Knock-knock… who is coming back ? The debt of the 1997 Crisis !

How ironic… We are amid a full blown global crisis… governments around the world are all doing the same mistakes (inane “stimulus” or “bailout” plans) digging their own grave… and Thailand of course is following exactly the same path, with our glorious Oxford educated Prime Minister… but guess what… the 1997 Crisis is still there ! 😉

You must be thinking : TC is going loco. But check this striking piece of thai ingenuity.

The Public Debt Management Office says it remains uncertain whether lingering damage from the 1997 economic crisis should be the responsibility of the state or the Bank of Thailand.

The government is considering pushing for a legal change that would shift debt service costs for losses incurred during the crisis back to the central bank to help free up more funds from the budget for immediate stimulus and investment programmes.

The central bank’s Financial Institutions Development Fund incurred liabilities of 1.4 trillion baht during the crisis for its bailout of creditors and depositors of ailing banks and finance companies.

The liabilities have been restructured over the past several years through government bond issues. While the central bank is responsible for ultimately paying down the principal debt, the Finance Ministry must carry the interest cost of the bonds. […]

Carrying costs for the liabilities are as high as 60 to 70 billion baht per year for the government, an expense item that Finance Minister Korn Chatikavanij has stated he wants to bring down to help free up funds for other programmes. […]

The liabilities have been split into three lots, with 500 billion baht in the first lot to be paid down from annual profits generated by the central bank. Two other lots, of 112 billion and 776 billion, would be paid through returns from the central bank’s general accounts.

From 1997 to 2007, however, the central bank has paid down just 31.6 billion baht for the first lot of 500 billion baht in debt. (Bangkok Post)

Yes ladies and gentlemen… They didn’t solve the 1997 Crisis… they did like France in the 90s, Japan in the 90s, USA in the 80s … they just moved the dirt UNDER THE CARPET.

But the dirt is still there. Of course. Even 10 years after. And those morons are now fighting like children…

The current government is so deeply into economic shit and so totally void of common sense, and so totally full of pathetic Frankenstein ministers… and so desperately looking for cash to finance its inane policies... that it wants to give the pile of dirt to… the Bank Of Thailand.

The idea that BOT’s “profits ” could solve the issue is utterly grotesque… The last time the BOT published its financial results… they were not very good (read here). 😉

So to summarize : the BOT can’t pay. The government can’t pay. So the debt is still there… interests are running… Exactly at the time when the government throw more cash on the current crisis… and needs to borrow more.

Cisor effect.

The 2008-20XX Great Global Crisis has just begun… but Thailand is still talking about 1997…

Abhisit is trapped.

8 Responses to “Knock-knock… who is coming back ? The debt of the 1997 Crisis !”

  1. 1 mhanna43 12 February 2009 at 12:50 am

    Collapse. And add on the constant “Brain Raiding” of the media to the general public leads to nice recipe for disaster. Well, recipe has been made, we are just stirring the soup now.

  2. 2 World Citizen 12 February 2009 at 5:16 am

    Yes its time for…………..wait for it…………………
    ………..The only game Thailand has not yet joined………


    How better to repay your debts & boosting exports—of food

  3. 3 ThaiCrisis 12 February 2009 at 5:37 am

    Indeed. As I wrote several times, the “temptation” is going to be increase.

    It will take a lot of will from the BOT to resist…

    In any case, and more globally, “competitive devaluation” is the next card in Asia. It’s unavoidable I think.

  4. 4 Prokster 12 February 2009 at 5:56 am

    Let’s hope so, the longer they hold out (exactly why Ithey have been so stubborn I have no idea), but the THB simply must go to 38 if not 40 if the idiots are to stay anywhere near the subs bench.

  5. 5 Marvo 12 February 2009 at 12:08 pm

    Ineresting stuff TC. One can’t help wondering how bad it could actually get for Thailand. The longer the BOT hold out, the harder the fall’s going to be me thinks.

  6. 6 antipadshist 12 February 2009 at 4:42 pm

    “competitive currency devaluation”

    well, compatitive or not – but the devaluation is pretty evident. or inflation. whatever.

    here is the simple fact:

    as I recall back in Nov 2008 the price for 1 baht of gold (that’s roughly half ounce) was 12500 Baht.
    now (as of Feb 11th) it is 15400
    that is 3000 Baht difference (hmmm… almost …. 100 bucks ! 87$ more exactly)

    so, 3000 Baht raise indicates that Thai Baht has lost its value (well, comparing to gold) almost 25% (3000 / 12500 * 100 = 24% )

    this (Baht value loss to gold) might be not so much under attention of ordinary folks who struggle to meet the ends and pay their bills – however they are fully aware of food products (and other basic necessities) prises raise. say, milk for kids. as I recall there was at least 12% raise – by now may be it is more than that.

    so, davaluation of of local Thai currency is pretty obvious. 😉

    and surely – there is more to come. 😦

  7. 7 Anonymous 12 February 2009 at 10:09 pm

    Left hand… meet right hand. The BOT *is* the government. It’s debt is the government’s, and it’s losses are the governments. This is nothing more than a bureaucratic accounting feud.

  8. 8 fall 13 February 2009 at 1:41 pm

    Hey, didn’t Mr. T’s showcase was clearing of 1997 IMF debt? What’s going on here?

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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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