Posted on 05/24/2018 12:14:14 PM PDT by BeauBo
Turkey’s lira fell as much as 5% on Wednesday (23 May '18), and it’s lost more than a fifth of its value this year... On Wednesday the (Turkish Central) bank lifted a key lending rate to 16.5% from 13.5%... Mr. Erdogan has wanted to keep interest rates low before the June 24 parliamentary and presidential elections when he hopes to consolidate even more power.
(Excerpt) Read more at wsj.com ...
In the 1980’s and 1990’s Turks endured long periods of high inflation - 50% to 100% a year in the 90’s.
The expectations of high inflation, and the protective behaviors that that people adopt, will probably develop relatively quickly there, because of their experience.
One of Erdogan’s biggest selling points (electorally), was that his regime coincided with the end of the long inflation/currency devaluation nightmare.
Fear of going down that road again, could be a powerful influence on voters. It might not matter anymore though, as rigged as the Turkish system has become. Erdogan may have to be carried out of his new palace (now the largest on Earth).
Erdogan may risk losing the “mandate of Heaven”, with the re-awakening of the Turks much feared inflation/devaluation bogeyman.
Turkey is not going to die until they die on the mountains of Israel. Check out Ezekiel chapters 38 and 39. Russia, Iran, Turkey, and a bunch of other countries, mainly all those former Soviet countries that end with ‘stans, I.E. like Turkmenistan, Pakistan, and others. All those will come and attack Israel in the Last Days, as identified in the Bible.
Erdogan’s economic successes had to do largely with lucky timing (global capital flows toward developing economies), incorporating a batch EU recommended policy changes, a flood of EU investment, and still being able to freely print more money into the rapidly growing GDP. Turkey was then one of the best options for Global capital, looking for higher returns.
Well the boost of the early reforms has past, and his new policies (cronyism) are an increasing drag. He has driven away European investors dramatically, and luck is not with him now, as a growing US economy is attracting capital back from developing economies. Turkey is becoming significantly less attractive to investors, as compared to other emerging markets due to political risk and less rule of law in commerce. There is growing fear about the risks in Turkey.
Erdogan has continued printing money though, and now his budget deficits (previously held in check procedurally in the Legislature) are breaking out from historical norms, under his increasingly autocratic whims. Now its time for the economy to pay the bill for the over-printing of money into a sharply slowing economy.
Or the old !standby: “the Jooos! are behind it! Now run along and have a pogrom, as long as you’ve got those pitchforks and torches.”
[On Wednesday the (Turkish Central) bank lifted a key lending rate to 16.5% from 13.5%]
My grandfather was one of the lucky ones. He escaped in a balloon during the Jimmy Carter Presidency.
“Erdogan’s economic successes had to do largely with lucky timing (global capital flows toward developing economies), incorporating a batch EU recommended policy changes, a flood of EU investment, and still being able to freely print more money into the rapidly growing GDP.”
LOL! I had no idea Turkey had such a terrible monetary past.
“LOL! I had no idea Turkey had such a terrible monetary past.”
“The incompetence of its past leaders, relative to Erdogan (who’s no prize), is why Turkey was such a laggard before Erdogan.”
My take is that Erdogan is not really better than the past
(corrupt, more than incompetent) leaders - except for the initial package of business law improvements he instituted, at the behest of the EU. Back then, getting into the EU was a real prospect for Turkey.
The EU bureaucrats spoon-fed his administration (as they would have any regime in power at that time) much improved best practices, while Erdogan and his cronies focused on milking (especially) the energy sector for corrupt profits, consolidating political power, and radicalizing the education system and society with islamism.
Erdogan really brought no great sophistication to the management of the economy - his interest was basically how it would play politically for him. Getting into the EU was a politically popular aspiration in Turkish society, and he adopted it as his economic platform, for purely political purposes. He is a politician first and foremost, an islamist ideologue and huge ego beyond that.
He has had no apparent qualms at taking very destructive economic actions, since he has solidified his political power. I would say that he is now actively driving down Turkey’s economy, and is not likely to stop.
By Western standards, Erdogan is a worthless sack of shit. But Turkey is not part of the West. By Turkish standards, he’s a prince among men.
“By Turkish standards, he’s (Erdogan) a prince among men.”
I leap to the defense of Turkish standards, and point to the ongoing brain drain in Turkish society in recent years (and increasing).
Turks are voting with their feet.
Erdogan is feared, I’ll give him that.
“My take is that Erdogan is not really better than the past
(corrupt, more than incompetent) leaders - except for the initial package of business law improvements he instituted, at the behest of the EU. Back then, getting into the EU was a real prospect for Turkey.
The EU bureaucrats spoon-fed his administration (as they would have any regime in power at that time) much improved best practices, while Erdogan and his cronies focused on milking (especially) the energy sector for corrupt profits, consolidating political power, and radicalizing the education system and society with islamism.”
I could make a strong case that Erdogan is emphatically lacking in personal honesty, and wants the throne for personal enrichment.
He has been repeatedly, publicly busted in widespread public corruption (smuggling oil from ISIS, busting Iranian sanctions, systematically scamming citizens of the wealth with corrupt judges, etc.). There is a big court case in New York over massive fraud, that he apparently led.
If it was the case that his good management is what led to the decade of relative prosperity, what has changed? His power to effectively manage is greater than ever.
“I could make a strong case that Erdogan is emphatically lacking in personal honesty, and wants the throne for personal enrichment.
He has been repeatedly, publicly busted in widespread public corruption (smuggling oil from ISIS, busting Iranian sanctions, systematically scamming citizens of the wealth with corrupt judges, etc.). There is a big court case in New York over massive fraud, that he apparently led.
If it was the case that his good management is what led to the decade of relative prosperity, what has changed? His power to effectively manage is greater than ever.”
Lee Kuan Yew is great example of a leader whose wise economic policies lifted up a nation. I would argue that in his case, it was based on a clear understanding of, and commitment to, sound economic principles.
That does not have to be tied to democratic political behavior to work - it worked for the South Korean Military Government, Pinochet in Chile, and Sheik Mo in Dubai, just as did for Ronald Reagan.
I am saying that unlike them, Erdogan adopted his economic positions not out of intellectual commitment to them, or even with a deep understanding of them, but out of sheer political expediency. Just like he said of democracy - it is like a train you get off of, when you arrive at your destination - his old economic policies were just political props for him, which he has now widely discarded.
That is why I doubt that he will be able to manage the Turkish economy successfully through bad times - he is making things worse now, much worse.
We’re not much better. A few years ago under Obama we stopped funding the budget by selling T-bills and just had the Federal Reserve print more money.
“I am saying that unlike them, Erdogan adopted his economic positions not out of intellectual commitment to them, or even with a deep understanding of them, but out of sheer political expediency. Just like he said of democracy - it is like a train you get off of, when you arrive at your destination - his old economic policies were just political props for him, which he has now widely discarded.”
“So you’re saying he’s just a moron who got lucky.”
Moron, no, but lucky, very much so. The factors that led to Turkey’s economic success, have run their course, and Erdogan’s management will be a major, in fact disastrous, drag going forward.
His predecessor Kemal Dervis, instituted strong reforms, which had the economy growing just as Erdogan took office.
Turkey’s worst decades of economic performance occurred after its 1974 invasion of Cyprus, when it became a pariah state, subject to sanctions. The military dominated former Governments were wedded to that conflict and refused to concede to any settlement, but it was a great bargaining chip for Erdogan.
The year after he became Prime Minister (2004), he settled that conflict with the UN, in return for a flood of incentives from the EU (and reportedly, a load of personal bribes). In 2003 and 2004, Erdogan’s party pushed through a reform package, including the new labor law. These EU designed reforms, and the Cyprus deal incentives, are what set the Turkish economy into orbit.
Since then, Erdogan has done little to help the Turkish economy, and much to hurt it. He has consolidated power with his Party, and since purged the economic reformers who led the initial liberalization, replacing them with corrupt cronies. Since the coup attempt, Turkey has become a virtual dictatorship, and Turks are no longer secure in their person or property.
The only thing that has seemed to motivate Erdogan’s economic policies for the last decade or more, has been personal graft (he is worth billions, his son controls oil exports/smuggling, his son-in-law all domestic energy distribution). Erdogan had the world’s largest palace built for himself, where he now lives.
I believe it is a fundamental misperception to view him as a technocrat. He is an autocrat, who has purged the technocrats from his party, and increasingly, has driven them from the nation at large.
“The factors that led to Turkey’s economic success, have run their course, and Erdogan’s management will be a major, in fact disastrous, drag going forward.”
* Smith’s dry response to that acquaintance’s work re the Sabbath is a classic:
“He (the acquaintance) was busy with his History of the Public Revenue, in which Smith gave him every assistance in his power, and he had actually finished a treatise on the Christian Sabbath, which, in deference to Smith’s advice, he never gave to the press. The object of this treatise was to show that the puritanical Sabbath observance of Scotland had no countenance in Holy Scripture, and that, while part of the day ought certainly to be devoted to divine service, the rest might be usefully employed in occupations of a character not strictly religious without infringing any divine law. When the work was completed, Sinclair showed the manuscript to Smith, who dissuaded him strongly from printing it. “Your work, Mr. Sinclair,” said he, “is very ably written, but I advise you not to publish it, for rest assured that the Sabbath as a political institution is of inestimable value independently of its claim to divine authority.”*44”
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