Saturday, 13 February 2010

It could be worse?

Fromm Yesterdays Nation Opinion

1. Vietnam has just devalued the dong for the second time since November. Effectively, the Vietnamese currency has been officially marked down by 3.3 per cent. The new midpoint for the US dollar and Vietnamese dong was quoted at 18,544, whereas the ceiling rate of 19,100 compared with Wednesday's market rate at around 18,550. Yesterday the Vietnamese currency fluctuated over a wide range of 18,700-19,100 to the US dollar. Many believe that the Vietnamese dong will still have ample room to go down further.2. The growing possibility of Greece's default has prompted Germany to devise a bail-out plan. But other European Union members such as Spain, Portugal, Italy and the UK are also in trouble. Sovereign debt is the key theme this year. The euro is under the threat of a breakup.
3. Japan's public debt has surpassed 200 per cent of the gross domestic product. It is borrowing money at around 1.68 per cent. If the interest rate were to rise by one full percentage point, Japan would be plunged into a black hole.
4. More than 30 states in the US have already gone bankrupt. They are waiting for bail-outs from Washington DC. But the US federal government is also in dire straits, with public debt rising to beyond 80 per cent of GDP - not to mention more than US$100 trillion in contingent liabilities in healthcare and social security.
5. Prime Minister Hun Sen of Cambodia is piling up his army near the Thai border. What is he up to? Is he getting ready for war? It appears that the US is now more enamoured of Cambodia than it is of Thailand. Hun Sen has also lambasted Thai Prime Minister Abhisit Vejjajiva, invoking curses upon him and using foul language.
6. The Thai Army is now in firm control of the if the political situation gets out of hand. It will roll out the tanks if the red shirts strike first. The potential flashpoint could happen a week before the Supreme Court's reading of its verdict on the assets seizure case against fugitive former prime minister Thaksin Shinawatra on November 26. Or trouble might happen afterward. The St Gabriel's alumni are secretly forming their shadow Cabinet.
7. The situation has become particular tense, with fund flows from abroad into the accounts of key members of the red-shirt leadership. The final battle is shaping up.
8. The coalition partners are playing the constitution amendment card, to add fuel to the fire. Abhisit is challenging them to walk away from the government. But the coalition partners do not want Thaksin to come back either.
9. The Supreme Court is most likely to hand down a verdict to seize the entire Bt76 billion of Thaksin's frozen assets. After which the National Counter Corruption Commission might follow suit with further criminal charges against Thaksin.
10. Thaksin will fight his last battle, the outcome of which will spill over into March.
That's my reading of what's going on around us in the immediate and near term. It will be a horrible year.

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