Was G. Soros responsible for financial collapse in Thailand?

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Friday, February 9, 2001
INTRODUCTION

Angry at George

One of the big news stories in Thailand last week was the proposed visit of the billionaire investment manager George Soros. Many Thai people were angry that he was coming because they blame Mr Soros and other foreign investors for causing the 1997 fall of the Thai baht and the economic collapse that followed.

The protests against Mr Soros caused quite a bit of comment in the Bangkok Post. You will read what one of our readers had to say in this lesson. Of course, in the end, Mr Soros called off his visit and this week things are back to normal.

Much of the anger against Mr Soros was simply emotion. Few people really understand what happened in and before 1997. They don't know if Mr Soros was really involved, nor do they understand what he is accused of doing. After you finish this lesson, you will be able to tell them.

Some basics
The Thai baht is a commodity, much like rice, sugar and oil. Its value is based largely on supply and demand. If people throughout the world are buying more goods and services from Thailand than Thais are buying from the rest of the world, the baht's value should rise.

However, for the ten years prior to 1997, Thais were spending more on foreign goods and services than they were earning from their own goods and services. Thus, the baht's value should have fallen. But it didn't. Why not? Read on:

The makings of a crisis
One reason the baht's value didn't fall before 1997 was that Thai businesses were borrowing a lot of foreign money. Another reason was that the Thai central bank was keeping the baht's value at about 25 baht per one US dollar.

For a long time, it did this by keeping Thai interest rates higher than in many other parts of the world. This attracted foreign money.

As the crisis approached, however, the central bank was forced to try a different approach. It started selling US dollars from its own reserves to buy baht.

As the situation worsened, many people believed that the central bank would soon run out of money to support the baht. The bank remained firm, however, knowing that letting the baht fall in value would ruin many local businesses with foreign loans.

Why? Suppose a Thai business had a one million dollar loan from a foreign bank. At 25 baht to the dollar, it would have to repay 25 million baht plus interest. If the baht fell to 30 to the dollar, however, it would have to repay 30 million baht plus interest.

Unfortunately, by mid-1997 so many worried investors were selling baht to buy dollars that the central bank was unable to spend enough money to support it and on July 2nd, the baht's value was allowed to fall.

Let's speculate
Some Thai people believe that many of the people who were selling baht for dollars were speculators who wanted the baht to fall so they could earn large profits. The most powerful and successful of these speculators, they believe, was George Soros.

Actually, you too could have been a speculator at that time. Here's an example of how you could have earned a handsome profit.
First suppose you had gone to a bank and borrowed 25 million baht to be repaid in three months. (To make this easier, let's forget about the interest and fees you would have to pay.)

Next you sold the 25 million baht for one million dollars.

Now suppose that the baht fell in value to 30 to the dollar. How many baht would you get if you sold your one million dollars? Since you needed to repay only 25 million baht, how many baht would you have left over.

Now suppose, as actually happened, the baht fell to 45 baht? How many baht would you have left over after you repaid your loan?

Certainly a lot of such speculation did take place before the fall of the baht. George Soros may even have been involved although there is no clear proof. But is this an evil practice like some Thai people believe? And who deserves most of the blame for the fall of the baht, the speculators or the government officials who allowed the Thai economy to get so badly out of balance?

One reader's opinion
One of our readers wrote a letter to Postbag giving his opinion about who is to blame for the economic crisis. But he did it in the form of an allegory, a story in which the characters and events are symbols intended to teach a lesson of some kind. As you read the letter, consider the following questions:

Who are Captain C and the members of his crew?
Who is Pirate George?
What is the storm mentioned in the story?
Who is Captain T?
What is the point of the letter?

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
I'm sorry sweetheart the big folks are talking about George Soros and thailand.
why don't you waddle off downstairs make yourself a bowl of cereal and watch
the funny men on fox news. Kay baby.

I was pointing out you are full of it, quite frankly I don't see any point in addressing what you are pandabear say at this point because trying to have a reasonable discussion with you two is like beating one's head against a brick wall. After being compared to Adolf Hitler and being called an anti-semite by the two of you, I can see there is no chance of having a reasonable debate with either of you. Oh I will continue to respond to stuff, but I generally have no respect for either of you and at this point even if you apologize to me, at this point I wouldn't believe a word you said.

I gather that this means that the prosecution rests its case?

I'm saying given you smear attempts towards me in the past week, you quite frankly have no business even trying to pretend to be a judge. If I were the prosecution I would have appointed an investigation as to your relationship with the defense, and given your slanderous remarks outside of "court" you would also have been facing a lawsuit, which would prove a further conflict of interest.

Now if marshall wants to bring up counterarguments or debate me fine, but you and JakobVirgil in my opinion (you especially) crossed the line royally when you compared me to Adolf Hitler at least twice. I won't let this matter go, especially since you did it more than once and I had reported you more than once.

Well Quoting Jew baiters and I will stop calling you one.
8/9 bad guys are Jews? 1 in 50 americans are jewish. What is the chance of that.
Do the math (5pts for the correct answer) Beck stinks of ZOG fantasists .
Calling Soros a Puppet Master is the final Nazi candle on his Nazi cake.
So go crying to the moderators I defend your right to be a nazi
but I will not give up my right to call you out on it.

Now if marshall wants to bring up counterarguments or debate me fine, but you and JakobVirgil in my opinion (you especially) crossed the line royally when you compared me to Adolf Hitler at least twice. I won't let this matter go, especially since you did it more than once and I had reported you more than once.

Seriously, this is why I have absolutely no respect for you. You can't counter what Glenn Beck says based on facts so you have to spew lie after lie after lie, you call him an anti-semite; then you call anyone whom points out you are wrong an anti-semite. As much as you may think that I hate you, I really don't, I feel sorry for you, that you have been brainwashed to believe everyone that doesn't follow lockstop with the liberal platform is somehow stupid or evil. The truth is I'm not an anti-semite, Glenn Beck is not an anti-semite; that was just a lie concocted by individuals whom Beck has gotten under their skin. Soros is a very troubled individual putting it mildy, this has nothing to do with the Jewish faith.

Should I blame every liberal for the actions of Bill Ayers, no and quite frankly I don't.

Glenn Beck is going after George Soros, because of George Soros' actions, Soros could be Catholic, Mormon, Atheist, Budhist, etc. and Glenn would still be just as critical of the man because of what Soros has done, not because of religion.

In short your accusations that people accusing Soros of wrecking economies being anti-semites is way out of line and extremely dishonest putting it mildly.

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The court finds the defendant, Mr. George Soros, not guilty of having caused Thailand to collapse financially.

Believe me, I would have loved to have found the defendant guilty, so that I could have levied a substantial fine. I'm just as greedy and corrupt as any judge in America.

I could care less what you say,

if this were a court you wouldn't have been the Judge,

in fact you would (if you had any ethical standards) had been forced to recuse yourself.