Government calls for a hike of money supply

A very interesting piece published by Nation, that illustrates the inanity of the policies conducted currently. Some quotes.

Deputy Finance Minister Suchat Tadatamrongvej has called on the Bank of Thailand to increase money supply to counter a lack of liquidity.

Previous central bank bond issuance had also reduced liquidity, he argued. These factors have caused commercial banks to raise both deposit and lending rates in order to mobilise more funds, he said. Commercial banks’ lending rates are currently about 7 to 8 per cent and deposit rates are about 4 per cent.

“Money supply is another big issue that the Finance Ministry and the Bank of Thailand need to discuss at length,” he said. The central bank might have previously issued too much in bonds, worth Bt1.5 trillion, so it withdrew significant liquidity, Suchat said.

This is true : in 2006-2007, the BOT was pursuing a dangerous policy : curb the increase of THB versus USD. The aim was to save the Private Exports.

We have had capital controls (december 2006), etc. The BOT was buying mountains of USD (exchanging them against THB)… that were loosing value every month (the dollar was crashing). The international currency reserves exploded, look at the chart…

And then, to avoid inflation, the Bank had to mop up those liquidities by issuing very large amounts of bonds.

Suchat has continued to oppose the central bank’s policy of using interest rates to fight inflation and encourage greater savings. The bank recently raised its one day repurchase rate by 25 basis points to 3.75 per cent.

If Thailand were like Vietnam, where demand is high, the interest rate should be raised, he said – but demand in Thailand is still weak.

Wrong. The demand is lower than in China (of course), but still strong : houses, condos, cars, gasoline consumption etc.

And furthermore, the government does everything to support and increase the demand (tax cuts, budget deficit, and many other “boost” and “stimulus” goodies).

“We should follow Japan and China, implementing low interest rates and a weak exchangerate policy,” Suchat suggested.

A weak currency would boost exports as Thai goods are relatively cheap compared with those competitors, he said.

Voila. At least, they’re honest. They want to match the foolish policies of China and Japan !

As for exports, it’s a non sense. Thai exports have never been so high !

So to summarize, those bureaucrats and politicians just want to add fuel onto the fire, for obvious and short term political gains. They have only one obsession : more.

Low interest rates, weak currency and money supply… are the 3 fastest ways to get an explosion of inflation (which is already high) and creation of bubbles.

They are running against the stream : the future is frugality.

Samak : “Aggressive behavior is my nature”

… Indeed.

“It is time now for the prime minister to consider himself and decide whether he is still fit to be prime minister,” said Mr Jurin [Opposition spokesman ]. “If he insists on clinging to his office, the problems of the country will escalate.”

Mr Samak immediately replied. “Aggressive behavior is my nature,” he said.

“It is not a matter of indecent behaviour. I did not do anything wrong and have the right to continue my work as prime minister. How I have behaved has not caused any damage to the country.”

The special joint session of parliament opened on Sunday afternoon in an attempt by Prime Minister Samak Sundaravej to defuse the crisis brought by street protest and the seizure of Government House by anti-government demonstrators.

Before heading into the session, Mr Samak said:

“I will not bow. I will not step down and I will not resign no matter how much pressure on my government. The government cannot resolve the problem, so this joint session of parliament is the best way to try to find a solution.” (Bangkok Post)

It’s difficult to imagine how the session of Parliament could solve the political crisis. This is just PR. Nothing more.

So to summarize the balance of powers at the end of this week end : PAD won’t give up. And Samak won’t give up.

The stakes are getting higher… But eventually, someone will have to back off…

Private buses : green light for fares increases from + 10 to + 23 %

Back to business ! While the people get entertained with temporary tax cuts on diesel, fakes goodies, and other prices controls policy Zimbabwe style… the inflation tsunami is building up. Quietly.

Private bus services in metropolitan Bangkok are now allowed to raise their fares immediately after having been denied the opportunity to participate in fare hikes suspended for several months.

The Supreme Administrative Court on Friday lifted an injunction by the Central Administrative Court which had suspended fare hikes by private bus operators.

With the issuance of the order, Private Bus Development Association president Chatchai Chaiviset said bus operators are allowed to instantly raise the bus fares as proposed in May.

Effective on September 1, fares charged by private air-conditioned buses will rise by one baht in the set trip distance rate.

The fares collected by buses, minibuses, and passenger pickup trucks will rise to 10, 8, and 7.50 baht from the 8.50, 7, and 6.50 baht charged earlier. (TNA)

Voila. The court put on hold the prices increases end of may (read here)…

Three months after, back to square one… They saved 3 months. Great.

FBA : 40,000 companies with foreign shareholdings will be investigated

Knock ! Knock ! Who is back ? The Foreign Business Act of course !

This famous Thai Saga (between the Benny Hill Show and Monthy Python) continues to excite the politicians. It’s a never ending story. Here is the latest episode.

The department will stringently investigate some 40,000 companies that have foreign shareholdings of from 40-49 per cent for possible violations of the FBA.

The department will randomly investigate them to make sure that no foreign investors have taken advantage of any loophole in the act to hold more than 49 per cent in firms on the protected list.

Asked about an investigation of whether 12 companies had breached the act as alleged in complaints to the ministry since 2006 , Kanissorn said some cases had been passed to the police for withholding evidence.

Twelve firms under investigation are UCOM, BoleroTak Wu Holdings, Telenor, Hutchison CAT Wireless Multimedia, Asia Aviation (Thai Air Asia), Thai Sky Airline, Cen Car (Carrefour), EkChai Distribution System (TescoLotus), Siam City Cement, DHL Logistics (Thailand), event organiser Izumi Zenkosha (Thailand), and real estate agent Burapa Lumpini Land. (Nation)

The Junta started in 2006 an inane amendement process of the law (read my special dossier here) before to back off. Humiliated.

This story of the “40 000 companies to be investigated” is not new.

In september 2007, they’ve made a similar announcement.

“The Business Development Department is in the process of inspecting as many as 40,000 companies to see if they have used nominee structures to hold shares for foreign investors _ a practice prohibited by the Foreign Business Act. (read my article)

It came just after the decision from the government to withdraw the amendement… Face saving exercise I asked at that time.

So one year later they start again, even though it’s a new government. Who is going to believe them ?

That’s the problem with the Thai Dramas. Eventually, they lost all credibility…

As to repeat that Carrefour, Lotus and DHL are still under investigation (since 2006 !)… it’s of course laughable…

They just can’t attack 3 MAJOR international companies (even though in Thailand they use local… “partners”).

The thai government should understand this, and stop making ridicule of itself.

It becomes… embarrasing.

Acceleration : Samak granted an audience with the King

Prime Minister Samak Sundaravej is granted an audience with HM the King to report the situation in the country, an informed source said.

Samak went to HM the King’s Klaikangwon Palace in Hua Hin on Friday’s evening. (Nation)

Without any doubt : it’s a sign. Probably the King would not only listen to Samak’s “report“…

There have been other meetings today, for instance Samak with the military, and another one between the coalition parties.

UPDATE
The audience has been postponed to saturday afternoon.(Nation)

GDP, deflator versus CPI : in the US too they have “statistical glitches”

Following my article on GDP Q2 (read here), you might remember my chart about the deflator/CPI.

I wrote that the 3,7 % on Q1 were a statistical glitch. I remind you the rule : the lower the deflator is, the higher the real GDP (constant prices) is.

When we say that the growth of GDP on Q2 was 5,3 %, its compared to Q2 2007. And it’s for real GDP.

Now, as you may know the USA published thursday a “revised” GDP for Q2. With surprising numbers indeed.

Here is a chart… about the US deflator… You can note exactly the same “statistical glitch” than for Thailand. But longer.

I invite you to read the very good article from Mike Shedlock GDP Much Weaker Than Headline Numbers who seriously debunkes the US “surprising” figures.

It’s a must read if you want to understand what lays behind GDP datas, and if you want to avoid to be taken for a turkey… The strong growth in Q2 in the US is an illusion. The name of the game will be different on Q3 and Q4, exactly like in Thailand (and probably the entire world).

One article summarizes what is coming in the US : Consumer Spending in U.S. Slowed in July as Prices Rose Most in 17 Years (Bloomberg).

July… first month of Q3. After the party…

Police backs off, unions call for strikes… starts to get messy

Things are going fast.

To follow the details, check BangkokPundit.

But in a nutshell :

-5,000 police pull out of Government House

-THAI labour union calls for its members to take leave (after the trains SRT)

-and protests seem to spread upcountry (airports blocked)

Things start to look interesting…

“I’d need just 3 days to force the government to tender its resignation”

You think that you have seen the worst with Thaksin, Samak… Well… Wait for Panlop. The infamous General Panlop, responsible for the brutal assault on the Krue Sae Mosque (among many, many other… “things”)…

“If I had done it, I guarantee that the prime minister would not have survived” said the general in august 2006 when he was fired, following a rather strange assassination attempt against Thaksin…

Well. Two years after, we can hear the same… big mouth.

“If I become involved in the protests, I will need just three days to force the government to tender its resignation,” he said.

Panlop said he would participate in the PAD-led protests should Chamlong be taken into police custody.

But he said he considered himself an aggressive strategist unlike Chamlong, whose approach was moderate. (Nation)

Without any doubt this “committement” casts a very dark light on the PAD. Another one.

Police offers free buses to protesters… PAD makes appeal… and toilets are opened

The Benny Hill Show continues, at full speed. And it’s getting weirder.

3 pieces :

-Police offer free rides for protesters to go home (Nation)

-PAD’s lawyer appealed the Civil Court’s injunction, ordering the anti-government group to move out of the Government House and surrounding roads (Bangkok Post)

-Protesters use toilets of Command Centre (Nation)

Next, the police will offer cookies (home made) and some tea to the protesters ? Or what about… bribes ? ! The police could indeed give tea money to the PAD supporters to make them leave the compound…

And what about the “legal” move from the PAD… An appeal ? It’s huge.

It’s like a guy who is committing a crime, right now. The police comes, does nothing, and just asks a Court to give an injonction to the guy to stop committing the crime. The Court proceeds. And after, the guy appeals (in Court), by contesting the injonction !

I mean we’re touching some strange boundaries there… It’s surreal, nothing less.

Like if invading a gvt’s building could been something… legal for a court !

And the story about the… toilets. Protesters can now use the toilets in the “Command Center” building.

It’s not the Government House. It’s Lunak Park.

I doubt there is anything normal anymore in Thaiwonderland.

But at least, we are laughing.

Are you boosted, stimulated enough ? The government wants more

The government pledged yesterday to raise consumers’ purchasing power, boost export growth, ease liquidity constraints for small- to medium-sized enterprises (SME) and tourism operators and ensure foreign exchange stability for economic growth in the second half.

According to Finance Minister Surapong Suebwonglee, more pro-growth measures are being planned to cope with expected challenges in the second half. In particular, exports are likely to be affected by the US economic slowdown, agriculture prices may fall from expected oversupplies, and private investment and domestic purchasing power could shrink.

Dr Surapong, who is also a deputy prime minister, said a growing concern that needed to be addressed in the remaining months involved tight financial liquidity in the industry sector, particularly among SMEs. (Bangkok Post)

More non sense comming from the clown Surapong (the guy with the smile of a soaps salesman).

This guy has only one motto that he keeps repeating like a headless chicken running amok in the courtyard :

STIMULATION ! BOOST ! MORE !

I mean it’s becoming utterly ridiculous. Let’s buy him a dildo.

On one hand, they keep telling us that growth will reach 6 % in 2008… And on the other hand, they want more “stimulus and boost policies“, more tax cuts, more cheap loans (make them free, it’s even better), more subsidies, more prices controls, more budget deficit, more gifts to the people (for 6 months), more mega-projects. etc.

MORE.

They are totally retarded.

Times of frugality are coming.

Surely, it won’t be good for those pathetic politicians seeking easy short term gains… but that’s the reality of the global environment.

Read also : “Economic advisers propose seven measures to boost Thai economy” (TNA)

Samak has no shame : “Europe uses Aung San Suu Kyi as a tool”

The “Prime Minister” (sorry everytime I need to use quotation marks…) of Thailand, Samak, continues to wallow in ignominy like a pig in a swimming pool of manure, and continues to clean the dirty laundry of the mass murderers who rule Burma.

After :

-Aung San Suu Kyi is “married to a foreigner“

-the general are good budhists and killings are normal

Prime Minister Samak Sundaravej yesterday criticised Western nations for pinning their hopes of bringing democracy to Burma on the release of detained opposition leader Aung San Suu Kyi. Mr Samak met the United Nations’ top envoy to Burma Ibrahim Gambari yesterday and told the diplomat that efforts to engage the military regime would be more productive if the Nobel peace prize winner was left off the agenda.

”Europe uses Aung San Suu Kyi as a tool, [but] you can have deeper discussions with Burma,” he told reporters.

”The [international community] should talk about how to bring democracy to Burma and focus on the constitution and the elections,” he added. (Bangkok Post)

I’m wondering what kind of “deeper discussions” Samak himsekf could have with the generals ?

Philosophical ? Political ? Related to… cooking (the PM loves to cook) ?

Or discussions with… figures ? Sums ?