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  1. #1
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    PM: No new financial crisis

    http://www.bangkokpost.com/business/...nancial-crisis

    PM: No new financial crisis

    Virabongsa Ramangura
    • Published: 14/10/2010 at 04:22 PM
    • Online news: Economics

    There will be no repeat of the 1997 “tomyum kung” financial crisis as a result of the strengthening baht, as the private sector fears, Prime Minister Abhisit Vejjajiva said on Thursday.

    “This is because the government is trying to deal with the problem in a way that does not distort the mechanism of the foreign exchange market.

    “The past example showed that several countries had tried to weaken their currencies by intervening in the money market. But their attempts failed, mainly due to the policy to weaken the US dollar by the United States.

    “The Bank of Thailand could lose more money for nothing if it continues intervening in the forex market, as it might fail to weaken the baht as expected.

    "Moreover, it would not worth using such a huge amount of the country’s foreign reserves for such purpose,” said Mr Abhisit.


    PM Abhisit Vejjajiva

    He was confident there would be no second round of the financial crisis that began in 1997. He said the 1997 crash was caused by the attempt to distort the money market mechanism.

    The government’s first round of the baht measures were mainly for minimising the negative impact of the baht’s appreciation.

    The second round of measures will soon follow with an aim of speeding up investment and the import of machinery to boost the demand for foreign currency, the prime minister said.

    State enterprises will invest about 50 billion baht under their business expansion projects in the last quarter of the year.

    Asked about the call for the central bank to cut the repurchase rate or delay its plan to raise the policy rate to help ease pressure on the baht, Mr Abhisit said the BoT’s Monetary Policy Committee will have to take into account the foreign exchange rate at its next meeting.

    He added that the central bank believes even if the policy rate is reduced, it will not help improve the strengthening baht situation.

    The monetary policy panel is scheduled to meet on Oct 20.

    Former deputy prime minister and finance minister Virabongsa Ramangura expressed concern that there could be another round of financial crisis, if the central bank fails to take any action to deal with the baht’s rise.

    The second round of tomyum kung crisis will certainly take place in Thailand, if the baht rises to 25 baht against the US dollar, he said at a seminar on the strengthening baht.

    He was also worried that the strengthening baht would lead to a broken bubble in the stock market, particularly in the shares of energy companies.

    Energy companies made a huge profit this year, but from the foreign exchange rate not from a better performance, he explained.

    Mr Virabongsa did not think the central bank’s latest measures to block capital inflow to curb the baht’s appreciation would work.

    He suggested the central bank cut the repurchase rate (RP) to immediately halt foreign capital inflow.

    “The meeting of monetary policy panel on Oct 20 should consider cutting the policy rate by 0.75 per cent so it stays at a similar level as that of the US. The rate cut will help weaken the Thai currency,” said Mr Virabongsa said.


    Former finance minister Virabongsa Ramangura

    He said the BoT should also clearly announce the ceiling limit it would allow the baht to rise to.

    If possible, he said, Thailand should reintroduce a fixed exchange rate policy, as many factors allow it to do so.

    “The country now has large foreign reserves and continues to gain a trade and current account surplus. It is safe to return to the fixed exchange rate policy at this time.

    “Otherwise, the central bank should clearly state that it will continue with its managed floating exchange rate policy. This means that if the exchange rate rises higher than the limited level, the central bank will take action,” the ex-finance minister said.

    In addition, the central bank should sell more bonds to absorb the excessive liquidity and to halt foreign capital inflow, as it had done in the past, he said.
    "Slavery is the daughter of darkness; an ignorant people is the blind instrument of its own destruction; ambition and intrigue take advantage of the credulity and inexperience of men who have no political, economic or civil knowledge. They mistake pure illusion for reality, license for freedom, treason for patriotism, vengeance for justice."-Simón Bolívar

  2. #2
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    Quote Originally Posted by StrontiumDog
    "Moreover, it would not worth using such a huge amount of the country’s foreign reserves for such purpose,” said Mr Abhisit.
    who the fuck graduated this moron ?
    Weakening the baht is not done using foreign reserves but increasing them.
    To push the baht down the BOT needs to sell baht buying other currencies , therefore increasing its foreign reserves.

  3. #3
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    How's your Srithai Superware shares going at the moment?

  4. #4
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    http://www.nationmultimedia.com/home...-30140142.html


    PM lays out roadmap for govt in post-crisis era


    Thai Prime Minister Abhisit Vejjajiva on Friday laid out goals of the government in a post-global crisis era, but said that achieving these goals won't be as smooth as silk.

    Speaking before businessmen, members of the press and officials of THAI Airways, which is celebrating its 50th year, Abhisit said Thailand should take advantage of the recovery from the financial crisis and strengthen its economy by tapping into its resources, pursuing trade agreements with other countries and enhancing transparency in government.

    "The Asia Pacific and Southeast Asia will be the region that will provide economic growth at the global level," Abhisit said. "This is reflected in the interest of the other regions in engaging with us. The centre of gravity of global developments is shifting to this region and Thailand must take full advantage of that. To do so, that means we have to be a very active player in terms of economic integration and regional architecture."

    To do this, Abhisit said the government should put emphasis on connectivity in both physical and virtual networks to enable the Thais to take advantage of bigger markets and competition.

    The Nation

  5. #5
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    http://www.bangkokpost.com/news/loca...economic-goals

    PM sets three main economic goals
    • Published: 15/10/2010 at 04:04 PM
    • Online news: Local News

    The government has been able to get the country out of economic crisis and is now setting to move forward to its three main economic development goals, Prime Minister Abhisit Vejjajiva said on Friday.

    In his special speech on “Thailand’s Economic Development Roadmap” presented at a function to mark 50th anniversary of the Thai Airways international, Mr Abhisit said the three economic development targets are;

    1) Global integration. The government will enhance the country to use economic advantage from the globalisation. It will strengthen the country’s competitiveness potential locally and internationally through the development of infrastructure-road, utility system, water resource management and agricultural sector.

    The government will support the research and development activities to increase production capacity of the industrial sector. The government also plans to increase agricultural production output in order to ensure food safety, both regionally and globally.

    In addition, the government will give more importance on the green economy in order to enhance the development projects take into account the protection and conservation of the environment.

    2) Strengthening the Thai economy. The government will come up with measures to help increase income of the people. It will maintain purchasing power of the people to allow economic transactions and activities to further continue.

    In the meantime, the government will ensure the security on income of farmers, who are the majority of population, through farm prices guarantee schemes. This will also help increase the purchasing power of people.

    The government will also set up a welfare society system in preparation for the future. This system will help ensure equality in income distribution.

    3) Creating justice economy. The government will reform tax structure, including land and asset taxes to enhance the people to equally have a chance of owning land and house. The new tax system will ensure that the economy and society will be developed simultaneously.

    The prime minister said his government will put utmost efforts to achieve the set goals by applying good governance principle and preventing corruption.

    “This is the economic roadmap that the government has strong intention to move forward to”, said Mr Abhisit.

  6. #6
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    Quote Originally Posted by Loy Toy View Post
    How's your Srithai Superware shares going at the moment?
    I am no more vested , sold the last 20,000 a couple of months ago.
    It quotes 10.40 now.

  7. #7
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    Quote Originally Posted by StrontiumDog
    PM sets three main economic goals.....
    what a load of fried air

  8. #8
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    http://online.wsj.com/article/SB1000...sia_whats_news

    Threats Grow in Developing World
    By PETER STEIN

    Could emerging markets experience a "black swan" moment?

    In recent weeks, a steady flow of global capital into emerging markets has picked up pace as investors flee weak Western economies with their rock-bottom interest rates in favor of the growth potential in the emerging world, especially in Asia. Of the more than $60 billion in net inflows into emerging-market equity funds so far this year, $23.3 billion, or more than a third, has jumped in just since the beginning of September, according to EPFR Global.


    The question is, could something unexpected happen that wrongfoots the market—either a "black swan" event that completely surprises investors with a rare and highly disruptive outcome (a coup in North Korea, say), or even just a bout of short-term turbulence that rocks global markets?

    There are, of course, good reasons why money is flowing from the developed world into the developing one. The pace of growth and relatively low debt levels in economies like China, Southeast Asia and Brazil offer huge promise at a time when the overly indebted economies of the U.S. and Europe are being forced to deleverage.

    Many investors, however, are betting not just on growth, but on surging asset prices stemming from a giant inflows of easy money. Stock prices in much of Asia have already been rising on expectations of further moves by the Federal Reserve to stimulate the limp U.S. economy with more "quantitative easing," purchases of Treasury bonds aimed at pumping more cash into the financial system. Fed Chairman Ben Bernanke's comments Friday in Boston did nothing to dispel those beliefs.

    A lot of investors "expect this great bubble that they're all going to make money in," says Russell Napier, a strategist with CLSA Asia-Pacific Markets. He believes it's likely Asian governments overwhelmed by the inflows and unwilling to let their exchange rates rise too quickly against the dollar will resort to capital and credit controls that could deliver a market jolt.

    Some signs of that scenario are already popping up. This month, Brazil doubled a tax on foreign investment in certain Brazilian bonds. In Thailand, authorities last week imposed a tax on foreign purchases of Thai bonds and may take other measures to rein in speculative investments from overseas.

    So far, markets have taken those moves in stride. But it's possible some government battered by a wave of foreign money could overdo it, as they've done before.

    In December 2006, Thailand, trying to restrain the rising baht, announced that foreign investors in Thai stocks and bonds would have to deposit 30% of the value of their investment in a noninterest-bearing account with the central bank for at least a year. The country's main stock index fell 15% in a day, wiping out $22 billion in market capitalization, and other emerging markets fell, too. The authorities quickly reversed themselves on some of the curbs, though others were kept in place for another 15 months.

    Other risks lie in the U.S. Frustration over China's currency policy, for example, could lead Congress to impose sanctions leading to an all-out trade war.

    "If you are an investor in the emerging world, watch what is going through Congress," says Paul Schulte, a strategist at CCB International Investment Ltd. in Hong Kong. "If you see trade bills that are harmful gathering momentum, get out." Of course, when everyone wants to get out at once, these markets often can't accommodate.

    Sean Darby, a strategist at Nomura Holdings Ltd., remains wary of U.S. policy risk, too. He remembers during the financial crisis when Congress failed to pass measures that the markets already assumed had been agreed on. "I was scarred by those experiences, going to bed thinking something was a done deal and waking up to find out it had gone the other way," he says.

    Yet even amid proliferating references to "currency wars" in the news, volatility in Asian stock markets is at new lows, according to Deutsche Bank. That makes it relatively cheap to place a bet that the status quo will be disrupted in some way that the market isn't accounting for.

    One way to do that is through what's known as a straddle, in which an investor purchases both put and call options on a market index. A straddle is a bet on volatility, as it makes money if a market moves sharply either up or down. (A put option allows an investor the right, but not the obligation, to sell securities at a specified price within a certain time period. A call option allows the investor the right to buy securities under similar conditions.)

    Brad Jones, Asia investment strategist at Deutsche Bank, says an "at the money" straddle of the main South Korean stock index currently runs about 7%. That means that for $70,000, you get exposure to $1 million worth of the index. And if the stock market either goes up or down by at least 7%, you make money.

    "Your maximum gains are unlimited if the market trends in either direction," he says. If the market goes up or down 20%, you make 20% of your exposure minus your cost—that is, $130,000. Of course, if the market doesn't go up or down 7% before the straddle expires—in three months, in this example—you lose your $70,000.

    Given the low cost of this insurance at the moment, "I don't think you need to have a 'black swan' type of view to think about buying some level of protection," he says.

    Nor do you need a negative view on long-term emerging-market prospects to believe there's money to be made betting against the herd rushing into these markets in the short term.

  9. #9
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    "Read my lips ..

    'There will be no repeat of the 1997 “tomyum kung” financial crisis as a result of the strengthening baht, as the private sector fears, Prime Minister Mark "The Annihilator" Vejjajiva said on Thursday.'"

  10. #10
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    Quote Originally Posted by wefearourdespot View Post
    Quote Originally Posted by StrontiumDog
    "Moreover, it would not worth using such a huge amount of the country’s foreign reserves for such purpose,” said Mr Abhisit.
    who the fuck graduated this moron ?
    Weakening the baht is not done using foreign reserves but increasing them.
    To push the baht down the BOT needs to sell baht buying other currencies , therefore increasing its foreign reserves.
    All central bank forex reserves are priced in US dollars because the dollar is the reserve currency at the moment. The PM was referring to the value of the BOTs reserves priced in dollars so his statement is still correct.

    If you look at it the way you did, then you are technically correct too.

  11. #11
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    This is all becoming fun.

    As the US has so skillfully displayed, the best way to lower a currency's value is to print more of it.

    So Thailand should simply print more money.



    So should every other country,

    I'm for the million Baht note!

    Obama's picture could well appear on the trillion dollar bill.

  12. #12
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    Thailand is already printing money, they are taking more international debt already

    eventually Forex speculators will notice, and that's when we might see a comeback to 1997

    not good news, as it could trigger a social revolt if we see the THB go back to 40 with a pending financial crisis

  13. #13
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    Quote Originally Posted by Thormaturge View Post
    This is all becoming fun.

    As the US has so skillfully displayed, the best way to lower a currency's value is to print more of it.

    So Thailand should simply print more money.



    So should every other country,

    I'm for the million Baht note!

    Obama's picture could well appear on the trillion dollar bill.
    all this money printing and most people think the only unprintable currency in the world is over valued.

  14. #14
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    here is the thing, as more money is printed, the more speculative Gold becomes

    when the printing stops, and real interest rates go up once more, Gold will collapse

    are you willing to take that bet with a loaded gun ?

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    [quote=Butterfly;1585652]
    here is the thing, as more money is printed, the more speculative Gold becomes
    No, the more money that is printed, the more speculative fiat cash becomes. Its already happening now.

    when the printing stops, and real interest rates go up once more, Gold will collapse
    Gold will collapse priced in what ? US dollars ? The problem is that higher interest rates in the US will collapse the US economy and the tax revenue that services the debt that backs the dollar. Remember the dollar is not backed by gold, its backed by the full faith and CREDIT of the US government.

    are you willing to take that bet with a loaded gun ?
    In dollars ? definitely.

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