was above the consensus

estimate of 15 percent and even the highest forecast of 17 percent.

The economic expansion was aided by a 31 percent rise in public investment, a

22 percent increase in private investment and a 12 percent gain in household

consumption and government spending. Manufacturing output surged 37 percent,

aided by record car production, while the tourism industry enjoyed a near 40

percent increase in arrivals.

"The economy has recovered fully from the flood

disaster," Arkhom Termpittayapaisith, secretary general of Thailand’s National

Economic and Social Development Board (NESDB), told

Thai daily The Nation.

How can you take distorted information like this and make an educated opinion? The Thai government employ the mushroom economic strategy, keep them in the dark and feed them on kwai shit.

I uderstood it. No problem. I think you did too.

[chiangmaikelly]

“Thailand always amazes you” proclaims the Southeast Asian nation’s tourism

body, and with an 18.9 percent rise in gross domestic product last quarter

economists were suitably impressed.

And this has to do with the 1997 economic meltdown how? You would do better to inlude the whole quote above if you want to understand it. It makes perfect sense of you know what quarter it is being compared to. No TB points, sorry.

Don't think Waza was looking for a gold star from you CMK.

Darn few of em given out on this thread actually.

[davejones]

And before the financial collapse of 2008, all experts were saying how great things were, and there was no danger ahead, only more good times. The vast majority of so-called financial experts have no idea whatsoever what is going to happen. Yes, there'll be a recession sometime in the future, and after that there'll be more growth. But we don't know when. These experts can't even accurately predict what will happen in the next 3 months. They even get wrong what happened in the last three months. They are totally hopeless, so you may as well ignore them.

When reporting GDP figures for the last three months, the "experts" are often surprised that they were wrong. So even though they are predicting what has already happened in the past, they still get it wrong. If they can't predict what happened in the past, what hope do they have of predicting the future? If they were so good, they'd all be rich, and wouldn't have boring day jobs predicting what will happen next.

[chiangmaikelly]

And before the financial collapse of 2008, all experts were saying how great things were, and there was no danger ahead, only more good times. The vast majority of so-called financial experts have no idea whatsoever what is going to happen. Yes, there'll be a recession sometime in the future, and after that there'll be more growth. But we don't know when. These experts can't even accurately predict what will happen in the next 3 months. They even get wrong what happened in the last three months. They are totally hopeless, so you may as well ignore them.

When reporting GDP figures for the last three months, the "experts" are often surprised that they were wrong. So even though they are predicting what has already happened in the past, they still get it wrong. If they can't predict what happened in the past, what hope do they have of predicting the future? If they were so good, they'd all be rich, and wouldn't have boring day jobs predicting what will happen next.

It is kind of hard to ignore them when your paycheck depends on what they think, eh? If one of the three rating agencies downgrades a countries credit rating and the value of the currency goes down. And your money in that currency goes down it is rather hard to ignore eh? But I imagine you are suggesting some kind of a cave man barter system. Because if we ignore all the banks and bankers and economists we certainly can't trust any currency, eh? How do you buy things if you don't trust the experts to put a value on money?

[dunque]

Raising interest rates would stoke inflation?

That's a new one for me.

After a lifetime of teaching macro economics.

Money in low interest rate countries is used to purchase money in high interest rate countries. This is called the carry trade. If everyone wants to buy baht the value of the currency goes up. If the value of the baht goes up then it costs more to buy things in Thailand. That is inflation. Where did you teach econ?

Er, so if the baht appreciates all that imported oil and gas gets more expensive then ?

[samran]

^^ voodoo economics I think they call it.

[Naam]

Raising interest rates would stoke inflation?

That's a new one for me.

After a lifetime of teaching macro economics.

Money in low interest rate countries is used to purchase money in high interest rate countries. This is called the carry trade. If everyone wants to buy baht the value of the currency goes up. If the value of the baht goes up then it costs more to buy things in Thailand. That is inflation. Where did you teach econ?

Er, so if the baht appreciates all that imported oil and gas gets more expensive then ?

sure! becos oil and gas seller him tink Thai people have value munney too mutt and him make gas and oil more expensif too mutt.