#  >  > Living And Legal Affairs In Thailand >  >  > Thailand and Asia News >  >  > Business, Finance & Economics in Thailand >  >  Predictions for the economy 2009 and beyond?

## Rattanaburi

Things aren't looking too good out there. The bad news just keeps coming. Is it a strange new economic world or just a bump along DOW 20,000. What do you think is in store for the economic world / investors in the coming year? Share your opinion. Let's see who will get it right. Make some picks for the coming year if you dare.

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## good2bhappy

USA will follow an Isolationist policy!

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## Zephod

I see a 3+ year global recession and we have yet to get anywhere near the bottom.

Peace..
Zephod

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## watterinja

Some analysts are already calling it one of the 3 worst years in financial history - 1931, 1937, 2008 - with 2008 being the worst by far in terms of wealth destruction. 1931,1937 were in the times of the Great Depression.

Interesting times lie ahead.

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## Mid

best option currently appears to be to return to bed till 2010  :Sad:

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## Rattanaburi

^ I kind of agree with that Mid. Friday markets were up but I don't think this is going to last. I just don't see too much working for the US economy at least.

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## Thormaturge

With the current head in sand approach to economic policy in the West, what I see is looming inflation.

The USA in particular, but also Western Europe, have to learn to reduce consumption in order to accommodate the rise of China and India. There isn't enough of everything to go around and the two emerging economies are sucking resources away from the developed ones.

Western governments will continue the illusion of wealth by allowing asset values to rise, and by even encouraging it. House prices will rise again and stock values will climb, all on the back of ludicrously cheap credit. This time the credit will be backed by the State since the banks aren't this stupid.

Inflation will rise spectacularly thereby stripping any true value out of the assets and leaving everyone worse off in real terms. The Dollar, the Euro and Sterling will all drop through the floor as interest rates are deliberately depressed in order to continue the illusion.

This is the world Obama is promising everyone, and it is what America voted for. Everyone else is following the new Messiah like sheep. O baa ma, O baa ma, O baa ma.

There are going to be an awful lot of very very poor pensioners in the next decade.

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## klongmaster

^Interesting analysis Thorms: where does SEAsia fit into this...is it possible for small countries like Thailand to steer their own course or will they be part of the flock?..

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## bkkandrew

I don't think I need comment as most know where I stand on this.  :Smile:

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## MeMock

Gold and Oil way way up.

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## Thormaturge

I think China will be back on a roll soon, fuelled by the funny money from the USA which will continue consuming the trash China has been manufacturing with money borrowed from the Fed. This time the US will be selling the family silver to buy rubber dog toys. US Treasury bonds will be the next worthless asset.

The USA has to eat and Thailand will happily continue exporting agricultural produce, so the Thai economy should hold up although with the Thai economy so closely tied to that of the US we will see inflation being exported here too. Price increases in the USA will cause prices to rise in Thailand correspondingly.

This should ensure the Baht - Dollar ratio remains broadly stable The question for Asia is whether small currencies such as the Baht can survive, and I do not believe they can. Speculators have shown us in 2008 just how much damage they can do, whether it be to commodities, banking institutions or economies. There must be a common ASEAN currency and I think it will be forced upon Asia to develop one. Meanwhile it may well become common to formally link currencies in Asia to the Dollar. 

I look forward with eager anticipation to the eventual launch of the "Asean" as a currency to replace the Baht.

I will add coal to Memock's list. The USA generates half of its electricity from coal and China is building scores of new coal fired power stations. The rising price of oil will make it economicallyviable to clean up coal fired power plant emissions.

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## mellow

^ Do you really believe that the USA depends on Thailand for food?

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## Thormaturge

^
That isn't what I said. The USA does import agricultural produce, especially seafood, from Thailand and that is likely to continue. If anything Thailand has been increasing its agricultural exports by expanding into new markets so Thailand won't sink. The USA exports wheat which is of no interest to Thailand whatsoever. If the USA sucks money in from Russia and pays some of it to Thailand then nobody should be too upset.

In a perverse way I believe political instability suits Thailand since politicians don't have enough time to exert any real influence and commercial considerations fuel the economy instead.

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## britmaveric

Economy will be back in order around 6-1yr. Then it will be boom time once again for the yank economy... lower oil, and low gold prices. (teeraks beware)

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## bkkandrew

> Economy will be back in order around 6-1yr. Then it will be boom time once again for the yank economy... lower oil, and low gold prices. (teeraks beware)


 :rofl: 

When Brit speaks, we all know the opposite will happen.

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## Lynn

After reading the majority of the replies, I can tell that most of you don't have a clue of what is going to happen in the near (12 months) future. All I will say is to start saving money if you haven't yet and make a real budget for your living expenses...it is going to be rough for a while until the governments sort out their economies and things get back on track.

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## britmaveric

Should spend spend spend - squirreling away your dosh won't help the economy.  :Very Happy:

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## bkkandrew

^^Lynn, with respect, I see little point in reposting vast amounts of information on this thread when it can be found here:

https://teakdoor.com/us-domestic-issu...-us-banks.html

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## bkkandrew

> Should spend spend spend - squirreling away your dosh won't help the economy.


You carry on and help uncle Tom Cobley and all. I'll just take care of my family thanks  :Wink:

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## britmaveric

That is the usual way - help thy self not others.  :Wink:

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## bkkandrew

^Righto, deposit all your funds behind the bar at a suitable Pattaya venue and we can all go about reviving the world economy in a concerted 'push'.

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## britmaveric

You buying Andrew??  :beer:

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## bkkandrew

^Nope, you seem to have missed the 'Britmaverick's funds behind the bar' part of my post, haven't you.  :Wink:

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## Thormaturge

We are heading back to the days of high inflation, where money itself loses value.  Place $ 20,000 in the bank today and in ten years' time it won't  buy you a quarter of what it does today.  Governments are so eager to "kick start" their economies that they are stoking up inflation much like someone throwing gasoline on a smouldering fire.  

You need a hedge.  Gold is probably the best bet although, once again, I expect property to develop a bubble and burst pattern.  

Spend spend spend isn't the way to financial security.  Save, invest and look for quality are the tenets of this not-so-brave new world.

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## Panda

Its simple really.
Countries that import more than they export go into debt.
Borrowing more money to buy more imports is not a real smart thing to do. Since it only increases the debt.

Paper money is only a trading medium for the actual goods and services that represent real wealth.
The $US is vastly overvalued since it is based on debt rather than production and that cant continue forever. But as the worlds default trading currency, its still in great demand which in turn is forcing its trading value up unrealistically.

Sooner or later the world leaders are going to have to face the fact that this endless cycle of debt trading on an overvalued $US will come crashing down.

The only way out of this mess is the introduction of a world trading currency based on a basket of currencies to even out the inequities. 
Such a system would result in a rapid fall in the value of the $US (and therefore the amount of trade in actual goods the US would have to export to pay back their $ debt). So, it would be good for USA as a whole because it would mean imports became far more expensive and thus stimulate the domestic production of consumables. But it would be bad for countries who have lent US money and bought up their paper money at previously inflated rates.

The core of the problem at the moment is that the whole monetary system of the world is out of whack with production because its based on a $US propped up by an ever increasing debt cycle.

Whats happening now is the beginning of an adjustment in the value of paper money, but ironically at the moment, there is a rush to buy $USs as a safe haven as world trade falls off and the $ value of companies producing goods and services declines. Thus pushing up the tradable value of the $US further and making the inevitable crash landing even harder when it comes. And of course the US governments policy of borrowing more money and encouraging more debt and spending is also increasing the severity of the pending crash.

When all the dust settles (I hope) in 3 to 5 years, we will have a new universal world trading currency in balance with production of goods and services. 

It hasn't just been a US housing bubble thats caused the current world recession, its been a $US bubble. The post WW2 monetary experiment in using one countries currency as the worlds default trading currency has run its course. It worked for a while, but started to go down hill when the US completely abandoned the gold standard 35 years ago. Now the rest of the world has got to absorb the loss incurred by the $ bubble. Its got to happen sooner or later no matter how much we try to defer it. And like all adjustments, the sooner it happens the less of a shock it will be.

Its absurd to think that just printing paper money can create wealth.
Wealth is dependant on labour and production of actual goods and services.
Paper money is just the medium for exchange of real things of value and when we start to focus on the paper money as more valuable than the real products, the value of the paper money becomes inflated and we realize we dont have as much in real goods and services as we thought.

It will all work out in the end but it will be a very painful experience unshackling the whole world monetary system from the $US.

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## Muadib

Consumer confidence is down... 

Housing market / prices in the toilet...

Projected 1000's of bankrupt retailers worldwide in 2009... 

Market analysis predicting stag-flation, and not just as in inflation, but deflation of market values along with inflation due to printing $$$ to fund bailouts... 

Have any of you read anything on Peak Oil??? We've past the tipping point and are now depleting world oil reserves at the rate of 7% per year, with no new major oil fields being found / prospected due to regulations... 

Markets may recover a bit at the end of 2009, but hopefully in 2010 and return to normalcy by 2015... That is _if_ concerted efforts are made to replace oil as the primary source of energy production and for transportation... Not to mention all plastic products are petroleum based derivatives... 

I'm afraid I agree with most analysts who are saying that this is the worst economic event since the great depression of 1929 and was created in the good ole USA...

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## Panda

There is plenty of oil to go round for probably the next 300 years.
Its just the high quality, cheap to extract stuff is getting low.

The world economies wont collapse because of the price of oil. We can make gasoline out of garbage for  the equivalent of $US 70 a barrel. -- but at the cost of big infrastructure start up cost. Canadian oil sands have plenty of oil, but low quality and costs a lot to extract. Iraq and Iran are the next big producers of cheap high quality oil. They have enough to keep us going for decades after the Saudi fields start running out in about another 20 years. Last years oil spike was mainly caused by speculators entering the market. Call it an oil bubble if you like. 

It ain't oil thats causing this adjustment in world wealth.

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## Thormaturge

By the time we have exhausted all of the oil and coal the planet will be uninhabitable due to pollution anyway, so we may as well just enjoy the SUV lifestyle while we can.  I'm all for pumping the stuff even faster so as to keep the price low.

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## mellow

> ^
> That isn't what I said. The USA does import agricultural produce, especially seafood, from Thailand and that is likely to continue. If anything Thailand has been increasing its agricultural exports by expanding into new markets so Thailand won't sink. The USA exports wheat which is of no interest to Thailand whatsoever. If the USA sucks money in from Russia and pays some of it to Thailand then nobody should be too upset.
> 
> In a perverse way I believe political instability suits Thailand since politicians don't have enough time to exert any real influence and commercial considerations fuel the economy instead.


   The US imports about 3% of its seafood from Thailand.   Agricultural imports and exports : ERS/USDA Data - Foreign Agricultural Trade of the United States (FATUS)

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## Thormaturge

^
The point I was making is that the USA is Thailand's largest export market for seafood, which is unlikely to change, due to the size of the US market. The fact that this represents just 3% of America's seafood requirement merely underlines the difference in size between the USA and Thailand. I would be amazed if the seafood industry here in Thailand were able to feed the entire US of A with its exports given that it is already having to feed the entire population of Thailand but that 3% is a whopping market and generates considerable foreign currency ( $30 each annually for every man woman and child in Thailand )for the Thai economy.

People may stop buying cars and dog toys, but they don't stop eating. Well Americans don't anyway.  :Smile: 

I was, after all, describing Thailand's future prospects, not those of the USA.

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## bkkandrew

All of this is window dressing in respect of predictions for 2009. For the first part, the only game in town is the second bailout wave. Brown's already kicked this off in the UK, as the banks have managaged to burn their way through the first lot in a couple of months. You know- the money that took public debt to 300% of GDP.

Obama will get his change to 'think of a number and double it' soon. Once he proves that he can think of a really big number indeed, capitulation in the US, the dollar and those that rely on it will be complete.

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## bkkandrew

> I think China will be back on a roll soon.


 
Good luck with that...

Bloomberg.com: Worldwide

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## Thormaturge

What I have trouble figuring out is what GM propose doing with all the cars they are still manufacturing and which nobody is buying. 

Somebody in the USA is going to have to deal with unionised labour which is making American products uncompetitive.  Everything I see points to tremendous inflation to erode wage bills and further devaluation of the currency to sell the stuff most people can't afford.  All of this leads to erosion of individual wealth.

I was dumbfounded to learn that container crane drivers earn $160,000 pa.  Either these wage bills come down, or prices go up.  Obama seems to be taking the high price route.

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## Thormaturge

> Originally Posted by Thormaturge
> 
> 
> I think China will be back on a roll soon.
> 
> 
>  
> Good luck with that...
> 
> Bloomberg.com: Worldwide





> Chinas economy expanded 9 percent from a year earlier in the third quarter of 2008, the least since 2003. The World Bank forecasts a 7.5 percent increase in 2009, the smallest in almost two decades.


When Obama gives everyone the money for their replacement rubber dog toys China will have avoided a recession and will be growing in double digits gain.

No problem.

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## bkkandrew

> No problem.


Apart from the teeny weeny one about the US Dollar reaching parity with its Zimbabwean namesake as a result.  :mid:

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## Thormaturge

^
Ah but with dirt cheap credit and soaring inflation Americans will find it hard to resist rubber dog toys, even at $ 500 each, because they know that with inflation the price will be $ 550 in six weeks' time, so it will be like an investment.    They can always pay the balance off later, right?

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## EmperorTud

Skills will become the real tangible trading items in the early 21st century.

Tangible in terms of your survival when Western society, and in turn most of the World collapses into chaos within the next few years.

Unfortunately I think they will initiate another World War to maintain control over us and to reduce the now unproductive overpopulation problem, especially in the Third World.

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## Thormaturge

The Chinese already seem to own Thailand so we should be OK here.

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## Panda

> When Obama gives everyone the money for their replacement rubber dog toys China will have avoided a recession and will be growing in double digits gain.
> 
> No problem.


US government borrows money from China to give to its citizens to buy goods from China. Does anyone see that there could be a slight problem here in the long term?

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## Thormaturge

^
Yes, America winds up with the rubber dog toys and China gets the money.

Just hope rubber dog toys hold their value.

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## Panda

> ^
> Yes, America winds up with the rubber dog toys and China gets the money.
> 
> Just hope rubber dog toys hold their value.


The joke will be on the Chinese when the value of the $US crashes.
Sort of like borrowing $100 worth of goods and only having to pay back $50s worth down the line. The trap hasnt sprung just yet and just about every country other than USA stands to loose when it does. Such is the worlds resistance to move on to a new monetary system that could rectify the current imbalances between $US paper money and actual goods and services. It has to come sooner or later though.

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## bkkandrew

> It has to come sooner or later though.


Oh, it will be soon, sure enough. The bailouts part two will be the trigger, as I said when bailouts part one was mooted.

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## Thormaturge

If America thinks the world's banks will get caught a second time then it is in for a shock.  Well, more precisely Obama is in for a shock.

The key is going to be those Treasury bills.  Who on Earth is going to buy a T Bill returning 2% per annum in a depreciating currency?  Sure American pension funds will lap them up for the security but I cannot see any overseas investors falling for this one again.  This time it will be the American pension funds that bear the brunt of the economic downturn leaving millions of US pensioners unable to retire.

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## lom

My prediction:

The 2 most overvalued currencies in the world, the US dollar and the British pound
will drastically lose their appreciation.

After summer, 1 Euro = 1.25 GBP = 1.65 USD

London will lose it's position as the financial centre of Europe.
Frankfurt will become the new centre.

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## Thormaturge

^
The only thing propping up the Euro just now is the German economy but it has a huge millstone around its neck (as in the rest of Europe). 

Soon the world will bow to the superior economic status of Thailand. :Smile: 

well, either Thailand or the UAE.

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## BugginOut

> Inflation will rise spectacularly thereby stripping any true value out of the assets and leaving everyone worse off in real terms. The Dollar, the Euro and Sterling will all drop through the floor as interest rates are deliberately depressed in order to continue the illusion.


This has already happened.

Furthermore, the US doesn't need Thailand for agricultural imports. It has California. Look it up.

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## Thormaturge

^
You're between a third and a quarter of the way through the correction.  Hope you didn't think that 2008 was it.

Imports from Thailand have been increasing.  Look it up.

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## bkkandrew

> My prediction:
> 
> The 2 most overvalued currencies in the world, the US dollar and the British pound
> will drastically lose their appreciation.
> 
> After summer, 1 Euro = 1.25 GBP = 1.65 USD
> 
> London will lose it's position as the financial centre of Europe.
> Frankfurt will become the new centre.


Currency movements and the location of a financial 'centre' are completely unrelated, so I am unsure to why you have reached the latter conclusion.

The does remain about a 25% chance of a Euro break-up, with Ireland, Portugal, Italy, Spain and Greece coming close to peeling away. If this happens the Euro may get stronger, weaker or implode alltogether. :mid:

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## mellow

In accordance to what I have been reading, all trade agreements are going to be reviewed with the new administration, this will leave Thailand sadly wanting. good2behappy is probably correct about the USA following a protectionist policy, and Thormaturge statement about the unions is also correct. Globalization isn't working, what western country can compete with 200 baht a day wages? The answer and the solution is to close the doors. Increase all tarrifs on imports to match domestic prices, and let the country rejuvenate itself.  Countries such as Thailand will have to find other markets or follow the self sufficiency doctrine. I'm sure Europe will be glad to pick up whatever slack there is, created by the terrible US of A. They are much kinder, much more educated, have tons of refined culture, and no money worries.

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## bkkandrew

> Originally Posted by Thormaturge
> 
> 
> ^
> Yes, America winds up with the rubber dog toys and China gets the money.
> 
> Just hope rubber dog toys hold their value.
> 
> 
> ...


Its not just the Chinese - its all of Asia. I have just posted an excellent (but scary) article on the subject here:

https://teakdoor.com/us-domestic-issu...tml#post903050

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## Panda

> My prediction:
> 
> The 2 most overvalued currencies in the world, the US dollar and the British pound
> will drastically lose their appreciation.
> 
> After summer, 1 Euro = 1.25 GBP = 1.65 USD
> 
> London will lose it's position as the financial centre of Europe.
> Frankfurt will become the new centre.


Things dont look too rosy for any of the old established western powers, Europe included. All of them will be having trouble with overvalued currencies impeding exports. But in the free currency market people are still buying up the old tried and proven currencies in the hope of finding somewhere stable to put their money.
Unfortunately this overvaluation of western currencies is simply making the countries concerned more uncompetitive and driving them further towards bankruptcy as imports fail and exports increase.

The developing nations are bound to take the lead eventually as far as currency values and balance of trade goes. Its just a natural process of evolution. A redistribution of world wealth as the most productive countries take the lead.
Unfortunately, the worlds present monetary system is tending to lag behind national trends in productivity and so the whole financial system is out of sync with reality at the moment. All the old western powers think they can borrow their way out of debt, but it just doesn't work that way. Well, not for long anyway.

Bottom line is that eventually, all the old developed nations are going to have to take a cut in currency values and individual standards of living to stay afloat.

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## Thormaturge

> In accordance to what I have been reading, all trade agreements are going to be reviewed with the new administration, this will leave Thailand sadly wanting. good2behappy is probably correct about the USA following a protectionist policy, and Thormaturge statement about the unions is also correct. Globalization isn't working, what western country can compete with 200 baht a day wages? The answer and the solution is to close the doors. Increase all tarrifs on imports to match domestic prices, and let the country rejuvenate itself. Countries such as Thailand will have to find other markets or follow the self sufficiency doctrine. I'm sure Europe will be glad to pick up whatever slack there is, created by the terrible US of A. They are much kinder, much more educated, have tons of refined culture, and no money worries.


...and without all those cheap imports inflation will reduce those high earnings to the point where they are worthless.  It is only America that can afford American prices which is why GM can't sell cars.

   Naturally you can't prevent American companies building their products overseas so all the prducts you plan on exporting will simply be built overseas, thereby racking up US unemployment.

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## Butterfly

Ok I will try mine: after the USD, UKP, the EURO will take a nose dive

US will recover faster than expected, maybe end of 2009, oil will be back to 20 USD, US markets recovering slowly but surely, other world markets following also but more slowly

China and SEA might see a small echo of 1997 in terms of growth, but without the dramatic effect of the currencies collapse

anyway wishful thinking,

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## Rattanaburi

Found this article on MSNBC...

*U.S. could be facing debt 'time bomb' this year*
*Investors' thirst for American securities could finally be quenched*
*U.S. could be facing debt 'time bomb' - Washington Post- msnbc.com*


BKKAndrew, the other thread is 50+ pages; I'll read it later. What's your basic prediction for the future as a short summary. How many years do you see it recovering in if at all?

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## Thormaturge

> Interest rates on Treasury bills have plummeted to historic lows,


With the prospect of the Dollar sliding further downwards my bet is on foreign investors buying gold instead of T Bills.

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## Farangbaba

*
This was published the other day in the Daily Mail by Peter Oborne.
It makes a lot of sense to me, but I am sorry that I do not know how to format it properly yet.
http://www.dailymail.co.uk/debate/article-1104018/PETER-OBORNE-The-pound-trouble-dont-fooled-euro-gloaters-Their-bogus-currency-20th-birthday.html
* 

*The pound may be in trouble but don't be fooled by the euro gloaters. Their bogus currency will never see its 20th birthday*

This week marks the tenth anniversary of the euro - and every eurocrat in existence is hailing the single currency as an exquisite success. 

According to European Commission president Jose Manuel Barroso, the euro has helped create 16 million jobs. The French finance minister Christine Lagarde hails it as 'a zone of security and stability'. 

Joaquin Almunia, the European Commissioner for Economic and Monetary Affairs, declares that: 'The euro has become the symbol of EU identity and is protecting us against the tremendous external shocks that we have had to cope with since the summer of 2007'.


Scroll down for more
 
Attack: The euro is being tested for the first time - and it won't survive the mauling
Meanwhile, there are many within the British political and business elite - among them Business Secretary Peter Mandelson and former Prime Minister Tony Blair - who secretly wish Britain was in the euro, and believe we made a terrible mistake when we refused to join in 1999. 

To be fair, the europhiles do _appear_ to have reason to celebrate. 

Consider these statistics. Following yesterday's accession of the Eastern European state of Slovakia, there are now 16 members of the single currency, compared to a mere 11 in 1999. This means an amazing 330 million people now use the euro as their national currency - more than the population of the U.S. 

No wonder, say the eurofanatics, that it has strengthened over the past few years and now stands at parity with the pound sterling - stronger than it has ever been. 

Not merely that, there are also those who now believe that the euro will soon overtake the dollar as the world's reserve currency. Indeed, even the villain in the latest James Bond film, Quantum Of Solace, chooses to pay his debts in euros because, so he says: 'The dollar isn't what it was.' 

But the truth is very different. As even its strongest supporters must admit, the new 
currency was mollycoddled during a decade of benign global economic conditions - and only now is being tested for the first time. And it is already showing signs of being unable to survive the strain. 

Indeed, far from being the staggering success its supporters claim, the euro-zone is already inflicting huge damage on the nations within it. Many currency market experts believe that some of these struggling members may be forced to peel away from the euro - with devastating consequences for the rest of the world. 

The greatest problems, in the short term at least, are in the four Mediterranean economies known as the PIGS - Portugal, Italy, Greece and Spain. 

For each of these countries, the euro has already proved a disaster. Put simply, most of the PIGS are so heavily indebted that the market no longer believes they will be able to repay their borrowings. 

Normally, if a country falls into too much debt, it can devalue its currency, essentially devaluing its debt burden - this is exactly what Britain has done over the past few months. In the euro-zone, however, the currency's value is set centrally. 

This means the only way out for the struggling PIGS is to crash out of the euro, default on their debt and start again. At the start of 2009, this prospect is beginning to cast a huge shadow over the global economy, for the sums involved are huge. 


Take the terrifying case of Greece, which was an economic basket case even before it entered the euro, and is even more of a shambles today.

Greek unemployment is soaring, and its current account deficit is a whopping ten per cent of gross domestic product (Britain's deficit is bad enough at three per cent). 

But the largest problem is Greek government debt, which stands at a monstrous 94 per cent of gross domestic product - and rising fast. 

Already investors have reached the obvious conclusion that there is a very high chance that the poor old Greeks will never be able to repay their debts. That is why the markets now demand to be paid an extra two per cent in return for lending to Greece compared to Germany, even though both countries denominate their debt in euros. 

The brutal truth is that if the markets really believed the euro was going to survive, Greek and German debt would cost the same. 

But soaring debt is not the worst of Greece's problems. The economy has tilted into recession, and unemployment has risen. Greece desperately needs interest rates to fall - but the European Central Bank is refusing to cut them. The effects are being felt on the streets, and the past few months have seen the worst riots in Athens since the country was a military dictatorship in the Seventies. 

There have not yet been riots in the other PIGS - but Portugal-Italy and Spain are all heading for trouble. Spain, thanks almost entirely to the misguided policies of the European Central Bank, is now an economic disaster zone. 

In the early years of the euro, the ECB kept interest rates far too low - fostering an inflationary property boom which has ended in inevitable collapse. 

Now rates are much too high for Spain's broken economy. The Spanish jobless figure, thanks to the country's membership of the euro, is already 13 per cent. It is expected to approach a truly unbelievable 20 per cent by2010. 

Things are already bad enough in Britain, where the jobless rate stands at six per cent. 

At least Spain's public debt is relatively manageable, but that is not true of the remaining PIGS - Italy's government borrowing is actually larger than its gross national product. 

The truth is that all the PIGS are paying a terrible price for their membership of the euro. If they had kept their own currencies, they would be able to use the traditional tools of economic management. They would set their own interest rates and they could inflate or deflate their national currencies as circumstances demanded. 

As it is, however, governments in the euro-zone are utterly powerless to do anything about the menace of joblessness and economic collapse. And to appreciate how damaging that is, one only has to contemplate the fate Britain would now be facing if had we made the mistake of joining a decade ago. 


 
For starters: Greece is just the first of the four major Mediterranean economies to turn into an economic basket case
In the early years, we would have suffered the problems of the poor, hapless PIGS. 

The interest rates set by the European Central Bank would have been far too low - meaning the credit boom of the past decade would have been even more inflationary and damaging than was actually the case. 

And the recession would have bitten far deeper. Interest rates have stayed far higher on continental Europe, driving millions who would otherwise have a job out of work. 

And our currency would have been tied to the strong euro, rather than being allowed to depreciate, find its own level, and give vitally needed assistance to exporters. 

Bad though the recession already is, it would have been far worse for Britain had we - as Tony Blair so desperately wanted - joined the euro. 

That is why, as the euro celebrates its tenth anniversary, I predict two things. 

First, it will never reach its 20th anniversary. The drachma, the lira, the peseta and the Portuguese escudo (and the Irish punt - Ireland can be regarded as an honorary PIG) will all make a return as the PIGS plunge for the exit. 

Second, the collapse of the euro-zone will not be a peaceful process. Expect the European political elites to fight to save their beloved single currency.
Eventually, however, their citizens will take to the streets and force their hands. In Britain we can thank our lucky stars we do not have to go through the same painful and bloody crisis. 

Gordon Brown had a mixed record as Chancellor of the Exchequer, and bears a heavy share of the responsibility for the recession. But he did one thing for which we should all be thoroughly grateful - he kept us out of the European single currency.

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## Butterfly

> With the prospect of the Dollar sliding further downwards my bet is on foreign investors buying gold instead of T Bills.


with what cash ? there is not any left. Gold will be on the path to deflation like everything else. Gold doesn't do well when there is no inflation.

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## Muadib

> There is plenty of oil to go round for probably the next 300 years.
> Its just the high quality, cheap to extract stuff is getting low.
> 
> It ain't oil thats causing this adjustment in world wealth.


Care to elaborate where these oil supplies are that are readily available for the next 300 years??? 

Energy costs are a commodity item there is ever more present on balance sheets, which in turn drive P&L's...

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## Butterfly

> Energy costs are a commodity item there is ever more present on balance sheets, which in turn drive P&L's...


would you care to elaborate on that statement ? it sounds very bkka-like

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## Thormaturge

> Originally Posted by Thormaturge
> 
> With the prospect of the Dollar sliding further downwards my bet is on foreign investors buying gold instead of T Bills.
> 
> 
> with what cash ? there is not any left. Gold will be on the path to deflation like everything else. Gold doesn't do well when there is no inflation.


Haven't you heard? Santa Claus is coming to town.  Lots of lovely cheap credit is being offered by governments worldwide.  

The Western economies, particularly the USA, are stoking up inflation nicely.  The Fed is positively chucking kerosine onto the fire.  We are in for another round of spiralling house prices fuelled by cheap credit, with the price of everything else following suit.  Ether incomes will fail to keep up or there will be staggering unemployment.

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## Butterfly

> Santa Claus is coming to town. Lots of lovely cheap credit is being offered by governments worldwide.


yes, but this will help get us out of a recessionary gap, not fuel inflation





> The Western economies, particularly the USA, are stoking up inflation nicely. The Fed is positively chucking kerosine onto the fire.


You will need to get yourself familiar with macro-economics. We are in a deep recession, thanks to a supply shock and a credit bubble. The fire is long gone, what we have now is an ice age. You need the fire to melt the ice.

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## Panda

> Originally Posted by Panda
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by Thormaturge
> ...


And not just Asia. Just about every country in the world has substantial reserves of $USs. A large drop in the exchange value of $USs would affect the perceived wealth of virtually every country on the planet. Hence the world leaders desire to keep the debt ridden $US alive as the primary exchange medium for world trade.

With the US in such debt, lack of trade balance and now starting to print an oversupply of paper money, its only going to take a small amount of panic selling to start a stampede to abandon the $US. And thats the very thing every country is trying to avoid. But its got to happen sooner of later. And when it does USA will be paying off its debt at 50 cents in the dollar relative to the value in tradable goods and services compared to when they borrowed the money. Good for a US recovery, -- bad for everyone else.

Its not a housing bubble, its not a stock market bubble its a $US bubble thats going to cause a major readjustment in world wealth.

"http://en.wikipedia.org/wiki/Foreign_exchange_reserves
 url(http://upload.wikimedia.org/centraln...tton-red.png); 
"At the end of 2007, 63.90% of the identified official foreign exchange reserves in the world were held in United States dollars and 26.5% in euros [1].
*Monetary Authorities with the largest foreign reserves in 2008."*
*Rank**Country/Monetary Authority**billion USD (end of month)**change in year 2007*1 China$ 1905 (Sept) 1+32.9%2 Japan$ 997 (August)+8.7%3 Russia$ 484.7 (November 2008) 2 [1]+56.8%- Eurozone$ 430 (November)+16.6%4 Taiwan$ 282 (August) [2]+2.7%5 India$ 247 (Nov) 2+64.4%6 Brazil$ 208 (Dec) 3+105.9%7 South Korea$ 201 (Nov)+9.7%8 Singapore$ 175 (July)+19.1%9 Hong Kong$ 158 (August)+14.6%10 Germany$ 137 (August)+20.3%

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## Panda

> In accordance to what I have been reading, all trade agreements are going to be reviewed with the new administration, this will leave Thailand sadly wanting. good2behappy is probably correct about the USA following a protectionist policy, and Thormaturge statement about the unions is also correct. Globalization isn't working, what western country can compete with 200 baht a day wages? The answer and the solution is to close the doors. Increase all tarrifs on imports to match domestic prices, and let the country rejuvenate itself. Countries such as Thailand will have to find other markets or follow the self sufficiency doctrine. I'm sure Europe will be glad to pick up whatever slack there is, created by the terrible US of A. They are much kinder, much more educated, have tons of refined culture, and no money worries.


The US wont need protectionist policies or import tariffs when the US debt-dollar falls in tradable value. Domestic products will become far more attractive compared to the more expensive imported stuff. Exports will become more competitive too. A phoenix rising from the ashes. Every other country will pay for it though.

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## Thormaturge

> Originally Posted by Thormaturge
> 
> Santa Claus is coming to town. Lots of lovely cheap credit is being offered by governments worldwide.
> 
> 
> yes, but this will help get us out of a recessionary gap, not fuel inflation


 



> The fire is long gone, what we have now is an ice age. You need the fire to melt the ice.


The spark is already there, it is called free enterprise. A combination of free enteprise and cheap money is what got us into this mess and we're simply going for more of the same to get out of it, except this time there will be more credit, and cheaper.

Hair of the dog therapy.

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## bkkandrew

> Found this article on MSNBC...
> 
> *U.S. could be facing debt 'time bomb' this year*
> *Investors' thirst for American securities could finally be quenched*
> *U.S. could be facing debt 'time bomb' - Washington Post- msnbc.com*
> 
> 
> BKKAndrew, the other thread is 50+ pages; I'll read it later. What's your basic prediction for the future as a short summary. How many years do you see it recovering in if at all?


It is much more complex that that, which is why I invited you to look at the detail on the other thread.

However, both the US and UK face financial and economic decimation, currency collapse and Governmental default (by way of the printing press or insolvency). Needless to say, that will take many years to recover from.

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## britmaveric

^Also EU, and most every other country in the world.  :Smile:

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## bkkandrew

^Well, they would hardly be _unaffected_, would they... :mid:

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## Butterfly

> The spark is already there, it is called free enterprise.


it's actually called growth, do we want it or not ? the alternative is living like in the middle age. Not a bad thing per se, but I doubt the majority of the world population would agree with that plan.

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## Whiteshiva

Just thought I shoudl point out that TD posters have a pretty piss-poor record when it comes to economic forecasts.....

https://teakdoor.com/issues/31295-pol...tml#post903921

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## Butterfly

^ it's random, actually. Sometimes you are lucky, sometimes you are not

That's why I am laughing every time someone is betting their predictions on some idiotic blog guy diatribe who may have got it right a couple of times. It's more than likely he will be wrong the next time.

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## bkkandrew

> Just thought I shoudl point out that TD posters have a pretty piss-poor record when it comes to economic forecasts.....
> 
> https://teakdoor.com/issues/31295-pol...tml#post903921


After the dollar collapse, which I was factoring in pre-end 2008, the price (in dollar terms) will be somewhat different... :mid:

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## britmaveric

^you will be waiting for sometime mate especially when the $ doesn't collapse.

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## bkkandrew

> ^you will be waiting for sometime mate especially when the $ doesn't collapse.


Why won't the dollar collapse? :Confused:

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## britmaveric

For starters you are predicting it.  :Smile:

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## Panda

> Originally Posted by britmaveric
> 
> 
> ^you will be waiting for sometime mate especially when the $ doesn't collapse.
> 
> 
> Why won't the dollar collapse?


The main reason why people think the $US is unassailable and permanent in its strength is that they have never known anything different in their lifetimes.

But the experiment with the $US as the worlds denominator of wealth is but a recent invention in historic terms. The dynamics of the worlds financial systems have changed considerably over the past few decades.

The world is evolving and developing. Things change ever more quickly as time progresses. This experiment in trying one nations currency as the worlds default trading medium has run its course and proven to be ineffective now. Time to move on and put something more durable in place.

Something more flexible is needed. A world trading currency that is based on actual productivity of real goods and services rather than just faith and debt.

The point that most people miss is that paper money doesn't drive the worlds economies at all. Its productivity that is the real driver.

Right now, a lot of people think that value of the worlds productivity is worth less, but it hasnt changed at all. Its just that the paper money trading medium $US is vastly overvalued.

A lot of investors are pulling their money out of companies that actually produce useful stuff right now and investing it in $US paper money. That's going to cause a lull in world production for sure and also a rise in the value of the worlds trading currency. That's where we are at the moment. Investment going away from production and towards propping up the illusion of of paper money wealth.  

Pretty silly, but thats the way the worlds financial system operates at the moment based on an unsustainable monetary system.

The worlds experiment with the $US hegemony is coming to a close.

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## Scandinavian

> By the time we have exhausted all of the oil and coal the planet will be uninhabitable due to pollution anyway, so we may as well just enjoy the SUV lifestyle while we can.  I'm all for pumping the stuff even faster so as to keep the price low.


True. We have to start terraforming (Terraforming - Wikipedia, the free encyclopedia) Mars now, the sooner we start the better. It will take 2-300 years depending on the method, but needs to be done sooner or later anyway.

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## bkkandrew

> For starters you are predicting it.


So the following weren't good enogh for you:

Massive drop in Sterling (predicted 5-months prior)
Collapse of Lehman, WaMu, IndyMac et al (predicted 7-months prior)
Collapse of B&B and HBOS (predicted 4-months prior)
Collapse of AIG (predicted 5-months prior)
Collapse of the Icelandic banks (predicted 2-months prior)

Etc., etc., etc...

Perhaps you could point us towards your financial predictions thread? :mid:

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## EmperorTud

> True. We have to start terraforming (Terraforming - Wikipedia, the free encyclopedia) Mars now, the sooner we start the better. It will take 2-300 years depending on the method, but needs to be done sooner or later anyway.


Why not just have a huge war and slash the population of this planet by 80%?

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## Rattanaburi

^actually Tud, halfing the population of the planet would be a good start. Not sure if war is the best way to do that though unless we shoot sterilisation bullets and bombs at each other.. The capitalist model seems to require that more people are continually added to the pyramid. As we let population get bigger and bigger we are losing so much in my view. I'm still hoping that bird flu which is 'imminent' 'imminent' 'imminent' will get here soon.

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## Butterfly

> Collapse of B&B and HBOS (predicted 4-months prior)
> Collapse of AIG (predicted 5-months prior)
> Collapse of the Icelandic banks (predicted 2-months prior)


none of those collapsed, they were nationalized

and you are missing a few others that you completely missed, so your average is about 4 out of 10, which is the average for about everyone else. A monkey does better though with 50% chance. Monkeys tend to do better than men when it comes to predictions.

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## Whiteshiva

> ^ it's random, actually. Sometimes you are lucky, sometimes you are not.


Random????? - so why bother making predictions then, Butters?  :Roll Eyes (Sarcastic):

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## PlanK

> Originally Posted by britmaveric
> 
> 
> For starters you are predicting it. 
> 
> 
> So the following weren't good enogh for you:
> 
> Massive drop in Sterling (predicted 5-months prior)
> ...


Have you got next week's lottery numbers?

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## Butterfly

> so why bother making predictions then, Butters?


I usually don't, it's pointless, at best you can be 60% right, or give only an estimate or educated guess

The best of analysts on WallStreet have a 60% to 75% success rate, and they are paid millions for that.

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## Whiteshiva

> Originally Posted by britmaveric
> 
> 
> For starters you are predicting it. 
> 
> 
> So the following weren't good enogh for you:
> 
> Massive drop in Sterling (predicted 5-months prior)
> ...


What about the price of oil being above 250 US$/bbl at the end of 2008?  You do remember making that prediction, don't you?

https://teakdoor.com/issues/poll-551-...new-years.html

 :Smile:

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## baldrick

> ^ it's random, actually. Sometimes you are lucky, sometimes you are not





> For Taleb, then, the question why someone was a success in the financial marketplace was vexing. Taleb could do the arithmetic in his head. Suppose that there were ten thousand investment managers out there, which is not an outlandish number, and that every year half of them, entirely by chance, made money and half of them, entirely by chance, lost money. And suppose that every year the losers were tossed out, and the game replayed with those who remained. At the end of five years, there would be three hundred and thirteen people who had made money in every one of those years, and after ten years there would be nine people who had made money every single year in a row, all out of pure luck.


that came from this article - long but interesting all the same
gladwell dot com - blowing up

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## bkkandrew

> Originally Posted by bkkandrew
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by britmaveric
> ...


Yes an after the dollar collapse it will be. I was assuming the dollar collapse would occur prior to the end of the year rather than after. Dec 31st is only a random day in the calender don't forget.  :Wink:

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## britmaveric

What will happen if the $ doesnt collapse - have you thought much about that Nostradamus Andrew?  :Smile:

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## Whiteshiva

> Originally Posted by Whiteshiva
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by bkkandrew
> ...


Very true - and if you make a large number of predictions, a random number of them will come true. 

All I am trying to say here is that certain posters  :Roll Eyes (Sarcastic): could perhaps benefit from using terms like "I believe..", "In my opinion.." or "I think.." before declaring that, say, the baht will drop by 25% by next August. It would make them less prone to ridicule if or when they turn out to be wrong......

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## bkkandrew

> Originally Posted by bkkandrew
> 
> Collapse of B&B and HBOS (predicted 4-months prior)
> Collapse of AIG (predicted 5-months prior)
> Collapse of the Icelandic banks (predicted 2-months prior)
> 
> 
> none of those collapsed, they were nationalized


They were nationalised _because_ they collapsed. And the Icelandic Government had to be bailed out by the IMF because it didn't have the funds to nationalise.




> and you are missing a few others that you completely missed, so your average is about 4 out of 10,


No I simply didn't list them all, as I don't want to appear to go on and on. Howeve, if you insist, the others were Lehman (4-months), Bear Sterns (5-months), Hypo RE (2-weeks), Fortis (1-month) Fannie Mae (6-months) and Freddie Mac (6-months). So there's my 10. Actuallt there were some more smaller ones too, but don't wish to bore.




> [ which is the average for about everyone else. A monkey does better though with 50% chance. Monkeys tend to do better than men when it comes to predictions.


Discussing cheese-eating surrender monkeys now Butterfly?

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## bkkandrew

> What will happen if the $ doesnt collapse - have you thought much about that Nostradamus Andrew?


It is an economic certainty (assuming they are not bailed out by aliens or some such)...

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## bkkandrew

> All I am trying to say here is that certain posters could perhaps benefit from using terms like "I believe..", "In my opinion.." or "I think.." before declaring that, say, the baht will drop by 25% by next August. It would make them less prone to ridicule if or when they turn out to be wrong......


Certain things are certainties, some are opinions. There was no box to tick on your poll that read 'I believe'... :mid:

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## britmaveric

Let's box you in Nostradamus Andrew - define what qualifies as a yank $ collapse, and when exactly this will occur in 2009?

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## lom

> All I am trying to say here is that certain posters could perhaps benefit from using terms like "I believe..", "In my opinion.." or "I think.." before declaring that, say, the baht will drop by 25% by next August. It would make them less prone to ridicule if or when they turn out to be wrong.


A prediction is not a financial advice.
It is nothing more than "In my opinion" or "I believe" so those words becomes redundant.

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## Butterfly

> They were nationalised because they collapsed.


no, they didn't. You are confusing regulatory actions with financial collapse. They were in regulatory violations and were nationalized. Not even had a bank run. If they had one, you might have had a small case, but it didn't even happen.

As for Iceland, they had a bank run, which had them collapse. The funny thing is they could have kept things going for years without the bank run. Bank runs, no matter how solid a bank is, will usually collapse the bank by the very nature of their business. They simply don't keep reserves to serve all clients, their business is not to store money or be a safe deposit box, but to lend money.

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## bkkandrew

> Originally Posted by bkkandrew
> 
> They were nationalised because they collapsed.
> 
> 
> no, they didn't. You are confusing regulatory actions with financial collapse. They were in regulatory violations and were nationalized. Not even had a bank run. If they had one, you might have had a small case, but it didn't even happen.


And Butterfly, months after the event remains the only person in the world that doesn't accept the banks failed and needed to be bailed out and nationalised. Another Iraqi Information Minister moment for Butterfly.  :rofl: 




> As for Iceland, they had a bank run, which had them collapse. The funny thing is they could have kept things going for years without the bank run. Bank runs, no matter how solid a bank is, will usually collapse the bank by the very nature of their business. They simply don't keep reserves to serve all clients, their business is not to store money or be a safe deposit box, but to lend money.


What utter nonsense. Iceland was a giant ponzi scheme. Madoff without the Jews. The reason people pulled their money was the ponzi scheme became obvious to many. Just like Madoff with his yachts, Country Clubs and the like, ansland of 300,000 people bought half of Britain's High Streets, West Ham FC and God knows what else. Pure greed by a few Icelandic Hi-So types has bankrupted a (small) nation.

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----------


## Rattanaburi

^I think the people who bought this in the past two years have seen half of their savings disappear. 


Did you get this in an email from a Nigerian named Babson, the nephew of General Muhabewawa?

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## Rattanaburi

Just more and more bad economic news. Lots of misery out there the weather is ridiculously cold, people suffering from lack of gas in Europe, Madhoff and other financial criminals making the news, Israel going nutty, Osama and the other Muslim nutters inspired again, people being kidnapped in Philippines again, layoffs, etc. Oh, and markets are down again.

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