Green Shoots Soup: number of bankruptcies explodes in may (+113 %)

The Green Shoots Saga continues, unabated.

Number of “dissolved companies” (AKA = dissolved and bankrupt : LTD companies + LTD partnerships + Ordinary Partnerships) has exploded by 113 % in may, compared to may 2008 !

10 251 companies disappeared from the radar screens in may versus 4 811 the previous year (and 3 125 in may 2007).

It’s unprecedented…

And don’t forget : this is a very lagging indicator (dissolution of a company can take… months… even years to be completed…)… So it’s clearly not a good news.

But no one (even among clowns) should be surprised : businesses face very tough environment… therefore, it’s perfectly normal… many companies are closing. And it could even get worse.

As for the creation, we had -7 % in may year on year.

(Source Department of Business Development)

Anyway. Be cool. The clowns gang, Abhisit, the Bank Of Thailand… they all repeat that the thai economy has bottomed out… and the “recovery” is under way

Sleep well.

Chart, GDP Q1 : recession is worsening and no bottom

The GDP report for Q1 has been published by the NESDB (here).

The main information is : the thai economy shrank 7,1 %, compared to the first quarter 2008. In Q4 2008, the drop was 4,2 %.

Therefore, we are in recession (classic definition is 2 quarters with negative growth).

The official analysis is that the thai economy has bottomed out, AKA it can only get better the following quarters.

This is wrong.

I wrote on my previous report :

On Q1 2009, deflator will be the same than on Q4 (more or less)… While the contraction of the economy is worsening… therefore the comparison quarter-on-quarter between Q1 2009 and Q4 2008 is going to be really bad (like in so many other countries).

Therefore, the annualized GDP growth rate is going to be really bad on Q1…

I was spot on : deflator on Q1 was 2,2 % (2 % on Q4)… So if we calculate the annualized GDP rate (difference between Q4 and Q1, times 4), we get a striking -13 % !

Now, let’s have a look on 3 components of the GDP (real GDP = inflation removed) :

We are diving. Even the private consumption is now in negative territory (-2,6 % compared to Q1 2008).

The NESDB writes :

… the first reduction in 10 years since 1Q 1999 owing to a fall of real sector in line with world economic slowdown. This dampened consumer’s confidence and purchasing power, which resulted in a decrease in expenditure on durable, semi-durable, and non-durable goods, particularly on passenger car, and motorcycle.

As for the Gross Fixed Capital Formation (investments) the fall is even worse : -15,8 %.

Here are the values (in millions THB, nominal GDP = at current prices), for each components so you can juge their relative importance.

Private consumption = almost half of GDP (1 195 billions). The Government spending is a tiny part (270 billions).

Exports and imports… Now this is something that people have often some problem to understand… For the GDP calculation, imports are deducted from exports (because you obviously don’t produce what you import).

So what is important is the difference (exports – imports).

On Q1, imports dropped at a furious rate (-30 % !), much more than exports… Therefore, the trade balance is positive, therefore the contribution for GDP is positive (5,2 %).

And what about the change in inventories ? A big drop (-7,5), that depresses the GDP growth rate.

2 explanations :

-companies have cleared their stock. Normal reaction during a recession.
-and gold. The NESDB writes :

In addition, export of gold increased significantly due to higher price in the world market. This caused the stock of gold declined nearly Baht 100,000 million.

Indeed, my readers already know this anomaly (that showed up in the february exports figures, read here).

Inventories changes accounted for -156 billions… and gold is responsible for two thirds…

So let’s try to recap and to make a reasonable forecast for Q2. It means not a forecast to please people but a forecast that takes the reality into account.

-exports : no change. We are still 25 % down. Confirmed in april (first month of Q2, with a crash of 26 % read here). There is absolutly no reason to believe that exports could increase (a lot) on may and june. Furthermore, don’t forget the base effect… The Peak Exports was july 2008… It means year on year comparisons are going to get uglier and uglier !

Furthermore, we can see that oil prices are going up again… That could increase imports… and therefore, reduce the trade balance… and therefore reduce the positive contribution for GDP growth…

-investments : no change. The situation is even worsening. Very simple to understand : the longer the crisis lasts, with a depressed global demand, the more businesses are going to postpone their investments projects. It’s just insane for a business manager to try to increase (today) his production capacities !
It makes no sense. Furthermore, the psychology is starting to crack, and this is precisely why the authorities are stepping up their idiotic PR campaign about “Green Shoots” and “Recovery”. It shows their desperation.
The longer the crisis lasts, the more the fools who believe that it would be short timed, change their minds… And they join the recession club (cut of investments, cut of spendings, etc.). Not good to fuel a recovery.

-government spendings. Ah ! The best part for the Lalalanders… They believe that gvt can buy its way out from the crisis. Sorry folks, the government is broke, and I really don’t believe Thailand can act like USA (= to borrow like there is no tomorrow).

-Private consumption : worsening. Let’s ask the clowns how they think Mister and Miss Somchai, who started to reduce their expenses on Q1, are going to change totally their behavior and will spend like crazy on Q2 ?

Allo ? What ? I can’t hear the clowns anymore. Oh yes, I’ve just had an idea : let say that the 66 millions of thais are going to win lottery next week. Give them 1 billion THB each, case closed, problem solved.

It’s of course just a fantasy. And why it could even get worse ? Well, again, the longer the crisis lasts, the more companies will close, downsize, the more people will lose their jobs… the more they will be afraid of the future etc. It’s of course a basic negative loop. But the clowns can’t understand this very simple idea.

So, with such depressed conditions, GDP on Q2 will be as bad as Q1. Simple as crystal clear.

Now, what are the positive items that could curb and change this reality, a little bit and on temporary basis ? There are some.

-government spendings : a little boost (like the 20 billions national bribe given by Abhisit in april) could soften the negative trend. But it would be a blip on the radar. Absolutly not a sign of recovery. Abhisit is just unable to launch and manage really the mega projects. Even though he would sign all the contracts and would get all the financing tomorrow, the money would not be injected into the system before several months.

-inventories : I think some companies have cut their production… too fast and too deep… They will have to produce again, even at lower levels. And the gold mania is probably over (unless prices explode, that would convince many thais to sell their gold).

Voila. And all my comments at the end of my report about GDP Q4 remain valid.

The longer this crisis lasts, the more the negative effects will increase : compound effect, negative loop, you name it.

The system (with many shock absorbers) can’t sustain a long crisis.

Thunderstorm : GDP shrank 7,1 % during Q1

It was supposed to be the Abhisit’s Day, AKA The Slap In The Face Day (read here). Well… “mission accomplished” !

GDP in 1Q 09 drastically contracted by 7.1%, compared with a decrease of 4.2% in 4Q08, due to world economic crisis which severely affected goods and services exports, a main contributor of Thai economy.

Export value of goods in dollar terms decreased by 19.9%, whereas import value reduced dramatically by 38.3%. Moreover, investment shrank by 15.8%, along with household consumption expenditure which reduced by 2.6%.

However, government expenditure expanded slightly by 2.8%. (NESDB)

It’s a striking fall. But it’s absolutely not a surprise… Only fools, AKA the whole government and all the bureaucrats, could be surprised. The same people told us that the “recovery” was on its way (read here).

Central bank began to witness signs of recovery in the first quarter.

When did they say that ? January 16 !

There is a word for this kind of simple minded people and liars : clowns.

Anyway, you’ll find all the figures (statistical tables) and the official report here.

I will update the charts as soon as possible. Meanwhile you can still read my report about GDP Q4 2008.

It’s so predictable : the same clowns who were wrong and/or who lied 3 months ago, started the new tune today : “bottom out… Q2 will be better”.

It’s funny because when we look at the indicators for april (the first month of Q2)… well… we see the exact same patterns than the previous months : exports down (25 %), sales of cars down, investments dropping, VAT collections falling, etc…

Anyway. I will give more details on my report (just need a little bit of time to write it).

Lalaland : “Overall, economic fundamentals were satisfactory on Q1″

Another breach in the space- continuum ! Higher and stronger than Alice in Wonderland with a rocket up in her arse…

Mid january, it was the Bank of Thailand… the BOT saw “signs of economic recovery” … A real performance and a big laugh..

Today, it’s the Finance Ministry’s turn, with this highly funny summary about the thai economy during Q1 : “Overall, the economic fundamentals were in the satisfactory level, with low inflation and stable foreign reserves, despite risks in rising unemployment.”

Thailand’s tourist arrivals stood at 3.7 million in the first quarter of this year, down 14.7 per cent from the same period last year due to global economic crisis and political problems, according to the Finance Ministry’s economic report.

Released yesterday, the report showed that while quarterly private investment and consumption slid, supporting the economy was the government’s spending. In the quarter, Bt567.4 billion of government budget was disbursed, up 41.1 per cent on year, due to the economic stimulus schemes. In March, about Bt16.2 billion from the Cheque Chuay Chart scheme was disbursed and Bt14 billion of the free-education scheme was disbursed.

“The economic stimulus measures played a more important role in bolstering the economy, especially when domestic demand and private investment shrank largely. Though overall exports dropped due to the global economic conditions, some items showed an improvement particularly those in the agro-industrial and electrical and electronic products thanks to the demand recovery in the Middle East, China and Africa,” said Ekniti Nitithanprapas, the ministry’s spokesman.

“Overall, the economic fundamentals were in the satisfactory level, with low inflation and stable foreign reserves, despite risks in rising unemployment.” (Nation)

I’m laughing, but actually it’s not very funny. It could even be scary. Those brainless bureaucrats think that the national bribe of 2000 THB for 9 millions people and other government’s spendings are enough to make the economy, to give the impulse, to shape the economy.

It’s of course totally wrong. The 20 billions THB burned of the national bribe are nothing but a fart on GDP figures.

Furthermore, government’s spendings are… borrowed money. The government is penny less (read here) and can’t create jobs per se. It takes on the left to give on the right (or it borrows). This is what the government is doing. And anyway, the bullets fired on Q1 won’t be available on Q2… The gun is empty… and cold.

The Soviet Union is long gone… but those stupid socialists and keneysians fanatics still believe in the magic stick, in alchemy applied to economy.

Give the authority to the government to spend 89797787567856 trillions of THB (borrowed of course), pay people to dig holes and other people to fill holes, and chop chop, miracle, Jesus is back, my casas es tu casa, the GDP will grow.

Anyway, I’m getting angry, it’s bad for my heart. But all those clowns will lose face on may 20, when GDP figures (first estimation) for Q1 will be published by the NESDB.

(meanwhile, you can still read my report about GDP Q4 2008)

Public debt rises to 3,59 trillions THB in february

Thailand’s public debt at the end of February stood at 39.93 per cent of gross domestic product (GDP), not far from the statutory ceiling of 50 per cent of GDP as required by law, a senior Ministry of Finance official said on Monday.

Pongpanu Svetarundra, director-general of the Public Debt Management Office, said Thailand’s national debt at end of February was approximately Bt3.59 trillion.

Of the total amount, about Bt2.29 trillion was in direct government borrowings, Bt1.01 trillion from state enterprises which are not financial institutions, Bt182 billion were debts incurred by government-run financial institutions, Bt110 billion in debts of the Financial Institution and Development Fund and Bt3.68 billion by other government agencies, he said. [...]

Compared to January 2009, Thailand’s public debt in February increased by Bt73.78 billion, Pongpanu said. (TNA)

The percentage of GDP is idiotic. For one very good reason : GDP is falling. Right now. While you’re reading this.

So the percentage will increase. Mechanically.

In 2008, total GDP was 9 102 billions (at current prices). Let’s assume a drop of 5 % for the whole year, that would make 8 647 billions… So a ratio debt to GDP of 42 %.

But we forget another factor… during the year the total debt will continue to go up !

The government is penny less… And despite (shy) calls for budget cuts… the debt will increase. Abhisit has no choice.

So the ratio debt to GDP will follow. Up. No escape.

[Rendez-vous may 20, the NESDB will publish the GDP report for Q1 2009]

GDP forecast : from -2,5 to – 5 % for the year

Korn, the alleged Finances Minister, is the man who revises GPD forecast faster than his own shadow.

End of march, he said that the economy would contract by 2 to 3 %. Tuesday, he said that it could be worse. And now…

The Thai economy could contract by as much as 5 percent in the aftermath of the recent political upheaval, Finance Minister Korn Chatikavanij said Wednesday.

Mr. Korn said the turmoil had shaken investor confidence significantly, as well as inflicting a major blow on the tourism sector. As a result, academics are now forecasting that the Thai economy will contract in the range of 4.5 to 5 per cent, from the pre-riot forecast of a 3 per cent contraction.

Two million people facing the prospect of job loss and shrinking revenue collections prospect on part of the government are also looming. (TNA)

Now, this is a proof (albeit a late one) of realism… And rationality.

For that matter, Korn is walking his Way of The Cross… It must be painful. But admission is the first step toward wisdom…

However, to claim that the riots are the cause of such revision is of course totally stupid. It’s probably fair game on a political level, but not from an economic point of view.

Anyway. Let’s see now what the government intends to do to fight such (severe) contraction.

Mr. Korn said one possible solution is for the government to speed up the dispersal of some Bt1.5 trillion in economic stimulus measures.

That’s the beauty of it : don’t change a team of losers with losers ideas !

Korn is powerless and tool-less… The 1,5 trillion THB is speaking about (why not 3 ? 6 ? 10 ?) are totally virtual. This money exists only inside the brain of people foolish enough to believe it exists.

Something I don’t understand : the genius Abhisit’s idea of the special allowance of 2000 THB given to 9 millions people was supposed to “boost ” the economy ? Not anymore ? What happened ? That’s really too bad. ;–)

And Abhisit told us that his government was committed “to spur economy and to lift the quality of life of all the Thais“

Yes it was mid january… A century ago…

Anyway : let’s not change anything. Too dangerous and too hard for the neurons. Hope fueled fantasy will do the trick.

And mai pen rai…

Korn opens the umbrella : “GDP decline worse after riots”

The GDP for 2009 would would decline beyond the -2.5% to -3.0% earlier expected be caue of the rioting by the red-shirt group, Finance Minister Korn Chatikavanij said on Tuesday.

Mr Korn said the Ministry of Finance would revise its GDP growth estimate for the year as it was certain that from tourism and exports would fall as a consequence of the unrest. (Bangkok Post)

What a nice umbrella for a man who never believed there was a recession… And for a man who already said that economy could contract by 3 % (on march 24, read here). A man who told us that the 2000 THB “special allowance” decided by Abhisit would save the day. The country. The world. And the thai GDP for sure.

Now, obviously, the protests are convenient… From a political point of view…

We are going down because of the Reds !

We got the same lie with the PAD circus at the airport. The clowns (Abhisit already) told us that exports in december for instance went down because of the airport closure…

With or without protests, the GDP on Q2 is going to be terrible.

The omen is all over the wall (see my report about GDP Q4).

Anyway, see you on may 25 for the publication of the GDP Q1 report…

Chart : Private investment and Consumption indexes dive in february

(Source Bank of Thailand)

The Private Investment Index and the Private Consumption Index plunged in february.

-12 % and -7 %, compared to february 2008. Everything is in line… with a very bad GDP Q1.

There is absolutely not sign that could make us believe that march has been better…

GDP report Q4 : analysis, charts, and a very bad omen

(Source NESDB, report and data).

As promised, here is my review of the report published monday by the NESDB.

I remind you the main information : real GDP (it means at constant prices) shrinks 4,3 % on Q4 2008 compared to Q4 2007.

Furthermore, growth in Q3 was revised down (from 4 to 3,9 %).

First, here is the chart, per quarter, year on year.

As you can see, if we put on the side the 97 crisis, such a drop is unprecedented.

Now, a little game. As you know, there are seasonal effects. Always.

Q4 it’s the end of year, it’s the high season for tourism, businesses close their fiscal year etc. So, we should compare the evolution of all Q4 compared to Q3 for all the years since 1997.

Precision : here we work on nominal GDP (at current prices) because it’s more precise and because the time of comparison is shorter than year-on-year.

It’s obvious : it’s unprecedented. Even during the 1997 crisis, the GDP grew on Q4 (by 3,79 %), compared to the previous quarter.

Now, let’s go deeper with a comparison between Q3 and Q4 of 2008, to see some trends.

After all the first fallouts of the global crisis started to be visible lately (it started in august-september for exports for instance).

The evolution between Q3 and Q4 is much more relevant (to see the pace of the decline) than an analysis year on year.

First the values :

Real GDP (at constant prices), in millions THB
Q3 : 1 080 679 (= 1 080 billions THB)
Q4 : 1 084 901

Nominal GDP (at current prices), in millions THB
Q3 : 2 321 431
Q4 : 2 201 143

I can see that you are surprised too.

The nominal GDP decreased between Q3 and Q4 (-5,18 %)… but the real GDP has… increased (+0,39 %).

How can we explain such alchemy ?

It’s because of the calculation of the deflator. In other words the way of removing inflation, AKA the calculation at constant prices (read my article here).

The rule is : the lower the deflator is, the greater the real GDP will be. Therefore it makes a year on year comparison more… attractive.

If we want to calculate the annualized growth rate of GDP (it means difference between Q3 and Q4, real GDP, times 4) we get 1,56 %. It means, if the current pace continues throughout the year, the total growth of GDP for 2009 would be 1,56 %.

In any case, that would be a serious slowdown (compared to growth rates Thailand enjoyed before). But nothing compared to other countries (read my article here), who already suffer negative annualized GDP growth rate.

Deflator was high on Q3 (6,7 %), and low on Q4 (1,9 %)… cisor effect… therefore the annualized GDP looks better. But this is a one bullet weapon…

On Q1 2009, deflator will be the same than on Q4 (more or less)… While the contraction of the economy is worsening… therefore the comparison quarter-on-quarter between Q1 2009 and Q4 2008 is going to be really bad (like in so many other countries).

Therefore, the annualized GDP growth rate is going to be really bad on Q1…

Now let’s have a look at 3 of the components of the GDP, with their evolution in percent, year on year.

It’s not a surprise : government expenses increased 10 %… The private consumption remains positive… But the very worrying sign is of course the Gross Fixed Capital Formation (AKA investments)… with a drop of 3,3 %.

No matter what the government is doing or spending… businesses do not invest. Period. The government, like everywhere else in the world, is just throwing money into the air… hopping that it will be enough to hide for a while the holes. The black holes.

It won’t work. Because the fundamental point of this crisis, excepted its scale, is of course its duration.

That’s the faultline.. The policies the governments around the world are using… are designed to be sustainable on the short term… They can’t cope with a very long crisis.

Countries in Europe are proud of their social model, with several (a lot !) of “safety nets”… For instance, you loose your job, the state (sorry : the tax payers) will continue to pay your salary (although not at 100 %) for 23 months (France). Yes 23 months. I know what you think : that’s great. Or he’s lying.

Such policy can deal with intense and short crisis… They act like shock absorbers. But what could happen if the crisis stays ? For years ?

Then the model would just collapse.

The model for the retirement of many babyboomers in USA was : I sale my house at high price with huge profit, and my pension is indexed on a ever increasing Dow Jones index. Great. Life is sweet.

But what would happen if the prices of house drop (it did) and then stay low for long time ? And the stock market ? They are manipulating the Dow Jones trying to gain a few weeks, a few months, to avoid the panic… But what if the stock market drop (it did, and will continue) and then stay low for long time ?

Then the model would just collapse.

What is true for social safety nets, is true for banks balance sheets, stock markets, pension funds, and many parts of the economy.

A small company for instance can cope with a few months of decline of production… and/or with a few customers defaults payments… but not more… The state can give some oxygen to those companies, on a small or even on a big scale (bailouts)… but it will work only on a short term.

In Thailand, the morons are very proud of the plan “2000 THB for 8 millions or 9 millions people”… They think it’s going to “start up” the economy… Like Bush with his “stimulus check” last spring…

It’s just derisory. It will make a fart, a blip on the GDP of the second quarter.

It’s not sure yet of course. But more and more, the picture appears clearly : we have an unprecedented crisis, because of its scale, its globality (all the countries), its simultaneity and… its duration.

The politicians can’t imagine a long crisis.

For them, it’s the real nightmare scenario.

Disaster : GDP shrinks 4,3 % in Q4

What a blow. What a blow for all the useful idiots, the suckers, the brainless, the followers, the members of the “everything is fine” sect.

The National Economic and Social Development Board (NESDB) announced that the gross domestic product (GDP) in the fourth quarter last year contracted for the first time in a decade.

According to the economic report, the GDP in the previous quarter fell 4.3 per cent [compared to Q4 2007]. For the whole year of 2008, the GDP expanded 2.6 per cent. As for 2009, the economy may worsen and sink by about one per cent. (Bangkok Post and the article from Bloomberg)

As soon as november 2008, you knew what would happen (read my report on GDP Q3).

But Abhisit, the BOT governor, all the government, the bureaucrats didn’t. Well they pretented of course. Many of them are truly dumb. But others are just pretending. They want us, the masses, to be confident.

They think that the economy is just a question of confidence. Give to the masses some opium, some games, and a little bit of bread (and don’t forget TV shows), and the GDP will grow for ever.

Take a loan to buy a condo and a car, eat your soup, and shut the fuck up.

Well it’s a little bit true. Unfortunately. But not totally.

And for that matter, they are ready to lie. Over and over again.

You’ll see. I bet : the useful idiots will continue to talk about “a recovery during the second half “, the last fashion fantasy.

Politicians will continue to lie. Abhisit will continue like a parrot to speak about “technical recession” and fast recovery. The BOT governor will continue to say that the crisis is not that bad because it didn’t start in Thailand, the Boiler Room will repeat that the thai property market is well insulated from the crisis etc.

It’s more comforting. And so easier.

UPDATE
I’ve finished the analysis of the report. Click here to read.

[Technical reminder : when we compare GDP year on year, we are talking about real GDP [at constant prices]].

Annualized GDP : let’s review the situation in a dozen of countries

Knock, knock… While the clowns are waiting for the Messiah (pick up your choice : “Obama” in the US, “Sarkozy” in France or “Abhisit” in Thailand) along with the Noah’s Ark (decipher : “recovery during the second half of 2009“) the crisis is worsening…

Let’s review some hard data.

What’s that ? Annualized GPD. It’s the difference between Q3 and Q4, times 4.

Let’s take an example :

Japan’s economy shrank 3.3 percent in the fourth quarter [compared to the previous quarter]. Japan’s gross domestic product figure translated into an annualized fall of 12.7 percent, exceeding a consensus market forecast for a 11.7 percent contraction, government data showed. (Reuters)

Another info so you can put things into perspective :

The pace of contraction [in Japan] surpassed an annualized 3.8 percent drop in the United States, which was the biggest fall in nearly 27 years.

Are things clearer now ?

I mean… those figures are ugly. And please, remember that we are talking about… Q4 !

You got already, here and there, data that give a taste of what Q1 will be… World trade, production, housing market, unemployment… it’s a mess. And a global one.

As for Thailand… Rendez-vous monday… The GDP report for Q4 will be published…