In all the chaos over the government and the totally insane PAD - at least the Bank of Thailand Assistant Governor Duangmanee Vongpradhip is still doing her job. I think sometimes the government around her forgets that countries don’t run themselves. I have written before that inflation is off the charts here and the only way to deal with it is to cut demand. Bangkok is full of excess right now and the government’s wacky stimulus plans are pretty pathetic all in all. Thai crisis feels the same way:
People can talk about prices inflation versus wages inflation, or money supply…. or say that interests rates have no effect in such environment… Bullshit.
You want the prices to go down ? Reduce the demand. Period.
High interests rates will do the job.
The party is over. Too many cars, too many empty condos and houses, too many stupid “boost policies”, too much money given away…
Anyway. Rates went up 0.25 and are now at 3.75%.
Notice the baht - keeps trending down as well. More bang for your barfine buck.
Unfortunately, monetary policy doesn’t work the same way in a closed financial system like Thailand’s as it does out in the free world, not even if we assume, charitably, that there is at least one person at the BOT who actually understands its theoretical uses. Remember the BOT’s external remittance restrictions?
On the whole, well-off Thais can’t just decide to invest their surplus stolen money in, say, the UK bond market so it ends up sitting in Bangkok Bank or the like at artificially low rates. Local banks keep lending for dubious real estate projects since they are flush with the liquidity generated by this Third World mentality market restriction, have to do something with it or they’d go out of business (not literally, of course, but in a general sense), and there’s not much else in Thailand to lend money for. Ratcheting up rates isn’t going to change much of anything other than to squeeze the lower middle class on their credit card debts.
View all comments by Old Asia Hand
oah - can’t argue with. I think the remittance restrictions were dumb but were done in good faith hoping to stem the rise of the baht but I think even if the result is not correct due to the underpinnings of the banana republic’s financial quirks - it still needed to be done.
View all comments by sideshowBOB
um, actually the baht has strengthed the past 3 days
View all comments by The Ghost
No, if you watch the daily market rather than just the end-of-day number that is usually reported, it’s only been fluctuating a few pips in line with very slight dollar weakening as the price of oil has risen. Still, with the mobs in the streets vividly demonstrating to everyone watching CNN that Thailand has no government to speak of, you’ve got to be a little surprised that the baht really hasn’t reacted at all.
View all comments by Old Asia Hand
I’d just like to say that I agree wholeheartedly with everything OAH says. At least I’m sure I would do if I could get through an entire comment without blacking out.
View all comments by Pants Elk
@OAH: [quote]you’ve got to be a little surprised that the baht really hasn’t reacted at all.[/quote]
I’m more than surprised, I’m dumbstruck, much like @PE I guess except for the fact that I fail to black out. ;o)
Siam Sunshine
View all comments by Siam Sunshine
the baht is ‘trending down?’ ‘plummet’ would be better - then I could pop over - GAP HERE TO ALLOW PE TO DRAW BREATH - have a mango mcMUFFin, pick up a condo, visit Star of Light, sink a coupla beers with the ‘chaps’ and still have change out of a 1,000 Baht note
View all comments by doctorbond
I have just bought the Thai half of the Mekhong river for approximately 1.50 GBP, such is the strength of the baht.
View all comments by Pants Elk
Good move PE - I’ll bring my inflatable canoes with me and we can play ‘ditch or dysentry’
View all comments by doctorbond
…and so we bid yet another fond farewell to even the remote possibility of a modestly intelligent discussion about a subject of substance.
View all comments by Old Asia Hand
Oh, tsk! Play to strengths. You offer a modestly intelligent discussion, I offer irritating facetiousness. It’s the comment section of a Bangkok bar blog, and I’d like to think there’s room for us both.
View all comments by Pants Elk
…. and I hand you back to the Stadium of Light and our on the scene correspondent…..
Thanks Frank, well it’s been quite a battle but the current scoreline is Erudite Discussion 2 Mindless Fuckwits 7…
So it looks like the Mindless Fuckwits are racing ahead… here’s one of the team now, I’ll see if I can get a word with him…
“DocBond, you’re a mindless fuckwit and things seem to be going well for you so far…. to what do you attribute your success….?”
“half past five”
” Well there you have it Frank, all to play for and I’ll return you now to the studio….”
View all comments by doctorbond
United Kingdom Pounds Thailand Baht
1 GBP = 62.2135 THB 1 THB = 0.0160737 GBP
1 GBP = 84 THB - That should help?
View all comments by AUK
@ OAH - I think monetary policy is really interesting, and I think what you say is true–a lot of money sits in Thailand because some robber baron wealthy people have it and aren’t willing to pay some smart people to manage it for them. No trust. So it’s in gilts and Singapore dollars and so on. Considering the utter devastation that has hit the US real estate market (and the answer my friends, is blowing in the wind directly in the direction of the UK and Spain) I can’t believe the RE that is still going up in BKK. But who knows, maybe they’re a lot smarter than I am.
Hope you’re still awake PE.
The entire world dodged a major bullet when commodities started to pull back ~2 months ago. I sincerely hope that continues and the US can have a nice, orderly recession that is long overdue, as opposed to some horror show of bad luck. And I hope the rest of world doesn’t take too much flak, but there is a lack of transparency in a lot of markets, not just Thai ones.
View all comments by tosh
tosh, I read and enjoy this stuff. But the Big Mango Brothers pay me a nice per-click sum for “asinine, borderline insulting” comments and I don’t want to go against protocol and jeopardise the only regular income I have.
View all comments by Pants Elk
oah - just like with email u just dont read or delete the ones of no interest. Like white noise. Just pass over it.
t - great points on the commodity shit but not sure the party is over. Russia is going to start some shit indeed and I don’t think we are out of the woods.
thailand is a special case for exactly the stuff OAH talked about. The normal market forces don’t seem to apply but inflation is biting and the oversupply is happening. So I think things are going to take a hit. For tourists and stuff it will be a good news.
I am amazed the currently political turmoil is not having a greater effect but I think it makes sense. THE PAD are lunatics and now everyone knows it. The courts will decide the fate of the current government and their initial responses to the Thaksin regime are a sign of what will happen to Samak and team.
fun fun
View all comments by sideshowBOB