gummigut Posted March 20, 2003 Report Share Posted March 20, 2003 Getting back to the point at hand, will that baht stumble before the end of the year... I still believe there will be a little bump if the war ends quickly (which I believe) and we don't have any major terrorist or additional flare ups (which I think there is a very good chance). In any event, if there isn't a bump, and the world economy does sink, how much more will Thailand sink compared to everyone else? How long is the lag time for the economic information to get reported and drag the exchange rate down? I still maintain that the smarter bet is for the FX rate to remain relatively stable at least till the end of the year which is the point in question. As for the long-term outlook, I think it sucks. I've said that before and I'll say it again. I just don't think the shit will hit the fan by the end of the year. I think 2-3 years down the road. Though I've been saying that for 6+ months, so maybe 1.5 wo 2.5 years. <<burp>> Link to comment Share on other sites More sharing options...
JJsushi Posted March 20, 2003 Report Share Posted March 20, 2003 Says scuba22: Hi - Here's some data: Projected Thai GDP Growth, 2003 (as of Jan 2003, from BK Post): DBS Vickers: 5.0% Goldman Sachs: 4.5% HSBC: 4.2% Standard Chartered: 3.5% Bank of Thailand: 4.0% NESDB (yesterday): 4-5% CLSA (last week): 6.8% Merrill Lynch (last week, and that's your pal Supavud): 3.6% Clearly there is disagreement as to the degree of growth, along with some public fighting between the NESDB and the PM (who claims 6%); but there does seem to be a pretty strong consensus for continued growth. Do you know something all these fellows missed? Cheers, Scuba Economists still suck (The only occupation I know where you get paid a boatload of money to be right 5% of the time and you can consider the failures as markets not conforming to theory or models)! BTW-Good to see you posting on this board also. Link to comment Share on other sites More sharing options...
Guest Posted March 20, 2003 Report Share Posted March 20, 2003 hello scubie! Link to comment Share on other sites More sharing options...
Redbaron Posted March 21, 2003 Report Share Posted March 21, 2003 Says rookie: ..'Thanks guys, now it's twice as clear as it was before....' So you got it...good for you. The more I read of this thread the more you can color me ...confused. But then I was confused even before reading this thread... ;-) Good one rook, I think I'll leave it in these gents' capable (?) hands. Link to comment Share on other sites More sharing options...
Guest Posted March 21, 2003 Report Share Posted March 21, 2003 > I still maintain that the smarter bet is for the FX rate to remain relatively stable at least till the end of the year which is the point in question. That seems to be the consensus of the people who make such predictions (e.g. BOT, NESDB, I-banks, World Bank). Personally, I'd like to better understand the analysis behind this; so I'm planning on hitting the macroecon text this weekend - interested? :: Cheers! Link to comment Share on other sites More sharing options...
Guest Posted March 21, 2003 Report Share Posted March 21, 2003 > Economists still suck Consensus certainly doesn't mean that it's right, but I think it does raise the bar for a convincing case the other way. There's a comment someone made about good economists and bad economist. Good economists have integrity, think for themselves, examine the data, consider the statistical significance, and make small predictons based on lots of information. Bad economists make up results loosely based on some random observations and never worry about whether their predictions turn out right or not. In their next life, a good economist is reborn as a physicist. A bad economist is reborn as a sociologist. > BTW-Good to see you posting on this board also. Thanks, I'm a slow convert to new formats! :-) Cheers, Link to comment Share on other sites More sharing options...
Guest Posted March 21, 2003 Report Share Posted March 21, 2003 Hi bud! Hey - I saw your book over at Bookazine a couple weeks ago, man that's depressing stuff. Reminded me of my days on the pediatric cancer wards; let's chat sometime soon! Cheers! Link to comment Share on other sites More sharing options...
Guest Posted March 22, 2003 Report Share Posted March 22, 2003 Naaaah, what I'm working my way up to saying is that Gadfly and Gummigut are argueing about the value of the baht in two different timeframes. Gadfly is making a very persuasive case that the baht will, in the long run, most likely decline (e.g with respect to the US $, Euro, and other hard currencies) because there does not appear to be any factor that will increase the demand for baht relative to the demand for the $ or Euro. At the same time certain economic policies of the Thai government will likely lead to an increase in the supply of baht (as all governments are want to do, but that is a topic for another thread). The only logical conclusion of these two trends (stable or even decreasing demand for the baht while the supply of baht is growing relatively faster than the supply of hard currencies is growing) is that the baht will eventually futher decline against the world's hard currencies such as the $ and the Euro. Gummigut, on the other hand, is making an equally persausive case that the baht will not significantly depreciate in the near term (in the next 12 months or so) because the Thai central bank still has sufficient foreign exchange reserves and other means at hand to prop up the baht in the event of any shocks to the baht (speculative attack, oil price spikes, etc). In short, Gadfly and Gummigut are talking about the same issue, but not about Excellent summary. And not contentious either. I think I annoyed Mr. G by pointing out that he confused securitization with security. Since they are entirely different things, it is not a matter of semantics or trival. And to confuse words that mean completely different things simply because they sound alike would be extremely embarassing for a financial expert like Mr. G. Mr. G, my apologies if I have caused you to lose face. :: Searcher your summary is excellent. The only thing I would add to your summary of my position is this: not only will - as you point out - "certain economic policies of the Thai government ... likely lead to an increase in the supply of baht," they are also likely to lead to a decrease in demand for Baht. By implementing policies that are, at best ambivalent, and, at worst, hostile to foreign investment, the Thai government discourages foreign investment in Thailand. Foreign investment is a major source of demand for Thai Baht, and if foreign investment goes down so does demand for Thai Baht. To put it in concrete terms, if a foreign investors intends to build a factory here, he?ll need to buy Baht to pay for the concrete he needs to build that factory, and thus he increases the demand for Baht. But if foreign investment is dampened because of policies designed ?to prevent foreigners from taking over the country? (I am not quoting anyone on this board, but a senior Ministry of Commerce official), the whole discussion about investors waiting on the sidelines until the war in Iraq is over to invest in Thailand is moot. Instead of investing in Thailand when the war ends, they?ll invest somewhere else. And this brings me back to what I thought was the most interesting question posed by the Wall Street Journal article and the CP executive: where is the economic growth for Thailand going to come from in the future? We have been distracted from that question, but it doesn?t matter if you are a supposed financial expert or not; instead, pause for a moment and think about that question: where is the growth here going to come from in the future? Do you see an answer to that question anywhere above? Many of you live here, and you know how ambivalent the current attitude is about foreign investment - an alien business law that prohibits foreigners from owning many types of businesses, proposed additional restrictions on work permits, an outright prohibition on foreign ownership of land ? Those of you live here - and you don't need to be a finance professor to answer this one - do you really believe increased foreign investment is a plausible source of future growth? Most of the rest of the world is knocking down barriers to increase foreign investment. My guess is that we?ll see more of that after the Iraq conflict ends and we find ourselves living in a world with a dominant U.S., which ? along with its allies the U.K. and Australia ? have strong open door investment and free trade policies. Notwithstanding the ridiculous position adopted for political reasons on steel mills, the U.S. is opent door - it has an average tariff rate in the 2-3% range while Thailand?s average rate is around 17% and rising. If you live here, you know which way the vested interests want to go, how they became vested interests (government restrictions keeping out competitors), and what their position is in the current line-up. Are they going to allow the opening up that is necessary to increase foreign investment? I freely admit that there is a great deal of crystal ball gazing here on my part, but I have a hard time seeing how Thailand ? with its current protectionist policies and vested interests ? will fare well in the days to come unless there is a radical departure in outlook and policy. Again, because it cannot be repeated enough: where is the growth here in Thailand going to come from in the future? Anyone have a plausible answer? 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gummigut Posted March 22, 2003 Report Share Posted March 22, 2003 "I think I annoyed Mr. G." Oh don't flatter yourself. It actually was fun in the beginning but now it's getting rather droll. Okay, here is the droll part. You've failed to address my points except for the part that "he confused securitization with security". Anyone reading this with half a brain and familiarity with finance will understand that I didn't confuse the terms. In your post where you brought up mortgage law (a noun) you stated "nothing remotely similar is possible in Thailand" like "you can mortgage accounts receivables, inventory and equipment" (this is an action, i.e. verb). The act of using your assets as a basis for a revolving fund (securitization) is a verb. I was making a point that what you say isn't true. Your argument that there is no infrastructure to convert the items you mentioned into working capital is false. There is, but each company has to create it basically for themselves so it's only available/feasible for a limited amount of companies. "I freely admit that there is a great deal of crystal ball gazing here on my part, but I have a hard time seeing how Thailand ? with its current protectionist policies and vested interests" Well, golly gee willickers, these are new developments for Thailand!!! Protectionist policies and vested interests! NOT. What do you think was in place beforehand? A total free trade environment? Yeesh. Okay, if the policies you cited (alien business law, no foreign ownership of land, etc... - note, I'm discounting the additional restrictions to work permits as this is an on and off again affair) is going to drag down the economy further down, can you please explain why it is different now then in previous boom and bust cycles as Thailand has had these policies for quite some time. Don't think you can point out how it is different now cause it ain't. Yes you can argue that it drags down the economy, but it ani't no different than before. "Most of the rest of the world is knocking down barriers to increase foreign investment." Have you been following the EU? Yeesh. Well, atleast you've seem to dropped the argument that the baht is going to go south in a significant way in 2003. What has made you change your mind? If not, why? I'm sure your Thai economists would love to know why the baht is going to go south in 2003. Why, so they can revise their estimates to flat growth for GDP for surely a major FX swing will effect GDP in some shape way or form. As of now, it seems everyone is forecasting 3-5% growth. This includes Citibank, Deutsche Bank, GS (though as previously pointed out, they really don't exist here), HSBC, JP Morgan (chase, lol, chase), ML (phatra), Bkk bank, MS, Nomura, TFB, blah blah blah. Oh, and the ratings can remove positive credit watch too, as the country will be much harder pressed to service it's debt if the baht is signficantly weaker. "Again, because it cannot be repeated enough: where is the growth here in Thailand going to come from in the future? Anyone have a plausible answer?" If you have abandoned the argument that the FX market won't go south for the winter (least not this year) the timeframe in question is so large it makes this a very open ended question. It's like, where am I going to eat lunch in a year from now. Chances are you probably know, but you can hit the lottery. If you bothered to do some thinking (ahem, "because it cannot be repeated enough") it could come from a number of places. The EU can drop some of it's severely restrictive tariffs on Thai products. The commodity food products like chicken, pork, and beef can somehow increase in price greatly lifting agri-food and food-processing companies in Thailand. Something could happen in China during this transfer of power that would lead to capital flight (which Thailand would benefit from a runoff), Japan can actually get serious about it's financial reforms and drag up the whole region (yah, fat chance), the world economy could get it's pants lifted off the floor by a quick war, Bill Gates could get a major hard on for a Thai girl and donate a gadjillion $'s to the country. As for your continued attempts at seeing face in everything: I'm Asian and your not. nyah nyah nyah nyah nyah. As for the words security and securitization, they are two sides of a coin. One's a noun and another is the verb. I'll try to use an analogy you might be familiar with. It's just like "Ashiv-tor" and "Ashiv". They are two different words (and they do sound alike, don't they?). You see, in Vulcan, one is the verb form, and the other is the noun form. If you really must know, the definition is "to repeat" and "reptition". That is if you really don't know vulcan as you do argue as you are out of this world. So, in two words I'll Mork it outta here. Nanu Nanu <<burp>> Link to comment Share on other sites More sharing options...
gummigut Posted March 22, 2003 Report Share Posted March 22, 2003 With regards to the FDI falling... I don't know how hard these numbers impace FDI, but it is now easier for companies to issue debt in Thailand. If you go to TBC or look at Tris rating agency rated debt, you'll notice extremely few issues. But recently GE Capital and Unilever has taken advantage of all the liquidity in the market. GE raised 6.5 billion baht. Unilever has raised over 10 billion baht since 12/02. Doesn't make sense to bring in funds from outside if domestic funds are starving for quality invesments and are available at cheaper cost. <<burp>> Link to comment Share on other sites More sharing options...
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