Chart, credit, october : +3,8 % year on year… but down for businesses

(Source Bank Of Thailand, table FI_CB_015_S3).

The growth of total outstanding credit for businesses recorded a drop of 7% in october (-6,4 % in september), compared to october 2008.

Overall, we still have a growth of 3,8 % year on year, at 7 623 billions THB.

Slowely, but surely (?) the credit belt is tightening. Sure, it could be worse. But the trend is not really euphoric for businesses.

By the way it’s interesting to look at the weight of each group :

In % of the total amount of outstanding credit, the part for businesses went from 60 % in 2006 to 47 % in october 2009.

And the part of “domestic banks and financial institutions” is catching up.

Anyway. It doesn’t prevent the Bank Of Thailand to make comments, coming out from outer space.

Commercial bank lending was likely to increase by five to nine per cent in 2010, the Bank of Thailand forecast on Thursday. Central bank deputy governor Bandit Nijthaworn said bank loans should rise next year as loan figures in October rose 0.2 per cent year-on-year and 0.4 per cent from September. Lending declined in the first nine months of this year due to the sluggish economy.

Mr Bandit said loans should move positively next year because the actual liquidity was five-times more than the required amount
. The amount available would be adequate for commercial banks to support the business sector.
(Bangkok Post)

9 % ? And why not 25 % ? ! It’s laughable. And as usual we can admire the perfectly non sensical and twisted inference made by thai officials. Let me highlight the key point : loans will go up because… there are liquidities !

This guy is so dumb, it’s scary.

The rule is : credit = solvent demand + means (liquidities).

It means : even if there are tons of cash, but NO (SOLVENT) DEMAND BECAUSE… for instance… an economic crisis (hello, you remember ?) then there will be no loans. I repeat : banks won’t lend.

Banks won’t lend to please the BOT, Korn (the alleged Finance Minister), Wall Street, the panda in Chiang Mai’s Zoo or Santa Claus.

Businesses won’t ask loans to invest if there is no demand for more goods, more production. However, they might looking for money… just to survive. And in this case, the banks won’t lend. Too risky. Vicious circle.

Credit is not, should not be like a living creature. Credit is a mean. Not an end.

And this is precisely what was forgotten by all the clowns around the world. And this is precisely the cause of the Big Crisis : free money pushed into the throats of millions of people and businesses, in the name of “economic growth”, when in facts the proper name was : Ponzi Scheme.

7 Responses to “Chart, credit, october : +3,8 % year on year… but down for businesses”

  1. 1 lol 14 December 2009 at 9:09 am

    It’s a perfect situation for another stimulus package from the government. The new larger package will suck up the liquidities in the market, and that will make the banks and the politicians really happy.

    Meanwhile businesses will still struggle to find more funds just to survive, and found themself stuck with tighter lending regulations and higher interest.

  2. 2 richsamui 14 December 2009 at 10:30 am

    Well, I am new to comment here, but have been reading this blog for quite a while…Noticed something not dissimilar to other blogs – lots of comments for controversial things, not so much for tow ?he real meat like this..I am one of those fools who invested a lot in this country only to be dissappointed with it’s performance and i must say that i really appreciate the REAL economic commentary found here…So how’s the king now? That pretty much descides everything in the future….

  3. 3 Pricilla 14 December 2009 at 6:37 pm

    Richsamui, in what countries are people ecstatic about their investments? I also have a bit of money here in real estate and would like to offload some to build up my cash levels more for what I think is coming.

    My bother however got hit hard in the stock market, we are both now repositioning. Interesting read an article on Market Oracle suggesting the Thai market and real estate will recover and do Ok, maybe not but some optimism out there.

  4. 4 Insanity 14 December 2009 at 11:19 pm


    If possible, please advise the Market Oracle link you refer to – thks

  5. 5 richsamui 15 December 2009 at 5:10 am

    Pricilla, I too would interested in the link – any sunshine in the gloom would be welcome, indeed. I am currently sitting on a couple of high en villas here in samui. can’t find even a tourist rental for them even this close to Christmas/new year. and i am not asking the earth for them!

    As far as sales go the island is dead and has been for months.

  6. 7 ray 23 December 2009 at 7:34 pm

    thaicrisis. finally access again!!! looks like u hit a few nerves.

    richsamui… i too live in samui and have invested here in real estate. yes u are correct things are bad but business has picked up. as for yr high end villas it will be very difficult to sell because the potential buyers are europeans and they are out of cash since 2008.

    pricilla. if u have real estate in bangkok it will be easier to off load( esp. commercial real estate sukhumvit ,silom etc)..

    real estate in bangkok prices will not go up. most demands come from singapore, hongkong ,japan… after the coup and then financial crisis the above mentioned countries will but bring the money to invest in thailand. now they r off to china.

    also it is funny that realestate developers( many my good friends) always compare thailand/bangkok prices to singapore and say that is is dirt cheap.

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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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