The Thai Baht - How Low Can It Go?

[chitown]

Any predictions or maybe wishes?

1.00 USD = 35.0603 THB

[melvbot]

Where are you getting the quotes from Chi?

BKK Bank $ Buying 34.67 Selling 35.35

[good2bhappy]

how can the baht be stronger than sterling?

[chitown]

XE - Universal Currency Converter

[pickel]

XE - Universal Currency Converter

That's mid-market rates, the mid point between buying and selling.

[Travelmate]

Daily Foreign Exchange Rates

Use this.

[baldrick]

and don't be whinging when the USD starts its dive about march next year.

[Travelmate]

the USD starts its dive about march next year.

Why is that so?

[baldrick]

cause I says - ok

The tsunami of oncoming US Treasury debt issuance holds the real potential to crowd-out private-sector issuance both in the US and abroad, steepen the US Treasury yield curve, put downward pressure on the real economy, undermine the US's AAA rating, weaken the US dollar, and if the Treasury is required to resort to monetizing new debt issuance by "selling" it to the Fed due to pushback from foreign investors, it could even threaten the Bretton Woods' US dollar reserve status and the dollar's role of denomination currency for commodities: a very high price to pay for a decade-long party on Wall Street.

Deregulation a go-go
In 1980, Washington deregulated the interest rates banks could charge, a historically important event marking the beginning of the soon to be Neo-Go-Go years for finance. For the next 25 years, the continuous deregulation of the financial industry removed, or better, untethered financial profits from any connection to the real economy. Keven Phillips' essential book on the financialization of the economy, Bad Money, points out that by 2004-6, financial services represented 20% to 21% of gross domestic product, manufacturing just 12% to 13%.

In order to grow the financial industry so fantastically, one thing was necessary, debt, and debt became pervasive across the economy. The Financial Times writes, "The aggregate stock of US debt rose from a mere 163% of gross domestic product in 1980 to 346% in 2007. Just two sectors of the economy were responsible for this massive rise in leverage: households, whose indebtedness jumped from 50% of GDP in 1980 to 71% in 2000 and 100% in 2007; and the financial sector, whose indebtedness jumped from just 21% of GDP in 1980 to 83% in 2000 and 116% in 2007."

The changing of the American economy from production to finance is best represented by General Electric, the storied American company founded by Thomas Edison and responsible for helping build America's 20th century industrial infrastructure. In 2007, GE gained half its profits from GE Capital, its financial arm. The same change in reliance on finance for profit could also be seen with America's largest automobile companies General Motors and Ford.

This transformation of American economy has been accomplished for the benefit of small segments of society, Wall Street and finance. They benefited from the dismantling of the manufacturing base and its transference across the ocean. They benefited from the increased indebtedness of the American citizenry and government. Finally, they benefited outrageously from the great orgiastic last two decades. Regulation from financial activities was removed and leverage was brought to casino-like scales.

The greatest damage has been done to the future. For while America went on binges of conspicuous consumption, paper wealth, and debt, we abandoned changes necessary for the future. In essence, for three decades America lived off the wealth created from the previous half-century and then increasingly, and even more unfortunately, consumed the wealth of the future. The most atrocious aspect of this debt orgy is that almost every dollar is owed to the status quo, entrapping the future into the past.

Oil of course is both symbolic and the easiest hard example of America's consumptive debt failure. Since the 1970s and our recognition of oil as a finite global resource, thus neither infinite in supply or permanently cheap, the US has increased oil consumption by 30%, cut public transit budgets, and built ever-larger fuel-inefficient vehicles. The United States of Debt, the most oil-dependent society on the planet, ignored the fact global oil discoveries peaked in the 1960s and have decreased every decade since.

From 1980, the planet has consumed more oil every year than it replaces through discoveries, though this wouldn't be alarming for a people encouraged to thrive on debt. However, over the last five years the bill has come due. An increasingly tight global supply of oil caused exponential rising prices, which became instrumental bringing about the crash of America's debt culture. America's debt economy could not run on $4 a gallon gasoline.

Nonetheless, it is not just the financial system, America's entire political economy is broken. The one-time vibrant mixture of robust markets and decentralized republican government has atrophied into a centralized behemoth alliance between bureaucratic Washington DC and mega-corporations.

[pesky tourist]

It can only get better

[Spin]

Any predictions or maybe wishes?

30, yes 30 within 6 months.!

[watterinja]

Thanks Baldrick... two excellent quotes...