Ratings Agency Wary Of New Thai Govt Policy

[webfact]

Ratings agency wary of new Thai govt policy

BANGKOK, July 6, 2011 (AFP) - Ratings agency Standard & Poor's on Tuesday warned that Thailand's fiscal position was at risk if the election-winning opposition party implements all the policies it promised on the campaign trail.

The Puea Thai party, fronted by premier-in-waiting Yingluck Shinawatra, won a majority of seats in Sunday's vote after pledging a populist platform that echoed policies of her brother Thaksin, who was ousted from power in 2006.

Seen as a political proxy for her sibling, Yingluck offered vote-winners such as free WiFi facilities in cities, tablet computers for all primary school students and a new rice mortgage system based on a guaranteed rice prices.

Such policies have a downside risk, the ratings agency said.

"Implementing many of these policies without having proper appropriation of the revenues would adversely affect the country's fiscal position," warned the group's credit analyst Takahira Ogawa.

He said countermeasures against the global recession and the populist policies of recent years had already eaten into Thailand's fiscal strength, and significant further erosion could damage the current ratings.

The Puea Thai's victory marks an impressive comeback for the Thaksin camp after five years of turmoil and street protests by both his supporters and detractors in the deeply divided kingdom.

"Given the depth of the political divide, complete reconciliation of the country in the near future may be difficult," said Ogawa.

"In our view, there is still some degree of political risk, because we are uncertain about the anti-Thaksin group's reaction to the election results, Puea Thai Party's policies, and the judgment by judiciary."

-- (c) Copyright AFP 2011-07-06

[virtualtraveller]

"Implementing many of these policies without having proper appropriation of the revenues would adversely affect the country's fiscal position," warned the group's credit analyst Takahira Ogawa.

' Thaksin thinks, Peua Thai acts' - so much for him being an economic guru!

[Steely Dan]

It may seem A little esoteric but one technical analysis method I use which does not involve fundamental economic data predicted The Baht would fall to around 50 to the dollar. This is a long term forecast which I reiterate is independent of fundamental data, but if Thailand lost control of it's finances a currency devaluation could get us to this figure. Food for thought indeed.

[laocowboy2]

I rather think the 'IF' in if the policies are implemented gives away the game.

Manifesto promises are rarely kept in any country - and if kept, the eventual execution is often heavily watered down. So expect the rise in the minimum wage become a target to be reached over X years (and this may be needed anyway given what is happening with inflation) and ditto for guaranteed agricultural support prices. As for a tablet for every child, that will follow the large contract to AIS to put broadband into every school first - no point in having a tablet if you cannot hook up. And perhaps some satellite broadband srvices for the North East - I believe we know a well known Thai entrepreneur who could help with that.

I expect a more accomodative fiscal policy (more spending not being matched by new revenues) - the question is whether this will be offset by a tighter monetary policy. The BoT would want to raise interest rates by at least another 50 bp this year - and possibly by as much as 125bp. However under a PT government, how independent will the BoT really be?

Higher interest rates means a stronger THB. Even if rates do not rise, a strongly growing GDP (which we will have) will suck in foreign portfolio investment. Either way, not much hope of a significantly weaker THB in the short term.

"Implementing many of these policies without having proper appropriation of the revenues would adversely affect the country's fiscal position," warned the group's credit analyst Takahira Ogawa.

' Thaksin thinks, Peua Thai acts' - so much for him being an economic guru!

[rotary]

Can we have 3G before free WiFi?

[ballpoint]

I'm just waiting for the usual red gambit whenever an international organisation praises the Democrats or doubts the PTP. The smearing of Standard and Poor's will begin soon.

[Jingthing]

Red line -- Standard and Poor's is not the boss of Thailand. We are Thai! Never been colonized. Yada yada yada ...

[Samuian]

Yingluck offered vote-winners such as free WiFi facilities in cities, tablet computers for all primary school students

Supplied and labeled AIS?

and a new rice mortgage system based on a guaranteed rice prices.

Yes, the consumer rice price has already reached 40 Baht the kilo for premium rice.... she said something to raise the price from 4xx to somewhat 600 ... the outgoing government was faced with a huge stash of heavily subsidised paddy rice stacked up and it was found that tremendous amounts were cheap imports....it's one of the most important export goods, as a result of the already expensive rice, Vietnam sees a incredible rise....

[Bagwan]

Thankfully I grew up in an age before calculators. Thus my mental arithmetic capability at the age of about 11 years was infinitely better than many present Thai graduates. Tablets were something out of a bottle to make you feel better. A blackboard and chalk was all a real schoolteacher needed to impart understanding. However I do remember the rumpus about ballpoint pens and how they would encourage untidy handwriting.

I don't know who is paying 40 baht per kilo for rice since in Pattaya I can buy a 49 kilo sack of Hom Mali for 1150 baht, which is a tad over 23 bah per kilo for those who need a calculator or tablet. As I've instilled in my family, buy in bulk and buy quality goods. It is far cheaper in the long run.

[chaoyang]

And then again S&P could be well wide of the mark. It issues these kinds of outlook scenarios all the time, but you won't see a followup story in a year if their musings prove to be wrong.

Is this the same US agency that failed to see the impending US crash?

Yes, and "populist" is a dirty word among hard-core capitalists, ever worried about taxes and stock market values. Is actually doing something for the less advantaged in a country the work of an evil genius?

As we know, the internet is a game-changer and life-changer. Providing access to all through connectivity and their own computer could (and I stress could) help develop a more aware society.

Compared to the amount siphoned off by the existing corruption and the entitlements to the rich, it's chicken feed anyway.

[geriatrickid]

And then again S&P could be well wide of the mark. It issues these kinds of outlook scenarios all the time, but you won't see a followup story in a year if their musings prove to be wrong.

Is this the same US agency that failed to see the impending US crash?

Yes, and "populist" is a dirty word among hard-core capitalists, ever worried about taxes and stock market values. Is actually doing something for the less advantaged in a country the work of an evil genius?

As we know, the internet is a game-changer and life-changer. Providing access to all through connectivity and their own computer could (and I stress could) help develop a more aware society.

Compared to the amount siphoned off by the existing corruption and the entitlements to the rich, it's chicken feed anyway.

Yes, S&P is one of the three major credit ratings agencies blamed in part for causing the current economic crisis. CNN summed it up best with this;

the corruptness of S&P's business model - being paid fees by the same Wall Street banks that underwrite the securities S&P rates - is one of the few issues that the left and right agree on.

When the rating agencies' CEOs appeared before the House Oversight and Government Reform Committee, Jackie Speier (D-Calif.) called the agencies' conduct a "bone-chilling definition of corruption." Similarly, former congressman Christopher Shays (R-Conn.) said, "The ratings agencies are useless now. I think they have no brand"

At least six states' attorneys general have investigated S&P on the alleged shakedowns in respect to the free for all that occurred in rating municpal bonds that cost taxpayers a still undetermined multi million dollar loss. Every major financial journal has blasted S&P along with the other "rating" agencies for their conflicts of interest. Sadly, the information provided by these agencies is no longer considered reliable. This is one of the consequences of giving improper ratings to crooks.

There may indeed be reasonable grounds to be wary. Unfortunately, S&P no longer has the credibility to pass judgement on anyone or any financial instrument.

Edited July 7, 2011 by geriatrickid