Tourism : international arrivals down by 30 %… and counting

The Association of Thai Travel Agents (ATTA) projects international tourist arrivals to Thailand through its members will decrease by 38% to 1.5 million this year due to the persistence of global economic problems and local political instability. [...]

In the first 10 months of this year, ATTA reported tourist arrivals through its members dropped by 30% year-on-year to 1.257 million. The lowest point was October with only 89,388. (Bangkok Post)

The figures are adamant. What is more funny are the explanations…

“Initially, we expected October arrivals of 140,000, slightly lower than last year’s 143,746, but the strike by railway workers caused many rail-based tour groups, especially those from Malaysia and Singapore, to cancel their trips,” he said.

The incident also affected European visitors who bought rail packages, as they simply moved to other countries.

Mr Surapol added that the greatest plunge in visitors came from South Korea, whose arrivals dropped by 56.5% to 70,526, followed by Japan, off by 38.4% to 135,202, and Finland, down by 37.9% to 8,095.

Do you know a lot of european tourists buying “rail packages” to visit Thailand from another country (we are talking here about international arrivals)… ?

Anyway, let’s be serious. The Green Shoots Mania hasn’t “touched” the masses of international travelers. Obviously.

The party is over. They need money to pay back the banks bailouts, to pay for the insane keynesian policies of all the government in the world, many lost their job, their house, and they are burried under debts (public and private)… so they have less money for the bagatelle, AKA some holidays in Thailand to get their skin burned by the tropical sun, eventhough they love it.

And ask yourself : will they have a higher income tomorrow compared to today ? And compared to yesterday ? It’s all about income, AKA solvent demand.

This a basic principle that the clowns don’t want to understand. Income. Income. Solvent demand. Jobs. And debts.

A “jobless recovery” like they say is nothing more than a pathetic oxymoron. There is no sustainable recovery, only a statistical fart as far as GDP is concerned, and a propaganda fantasia sold by corrupted politicians, totally burned out, scared of their own shadow.

And there won’t be any recovery, while developed economies are still destroying jobs.

Banking system, thai understanding of “liberalisation” : “foreign banks can open 2 more branches”

BoT pushes liberalisation under new plan, writes Bangkok Post.

As any normal human being, you would feel excited. So you decide to continue to read. And gradually, you feel baffled and eventually you end up in tears. That’s the beauty of Thailand : a perpetual source of exercise for our zygomatic muscles.

Ready ?

Thailand’s new financial master plan will offer greater opportunities for foreign banks, says Bank of Thailand governor Tarisa Watanagase. [...] The central bank’s second financial-sector master plan would gradually liberalise the sector from 2010-14. [...]

From 2012-13, the central bank will allow greater competition within the sector, starting by allowing foreign banks to open up to two branches in addition to their head offices.

Do you know, as of september, what is the total number of branches of commercial banks in Thailand ?

5 673.

I repeat : 5 673

I know, the proper word is : “surreal”.

(source BOT, FI_CB_060_S2)

So after giving a huge, astronomical boost to foreign banks (allowing them to open 2 more branches)… then come the final blow :

The central bank has no plans to offer new universal banking licences, seeing the current 15 banks as enough for the country’s needs.

Voila. The words “competition” and “liberalisation” in Tarisa’s mouth mean : “we don’t need more banks”.

Surreal. Just surreal. But so tasty. Viva Tarisa !

PS : since I study Thailand, there is one great mystery I was unable to solve : do they really believe the non-sensical words coming out of their mouth… Or do they really think that foreigners are totally and definitely stupid ? To this day, I’m still wondering…

Exports in september… Recovery ? The suckers, once again, fail to look at the details

Even ThaiCrisis has been fooled ! I use the infamous word “Green Shoots” after the first publication of the total amount of exports for september.

Abhisit was proud to pronounce the “R” word. Recession ? Amid an ocean of artificial pleasures (and potent Lala drugs) during the Asean Meeting, it was more like “Recovery”. Same for the so called Commerce Minister. And of course, the stupid journalists answered “sir yes sir” (and I put Bloomberg in the same basket as Bangkok Post and Nation).

First the headline :

-exports reached 503 billions THB in september, against 448 billions in august. Year on year (compared to september 2008), it’s a decrease of 8,4 %. Far better than the -16 % recorded in august.

Source Bank Of Thailand.

But as usual, we need to look at the details…

What caused this surge in september, compared to the previous month ? The car industry ? The IT industry ? Agriculture ? Such factors would without any doubt fuel the “recovery” theory. Right ?

But what do we see instead ?

A surge of the category… “Pearl, Precious Stone and Jewelry”. Yep ladies and gentlemen, a surge of 45 % in one month… And an increase of 55 % compared to september 2008. Talk about a wild Green Shoot !

Here we go again… Exactly like what happened last february… Someone is sucking out gold from Thailand, and Thailand is eager to please.

Now ask yourself : is it healthy ? Can we like the clowns at the government talk about “recovery” ?

Does the fact of selling gold creates… any jobs ?

Attracted by high gold prices and probably because they badly need cash.. thai people are selling their gold. And then this gold is exported. Is it healthy ? Other people in the world (China)… are buying gold. Who do you think are the smartest ?

Abhisit can turn 99 times the (golden) spoon in the rice bowl and throw away some incantations (“recovery”, “recovery”) we are not out of the wood yet.

I repeat : not yet.

The recovery could come… but the facts remain stubborn : not yet.

Chart, exports : at last, a Green Shoot… – 8,5 % in september

At last ! A Green Shoot…

And, obviously -8,5 % in september (year on year) is better than the -25 % we had in july.

The Commerce Ministry has released the first data for exports in september : 14,99 billions USD.

Imports fell 17,9 % at 12,92 billions USD.

The Bank Of Thailand will publish the details on october 31.

A classic comment (from an economist in Singapore), in line with the doxa.

When base effects kick in in November, we will probably see stronger headline numbers. Exports will continue to get better. (Forbes)

Base effect… In november last year exports in value dropped like a stone. Therefore, the % of difference with november 2009 is likely to be less “uggly”.

http://www.bangkokpost.com/business/economics/157696/exports-imports-down-in-sept

To face debts, Thai Airways plans to raise… capital

Thai Airways International, Thailand’s largest airline, plans to issue shares next year to raise funds for repaying short-term debt, its newly appointed president said on Monday.

Piyasvasti Amranand did not say how much money the flag carrier will raise. But 29 billion baht ($869 million) of debt matures next year, he added.

Kosin Sripaiboon, a senior analyst with UOB Kay Hian Securities, said he expected Thai Airways to raise almost 20 billion baht ($600 million), or issue 800 million new shares, half of its current registered capital of 1.7 billion shares.

The carrier has a total debt of 160 billion baht [4,8 billions USD]

“We need to raise capital because we have a lot of short-term debt to be repaid,” Piyasvasti said.

“We are also trying to convert our short-term debt to longer maturities. As the long-term debt has a maturity of six years, that doesn’t match our funding for plane procurements,” he told reporters on the first day of his top job. (Reuters)

Let me translate what the new president seems to have discovered on his first day on the job : Thai Airways is broke. Speak about a discovery !

Let’s review the titles of some of my articles about the national carrier.

-Thai Airways : “The situation has deteriorated from bad to worse “...
-Thai Airways : is there any captain on (the) board ?
-If… if… if and if… Thai Airways will return to profits
-No cash to pay new airplanes, airports closure, economic downturn… Thai Airways is crashing
-Peter Principle : desperate Thai Airways relies on… government officials to fill its aircrafts and seeks 1 billion USD
-Thai Airways : tales of the daily corruption

You have an image coming to your mind ? Yes, you’re right : a crashing airplane.

Sure… we could blame the high oil prices in 2008… the political crisis… the flu… then the recession… then the extraterrestrials, etc. This is exactly what the new president is doing.

Long gone are the days when Thai Airways was so terribly exotic… when tourism increased every year… when the reputation of the airline was a rising star…

Those externals factors had a cruel effect : they expose the company, naked, in front of the whole world. It’s impossible to lie anymore, to hide behind a reputation and a never ending tourism growth. The party is over. Now it’s time to pay, and the smart money is unlikely to answer the call.

Thai Airways is a public company (the thai government is the first shareholder), baddly managed, indebted, overstaffed, with an old fleet, acting like a reservoir of privileges for many lunatics in unform (the cousin, the maid, the mia noi of General X, colonel Y etc.), frozen in time, rapped and abused over and over by politicians, and unions too.

A perfect cas d’ecole. A negative show case.

So who is going to buy this generous offer ? Shares from Thai Airways ? To invest now in an airline, and in Thai Airways, would be just suicidal.

The thai government ? Broke too.

And what about dilution ?

But eventually, of course, someone will pay : the thai people.

Chart, gvt’s revenues : -8,8 % for fiscal year 2009

End of september, end of the fiscal year for the thai government. Data have been updated on the website of the Finance Ministry.

Result ?

Total revenues (gross) : 1 674 billions THB, -8,8 % compared to the previous fiscal year (october 2007 to september 2008)
Corporation taxes : -14,8 % (392 billions THB)
Personal income taxes : -3,5 % (197 billions THB)
VAT : -10,8 % (at 343 billions THB)

And we are talking in current THB… So factor in inflation plus the several “stimulus” packages… that’s weak.

What about september alone ?

The VAT is at -10 % compared to september 2008. That’s better than august (-16 %). Corporation taxes take a hit at -82 % (128 billions THB).

Corporation taxes should remain under pressure.

Exchange rate Drama : more non sense coming from so called “exporters”

The Exchange Rate Drama is unfolding. And some lala businessmen are crying like babies.

Thailand’s exports are unlikely to achieve 10% growth next year if the government leaves the baht’s appreciation unchecked, exporters warn.

“Ongoing baht strength will harm Thai shipments and weaken our competitiveness,” said Pornsil Patchrintanakul, deputy secretary-general of the Board of Trade.

Mr Pornsil was one of a group of leading executives from more than 50 trade associations who on Monday met with Veerasak Jinarat, the vice-minister for Commerce.

The baht, quoted Monday at 33.35 to the US dollar, is currently trading at a 14-month high and is up 4.4% since January.

Exporters said the baht has appreciated significantly faster against the dollar than competing currencies such as the Chinese yuan or the Vietnamese dong, hurting Thailand’s trade competitiveness. (Bangkok Post)

Who is Mister Pornsil ? A guy who has a very simple view of business : rewards and no risks.

His only ability to sell something outside Thailand is to rely -not on merit, talent, intelligence, better products, courage and why not luck-… but on cheap currency.

In the ideal and lala world of Pornsil, international trade would be someting like that :

-Hello mister foreign buyer. I sell to you 1 kilo of rice, 1 t-shirt and 1 air conditioner… let’s see total cost 200 USD… Special price for you. I will get 252453456533 millions THB thanks to the exchange rate. It’s magic. Yeah that will do. I could buy 17333 condos for my daughter, my nephew, my maid and mia noi. And maybe 6536 BMW cars. Pink color. Okay khrap ?

When the USD – which is the only currency that matters as far as exports are concerned (read my article here)- when the USD is falling… then small fry people like Pornsil start to freak out.

Not even 1 minute, Pornsil is able to think that a lower USD will lower the huge oil bill Thailand has to pay every month, and the bills for many other raw materials and parts imported. And therefore, will lower the costs of many businesses… Hence, the costs of exporters !

I mean it’s Economy 101. Minus 101 should I say. First grade school level. But obviously, it’s too complicated for Pornsil’s 2 neurons brain.

Furthermore, Pornsil is unable to understand that if his pathetic export company is selling less It’s not because another country can give a better price thanks to a better exchange rate… But instead, because DEMAND (solvent demand) HAS BEEN REDUCED… The crisis, hello ? The recession ? Oh my god… I forgot that Abhisit told us that the economic crisis was over. My mistake. One point for Pornsil.

Again, it’s way too complicated for all those clowns.

Last but no least, I would like to refresh your memory, with a (now) famous statement from Tarisa, our dear BOT governor. January 2009. Like an eternity away.

“Comparing the baht against the dollar does not represent the whole picture.”

Cheers Tarisa. You’re a winner.

Dance of the suckers : thai Central bank “intervenes” to curb THB gains

We had an interesting string of events this week :
-dollar was hammered
-gold shot up

… and

Asian central banks said to be intervening in currency markets overnight by buying dollars included South Korea, Hong Kong, Taiwan, Thailand, the Philippines and possibly, Indonesia, according to analysts. (Reuters)

A pathetic fart. And the perfect Dance of The Suckers.

And indeed the Bank Of Thailand does confirm :

The Thai baht, Asia’s fourth best-performing currency this year, is rising too fast this month and the Bank of Thailand is taking action to slow its rise, an assistant central bank governor said on Thursday.

‘Somedays its strength is beyond economic fundamentals,’ Suchada Kirakul told reporters. ‘The baht is strong and we are still taking care of it.’

‘Our economic factors are not as good as others’, so we (our currency) does not need to rise as fast as theirs’,’ she said. [...]

The BOT has been in the market frequently in recent weeks to curb baht gains, but the currency has climbed fast after breaking 33.50 — a level which the market suspected would trigger intervention. (Forbes)

First, you’ll notice : they spend a huge amount of energy to convince us that the Recovery (hats off) is there, but… meanwhile they tell us that the thai economy is not as good as others… And therefore, cry baby, the local currency should not increase versus USD.

Let’s make it clear : the THB is not “strong”. What is happening is that the USD is falling. Period. And a lot of smart money is going into asian and emerging countries. It’s mechanical : offer and demand… People want to invest in Asia (and to fly away from USD), so they have to buy local currencies, and so they are selling US. Therefore the exchange rates of those local currencies are going up.

But it’s too complicated for the Suckers. It’s politically incorrect. Because the Recovery is nothing but a fiction, they all want to boost their exports… at the expenses of others.

It’s the famous Beggar thy neighbour policy, through competitive devaluation (or at least competitive-not-valuation).

The famous blogger Mike Shedlock summarizes it perfectly :

Every country wants to grow by ramping up exports in a world of decreasing consumer demand. To achieve that end, every country wants its currency to be weaker against every other currency. Of course that is logically impossible.

Logically impossible indeed. But again, it’s too complicated for the Suckers to understand this.

The BOT is buying USD through forward positions.

(Source BOT)

From a low point of 3,68 billions USD end of february… the total forward positions increased to 15,63 billions last week.

It means we can’t even see the “‘interventions” of this week in the current chart (we will have to wait 7 days more).

To know more about forward positions, you should read my article of last december : The case of the forward positions : the coal mine canary.

Forward positions = Bank of Thailand’s forward obligations to buy (long) or sell (short) foreign currency against Thai Baht.

For that matter, they are like a “peek” at how the reserves will behave in the future.

By the way, I was perfectly right. I wrote that eventually the BOT would follow the asian bias, to save thai exports.

And I spoke about the “joker” too.

And this is the true frightening part… USA are doing exactly the same (but for different reasons, not exports). The USD is condemned to loose value. It’s inescapable (zero interest rates, massive printing of money, mountains of debts, etc.)

So you start to understand the problem : we have a freaking race toward zero, a race toward the bottom. What could happen if all the countries in the world see their currencies going down ? At the same time ? It’s insane.

Yes… this is exactly what is happening now… and this is why gold is going up ! Paper money is toilet paper.

Anyway. Back to the BOT and asian central banks.

Interventions do not work. They can’t control the forex market. Because it’s just too huge. Japan was a famous “currency manipulator”… At least on intends side… But it didn’t work. So of course, if we speak about scale, the BOT’s small farts will change nothing.

Only one thing could work… They did it not so long time ago… You don’t remember ?

Capital controls !

Yes ladies and gentlemen… In december 2006, three months after the Coup… And the situation was exactly the same : the THB was shooting up against the USD. At that time already, the obsession was to save exports sector.

One last word : when we speak about “saving thai exports”… it’s not really a matter of competition. I think it’s even simpler than that. It’s a matter of liquidities. For the whole economy.

Thai companies convert in THB (most of) the USD they earn outside Thailand (this exchange was even compulsory before... the BOT changed the regulations in 2008 , read here).

It’s very simple to understand :

-1-with an USD-THB exchange rate of 40, when you export 1000 USD of goods, you receive 40 000 THB. You feel rich. You can use this money to invest, to buy stupid and overvalued condo in Bangkok… The builders will earn money… Workers have work… The economy is running. People are happy. So politicians are happy too, and they can steal more money.

-2-with an USD-THB exchange rate of 33, when you export 1000 USD of goods, you receive 33 000 THB. You feel much poorer. You won’t buy a third condo for your children. Or to rent to stupid foreigners who won’t come to Bangkok anymore. Builders will earn less money. Unemployment rises. The economy is choking. People are not happy… And politicians are scared… And they can’t buy another Mercedes Benz with the money they can’t steal (and that’s really inhumane ).

Liquidities = lubricant = fuel = gasoline onto the fire.

The thai economy (along many other asian countries) is not really healthy (at this stage). A large chunck of the “growth” we have had in the recent years… was a mirage. Fueled by cheap currencies. Remove the lifeline of a strong USD… what do we have left ?

Abhisit’s smile ?

Not quite enough to save us…

PS : I advise you to read the latest piece of Eric Janszen, about inflation on the long run… What he calls inflation via currency depreciation : the stealth currency devaluation. It’s radiant.

You’d think the deflationists would wonder how oil prices are above $70 in 2009 when demand is lower and inventories higher than in 2001 when the economy was nominally 15% smaller and oil prices averaged $22 after a very brief recession. [...]

The U.S. monetary system is not on a gold standard in 2009 as it was in 1933. Instead the U.S. and the rest of the world monetary regime employ a de-facto global oil standard.

To prevent a liquidity trap via currency depreciation, instead of depreciating against gold the U.S. government depreciates the dollar against oil.

On one hand, we have Mike Shedlock, the Great Deflationist. And the other hand, what Mish calls the inflationistas. This debate deflation versus inflation is raging. Personally I’ve picked up my side : both.

Mish is right : we are in deflation (assets prices / debts deflation). But Janszen is right too : on the long run, the bias toward a slow debasement of the value of money is just too appealing for the politicians (nothing new, the roman emperors did the same).

Green Shoots Som Tam : number of bankruptcies explodes in august (+428 %)

The number of “dissolved companies” (= dissolved and bankrupt : LTD companies + LTD partnerships + Ordinary Partnerships) has exploded by +428 % in august, compared to august 2008 (5 329 versus 1 009).

And furthermore, the striking jump in may (12 384 companies dissolved) was absolutely not revised.

I guess this is another Green Shoots Story ?

Everything is fine.

And it’s a lagging indicator… It takes months, sometimes even years… to close a company in Thailand… It was so difficult before that (the law has changed since) it was easier to put businesses at sleep… No need to close them down. Too complicated. Why bother with papers ? And the thai bureaucracy was so stupid… Anyway.

My point : the massacre we see now… is like a picture taken a few months ago… Now ask yourself : will the situation improve in the coming months ? Do you believe we will have less or more bankruptcies ?

Congratulations, you just have won a picture of Abhisit (with his grey suit, in Super 150’s Fine Virgin Wool).

Next time, if you’re lucky, you’ll get a picture of me. Running naked in a Green Shoots forrest.

(Source Department of Business Development, direct link here )

Chart, foreign reserves, and exchange rate

Gold 1, 2, 3 lift off ! 1042 USD/ounce last night ! Cause and effect of a crashing US Dollar…

Time to update the charts about the foreign currency reserves of the Bank Of Thailand.

Like virtually all central banks in the world, the BOT is happy (… not really) to buy USD.

Because, like virtually all countries in the world, Thailand is obsessed with the exchange rate in USD. They would do anything, even crashing their own local currency, to save the appearances and to save thai exports …

(Source BOT, table EC_XT_031)

Those trees won’t be able to grow to the sky…

We should have some real sport before the end of the year…

3G Phone licences : the minister criticizes foreigners and… Abhisit agrees

The long-delayed auction of third-generation (3G) mobile broadband licences scheduled for mid-December could be put on hold indefinitely if Ranongruk Suwunchwee has her way.

The Information and Communications Technology (ICT) minister wants the auction put off as long as possible, reasoning that the conditions deter state telecom enterprises and favour foreign players.

“These conditions discourage TOT and CAT Telecom but pave the way for foreign players to freely bid and grab our national resources,” Mrs Ranongruk said after meeting executives of both state telecoms over the weekend. (Bangkok Post)

Grab our national ressources ? ! Unbelievable.

A cheap nationalistic rant from the ICT Minister (?)… She’s happy to be the citizen of a third world country, where 3G phone could arrive (maybe, perhaps) in 50 years… Time for thai companies to… to what by the way ?

I mean even Laos has 3 G phone system !

But in Thailand it’s more important to save the arse of the buddies… I mean : competition is a very bad word in Thailand. It’s a stupid concept, designed by stupid foreigners.

Anyway.

The good point is that Abhisit (“Change Yes We Can’t”) fully agrees !

Prime Minister Abhisit Vejjajiva says that Thai telecom operators with limited capital deserve a fair chance in bidding for 3G mobile broadband licences because they might be at a disadvantage compared with foreign investors. (Bangkok Post)

The little puppet prime minister knows that he must kiss the hands of his real masters : not the foreign telecom companies.

And what about fairness, a word that the so called Oxford educated prime minister loves (along “democracy”, “rule of law” blablabla) ?

Why they don’t reduce the price of the licences ? Of course it would be too complicated for their one-neuron-brain. And they are way too greedy.

They want both the money of the licence, the butter of their thai buddies… and the arse of the foreigners.

So, stupid foreign investors. Now you do know, don’t you ?