Latest bright idea to boost exports : “let’s devaluate the THB” !

It’s getting better and better…

Here is the latest bright idea from the alleged Finance Minister in order to boost the exports…

Finance Minister Suchart Thadathamrongvej said he would like the baht currency to depreciate by five percent to help stimulate the export sector and shoulder the economy in 2009.

The economic growth for next year should stay at four percent or lower while the export growth would be no more than 10 percent due to the global economic crisis, he said.

The minister said he will discuss the devaluation of Thai baht with Deputy Prime Minister Olarn Chaipravat, who is in charge of overseeing the national economy. (Bangkok Post)

Suchart is a clown. A bozo. And a dangerous one. A simple minded. A lunatic.

Hey Suchart ! I’ve got another idea for you : why not devaluate the THB by 1000 % versus the USD, so allΒ  thai companyies would become, instantaneously, multi billionaires… in worthless THB… That sounds good, huh ? πŸ˜‰

Of course, all the thai imports would become 1000 % more expensive, but mai pen rai ! It’s not important. Furthermore, don’t we have a trade deficit ? Nah… it’s irrelevant… πŸ˜‰

Thai exports are going into the wall. It’s not an exchange rate issue, it’s a demand problem. The major trading partners of Thailand are already in recession…

Suchart can even buy a simple-way ticket to the moon or put on pink underwears… the thai exports will go down, and the growth of GDP will go down, there is nothing he can do about it.

Guys, you should know by now that we are in deep troubles… But I can tell you… with people like Suchart there is no limit…

11 Responses to “Latest bright idea to boost exports : “let’s devaluate the THB” !”

  1. 1 chinesethai 20 October 2008 at 11:16 am

    Export is getting so bad really that I can feel the impact directly. Even my suppliers complained to me on the phone last Friday that they too are witnessing their sales going down. Most of my customers’ export markets are in Europe and the U.S.

    Now we have Finance Minister Suchart Tadathamrongvej, who is a loser economist, and Commerce Minister Chaiya Sasomsap, who runs a hitman squad, sailing Thailand’s economy through the worst global financial crisis in decades!! I am wondering how Pro-Thaksin supporters would have anything to say about this. “Communist” China is also feeling the pain but its Trade Minister doesn’t even say something unthinkable like this.

    Most informed Thais have forgotten that they have a government. Businesses that will be able to weather this storm will be the ones that have been more conservative, less expansive, less debt-laden and self-sufficient.

  2. 2 Look Cheen 21 October 2008 at 1:34 am

    I am rather puzzled who is indeed stupid: the finance minister or those guys who called him stupid.

    Devaluation is something that you don’t announce publicly in advance, otherwise people will speculate and make profit out of it. I am one million percent certain that this Suchart guy will not announce devaluation — because he is just floating trial balloons. I am old enough to know that when Pa Prem announced devaluation of the BAHT many many years ago, he or his Japanese-educated finance minister Sommai Hoontrakul did not say a word about it in advance. The result was that his right-hand man Gen. Arthit Kamlang-ek was so upset because he was directly affected as he didn’t have a chance to buy US$ first. That was the beginning of the rift between the two generals, which one was more ambitious, it is up to you to decide.

    To call Suhcart stupid shows that you don’t understand economics and the Thais’ real character.

  3. 3 ThaiCrisis 21 October 2008 at 1:46 am

    Well, apparently, you are the one who really don’t understand the thai situation.

    Of course it’s a rather bad idea to announce a devaluation… before it happens.

    But in this case, you totally missed the point : nobody believes that Suchart has any power to indeed devaluate the THB !

    It’s a fiction.

    He’s the mere alleged Finance Minister, of a ghost government, without office to work and an obvious very short life span.

    So ?

    I was just judging the opportunity of his idea. To devaluate your currency in order to boost exports WHEN YOU HAVE A TRADE DEFICIT is totally stupid. I stick to my words.

    There is no other way to qualify such inanity.

    China can do it. And did it a lot (by suppressing artifically the RMB)… but China has A MASSIVE TRADE SURPLUS. That’s a big difference.

    And I should add that our trade deficit is not caused by perfumes or wines… goods that we could stop buying… The thai economy can’t afford to pay more for its imported energy for instance.

    Furthermore, a lot of imports are processed for… exports (parts for the japanese car industry in Thailand) and many other raw materials. So ?

  4. 4 Gloomy Observer 21 October 2008 at 3:58 am

    I’m glad you qualified that statement: because currency shifts are EXACTLY how you shift from trade deficit to surplus. But it depends on the elasticity of demand for the imports: 0% in the case of energy and goods to be re-exported.

    That said, I am 100% confident that we will see a weaker baht soon.

    (i) the regional trend will be down (which the BoT seems to care about);
    (ii) interest rates are going to be slashed;
    (iii) the trade deficit itself, combined with a drop in FDI, will put pressure on the baht; and
    (iv) the tourism sector (which does not need so many imports) is looking more and more uncompetitive…it is getting pricey to holiday here, and a weaker Baht is the only way to do it.

    So, shortly, expect the BoT to start printing up some money and buying USD with it….

    …but it won’t make any real difference to the economic outlook. It will be like taking ordinary pain killers before having root canal treatment….it will just take the edge off of it.

    I also agree that any Thai businesses that survive this will be stronger for the future – or just well-connected (as is the normal way here!)

  5. 5 ThaiCrisis 21 October 2008 at 4:44 am

    ->Gloomy Observer

    I don’t really agree. What you say is the text book : if our currency weakens then, thanks to market rules, costs of imported goods would increase, then people would buy less of those, then trade deficit would shrink… and eventually would become a trade surplus.

    It’s working like that in a perfect world.

    But we have to look at the details of exports/imports of Thailand.

    The current trade deficit is not caused by perfumes, luxury cars and wines (albeit πŸ˜‰ )… but by energy. And parts/raw materials used by our glorious exporters.

    So, a weaker THB would increase those costs… leading to higher exports prices, leading to loose the advantages of a weaker currency.

    Furthermore energy is not only used by exporters… so all the thai businesses and individuals would suffer from higher energy prices.

    As for the exchange rate… I do agree that we should see a weaker THB in the future.

  6. 6 KV 21 October 2008 at 5:38 am

    Article on China demand affecting its neighbors in Asia.

  7. 7 chinesethai 21 October 2008 at 6:33 am

    This global imbalance must be fixed now.

    I mean we can no longer ……
    – let America be the world’s only formidable consumer and liquidity provider, and produce no tangible products.
    – let China be the world’s only formidable factory and piggy bank.

    We will feel the pain from both directions in US dollar movement. The decoupling is painful indeed. Gosh.

  8. 8 Gloomy Observer 21 October 2008 at 7:32 am

    Ironically, this all ties into politics: we need stronger consumers in Asia in general, which means boosting rural incomes – see the reforms now being put in place in China to try to get peasants to move up the economic ladder. In Thailand, meanwhile…

  9. 9 chinesethai 21 October 2008 at 3:32 pm

    Fingers crossed for China. It will take decades to achieve it but …. better than doing nothing. But Thailand… I agree with you, Gloomy Observer.

  10. 10 James 22 October 2008 at 3:53 pm

    Big economic troubles ahead for developing world. The biggest financial bubble in the history of mankind is yet to burst. All the money pumped into emerging markets is leaving at light-speed! Exports are dead stopped and people are in debt up to their eyes from buying property and things they can’t afford.

  11. 11 james 23 October 2008 at 9:01 am

    Baht should be at 46 to dollar. Thailand is going to be in a lot of financial pain if they do not devalue asap. The entire emerging markets economy is going to go black, not red.

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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