Chart, BOT on hold at 1,25 % and the new concept of “enhancing economic recovery”

The meeting of the Monetary Policy Committee (MPC) has agreed to keep the repurchase rate unchanged at 1.25 per cent – a rate suitable for enhancing economic recovery, a source at the Bank of Thailand said on Wednesday. (Bangkok Post)

Another perfect non event. And another big laugh.

Notice the weird concept : “enhancing economic recovery”. ๐Ÿ˜‰

Let me translate for you :

-we broke your ears with the so called “recovery” since several months

-but us at the Central Bank, we know very well it’s pure bullshit, just a funny fart as far as GDP is concerned, ignited by “stimulus packages” worldwide (have a sniff of our good cocaine, or ya-ba perhaps ?). There isn’t of course any sustainable and real recovery. But the show must go on.

-this is why we can’t, no way, increase our rates, AKA the price of money… Because it would kill people and businesses and governments indebted (that is : us, you, them, everybody, like the Blues Brothers were singing)…

For that matter, as thai central bankers, we are following the Mother Of All Central Banks, AKA the US Federal Reserve. In the US, they can’t increase interest rates, eventhough they are talking about “exit strategies“… Because it would sign the implosion of the whole system. Of course, they can’t lie forever, nor we can’t, but right now we just try to gain some time… Until what ?

Well, we don’t really know : the rebirth of Jesus. The fall of an asteroid. Or something like that. Not sur. But we’re working on it.

-but anyway, you, as the plebeians, you have to believe us, and… you have to pay our dear friends working at commercial banks

-because thanks to the cheap money we provide, banks are making a killing thanks to an increasing spread (difference of the price they pay for this money, and the price they charge you, the plebeians, for lending you this money).

That’s not the only tool they’ve got : they can take also this cheap money at 1,25 %ย  coming out fresh from our printing presses, and then start to speculate with it. It’s working too, and very well !

Voila. Now, I thinks it’s clearer, no ? ๐Ÿ˜‰ [I think I could really work in a Central bank].

It’s time to update my famous chart (last time was in april 2009 ! Time goes too fast).

Methodology : for the first working day of each month, I take the Minimum Lending Rate of the Bangkok Post, and the repurchase rate of the Bank Of Thailand.

Why Bangkok Bank ? Because it’s the biggest thai bank. Disclaimer : “Minimum Lending Rate” does not mean… well… the minimum lending rate. ๐Ÿ˜‰ People can have lower rates.

But still, you get my point. Since the BOT slashed interest rates to a ridiculous 1,25 %, we can clearly see that the spread is increasing.

It means : more profit for the commercial banks (disclaimer : on the paper only, if no one is borrowing this money then of course the bank doesn’t make any profit).

The meeting of the Monetary Policy Committee (MPC) has agreed to keep the repurchase rate unchanged at 1.25 per cent – a rate suitable for enhancing economic recovery, a source at the Bank of Thailand said on Wednesday.

2 Responses to “Chart, BOT on hold at 1,25 % and the new concept of “enhancing economic recovery””


  1. 1 African Nomad 14 January 2010 at 8:38 am

    The increasing spread reminds me of the good old-fashioned ‘rip’ – used in boiler-room operations. ๐Ÿ™‚

  2. 2 Pricilla 14 January 2010 at 6:57 pm

    I am encouraging my son to go into banking, hopefully with Goldman Sachs, as if employees there attain a government position all their bonuses and shares remain intact and still payable. Goldman knows the payout their people will deliver, in fact the US government is 100% bought and owned completely by Goldman.

    The bonuses are enormous, when they leverage the bank too far and it fails the government will bail them out, it is a win-win scenario. Obviously Thai banks, also very well connected with government, are onto the same game re interest rates.

    Ironic actually how the very people that contribute nothing to society, add nothing to the productivity of the economy, and fleece people of their savings are all getting filthy rich.

    I wonder if when the second crash hits and the bonus boys get bailed out again if the brain dead public will start too wake up as to who the suckers are paying for it and start piking some heads. Nah, the media will spin it favorably.


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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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