Archive for January, 2009

Gvt revenues : VAT continues to fall in december

No recovery in sight (read what I wrote in december).

VAT collection dropped 6,91 % in december, compared to december 2007 at 36,86 billions THB (in november, it was -6,56 % y-o-y).


A negative % of change year on year… 2 months in a row (november and december) is unprecedented. Like many other data.

And now a view per quarter.


Overall the situation is not catastrophic. Yet. We are back at the levels of end 2007…

But it’s bad reasoning… because inflation. With higher prices, the VAT should increase. Mechanically. If it doesn’t, then you have a problem.

In any case, it’s going to be long.

You have to figure the long process at work here : a company looses its exports customers... the company is going to cut its costs first, then it will use its cash on hand, its bank will probably cut its support… still no new customers… the company chokes, then it starts to downsize… employees lose their job… those people can’t find new jobs (because the situation is deteriorating around too), therefore they cut their expenses, consume less (VAT collections are going down), invest less (no new house, car) … the State loses money… etc.

It’s the vicious circle of a recession.

Ask yourself : do you see any probability of an improvement in the world, in the next 6 months ? One year ? No you don’t. Of course you don’t.

Even if you’re watching CNBC all the day… you start to doubt

The poison of doubt, supported by more and more data from the ground, is getting into your brain.

Nothing is going to stop the vicious circle, the vicious negative loop that fuels itself.

Look at the details for december…

Everything is going down : total collections for Revenue Department, down by 9,65 % y-o-y. Personal income tax, corporate tax (don’t forget, it’s a lagging indicator… taxes paid now are the mirror of… last year results)… etc.


Source (report from the Ministry of Finance for december 2008 )

Abhisit is “confident” that extra budget will stimulate the economy


His picture says it all… Abhisit, after less than 1 month in office, is already in “Exhausted Parrot Mode”.

Inane economic policies, boat people scandal, global economic crisis, thai exports down and contraction of GDP (probably -3,5 % during Q4 2008)… too much pressure for him.

He is just repeating the same crap, over and over, ad nauseam.

Last one :

Thailand’s Prime Minister Abhisit Vejjajiva said on Thursday he was confident that a Bt116.7 billion (US$3.35 billion) supplementary budget would help cushion impacts of the economic slump, and that the funds would be injected into the economy as early as March.

The premier made the remarks after the bill won parliamentary approval early Thursday.

The government pins high hopes on the extra budget to help stimulate the country’s economy amid global economic downturn. (TNA)

Countries around the world are pilling montains of dozen, hundred billions of USD… With zero effects… What Thailand is going to do with the 3,35 billions USD promised by Abhisit ?

Don’t forget your stimulation pill before to go to sleep… ;-)

48 hours after… in Davos (Switzerland)… Abhisit is obviously excited and starts to change his tone.

Abhisit said the Thai economy was now technically in recession but he hoped it would return to positive growth in the final quarter of 2009. (Bangkok Post)


International air traffic : “unprecedented and shocking” free fall in december (passengers and freight)

Another “unprecedented” news (read here). I told you : it’s every day now.

International air freight traffic plunged by 22.6 percent on the year in December, an ‘unprecedented and shocking’ free fall, the International Air Transport Association said on Thursday.

‘There is no clearer description of the slowdown in world trade,’ it said in a statement, adding that international passenger traffic had dropped 4.6 percent year-on-year.

For the full year of 2008, international air cargo traffic was down 4 percent, while international passenger traffic posted modest gains of 1.6 percent, according to the Geneva-based body. (Forbes)

And what about sea freight ? Unprecedented too in Thailand (read here). Thai exports results ? “Unprecedented” too.

So ask yourself : how are going to be january, february and the following months ? “Unprecedented”. And how will be the crisis fallouts ? “Unprecedented”.

You want more ? Yesterday, USA… Philly Fed Index was published. “Unprecedented” low.

You want more ? Yesterday, USA, “Record Low New Homes Sales in December“.

More ? Today, Japan : “Factory output slumped an unprecedented 9.6 percent in December“.

Do you start to understand ?

Whether we received data in value, volume, or percentage of growth year on year, month on month, moving average etc… we get “unprecedented” readings. More and more.

The black swans are multiplying.

[Have a look on this blog... 20 charts with data released in january to show the on going economic disaster in the USA].

Thunderstorm : GDP shrank -3,5 % in Q4 (first estimation)

The Finance Ministry’s Fiscal Policy Office or FPO reported the expansion rate of Thailand’s Gross Domestic Product or GDP for the fourth quarter of 2008 at minus 3.5 percent, a consequence of the weakening global economy causing lower exports and declining private consumption and investments inside the country.

FPO Director-general, Somchai Sujjapongse admitted that Thailand’s GDP is likely to continue to shrink in the first quarter this year if the allocation of the state’s fiscal budget is delayed. He says the government must enhance the economy by using fiscal and monetary measures, as well as weakening the baht to raise the nation’s competitiveness in trade and to prevent a higher current account deficit. (TOC)

Watch out. This is a first (early) estimation… The official GDP report for Q4 will be published on february 25, by the NESDB.

It’s a blow. A blow to the suckers, the lalalanders, the liars, the daydreamers, the “bottomers”…

I was right. Read my article on GDP Q3. ;-)

I know : it wasn’t difficult. Just plain common sense.

But the past is the past. The real burning question is : what will happen in 2009 ?

The call -again- is easy. Negative growth, AKA recession. For the whole year.

Due to base effect (+ public spending are going to be frozen in january and february because of the new government), Q1 2009 will be under pressure.

However, because of the deflator... they could save the day. Inflation is crashing, that will help to present better figures (for real GDP, AKA at constant prices).

In any case, the pathetic “stimulus” package and other lunatics policies decided by the Abhisit government won’t change the reality.

The harsh reality of the first truly global economic and financial crisis.

Of course, the “bottomers” are going to tell you (they have started) that we are going to “rebound” during the second half of 2009.

Sure. Demand from Mars and Jupiter’s inhabitants is going to save our exports. And our economy.

Welcome to the Rabbit Hole.

[exactly like I said... the pressure for a "weaker THB" is going to increase. A lot. Read my article on the Bank Of Thailand... It's tasty.]

Exchange rate : the BOT is lying… “USD-THB is not the whole picture”


An interesting article in Bangkok Post with some fresh statements from Tarisa, the governor of the Bank Of Thailand.

Put on the side the usual sleep good bullshit about “room for fiscal policy”, interest rates cuts, blabla etc.

But one line is striking about… exchange rate.

On exchange rate policy, Dr Tarisa said the baht had been stable relative to regional currencies. A policy to push the baht weaker would only hurt confidence.

A weak currency shows that a particular country has a confidence problem,” she said.

The baht has been supportive for international trade. It has weakened against our trade partners and trade competitors. Comparing the baht against the dollar does not represent the whole picture.

It’s interesting because it’s the first time Tarisa says so clearly that she doesn’t mind a “strong” THB (when I write “strong”, everything is relative of course). Let’s reformulate : the BOT says it wouldn’t like a “weak” currency.

However, the last sentence is a lie, a fantasy.

The exchange rate USD-THB is everything, is the whole picture, as far as trade is concerned, as I showed here (chart).

81 % of thai exports are paid… in USD. ;-) And those are… BOT statistics.

International trade for Thailand means US Dollar. Period. Like it is so for the neighbouring countries.

Tarisa tries obviously to lull us to sleep, to divert attention. Who is going to be fooled by this gesticulation ? She’s losing her nerves.

Come on Tarisa, let’s swallow the red pill.

Month after month, the pressure is going to increase on thai exports (november and december are only an appetizer of what will happen in 2009)…. and the pressure will increase on Tarisa’s shoulders… because precisely of the exchange rate USD-THB ! (to weaken the THB versus USD would… immediately “boost” exports)…

Let’s see how she will handle the pressure… ;-)

[exactly like I said... the pressure for a "weaker THB" is increasing. A lot. Read my article about GDP shrank 3,5 % on Q4...]

Boat people scandal : from sea+death to jail+fine… there is an improvement

66 illegal Rohingya migrants sent before a Thai judge in this gateway to Myanmar on Wednesday were fined 1,000 baht each (nearly US$30), and when none were able to produce the funds, the judge sentenced them each to five days imprisonment.

Ranong police superintendent Pol.Col. Veerasilp Kwanseng earlier explained that the 66 Rohingyas were the adult men present among 78 boat people detained by the navy on Tuesday.

Twelve of the Rohingya migrants were found to be minors– underage children looking for work, but too young for the Thai authorities to prosecute. The 12 are now being cared for in police custody at the Ranong immigration police office. (TNA)

An improvement If we may say. Definitely… (I would like to add a smiley, but It would be improper).

Question : what will happen after 5 days ? The sea again ?

In a way, the thai authorities are… trapped. Ater the terrible fiasco of the boat people scandal, they are trapped.

And now, they have to take into account what the international community is saying.

The first courageous decision from Abhisit : return of taxes on diesel

At last ! It took long time, and many people within the government didn’t agree… but at last they have decided to scrap the diesel subsidy (part of the Samak Plan) that was decided last july.

At last.

With falling oil prices, this subsidy became totally obscene. Nonsensical.

The Cabinet on Wednesday gave the greenlight to the increase of excise taxes on petrol and diesel, to encourage the public to save energy.

The decision will take effect on Feb 1.

Among the six energy-saving measures approved by the Samak government, the Abhisit government decided to scrap the excise tax cut. As a result, the excise taxes on all fuel products would return to the pre-July 2008 level.

Jesus… Nation is so stupid… What a bunch of brainless people.

Samak Plan was absolutly not to save energy ! It was to cushion the inflation of prices ! And it leaded to… an increase of oil consumption (look the chart).

Excise taxes on petrol would reach the limit of Bt5 per litre from Bt3.685-Bt4.685, while that of diesel would be Bt3.6-Bt4 per litre from Bt0.005-Bt2.405. Meanwhile, the tax on gasohol E85 is cut to Bt0.75 from pre-July level at Bt2.5795, while that of gasohol E10 and E20 is raised to Bt3.317. Biodiesel B5’s tax is maintained at Bt2.19.

Finance Minister Korn Chatikavanij said that these measures would promote alternative energy and agricultural products as well as reduce crude oil imports.

“The government should earn additionally Bt1.572 billion from these measures,” he said. (Nation)

This guy is a pathetic liar. It will bring much more money than 1,5 billion… Because it costed much more. ;-) It has even been a disaster for public finances (read my article).

And they need badly that extra money to finance, for instance, the stupid 2000 THB allowance for every living organisms.


But of course, I forgot that they wanted to create a subsidy for the end of the subsidy (read here).

It is now confirmed.

Energy Minister Wannarat Charn-nukul, as chairman of the National Energy Policy Committee, said the committee resolved on Thursday to help delay the full increase in pump prices to alleviate consumers’ burden. Meanwhile, pump prices could be raised by no more than Bt1.50 per litre in the subsequent round.

“It should take about two months for the pump prices to be increased to match the higher excise taxes,” he said, adding that the Oil Fund would need to spend about Bt3.5 to Bt4 billion to subsidise the prices. (Nation)

All this circus to “save” 2 months… What a bunch of pathetic bozos.

4 products added to the prices controls list

An additional 4 products will be listed by the Commission on Price and Services as controlled products, they include coffee, corn, tapioca and wheat flour, which will increase the number of controlled products and services to 40 items from the previous 36.

The reason given for the need to list coffee and wheat flour as controlled products is due to an increase in local consumption of these goods with a restricted number of producers on the market, which arouses concerns regarding a monopoly, especially in the area of coffee. Measures for informing and transferring stocks might also be put in place.

Corn for animal feed and tapioca will also be proposed as controlled products with measures introduced to limit the transfer in the border provinces, in order to solve the problems of smuggling agricultural products from neighboring countries for pledge schemes, which gives Thai farmers a market disadvantage.

The Commission on Price and Services has previously listed garlic as a controlled product in order to solve the problem of smuggling garlic from China into Thailand. (TOC)

We talked a lot about this list last year, during the peak of inflation (Samak government).

So it’s tasty to see that whatever the government is… the thai administration continues its work. Unfazed.

Change with Abhisit ? The guy obviously feels very good into the shoes of his predecessor.

Anyway. it’s interesting to see the thai bureaucracy mixing with delight bananas and oranges, using one tool for very different situations (or targets).

-price control due to an higher consumption, and the fear of a so called monopoly.
Here the idea is to cap the prices, because they could go up. Of course the bureaucrats could instead boost the competition to solve the problem. But that would be too easy…
Anyway, I strongly believe that this monopoly story is a pure fantasy… They just want to curb inflationary pressures.

-and then price control to prevent… smuggling. Same logic than for the garlic last august (read my article here). But here the idea is totally… reversed ! The target is to prevent the prices… of going down.
But of course, it won’t work. Cheap chinese garlic will continue to arrive… because it’s cheaper. That’s the point. Voila how you create a black market.

Overall, prices controls are not a good tool. Inefficient. With a lot of negative secondary effects.

For that matter, it’s the perfect bureaucratic tool. ;-)

And this is precisely why Thailand loves to use it.

I’ve found one sensible thai politician who sees clearly through the crisis

In 2006 or 2007 I would have probably questioned the sanity of Juti Krairiskh with his “sufficiency economy” idea.

At that time, the Junta, the clowns in their shiny uniforms (yes we had a military Junta… people forget so easily) were toying with the “sufficiency economy” philosophy, while buying mountains of military gears. ;-)

It’s was a scam. A vulgar scam.

Fast forward. 2009. The Big Freaking Global Crisis.

Most of the politicians don’t know how to react. Because the situation is unprecedented. And when it’s unprecedented, politicians have only one strategy : the head into the sand and the bullshit wrapped with gift paper.

But good news, at least one thai politician is giving a realistic (AKA harsh) summary of the current crisis, in the thai english press.

Let’s have a closer look.

MP Juti Krairiskh from Phitsanulok yesterday called for the government to turn to sufficiency economics to save Thailand because most other countries are now tanking into the “toilet”.

Today the European Union, China and the United States, which are our export markets, are all reeling under recession. All the countries will be dumping their goods like crazy. Trade agreements will be breached,” he said.

Juti, who belongs to the New Decade Group led by Banyat Bantadtan, urged the government to come clean on the real state of the economy, given the deterioration in exports and the current account.

The global economy is facing a recession. The US won’t recover for three years. China might be the only hope, while most countries have crashed into the toilet. But China is waiting to crash into the toilet too,” he said. (Nation)

This man is full of common sense.

“Trade war”, “3 years” and “toilets” those are prescient words… Key words.

Now that we have the diagnosis, please pass the salt and the prognosis.

Under the circumstances, Thailand must rely on sufficiency economics, as championed by His Majesty the King, to save itself, Juti said.

The government has the responsibility to promote and educate the people about the philosophy of sufficiency economics, he said.

In practice, Thailand would not shy away completely from external demand but would focus on promoting domestic resources and consumption so that despite any external shocks or depression, it could stay afloat.

The economic difficulties will continue into next year so the government must tell the people how it intends to relieve their hardship and get revenue for its spending plans.

“It must be based on reality and on how to realistically save the country,” he added.

“Sufficiency economy” is nothing more than “living by your means”. It’s common sense. Royal or not, that shouldn’t be the question.

When it’s not used as a scam against the people (“be poor, shut the fuck up, and let me buy an obscene Mercedes“), this basic idea is certainly a good one.

It’s a gauge. Abhisit The Clown with his 2000 THB special allowance given to every living organisms doesn’t understand the meaning of it. Obviously. ;-)

Let’s go further : Thailand will suffer. It’s unavoidable. But it seems that the country has good cards to suffer less than western societies.

A few reasons :

-Thailand doesn’t have the huge liabilities, unfunded promises, that are going to totally zombify and shake the economies of western countries (social security in Europe, medicare in the US, retirement funds, pensions etc.).

Just think about retirement funds and pensions… It’s an atomic bomb. US model or french model… it’s nothing less than a Ponzzi scheme… A super huge Madoff Fund… You can’t defeat demography. But so many stupid people think they can, it’s scary.

-Thai people can obviously live with much less than westerners, therefore (base effect) to go lower will be less painful.

–Even though Thailand has an inefficient and kafkaian administration and public sector… it costs much less in proportion than in Europe for instance. Therefore, it will be less a burden to maintain.

-Unemployment ? Sure. It will to rise. But we already have 42 % of the labor force in agriculture… That’s a huge cushion. Do we have a cushion in Europe ? In the US ? Nil. Nada. Zero. Plus, they will always find buyers outside the country for the thai food surplus.
We might not find new buyers for new cars… But food will always trade.

-Informal economy. To rely on official GDP figures (like myself too often)… is certainly a mistake. Black, gray, underground, informal you name it… this second or even third economy is well developed in Thailand. It’s like a national sport ;-). And it could surely provide another cushion to absorb the shocks.

-Resourcefulness. Necessity is always law. Many thai are probably more resourceful than people living in Europe, totally addicted to state’s Nanny support (that is going to be under great stress because of the crisis).

Add the classic ideas : weather, family support, social structure, Thailand has oil, etc.

So as you see, me too I can be optimistic. ;-) Sometimes.

But watch out… to have trump cards in your hand, doesn’t imply that you will be able or willing to use them…

The biggest risk actually for the country is of course the political risk…

Dumb and corrupted politicians and elite, plus the perspective of the royal succession… those are the biggest challenges.

What’s up Abhisit Santa Claus ? The special allowance extended to all living organisms

Speaking on his Sunday live TV talk programme on NBT, the prime minister said the government’s 2,000 baht stimulus plan had been questioned over its coverage. Some people had raised concerns the programme would bypass them.

Mr Abhisit said the government was considering extending the scope of the scheme.

Additional groups to receive benefits from the 2,000-baht distribution include state enterprise staff, local administration officials, the staff of independent organisations under the constitution, and teachers at private schools. (Bangkok Post)

What an amateur… What an amateurish Prime Minister. He’s just discovered that when he gives a candy bar to a group, other groups will fell bad and will ask for the same !

So let me recap what Abhisit did with his brillant idea of a 2000 THB gift (sorry “special allowance”). I don’t make it up. It’s documented.

2000 THB for income up to 10 000 THB (january 12). For around 8 millions of people (linked to Social Security and civil servants).

Income up to 14 000 THB (january 12).

Income up to 14 999 THB (january 14)

New groups will benefit from the allowance (january 25). We don’t even have a total number.

We are waiting with impatience for the version 5. Two thousands THB for all cats, chickens, cockroaches and micro-organisms living in Thailand perhaps ?

I mean how can we qualify such behaviour ? Only one word comes up : clown.

Furthermore, I’m waiting to see how they are going to give the money to the other groups… For Social Security and civil servants it’s easy they have the files and the bank accounts (read here)… but for all the other people ?

Change with Abhisit ? Yes we can’t.

Gold market : another unprecedented event… shops close

Another “unprecedented” event has occurred in Thailand (for the previous one, read here), this time on the gold market.

Gold shops in Bangok’s Yaowarat district – famed for top-quality gold products – discontinued business during the Chinese New Year for the first time in history, planning to reopen tomorrow.

Jitti Tangsitpakdi, president of the Gold Traders’ Association of Thailand, was adamant that the closure was due to price volatility rather than the high volume of resales from consumers cashing in on the higher prices.

Before the Chinese New Year holiday break began on Sunday, gold shops in Yaowarat had sold a total of close to two tonnes of gold, worth around Bt6.8 billion.

Yet, on Saturday – the last day of business before the break – local gold prices jumped Bt450 in a single day, to Bt14,600 per 15 grams.

“World gold prices have been jumping up and down several times in a day,” Jitti said. “Shops have had to change their prices many times, so we decided to stop selling gold on Monday and Tuesday.” He added that gold markets in other Asian countries had also closed during the holiday period. (Nation)

This is untrue. Nothing less. Here is the proof.


Friday, they sold a lot of gold (because Chinese New Year). But you see on the chart that the big price jump occured during New York trading hours friday (when Thailand was already sleeping)…

Therefore, the price of gold in Thailand jumped… saturday. And saturday… it can’t move anymore, because international markets (New York and London) are closed.

(look here the Gold Traders Association of Thailand)

Therefore, during the week end, it’s the price set friday that should apply… ;-) Should.

Panick. Some people who bought friday… wanted to sell saturday, to pocket a quick profit ! And this is what motivated the shops to close. They were afraid to endure a cisor cut… by buying back sunday and monday at high prices… before a big drop of prices the following days.

Or… they didn’t want to sell at 14 600 THB sunday and monday… because they expected the price to shot up… again… now. By waiting 1 or 2 days, the shops could increase their profits…

And apparently they could be right (monday morning in New York, gold continues to go up !)…

In other words, down or up : they have cheated with market rules. ;-)

They did the same than stock market operators who decide, in case of emergency (sharp fall), to close the market or suspend a stock for instance.

Anyway… “unprecedented “, as I wrote many times, is the main key word nowadays.

You want to understand the scale of the Big Global Crisis ? Learn how to say the word “unprecedented” in every language. ;-)

Nothing is normal anymore. Black swans are multiplying.

Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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