Guest Posted March 23, 2003 Report Share Posted March 23, 2003 > For a developed country such as the U.S. those would be impressive numbers, but >for a country at Thailand's level of development the growth figures are anemic. > Some here have tried to suggest that 3-4% growth figures paint a rosy picture for >Thailand, but when an economist says a country like Thailand can expect growth in > that range, he is not saying the economy is in fine shape - just the opposite. This > is pretty basic stuff. Mmmm?not exactly. US GDP growth trend rate has been about 3.5% post WWII; this is the supposed ?balanced? position where you get steady output increase with a concomitant demand increase; growth higher than demand capacity leads to increasing inflation, which in turn then limits the growth. There was much talk that this trend rate increased with IT-driven productivity gains, but that mostly deflated along with the dot-com and telecoms bubbles. As for whether 3.5% growth is poor for a country at ?Thailand?s level of development?; well, Thailand is definitely a ?middle-income? country (GDP pc US$2000; at PPP US$6000 or so); a 3.5% growth level causes doubling in about 20 years; 5% in 15 years. That?s not too shabby in my book. Breakneck growth is generally not sustainable and can cause significant pain, see 1997 crisis for example. Pretty basic stuff indeed. Cheers, Link to comment Share on other sites More sharing options...
Guest Posted March 23, 2003 Report Share Posted March 23, 2003 I promised I wouldn't get into this particular debate, but oh what the hell. Gummi is using a much broader definition of "security" than either you or Mr. Gadfly. The way I'm reading it, Gummi uses "security" to mean "the right to a specified set of cash flows". That's a perfectly acceptable definition, and is applicable to mortgages, bonds, annuities, or equity. "securitization" (v) is the conversion of a set of cash flows into a security; thus any set of cash flows (home mortgages, acccounts receivable, david bowie records) can potentially be securitized. Financial instruments in Thailand are indeed few, but there are securitization options for a number of types of cash flows; including securitized corporate bonds and property fund units. Hope that helps, Link to comment Share on other sites More sharing options...
gummigut Posted March 23, 2003 Report Share Posted March 23, 2003 "Securitization occurs when you transfer assets to a bankruptcy remote vehicle, and then issue equity in that vehicle." This is a rather strict interpretation of the word. Many other definitions of the word abound. "Securitization is an ugly and somewhat nebulous term that refers to at least two distinct innovations in financial markets that first became notable in the 1980s. In its first and more literal usage, the term refers to the transformation of nonmarketed assets into marketable assets, securities. Assets - primarily consumer loans like home mortgage loans, auto loans and credit card receivables - that had traditionally been held in commercial and savings bank portfolios increasingly are packaged into securities for resale on the secondary market. In its second variant, securitization refers to a shift in the way firms borrow funds: firms that had traditionally borrowed from banks increasingly have relied upon securities sold on financial markets. This trend includes the steady growth of the US commercial paper market, and the explosive growth in the 1980s of euronote facilities and the original issue junk bond market". The New Palgrave Dictionary of Money & Finance I take securitization to mean the pooling of like assets into a new financial vehicle. This is a very acceptable definition of the word that has been used on Wall Street for over a decade. "you are saying that even if they are two entirely different things, security and securitization are practically the same thing because they provide the same practical benefit." No, I am saying they are two sides of the same coin. One is the verb form and the other is a noun. Much like "repeat" and "repitition". If you use the strict interpretations that you are applying, they really aren't as close as "repeat" and "repitition". Using my definition (which is wildly used on the Street) then they are much closer. "Personal property security or mortgages (UCC-1s) ... I don't think there is anything like that in Thailand (is there?), and I think that is the point you missed." I got the point. Please read my words. I previously mentioned that this type of infrastructure is not available in Thailand. I was refuting Gadfly's point that nothing like mortgaging accounts receivables is available in Thailand. The options are there, but you have to build it from scratch yourself, thus expensive, thus only available to the bigger fish. I was using it to point out that this is another point that Gadfly got wrong, and not the fact that there is an infrastructure like UCC in Thailand (whch I mentioned I don't think there is). Didn't miss the point, thank you. "but I still see a big question mark over Thailand's prospects, and to me at least, that is the more interesting issue." That is what this discussion has morphed into. I agree it is an interesting issue. I'd put forth more insights (if I had any, lol) if I thought Gadfly was truly interested. Given his arguments, which basically consists of other peoples words, I'm not inclined to share any insights (again, if I had any) with him. If Gadfly actually had any ORIGINAL ideas, it would indeed stimulate discussion. We could then really have a good input oriented brainstorming critique. As it is, I don't think he can hold up his side as he has demonstrated his non-familiarity with the environment by his comments. I'm still learning about the local economic environment. I'm also lazy so I'm slow, but I know enough to recognize when someone is parroting others like Gadfly's postings. Thus I suggest he do some thinking and then forward some ideas and then maybe we can have a discussion. I've put forth a few cursory items and what has he really added to them or the discussion on the whole? Oh yes, those words, "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?" Yeesh jjsushi: "I also don't give much credence to those that go around quoting and parrotng some large organizations' analyst or economist as if these guys cannot be wrong because they work at Goldman or HSBC." But you need to start somewhere. I think they are a good place to start. Then you attack their analysis and see if it holds up and where it falters. I'd rather do that than from scratch myself (well, would be cool, but don't have the time, money, nor resources). As I've said before about most anything, you really have to do your due diligence. "To answer the age old question of "future growth" who in the hell knows where it will come from for any country?" My thoughts exactly. While there is a very good chance you know where it's going to come from, you can get some curveballs. Just like where you are going to eat lunch in a year. Most likely you'll have the same job and you'll go to the same places, but who knows? You could win the lottery, lol! <<burp>> Link to comment Share on other sites More sharing options...
Guest Posted March 23, 2003 Report Share Posted March 23, 2003 Hi Gummi. On behalf of myself and other board members, I would like to thank you, and the other economic advisers, on presenting FAR more information on macroeconomics, than we can ever possibly desire to know or understand. Macroeconomics is definately a philosophy ('a pouring from the empty into the void') that is beyond most of our feeble 'sanukers' brains. No wonder Anderson could make Enron look like a great company. So, the baht will go up. Or the baht will go down. (hmmm...against which currency?) No one is sure. But probably not by much in the next year. OK. We can all understand that part. The rest is individual rationizations of individual opinions (philosophies). Enlightening gentlemen ...... but way too much. Now to the important questions......will the price of barfines and ST/LT rise or fall relative to the GDP or whatever benchmark you fellas choose. Link to comment Share on other sites More sharing options...
JJsushi Posted March 23, 2003 Report Share Posted March 23, 2003 One thing lost in this debate about the future valuation of the baht is the practical. Economists are great and all with their theories and academians can blah blah all day about growth, deficits, current accounts, GDP, etc but how quickly we forget something called the markets. You see there is an industry of currency traders who make their living buying and selling the baht. Regardless of what all of the high brow ivory tower guys write and speak of you have got some average guy with a bachelors degree from an average university, who has an average view of the world and happens to trade a billion dollar hedge fund. This guy also communicates with other average guys on a daily basis who control billions of dollars of capital. Sometimes these guys may listen to these economists and other times discount them. These guys are nervous by nature and based off of trading models, trends, rumor and speculation they can take the bottom out of a market and send it into free fall or they can take it to untold highs. They can be absolutely right or wrong about the economic fundamentals of their trading decisions but the fundamentals are irrelevant when it comes to their profit and loss in their trading book. The boss can give a rat's ass that your P&L is down $25 million based on some analysts future rate growth and the analyst is technically right but the market is wrong. As long as you make money you can tell him you consult an Navajo Shaman. A trader always knows that the market is always right even when it is undeniably wrong. The bottom line is making money because economic theory does not pay for the 2nd and 3rd homes nor the wifes anniversary gift. Traders who sift through all types of market data will determine the day to day value of the baht. Confidence in the market is the key at times. Ask the Bank of England and all of the AESEAN members what can happen when the trading community loses faith in your currency. Capital swings can be brutal when confidence is lost. Economic policies may shape the growth of an economy but markets/investor confidence will help fuel it. The million baht question for me is what does the market think of the baht? Look at the currency swaps or forward rates to get a good idea. Keep in mind that the longer the agreement the more risk or volatility you will experience. Any given event can affect these rates but for the average guy who wants to get a good idea of where his baht will be barring any hiccups in 6mos to a year should look at the the swaps or forwards. BTW- I am enjoying you guys discuss this stuff but as with most things intellectual ego gets in the way and the debate dissolves into nit-picking about small nuances that tend to take away from the larger theories. BBTW- Economists are still overpaid crystal ball gazers if you ask me and they SUCK! Link to comment Share on other sites More sharing options...
Guest Posted March 23, 2003 Report Share Posted March 23, 2003 I agree, the market/futures traders do this for a real living. BBTW- Economists are still overpaid crystal ball gazers if you ask me and they SUCK! But what is their rate compared to SOL. Link to comment Share on other sites More sharing options...
Guest Posted March 24, 2003 Report Share Posted March 24, 2003 > I also don't give much credence to those that go around quoting and parrotng > some large organizations' analyst or economist as if these guys cannot be wrong > because they work at Goldman or HSBC. Don?t get me wrong ? I?m not saying these guys are right because of where they work. What I?m saying is 1. The consensus opinion is toward more growth (bearing in mind that the consensus could well be mistaken) 2. Going against the consensus requires some pretty good reasoning (this is basically Carl Sagan?s ?extraordinary conclusions require extraordinary proof? principle) > Bottom line is to take the data provided, listen to a wide range of opinions from > various people, do some of your own research and formulate your own opinion. Good advice; though I notice that there are many opinions floating around unencumbered by data. I?ve tried to present a bit of data (always a difficult thing in developing markets), and a range of opinions which all seem to point in a similar directions. I?d love to hear opposing points of view, but some specificity and data would be helpful. ?There are a lot of bad policies? doesn?t really help me understand the issues. > Once a country is past the cheap labor stage in it's development, growth has to > come from an educated populace that can create the growth with their minds. Along with education, they also need serious investment in technology, infrastructure and the legal system; all critical to long-term growth. It?s these structural elements that I don?t see being addressed by the current administration; from the looks of things, they?re still trying to grip tightly to the cheap labor stage. I think that?s got a shelf life of a few more years, but not much more than that. It?s of little consequence though ? that should be enough time for certain people to consolidate their power and pretty much take over the country. You spoke of looking at the motivations of i-bank economists; well, let?s look at the motivations of the people making economic policy as well, eh? Cheers, Link to comment Share on other sites More sharing options...
Guest Posted March 24, 2003 Report Share Posted March 24, 2003 Hi - Re: Alien business act: > I spoke with a lawyer friend of mine here who stayed after > the crash... He says that it is now nearly impossible to get a > license to operate any business restricted under the Alien Business Law Category A - Closed to Aliens Agricultural Businesses - Rice farming, Salt farming, including manufacture but excluding rock salt mining Commercial Businesses - Internal trade in local agricultural products, Land trade, Brokerage or Agency, Auctioneering Service Businesses - Accounting, Architecture, Advertising, Law, Barber, hairdressing, and beautification Other Businesses - Building construction Given that your friend is a lawyer, which is on the prohibited list, it seems that the law isn't as big a deal as one might think, eh? There are a number of international firms here in "rstricted" industries, e.g law (Baker/Mackenzie, Linklaters, White & Case), advertising (Ogilvy, McCann Erickson, Leo Burnett), and accountancy (E&Y, PWC, etc.); all of which make me wonder how serious this legislation really is; though granted, I don't see many foreign salt miners around. There is a second, longer list of industries for which one needs BOI permission. However, given that people find ways around the restricted list (I imagine by fiddling with ownership structures), they can do this here as well. Permission is also not terribly difficult to get - the BOI doesn't reject much, from what I understand; especially as they're measured by the number of projects they approve! Cheers, Scuba Link to comment Share on other sites More sharing options...
khunsanuk Posted March 24, 2003 Report Share Posted March 24, 2003 Hi, Guys, I'll be moving this one to Finances in a couple of hours. Sanuk! Link to comment Share on other sites More sharing options...
soongmak Posted March 24, 2003 Report Share Posted March 24, 2003 On behalf of myself and other board members, I would like to thank you, and the other economic advisers, on presenting FAR more information on macroeconomics, than we can ever possibly desire to know or understand. LH, you're certainly NOT speaking on behalf of me! I am grateful to have some board members who take the time to enlighten us regarding the Thai economy. It is sure as hell more entertaining than the umpteenth discussion regarding drink prices, barfines and the prices for LT/ST. Cheers! Link to comment Share on other sites More sharing options...
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