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Marc Faber on Thailand, markets

A little background on the situation in Thailand as markets resume trading there.

From The New Zealand Herald web site:

BANGKOK - Thailand went back to work as normal on Thursday after a military coup legitimised by the king but the opposition called for fast-tracked elections to show the new rulers are serious about a return to democracy.

A day after the military shut down the city in the interests of maintaining calm, Bangkok traffic was back to the familiar near-gridlock, while coup leaders worked on fulfilling a promise of a civilian prime minister in two weeks.

The stock market was down just 0.6 per cent at the midday break after falling as much as 4.2 per cent in the first minutes, a far less precipitous drop than had been feared in the immediate aftermath of the coup.

Traders said a royal proclamation legitimising the military government went a long way to reassure investors.

The coup leaders said they would craft a constitution within a year to repair flaws that ousted Prime Minister Thaksin Shinawatra was accused of exploiting to wield near-dictatorial powers, then hold an election.

But Abhisit Vejjajiva, leader of the main opposition Democrat Party, called for elections in six months and urged the generals to lift restrictions on individual rights.

"We are encouraged that they don't want to hold onto power and that their job is to put the country back on the democratic path," he said.

"But they have to prove it and prove it as soon as possible."

Thailand was technically still under martial law.

The same article went on to note that Moody's had reaffirmend Thailand's ratings and stable outlook Thursday, though Morgan Stanley had cut their growth forecasts for the country.

Bloomberg reported that risks to bondholders were easing, as credit-default swaps based on Thailand's bonds fell from earlier highs.

The risk of owning Thailand's bonds fell after the nation's monarch gave his support to the military leaders who seized control of the government, according to traders betting on the creditworthiness of countries in the credit-default swap market.

The price of credit-default swaps based on Thailand's bonds fell to $49,000 from as high as $70,000 on Sept. 19, when the coup ousted Prime Minister Thaksin Shinawatra. An increase signals perceptions of credit quality are deteriorating; a decrease indicates improvement.

Global stock investor Mark Mobius, who was quoted in the Bloomberg article, felt the events in Thailand were not unprecedented and noted that he would be a buyer at lower levels.

Moneycontrol India asked Thailand - based investor Marc Faber his opinion of what was happening in the markets and in Thailand. He seems to feel that Thailand's coup is being over attributed as an explanation for movements in the markets. He also makes some very interesting comments on commodities, India and the US dollar. Have a look.

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