This morning, a very interesting article in Nation, that we can put in perspective with increase of oil's prices and of interest rates (a trend all over the world, and soon in Japan too).

To summarize the "strategy" of the thai government : in order to "curb" inflation... they just have to forbid prices increases !

That's really brillant.

Of course, it will :

-end one day

-and the more we wait, the more painfull it will be

And the second axis of this "strategy" is to maintain statu quo until... well let's say october, elections time : 3 months.

Bravo !

Govt seeks three-month extension on price freeze

The Internal Trade Department has asked for cooperation from manfucturers to maintain the price of goods for another three months to ensure the success of its policy to curb the country's inflation rate to less than 4.5 per cent this year.

The Commerce Ministry launched price-control measures last June as it foresaw high inflation spurred mainly by skyrocketing oil prices. The ministry asked manufacturers to freeze retail prices until July this year.

The ministry strategy is to keep the country's inflation below 4.5 per cent.

Great way to support Thai manufacturing.

If you have a self-sufficient closed economy with strict controls, as China almost had for decades, it might work. Thailand, however, is dependent on imports and exports, and direct foreign investment. Especially, dependent on imported oil, whose price it cannot control.

I was reading the Nation today - weren't there also articles about the GDP figures being lower than desired, and aren't we still running a current account deficit? And hasn't foreign direct investment plummeted?

In 1969, with inflation in the US running at 5%, President Nixon ordered a wage-and-price freeze. Planned to last 3 months, it lasted 33 months...and it caused havoc. For the first time since WWII, the US had shortages of nearly all foodstuffs, petroleum products, and manufactured goods. Fixing prices is a bad idea, in any economy.

Start trying to play with supply and demand and things go haywire.

Problem is that our economic ministries are populated by unreformed quasi socialistist. They just don't get it.