Archive for June, 2009

Chart, credit : the party is over, growth is decelerating

(Source Bank Of Thailand, table FI_CB_015_S3).

Time to update the charts about total credit and type of debtors, at commercial banks.

The total amount (outstanding) of credit was 7 576 billions THB in april, a + 8 % compared to april 2008 (but far lower than +18 % y-o-y we had in january).

My bet : in a few months, the trend will turn negative. The recession virus is infecting, slowly but surely, the thai credit system.

(Credit = Overdraft + Loans + Bills)


Now with amounts :



The “plateau” is visible… Despite the hysterical calls from the government for the banks to lend more, to pump up more cash into the system… it’s obvious : banks won’t take the risks.

This basic, fundamental rule, is totally forgotten : during recession it makes no sense to :

-borrow more money (in order to invest, to increase production capacities when precisely demand is falling)
-and to lend more money (because risks are increasing)

… unless interest rates are very high (to pay for the risks)…

The clowns (all over the world) think that they can make businesses and individuals borrowing more money, and force banks to lend more during a recession… and at the same time keeping interest rates super low.

Another depressing opinion poll : “okay with a corrupted government”

I wrote in january :

The most depressing “opinion poll” ever : children want… things from Abhisit

It was indeed depressing. But I’m not sure anymore It was “the most”… 😉

A new one is a serious competitor for the golden medal.

A latest survey reveals that many Thai people would accept a crooked government if it can make the country prosper and raise their standard of living.

The Abac Poll Research Centre conducted a survey on people’s well-being, involving 1,228 households in 17 provinces nationwide.

84.5 per cent viewed that corruption in businesses would not be unusual and 51.2 per cent said they would tolerate a corrupted government if it can improve the country and their well-being.

73.9 per cent agreed that living self-sufficiently can help ease the economic crisis. (Bangkok Post)

I give no credit to Abac… At all… But what strikes me is that they didn’t censor such “poll” ! 😉

And I love the part about the “self sufficiency” policy. It’s obvious that this joke was added after by some editor or crook to please theirs masters… I mean it’s hilarious.

It like to ask : “as a crook, a corrupted citizen who supports with a burning enthusiasm a corrupted government, as long as it can benefit yourself, do you approve the self-sufficiency philosophy promoted by our beloved King ?”

There is one mystery though… Why they didn’t write : “99,9 percent agreed” ? Or even “120 %” ? 😉

By-elections : another defeat for Abhisit, another slap in establishment’s face

The opposition Puea Thai party is the likely winner of the by-election in Si Sa Ket province, according to the Election Commission’s unofficial result on Sunday evening.

EC member Songsak Chantharukkha said more than 60 per cent of the ballots in Constituency 1 of Si Sa Ket had been counted.

He said Puea Thai MP Surachart Charnpradit had at least 40,000 more votes than Chart Thai Pattana MP Sakulthip Angkasakulkiat. (Bangkok Post)

Another (large) victory for Thaksin’s party with by-elections. And another defeat for the “Frankenstein Coalition“, led by the Democrat Party and supported by Newin… ex-friend of Thaksin.

Yes, over and over again, we shall repeat ad nauseam that Abhisit, in order to be elected PM by the House last december, had to sign a devil pact with someone who was a close ally of the so called Arch Devil : Taksin himself !

And Abhisit is still pretending to be proud, to be a “democracy” lover… It’s laughable. Anyway.

That’s the problem with those damned elections : people do not vote like the so called “democracy lovers” (military, Abhisit, bureaucrats, convervators etc.) want them to vote ! How terribly unfortunate… 😉

It happened in 2001, 2005, in 2006, and in 2008… everytime… they voted for Thaksin… And then there have been a coup, and the dissolution of TRT and PPP to “balance” the situation… To “fix” it.

The political stalemate is still vivid.

Despite all the government’s efforts to promote “normality” (an appearance of normality, like a huge Potemkin Village), the thai society is deeply divided.

Abhisit has solved nothing (he’s unable and unwilling to , being just a “cardboard” Prime Minister, controled by the establishement).

The 122 billions USD question : should Thailand use its foreign currency reserves ?

Since a few weeks, we hear calls for the BOT to use its foreign currency reserves, in order to boost the domestic economy. People don’t understand why the government should borrow billions of USD… when the BOT has a total of 122 billions in “reserves” (+ 6 in foward positions).

This discussion is not new actually. It started with the Samak government, last year.

First, if you don’t know what are the Bank Of Thailand reserves, read the official definition and my article.

(Here is an update of the chart, source BOT)


Let’s start with the official opinion of the BOT : it’s an absolute no-no. And this is not new. Here are some interesting quotes from Tarisa (the BOT governor), published last week.

Recently, Dr Narongchai Arkasanee, a well-known economist, and other academics, called on the central bank to use US$200 million (Bt6.82 billion) to $300 million of its international reserves of $120 billion to help stimulate the sagging economy as the government is cash-strapped.

Tarisa vigorously defended the central bank’s international reserves management, saying that in economic theory it is not an appropriate policy to use international reserves to prop up the economy.

“We have already talked it out with the prime minister and the finance minister that using international reserves to stimulate the economy is not a good option.

Apart from the US dollar, there are other currencies in the reserves. If we sell the dollar from the reserves, the value of the baht will jump, which would complicate the problems. And if the Bank of Thailand were to push out the baht by converting the US dollar in its own account, this would also amount to printing money,” Tarisa said.

No country in the world is spending money from its international reserves directly. If we were to use the reserves to buy up some oil reserves, then this matter can be put to rest because it would not affect the domestic economy.” (Nation)

Not an appropriate policy ? That’s a very interesting wording. But she’s right : very few countries are tapping into their reserves…

So why it wouldn’t be appropriate ? Let’s explore a few possible reasons.

Exchange rate
For a country like Thailand, with a growth driven mainly by exports, the issue of the exchange rate USD-THB (the other currencies are totally irrelevant as I showed in this article) is the core issue.

At 34 THB for 1 USD, exporters, businesses are already complaining. They all want a weak THB, to (artificially) boost their income (it’s the “beggar thy neighbor” policy, read my article here)

Selling USD, and converting them into THB, would lower the value of USD relative to THB (offer and demand). And then a higher THB would make like difficult for thai exporters.

Inflation could be another concern. All this cash, would be converted in THB, and then would flow the domestic economy. If liquidities are already at high levels, then it could produce an inflation of prices.

The honey pot syndrome
Tarisa is probably shy. But I see a third factor : thai politicians.

Who can trust thai politicians ? Nobody of course. And Tarisa knows that very well… She’s a member of the state apparatus. To give to the politicians the keys of the coffer would be in a way suicidal. This mountain of money could have very negative effect on their sanity… And their own bank accounts 😉

It would be like giving the keys of the fridge to a pack of hungry wolfes…

So maybe the BOT wants to keep an adamant position against this idea, to prevent any breach. To accept to give even a few hundred of millions of USD could create a dangerous situation.

As Tarisa says, tapping into foreign currency reserves is not a conventional policy. Central bankers are naturally reluctant to such an idea, because it doesn’t fit with their text books.

Especially in Thailand, where weight of “traditions” and lack of creativity are a heavy burden. However, we should note that the FED with Bernanke was not afraid to take “unconventional” decisions (very unconventional…).

Overall, those are the 4 reasons that could explain the BOT’s refusal.

But I think Tarisa is not telling us everything.

I would like to add a fifth reason, a fifth factor : the fear factor.

The fear factor, the conspiracy of the idiots or the MAD policy
There is a very fragile equilibrium right now in the world, about the USD. We all know that the US is doomed, but nobody who could have an influence over the USD want to take any action that could accelerate the move.

Yes, I’m speaking about central banks… who continue to buy (like there is no tomorrow) US Treasuries (my article here)… therefore USD.

If one central bank starts to getting out of the USD… even on a small scale, it could have huge consequences… and put the equilibrium in serious danger.

I’m not speaking about a conspiracy (albeit…) … but rather a “converging and common interest” between most of the central banks around the world… like a non written agreement if you prefer…

During the Cold War, there was the MAD concept : Mutually Assured Destruction… It’s exactly the same now with the USD…

So what to think ?
As for my own opinion… Should Thailand use its foreign currency reserves ?

I would definitely answer yes. At 122 billions USD and counting, the reserves are just too high (regarding conventional theory, and Tarisa should start to worry about the way she will justify an ever growing reserves…).

A fraction of this money could definitely be used to boost an investment program. A real one.

Thailand needs heavy infrastructures. And those wouldn’t be luxury (like to build a new stadium… interest = zero as far as economy is concerned)… but could really fuel future growth.

And the sector we are looking at is obvious : transportations.

But… of course once you have set up a principle, then politics catch you back.

It would be utterly unimaginable to give a large amount of money to the current thai government… I mean can you imagine a guy like Newin, whose gang controls the Transport Ministry, and such money ? It would be obscene.

That’s one of the main burden of the country : the dirty “politicians” (included bureaucrats and military).

Green Shoots Stew : VAT down 20 %, corporate taxes crash (-38 %) in may

Korn, alleged Finance Minister, February 1, 2009

Korn said the government would receive huge amounts of cashes from taxes in May.

ThaiCrisis, February 1, 2009.

As for the “huge amount of cash” scheduled for may… Yes, it’s corporate taxes (may and september).

But Korn is a clown because he relies on a ressources that is going down, and will continue to do so… Businesses will make less and less profits.

The report for government revenues in may has been published (source Finance Ministry).

And guess what ? Corporate taxes crashed 38,5 % year on year, from 139,5 billions THB in may 2008 to 87,7 billions !

It’s good to be good. But it was really a too easy shoot…

My point : I’m not particularly smart. It’s Korn who is totally dumb.

He’s a disgrace, nothing less. Like a child waiting for Santa Claus with a stupid smile on his face… The thai economy was already in recession, and this clown wanted us to believe that thai companies would pay a lot of taxes on profits they were not making anymore.

He should be fired.

As for the VAT, another tasty Green Shoot : -20 % at 32 billions. VAT is a good indicator of consumption… No improvement.

But wait a minute !… Abhisit promised us honey, peace and love with his “special allowance”… in april ? 2000 THB to 8 million low earners ? “Fire up the thai economy” ?

“We want to help employees with the low income,” he said. “What we do is to give cash into their hands to induce spending by injecting cash into the economy. This would help the economy in the first, second and third quarters. (Bangkok Post)

Said Abhisit, end of january... Well apparently, the policy did just what it was supposed to do : a fart. A light fart. 😉

“Help the economy in the first, second and third quarter” ? !… What a master clown !

That’s the killing point with Internet : you talk like a dumbass, and then It follows you… All your life long.


The total government net revenues in may : – 21,6 % at 217 billions THB (may and september are always high, thanks to corporate taxes).


And the official report, with the year on year comparisons.


You want a good laugh ? You want to understand how sensitive those issues are, and how desperate the government is ?

Just read the article published by Bangkok Post, that contains a few statements from officials. It’s surreal.

-Tax revenues for May exceeded targets for the first time this fiscal year, thanks in part to tax increases in fuel, alcohol, beer and tobacco, the Finance Ministry said yesterday.

Surreal. The total revenues are down 21 % compared to may last year, but the clowns are focusing on… taxes on alcohol, tobacco and fuel… How strange… they don’t speak about corporate taxes. 😉

-Somchai Sujjapongse, the director-general of the ministry’s Fiscal Policy Office, noted one promising sign was that value-added tax collections totalled 32 billion baht in May, significantly higher than the 20 billion baht per month collected earlier this year.

“Even though VAT was lower than the 40 billion baht in revenues collected in normal times, the increase from previous months is a good sign that consumption is picking up,” he said.

This is a gross lie. It’s amazing ! The total VAT never went down 20 billions per month in the recent months (look at my freaking chart !). And may is LOWER than april… And year on year, it’s a drop of 20 %.

So where are the “promising signs” ?

Ah yes I forgot : on the moon.

Abhisit’s platitude du jour : “If we succeed, people will be satisfied”

The broken mechanical puppet continues the show : upbeat, recovery, dynamism, stimulus, growth, hope, etc. Abhisit is like a machine, repeating ad nauseam a few keywords, perfectly empty.

Latest show in Singapore.

The Thai economy should return to positive growth later this year with recovery by 2010, Prime Minister Abhisit Vejjajiva told leading business executives during his visit to Singapore on Monday.

He said the government’s stimulus package would lead to the creation of 1.5 to 2 million jobs.

1,5 to 2 millions jobs ? Why not 4 millions ? Or 8 millions ? Last week it was 400 000, or 1,2 million. The figures change on a daily basis actually. That’s the first rule of thai politicians : throw in the air some big “figures”. To impress the audience.

He hoped the Senate will approve the public lending bill passed by the House last week which empowers the government to borrow 400 billion baht to fund the stimulus.

The money will be used to upgrade irrigation, transportation and communications, schools and health care centres, he said.

Like BP wrote… there is a lot of “smog” about the ways the money will be used. Depending of the day of the week, and the guy who is talking, figures change, targets change. The truth is : they don’t know themselves. And they don’t care.

They just want money, to “boost”, to “stimulate”… As for a detailed plan, we will see tomorrow. “Sign me the blank check first”.

“The biggest challenge is to take the country through this economic crisis and to emerge out of this.

”If we address those issues, I think the majority of Thais would be satisfied,” the prime minister said. (Bangkok Post)

My god… what a platitude !

We would be satisfied if Abhisit could stop playing this cheap comedy.

Abhisit starts to understand : thai exports are falling because…

Eureka !

Our dashing PM starts to understand. Light the candles !

The government will reassess the problems causing Thailand’s exports to decline sharply, Prime Minister Abhisit Vejjajiva said on Saturday.

“I’ve already asked the Finance Ministry” to probe the trend, Mr. Abhisit said. “However, the major reason is that the purchasing power of (our) trading partners has fallen and (our government’s) measures are expected to produce (only) limited results.”

This is the reason why the government must focus on domestic investment to stimulate the economy, he said. (TNA)

After months of lies, of grotesque forecasts (the famous “targets”), of hysterical “Green Shoots” foolishness and tons of other non-sense talking, Abhisit starts to speak… truely.

yes there is nothing Thailand can do about world demand

-the inane “stimulus”, “boost” and other “dildos plans” have zero effects on exports, none whatsoever

-no there aren’t any untapped exports markets, in other solar systems, that could save thai exporters (-26,6 % in may)

-yes if the negative trend continues, the damages will increase greatly (bankruptcies, defaults on loans, more unemployment etc.). Negative loop feedback. It’s probably unavoidable at that point.

-yes, like I repeat over and over on this blog since several months (read here and there), don’t expect any recovery of exports anytime soon. Peak Exports (july 2008) is behind us. And will stay behind us.

-last but not least : Thailand has (had) an export driven economy… So for that matter it’s easy to foresee difficult times ahead as far as GDP is concerned… if the negative trend on exports continues for long.

Private consumption is dead, investments too… and government is broke (read my GDP report)… So ?

How the thai GDP could grow ? With love and water ? Wishful thinking ? Abhisit’s smile ? How ?

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.