Westerners and Their Money

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Dodger
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Re: Westerners and Their Money

Post by Dodger »

fountainhall wrote: Tue Jun 25, 2019 10:54 am I am no more an economist than you, Dodger. But I don't follow one issue in your analysis. So the Chinese control the majority of the money in Thailand. Agreed. And the likelihood is that this will increase. Agreed. That being the case, is it not in China's interests to see the baht kept at least at its present level. They surely do not want their assets to depreciate.

Unless Trump and Xi can come to some agreement on trade soon, my wonder is: what will the Chinese do with all the $1.3 trillion + of US Treasuries they hold in their $3 trillion foreign exchange reserves? I have read that they are already diversifying so that if there is a $ crash or substantial weakening, they will not lose too much. But with so much US denominated debt (only the US Federal Reserve holds more), China cannot quickly offload it without resulting in a depreciation of the US$ and/or a sharp spike in US interest rates. The former is not in their interest. Similarly if the US just continues to print money through its historically low interest rates, China again suffers unless it further reduces the value of the Yuan.

I suppose there as many answers out there as there are economists!
i guess the way I look at it (right or wrong) is that a strong Yuan - weak Baht is good for Chinese investors.

I think Thailand has way too many major projects in the works for them to handle, when historically, these types of projects have run way over-budget, missed their completion dates by years, not months, and have always placed a financial burden on the tax payers, thus having a negative impact on the economy. Due to the way business operates here it's not uncommon for money that's been appropriated for a given project to vanish and become totally unaccountable. This only adds to the risk involved. Good planning and investments = economic growth = stronger currency. Poor planning and management of investments = economic hardships = weaker currency.

ONE EXAMPLE:
Thailand has committed to the new Thai-Chinese High Speed Rail Project (just one mega project IN the works involving the Chinese) at a projected cost to Thailand of 300 billion baht, although the cost/benefit analysis supporting the financial justification for the project has not been disclosed to the public...RED FLAG! Historically, Thailand has never managed a large project anywhere close to budget...another red flag! Thai tax payers, who have just had their taxes on utilities and gasoline increased by approximately 20%, will shoulder the burden of paying for this...another RED FLAG! Chinese businessmen involved with negotiating these types of joint/international projects hold MBA's from western universities. Thailand's generals don't know what MBA stands for...another RED FLAG. This is just one of many reasons I see the value of the Thai baht taking a hit over the next 3 years.
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Re: Westerners and Their Money

Post by fountainhall »

Dodger wrote: Tue Jun 25, 2019 12:28 pmONE EXAMPLE:
Thailand has committed to the new Thai-Chinese High Speed Rail Project (just one mega project IN the works involving the Chinese) at a projected cost to Thailand of 300 billion baht, although the cost/benefit analysis supporting the financial justification for the project has not been disclosed to the public...RED FLAG! Historically, Thailand has never managed a large project anywhere close to budget...another red flag! Thai tax payers, who have just had their taxes on utilities and gasoline increased by approximately 20%, will shoulder the burden of paying for this...another RED FLAG! Chinese businessmen involved with negotiating these types of joint/international projects hold MBA's from western universities. Thailand's generals don't know what MBA stands for...another RED FLAG. This is just one of many reasons I see the value of the Thai baht taking a hit over the next 3 years.
I understand your concern. From what I read, analysts seem to suggest that the high speed rail project will not in fact create a disproportionate amount of debt and therefore create instability with the baht. And while passenger traffic may not justify the route, additional infrastructure projects and indirect benefits have to be taken into account. Then there is the issue of whether or not Thailand can afford not to be part of China's massive Belt & Road Initiative. Thailand has said it can fund the project without international lending. But if it seeks lending overseas, the Export-Import Bank of China has offered low interest loans.

I am sure the analysts have also taken into account another Belt & Road project that has not delivered the assumed benefits - the massive Hambantota port in Sri Lanka. Because Sri Lanka made a total cock-up of trying to manage the port and could not replay the loans, it gave China a 99-year lease on the port. China did not want to run the port, but agreed to do so to protect its investment. Some have argued that through the BRI China intends to lure countries into a debt trap. But this was not the case, if only because the Sri Lankan government commenced detailed planning for the port in 2007 whereas China did not come up with the BRI until 2013.
Analyst Siwat Luangsomboon from Thailand’s Kasikorn Research Centre said that assuring profitability of the route could prove challenging, but that given the other indirect opportunities it would bring, Thailand could not afford to miss out on the belt and road plan.

“From China’s perspective, the route is beneficial in terms of technology costs and infrastructure. But in Thailand and Laos, two countries with a much smaller area, the route may not pass areas that are production bases or where there is high population density, which will affect long-term train services,” he said.

“But there will be indirect benefits that must be taken into account, including the development of logistics, retail, construction, real estate, urbanisation and employment.”

Siwat thinks Thailand can avoid a debt trap even if it has to depend on loans from Chinese institutions.

“Thailand has financial credit that will allow it to diversify the loan sources, unlike Laos or countries in Central Asia, so it is impossible that we would be facing a disproportionate level of debt compared to our domestic market size.”
https://www.scmp.com/week-asia/geopolit ... ed-railway
https://www.beltandroad.news/2019/05/22 ... tota-port/
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Re: Westerners and Their Money

Post by Undaunted »

mahjongguy wrote: Tue Jun 25, 2019 12:16 pm But, talking about the dollar, you said gold is at 2,250 when in fact it's 1,435.
I am speaking about Thai gold...today 1 Thai gold baht = 2,650 bht This is the highest I have ever seen the price of gold here in Thailand!
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Re: Westerners and Their Money

Post by mahjongguy »

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gera

Re: Westerners and Their Money

Post by gera »

Dodger wrote: Sun Jun 23, 2019 11:01 am I see the U.S. dollar (one of the strongest currencies) strengthening incrementally against the Thai baht (one of the weakest currencies) over the next 3 years.

Thailand hasn't been invaded by anyone for the past 80 years, although tens of billions of baht are being funneled to the generals in the military. At the same time, the cost-of-living has increased significantly due to higher taxes placed on utilities and gasoline which is shrinking an already microscopic middle-class. Two percent of Thailand's population control over 85% of the money, and foreign investors aren't fooled into thinking that the recent elections in Thailand resulted in the return of democracy. Manufacturing industries, trade export and tourism will unfortunately all take a hit.

I hope to see an exchange rate of U.S. $1 to 35 Thai baht in the not too distant future.
Most of the claimed in this post is factually wrong. Dollar is going down (entirely due to Trump) and though Chinese arrivals getting a hit, Thailand is getting more direct investments because international companies moving their supply chains from China to South East Asia including Thailand. US economy is entering recession within a year or so (entirely due to idiotic policies of Trump). Gold, cryptocurrencies and even Thai baht are the way to go.
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Re: Westerners and Their Money

Post by Dodger »

fountainhall wrote: Tue Jun 25, 2019 1:32 pm...From what I read, analysts seem to suggest that the high speed rail project will not in fact create a disproportionate amount of debt and therefore create instability with the baht.
On the surface that statement by the analysts may be reassuring (to some), although without the public being able to see the cost/benefit analysis and risk mitigation plan which normally accompanies this type of analysis. no one, not the analysts, not the contract negotiators, not the project managers, not God, or the government officials responsible for approving this project, could claim that a screw up with the project could not in fact create a disproportionate amount of debt and/or instability with the Thai baht.

I'm not looking to poke holes in this, or somehow trying to use this to rationalize my opinion about the weakening baht at all. I sincerely hope Thailand can pull this off for the benefit of the people of Thailand, but, as I stated earlier, there are simply too many RED FLAGS, and putting a team of Thai Project Managers in charge of a project like this would be like installing screen doors in a submarine. Look what happening to that little Sukhumvit Road Tunnel Project in Pattaya. It was nearly two years late in development...ran over budget by millions of baht...and, due to numerous failed projects and significant capitol investment intended to stop the sewers from flooding, the tunnel now floods any time it rains for more than one minute making it useless. Now, compare this little tunnel project with a high speed rail project that crosses international boundaries and extends from Thailand all the way to China.
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Re: Westerners and Their Money

Post by Dodger »

gera wrote: Tue Jun 25, 2019 3:40 pm
Dodger wrote: Sun Jun 23, 2019 11:01 am I see the U.S. dollar (one of the strongest currencies) strengthening incrementally against the Thai baht (one of the weakest currencies) over the next 3 years.

Thailand hasn't been invaded by anyone for the past 80 years, although tens of billions of baht are being funneled to the generals in the military. At the same time, the cost-of-living has increased significantly due to higher taxes placed on utilities and gasoline which is shrinking an already microscopic middle-class. Two percent of Thailand's population control over 85% of the money, and foreign investors aren't fooled into thinking that the recent elections in Thailand resulted in the return of democracy. Manufacturing industries, trade export and tourism will unfortunately all take a hit.

I hope to see an exchange rate of U.S. $1 to 35 Thai baht in the not too distant future.
Most of the claimed in this post is factually wrong. Dollar is going down (entirely due to Trump) and though Chinese arrivals getting a hit, Thailand is getting more direct investments because international companies moving their supply chains from China to South East Asia including Thailand. US economy is entering recession within a year or so (entirely due to idiotic policies of Trump). Gold, cryptocurrencies and even Thai baht are the way to go.
I believe the U.S. dollar will stay relatively strong, not so much because of what it does or doesn’t do, but because other countries around the world are experiencing situations that will continue to make their currencies relatively weaker.
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Re: Westerners and Their Money

Post by Undaunted »

Dodger wrote: Tue Jun 25, 2019 4:22 pm
gera wrote: Tue Jun 25, 2019 3:40 pm
Dodger wrote: Sun Jun 23, 2019 11:01 am I see the U.S. dollar (one of the strongest currencies) strengthening incrementally against the Thai baht (one of the weakest currencies) over the next 3 years.
I hope to see an exchange rate of U.S. $1 to 35 Thai baht in the not too distant future.
I believe the U.S. dollar will stay relatively strong, not so much because of what it does or doesn’t do, but because other countries around the world are experiencing situations that will continue to make their currencies relatively weaker.
Dodger, as much as I would like to agree with your thoughts about the dollar I can’t as there is absolutely no logic to back a strengthening Dollar against the Baht! I believe you thoughts are based more on wishful thinking than facts.
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Jun

Re: Westerners and Their Money

Post by Jun »

1 Long term, I think the USD is going down the toilet on a sea of debt. Short term, whilst it remains the reserve currency, anything can happen. And I know I can be wrong.

2 Relying on a strong USD, EUR or GBP is when living costs are in THB is risky. Fixing this is probably more productive than speculating.

The comment on the Sukhumvit road tunnel flooding is interesting. I also saw flooding on other infrastructure projects. The ongoing rail upgrade in Isan has 2 lines and gets rid of the level crossings. To cross the railway, they either have enormous concrete bridges, probably about double the necessary length or smaller tunnels under the track. You don't have to travel far to realise the water table is near the surface and & sure enough, perhaps 30% of these tunnels were flooded, in the dry season & before the rail upgrade is even finished. The waste on this project is amazing.

Then Khon Kaen now has an enormous elevated rail station under construction. When I arrived at the temporary rail station, perhaps 20 people got off the train. The new station looks like it could cope with about 5000 getting off a train. They will need vastly improved operation of the rail service to encourage any more users onto the trains.
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Re: Westerners and Their Money

Post by Dodger »

Jun wrote: Tue Jun 25, 2019 7:47 pm2 Relying on a strong USD, EUR or GBP is when living costs are in THB is risky. Fixing this is probably more productive than speculating.
Excellent point.

The only thing anyone can rely on regarding the value of global currencies is the fact that they will always remain in a constant state of flux. Understanding that the value of a county's currency is determined by how it compares to the value of other currencies makes it totally impossible for any currency to carry the same value for two consecutive days let alone a lifetime. The U.S. President cuts a fart and a seismic wave hits the Dow Jones numbers like a tsunami. People's reaction to FEAR is what ultimately determines the value of a country's currency. Amazing!

In my retirement planning I knew that the value of the Thai baht as compared to the U.S. dollar would constantly be changing, which, if not considered during my planning, could present high risk. My objective was simple: Plan for the worst and hope for the best. I established a budget based on the lowest the Thai baht had fallen in the 30 years prior to my retirement and bank the surplus of money I have each month for when the value of the Thai baht strengthens against the U.S. dollar. The surplus I refer to is the exact difference between my monthly retirement income minus the lowest the Baht had fallen in those past three decades.

My decision to own versus rent was made during this same pre-retirement risk assessment.
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