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).

BOT’s fantasies rewritten by the thai press fantasies

Consider this headline from the Nation :

The Bank of Thailand yesterday officially signalled a policy-rate hike in the second half of the year but promised to take into account the pace of economic recovery and inflation before making any move.

Then, read what was really said by the Bank Of Thailand :

He said monetary policy could return to normalcy this year if the private sector and the economy saw stable expansion. If core inflation rises above 2.3 per cent in the third or fourth quarter in the wake of higher oil and commodity prices, the central bank may consider the possibility of increasing the policy rate.

First : the current monetary policy is abnormal. 😉 We knew it. But it’s good to repeat it for the sheeps.

Second : the BOT never said It would increase rates. They just repeated what the textbooks are saying : if inflation remains low, if the economy is growing… if… if… if then the central bank “may consider” increasing rates.

Let’s put it that way, for the morons at Nation : text books and fantasies are useless.

And since people who are able to connect at least 2 neurons know that there isn’t any sustainable recovery, just several dope fixes injected to the world economy, then the situation will get worse, then any rate hike is likely to remain a fiction. A fantasy.

Now, let’s study the own fantasies of the thai Central Bank. And you’ll find out why I call them “morons”.

Consider this striking sentence :

At a press conference yesterday, BOT Assistant Governor Paiboon Kittisrikangwan said inflation would remain low this year, because the government had extended its measures to ease the cost of living until the end of the first quarter. Headline inflation, without volatile items like energy, could be 3-5 per cent, while core inflation could be 1.3-2.3 per cent.

The BOT official states that inflation will remain low… BECAUSE THE GOVERNMENT SUBSIDIZES PRICES OF SEVERAL GOODS AND SERVICES.

Breath. Five minutes. And then read again. Voila 😉

A magistral proof that those so called “officials” are totally moronic, indeed. It’s even an understatement.

If we follow their twisted logic, then inflation couldn’t exist anymore on earth (and the solar system). Just declare it illegal, and/or subsidize ALL the prices. Case closed.

Damned ! I’m wondering why Germany didn’t find this magical cure in the 1920s. Or more recently Zimbabwe. 😉 Or Venezuela.

But let’s be clear : this insanity is absolutely not an exclusivity of thai central bankers… I mean, if you look around, the FED, the BOJ, the ECB… it’s even worse. Much worse.

With such clowns driving our car… the crash against the 2010 Great Wall is likely to be bloody. And really messy.

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.

Chart, foreign currency reserves and US Treasuries : “Gimme more”

Britney Spears ? Nope. The Bank Of Thailand.

Time passes and the BOT pursues with a striking constance -like all the other asian central banks- their suicidal mission : buying US Dollars, mountains of it, and worse  US Treasuries, AKA US debts in US Dollars, in order to save their pathetic exports figures by keeping a weak exchange rate for their currency: it’s the Beggar thy neighbour policy.

US debt in US dollars ? Talk about a double whammy.

And meanwhile… the smart guys (asian too) are buying gold.

Talk about major schizophrenia.

Let’s update our charts.

“Gimme more of less”. What to say else ? More USD and more US Treasuries (US debts).

Yes, the proper word is : “correlation”. This chart is screaming… The Great Correlation.

The key word is : “stability” (apparent, virtual). That’s the fantasy of the thai central bank… But it doesn’t work this way. Because if indeed it’s possible to fool all the people all the time, at one point you face laws of physics…

We can see a lot of efforts (buying a lot of USD) in order to keep the exchange rate USD-THB stable.

We are deep inside the Rabbit’s Hole, Wonderland. It’s the lala economy.

Sustainable ? We will see.

(Source Bank Of Thailand, and US Treasury).

PS : Sorry to repeat myself, over and over… But if you’re looking for some light inside the tunnel… Point your browser to Mish Blog and Calculated Risk Blog. Those people have understood it all… since at least 3 years… Yes, the “crisis”, the “recession”, the “depression” whatever you wish to call it is nothing but new… It was documented, predicted, announced, analysed, dissected… But of course, you didn’t get the chance to read it on Bloomberg or the Wall Street Journal.

Don’t be a clown.

Break your chains.

Banking system, thai understanding of “liberalisation” : “foreign banks can open 2 more branches”

BoT pushes liberalisation under new plan, writes Bangkok Post.

As any normal human being, you would feel excited. So you decide to continue to read. And gradually, you feel baffled and eventually you end up in tears. That’s the beauty of Thailand : a perpetual source of exercise for our zygomatic muscles.

Ready ?

Thailand’s new financial master plan will offer greater opportunities for foreign banks, says Bank of Thailand governor Tarisa Watanagase. […] The central bank’s second financial-sector master plan would gradually liberalise the sector from 2010-14. […]

From 2012-13, the central bank will allow greater competition within the sector, starting by allowing foreign banks to open up to two branches in addition to their head offices.

Do you know, as of september, what is the total number of branches of commercial banks in Thailand ?

5 673.

I repeat : 5 673

I know, the proper word is : “surreal”. 😉

(source BOT, FI_CB_060_S2)

So after giving a huge, astronomical boost to foreign banks (allowing them to open 2 more branches)… then come the final blow :

The central bank has no plans to offer new universal banking licences, seeing the current 15 banks as enough for the country’s needs.

Voila. 😉 The words “competition” and “liberalisation” in Tarisa’s mouth mean : “we don’t need more banks”.

Surreal. Just surreal. But so tasty. Viva Tarisa !

PS : since I study Thailand, there is one great mystery I was unable to solve : do they really believe the non-sensical words coming out of their mouth… Or do they really think that foreigners are totally and definitely stupid ? To this day, I’m still wondering…

Chart, foreign reserves, and exchange rate

Gold 1, 2, 3 lift off ! 1042 USD/ounce last night ! Cause and effect of a crashing US Dollar…

Time to update the charts about the foreign currency reserves of the Bank Of Thailand.

Like virtually all central banks in the world, the BOT is happy (… not really) to buy USD.

Because, like virtually all countries in the world, Thailand is obsessed with the exchange rate in USD. They would do anything, even crashing their own local currency, to save the appearances and to save thai exports …

(Source BOT, table EC_XT_031)

Those trees won’t be able to grow to the sky…

We should have some real sport before the end of the year…

Chart, credit, august : still going down for businesses

(Source Bank Of Thailand, table FI_CB_015_S3).

“After the Green Shoots, the credit crunch ?“, I asked in august, regarding the figures for credit (from commercial banks in Thailand).

Rethorical question…

The trend is getting worse.

The total outstanding credit for businesses recorded a drop of 3,64 % in july (-1,38 % in june), compared to july 2008.

As for the total and individuals, the % of growth year on year is going down too (but we are still in positive territory y-o-y at + 6,5 and +5,2 %).

The clowns are having fun with stock markets (look at the SET !), same trend worldwide… but on the ground businesses, AKA the real economy, AKA jobs, AKA people… are having trouble to suck the credit breast.

And for many of those companies, today, credit doesn’t mean “investment”. But rather oxygen to breath… To survive. To not die…

But they will.

As for the banks, well, even though the clowns don’t want to understand the basic principle of risks and rewards, the banks are just being rational. Now. Who could blame them ?

In a recession, it makes no sense to increase the risks, to increase capacities by lending money to companies in trouble.

The problem is : somehow it’s the “carpet bombing” principle. Some of those businesses really need money to invest and to grow… But the banks are too afraid.

Anyway my friends. We shall rejoice. The stock markets are euphoric, like teenagers going on a date. Abhisit is handsome (but less than Obama). Bernanke has a beautiful bear(d). The sky is clear. And the women are pretty. 😉

The crisis is over. I repeat : the crisis is over.

The global downturn was effectively declared over yesterday, with the Organisation for Economic Co-operation and Development (OECD) revealing that “clear signs of recovery are now visible” in all seven of the leading Western economies, as well as in each of the key “Bric” nations. (The Independent)

Until… very soon. 😉

Foreign currency reserves, + 17 % in august : the Bank Of Thailand on a crash course

The chart speaks by itself.

Foreign currency reserves (+ forward positions) reached 138 billions USD at the end of august, an increase of 18 % y-o-y, compared to august 2008 !

But meanwhile… the USD is losing ground versus the THB…

Let’s look the reserves and the exchange rate USD-THB.

(Source Bank Of Thailand)

So let’s summarize :

-The Bank Of Thailand is buying US Dollars (it’s a guess, we can’t be sure, foreign currency reserves are converted in USD, the BOT does not give the composition of its reserves), in order to curb the increase of the THB versus the USD. Why ? To save the thai exports (on this issue, there is no doubt). This is why overall, we can affirm that the BOT is buying USD indeed.

-Exports are being crushed by the global crisis (falling demand)… If you add the exchange rate problem… It can compound the problem.

-To illustrate the issue : a thai company sells 1 USD of goods… With a low THB It will get for instance 40 THB… It will “feel” much richer than with a strong THB (It could get only 30 THB for the dollar)…

-But despite this suicidal move (the famous “beggar thy neighbor” policy), the THB is still increasing versus the USD… Proof that downward pressures against the USD are high.

Thailand behaves exactly like all other asian countries (and BRIC countries, read here).

It’s a pathetic short term view… But the political pressures are just too high. Central bankers and bureaucrats are just a bunch of panicked cowards… “give me 5 minutes more mister executioner”….

They don’t have the energy and the courage (and the intelligence) to try to build a real economic growth… instead, they rely on accounting tricks and other tour de passe-passe.

Why do I use the word “suicidal” ? What would happen… if the USD continues to fall ? The Bank Of Thailand will be among the suckers, the mega suckers, with a mountain of worthless US Dollars… Sucker number one would be of course China. 😉

Last but not least… here is my botte secrète : the chart with foreign reserves and thai holdings of… US Treasuries ! Unfortunatly, with data until june only.

(source US Treasury)

Correlation ? You bet. 😉 So let’s wait for august data.

Will the Bank of Thailand (and the whole country) be… a double sucker ? Buying US debts in US dollars. 😉

Wait for the next episode of this Great Drama.

Chart, credit, june : after the Green Shoots… the credit crunch ?

(Source Bank Of Thailand, table FI_CB_015_S3).

The total credit (outstanding) at commercial banks was at 7 483 billions THB in june. That’s 131 billions less than may. But it’s still increasing by 7,5 % year on year (compared to june 2008).

Sounds good ? Well… look at the details.

Yes… Growth of credit for business is in negative territory (-1,3 %)... And it’s still decreasing for individuals.

Businesses are under pressure because of the recession.. and for some their cash bloodline is getting dry. And It makes perfectly sense : banks are not willing to increase lendings. Because risks are increasing. And because it’s absurd to add capacities during a recession.

At least, this is how It works in a “normal” system. In China for instance, when the politicians order the banks to increase lendings… the banks comply. And in a hurry (it would be so bad to end up in jail…)

That’s the beauty of communism if I may say. 😉 But of course It’s just another bubble (“property sales surge 60 %“), ready to burst. Anyway.

Now let’s look at the amounts.

And the differences per month.

Our dashing Prime Minister, Abhisit, told us that Green Shoots are to be seen everywhere, that the bottom is reached, that recovery is under way blablabla…

Looking at the figures provided by the BOT, his statements are just wishful thinking…

The credit party is over.

And the clowns should explain us how a system based on credit can continue to grow if the credit is drying up ? This basic question is a burning one in the US (read this striking article about the severe US consumer credit crunch).

But it’s much more entertaining and convenient to talk about Green Shoots Soup and Recovery Salad.

Bon appetit. And sleep good.

[ I’m taking holidays. See you last week of august. Until then, may the Crisis be with you and be ready for an exciting september 😉 ]

Chart, credit card, may : Green Shoots still brown in people’s purse

(Source Bank Of Thailand, table FI_CB_080_S2)

I know : reading about the “road to recovery” (title displayed on CNN TV for instance), “better than expected” figures, “hopes”, “beginning of the start of the end of the recession”… in the USA and even Thailand… you scratch your head.

Anyway. Christmas is not far away… And Santa Claus is going to surprise us. Meanwhile, let’s have a look on credit cards data for may.

The number of credit cards declined by 47 900 at a total of 13,08 millions. Year on year (compared to may 2008), that’s a growth of 6,88 %.

Look at the trend.

And now, with values.

But even with the magic of plastic (“fantastic”, right ?)… the real indicator is… the cash. The money. The dough. The bucks.

The total spending (usage) declined to 70,05 billions THB, that’s -4,73 % compared to may 2008.

What a nice trend line ? Right ? 😉

So to summarize : compared to may 2008, the number of credit cards increased by 6,88 %, but the spendings with those cards decreased by 4,73 %.

A nice “cisor”.

A cisor to cut the Green Shoots.

But don’t forget the official motto : everything will be fine. We are on the road of the recovery. The recession was just a bad dream. You are going to awake in the real world, that is with unlimited consumers spending growth, and each thai individual will have 10 credit cards.

😉

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.