Kittirat brushes aside IMF's suggestions

[EyesWideOpen]

This is a tough call regarding the state of the Thai economy. On one side we have the famous Mr. Kittirat,

who by his own admission tells white lies about the economy to " soothe" the Thai public. The other side

has the IMF, who speak of a dire future for Thailand, and who certainly have not axe to grind.

So who to believe? Decisions decisions......

[smutcakes]

A recent Forbes editorial wasn't quite so optimistic:

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

In my opinion, the economy at the moment is in dire straits.

Lets hear your educated opinion then? What is in dire straights?

[Pi Sek]

A recent Forbes editorial wasn't quite so optimistic:

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

In my opinion, the economy at the moment is in dire straits.

Lets hear your educated opinion then? What is in dire straights?

Good morning Khun Smutcakes, I hope you're well today.

My educated opinion* is that household debt is currently far too high and the government is spending too much money with not enough means to recover it (this has been the case for many years, so Peua Thai are not the only causes of it).

Look at the graphs in the Forbes article, they're very telling... bursts of government debt levels whenever the governments (again, by the way - TRT, PPP, Dems and Peua Thai) needed to garner public support (e.g. when they're close to an election, or when they're engaging in popularity contests to justify undemocratic or illegal actions). Government debt was nice and steady when Gen Surayudh's coup-appointed government was in power, although that's not surprising because 1) they didn't actually do anything with the economy when in power and 2) they didn't really care about public opinion anyway!

I should also add that it's a Forbes editorial/opinion piece, although it is based on some pretty accurate economic statistics.

(* I don't usually like to use this expression, but I sort-of have to because it was in your question! Why is my opinion educated? I would say because I read a little bit and I take interest in what others are saying and form my own conclusions, and I realise my conclusions can be wrong and am willing to read/listen further.)

[smutcakes]

A recent Forbes editorial wasn't quite so optimistic:

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

In my opinion, the economy at the moment is in dire straits.

Lets hear your educated opinion then? What is in dire straights?

Good morning Khun Smutcakes, I hope you're well today.

My educated opinion* is that household debt is currently far too high and the government is spending too much money with not enough means to recover it (this has been the case for many years, so Peua Thai are not the only causes of it).

Look at the graphs in the Forbes article, they're very telling... bursts of government debt levels whenever the governments (again, by the way - TRT, PPP, Dems and Peua Thai) needed to garner public support (e.g. when they're close to an election, or when they're engaging in popularity contests to justify undemocratic or illegal actions). Government debt was nice and steady when Gen Surayudh's coup-appointed government was in power, although that's not surprising because 1) they didn't actually do anything with the economy when in power and 2) they didn't really care about public opinion anyway!

I should also add that it's a Forbes editorial/opinion piece, although it is based on some pretty accurate economic statistics.

(* I don't usually like to use this expression, but I sort-of have to because it was in your question! Why is my opinion educated? I would say because I read a little bit and I take interest in what others are saying and form my own conclusions, and I realise my conclusions can be wrong and am willing to read/listen further.)

Thanks for the reply. I wont disagree with what you are saying, but overall i would not say the economy is in dire straights, it is more than capable of servicing its debts. House hold debt is an issue, but not unique or universal in Thailand. Govt spending again is a worry, but on the grand scale debt to GDP is still relatively low. The rice scheme is obviously a major problem but its not going to bankrupt the country really. 4.4billion USD last year? correct me if i am misreading/quoting what i thought i read, but it is not a huge amount for a country like Thailand.

[MilesofSmiles]

This attached table summaries it quite well.

[bigbamboo]

The inflation rates are low, BUT the price of everything seems

to be increasing,especially foodstuffs, as the PM said it must

be all in our minds !

regards Worgeordie

Sure the price of things like food, petrol, clothes, etc. may seem to have risen alarmingly but against that you must remember that a new Lambourghini is much cheaper than it used to be.

[Emptyset]

Good morning Khun Smutcakes, I hope you're well today.

My educated opinion* is that household debt is currently far too high and the government is spending too much money with not enough means to recover it (this has been the case for many years, so Peua Thai are not the only causes of it).

Look at the graphs in the Forbes article, they're very telling... bursts of government debt levels whenever the governments (again, by the way - TRT, PPP, Dems and Peua Thai) needed to garner public support (e.g. when they're close to an election, or when they're engaging in popularity contests to justify undemocratic or illegal actions). Government debt was nice and steady when Gen Surayudh's coup-appointed government was in power, although that's not surprising because 1) they didn't actually do anything with the economy when in power and 2) they didn't really care about public opinion anyway!

I should also add that it's a Forbes editorial/opinion piece, although it is based on some pretty accurate economic statistics.

(* I don't usually like to use this expression, but I sort-of have to because it was in your question! Why is my opinion educated? I would say because I read a little bit and I take interest in what others are saying and form my own conclusions, and I realise my conclusions can be wrong and am willing to read/listen further.)

Thanks for the reply. I wont disagree with what you are saying, but overall i would not say the economy is in dire straights, it is more than capable of servicing its debts. House hold debt is an issue, but not unique or universal in Thailand. Govt spending again is a worry, but on the grand scale debt to GDP is still relatively low. The rice scheme is obviously a major problem but its not going to bankrupt the country really. 4.4billion USD last year? correct me if i am misreading/quoting what i thought i read, but it is not a huge amount for a country like Thailand.

I think you both make solid points. And Pi Sek correctly notes that those indicators he thinks are worrying have been going up under all governments for the last decade or so pretty much, so even if you think Kittirak is awful, you could argue he only represents a continuation of what's gone before. But yes, household debt has shot up particularly in the last 5 - 6 years it seems. And it's definitely not unique to Thailand. In fact it's that indicator that neoclassical economists apparently overlooked in the run up to the 2008 financial crisis. That there was a surge in household debt in developed countries in the years leading up to the financial crisis is the reason why we suspect there may be a problem with it now I guess. But as I pointed out in another thread several days ago which touched on this topic, I think the problem originated in the collapse of real wages which began in the late 70s. Wages got lower, but in a consumerist society, people are still going to want to buy things and companies still need to sell or profits will decline and aggregate demand will fall negatively affecting growth. So the solution was cheaper and cheaper credit.

It must have seemed like a win win situation. Profits were high because taxes and wages were cut, and people keep spending. But as we know, it was the ordinary Joe on Main Street that paid in the end, not Wall Street or any of those who profited from that system. And I think Thailand is facing the same problem. There's no getting away from the fact that Thailand is a fully fledged consumerist society now, and people are going to want things. I don't think it's possible to go back once you've seen what's on offer (hence the success of global capitalism I guess). People have only just begun to enjoy what people in the West have been enjoying for 50 - 60 years, so they're not suddenly going to want to lose that.

Of course, I would say why not look to higher taxes on the rich, redistribution and higher wages as ways of offsetting the reliance on credit. But that won't be a popular solution here. There's also a question with how far you can go with that before it starts to significantly impact on growth, which is still the most important driver of poverty reduction until a certain income threshold has been reached. Then education and gradually moving the population away from agriculture into more productive areas of the economy will help too.

So I agree with Pi Sek that this is definitely a big problem for politicians now, because they've had the minimum wage increase, and now it seems all they can do is offer more sources of credit or you'll have more and more people relying on illegal loansharks and the like. And in terms of what it means for democracy: well, obviously people are going to vote for those who offer immediate solutions rather than a more gradual route to prosperity that might be better in the longterm. Especially if they're struggling with debts on a daily basis. But I don't think you can blame people for being materialist when society constantly tells you this item or that item is necessary for fulfillment.

[Emptyset]

Also, Pi Sek - regards your point about government debt being steady under the junta, well, it was falling under TRT! But of course that's partly because of the healthy global economy and high GDP growth than any sort of genius financial management. I also think you overlook the need for stimulus as a reason for debt growth, under both the Democrats and the current government. Granted, I'm sure the money might've been spent better in some cases (cf. the rice scheme, and say, the dust free road scheme under the Democrats), but without that stimulus the economy would've slowed down and debt would've risen as a proportion to GDP anyway. I think the corollary of your point is that it would take an undemocratic government to move Thailand away from its populist consensus. And at this juncture that's probably true - it would have to be a government not beholden to the masses and their material desires. But as you can probably guess, I certainly wouldn't advocate that as any sort of solution. Quite the opposite. lol.

[Thai at Heart]

Yesterday alone, foreign investors sold Thai shares worth Bt10.2 billion against purchases of Bt5.9 billion, resulting in net sales of Bt4.28 billion. This followed the Bt3.3 billion in net sales on Tuesday and over Bt1 billion on Monday. The year-to-date net-sell has ballooned to Bt123.95 billion. Global funds have also pulled some investment from Thai equities this month.

"There may be trouble... Ahead...... :#

3.3 billion thai baht?100 million dollars? OH nooeeeeessssss run for cover.

$100 million this week...... 125 billion so far this year...

Sent from my iPhone using Thaivisa Connect Thailand

Well, if you want a weaker baht, I would suggest everyone applaud yinglucks efforts to undermine confidence in Thailand.....

[Thai at Heart]

Good morning Khun Smutcakes, I hope you're well today.

My educated opinion* is that household debt is currently far too high and the government is spending too much money with not enough means to recover it (this has been the case for many years, so Peua Thai are not the only causes of it).

Look at the graphs in the Forbes article, they're very telling... bursts of government debt levels whenever the governments (again, by the way - TRT, PPP, Dems and Peua Thai) needed to garner public support (e.g. when they're close to an election, or when they're engaging in popularity contests to justify undemocratic or illegal actions). Government debt was nice and steady when Gen Surayudh's coup-appointed government was in power, although that's not surprising because 1) they didn't actually do anything with the economy when in power and 2) they didn't really care about public opinion anyway!

I should also add that it's a Forbes editorial/opinion piece, although it is based on some pretty accurate economic statistics.

(* I don't usually like to use this expression, but I sort-of have to because it was in your question! Why is my opinion educated? I would say because I read a little bit and I take interest in what others are saying and form my own conclusions, and I realise my conclusions can be wrong and am willing to read/listen further.)

Thanks for the reply. I wont disagree with what you are saying, but overall i would not say the economy is in dire straights, it is more than capable of servicing its debts. House hold debt is an issue, but not unique or universal in Thailand. Govt spending again is a worry, but on the grand scale debt to GDP is still relatively low. The rice scheme is obviously a major problem but its not going to bankrupt the country really. 4.4billion USD last year? correct me if i am misreading/quoting what i thought i read, but it is not a huge amount for a country like Thailand.

I think you both make solid points. And Pi Sek correctly notes that those indicators he thinks are worrying have been going up under all governments for the last decade or so pretty much, so even if you think Kittirak is awful, you could argue he only represents a continuation of what's gone before. But yes, household debt has shot up particularly in the last 5 - 6 years it seems. And it's definitely not unique to Thailand. In fact it's that indicator that neoclassical economists apparently overlooked in the run up to the 2008 financial crisis. That there was a surge in household debt in developed countries in the years leading up to the financial crisis is the reason why we suspect there may be a problem with it now I guess. But as I pointed out in another thread several days ago which touched on this topic, I think the problem originated in the collapse of real wages which began in the late 70s. Wages got lower, but in a consumerist society, people are still going to want to buy things and companies still need to sell or profits will decline and aggregate demand will fall negatively affecting growth. So the solution was cheaper and cheaper credit.

It must have seemed like a win win situation. Profits were high because taxes and wages were cut, and people keep spending. But as we know, it was the ordinary Joe on Main Street that paid in the end, not Wall Street or any of those who profited from that system. And I think Thailand is facing the same problem. There's no getting away from the fact that Thailand is a fully fledged consumerist society now, and people are going to want things. I don't think it's possible to go back once you've seen what's on offer (hence the success of global capitalism I guess). People have only just begun to enjoy what people in the West have been enjoying for 50 - 60 years, so they're not suddenly going to want to lose that.

Of course, I would say why not look to higher taxes on the rich, redistribution and higher wages as ways of offsetting the reliance on credit. But that won't be a popular solution here. There's also a question with how far you can go with that before it starts to significantly impact on growth, which is still the most important driver of poverty reduction until a certain income threshold has been reached. Then education and gradually moving the population away from agriculture into more productive areas of the economy will help too.

So I agree with Pi Sek that this is definitely a big problem for politicians now, because they've had the minimum wage increase, and now it seems all they can do is offer more sources of credit or you'll have more and more people relying on illegal loansharks and the like. And in terms of what it means for democracy: well, obviously people are going to vote for those who offer immediate solutions rather than a more gradual route to prosperity that might be better in the longterm. Especially if they're struggling with debts on a daily basis. But I don't think you can blame people for being materialist when society constantly tells you this item or that item is necessary for fulfillment.

I believe that the finance of houses shouldn't be treated in the same manner as cars or TVs.

I have tried to come up with a plan how in my head,, but safe to say, how banks lend and account for debt on housing is the issue not consumerism per se.

95%+ mortgages and excessive refinancing is the problem.

[Pi Sek]

<snip>

I think the corollary of your point is that it would take an undemocratic government to move Thailand away from its populist consensus. And at this juncture that's probably true - it would have to be a government not beholden to the masses and their material desires. But as you can probably guess, I certainly wouldn't advocate that as any sort of solution. Quite the opposite. lol.

Actually, a government not beholden to the masses and their material desires would be a solution... just probably not a workable solution, and certainly not an acceptable one! As you say, it's a difficult step for a consumerist society to come to terms with not having things they want, especially if they believe they need them. Anyway, what's Thai for "austerity measures"? (I sincerely doubt we have ever heard that expression in Thai parliament!)

As to whether that would take an undemocratic government... well, I suppose that would depend on just how bad the Thai consensus on the Thai economy becomes, but I think you're right, I can't see Thais voting in any numbers to reign in over-spending even if things went completely tits-up. Having said that, when was the last time Thailand didn't have an undemocratic government?

I think one of democracy's failings is that what is good for a village isn't necessarily good for the country. What's good for the country isn't necessarily good for the world. What's good for the economy isn't necessarily good for society. What's good right now isn't necessarily good in a few years' time. That's a lot of variables for a Somchai, Pi Sek or Emptyset to take into account, especially when it's not what seems important to us at the time.

Not that I can come up with anything better

[PhilipCook]

How dare the IMF criticize his master-pisa.

[outsider]

This is Thailand na. You not Thai, you not understand na...

[Pi Sek]

This is Thailand na. You not Thai, you not understand na...

I nearly split up with my girlfriend over that very same thing last night.

... edit to add, even though I was awarded Thai citizenship last year!

Edited November 14, 2013 by Pi Sek

[Emptyset]

<snip>

I think the corollary of your point is that it would take an undemocratic government to move Thailand away from its populist consensus. And at this juncture that's probably true - it would have to be a government not beholden to the masses and their material desires. But as you can probably guess, I certainly wouldn't advocate that as any sort of solution. Quite the opposite. lol.

Actually, a government not beholden to the masses and their material desires would be a solution... just probably not a workable solution, and certainly not an acceptable one! As you say, it's a difficult step for a consumerist society to come to terms with not having things they want, especially if they believe they need them. Anyway, what's Thai for "austerity measures"? (I sincerely doubt we have ever heard that expression in Thai parliament!)

As to whether that would take an undemocratic government... well, I suppose that would depend on just how bad the Thai consensus on the Thai economy becomes, but I think you're right, I can't see Thais voting in any numbers to reign in over-spending even if things went completely tits-up. Having said that, when was the last time Thailand didn't have an undemocratic government?

I think one of democracy's failings is that what is good for a village isn't necessarily good for the country. What's good for the country isn't necessarily good for the world. What's good for the economy isn't necessarily good for society. What's good right now isn't necessarily good in a few years' time. That's a lot of variables for a Somchai, Pi Sek or Emptyset to take into account, especially when it's not what seems important to us at the time.

Not that I can come up with anything better

Yes, I certainly agree it would be a proposal that some would see as a solution - I meant it was one solution that I would never propose. I'd never want to give up whatever miniscule amount of say I have in the way my country is run, so why should I expect others to give up that right? I actually find it fascinating that there are people who would willingly give up that right - like the protesters calling for the suspension of democracy. I guess stability & order and a fall back towards old traditions is more important than being able to vote in & out governments for some people. And I can comprehend that. Democracy is often chaotic & throws up results a lot of people don't like; but if you look at the modern history of Europe, we somehow nevertheless always manage to muddle through. I just think talk of going back to an unelected government is a dangerous road to go down, an undoubted step backwords and I'm glad you seem to agree on this.

Regards your third paragraph, yes, but I think that goes back to what I said about muddling through in the end. Even people with very sophisticated models get key decisions wrong. In fact, they often seem to get things more badly wrong than a bloke in a pub could if he were simply making random choices (2008 crisis is a case in point!). I think there actually tends to be safety in numbers here, there's a good chance one person will get things wrong, but it tends to lessen when you have 60 million. That might be just wishful thinking though. You're also right about what's good for the village etc, but what better way is there to manage competing interests? Again, most autocrats tend to be self-interested.

It is an important point though, that's why it's worth re-iterating that democracy isn't just about voting. Or rather it shouldn't be about just voting. A properly democratic government should also promote liberal values: tolerance, pluralism, respect for minority rights and so on. When those values are inculcated, managing various interest groups doesn't tend to be such a problem. Of course, it's not going to be perfect. In terms of voting preferences, I think the vast majority of people are going to put their own immediate interests first and foremost. And someone in every society is going to lose out to an extent, but I just tend to hope it's the rich guy, not the poor guy. lol.

[Emptyset]

I believe that the finance of houses shouldn't be treated in the same manner as cars or TVs.

I have tried to come up with a plan how in my head,, but safe to say, how banks lend and account for debt on housing is the issue not consumerism per se.

95%+ mortgages and excessive refinancing is the problem.

Yeah, that was certainly the case in the US/Europe. Not sure how significant a part mortgages play in Thai household debt in general though? I mean, most people struggling in debt in villages didn't need to buy their houses. And in urban areas, most are still happy to rent - as many were in the UK and the US before public housing collapsed - and rents are still reasonable. Incidentally, I was just reading about the Baan Mangkong public housing project for slum dwellers which began in 2003. One of the problems that residents still face is that they're not sure how long their lease is. I believe providing affordable public housing with lifelong tenencies is something governments could be doing more to look at, particularly w/r/t slum dwellers etc. I'd have to check, but I think in Singapore there's a high % of affordable public housing. So maybe that could be a potential model.

[khunken]

Kittirat is always quick on the trigger to deny, criticise and 'brush aside' any commentary from outside organisations. He never has an original or thought-out response - just parrots the PTP line.

I wouldn't say that Thailand is currently in an economic crisis but it is heading that way. Inflation is eating into the buying power of consumers (government figures are laughable) and exports are not doing great either. Government borrowings are high and likely to continue higher with more money being plowed into the rice scheme and some government infrastructure funding necessary if they get the ok for the B2.2 tn trough.

It shouldn't be forgotten that B1.2tn has been swept under the BOT carpet as well.

The rice scheme is probably the greatest worry. They have no idea how to end or taper it and it just allows any other group of agriculture producers to claim their subsidy when prices for their commodity fall. It has produced a hand-out mentality that reduces the country's competitiveness at a time when the Asean is going to look for tariff reductions in the near future.

[thaicbr]

Thanks for the reply. I wont disagree with what you are saying, but overall i would not say the economy is in dire straights, it is more than capable of servicing its debts. House hold debt is an issue, but not unique or universal in Thailand. Govt spending again is a worry, but on the grand scale debt to GDP is still relatively low. The rice scheme is obviously a major problem but its not going to bankrupt the country really. 4.4billion USD last year? correct me if i am misreading/quoting what i thought i read, but it is not a huge amount for a country like Thailand.

It's not huge .. but it's also not just a drop in a bucket. Bearing in mind that is just the 2011/2012 harvest (and possibly lower than REAL figures)

But to put it in perceptive it's about 6% of the 2013 national budget. and would have pretty much covered Interior and National Security: 144,820,000,000.6 Baht (6 per cent) for judiciary, attorney, police force, fire departments, correction facilities, research and development to maintain domestic security.

source http://asiancorrespondent.com/88179/siam-intelligence-thailands-budget-2013/

Ps: the 2009 budget under Samak 1.8 trillion. under Abhisit 2010 budget 1.7 trillion and 2011 2.07trillion. back to Shin clan 2012 2.25 tb. 2013 2.4tb. The 2014 national budget has been set at 2.52 trillion baht, an increase of 125 billion baht, or 5.2 percent from the 2013 national budget. there ya go thats ya rice pledging money.

[thaicbr]

these tax received lists make interesting reading.

2012

http://www.rd.go.th/publish/45896.0.html

2013

http://www.rd.go.th/publish/46890.0.html

all

http://www.rd.go.th/publish/5999.0.html

[Pi Sek]

<snip>

I think the corollary of your point is that it would take an undemocratic government to move Thailand away from its populist consensus. And at this juncture that's probably true - it would have to be a government not beholden to the masses and their material desires. But as you can probably guess, I certainly wouldn't advocate that as any sort of solution. Quite the opposite. lol.

Actually, a government not beholden to the masses and their material desires would be a solution... just probably not a workable solution, and certainly not an acceptable one! As you say, it's a difficult step for a consumerist society to come to terms with not having things they want, especially if they believe they need them. Anyway, what's Thai for "austerity measures"? (I sincerely doubt we have ever heard that expression in Thai parliament!)

As to whether that would take an undemocratic government... well, I suppose that would depend on just how bad the Thai consensus on the Thai economy becomes, but I think you're right, I can't see Thais voting in any numbers to reign in over-spending even if things went completely tits-up. Having said that, when was the last time Thailand didn't have an undemocratic government?

I think one of democracy's failings is that what is good for a village isn't necessarily good for the country. What's good for the country isn't necessarily good for the world. What's good for the economy isn't necessarily good for society. What's good right now isn't necessarily good in a few years' time. That's a lot of variables for a Somchai, Pi Sek or Emptyset to take into account, especially when it's not what seems important to us at the time.

Not that I can come up with anything better

Yes, I certainly agree it would be a proposal that some would see as a solution - I meant it was one solution that I would never propose. I'd never want to give up whatever miniscule amount of say I have in the way my country is run, so why should I expect others to give up that right? I actually find it fascinating that there are people who would willingly give up that right - like the protesters calling for the suspension of democracy. I guess stability & order and a fall back towards old traditions is more important than being able to vote in & out governments for some people. And I can comprehend that. Democracy is often chaotic & throws up results a lot of people don't like; but if you look at the modern history of Europe, we somehow nevertheless always manage to muddle through. I just think talk of going back to an unelected government is a dangerous road to go down, an undoubted step backwords and I'm glad you seem to agree on this.

Regards your third paragraph, yes, but I think that goes back to what I said about muddling through in the end. Even people with very sophisticated models get key decisions wrong. In fact, they often seem to get things more badly wrong than a bloke in a pub could if he were simply making random choices (2008 crisis is a case in point!). I think there actually tends to be safety in numbers here, there's a good chance one person will get things wrong, but it tends to lessen when you have 60 million. That might be just wishful thinking though. You're also right about what's good for the village etc, but what better way is there to manage competing interests? Again, most autocrats tend to be self-interested.

It is an important point though, that's why it's worth re-iterating that democracy isn't just about voting. Or rather it shouldn't be about just voting. A properly democratic government should also promote liberal values: tolerance, pluralism, respect for minority rights and so on. When those values are inculcated, managing various interest groups doesn't tend to be such a problem. Of course, it's not going to be perfect. In terms of voting preferences, I think the vast majority of people are going to put their own immediate interests first and foremost. And someone in every society is going to lose out to an extent, but I just tend to hope it's the rich guy, not the poor guy. lol.

I think we both acknowledge that those protesters calling to remove the democratic model are probably doing so from a very dubious point of view, which is why you and I find them "fascinating" (good choice of word!). Even with my slightly fascist stance, it's an unrealistic and unsuitable way out.

60 million thinking better than 1? Yes, I agree, as did Socrates (and that, along with his method of proving it, was the reason he was put to death). However, there's a caveat - education, and hopefully we all know that this is a mute point in this country. You say "most autocrats tend to be self-interested" and that was the point of my rhetoric question about the last time Thailand didn't have an undemocratic government. That's also why I'm so against Thaksin, because I think he was the single most autocratic person in Thailand's history post-Rama V.

You're right, democracy isn't just about voting (that's something many pro-PTP Thaivisa posters seem to have trouble with... the difference between a democratic government and a democratically-elected one - although obviously they're not mutually exclusive). Tony Blair, much as I dislike the guy, said something at the "democracy forum" or whatever it was, that actually raised my estimation of him a little - "Democracy is not just about how a majority takes power, it is how the majority relates to the minority". I'd put it slightly differently - that democracy is as much about not making the minority unhappy as it is about making the majority happy. Well, I wish any government the best of luck with that one!

Good discussion, by the way

[Robby nz]

Would be interested to see what the overseas dollar reserves are now.

Last I read, which was some time ago, they had fallen $600 million in one week.

[Pimay1]

Would be interested to see what the overseas dollar reserves are now.

Last I read, which was some time ago, they had fallen $600 million in one week.

Even if they reported the current reserves who would believe Mr. White Lies? On a lighter note Kittirat could have said "we don't need no stinkin' badges IMF".

Edited November 14, 2013 by Pimay1

[mrtoad]

Special K is more interested in getting stuck into that 2 Trillion baht , as opposed to what the IMF might think.

[SantiSuk]

The rice subsidy scheme is mere chicken feed (pun intended) compared to the agricultural cock-ups that European governments have got up to in my lifetime!

[Arkady]

The IMF report seems to have been written by distinguished economists after detailed research on the ground and review of the latest data at the time which was largely the 2nd quarter GDP numbers. They also have access to the economics research of their parent company, The World Bank, which maintains an office in Bangkok with highly trained Thai and foreign economists. For someone with no formal training in economics and only an MBA from a Thai university to criticize the report as as lacking a fundamental understanding of the Thai economy and being based on old data without even bothering to read the report is an insult to the Thai taxpayers who pay his salary. It is reminiscent of the morons at the Bank of Thailand who criticized foreign economists warning of a financial meltdown in 1996, the year before the meltdown occurred. Thailand is actually a rather small economy that is quite easy to understand and being born and brought up in Thailand is not a prerequisite.

The report actually seems rather mild and polite in criticizing the shortcomings of economic policy. Saying that direct assistance to farmers who are really in need with an emphasis on education to improve employment prospects and that the massive losses will strain confidence in Thailand's public finances is an understatement.

[Bluespunk]

The rice subsidy scheme is mere chicken feed (pun intended) compared to the agricultural cock-ups that European governments have got up to in my lifetime!

Really? Which particular cock ups devastated a market leaders exports to the point of no return? Which ones left the bank supporting these ridiculous subsidies on the verge of bankruptcy? Which ones were based on the frankly ludicrous idea that one producer of a widely grown crop could could just dictate to the rest of the world the price it could be sold at? Which ones were so poorly thought through that there was no where to store it properly, resulting in the rotting and insect infestation of the poorly stored crop? Yes the EU has had some stupid policies but nothing on the criminally inept scale of this rice scheme.

[Emptyset]

The IMF report seems to have been written by distinguished economists after detailed research on the ground and review of the latest data at the time which was largely the 2nd quarter GDP numbers. They also have access to the economics research of their parent company, The World Bank, which maintains an office in Bangkok with highly trained Thai and foreign economists. For someone with no formal training in economics and only an MBA from a Thai university to criticize the report as as lacking a fundamental understanding of the Thai economy and being based on old data without even bothering to read the report is an insult to the Thai taxpayers who pay his salary. It is reminiscent of the morons at the Bank of Thailand who criticized foreign economists warning of a financial meltdown in 1996, the year before the meltdown occurred. Thailand is actually a rather small economy that is quite easy to understand and being born and brought up in Thailand is not a prerequisite.

The report actually seems rather mild and polite in criticizing the shortcomings of economic policy. Saying that direct assistance to farmers who are really in need with an emphasis on education to improve employment prospects and that the massive losses will strain confidence in Thailand's public finances is an understatement.

As I pointed out in a previous post, it appears to me that Kittirat wasn't responding to what the IMF actually said, but rather to a reporter's apparently erroneous description of what the report recommended. He's actually in no disagreement with the IMF on the interest rate/inflation issue. If you read the article carefully and compare with what the IMF report actually says, you'll probably come to the same conclusion.

Regards replacing the rice scheme with direct assistance, all he said was that it'd have to be studied first, which is perfectly true... I don't think the guy is a particularly brilliant FM but the criticism he's getting for his comments in this specific case seem to be unfair. Also think it's worth bearing in mind re your comments about 'foreign economists' & 1997, that countries post-crisis who ignored the IMF recommendations and 'structural adjustment packages' recovered faster than those that implemented the reforms fully. Which proves that it *is* sometimes better to ignore foreign economists. The IMF seems to have changed for the better now though, less beholden to neoliberal dogma than it was in the 90s/00s.

[Thai at Heart]

<snip>

I think the corollary of your point is that it would take an undemocratic government to move Thailand away from its populist consensus. And at this juncture that's probably true - it would have to be a government not beholden to the masses and their material desires. But as you can probably guess, I certainly wouldn't advocate that as any sort of solution. Quite the opposite. lol.

Actually, a government not beholden to the masses and their material desires would be a solution... just probably not a workable solution, and certainly not an acceptable one! As you say, it's a difficult step for a consumerist society to come to terms with not having things they want, especially if they believe they need them. Anyway, what's Thai for "austerity measures"? (I sincerely doubt we have ever heard that expression in Thai parliament!)

As to whether that would take an undemocratic government... well, I suppose that would depend on just how bad the Thai consensus on the Thai economy becomes, but I think you're right, I can't see Thais voting in any numbers to reign in over-spending even if things went completely tits-up. Having said that, when was the last time Thailand didn't have an undemocratic government?

I think one of democracy's failings is that what is good for a village isn't necessarily good for the country. What's good for the country isn't necessarily good for the world. What's good for the economy isn't necessarily good for society. What's good right now isn't necessarily good in a few years' time. That's a lot of variables for a Somchai, Pi Sek or Emptyset to take into account, especially when it's not what seems important to us at the time.

Not that I can come up with anything better

You talk as though government spending as a percentage of the economy is somehow grossly out of whack.

They have accumulated debt of less than 50% of gdp and in no way maintain a social system in line with that in the west.

They might not spend it correctly but spending per se is not out of line.

[Pi Sek]

<snip>

I think the corollary of your point is that it would take an undemocratic government to move Thailand away from its populist consensus. And at this juncture that's probably true - it would have to be a government not beholden to the masses and their material desires. But as you can probably guess, I certainly wouldn't advocate that as any sort of solution. Quite the opposite. lol.

Actually, a government not beholden to the masses and their material desires would be a solution... just probably not a workable solution, and certainly not an acceptable one! As you say, it's a difficult step for a consumerist society to come to terms with not having things they want, especially if they believe they need them. Anyway, what's Thai for "austerity measures"? (I sincerely doubt we have ever heard that expression in Thai parliament!)

As to whether that would take an undemocratic government... well, I suppose that would depend on just how bad the Thai consensus on the Thai economy becomes, but I think you're right, I can't see Thais voting in any numbers to reign in over-spending even if things went completely tits-up. Having said that, when was the last time Thailand didn't have an undemocratic government?

I think one of democracy's failings is that what is good for a village isn't necessarily good for the country. What's good for the country isn't necessarily good for the world. What's good for the economy isn't necessarily good for society. What's good right now isn't necessarily good in a few years' time. That's a lot of variables for a Somchai, Pi Sek or Emptyset to take into account, especially when it's not what seems important to us at the time.

Not that I can come up with anything better

You talk as though government spending as a percentage of the economy is somehow grossly out of whack.

They have accumulated debt of less than 50% of gdp and in no way maintain a social system in line with that in the west.

They might not spend it correctly but spending per se is not out of line.

Hi Thai At Heart, welcome to the most intelligent and insult-free discussion I've seen on Thaivisa for ages!

Yes, you're right, govt debt as a %age of GDP is not over the top at the moment, but that wasn't the gist of my post. Prior to the above quotes we were talking about private debt.

However, the Forbes editorial I referred to above by Jesse Colombo - who is admittedly rather pessimistic - states that "Thailand’s government spending is up by nearly 40 percent since 2008", and then he goes on to list where they're spending it and examines the revenues they're likely to get back (or not, as he suggests!). That is worrying, and I think the IMF is trying to convey the same message.

Also note that I wasn't having a go at just the current government... and that I also mentioned that in 2006-2007 the debt levels were the lowest they've been for ages which, in my opinion, is because the 2006-07 junta government were absolutely not concerned with economic stimuli.

[Pi Sek]

The rice subsidy scheme is mere chicken feed (pun intended) compared to the agricultural cock-ups that European governments have got up to in my lifetime!

Really? Which particular cock ups devastated a market leaders exports to the point of no return? Which ones left the bank supporting these ridiculous subsidies on the verge of bankruptcy? Which ones were based on the frankly ludicrous idea that one producer of a widely grown crop could could just dictate to the rest of the world the price it could be sold at? Which ones were so poorly thought through that there was no where to store it properly, resulting in the rotting and insect infestation of the poorly stored crop? Yes the EU has had some stupid policies but nothing on the criminally inept scale of this rice scheme.

To be fair, a few of my friends in UK agriculture from the 90s were all doom-and-gloom about milk subsidies and the state of the British beef trade... but I don't know enough about it to present a decent argument.