Interest rates : the massacre game continues

The trap is closing. Fast.

The US Fed, in total panic mode, has cut again yesterday by 0.5 at 3 %. Eight days after a cut of 0.75.

And apparently this new fix of dope had no real effect : Wall Street closed down last night.

And even worse, the Fed left the door open to more cuts by saying in its statement that “downside risks to growth remain“…

It means that interest rates in Thailand (3.25 %) are now higher than in the US.

The next meeting of the Monetary Policy Committee of the BOT is scheduled on february 27.

So what will happen now ? The downward pressure on USD, versus all the other currencies, especially the asian ones, is likely to increase.

And the BOT will continue to do what it did before : trying to curb the appreciation of THB, to save thai exports, by buying more and more of something that is loosing value every day : the US dollar (look at the ever increasing foreign currency reserves).

It’s the “walking-toward-the-cliff-with-a-smile” policy.

I really do hope that the new government will try to think out of the box this time.

It’s good to hear some thai voices (that’s new) that start to say that the current situation is not sustainable and that it might be a good idea to let the THB rise, in order to offset the energy bill and stimulate private investments throught imports.

Read for instance the article of Supavud (managing director for Phatra Securities) in Bangkok Post : “The Fed pumps liquidity into the financial market in the short term, but it risks credibility with higher inflation in the longer term. [Asian economies] should not tie their currencies with the dollar“.

EC : What about a dissolution of small parties ?

After severe losses of face (by issuing yellow cards to PPP candidates for “fraud“, by calling by-elections, and by seing the same PPP candidates winning again)… we thought that the Election Commission would have some rest… And would take some holidays.

But this is Thailand, the land of surprises. 😉

The Election Commission set up a five-member inquiry panel into the possible dissolution of the Matchimathipataya and Chart Thai parties [members of the PPP’s coalition] yesterday.

Election commissioner Prapun Naigowit said the disqualification of executives of the two parties for vote buying in the general election fell foul of Section 103 of the election law.

This says that if a party executive member misbehaves, the entire party can be held responsible and dissolved.

No time frame had been set, but the inquiry should proceed quickly he said.

”The dissolution decision rests with the Constitution Court, which will consider whether the party should be held responsible,” he said. (Bangkok Post)

No exit visa for long neck zoo animals

Usually, in the normal world, it’s difficult to make countries accept refugees. But here, a foreign country is willing to welcome a few refugees, but the thai authorities do not let them going out !

New Zealand agreed two years ago to accept two families of Kayan people – whose women traditionally wear a number of brass rings around their unnaturally long necks – as refugees, but Thai authorities will not give them exit visas.

According to a BBC report from the area in north-west Thailand on Wednesday, it is suspected that the families are being kept in Thailand because of the central role they play in the local tourism industry.

The BBC said three Kayan villages close to the Burmese border were a major lure for foreign tourists and quoted a spokeswoman for the United Nations High Commission for Refugees as saying, “It’s absolutely a human zoo.” 

Kitty McKinsey said some 20,000 other Burmese refugees had recently been allowed to move to third countries, but Thailand was not letting a group of 20 Kayans who had been accepted as refugees by New Zealand and Finland leave.

“We don’t understand why these 20 are not allowed to start new lives,” she told the BBC. “The Thai authorities are treating them in a special way.” (Bangkok Post)

Indeed. It’s a “human zoo“. Absolutly. No doubt.

I’ve been there (against my will), close to the golden triangle. The local thai mafia drive you around (even if you do not ask them to go to the long neck village !), then some thugs ask you to pay an “entrance fee“… before to access the zoo.

The naive tourists, usually, do not react. They honestly believe that the “fee” is official, and will end into some “local development funds for the well being of local population” etc.

It’s more than a disgrace, more than a shame. It’s pure human exploitation.

And it shows, once again, that the local “authorities” can work very closely to local mafia. Or maybe those are different names for the… same entity ?

But of course, it’s likely that the thai authorities will explain that they have to solve some very complicated administrative red tape, and that, unfortunatly, it takes very long time…

Joke of the day : “I could last 2 terms”

We have had a great deal of fun during Thaksin 1.

Thaksin 2 and then Thaksin “caretaker PM” were also good.

Then, we’ve reached a kind of climax with the Junta and the Military Clowns.

Now, is it humanly possible to do better ? Higher ? Stronger ?

It’s probable with Samak 1 (or Thaksin 4). 😉

“Even Chart Thai Party chief adviser Sanan Kachornprasart told me that I should serve to the best of my ability as this is the last stretch of my career – a short period would be four years and a long one for eight years,” said Samak.  (Nation)

Reconciliation : All the paths lead to Hong Kong

After the confrontation (or at least, the apparences of confrontation)… the french-kissing season (sorry… “reconciliation“) is officially opened.

All the loosers and the cowards are running, holding their breath, to please the master of Hong Kong, aka Thaksin or to try to ease the tension… And avoid possible revenge.

First, the chief of loosers, ex Junta leader, defeated at elections : ex general Sonthi.

Former deputy prime minister Sonthi Boonyaratglin said Wednesday that he had held ‘brotherly talk’ with former prime minister Thaksin Shinawatra whom he overthrew.

Speaking to reporters upon return from the visit to the Middle East, Sonthi said he talked to Thaksin before his wife, Khunying Pojaman, returned to Thailand and before the formation of the coalition.

He said he could not disclose the details of the talk but it had nothing to do with political bargaining. (Nation)

Political bargaining ? Of course not. Just simple brotherhood and unconditional love. 😉

Then, it’s another chief of loosers, Army Chief, general Anupong.

Army chief Anupong Paojinda has contacted ousted prime minister Thaksin Shinawatra out of concern the defence minister’s post will be given to a civilian, an army source said yesterday.

Gen Anupong telephoned Mr Thaksin, who is in Hong Kong, to confirm exactly who would be in charge of the Defence Ministry, said the source. (Bangkok Post).

And by a happy coincidence, “Both Gen Anupong and Mr Thaksin were members of Class 10 at the pre-cadet school.”

It helps of course. 😉

Anti-coup book banned for… “lese-majeste”

More it changes, more it doesn’t change… Another -fresh- example of censorship…

Bangkok Metropolitan Police, acting under an appeal from the Special Branch to investigate my book, have issued a letter to the Thamasart bookshop banning the sale of “A Coup for the Rich”.

According to the letter, dated 18 January 2008, the book is currently under investigation concerning charges of lèse majesté.

The letter, signed by deputy police chief Chutti Tamanowanij, states that the continued sale of the book risks creating a “misunderstanding” about the Monarchy among the Thai population (info given by New Mandala).

That’s the way it goes in Thailand : the police bans a book, stating “risks“, before to complete an investigation, and without any decision from a court. There won’t be any follow up. It’s just the “fait du prince”.

Hopefully, the author has decided to publish his book on Internet, in english, for free (PDF file here).

BOT prepared to use interest policy to stimulate economy

Bank of Thailand Governor Tarisa Watanagase on Monday said the bank was ready to count on using applied interest policy to stimulate the Thai economy now expected to be affected by the looming possibility of a United States economic recession and a consequent slowdown in Thai exports. (TNA)

Meanwhile, the same day, BOT assistant governor Duangmanee Vongpradhip said : “There is an opportunity for growth to reach nearly 4.5 per cent in 2008” (TNA)

So with an official growth forecast of 4,5 %, it would be necessary and urgent to cut interest rates to “stimulate the economy” ?

Talk about credibility. Once again, the BOT is running like a headless chicken.

The truth is : with a virtual pegg of the THB to the USD, the only obsession of the BOT is to follow the path of it’s big sister, the US FED.

The FED, in total panic mode, has cut last week. And will probably do it again today… The USD will continue to loose ground, putting a huge pressure on all the asian currencies.

Right now, no one is able in Thailand to think about an alternative path : they continue to run toward the cliff. With a smile.

AEC investigation, Samak case : “our work won’t be affected”

As soon as Samak, leader of the PPP, was elected Prime Minister, the Assets Examination Committee… is waking up.

A good reminder for us : Samak is still under investigation !

Second reminder : The AEC is an agency installed by the military after the Coup. Last year, the AEC has frozen some 2 billion US dollar assets of Thaksin and his family.

President of the Assets Examination Committee (AEC) Nam Yimyaem assured that People Power Party leader Samak Sundaravej’s instating as Prime Minister will not affect his committee’s work. He especially referred to an ongoing case against Mr. Samak by the AEC.

Mr. Nam declared that as the matter is being processed by the AEC and the Court it will not be affected by Mr. Samak’s position as the administrative branch of government and the judicial are independent of one another. He also affirmed that Mr. Samak’s case, which involves irregularities in the purchase of Bangkok fire trucks, will be resolved before the AEC finishes its term.

The AEC President admitted there may be conflicts when having to work against the administrative branch but he believed that as the government is a democrat body it will work justly and inline with ethical conduct. (PRD)

It’s the joke of the day. 😉 AEC’s president is day dreaming. Or he must be really desesperate…

“Administrative branch of government and the judicial are independent of one another” ? Now this is a real sense of humor.

Taxes on wines : at last, the UE reacts, and points the finger at thai customs

The European Union has formally requested consultations at the World Trade Organisation over the Thai customs practice of rejecting the declared valuation of EU products and applying an arbitrary value instead. The EU said the measures are having a significant impact on EU companies, especially exporters of wines and spirits. The problem also appears to be affecting car exports, it said. The EU has alleged that since September 2006, it appears that Thailand has rejected the declared transaction price of certain EU products imported into the country, and applied an arbitrary value instead.

This practice violates the basic principle that customs valuation is normally based on the transaction value of the imported goods as set out in the WTO Customs Valuation Agreement.

The practice also seems to be in breach of a number of Thailand’s other WTO commitments. (Bangkok Post)

At last ! The UE seems ready to react.

This story shows a few things :
-Customs are one of the most corrupted administrations in Thailand. It’s a national disgrace (I mean we’re talking here about wines only… but you couldn’t ever imagine how many other tricks they’re doing !).

-thai customs like to play it sneaky : on the paper the rule is respected (importers have to pay a fixed % as for import duties). But the trick is to increase the value of the goods, on which are calculated the taxes !
It can be done by only one officer… the importer would be totally powerless (the goods can stay “in storage” for a very long time if the importer doesn’t comply with the officer’s mood…).

-more generally, it’s another proof of an unbalanced game : asian countries are very keen to export their goods but are reluctant to open their own markets.

It’s time for western countries to fight back. World trade is a very important leverage for economic development around the world… but all the players must respect the rules.

Samak elected Prime Minister

Samak Sundaravej easily won a parliamentary voting session this morning to select the country’s new prime minister.The People Power party (PPP) leader received 310 votes while the Democrat party’s nominee Mr Abhisit Vejjajiva received only 163 votes, paving the way for Mr Samak to become Thailand’s 25th prime minister.

3 people abstained and 1 was not present at this morning’s voting session.

Let’s the show begin !

“I will start working at Government House before February 5, and the cabinet line-up will be finished before the start of Lunar New Year,” Samak told reporters.

“The person who will become finance minister is capable, knowledgeable, and professional. He is a party insider, but will be acceptable” to others, Samak said. (Nation)

Cement : by refusing increase of prices, gvt can create shortage

It’s the same story, over, and over.

The principle is easy to understand, even by children. However, authorities continue to make the same mistake, again and again.

To refuse an increase of price for a product, or more generally to have a fixed price policy, could lead to a shortage of this product.

True in USSR. True in Zimbabwe. True in China (where authorities refused an increase of price for diesel and gasoline, leading refiners to… stop production !).

If something costs you 100 to produce, and if the governement forces you to sell at 90… would you continue to produce ?

It’s chapter 1 of “Economy For Dummies”. 😉

Secretary and Business Relation Officer of Siam City Cement Public Company Limited, Dr.Sathaphon Phetthongkham claims that due to high costs of living, the company will submit another price modification proposal to the new government.

He says cement consumption has shrunk by 4 percent as many mega-projects have been suspended due to sluggish economy and political uncertainty.

Dr.Sathaphon cites that price of coal, a major ingredient of cement, has increased from 45 US dollars per ton up to stand at 65 US dollars per ton. In this connection, the company has been burdened with 70 percent higher of production costs.

According to Dr.Sathaphon, the company had asked for the price modification prior during the administration of Prime Minister Surayud Chulanont but was rejected. As a result, the company has had to shut down the operation of two production machines. ” (PRD)

As for Siam City Cement, we need to wait for further details (it could be just a power play to put the pressure on the authorities).