No sooner did PM Samak Sundaravej announce his plan to import diesel from Russia at eight baht per litre cheaper than normal than people have been running around to say how impossible this would be. The high transportation costs, they cry, the high sulphur content, they opine, the limited refining capacity, they etc and so forth. Well, we will see if it occurs – meanwhile, later today, the Finance Minister Surapong Suebwonglee is due to announce an economic stimulus package of around 40 billion baht which is expected to reduce excise taxes on (some types of) petrol, bus fares, electricity and a variety of other things. There is certainly a need for strong governmental leadership at this time, since consumer confidence is low and the SET index is dipping dramatically. The ability of the government to do this is being significantly damaged by the dangerous antics of the anti-democracy mob PAD and its supporters in the so-called Democrat Party.
The international credit crisis is contributing to the economic problems brought about by high oil and food prices, which have led to the highest rate of inflation in a decade and the threat of stagflation. The Governor of the Bank of Thailand Tarisa Watanagase has said the bank has not invested in securities issued by either of the two large American mortgage providers (‘Fannie Mae’ and ‘Freddie Mac’), only in US Government bonds. However, there appears to remain a problem of excess liquidity in the Thai (and the region’s) money markets. Money from commercial banks is being placed increasingly in government bonds and in short-term money market deals and this, the governor said, increases the risk of capital flow volatility – i.e. all the money could swiftly disappear overseas if better opportunities suddenly emerge and in any case the Thai economy is subject to what economists call ‘distortions’ because of this volatility.
Perhaps it is not surprising that drug use is on the increase.