INTERNATIONAL
The dollar heads south
When the euro became a major international currency in 1999, it took US $1.16 to buy one. That didn’t last long. The euro declined rapidly and within a year its value against the dollar was only 85 cents. That was great for Americans. Suddenly their European vacations were very inexpensive and while they stayed in Europe, shopping was a joy.
In fact, for most Americans, shopping seemed wonderful almost everywhere as they indulged their habit of spending far more abroad then they earned. This huge trade deficit has remained to this day even though the dollar has plummeted in value.
Consequently, cheap European vacations are a thing of the past for Americans. It now costs them about $1.30 to buy a single euro and some analysts expect that to reach $1.35 before long. The dollar has been falling steeply against the Japanese yen as well, so don’t be surprised if ordinary Americans become a lot more careful about what they buy from overseas.
Neither the Europeans nor the Japanese are very happy about the dollar’s fall because the United State is a huge market for their goods. They want the Americans to keep up their spendthrift ways. Normally, central bankers in both the European Union and Japan would try to strengthen the value of the dollar and reduce the value of their own currencies by buying up large quantities of the dollar. But, to be successful, that takes cooperation from the US government. This time, it doesn’t look like they are going to get it.
Asked if the US would support moves to stem the rise of the dollar, US Treasury Secretary John Snow, replied “The history of efforts to impose non-market valuations on currencies is at best unrewarding and checkered.” Translation: The Bush administration is content to see the dollar fall further.
Viewed from the American perspective, this would seem to make sense. A weaker dollar makes US goods less expensive abroad which should be a boon to US exporters. And since it makes imports more expensive, it should help reduce the country’s worrisome trade deficit.
It is probably safe to say that no other country could get away with America’s spending habits. The United States is not only running a trade deficit with the rest of the world, but its government is also running up a record budget deficit at home. The only reason the country is not bankrupt is that foreign countries remain so willing to invest in the United States and to buy up its debt.
Some analysts are worried that the international willingness to prop up the US economy may change. If that ever happens, US businesses could be in real trouble. To keep dollars coming in, interest rates would have to soar, choking off funds for US companies and consumers. Of course, that would hurt other countries as well, especially those who depend on the US market for their exports. Consequently foreigners actually have an interest in seeing a stable US economy.
Closer to home, the Thai baht has also been weakening against the euro and yen. That should make Thai businesses exporting to Europe and Japan happy. At the same time, however, it has been strengthening against the dollar. That is good if you are supporting a son or daughter studying in the United States, but it will make life tougher for Thai exporters. That’s the problem with currency fluctuations. Where there are winners, there are also losers.
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indulge
to allow yourself or someone else to have or do something enjoyable
trade deficit
the difference by which the value of a country’s imports exceeds the value of its exports
plummeted
fallen sharply
steeply
rapidly and deeply |
spendthrift
spending too much money or wasting money
stem
stop; prevent
non-market valuations
setting currency values artificially, e.g., by having central banks buy or sell large quantities of a currency rather than having market forces determine the value
unrewarding
not getting an appropriate benefit |
checkered
showing both success and lack of success
content
happy and satisfied
boon
a benefit
bankrupt
a condition of being unable to pay what you owe
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prop up
to support; to prevent from falling by providing a support
soar
to rise rapidly
choking off
preventing or limiting
fluctuations
frequent changes
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LOCAL
Insights from Chuwit
Banharn Silpa-archa, left, helps Chuwit Kamolvisit into a Chart Thai jacket at party headquarters. — APICHART JINAKUL |
It has been quite a transformation. The first images we got of Chuwit Kamolvisit in the media made him appear to be a petty thug. That was after goons allegedly associated with the massage parlour tycoon destroyed dozens of beer bars and shops in a Sukhumvit plot of land he owned.
It didn’t take long for him to turn things around. A new haircut and a very public confrontation with police began to win him a following among Bangkok voters. Months later, he won more than 300,000 votes in the election for Bangkok governor..
We now know his formula. It’s a mix of personality, gall and a whole lot of money. According to a story in Sunday’s Bangkok Post, Mr Chuwit has spent more than 200 million baht since he entered politics a year ago.
Last week, apparently realising that he was standing at the edge of a bottomless pit, Mr Chuwit took a step back. Instead of continuing to go it alone with his own First Thai Nation Party (FTN), he abruptly decided to merge the FTN with Banharn Silpa-archa’s Chart Thai party.
Mr Chuwit’s explanation gives interesting insight into the role of money in Thai politics and the people who provide the financing.
“I realised that the dream world is different from the real world, the Bangkok Post quoted Mr Chuwit as saying. I realised that if I continue to fight [as leader of the First Thai Nation], I will lose all – 100 million baht if I have 100 million baht or 1,000 million baht if I have 1,000 million baht.
“The world of politics is a world of reality and it is a world where money counts. You have to have 20 million baht to contest a constituency. When candidates had no money, they came to me. So how could I afford to pay for 300-400 constituencies?” he said.
Mr Chuwit said he opted for Chart Thai rather than the main opposition parties because the party is “more practical, flexible and its leader is a political veteran.”
He indicated that joining Chart Thai also gives him a better chance of entering the government. He said he would focus his efforts on Bangkok and if he managed to secure five seats in the House of Representatives, he would bargain for a cabinet post with Mr Banharn. What post would he ask for? The Interior Ministry, he said.
“Why not? You need a thief to catch a thief, isn’t that the way it goes? I know all the tricks about the vice dens and the police.”
Mr Chuwit obviously has the personality and the gall to succeed. Now let’s see how much more money he spends to realise his ambition. Watch also this week to see if disgruntled FTN party take action against their leader. Last week many of them complained they were not consulted about Mr Chuwit’s plans to merge the party with Chart Thai.
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transformation
a complete change of someone’s appearance or character
petty
unimportant; minor and not worth paying much attention to
thug
a violent person, esp. a criminal
goons
violent people who are paid to hurt people or damage things
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tycoon
a wealthy and influential businessman
gall
being overly confident or reckless
bottomless pit
a situation which requires and endless supply of money
abruptly
suddenly |
constituency
a district represented by one member of parliament
opted for
chose
flexible
able to be changed easily according to the situation
veteran
a person with much experience
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vice dens
places were illegal activities take place like gambling or prostitution
realise
to make real; to make happen
disgruntled
unhappy; dissatisfied
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•This lesson was prepared by Acharn Terry Fredrickson, BA
Stanford, MA (TESL) University of Minnesota, Manager/Editor of the Learning Post at the Bangkok Post and general editor of this programme.
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Last modified: November 22, 2004
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