You don't need a crystal ball or a time machine. You just have to understand the dynamics of the system, the array of actors or agents in the system to make some very good forecasts. But most people are not doing that. So in June 1997, the central bank of Thailand depagued the Thai bot from the dollar. So they had to peg to the dollar, and people looked at that and said, well, I can borrow dollars and invest in Thailand and get a higher return. It's a carry trade. Carry trade. And what do you worry about in a carry trade? Well, you worry about short-term rates in the short position going up. So short-term US dollar rates. So that was not a concern at the time. And you also worry about the exchange rate. But here you had the central bank of Thailand saying it's pegged, and you can always get your money out at a fixed rate. So people were doing golf courses and hotels and resorts and other kinds of investment, et cetera, in Thailand like crazy. And then all of a sudden, people started to (10/98)
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