Turkish Economy & Updates

Nilgiri

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so there is still long way to go before things get really bad (when further liquidation for survival needed)

An idea of what could be looming soon if more trust is lost and course is not reversed in December or at least early 2022:

"Right now locals seem content to keep their dollars in the local system. If they start to move money elsewhere, to Germany, to Austria, it's another story... Then we will have a conversation about a real currency crisis."


That will be start of a capital flight pattern...that is when you see catastrophic inflation...as principal backing bulk to support liquidity is stripped away leaving (even more) excessive liquidity chasing what little is left/stuck.

I dont think Erdogan will risk having that happen...but who knows.

They need someone sane + independent in central bank to stabilise....the insanity has gone long enough surely?
 

Nilgiri

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@Nilgiri How can currency manipulated?

Well it is like any price manipulation.

Exchange rate is just another price (your currency to buy another one and vice versa).

You look at demand and supply of what sets the price and you have the answer.

In archaic economy (which is simpler to understand), a big wealthy guy can say hoard something, say apples, potatoes....when their prices are low. He can coordinate this with other wealthy people to create a cartel hoarding system.

This artificially bumps up the price during that period....and when they release together, they bring the price down in that other period etc.

Currency markets you can do this too....simply hoard the monetary instruments you want to in concert with others.

Thinking back first time I came across this was in high school final years studying economics, my economics teacher told me about (Malaysian) PM Mahathir comments on George Soros (blaming him for asian finance crisis of late 90s).

He wrote SOROS in big letters on the board and asked us if anyone knew who this guy was lol.



HOWEVER....

This is tough to pull off in any serious fashion (esp Turkey with its overall wealth size and development).... with proper regulatory environment set by the country....and proper policy set by it to hedge and structure all monetary flows and investments....with all safety valves implemented well.

There is no reason for any country institutions to over- indulge in high-liquid "hot money" (where speculation and hoard + buy + flight patterns are more prevalent in general) tactics.

Set the system up to favour cold hard money (hard investment, low liquid)....in the incentive and trust structure with the capable economists to handle it.

That way you always have 70%+ hard cold backing...so if 30% flies away (worst case scenario)...you still aren't left with horrid situation.

Turkey has done this quite badly overall in 21st century IMO, given its raw wealth per capita which is fairly good (of course concentrated in 10% of population, but that's the same everywhere).

Turkey has been very "hot money" oriented in the raw flow levels....and the cold money side has not been hedged and diversified enough (i.e too real estate and construction focused, rather than push solid industry and services).

Then the totally confused lowering of interest rates in high inflation environment.....making this all worse on top now as has been discussed enough already.

This policy signalling and overall approach is driving away good + stable and incentivising chaos and bad....in short, mid and long terms.


=================================

Overall it is simply learn and implement all the relevant lessons from before (including serious ones that faced sustained capital flight like Indonesia as @Indos and I chatted about earlier in the thread).

Found on this page:


President Habibie of Indonesia took some very tough decisions in that period (just like in India for our crisis in 91).

It can be learned from as just one example. He is arguably best leader Indonesia had, though his tenure was quite short (he was not a political minded fellow).

It needs leadership + bureaucracy system that puts country over politics as far as possible....during the crunch time when the precipice starts to come into view, as it has in TR case since 2018 especially. No point staying near cliff edge like this and test where the edge is.

Just move away and get things stable, in greater interest of nation.....even if you lose political term, you will have done better for your country and be remembered better looking back.
 

Saithan

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Well it is like any price manipulation.

Exchange rate is just another price (your currency to buy another one and vice versa).

You look at demand and supply of what sets the price and you have the answer.

In archaic economy (which is simpler to understand), a big wealthy guy can say hoard something, say apples, potatoes....when their prices are low. He can coordinate this with other wealthy people to create a cartel hoarding system.

This artificially bumps up the price during that period....and when they release together, they bring the price down in that other period etc.

Currency markets you can do this too....simply hoard the monetary instruments you want to in concert with others.

Thinking back first time I came across this was in high school final years studying economics, my economics teacher told me about (Malaysian) PM Mahathir comments on George Soros (blaming him for asian finance crisis of late 90s).

He wrote SOROS in big letters on the board and asked us if anyone knew who this guy was lol.



HOWEVER....

This is tough to pull off in any serious fashion (esp Turkey with its overall wealth size and development).... with proper regulatory environment set by the country....and proper policy set by it to hedge and structure all monetary flows and investments....with all safety valves implemented well.

There is no reason for any country institutions to over- indulge in high-liquid "hot money" (where speculation and hoard + buy + flight patterns are more prevalent in general) tactics.

Set the system up to favour cold hard money (hard investment, low liquid)....in the incentive and trust structure with the capable economists to handle it.

That way you always have 70%+ hard cold backing...so if 30% flies away (worst case scenario)...you still aren't left with horrid situation.

Turkey has done this quite badly overall in 21st century IMO, given its raw wealth per capita which is fairly good (of course concentrated in 10% of population, but that's the same everywhere).

Turkey has been very "hot money" oriented in the raw flow levels....and the cold money side has not been hedged and diversified enough (i.e too real estate and construction focused, rather than push solid industry and services).

Then the totally confused lowering of interest rates in high inflation environment.....making this all worse on top now as has been discussed enough already.

This policy signalling and overall approach is driving away good + stable and incentivising chaos and bad....in short, mid and long terms.


=================================

Overall it is simply learn and implement all the relevant lessons from before (including serious ones that faced sustained capital flight like Indonesia as @Indos and I chatted about earlier in the thread).

Found on this page:


President Habibie of Indonesia took some very tough decisions in that period (just like in India for our crisis in 91).

It can be learned from as just one example. He is arguably best leader Indonesia had, though his tenure was quite short (he was not a political minded fellow).

It needs leadership + bureaucracy system that puts country over politics as far as possible....during the crunch time when the precipice starts to come into view, as it has in TR case since 2018 especially. No point staying near cliff edge like this and test where the edge is.

Just move away and get things stable, in greater interest of nation.....even if you lose political term, you will have done better for your country and be remembered better looking back.
After this stunt I believe TCMB head should be elected on national level among candidates that is At least a graduate and has experience working for IMF or another international banking sector. 7 years term with re-election for another 4 giving him 11. Years in the chair.

should theoretically be enough to hamstring any government that would want to rape the economy.
 

Anastasius

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it's easy, just do as in the USA, China or Russia, more social aid to the people, and the GDP will rise immediately, but that's difficult to understand for those who never travel through the countries
"Just give out free money bro!"

Splendid and whose money will you be spending? Noel Baba'nin?
 

Nilgiri

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After this stunt I believe TCMB head should be elected on national level among candidates that is At least a graduate and has experience working for IMF or another international banking sector. 7 years term with re-election for another 4 giving him 11. Years in the chair.

should theoretically be enough to hamstring any government that would want to rape the economy.

When a new administration comes in 2023 (hopefully for Turkey), it needs to seriously look at growing solid institutional capacity and inertia to weather stuff long term. So there is no repeat of what has occurred this time in this century so far.

This is a long complicated subject to get into (as to the role of executive and even legislature versus "deep state" institutions).

You do need executive power in the function of this area (since they are backed by actual democratic mandate, unlike institution networks at large)....but you also need reasonable counter weight balance within critical strategic function systems.

Turkey needs to find a better balance within its constitutional framework. This applies to executive - judicial branch intersection too....given judicial is a major check and balance to the exec + legislature.

i.e how best to establish more principled, secure and reliable checks and balances. This needs a lot of sound legal experts and good virtuous leadership (or at least decent and rational to enough level) occupying window of power for long enough in the end.

It is easy to see what has transmitted long term from Ataturk founding for example. That is the power of truth and virtue bearing out in test of time.

i.e Republic (entrenched rights and enshrined collective unalterable strategy) principles needs to be front and centre in certain areas over pure democratic principles (which have their role as well....but in other areas and some intersections).

IMO, best place to study is the federalist papers...the whole volume of them (and specifically the core elements of debate to find core truth in realm of role and dispensation of power in society), in US during its independence war and constitutional framing.

One may notice the names of the two major parties there....it is for a reason. The story is a long one.

But the initiation point (of the "federalists" and founding fathers)....who they were influenced by (before and during that time).....and who they have influenced later....and how this all has developed in the actual core valuable (10% of) political science...... (90% or more of it these days is unfortunately useless noise volumetrically as any entropy will do over time).

It is actually the largest reason long term the US became a superpower. In world at large, the best parts of them harness the same...because they are core truths stemming from understanding of the human psychology (over our history and why we rise and fall collectively) in the end.

It is very applicable debate long term even when you have your own constitution set up (for modern nationstate) and you want to perfect system principles underneath it.

It is also the hardest thing to do....having enough wise, intelligent and powerful people filtering through the BS and getting the golden seams to implement and implement well.

Wise, intelligent and powerful are three separate things you see (most folks do not understand this truly...and conflate them in various subconcious ways especially....that if you have one, it automatically extends to the other two....which is a terrible assumption).

It is exceptionally rare to find them invested at same time in a person. It is imperative for each country to do its upmost to nurture, build and harness them (and set example for doing this even more long term).....as they are scarce....but they are there in that small % of population everywhere.

It most accounts for the differences in wealth, power and success among countries today....which have (over long periods of time) been able to most do this compared to those that have not or did not.

@VCheng
 

Foulgrim

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The collapse of the Turkish lira over time shows the strength of the currency that a country should have in the world of trade. Turkey will go through such crises in the coming years in its economic war with the US, at least as long as the Democratic Party is in power as Republicans are willing to appear more lenient with the Turkish economy. Turkey's confrontation with the United States is not only economic but mainly geopolitical as this is where this rivalry begins. Turkey has two options:
1) To endure sanctions and the devaluation of its currency until it is released by the US in the field of defense technology and to export its natural gas reserves in order to freeze the value of its currency in world trade.
2) To return to the USA as an obedient servant with all the comforts of the past.
This choice clearly belongs to the Turkish state and to the Turkish citizens who vote for them.
It is no coincidence that the major oil and gas exporters either have a parity against the dollar or an inequality (see Iran, Nigeria, Russia, China), but their military and commercial networking power allows them to manage it. Russia and China as major trading players manage this dollar exchange rate, Nigeria and Iran having large reserves of hydrocarbons are "protected" by Russia and China. If Turkey's natural gas reserves are at the level of Iraq and Algeria as it is called and fully exploits them commercially by 2027, if it continues to trade in the primary sector with the EU. , if it becomes independent of the US in defense technology and if the car industry it builds manages to establish itself in Africa with its growing population then these pressures from the US will ease significantly. But to do all this requires effort and sacrifice of at least 5-7 years still from the average Turkish taxpayer with all that entails. Until then, there will be such monetary imbalances as a form of pressure.
 

Lool

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The collapse of the Turkish lira over time shows the strength of the currency that a country should have in the world of trade. Turkey will go through such crises in the coming years in its economic war with the US, at least as long as the Democratic Party is in power as Republicans are willing to appear more lenient with the Turkish economy. Turkey's confrontation with the United States is not only economic but mainly geopolitical as this is where this rivalry begins. Turkey has two options:
1) To endure sanctions and the devaluation of its currency until it is released by the US in the field of defense technology and to export its natural gas reserves in order to freeze the value of its currency in world trade.
2) To return to the USA as an obedient servant with all the comforts of the past.
This choice clearly belongs to the Turkish state and to the Turkish citizens who vote for them.
It is no coincidence that the major oil and gas exporters either have a parity against the dollar or an inequality (see Iran, Nigeria, Russia, China), but their military and commercial networking power allows them to manage it. Russia and China as major trading players manage this dollar exchange rate, Nigeria and Iran having large reserves of hydrocarbons are "protected" by Russia and China. If Turkey's natural gas reserves are at the level of Iraq and Algeria as it is called and fully exploits them commercially by 2027, if it continues to trade in the primary sector with the EU. , if it becomes independent of the US in defense technology and if the car industry it builds manages to establish itself in Africa with its growing population then these pressures from the US will ease significantly. But to do all this requires effort and sacrifice of at least 5-7 years still from the average Turkish taxpayer with all that entails. Until then, there will be such monetary imbalances as a form of pressure.
Agreed
Lets not mention that those who tastes the life of luxury, never wants to leave it!
If you went to a Turk who lived in the era of 1 US/1.5 Lira, he would say he doesnt wanna suffer for 8 years to achieve results and that is a normal human response that none can deny it
Just read what happened to the remaining Ottoman monarchies who were deported from Turkey after the war, loool, they couldnt adapt to the lifestyle of poverty

Sadly, that is the way of life, C'est la vie as some might say

Why do ppl think the EU never wanna enter into wars, supporting dictators elsewhere, bows to Russia etc.... because they dont wanna ruin the Western Utopia. The moment the Euro weakens and the ppl wake up from the lovely dream of a strong Euro, the moment that the West will enter into chaos and instability
 

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Agreed
Lets not mention that those who tastes the life of luxury, never wants to leave it!
If you went to a Turk who lived in the era of 1 US/1.5 Lira, he would say he doesnt wanna suffer for 8 years to achieve results and that is a normal human response that none can deny it
Just read what happened to the remaining Ottoman monarchies who were deported from Turkey after the war, loool, they couldnt adapt to the lifestyle of poverty

Sadly, that is the way of life, C'est la vie as some might say

Why do ppl think the EU never wanna enter into wars, supporting dictators elsewhere, bows to Russia etc.... because they dont wanna ruin the Western Utopia. The moment the Euro weakens and the ppl wake up from the lovely dream of a strong Euro, the moment that the West will enter into chaos and instability
Luxury concerns the rich and they constitute an overwhelming minority in the entire population. But to achieve a high standard of living in a country takes a lot of effort to build. The United States as a country that united immigrants from three continents (Asia, Africa, Europe) sacrificed and risked a lot to achieve the standard of living that the average American citizen has today. Of course, this does not change the fact that in the USA of 330,000,000 inhabitants there are 567,000 homeless and 50,000,000 living below the poverty line. In the richest country in the world, live 50 million people who can not meet their basic needs. As many people as Greece, Portugal, Belgium, Denmark, Sweden and Norway have together. This powerful country with a GDP of 22.6 trillion $ has the highest poverty rate among developed countries: 17.8% overall, 21.2% under 17 and 23.1% over 65. The US is the country with the largest debt on the planet and no matter how strong it is geopolitically and economically this does not change the reality. Countries with the highest development agenda and lowest external debt will be the new geopolitical and economic forces in the 21st century. Turkey, China, Indonesia, Nigeria etc. have such characteristics.
 

Nilgiri

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Luxury concerns the rich and they constitute an overwhelming minority in the entire population. But to achieve a high standard of living in a country takes a lot of effort to build. The United States as a country that united immigrants from three continents (Asia, Africa, Europe) sacrificed and risked a lot to achieve the standard of living that the average American citizen has today. Of course, this does not change the fact that in the USA of 330,000,000 inhabitants there are 567,000 homeless and 50,000,000 living below the poverty line. In the richest country in the world, live 50 million people who can not meet their basic needs. As many people as Greece, Portugal, Belgium, Denmark, Sweden and Norway have together. This powerful country with a GDP of 22.6 trillion $ has the highest poverty rate among developed countries: 17.8% overall, 21.2% under 17 and 23.1% over 65. The US is the country with the largest debt on the planet and no matter how strong it is geopolitically and economically this does not change the reality. Countries with the highest development agenda and lowest external debt will be the new geopolitical and economic forces in the 21st century. Turkey, China, Indonesia, Nigeria etc. have such characteristics.

One of these websites actually does a good job in explaining the details behind just simplistic raw numerator/denominator ratio (which on face of it looks "OK" for Turkey):


One part goes into more detail on one part I summarised earlier here about "tiers"

(real estate + construction given TR govt unwisely went too much policy appetite for instead of hedging)

What Could Cause Turkey to Collapse?

The series of events that could cause collapse is outlined below:

1) The falling Lira makes the income collected in sales by property developers worth less in terms of foreign currencies.

2) The builders are unable to repay their foreign currency loans.

3) Large apartment buildings remain unfinished.

4) Property buyers who paid deposits lose their investments.

5) Local banks that lent to local property investors can’t recover their loans.

6) Local banks can’t cover their debts or reimburse depositors.

7) Depositors learn of the problems of their banks and try to withdraw their money.

8) The government bank guarantee scheme has to compensate depositors.

The cycle of economic destruction in Turkey has already reached point 4 in the above scenario.


=====================================================================

It is faulty to assume that debt/GDP or debt/wealth ratios are some complete totality in what they assert/portray.

It is faultier to then assume these then transmit in 1:1 away across countries.

As there are details to the (qualitative) tiers of debt, GDP, wealth involved....that can vary extremely between countries.

Credit rating is just one small example of it (comparing among countries that have same debt ratio "monolith" levels)

Just like it is faulty to assume everything (actual price level wise) is covered by an official CPI number.

What, why , where and how we are looking at things matters a lot in the end.

Monolithism is like eating just bread....or just rice....or just potatoes.....it wont get you very far compared to balanced + diverse intake (that needs protein, vegetables micro nutrients etc) in the field of nutrition and health.
 

VCheng

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When a new administration comes in 2023 (hopefully for Turkey), it needs to seriously look at growing solid institutional capacity and inertia to weather stuff long term. So there is no repeat of what has occurred this time in this century so far.

This is a long complicated subject to get into (as to the role of executive and even legislature versus "deep state" institutions).

You do need executive power in the function of this area (since they are backed by actual democratic mandate, unlike institution networks at large)....but you also need reasonable counter weight balance within critical strategic function systems.

Turkey needs to find a better balance within its constitutional framework. This applies to executive - judicial branch intersection too....given judicial is a major check and balance to the exec + legislature.

i.e how best to establish more principled, secure and reliable checks and balances. This needs a lot of sound legal experts and good virtuous leadership (or at least decent and rational to enough level) occupying window of power for long enough in the end.

It is easy to see what has transmitted long term from Ataturk founding for example. That is the power of truth and virtue bearing out in test of time.

i.e Republic (entrenched rights and enshrined collective unalterable strategy) principles needs to be front and centre in certain areas over pure democratic principles (which have their role as well....but in other areas and some intersections).

IMO, best place to study is the federalist papers...the whole volume of them (and specifically the core elements of debate to find core truth in realm of role and dispensation of power in society), in US during its independence war and constitutional framing.

One may notice the names of the two major parties there....it is for a reason. The story is a long one.

But the initiation point (of the "federalists" and founding fathers)....who they were influenced by (before and during that time).....and who they have influenced later....and how this all has developed in the actual core valuable (10% of) political science...... (90% or more of it these days is unfortunately useless noise volumetrically as any entropy will do over time).

It is actually the largest reason long term the US became a superpower. In world at large, the best parts of them harness the same...because they are core truths stemming from understanding of the human psychology (over our history and why we rise and fall collectively) in the end.

It is very applicable debate long term even when you have your own constitution set up (for modern nationstate) and you want to perfect system principles underneath it.

It is also the hardest thing to do....having enough wise, intelligent and powerful people filtering through the BS and getting the golden seams to implement and implement well.

Wise, intelligent and powerful are three separate things you see (most folks do not understand this truly...and conflate them in various subconcious ways especially....that if you have one, it automatically extends to the other two....which is a terrible assumption).

It is exceptionally rare to find them invested at same time in a person. It is imperative for each country to do its upmost to nurture, build and harness them (and set example for doing this even more long term).....as they are scarce....but they are there in that small % of population everywhere.

It most accounts for the differences in wealth, power and success among countries today....which have (over long periods of time) been able to most do this compared to those that have not or did not.

@VCheng

Very well put, indeed!
 

Dr boss

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1637829207556.png
The impact of the pandemic on the global economy.

We have experts here while their countries are in economic crisis, the question why are they not going to help their countries instead of talking about Turkey.
Only a Chinese could give his opinion, his country is positive according to the report of economists.

Answer:
Because they are all wind experts
Thank you for this moment of French fun :D
 

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even less than that of the USA, and even less than that of the Azeri who by the way thank the Turks against Armenia, without Erdogan no Karabakh today, it is not me who says it but the international press
Then why are you attacking a Turkish member living in the UK? Hypocrite much? And yes, I am thankful for Turkish support. We would've taken Karabakh regardless since the odds were in our favor but thanks for putting it all down to Erdogan, UAE shill. BTW, I am against Erdogan (and Aliyev) precisely because I want Turkey to be a strong, safe and a highly developed country to live in, so that it will succeed.

So go ahead and show your real flag already. And don't bother adding likes with your second account.
 

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even less than that of the USA, and even less than that of the Azeri who by the way thank the Turks against Armenia, without Erdogan no Karabakh today, it is not me who says it but the international press
You came out of nowhere and polluted this Forum with countless empty comments within a short time, how about you behave not like a toxic little brat?
 

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it's too complicated to understand, for that you have to come and study in the major universities of Paris, and not live in the East
oh shit you really have high opinions on yourself. In Tukey every akpian is talking as you do, guess all of them are graduated from major university in Paris, they all see the big picture.
 

Dr boss

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You came out of nowhere and polluted this Forum with countless empty comments within a short time, how about you behave not like a toxic little brat?
you don't accept criticism, because your arguments fall by the means, you have to get used to criticism and come back with arguments
 

Cypro

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even less than that of the USA, and even less than that of the Azeri who by the way thank the Turks against Armenia, without Erdogan no Karabakh today, it is not me who says it but the international press
yea thank the Turks, was is it you that suffered in Azerbaijan last year or just bragging behind keyboard in your warm european couch ? Yeah Turkey helped Azerbaijan (brother) and you will rub it in to their face for 100 years like you do in Cyprus. TB2 and Erdogan won the Karabakh war and NOT nearly 3000 Azeri brother sacrificed their life!! this is belittling of a big sacrifice of those people who suffered, don't do it.. Help and support from Turkey was big, but be humble and don't claim their victory.
 

Dr boss

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yea thank the Turks, was is it you that suffered in Azerbaijan last year or just bragging behind keyboard in your warm european couch ? Yeah Turkey helped Azerbaijan (brother) and you will rub it in to their face for 100 years like you do in Cyprus. TB2 and Erdogan won the Karabakh war and NOT nearly 3000 Azeri brother sacrificed their life!! this is belittling of a big sacrifice of those people who suffered, don't do it.. Help and support from Turkey was big, but be humble and don't claim their victory.
the victory we will continue, we create the corridor with Azerbaijan that will connect Turkmenistan and the other Turkish peoples.
Without Erdogan's support the Azeri would have given many more losses and Russia could have intervened or Europe, none dared to do so thanks to the intervention of Turkish diplomacy.
1637847313406.png
 
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