TR Economy & Updates

[Ardabas34]

My view on Turkey's finances is this:
China has invested heavily in Pakistan's economy, reshaping the entire country with huge value projects (62 billion $ China-Pakistan Economic Corridor). This investment also concerns Turkey (future investments of 100 billion $) as it will be the connecting link of China in the European market. The Belt and Road Initiative economic program involves more than 70 countries worldwide. Anyone who observes the course of this program well will see that all the countries that are friendly to Turkey will develop to a tremendous degree. China will never let such an important link as Turkey collapse financially because then China's dreams of One Belt and One Road entering Europe via Asia will be jeopardized. This is the big picture for me where no one in the US cares so much when analyzing the Turkish economy. The Anglo-Saxon axis forgets the economic expansion of China, how important Turkey and the other Turkic countries are.

Well this is the dream our government currently pumps through the media.

I am sceptical towards the utopic claim that "we are saved!" Akp pumps but I will be glad even if it saves us from the political dominance of US a bit.

There is also a guy called Dogu Perincek, high time Eurasianist. He became best pals from sworn enemies with Erdogan since 2015.
He says incredible stuff like the weatern world order that began with the capture of the gulf of Basra by the Portuguese in 15th century will after all, change. We are witnessing history!

He is almost speaking "prophetical" I would say.

 

[Nilgiri]

China has invested heavily in Pakistan's economy, reshaping the entire country with huge value projects (62 billion $ China-Pakistan Economic Corridor).

They really haven't tbh. (Since its stuff that produces that matters the most i.e factories, rather than white elephant infra brochures).

Its projected loans...90% or more of it (given low factory commitment since China is unsure how long it needs to hold onto these for its own people). That is very different to investment.

That is also the difference between intent and commitment. The difference between a contract and an MOU.

Even the 90%+ loan model is pending on:

A) Pakistan political servility and abandoning of US/West as far as possible (so that Yuan can be used rather than USD which China wants to stockpile/weaponise as long as possible w.r.t labour underpricing given that economic model is coming into pressure now this decade for various reasons)

B) Pakistan's ability to hold this debt burden (given it only saves about 5% of its GDP a year) and the opportunity cost to China (this is not clear)

One only need to look at the UNCTAD FDI figures (numbers from Pakistan own central bank which cannot be made up) regarding this.

@VCheng

 

[Foulgrim]

Well this is the dream our government currently pumps through the media.

I am sceptical towards the utopic claim that "we are saved!" Akp pumps but I will be glad even if it saves us from the dominance of US a bit.

Turkey, as a NATO member, is stepping on the West (Anglo-Saxon axis) with one foot and stepping on China's development economic policy with the other, while proposing its hands as a means of reconciling strategic agreements with Russia. In short, Turkey is doing well with everyone, formally and informally, in order to have the best possible results in its economic and geopolitical autonomy. That is why any US threats to Turkey with financial inequalities are US pressure on Turkey to become a subordinate of the Anglo-Saxon axis again, which of course will never happen. It is not just a narrative of the Erdogan government but an expectation of Turkey aiming at its economic and geopolitical independence as a regional power. This policy of Turkey is inextricably linked to the acquisition of nuclear weapons. The reason is the following:
Russia and China will gain geopolitically by creating unbearable pressure on the Anglo-Saxon axis (especially in the USA) as they will have nuclear Iran and nuclear Turkey as their spearhead against the US nuclear Israel! In this way, they will transform the United States from a military and economic superpower into a military and economic peripheral power where it will effectively command the American continent. Israel is doomed to sell out geopolitically from the US in the next 20 years and the nuclear weapons available to the Israelis will not be able to save them this time! The Arab countries do not forget by any means what "5 Day War" means. I think that countries like Turkey, Iran, Egypt, etc. will want it. to attack Israel in the future and this time there will be no France to help them with nuclear weapons nor the US with military equipment. The only way for Israel to escape what is being prepared is to accept bowing its head to Russia, Turkey, Iran and China, backing down on many of its claims. This is the long-term goal of China and Russia and I believe it will be fully realized in the next 30-40 years. Turkey is the "coveted bride" of the great powers (USA, Russia, China) where everyone tempts her with economic agreements to rise in the world economy.

 

[Indos]

Well actually the reason to increase the interest rate is to suck the money from the circulation to decrease inflation. Actually I dont like this policy as well since I believe we should do more intervention in the real sector than monetary to curb inflation, but since the currency is also traded in the financial market so increasing the interest rate is needed when the inflation is so high in order to make people/institution keep Lira instead of buying USD.

So the Lira crashed is very normal when Erdogan want to keep interest low during very high inflation situation. And it is very important to keep market level of confident high as well, If the leader acts not based on knowledge, the currency will be likely end up in free fall situation during pressing economic situation (in the case of Turkey is high inflation) because they believe the government cannot control the market, particularly when the leadership act in opposite of economic logic.

 

[Foulgrim]

They really haven't tbh. (Since its stuff that produces that matters the most i.e factories, rather than white elephant infra brochures).

Its projected loans...90% or more of it (given low factory commitment since China is unsure how long it needs to hold onto these for its own people). That is very different to investment.

That is also the difference between intent and commitment. The difference between a contract and an MOU.

Even the 90%+ loan model is pending on:

A) Pakistan political servility and abandoning of US/West as far as possible (so that Yuan can be used rather than USD which China wants to stockpile/weaponise as long as possible w.r.t labour underpricing given that economic model is coming into pressure now this decade for various reasons)

B) Pakistan's ability to hold this debt burden (given it only saves about 5% of its GDP a year) and the opportunity cost to China (this is not clear)

One only need to look at the UNCTAD FDI figures (numbers from Pakistan own central bank which cannot be made up) regarding this.

@VCheng

There are difficulties in implementing all these financial agreements, no one disagrees. But I do not think that these difficulties change the big picture.

List of megaprojects - Wikipedia

en.wikipedia.org

 

[Akhtar]

Well this is the dream our government currently pumps through the media.

I am sceptical towards the utopic claim that "we are saved!" Akp pumps but I will be glad even if it saves us from the political dominance of US a bit.

There is also a guy called Dogu Perincek, high time Eurasianist. He became best pals from sworn enemies with Erdogan since 2015.
He says incredible stuff like the weatern world order that began with the capture of the gulf of Basra by the Portuguese in 15th century will after all, change. We are witnessing history!

He is almost speaking "prophetical" I would say.

I am also sceptical of this. What are we exporting to central asia compared to what is coming through the belt and road ? How will the local economy compete ? How much trade will be lost with Europe ? Do we need to devalue the lira so much to remain competitive ? What control is China getting ?

Turkey has soft power in central asia with Culture. China has the hard power. If the two cooperate, China could easily increase its domination in central asia. For example, right now Pakistan is the middle man between China and the Taliban, aiding China in Afghanistan.

 

[Nilgiri]

There are difficulties in implementing all these financial agreements, no one disagrees. But I do not think that these difficulties change the big picture.

List of megaprojects - Wikipedia

en.wikipedia.org

A simple track of what was supposed to be delivered by now, compared to what has happened already says it own story.

Then there is also the fundamental question of what is the validity of the two models:

A) Build factories first with what you have and what you can save (to earn forex and realise production).....grow infra next to expand (with as little foreign loans as possible)...but factory-first +realisation-first priority. The course that Japan, South Korea etc etc all did before PRC.

B) Build debt-heavy infra first.....and factories second (relegated to brochures)....so actual forex-earning and production stays in a later (projected) phase II as the debt-provider sees it fit to....i.e debt-first +promise/projection-first priority... The model that no successful country ever did before.



....namely why did PRC pick model A for itself (under post-Mao deng era and then the 90s for example)

....but promotes model B only for any foreign takers (esp those in little to no position to bargain, but have pressing political need for brochures)....

i.e What is the hold up with model A if that is what clearly worked/working for China (and those before and currently).

It is quite instrumental to see for example what China invests in India (w.r.t factories) compared to Pakistan.

Great Wall Motors, SAIC etc etc..... are they making a bee line to Pakistan?

Or is it case of Pakistan needing tons of brochure-infrastructure (on paper still mostly for a reason) before moving the needle on being able to assemble something pretty basic that it can already do 10 - 20 years ago?....brochure infra with foreign debt that India never did?

This whole thing extends at large to economic model B worldwide.....just the relative bargaining power (of the receiver country) and relative (political) interest of CCP varies.

 

[Indos]

Erdogan and his corrupt clique just has to go away... this is the whole truth. Those last 5-6 years just completely ruined everything good that was achieved since the start of the century.
After 20 years of running the country He just has to go away because the road has ended. No matter who you are and what you do at a certain point you are just not fit enough to do your job and you bring more negatives than positives... so just retire already.

Leader should stay in power not more than 10 years, same here like Indonesia. Soekarno is awesome for the first 10 years of his power, leading Indonesia during independence war, and then after that he becomes part of the problem and almost make Indonesia like Syria when he want to make 1 million communist troops with the weapon from China. This is why Armed Force tried to kick him out.

Soeharto is also awesome in the first 10-15 years of his leadership, but later he becomes part of the problem. Indonesia understand the problem and this is why we limit President power maximum 10 years.

 

[Sinan]

Central Bank, burned $130 Billion liras to keep dolar low, didn't worked.
Then Central Bank raised interest rates to 19, to keep it low... it kind of worked.

Then our brilliant great leader, fired the head of the Central Bank. .(In 5 years this is the 5th one, previous ones got fired by Erdogan) and lira lost value again.

Now, we are out of ammunition + central bank is in the hands of a columnist of a newspaper. Seems like Erdogan vowed to destroy Turkey before he flees to Qatar.

 

[the]

 

[Nilgiri]

Central Bank, burned $130 Billion liras to keep dolar low, didn't worked.
Then Central Bank raised interest rates to 19, to keep it low... it kind of worked.

Then our brilliant great leader, fired the head of the Central Bank. .(In 5 years this is the 5th one, previous ones got fired by Erdogan) and lira lost value again.

Now, we are out of ammunition + central bank is in the hands of a columnist of a newspaper. Seems like Erdogan vowed to destroy Turkey before he flees to Qatar.

Insult to injury is the 10% overnight depreciation happened without any interest rate change (or policy change) at all.

This is all latency in the underlying trust acting for nothing and for "free" at the 19% interest setting....essentially an early advance for expected interest rate decreases coming up.

 

[Anmdt]

Insult to injury is the 10% overnight depreciation happened without any interest rate change (or policy change) at all.

This is all latency in the underlying trust acting for nothing and for "free" at the 19% interest setting....essentially an early advance for expected interest rate decreases coming up.

interest rate has risen by %2 on thursday or friday, before the weekend
the worst, %10 decline has happened after that as if a joke, and the rise of interest has been for nothing, as if intentionally set up.

 

[Deliorman]

^^

Who knows which AKP-Mafia guys filled their pockets from the huge rate differentials. God know how many shoe boxes have been filled again and how many offshore bank accounts have grown even bigger.

 

[Nilgiri]

interest rate has risen by %2 on thursday or friday, before the weekend
the worst, %10 decline has happened after that as if a joke, and the rise of interest has been for nothing, as if intentionally set up.

Hmmm yah I missed that news, I assumed Turk Central bank already increase to 19% from 17% earlier in year....because of this reform package that was released:

Check out this Twitter feed: https://twitter.com/MarkABentley and this articlesfor the lack of alternatives

Turkey's Erdogan targets inflation, state finances in economic reform plan

President Tayyip Erdogan said he would focus efforts to reform Turkey's economy on bringing down double-digit inflation and tightening state finances, under a keenly awaited package he unveiled on Friday.

www.reuters.com

Its a bit long to summarize quickly, but to summarize the 5 main points:
- fiscal policy tightening
- price stability
- support for exports especially for SME to close the current account deficit
- some liberation of the finance sector, to make room for digitalization and fintechs
- and creating more jobs

"Price stability" ...."targets inflation"

I thought some sense was arriving....it was just deception smoke and mirrors in the end.

I doubt fiscal policy will be tightened either if inflation control is thrown out the window already. I mean why not loosen it all after all to (seemingly/officially) address the last 3 points in some hail mary.....loans to chase more loans and hope something sticks or buys enough time for some other issue to take precedence and attention. Slim hope if you ask me given the bludgeoning effect of inflation on just about everything....but I don't know Turkish internal situation so well to comment.

BTW, was the firing of the central bank governor made to look like its related to the I.R hike from 17% to 19%?

Honestly though inflation (esp the hidden inflation that is not being measured) let out of control and let loose means emperor has run out of all short term tricks overall. There is some underlying numbers frightening his advisors I feel to get this desperate at this time too....there is plenty of structured analysis sane economist policy makers could have done instead given the corona wealth pooling situation.

 

[Turko]

Presidental finance office:"this appointment is within the jurisdiction of our president. If his majesty wishes , He may share the reason for this."


Guys what are you discussing here? What kind of ethics or scientific logic could be if there is a sultanish regime where The president sees the all authority must be reigned by himself.
Majesty even does not condescend to explain his move.
There is neither policiy nor strategy , there is daily mood of Sultan.

 

[Saithan]

Central government gross debt stock hits $249 bln - Latest News

The Turkish central government's gross debt stock totaled 1.85 trillion Turkish liras (around $249 billion) at the end of February, according to new official figures.

www.hurriyetdailynews.com

Without a coherrent strategy involving reducing debt to 0, and without reigns on government funded projects (budget restrictions) the circus will continue.

 

[VCheng]

They really haven't tbh. (Since its stuff that produces that matters the most i.e factories, rather than white elephant infra brochures).

Its projected loans...90% or more of it (given low factory commitment since China is unsure how long it needs to hold onto these for its own people). That is very different to investment.

That is also the difference between intent and commitment. The difference between a contract and an MOU.

Even the 90%+ loan model is pending on:

A) Pakistan political servility and abandoning of US/West as far as possible (so that Yuan can be used rather than USD which China wants to stockpile/weaponise as long as possible w.r.t labour underpricing given that economic model is coming into pressure now this decade for various reasons)

B) Pakistan's ability to hold this debt burden (given it only saves about 5% of its GDP a year) and the opportunity cost to China (this is not clear)

One only need to look at the UNCTAD FDI figures (numbers from Pakistan own central bank which cannot be made up) regarding this.

@VCheng

CPEC and China is another one of those taboo subjects where the manufactured opinion overshadows the reality by intent and design, at least to a domestic audience. Give it sometime and the whole edifice will show its true colors. China is a very different john than USA, for sure.

 

[Vergennes]

According to Ali Babacan, the former Minister of Economy of Erdogan I and II cabinet ; today in the opposition. The governor resigned from his post when he conducted an investigation into the disappearance of $130 billion from the Turkish central bank.

https://twitter.com/i/web/status/1374317353538879490

 

[Costin84]

According to Ali Babacan, the former Minister of Economy of Erdogan I and II cabinet ; today in the opposition. The governor resigned from his post when he conducted an investigation into the disappearance of $130 billion from the Turkish central bank.

https://twitter.com/i/web/status/1374317353538879490

They've burned them to hold the lira......mostly.
Turkish economic advisers actually bragg about these useless policies, like this guy....even though the lira is at 7.92 anyway

Erdoğan adviser says Turks sold more than $7 billion for liras | Ahval

Yiğit Bulut, a senior economic adviser to President Recep Tayyip Erdoğan, said Turks sold more than $7 billion for liras since yesterday.

ahvalnews.com

 

[what]

Babacan and Simsek were the only sane ministers the AKP should have ever kept, they could have done everything as long as they didnt meddle with the finances.