Archive for February, 2009

Bank Of Thailand and forecast : the right hand doesn’t understand the left hand

February 27
Mrs. Tarisa [Bank Of Thailand governor] views the Thai economy in the first quarter this year as being better than its performance in the last quarter of 2008, and states that she believes the economy will not be in recession because state spending and investment had begun to accelerate. (TNA)

February 28
Thailand’s economy in January continued to shrink with all economic indicators showing a continuing contraction, according to the Bank of Thailand (BoT). (TNA)

Talk about credibility…. Credibility is a word unknown to Miss Tarisa and all her followers : the clowns.

I would like to remind you that mid january, the BOT already said :

The gross domestic product (GDP) is very unlikely to shrink in 2009 since the economy in the first quarter began to have signs of recovery after various fiscal measures were taken. (read here).

Who said that ? The Deputy governor… A good pupil… πŸ˜‰

We have 3 kind of people there :
-the brainless
-the liar
-and brainless + liar

Please, could someone explain them that:

-January has been WORSE than december.
-february has been WORSE than january, if we look at all the indicators IN THE FREAKING WORLD.
-unless Jesus is coming back or Earth is visited by people from Jupiter, march will be AS BAD AS february (or maybe worse).

Exports in january ? Dead. Dead as dead meat. Investments ? Dead. Private consumption ? Down since january (VAT receipts are a proof, read here). Government expenses ? Not dead, but not enough to compensate the disaster in other GDP components. Read my report on GDP Q4.

So bad + very bad + very bad at most = NO FREAKING RECOVERY IN THE FIRST QUARTER

I repeat for Tarisa :

Bad + very bad + very bad at most = NO FREAKING RECOVERY IN THE FIRST QUARTER

For Christ’s sake ! Is she able to understand this ? !

After all, I think she can’t… She said that exports crash in Asia was… “a surprise “. Yes. Oui. Ja. One week ago, read here. You see. She’s hopeless.

I’m so fed up of this circus and those clowns. I’m losing my nerves.

Chart, car market : historic drop in january… back to may 2002 level

32 085 passengers and commercial cars were sold in january. A drop of 29,4 % compared to january 2007.

And it’s a drop of 45 % compared to the previous month (total of 59 006 units sold)…

We have to go back to may 2002 to find a lower total (30 092 units).


(Source BOT, table EC_EI_015 and EC_EI_016)

Justice… 100 years of jail for 300 000 THB stolen…

You want to know why the thai “justice” system is totally twisted and inane ? And why It could lead, someday, to a violent reaction within the thai population ?

The Criminal Court yesterday sentenced a former postoffice official to 50 years in jail for embezzling nearly Bt300,000.

Komkrit “Soranat” Wongsasing took Bt299,674 from 24 money orders between November 16, 2000 and March 2, 2001 when processing money orders at Dusit Post Office.

Komkrit, 32, has returned the money to Cat Telecom, which organises money orders via post offices.

“I was too young to realise I was doing wrong. I was worried about taking care of my elderly parents,” he said.

Because Komkrit pleaded guilty, the court commuted his sentence from 100 years. He was convicted of abuse of authority and corruption. Komkrit was arrested on November 18 last year. (Nation)

Everything in this news is absurd :

-crime committed in 2001, but the guy was arrested… 7 years later
-the enormity of the sentence (100 years !) compared to the stolen amount (8500 USD)
-and the money was not lost, he gave it back.

I mean… it’s hopeless. Rich people, murderers get away with bails, light or no sentence at all… but this poor sucker got 50 years…

The perfect non-event : Bank Of Thailand cuts interest rate

The Bank of Thailand cut short-term interest rates by a half of a percentage point yesterday as part of its ongoing efforts to jumpstart the economy.

The rate cut brings the one-day repurchase policy rate to 1.5% from 2%. Over the past three months, the central bank’s Monetary Policy Committee (MPC) has cut rates by 2.25 percentage points in an effort to spur growth. (Bangkok Post)

Repurchase interest rates are already near zero in US, UK, Japan… Did it change something ? NIL. Zero. Nada.

In Thailand, they will go to zero too. Meanwhile, the banks… display much higher rates. Check the spread.


Those who believe that free money (for the banks) can solve the crisis are making a big mistake. There is no demand. I mean no solvent demand.

Why a business would ask for a loan to build a new factory, when there is no demand out there, and when no bank would provide this loan in any case, because the risks are increasing, on a daily basis ?

It’s a fallacy. A fantasy of narrow minded people who think that the Magic Stick of low interest rates will solve any kind of problem. The famous Greenspan Put.

This crisis is not a liquidity crisis. It’s a solvency crisis.

The best proof in Thailand :

Siam Commercial Bank has no plans to cut its mortgage loan rates, even though interest rates continue to decline.

Rungruang Sukkirdkijpiboon, an SCB executive vice-president, said the bank’s current rates were already low.

The bank currently offers fixed rates between 3% and 5% for the first three years of mortgage loans.

“Based on current spreads for housing loans, we don’t really have room to reduce fixed rates for mortgages,” he said. (Bangkok Post)

This manager is right : why his bank would lower its fees on risks when… risks are increasing ?

Why would he lower mortgage rates for people… who are going to lose their job because of the crisis ?

Why would he take in colateral for a new mortgage a house with an overvaluated price ?

This is non sense. Pure logic. Unavoidable. No escape.

It’s true here, there, in Asia, Europe, USA, everywhere on this freaking planet.

If you still want to live in Wonderland supercharged with LSD, try to get a cheap loan on Jupiter. Or Saturn. In exchange, those aliens would be happy to increase the intergalactic trade, and will be very happy to help Thailand exporting its goods (just to please Khun Abhisit, he has such a nice haircut).

Three large-sized banks, Bangkok Bank, Krung Thai Bank, Bank of Ayudhya, yesterday announced lending and deposit rate reductions by 25 and 10-50 basis points, respectively. The change will take effect on Monday. (Nation)

Voila. The BOT cuts by 50. Bangkok Bank follows with… 25.

The Bank of Thailand (BOT) has urged commercial banks to cut their lending interest rates more sharply than deposit interest rates, while indicating monetary policy has limited room to boost economy.

BOT’s deputy governor Bandid Nijathaworn’s comment was a response to the banks’ cutting of rates after the central bank had reduced its policy rate by 50 basis points on Wednesday, to 1.50 per cent. (Nation)

Voila bis. The reaction of the BOT is not surprising. πŸ˜‰

From massage parlor to Commerce ministry… the minister has something to say about thai exports

… So you should listen. Religiously.

If you don’t understand my title, have a look here : The Gallery of the Frankenstein Government.

The Commerce Minister had some… links with… Poseidon, a famous… special… massage parlor (ah ah ah) on Ratchada in Bangkok.

Ready ? Go.

Commerce Minister Pornthiva Nakasai on Thursday said she still hopes this year’s export growth would be between zero and three per cent albeit many agencies forecast that it would face a negative growth. (Bangkok Post)

Pornthiva needs to understand that a growth of zero percent doesn’t mean much. πŸ˜‰ However, we can praise her enthusiasm and optimism…

The Ministry of Commerce would not lose face even if exports may fall because the ministry will continue working to its potential and will not be discouraged, according to Mrs Pornthiva.

Mai pen rai that the cause of her optimism is totally inane : to not lose face. But we do feel confident : she’s working.

If the government adjusts some regulations and facilitates traders, the export figures should grow as initially projected, the minister said, adding that Thai commerce officials stationed overseas were assigned to conduct in-depth marketing reports and monitor foreign markets closely.

This is an impressive plan. To conduct in-depth (the “in-depth” is very important) marketing reports will of course create (from thin air) more demand in those countries. Businesses and people will certainly become more solvent and will buy more thai goods. Just to please Pornthiva. It’s important to please Pornthiva.

She said there are still new markets for Thai products to explore after imports in the United States plunged because of the economic crisis.

Besides the US and Chinese markets, Thai exporters can still penetrate other markets in Russia and the Commonwealth of Independent States (CIS), she said.

New markets ? Where ? On the moon ? In another solar system ?

Have a look at thai exports per destination (chart here). Russia ? Russia’s economy is going south, very quickly, and with a currency in free fall… I repeat : free fall.

The ruble slumped 35 percent against the dollar since August” (Bloomberg). Thailand is exporting in USD… Pornthiva should be ashamed of her grotesque ignorance.

In those conditions, to say that this country can import more from Thailand is not just deeply stupid : it’s also highly entertaining. πŸ˜‰

Anyway. We should thank the Minister for her brillant thoughts about thai exports. We certainly feel more confident. I do.

Now, it’s time for me to go to the… massage parlor. To relax myself. πŸ˜‰Β  Bonne nuit.

Joke of the day : 17 types of business protected by FBA… liberalised ? Maybe. But later. Or preferably never.

The Commerce Ministry is considering liberalising up to 39 businesses under the protected list of the Foreign Business Act (FBA) in order to improve business conditions and promote foreign investment.

“The plan to liberalise businesses under the FBA is part of the government’s strategy to encourage foreign investment during the world economic downturn, as well as provide more flexible conditions to improve Thailand’s business environment,” said Kanissorn. (Nation)

You say : “Great. At last”. And you add : “They are pragmatic. That’s really good. We have a crisis, they’re reacting, in order to attract foreign businesses. Good”.

And then you continue to read the article…

The department has hired the Fiscal Research Policy Office to study which businesses under the FBA’s protection lists should be liberalised and which need more time for adjustment.

Ah… politicians have asked… bureaucrats… Hum.. To make a study. Hum… And within the “liberalisation” idea there is the idea… of protection. πŸ˜‰

But you have a good mood, so you continue to read.

Seventeen types of businesses under consideration are engineering, construction, brokerages, retail agencies, wholesale, advertising, hotels, food and beverage retailing, computer services, warehouse control and domestic transportation, business consultancy, schools, entertainment, auction and sale brokers, pawnshops, and plant cultivation and propagation.

For these 17 types, the Commerce Ministry’s Foreign Business Act committee will consider the adjustment period needed before they are opened up – three years, four to six years, or longer.

Now you are laughing out loud, like the young people like to say. You knew there would be a trick. πŸ˜‰

Of course.

Let me rephrase so you can understand the issue here : thanks to the Foreign Business Act (and the infamous List 3), businesses like restaurant, bar, tourist guide ARE FORBIDDEN to foreigners (unless a special licence is granted) because “Thai nationals are not yet ready to compete with foreigners“.

I repeat : thais are unable to compete with foreigners because they are so stupid (I don’t say that, the thai government does) for :

-Selling food or beverages
-Production of lime
-Hotel business, except for hotel management service.
-Plant cultivation and propagation business.
-Legal service business.
-Accounting service business etc.

The list is not over (read here, end of the page).

It would be hilarious if it wasn’t tragic.

So to summarize : another totally empty and idiotic statement from a thai official who thinks, genuinely, that he can fool those bloody foreigners. Us.

Well mister Kanissorn you’ve missed. You are a clown. And, worse, you insult your own people, over and over, by defending the List 3 of the FBA.

I’ve got another satisfaction. I know, it’s petty. The global crisis is going to crunch the haughtiness of those bureaucrats who think they’re smart.

All those clowns are going to be wiped out. Direct into History’s garbage can, where they belong.

[To know everything about the Foreign Business Act circus, the history, how it works, how the thai authorities are playing with it… read my special dossier]

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. πŸ˜‰

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. πŸ˜‰

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.

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.