Another perfect non-event : Bank Of Thailand cuts interest rates at 1,25

Sorry to repeat myself. But yes, it’s another perfect non-event.

The Monetary Policy Committee [BOT] yesterday expressed grave concern over political instability along with the prolonged global recession, which could drag the economy down deeply.

The MPC, as widely expected, cut its policy interest rate by a quarter percentage point to 1.25 per cent, the lowest level since July 2004. (Nation)

Why non-event ? Because the Bank Of Thailand is inaudible. They just have followed all the other Central banks around the world, and an absurd keynesian policy, to “figth the crisis”… free money. Toilet paper.

And ? What happened ? NIL, NADA, no result. The crisis is still there, more devastating than ever, gaining strenght like a hurricane, day after day.

Yes I know, CNCB told you last week (after the G20) that it was over, that Wall Street was celebrating. Bullshit. It’s a nightmare. The macro and micro economic statistics are horrible, USA, Europe, Asia, you name it.

So I repeat my question : And ? What’s next ? We are virtually at zero, the Bank of Thailand can’t cut further down obviously. 😉

So ?

To summarize :

-Zero interest rates, free toilet paper money doesn’t matter. We don’t have a liquidity problem. But a solvency problem.

-in the middle of a full blown recession, there is no demand. No demand for free money. To invest. Of course many clowns need to borrow free money, to repay other… debts… But recovery can’t be based on such scheme. The party is over.

-what businesses are going to invest today, increase capacities, seeking loans ? Those that are seeking loans… are the ones that are dying : cash flow problems, less demand. It’s over. Bye, bye. Would you lend money to such businesses (or individuals) ? Even if the government tells you to ? Of course not.

-the banks are cautious : they don’t want to lend more. They know very well that the other word that comes with “recession” is “bankruptcy”. So why would they lend money to businesses that will go bankrupt soon ? To please Abhisit ? To please the clowns ? Ah ah ah.

-the banks are like everybody else : they want to save their margins : therefore they are not going to cut their rates… However, they will cut the deposit rates ! Too bad for… the savings of people. Too bad for… consumption.

-so the BOT’s decision is just a small gift… to the banks and a few business friends (who will be able to refinance their debts).

Here is the proof.

Voila. 😉 Everything is simple.

Last point, the rant like the cherry on top of the cake. Ready ? Be focused, it’s going to be quick.

The interest rate cut would help stimulate the export sector, central bank assistant governor Duangmanee Vongpradhip said on Wednesday. (Bangkok Post)

I remind you that this… individual… working apparently at the Bank Of Thailand… is paid. A salary. 😉

What’s the link between a bicycle and a cabbage ? None. It’s the same here. The Assistant governor has just exploded the lunacy barrier, like a F16 would break the sound barrier.

Unless… unless… this individual made a big mistake… and in public drew a line with… the exchange rate issue ! Surprise ! 😉

In theory zero interest rates would weaken the local currency (money would go somewhere else)… But… of course it’s the same shit everywhere… So the theory doesn’t apply. Too bad.

Many clowns (politicians but also, and it’s worrying, business owners) are calling for a weak THB policy… in order to “stimulate exports”. The famous “beggar thy neighbor” strategy.

Totally taboo… But they are all thinking about it.

As I wrote… it’s a very powerful temptation.

Anyway… Back to Tarisa (BOT governor) and the question : what’s next ?

Now that interest rates are virtually at zero, what are you going to do ?

Quantitative easing ?


Game over.

1 Response to “Another perfect non-event : Bank Of Thailand cuts interest rates at 1,25”

  1. 1 World Insanity 10 April 2009 at 3:33 pm

    Further interest rates will not help Thailand climb out of recession.

    Savers are now facing zero per cent interest on their accounts, while many borrowers do not benefit as banks have not passed on the rate reductions in full.

    Rates have already been cut far enough, all this does is rebuild bank margins, further hurts confidence, worsens poverty and damages those who did not over borrow.

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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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