How do you say “credit crunch” in thai ? Well, you should start to learn, quick quick, leo leo, chop chop.
Nice, huh ?
(Source Bank Of Thailand, table FI_CB_015_S3).
If you’re new on this blog, or if you want to refresh your memory, read my article… about the data for april.
Credit : the party is over, growth is decelerating
I don’t want to bother people by repeating myself ad nauseam.
But I think the charts are easy to read.
The game is over…
Businesses are bleeding… since several months… Another proof : the explosion of bankruptcies (read my article)… This trend is going to continue… therefore banks will be less and less willing to lend. Too risky. And it makes no sense to lend in order to increase capacities during a recession.
Therefore, in a few months (as soon as next month for businesses ?), we will see a negative growth of total credit year on year.
It’s Economy 101. It’s basic. It’s simple.
And there is nothing Abhisit and all the other clowns can do about it.
This remark applies to virtually the whole world and to all our so called “leaders”… They’re all calling, with hysterical tone in their voice, for more lendings… as a way to solve a crisis created by reckless lendings and cheap money.
It’s of course totally absurd. Even a highschooler could tell. But it’s apparently too complicated to understand for the politicians.
It’s interesting to note that the total outstanding credit to the government… has increased by 57 % in may y-o-y (compared to may 2008), at 134 billions THB. Sounds impressive ?
It’s of course totally derisory compared to credit to businesses (total = 3 768 billions) and to invididuals (total = 2 173 billions)…
In other words, the government can’t fill the holes.… And the holes are just getting bigger and bigger.
Then after, you have to factor in… the negative feedback loop dynamic… less credit will cut the life support for many other companies… will lead to more defaults, unemployment will rise, leading to more defaults, less consumption, less taxes collections, creating more imbalances.
Again, it’s astonishing to see so many people living in Laland and who still believe that everything will be fine, that the crisis is going to disappear, thanks to some magic wand or invisible hand, thanks to Buddha (Jesus, Allah etc.) like it never happened, like if it was just a bad dream…