Press : “Asian Nixonomics may spell subsidy-driven stagflation”

A very good article about the current policies, and their risks, shared by most Asian countries.

Thailand follows with diligence the text book : postpone the pain, increase the subsidies on very short term, etc… It’s Wonderland. And soon after, it will be Horrorland.

July 28 (Bloomberg) — Asian governments from India to Malaysia, clinging to budget-busting fuel subsidies, may end up paying an even higher price: saddling their economies with an extended period of stagflation.

“Subsidies will come increasingly in the way of future growth,” says Kalpana Kochhar, a senior adviser for the International Monetary Fund’s Asia-Pacific Department in Washington. “Not passing prices through and keeping artificial price and wage controls never works.”

Governments are being forced to choose between two unattractive alternatives: run up bigger deficits by continuing to shield citizens from soaring energy prices, or start to withdraw subsidies, fueling inflation and political backlash. Inflation has already reached decade highs throughout the continent and played a role in destabilizing politics.

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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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