solar Posted September 22, 2002 Report Share Posted September 22, 2002 Recently I read on the net that Thailand has the 2nd fastest growing economy in the world (China being No 1), yet at 67tb to the £, the Thai Baht is certainly at its worst\best* exchange rate for as long as I can remember. What is going on? Any amateur economists out there? *take your pick Link to comment Share on other sites More sharing options...
Guest Posted September 23, 2002 Report Share Posted September 23, 2002 What with the US dollar dropping in value(deliberate?), they are trying to keep the baht weak so as not to damage their export market. Link to comment Share on other sites More sharing options...
gummigut Posted September 23, 2002 Report Share Posted September 23, 2002 While a government can assist an exchange rate I think past market history determines that it is the fundamentals that determine the rate. I don't know if Thailand has the second fastest growing economy. I think that's a stretch. Recently, someone came out with an estimate of a growth of 5% or something and the government was thinking of revising their estimates up to 3-4% growth for this year. As for why the Thai baht is not stronger... There are many factors. Chief among them would probably be the financial sector. While many banks have healther books due to the nationalizing of non-performing loans to the TAMC, the NPL's still amount to about 37% of GDP I believe. The TAMC has really only announced one restructured loan, while it has sold off the easy pieces already. All the hard NPL's are still there and given the current structure of the law, the creditors actually assume more liability to work it out. Thus there is no incentive to work it out and all those assets which could be better utilized are still dragging the economy. Additionally, new NPL's crop up at a very steady rate as the "easy" NPL that the bank themselves restructured go bad again. Banks are not lending and there is an over-liquidity problem in Thailand, why is the economy growing? The economy is growing because of consumer demand driven by credit or the "appearance" of credit. The farmer loan moratorium, the million baht village revolving fund, but most importantly via consumer bank lending. Another telling factor is that foreign investment is down as international players are sitting on the sidelines waiting to see how this all plays out before they place more chips in Thailand. They don't want to get burned like they did in 97. If this consumer demand driven growth can spur business growth then things would be okay. My personal feeling is that this is very akin to reagonomcs and hope Thailand can walk the balancing line without hitting a recession like the US did. Unfortunately Thailand may have an analagous situation to the S&L problem. It's NPL's and possible bad consumer credit lending which would just exacerbate everything. But having said all that, the economy is still growing, shopping malls and new hotels are being announced and there is some building going on, so what the hell do I know! <<burp>> Link to comment Share on other sites More sharing options...
Guest Posted September 24, 2002 Report Share Posted September 24, 2002 Oi! He asked for amateur economists! Link to comment Share on other sites More sharing options...
gummigut Posted September 25, 2002 Report Share Posted September 25, 2002 I am an amateur. No one is willing to pay me any money over here!!! And believe me, I've asked! <<burp>> Link to comment Share on other sites More sharing options...
Guest Posted September 25, 2002 Report Share Posted September 25, 2002 I couldn't find the smile to put in my post. Link to comment Share on other sites More sharing options...
solar Posted September 26, 2002 Author Report Share Posted September 26, 2002 gummigut Thanks for the detailed reply, but what do the abreviations mean: NPL, TAMC and S&L Do excuse my ignorance! Link to comment Share on other sites More sharing options...
gummigut Posted September 27, 2002 Report Share Posted September 27, 2002 NPL = Non-Performing Loan or some such. Loans where payments are not being made. TAMC = Thai Asset Management Corporation. Institution setup by the That government to workout the NPL's. Basically, the government has nationalized the non-performing loans taking them off the banks hands. S&L = Savings and loan scandal in the United States that brought on the recession in the late 80's and collapsed the real estate market to the point where the OCC (US Gov't) almost took over Citibank. Cost was rougly 1 to 1.5 trillion US dollars. Regulations were relaxed and people bought savings and loans bank. After buying the banks, these folks would make loans to themselves from small time depositers of the banks. Gov't backed the deposits and when the loans went bust the gov't (the people) ended up footing the bill. <<burp>> Link to comment Share on other sites More sharing options...
Guest Posted September 27, 2002 Report Share Posted September 27, 2002 What is a trillion? Is that an english billion? Link to comment Share on other sites More sharing options...
Guest Posted September 27, 2002 Report Share Posted September 27, 2002 US style 1,000,000 = 1 million 1,000,000,000 = 1 billion 1,000,000,000,000 = 1 trillion 1,000,000,000,000,000 = 1 quadrillion 1,000,000,000,000,000,000 = 1 quintillion UK Style 1,000,000 = 1 million 1,000,000,000 = 1 thousand million 1,000,000,000,000 = 1 billion 1,000,000,000,000,000 = 1 thousand billion 1,000,000,000,000,000,000 = 1 trillion J22J Link to comment Share on other sites More sharing options...
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