TR Economy & Updates

[Nilgiri]

Yup, sounds a good policy, I hope it works

Roundabout way of doing an interest rate hike (which would lose political face though for the admin.... so they opted for this very circuitous way instead).

The danger of it (compared to simple I/R hike) is the liabilities that could come due for it 1 year down the line.

 

[Lool]

Roundabout way of doing an interest rate hike (which would lose political face though for the admin.... so they opted for this very circuitous way instead).

The danger of it (compared to simple I/R hike) is the liabilities that could come due for it 1 year down the line.

Not really
As I said in my previous post, it all depends on the exchange rate at the time when the account matures; if the exchange rate is higher, then the govt will pay the difference and if it is the same or lower, then the govt will only pay the basic interest rate on the account

This policy is actually a good way to give ppl back their confidence in the lira; however, that is only true if the crisis is short-lived or inflation dramatically drops. I still dont understamd how they are so sure that the exchange rate will remain stable till the end of this year........ Rn, it may be sustainable but later on Erdo will surely start bitching again about rate cuts..... Can Nebati really convince Erdo to not cut rates again throughout this year or not is the golden question that needs to be answered

 

[Indos]

Not really
As I said in my previous post, it all depends on the exchange rate at the time when the account matures; if the exchange rate is higher, then the govt will pay the difference and if it is the same or lower, then the govt will only pay the basic interest rate on the account

This policy is actually a good way to give ppl back their confidence in the lira; however, that is only true if the crisis is short-lived or inflation dramatically drops. I still dont understamd how they are so sure that the exchange rate will remain stable till the end of this year........ Rn, it may be sustainable but later on Erdo will surely start bitching again about rate cuts..... Can Nebati really convince Erdo to not cut rates again throughout this year or not is the golden question that needs to be answered

IMO Turkey can learn from Indonesian history during 1966-1970 in how Soeharto government is able to tame the hyperinflation and huge currency depreciation made during Soekarno period.

 

[Lool]

If things go well, then this is a good sign. However, if the lira crashed, the govt will go bankrupt in a few days, if not hours!

https://twitter.com/i/web/status/1494274929579200519

 

[Indos]

Just check Indonesian number here, as long as you have good economists and President trust them, situation will becoming better gradually inshaAllah

 

[Indos]

Soeharto takes effective control of the country since 1967 and look the hyperinflation (1000 %) going down to just 15 % after 3 years. Hyperinflation also causes huge currency depreciation and the need to eliminate some zero in our currency paper

 

[Fairon]

IMO Turkey can learn from Indonesian history during 1966-1970 in how Soeharto government is able to tame the hyperinflation and huge currency depreciation made during Soekarno period.

Let me guess, Soeharto goverment followed the instructions on Nas and everything is fixed? /s

 

[Xenon54]

IMO Turkey can learn from Indonesian history during 1966-1970 in how Soeharto government is able to tame the hyperinflation and huge currency depreciation made during Soekarno period.

Turkey had deep reaching reforms after 2002 inflation crisis, it was a solid base for the banking sector but AKP reversed all those reforms because they were preventing the kind a corruption thats rampant throught their whole organization.

Turkey doesnt need a lesson, it needs to get rid of Erdogan and his corrupt goons and reinstall the refoms that were done under Kemal Dervis.

 

[Nilgiri]

Not really
As I said in my previous post, it all depends on the exchange rate at the time when the account matures; if the exchange rate is higher, then the govt will pay the difference and if it is the same or lower, then the govt will only pay the basic interest rate on the account

This policy is actually a good way to give ppl back their confidence in the lira; however, that is only true if the crisis is short-lived or inflation dramatically drops. I still dont understamd how they are so sure that the exchange rate will remain stable till the end of this year........ Rn, it may be sustainable but later on Erdo will surely start bitching again about rate cuts..... Can Nebati really convince Erdo to not cut rates again throughout this year or not is the golden question that needs to be answered

I can tell where it's headed in general though....members can simply see in 1 year time for themselves. We have been over it all multiple times in this thread already.

First look at the inflation rate and where that is expected to be this year (even by the official data).

Then look at the liability build up pressure....the difference between the inflation rate sustained/inflicted and the TR Lira depreciation rate (near nil) brought on by this intervention measure....i.e little crossover from the latter to the former.

Compare that to much simpler effective measure of I/R increase.

The net forex continues to approach zero (some even have it in negative).

All part of the reason Fitch downgraded TR credit rating recently to B+ from BB-.

The currency swap model has run its course largely....and has transitioned to sukuk selling to UAE lately (no coincidence about the relationship budding there overnight).

Tourism season will hopefully add some good injection to TR economy this year (given it was sorely wrecked due to covid).....but it will not provide some hail mary to what ails the TR economy at the base.

That needs structural reform...but that has been completely abandoned now for years (this needs solid institutional and central bank independence) and the dereliction of that will be continued underlying pain.

You simply cannot steer an economy like this on these demand side intervention-tinkerings with elections and political gamesmanship in mind....buying some time to buy some more time with whatever short term ponzi scheme ...while growing the pressure bubble by doing so....

..... and that too circuitous ones that burden taxpayer (on top of the inflation already).

You need supply side development, you need genuine capacity building, you need genuine investment....you need TRUST.

That is the ONLY way to address the mid and long term plague afflicting TR economy now...that the administration has created by its own hand in the first place.

@Saithan @xenon5434

 

[Xenon54]

I can tell where it's headed in general though....members can simply see in 1 year time for themselves. We have been over it all multiple times in this thread already.

First look at the inflation rate and where that is expected to be this year (even by the official data).

Then look at the liability build up pressure....the difference between the inflation rate sustained/inflicted and the TR Lira depreciation rate (near nil) brought on by this intervention measure....i.e little crossover from the latter to the former.

Compare that to much simpler effective measure of I/R increase.

The net forex continues to approach zero (some even have it in negative).

All part of the reason Fitch downgraded TR credit rating recently to B+ from BB-.

The currency swap model has run its course largely....and has transitioned to sukuk selling to UAE lately (no coincidence about the relationship budding there overnight).

Tourism season will hopefully add some good injection to TR economy this year (given it was sorely wrecked due to covid).....but it will not provide some hail mary to what ails the TR economy at the base.

That needs structural reform...but that has been completely abandoned now for years (this needs solid institutional and central bank independence) and the dereliction of that will be continued underlying pain.

You simply cannot steer an economy like this on these demand side intervention-tinkerings with elections and political gamesmanship in mind....buying some time to buy some more time with whatever short term ponzi scheme ...while growing the pressure bubble by doing so....

..... and that too circuitous ones that burden taxpayer (on top of the inflation already).

You need supply side development, you need genuine capacity building, you need genuine investment....you need TRUST.

That is the ONLY way to address the mid and long term plague afflicting TR economy now...that the administration has created by its own hand in the first place.

@Saithan @xenon5434

Its hard to explain market economy to minds that believe a strong man can fix everything on his own.
Some of these people cheer him as ''world leader'' just because UAE has organized a lavish welcome to him...

I usually goes like this:

-Erdo introduces a brilliant plan to tackle the crisis
-His minions cheer that its a good policy that will fix everything
-Turns out it was a ponzi scheme to save his billionaire friends
-The long silence
-
-
-
-
-Erdo introduces another brilliant plan to tackle the crisis

This is going on since 2017 where the first sings of crisis were becoming appearant, now at least they admit its a crisis to begin with but they still dont understand why there is a crisis, well, must be the foreign powers i guess.

 

[Nilgiri]

then the govt will pay the difference

This is the flaw in a lot of thinking these days.

WHERE does the govt get its funding from?

A govt is NOT a value-creating entity like a business.

It extracts from the present and worse extracts from the future.

These are all productive resources in the end with costs for taking them away and re-deploying them by govt power.

So its not "the govt" that will pay the difference....it will be the current and future turkish citizen (direct taxpayer or even general person by way of inflation tax inflicted).

Then you have to ask was it worth it?...especially given they did not have a choice in the matter? (You see how important a govt has to get it right given its cudgel size?)

A govt obviously has to exist and has to function (anarchy is often much like tyranny after all).....but this has to be kept to a minimum + focused + balanced as possible to build trust well.

i.e A fundamental recognition of what purpose a govt is there for and keep it hemmed into that.

That is the whole point in having institutions and checks and balances....to prevent autocratic executive over-reach (which can be either a left or right wing thing in the end....both equally bad).

Autocracy inevitable expands the govt into things it is simply not good at (since its not value-creation entity) and leaves a wake of bad faith, usurped trust and failure.

This can be disguised+delayed quite some time depending on the emotional politics of the country (often in some hope it will dissipate even though the executive does nothing to reverse)....but it will come due in the end, there is no escaping that.

 

[the]

Its hard to how these unorthodox policies can continue for much longer. The sharp rise in gas and oil prices will surely be 'nail in the coffin' of AKP. People will riot on the streets, refuse to pay bills and instead demand for early elections. Even worse, the rise in commodity prices will force small businesses to shut down and even larger firms will have to cut production, resulting in lower export volumes and a general worsening of economic conditions.

Unless the current government resort to inhumane actions such as forcefully putting down demonstrations then its highly plausable that Turkey could see a democratic coalition (made of 6 parties) in power by the end of the year. Even the very change in administration will no doubt improve Turkey's credibility and thus attract much needed foreign investment (without having to sell out your country).

 

[Indos]

Let me guess, Soeharto goverment followed the instructions on Nas and everything is fixed? /s

Who is Nas ???

The reason of skyrocketing inflation during Soekarno is printing money actually, he wages war and tried to invade Malaysia and Singapore ( Malaya ), we bomb Singapore about 50 times and wage war with Commonwealth Coalition lead by British and supported by British goons ( Ausie/New Zealand) and Malaysian/Singaporean troops of course in Borneo island (Malaysia part of Borneo), but the fight more into British which can be seen by the casualties in their side is in majority British soldier

LOL even we want to jump into Pakistan and India war and wants to annex Andaman and Nicobar islands of India and 1965 war was actually stoped and reach peace agreement after Indonesian promise to help Pakistan do realize, not only 2 submarines, but also warship, and planes, you can read on the whole article here

Golden Shark Adventure in Pakistan​

Two Indonesian Navy submarines were sent to Pakistan. His mission: join the war against India.​

By Hendi Johari | 03 May 2021

Members of the Kencana Shark Corps who manned the Indonesian submarine Nagaransang pay their last respects to Pakistani military officials (Sewindu Komando Submarine Type book, 12 September 1967)

Petualangan Hiu Kencana di Pakistan

Dua kapal selam Angkatan Laut Republik Indonesia dikirim ke Pakistan. Misinya: ikut berperang melawan India.

historia.id

 

[Manomed]

Its hard to explain market economy to minds that believe a strong man can fix everything on his own.
Some of these people cheer him as ''world leader'' just because UAE has organized a lavish welcome to him...

I usually goes like this:

-Erdo introduces a brilliant plan to tackle the crisis
-His minions cheer that its a good policy that will fix everything
-Turns out it was a ponzi scheme to save his billionaire friends
-The long silence
-
-
-
-
-Erdo introduces another brilliant plan to tackle the crisis

This is going on since 2017 where the first sings of crisis were becoming appearant, now at least they admit its a crisis to begin with but they still dont understand why there is a crisis, well, must be the foreign powers i guess.

 

[Tornadoss]

Who is Nas ???

The reason of skyrocketing inflation during Soekarno is printing money actually, he wages war and tried to invade Malaysia and Singapore ( Malaya ), we bomb Singapore about 50 times and wage war with Commonwealth Coalition lead by British and supported by British goons ( Ausie/New Zealand) and Malaysian/Singaporean troops of course in Borneo island (Malaysia part of Borneo), but the fight more into British which can be seen by the casualties in their side is in majority British soldier

LOL even we want to jump into Pakistan and India war and wants to annex Andaman and Nicobar islands of India and 1965 war was actually stoped and reach peace agreement after Indonesian promise to help Pakistan do realize, not only 2 submarines, but also warship, and planes, you can read on the whole article here

Golden Shark Adventure in Pakistan​

Two Indonesian Navy submarines were sent to Pakistan. His mission: join the war against India.​

By Hendi Johari | 03 May 2021

View attachment 40003
Members of the Kencana Shark Corps who manned the Indonesian submarine Nagaransang pay their last respects to Pakistani military officials (Sewindu Komando Submarine Type book, 12 September 1967)

Petualangan Hiu Kencana di Pakistan

Dua kapal selam Angkatan Laut Republik Indonesia dikirim ke Pakistan. Misinya: ikut berperang melawan India.

historia.id

With Nas( Quran and Sunna) he was implying government's economic policies based Quran. Because Erdogan declared that he can not be against nas and continue applying Interest which is forbidden according to Quran, as result he lowered the interest rates which caused foreign currency hike and inflation.

 

[Indos]

With Nas( Quran and Sunna) he was implying government's economic policies based Quran. Because Erdogan declared that he can not be against nas and continue applying Interest which is forbidden according to Quran, as result he lowered the interest rates which caused foreign currency hike and inflation.

I can answer that, please wait for some times....

 

[Indos]

With Nas( Quran and Sunna) he was implying government's economic policies based Quran. Because Erdogan declared that he can not be against nas and continue applying Interest which is forbidden according to Quran, as result he lowered the interest rates which caused foreign currency hike and inflation.

You should said it as Nash

OK Here answers by @nufix in PDF. He has economics background as I do

--------------------------------

Some one said Islamic Bank should not impose interest

@nufix answer

Islamic bank should be willing to lose? How tf should they pay wages and keep the lights on? And who says sharia bank should not make money?

Sharia banks, while not profiting from interests, are profiting from mudharabah or profit sharing, much like investment banking that deals with equity and performance based profit orientation rather than borrowing.

Meanwhile, sharia banks also profit from Murabahah where the bank is contracted to buy something by a customer and the bank sells it to the customer at a higher price to create profit. This works in the same manner as interests do minus the sins of course.

Sharia bank, while bearing the name of sharia, is still a bank. An institution created to print money in literal and non literal sense. You cant expect them to be charitable. I wouldn’t put my money to a bank that is charitable since it is my money that they are going to give away.

 

[Indos]

One Malaysian member posting

No, Islamic Bank will not take the loss. Instead they have higher interest rate compare to average bank to compensate and they don't call it interest, they call it profit sharing. During the early days they have fixed rate, which is beneficial if the interest fluctuates higher but don't benefit when central bank lowers the interest rate (Base Lending Rate). But it is unpopular as most Malays prefer commercial banks borrowing, cause is way cheaper and people don't see interest rate climbing soon. 1% in difference in interest rate is a lot if your loans is over 20-30 years. But these days Islamic bank are using National Bank interest rate which fluctuates which makes me wonder are they Islamic enough?

My answer


The interest in Islamic bank of course fluctuate. If it is fixed, it is not Islamic bank. The interest based on the business performance. What we see now if I put my money to Islamic bank, I will get interest based on bank performance. This is why Islamic bank is the most profitable during recent recession since they dont need to pay interest as much as commercial bank when their financial performance going down due to crisis. Financial system will be more healthy and less fragile if we use Islamic banks (Islamic system).

Actually if I am as a person want to lend some money to another person, making an interest on it is Haram (forbidden). People do ask money during difficulty right ? So it is Haram to make an interest when we lend some one money. But it is an institution that is beneficial for the economy and mostly lend money for businesses and the rest to some one who has already had good and stable income for consumption, not some one who get financial difficulty. There will be less money circulation as well if there is no bank. Banks grow the economy. Any way it is state owned bank, not own by person.

There is actually a verse in Quran that say God forbids compound interest and the other verse forbid some one who make an interest to another person. If I am about to interpret it, bank as institution can get away from being regarded as Haram as long as the interest is low and it is beneficial for the economy ( make money keep being circulated from some one who cannot grow it into some one that can grow it ).

“O believers, take not doubled and redoubled interest, and fear God so that you may prosper.” (Surah Al ‘Imran, verses 130-1)

And when the bank is even state owned so I would say it is difficult to regard it as forbidden activity, it is because government has right to tax their citizen if they have good income and profitable businesses. Islam also doesnt forbid government to tax their citizen, rather Islam shows that people should pay zakat and even do more than just zakat that benefit other people and society.

 

[Indos]

For Indonesia among 10 biggest banks, 6 biggest banks are state owned, 1 private/public own, 3 others are foreign owned banks.

So it is government who take the majority of interest as profit, not person

If my saving gets interest from government, I think it is part of Government role, and when I take loan from SOE banks, SOE banks impose interest, as a good citizen guy I am happy to pay the interest since it will go to government assets if my business grows and become profitable due to that loan

------------------------------------

State owned banks dominate Indonesian banking system whether Islamic or not Islamic banks

Here is 10 major banks in Indonesia by assets

Bank Rakyat Indonesia (first biggest-state owned), Bank Mandiri (second biggest-state owned), BCA (third biggest-private/public owned), Bank Negara Indonesia (forth biggest-state owned), Bank Tabungan Negara (fifth biggest-state owned), Bank Shariah Indonesia ( 7 biggest-state owned ) Bank Tabungan Pensiunan Nasional (ten biggest-state owned). The rest banks that are not mentioned are foreign owned banks.

Top 10 banks are really dominating the national economy.

 

[Indos]

In Islam there is also law saying in emergency situation, even we can eat pig to save lives. So in this fragile monetary situation in Turkey, government should do what is necessary to stabilize the Turkish Lira and bring down inflation.

There is famous story in Quran about prophet Ayub who break many Shariah Law like killing a kid, breaking someone else boat, etc that makes prophet Musa angry, but actually what is done by prophet Ayub is right because situation/condition that become the reason of the actions.