Archive for September, 2008

Knock knock… the amendment of the Constitution is coming back

The dusts of Samak’s bust and new government nomination are settling down… Back to business.

The new Prime Minister seems to have only one obsession : be granted a meeting with General Prem (Privy Council). National reconciliation ? We’ll see. And one week only after his nomination, he’s already under the threat of legal pursuits.

Therefore, everything is back to normal. πŸ˜‰

And the PPP is wakening its own burning obsession : to change the Constitution.

But it seems that they have modified their strategy to do so.

The Cabinet has decided to include the political reform as part of its policy statement and will push to amend the charter’s Article 291 in order to pave way for the formation of the Constitution Drafting Assembly (CDA) in charge of revamping the political system, PM’s Office Minister Sukhumpong Ngonkham said Tuesday (Nation).

Article 291 describes the process to amend the Constitution.

So, their plan is apparently to amend this article (and only this one)… then to create a CDA… in order to write a new constitution ! Before the plan was to amend only a few articles…

They want clearly to play again the card of “People’s Constitution”… like for the charter of 1997. A Constitution that served very well the PPP, TRT, Thaksin and his friends.

Back to square one.

The PAD is going of course to scream and protest against this idea.

Back to square one.

That’s the good point with thai politics : the more it changes, the less it changes (same same but different, you follow ?). πŸ˜‰

Businesses are not happy with the cop-made-Industry-Minister

You bet they aren’t happy !

πŸ˜‰

Only in Thailand (and Africa actually, that’s the problem if you make comparisons).

Businessmen seem to be frustrated over the appointment of Pracha Promnok as Industry Minister because they say he does not have any knowledge or experience.

He hardly knows anything about industry. I think he should have been made Interior Minister. Anyway, we have no choice but to accept this and hope he chooses the right advisors and works closely with the private sector,” a source in the Federation of Thai Industries said.

He added that having Pracha on the job would make it more difficult to restore the confidence of local and foreign investors, and that he would need to work really hard at developing the industrial sector. (Nation)

Pracha is a Police General… The world is indeed laughing.

Black Monday : will the thai authorities understand this time ?

The Dow Jones dropped 777 points, the largest point drop in history, plunging dramatically after the House failed to pass bailout for the nation’s financial system.

According to Bloomberg News, stocks lost $1.1 trillion in value, meaning the market loss was larger than the size of the $700 billion bailout.

Black monday ? Black october ? Black year ? It’s an understatement.

Red everywhere.

What is happening is not a surprise for the people who used their brain and a little bit of common sense (Mish, Roubini, everything was forecasted since… 2 years you don’t believe me ? Read their blogs, check with Google).

So no excuse. All the people who are loosing their shirt now… can blame… only themselves.

The thai authorities are of course totally off the track.

First, like all the others, denial. After the Lehman’s debacle they were saying “it’s going to be okay”, there won’t be a new financial crisis.

I wrote 3 days ago : “Why the BOT doesn’t understand the current situation and why it’s scary”.

With a very simple argument : Thailand can’t escape a slowdown (at best) of growth, when like dominos, all its biggest exports customers are already or are going to be in recession !

It’s so easy to understand. But, no, denial is easier.

It’s better to secure some juicy ministers, to take a maximum of cash before the temple goes down, better to play little childish games, better to name a cop as Industry Minister, better to excite people with “lese-majeste” and other absurd lawsuits, better to show to the entire world the insufferable thai arrogance.

So after this striking black monday… is the government going to acknowledge and understand the gravity of the situation ?

Disclamer : don’t get me wrong… I speak about Thailand because… well… obviously it’s what this blog is about ;-). But virtually all the countries, and all the authorities in the world have played exactly the same game (stupid dishonest denial for some and stupid honest denial for others πŸ˜‰ ).

ThaiCrisis ? My blog’s title is now a freaking understatement. Damned. What aboutΒ  “World Crisis” ? Sounds better, no ? πŸ˜‰

Chart, land transactions : fall in june (and chart per quarter in constant THB)

Is something going on ?

The total amount of land transactions (nationwide) fell 41 % in june, compared to june 2007, at 32,69 billions THB versus 56,28 billions.

(source Bank Of Thailand, table EC_EI_009)

We have to go back to january 2004 to find a lower figure (27 billions).

So, accident or… uncoupling ? Datas for july will be published end of september. it’s going to be important to follow.

Now… speaking about land transactions, let’s increase the time scale and add another factor for fun : constant THB

(Reminder : constant THB = current THB minus inflation [the CPI ]. One THB in 2008 has of course lost value [18 %] compared to one THB in 2002.)

The pattern appears : we are going down in real terms.

Right now, we are on a plateau. But if Q3 is as bad as june… then the pace would accelerate on Q3 and Q4 2008 (because we have higher inflation and we would also have a decline in current terms).

Cisor effect.

The circus continues : the new PM accused (already) of violating… the Constitution

Another coup de theatre. Let’s remember that Somchai was elected PM less than 2 weeks ago…

Premier Somchai Wongsawat yesterday faced fresh allegation of constitutional violations, which if found to be true, could lead to his disqualification as an MP and prime minister.

Appointed Senator Ruangkrai Leekijwattana said he would file a complaint with the Election Commission to check whether Somchai had violated Article 267, 265 and 106 (6) of the Constitution by holding shares in CS Loxinfo that has a concession with CAT, and having his daughter hold shares in M Link a company that operates a state concession.

Ruangkrai’s earlier complaint against former prime minister Samak Sundaravej of violating the Constitution by hosting his cooking programme had resulted in Samak losing his premiership early this month.

He said he suspected Somchai may have disqualified himself since January 22 this year by allegedly holding shares in CS Loxinfo, which operates a state concession or is a contract partner of a state enterprise. That would be a violation of Article 265 (2), resulting in him being disqualified as an MP as per Article 106 (6), and disqualified as PM as per Article 171.

CS Loxinfo is an Internet service provider, sending and receiving satellite signals for local and international communications, producing telephone books, besides also being in the publishing and advertising business. The company is a contract partner of CAT with a licence to provide sending and receiving television signals and Internet via satellite for 22 years.

He said Somchai may also have violated Article 48 of the Constitution which stipulates that political office holders cannot hold shares or own companies that operate newspapers, radio, television and telecommunication businesses both directly or by nominees or in any indirect method. Article 182 (7) stipulates that a minister’s term will end if they have violated Article 267, 268 and 269 of the Constitution. (Nation)

I once wrote that virtually every thai politicians violate the Constitution, because they’re linked to business world… They have for many of them important wealth, shares etc. It’s an amazing maelstrom in which large families have interests, spreaded in many businesses, private or public, listed or not.

What is even more amazing is that knowing the laws (the first “scandal” about shareholdings happened during the Junta, last year, read here and here leading to the resignation of 5 ministers !)… why the politicians are not protecting themselves by just abiding by the laws ? Even if those laws are stupid and/or too stringent.

So let’s see how Somchai is going to defend himself.

UPDATE SEPTEMBER 30

The Election Commission (EC) yesterday agreed to look into an allegation that Prime Minister Somchai Wongsawat has violated the constitution by holding shares in a private company. (Bangkok Post)

That’s the first step of the legal process.

Joke of the day : policeman earns money but doesn’t know where it comes from

A very tasty piece published today in Bangkok Post.

It’s about a grotesque and childish “project” from the Crime Suppression Division to “reduce debts among its staff “.

Every CSD officer is supposed to record their financial income and expenditure each month in a personal balance book provided by the agency.

But apparently some policemen are not really at ease with this idea…

We all know why of course… πŸ˜‰

But we reach the peak of surrealism when one colonel, with a typical thai ingenuity, reveals the trick.

A police colonel said he does not feel comfortable writing down his earnings and spendings.

He said that recording his monthly expenditure would not help him to better manage his money.

“Each month I earn some money but cannot say where it comes from,” he said.

πŸ˜‰ Only in Thailand.

Why the BOT doesn’t understand the current situation and why it’s scary

… Or I should write “doesn’t want to understand”.

Let’s prove it. Consider this :

Permanent secretary for finance Suparut Kawutul said there had been a limited impact from the US financial crisis on the local banking system, equities market and insurance sector.

Mrs Tarisa said the central bank could introduce a rescue package to inject liquidity and tackle bad assets in the Thai banking system if necessary.

“The present developments in other countries are a good example. The central bank might introduce a rescue package if necessary. We are ready if there is a need to increase liquidity in the system.”

Regulators took pains to point out that local institutions’ exposure to overseas assets was limited. The banking system currently has $3.6 billion (122 billion baht) worth of external credit compared with eight trillion baht worth of total liabilities. (Bangkok Post)

If we put on the side the stupid and classic “don’t worry attitude”… the rest sounds good.

It sounds reasonable. And even perfectly logic :assets in USA are in trouble, thai banks don’t own a lot of those, therefore Thailand is protected, insulated from the financial crisis.

But there is a flaw. A big one.

When 60% of your economy is based on exports, and when your biggest customers step into recession… well… you’re nailed.

USA, Europe (Ireland, Denmark) , Japan… and other countries (Singapore, New Zeland). It has started. And the pace is increasing.

Nailed on the wall, with no recourse. You can cry, protest, hit the air with your small fists, offer free water and tax free diesel for 6 months, lower interest rates to zero, light candles and pray Buddha, you are nailed. You go into recession too, eventhough your “local institutions have a limited exposures to overseas assets“.

Like Mike Shedlock wrote 2 years ago (this guy is a genius, he forecasted everything, along with Roubini, check his blog), we don’t have a liquidity problem. We have a freaking insolvency problem.

The poor Tarisa and the BOT are powerless, condamned to mimic what the FED is saying.

Like the clowns at the government, she will assist to the landing of the black swan : the recession in Thailand (or at least a growth zero).

And there is little she can do about it.

And I would like to add (this is the motto of my blog) : politics and economy are linked.

You can be sure that the political crisis in the country is going to accentuate the problem.

The hyenas will continue to fight for the royal succession… they won’t have time to think, properly, about the economic crisis.


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.