Chart, exchange-rate and holding of US Treasuries : more for more

In august 2009, here what I wrote on the chart with USD-THB exchange rate and thai holdings of US Treasuries.

The BOT fantasy : buying more and more USD (via US debts) in order to maintain the exchange rate USD-THB.

Well, 5 months later, where are we ?

Higher US Treasuries holdings… and higher THB. Well done guys ! 😉

But I agree, you could also see the half full glass here : It means, if the BOT haven’t piled up USD, the THB would have been even stronger.

I remind you the obsession of virtually every asian central banks : weaken their local currencies versus the US Dollar, in order to boost, stimulate their dear exports.

Each countries use different tools, but with the same cheap short term obsession : the Beggar thy neighbour policy. China for instance sets the exchange-rate (It’s much more convenient) because China is an authorian (to use the word “communist” would be an insult to Karl Marx…) state and because they don’t give a rat shit about what other countries and other people think.

For that matter, it’s a shame to see Geithner the slave to bow in front of the Chinese, and to delay the report on… (the alleged as they say !) currency manipulation by China (read here).

Even the Euro Zone is doing the same. The Great Greek Drachma Drama (copyrighted myself)  is… very convenient to say the least (on the short term, eventhough It’s a catastrophy on the medium term) to create a little bit of distrust… and to lower the Euro versus the Dollar. Enough to “boost” the famous german exports…

Boost. Stimulation.Throught debts and cheap (depressed) currencies. It’s the Dildo Economy on Prozac.

The whole freaking planet is running toward the Zero (as far as exchange rates are concerned). Happy and Stimulated. 😉 Have a Viagra, please.

Voila. Thailand is happy with a (small) recovery in exports… in order to please the clowns Korn and Abhisit so they can use the words “GDP growth” and “recovery”, leading to surplus. And those surplus are used to buy… US debts… allowing to keep a relative control on the USD-THB exchange rate. But meanwhile, those surplus and this fake “GDP growth” excite foreign money, oceans of liquidities… Leading to inflows (buy buy buy thai stocks !)… leading to a higher THB… leading to the need to further depress the THB if they want to continue to boost exports… with surplus… etc. etc.

It’s not even a vicious circle anymore. It’s a clown circle. A bozo circle.

Last but not least : the view with % of change year on year. I agree : the BOT seems to slowdown. But it’s too early to say.

(Source Bank Of Thailand, and US Treasury).

Chart, credit : total up… but down for businesses

Time to update our charts about… credit.

You know the motto : credit is the Grand Master Flash. The blood that flows into the veins of the Green Shoots’s Economy.

No credit = no money = no honey. 😉

This is why the clowns all the over the world are so totally obsessed with credit. They want you and the businesses to eat, to swallow, to digest credits, the more is the better.

Credit is the super charged drug for an inane and twisted economic system.

Anyway, enough of the big words. Let’s go back to our study : Thailand.

Total outstanding credit (at commercial banks) is going up. Total in january 2010 : 7 926 billions THB.

Party time Miam Miam !

But… credit for businesses is going down. I mean it’s obvious : the recovery is so strong, the Green Shoots are so Green that companies don’t need credit. They don’t have to invest. 😉

Individuals ? Going up very slightly. The big question mark is the group “Domestic Banks and Financial Institutions” that is responsible for the growth of total credit.

Let’s have a look inside this group.

60 % of the total outstanding credit amount of the group “Domestic Banks and Financial Institutions” = “Specialized Financial Institutions”, according to the BOT. Great. I mean, it’s very clear. 😉

What are they ? Who are they ? I don’t have a clue.

If we look at the weight of each group. Businesses represent now 45 % of the total outstanding credit at commercial banks (versus 60 % 4 years ago). Individuals, flat at 29 %. And we see the strong growth of the group “Domestic Banks and Financial Institutions” (20 % in february).

So let’s recap and what we should think about this ?

-commercial banks and “financials institutions” are borrowing from…  commercial banks.

-is it a way to blurr the situation, to prevent a honest assessment, or to makeup the statistics ?

-or is the proof that the system is perverted : banks are reluctant to give loans to businesses (too dangerous, because of the crisis)… they prefer to fuel the money into weird financial black boxes ? We don’t have indication on how the money is used after by those “Domestic Banks and Financial Institutions”.

-or is it the illustration of an evolution of the thai financial system : commercial banks are stepping back, and they let “specialized institutions” to deal with customers ?

I don’t have the answer.

I could just say : being old school, I still believe that a bank that doesn”t give a credit (because it can’t or because it refuses) to a business… is not a healthy sign.

A last one, before to hit the road :

(I didn’t represent the % of growth year on year of the group “Domestic Banks and Financial Institutions” on this chart, because It would be way too high). Businesses are still down 7,7 %, compared to january 2009.

(Source Bank Of Thailand, table FI_CB_015_S3).

Taxes : VAT up but corporate and personal income taxes down

knock knock…

The Finance Ministry has published data for february.

VAT collection was up by 23 %, compared to february 2009, at 39,05 billions THB.

Impressive ? It’s the base effect… What is interesting is that VAT was… down compared to the previous month (42,51). And to december (41,38). And to november (40,51). And to october (39,41). And to september (39,15). 😉

Seen under this angle… the message is therefore slightly different.

And what about corporate taxes ? Bingo. Down. Again. Ouch. And down on a year on year basis. -5,17 % at 14,17 billions THB.

If you believe that businesses should pay more taxes during a vivid and strong recovery, then you’re a dangerous terrorist. Or a very bad cook : you can’t obviously distinguish a Green Shoot Salad from a Green Shoot Goulash.

And, what about personal income taxes ? Recovery = more jobs = higher taxable income = higher taxes collections ? Again you’re wrong. Minus 1,76 % compared to february 2009, at 16,63 billions THB.

Chart : FDI (balance of payments) until Q4 2009

I woud like to bother you a bit. You’ re waiting for news about the Red Shirts Rallye ? Let’s talk instead about foreign direct investments. 😉

Here is an update of my chart about FDI with datas for the last quarter of 2009.

(Source Bank Of Tailand, table EC_XT_012)

A quick reminder : “Foreign Direct investment reflects the lasting interest of a
non-resident of an economy in a resident entity.”

There are 2 flows : inward (money coming into Thailand) and outward.

It’s easy to follow these flows, with the balance of payments.

Here is a document (PDF), from the Bank Of Thailand, explaining the statistics of FDI

How to read it ? On Q4, FDI reached 70 billions THB, a 18 % increase compared to Q4 2008.

Since mid 2007, there is a clear negative trend. It’s not surprising : why foreigners would invest amid such a political circus ? Military coup, bozo coup, Thaksin and the royal succession : all thoses words can be summarized : uncertainty.

And investors are afraid of uncertainty.

Q4 showed a strong push. But 2 things to remember : FDI data are always revised. And that could be a catch up effect, on dope, with the bailouts and other stimulus plans around the world (it won’t last).

So we should remain cautious.

Chart, oil net imports, december : going down

A few days ago, we learned that :

Oil consumption in January dropped almost 10% compared to the same period last year and a month earlier, due to consumers’ lack of confidence, according to the Department of Energy Business. (my article here).

The EPPO (Energy Policy and Planning Office, Ministry of Energy) has published data for november and december. And indeed we can see a nasty trend at the end of the year, after a “Green Shoot” in september.

As I wrote (many times) : oil, energy if you prefer, doesn’t lie. Particularly for countries like Thailand.

When you see that diesel consumption is going down, then it’s a serious red alarm. Because, the internal and external trade (from agriculture to industry) is based mainly on trucks, and sea freight.

Let’s start with imports of oil :

Next, the most important : net imports (Thailand does export oil, so we look at imports minus exports to get the real domestic demand)

In december, net imports were at 400 000 barrels per day. Look at the yellow line… It’s a low level.

[next chart, we’ll look at diesel, gasoline and LPG consumption]

Chart, businesses creations and dissolutions for january : a pause

New company registrations increased last month by 40.5 per cent year on year to 4,644 firms, the highest figure in almost a century, thanks to the government’s stimulus measures and clearer signs of an economic recovery.

Moreover, the number of companies shutting down operations dropped by 5.35 per cent to just 1,238 firms, the lowest in nine years. (Nation)

Difficult to be dumber than Nation. It’s amazing. How they can write such a mountain of crap ?

The fact :
– a century ? In march 2006, a total of 4945 businesses were created. Is it a “century” ?
– nine years ? in august 2008 a total of 1012 businesses were dissolved. Nine years ?

Dumb as dumbass. And those guys are paid. It’s amazing. They’re even unable to go to see the figures published on the website of the Business Development Department.

Here are the charts.

As you can see, the damages were so high in 2009… that a little pause is perfectly normal. It can not be a sign of a change of the trend.

“The rising number of new firms and the drop in collapsed businesses shows the country’s economy is on the rise. More new firms should be seen in the next period, and that will help promote strong economic growth,” Banyong Limprayoonwong, director-general of the Business Development Department, said yesterday.

He forgets that the dissolution of a company can be… a long process. Therefore, we are going to continue to see corpses… Assuming that there won’t be a double-dip recession that would add to the massacre.

Chart, exports, december : strong growth from China

(source Bank Of Thailand)

They did it. The group China+HK+SK+Taiwan managed to order more from Thailand in december, compared to the “Thai Peak Exports” that is to say july 2008 : +3 % at 109,88 billions THB.

China alone went from 55,1 billions to 61,8 billions THB.

Here is the chart.

In december, thai exports reached a total of 482,16 billions THB, versus 459 billions in november, and 404,31 in december 2008.

That’s a +19,2 % growth, year on year.

The percentage is impressive, but it’s the base effect. December 2008 was the “hell hole” of the crisis.

As we can see on the following chart, we are still 10 % off from the Thai Peak Exports (july 2008). But the gap is closing quickly.

Now the view per areas/groups.

The picture is very clear : Thailand is pulled by… Asia : Asean and China…

e could even say : China alone, because part of the demand for thai good originating from Asean is directly linked to trade with China (raw materials are processed, then reprocessed, etc.).

Sustainable ? We’ll see.

Chart, car market, month, quarter : euphoria in december

It started again ! As fast as a V8 engine… The car market has been euphoric in december in Thailand, eventhough with a view per quarter, we are back to “normal levels” (catching up effect).

Let’s start per month.

Both market, commercial and passengers, increased to a total of 72 000 units sold in december.

Then, with the year on year percentage of growth.

The base effect (the hole of end 2008) is of course playing.

And per quarter.

Q4 was a real “Green Shoot”, on… speed. 😉

Let’s be cautious for the coming months (catching up effect)… But without any incentive from the gvt, that’s a nice performance.

It shows that cars… still have a powerful (and fatal) attraction on people. They are willing to line up to buy cars. Social status. Feeling of power ? Or necessity ?

Who could blame them ? Look at our western morons… It’s even worse : governments in 2009 gave money away, allowing individuals to buy new cars… USA, France, Germany…  You name it. Cash for clunkers. “Prime à la casse”. Happy. More debt, but happy. 😉 And what we will do in 2010 and 2011 ? That’s obviously another story…

As for China… it became the first car market in the world in 2009 (in units)… It’s not growth anymore… it’s a mania on drugs.

So again : I won’t blame the Thais.

(source, Bank Of Thailand)

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”. 😉

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 %  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 ? 😉 [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. 😉 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.

Chart, businesses : number of dissolutions explodes in Q3 (+347 %)

Let’s burry 2009… A year that lot of people would like to forget.

All my best wishes for you and all the Thailand-lovers. And remember the 2 main mantras of 2009 :

-On going Recovery
-Change Yes We Can(‘t)

😉

And be prepared for a very interesting 2010, during wich the bulk of the deception (all the stimulus and bailout plans around the world, cheap money, artificially low interest rates, etc.) is going to blow off.

They tried to sell us a collective hallucination… To some extend, it worked (at least for the balance sheets of banks and the bonuses of their employees). But the Reality is going to catch up… with ugliness : mountains of debts, deficits, depressed purchase power because of unavoidable higher taxes, higher unemployement, currencies disorders etc.

For my last 2009 post, let’s have a look on the latest data published by the  Department of Business Development.

Unprecedented. The Big Crisis has ravaged businesses. It was forecasted. No surprise at all. But it’s interesting to  hear the government talking about “recovery” and “lower unemployment”…

A total of 24 592 companies have been dissolved during Q3. That’s a whooping increase of 347 % compared to Q3 2008…

Companies = Limited Company + Limited Partnership + Ordinary Partnership (Public Limited companies are excluded)

Dissolution = Dissolved Defunct and Bankrupt

Now a look per month.

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.