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Nearly one-third of tourism-related businesses 'may shut down permanently'


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On 7/12/2020 at 11:29 AM, BritManToo said:

I don't believe in COVID as a serious world health problem (0.5M dead out of 8B = trivial).

All the countries being shut was for an entirely different reason.

I don't know what that reason was, but it's probably still there.

 

Now if COVID had killed 1B ................

 

Black Death killed 50% of the world population.

Spanish Flu killed 33% of the world population.

COVID killed 0.00625% of the world population.

You ever heard of the term "prevention paradox" ?

The COVID numbers are to a certain extent so low, BECAUSE of the extreme lockdown everywhere.

We don´t know, where we would stand now without it.

But i agree, if you overreact, like Thailand, we´ll never get to herd immunity here.

 

 

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I hope that the tourism related business that uses the ugly and racist double pricing policies will fall and shut down first for good...

How is this not already occurring. Tourism is dead and will be for a long time. Is he really that blind.  Domestic tourism will be the only source of redistributing money around the country and will n

No worries. Tourism is only 9% of the Thai economy. Right? Right? 

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4 minutes ago, Trillian said:

Not quite! Of course QE can help devalue a currency but Thailand has no appetite to take on debt or the inflation that would follow, if they get the scale of it wrong - the government had to be coerced by the IMF to operate a larger budget deficit for goodness sake because they are so risk averse.

 

BOT has no remit to initiate QE and successive governments have shied away from issuing debt which is why their borrowings are so low at 42% of GDP (53% post bail out). And unless productivity gains can be released in the Thai economy, QE would only lead to higher inflation, Thailand has had great difficulty increasing productivity which is why the whole money printing concept is a non-starter. 

 

When I refer to the Baht not being fully convertible I do so in the context of making it weaker. One way the country could weaken the Baht is to make it fully convertible but even today the country is reluctant to do that for fear that speculators will take a position against it, another throwback to the '97 crash.

 

Almost 96% of government debt is in THB, only 4% is in foreign currency loans. If Thailand were to borrow in USD this would mean selling THB for USD which would result in a weakening of the currency and this is exactly what is intended with the high speed rail link contract with China which is to be paid in USD. Thailand is in the process of fixing a forward rate on that loan at a time when the Baht is strong and USD is weak, that is sensible borrowing which may help weaken THB and be the precursor to further loans along the same lines.

 

 

Wow, you really know your <deleted>. Would love to have a beer with you and just talk economy.

 

So to sum up what you said (this is btw my problem, I like to sum up complex things into simple terms): even if they did want to devalue the THB (we both kind of agree that they don't want to) it's not as simple as printing money, because it could spiral out of control and / or massively damage the economy by some shock effects. And an easier way would be to make it fully convertible but it's dangerous for similar reasons, it could spiral out of control due to speculators and the shock to the system?

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Isn't it the case that the BOT does not allow the baht to be fully convertible  because they and every one else knows it is overvalued, and therefore would be vulnerable to speculator currency attack. Eg selling the currency, stocks, bonds denominated in baht? 

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1 minute ago, morrobay said:

Isn't it the case that the BOT does not allow the baht to be fully convertible  because they and every one else knows it is overvalued, and therefore would be vulnerable to speculator currency attack. Eg selling the currency, stocks, bonds denominated in baht? 

I think it's true that Thailand fears external influence, speculators etc, shades of Soros and '97. 

 

Whether or not it is overvalued is another question, I believe it is not. The FOREX market sets the value of THB based on deals that have been transacted during the previous 24 hours and BOT has to agree that rate each day, in that respect the rate is confirmed based on economic fundamentals and also independently by the FOREX market. If the trading world felt the ex.rate was wrong a lower rate would prevail. If BOT disagreed with that lower rate an onshore and offshore market would develop, thus far that has happened since the withholding tax issue of a few years ago.

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30 minutes ago, hobz said:

Wow, you really know your <deleted>. Would love to have a beer with you and just talk economy.

 

So to sum up what you said (this is btw my problem, I like to sum up complex things into simple terms): even if they did want to devalue the THB (we both kind of agree that they don't want to) it's not as simple as printing money, because it could spiral out of control and / or massively damage the economy by some shock effects. And an easier way would be to make it fully convertible but it's dangerous for similar reasons, it could spiral out of control due to speculators and the shock to the system?

Yes I think that's correct, although as with any complex issue any potential solution is multifaceted. Increasing debt would help weaken THB but would generally be a bad thing; increasing imports and erasing the trade surplus would prevent excess foreign currency building in the foreign currency reserves which over time would help weaken the Baht but would leave Thai monopolies open to challenge from overseas producers; increasing borrowings in foreign currency would also help as THB was sold for USD however exchange rate risk becomes a serious concern, I'm sure there are other ways also.

 

BOT has been taking small steps on a number of different fronts to try and reduce  Baht strength and this includes allowing exporters to keep export sales proceeds overseas for longer, allowing citizens to invest overseas, allowing overseas funds transfers more freely, entering into currency swap agreements which prevents THB from strengthening as export sales proceeds were repatriated for Baht (60% of all export bills are settled in USD). But those steps haven't been enough to make a sizeable dent in Baht strength, it hasn't helped of course that USD has weakened, it's been around 96.0 on the Dollar Index for some time.

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same in UK towns some shops open with a reduced footfall and many wont open again .offices empty of workers and cafes neaby are empty .workers laid off till who knows when

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Re. the earlier discussion about QE.

 

A quote from BOT this morning in the newspaper that may not be linked:

 

"QE may not help recovery because there is already sufficient liquidity in the system", another basic reason why printing money is of no value in this instance.

 

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After the mishaps with the positive cases going walk about this week, it's going to be 2 week quarantine for everyone to get in. There is a market for longer length stays though, but that is not enough to save all businesses in the tourism sector. Tough times ahead without short term tourists.

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