The Nation's Editorial on Global Economy and its Financial Statement

The Nation


Editorial "Economists cannot provide any answers":


Like most economists, Krugman can't get out of the hole into which he has dug himself. He somehow believes that the global economy will return to its growth path, similar to what happened over the past few decades: The exporting nations, armed with excess production capacity, will continue to produce manufactured goods for global consumers. This excess production and excess consumption will continue forever, or so it seems, so that planet earth will experience joy and prosperity. Krugman and the world's economists believe in the sustainability of global capitalism and global financial capitalism even though they are teetering on the edge of a cliff.

---

But how can governments come up with further stimulus programmes when they are already saddled with debts amid growing business bankruptcies? Excess production and excess consumption have reached a point where we actually need radical restructuring so that we can get back to our original shape.

We can't continue to produce and consume excessively, buoyed by paper wealth that does not correspond to the fundamentals. Sadly, no economist can admit this reality, including the policy-makers, who are all tempted to introduce stimulus programmes for short-term gain.

The only way out of this crisis is to undertake restructuring in a painful way. We might witness a New Economy emerging. The old global capitalism is dead, for good.

I suspect Thanong wrote the editorial.

I doubt he was talking about his own company--even though he should.

The Nation's financial statement is one that shows a company that has been run into the ground.

It is saddled with short-term debt and long-term debt. Put simply, it is over-leveraged and it is losing money hand over fist.

Here are some of the bad parts of The Nation's financial statement:

(in thousand baht) Working Capital
Current assets	1449049
Current liabilities	1445740
Total	3309
Working Capital per baht of sales
Working Capital	3309
Total Sales	560000
Total	0.00590893
Current ratio
Current Assets	1449049
Current Liabilities	1445740
Total	1.00228879
Acid Test ratio
Current Assets	1449049
Inventory	374000
Current Liabilities	1445740
Total	0.74359774
Debt to equity ratio
Total Liabilities	2535573
Shareholders Equity	701072
Total	3.61670841

These numbers are not good.

It keeps borrowing short-term money to pay its bills.

Another horrifying number is that current liabilities are almost triple revenues and revenues don't even cover the operating expenses.

The equity in the company is exponentially shrinking.

You'd have to be a fool to buy this company's stock. It is at the point where it can't borrow anymore because its current assets already equal its current liabilities. When you subtract inventory, it is a even more dismal picture.

It has very little working capital to make more money.

Thanong better send this editorial to his publishers or he will be out of a job soon, though I suspect if the company goes bankrupt everybody will be running over to the state run media, or to the Manager Group.