All Heck Breaks Loose amid Fears of Another Currency Crisis after Turkey’s Central Bank Governor Got Sacked Following Shock-and-Awe Rate Hike

The Lira plunges, stocks plunge, yields jump. Capital controls expected.

By Nick Corbishley for WOLF STREET:

After four months of relative calm, the Turkish lira is once again doing what it does best: slumping against every major currency. It nose-dived 17% overnight to near all-time lows, hitting 8.39 against the dollar and 9.97 against the euro before recovering later on, ending the day down over 7% against the dollar, amid concerns that the central bank and state-owned banks cushioned the fall by selling dollars into the market, thereby further depleting Turkey’s already scarce foreign currency reserves. The lira has lost half of its value since its currency crisis began in 2018.

The Borsa Istanbul Index suffered one of its steepest selloffs in years, before triggering circuit breakers that halted trading. The BIST 100 Index ended the day down 9.8%. Yields on Turkey’s lira-denominated 10-year bonds soared from 14% to 19%, as investors rushed for the exits. Investors also dumped shares of European banks with close ties to Turkey. Spain’s BBVA, which owns around half of Turkish lender Garanti, tumbled 7.5%, its biggest fall since November.

The trigger was President Recep Tayyip Erdoğan’s snap decision on Friday evening to fire the governor of Turkey’s Central Bank, Naci Ağbal, who on Thursday, in order to tamp down on surging inflation and to prop up the lira, had engineered a shock-and-awe 2.0 percentage-point hike of the policy rate from 17% to 19%, when economists had expected a rate hike of half that magnitude. It was the third time since mid-2019 that Erdogan has sacked a central bank chief.

Ağbal himself occupied the post for only four months. Following his appointment in November, just after the lira had hit a record low of 8.58 per dollar, he regained market trust by hiking interest rates above the official rate of inflation. The day after his appointment, Erdogan’s son-in-law, Berat Albayrak, resigned as Turkey’s finance minister, raising hopes that Erodgan might reduce his influence over the central bank. Foreign funds began flowing back into the country. This helped to arrest and even reverse “the damaging trend of dollarization” — when a country’s populace uses the US dollar in addition to or instead of the domestic currency — says Societe General strategist Phoenix Kalen.

In just four months, the lira rallied 18% against the dollar as investors were lured by the highest real interest rate in emerging markets after Egypt’s. But Ağbal’s sharp hikes in interest rates had sapped demand for new loans.

“We’re seeing a significant deceleration in lira lending growth — all banks are seeing less demand for borrowing because of high interest rates,” said Sevgi Onur, vice president and banking analyst at Seker Invest in Istanbul, in early March.

Turkey’s debt-dependent economy cannot grow without strong growth of debt. Hence Erdogan’s decision to replace Ağbal. In the space of just one day’s trading, four months’ worth of gains evaporated.

Most investors were not impressed with Ağbal’s replacement: Sahap Kavcıoğlu, a lecturer in banking and a former executive of a state-run bank who apparently shares Erdogan’s belief that lowering interest rates helps to keep inflation in check. The big fear now is that Kavcıoğlu will try to reinvigorate borrowing by lowering the interest rate below the rate of inflation, which clocked in at 15.6% in February.

For the moment, the government and the central bank, which are more or less one and the same thing, are trying to soothe market jitters. The new central bank governor Kavcıoğlu said in a statement that future MPC meetings will be held as scheduled on April 15, signalling that there will be no imminent emergency rate cut.

Despite last year’s currency crisis, Turkey’s economy grew by 1.8% in 2020, emerging as one of only a handful of countries in the world to avoid a contraction in GDP. But that growth was largely fueled by a huge surge of lending by the central bank and state-owned banks, which are controlled by Erdoğan through his chairmanship of a sovereign wealth fund.

This cheap lending further depleted the country’s foreign currency reserves. Fears are now rising that Turkey’s central bank will not have the firepower needed to defend the currency over the coming months after reportedly burning through over $100 billion in foreign reserves since early 2019.

“Without much remaining reserves to defend the currency, and considering an expected exodus in foreign and local investor capital, it may be difficult for Turkey to avoid another currency crisis in the coming months,” Kalen said.

It will be Turkey’s third in three years. The more the lira falls, the more inflation will rise in Turkey’s import-dependent economy. The more inflation rises, the more people will turn to the dollar or other hard currencies to protect their savings. Once the central bank brings real interest rates back into negative territory, it will probably bring back the soft capital controls that prevailed during Berat Albayrak’s tenure in an attempt to stabilize rates. But the economy is still weak. The virus crisis wiped out a big chunk of the nation’s revenue from tourism. Now, the newly plunging lira is going to make it even harder for Turkey’s struggling companies to service their foreign-denominated debts. By Nick Corbishley, for WOLF STREET.

“A front-loaded and strong additional monetary tightening.” Read... Shock-and-Awe Rate Hikes Begin in the Emerging Markets amid Surging Inflation

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  98 comments for “All Heck Breaks Loose amid Fears of Another Currency Crisis after Turkey’s Central Bank Governor Got Sacked Following Shock-and-Awe Rate Hike

  1. Paulo says:

    15.6% inflation rate in a Country that needs more debt to function?

    Good luck with that. Boy, looks like some real unrest is inevitable.

    • YuShan says:

      A lot more of this kind of sh!t is going to happen everywhere in the world. And as always, the poor (or even the lower 90%) will pay the price.

      It really sucks to lose what you have worked for your entire life. We really need a return to sound money.

      • bungee says:

        YuShan,
        why do we need a return to ‘sound money’? you mean like a gold standard, right?
        just go buy gold. it’s easy.

        • YuShan says:

          Yes, we already have a gold standard if we choose to use it. Gold and silver are spendable currencies one again now that Kinesis has put allocated gold on a blockchain. You can now pay for your groceries with gold and silver using a debit card.

    • cas127 says:

      Reading things like “debt dependent” or “import dependent” always makes me wonder how said nations existed prior to heavy debt/import use.

      Because they did.

      Both debt/imports can *accelerate* growth (at the cost of increased volatility due to both domestic/intl factors) but neither is usually absolutely indispensable.

      It *is* possible to grow from retained earnings rather than debt.

      It *is* possible to survive with lower imports.

      Neither should be treated as some indispensable, absolute good.

      Especially when a domestic government is using double digit macroeconomic tools to maintain a debt/import status quo that may be, in fact, unsustainable.

      Also, whenever I hear about wild inflation, my very first question is whether the Government is printing fiat, secretly or openly, in order to buy the loyalty/control of the public or key players.

      Habitually foolish lending by a wide array of lenders can also create wild inflation…but that process tends to self correct through bad loans…and are almost *all* banks united in such foolishness? They would have to be in order to impact the macro economy.

      Whereas the G *directly controls* a chokepoint of the macro economy – the money supply.

      And the G’s desire/ability to maintain power/control through fiat fraud/rate manipulation is *never* self-correcting…since the G is doing it in order to *not* to have to reform itself/its failed policies.

      Yet financial coverage tends to engage in fruitless/often illogical hunts for the root cause of inflation in the *private* sector…despite its infinitely more fragmented nature than the G.

      • fizee says:

        Cas127 this is not a one-sided event. Frequently in these columns the blame is placed on the government, banksters etc while ignoring the greedy symbiosis that exists between government and the general populace. The levels of fraud in government handouts is because “government” money goes under different rules. People who might hesitate to steal from their neighbour have no hesitation in purloining G money.

        • cas127 says:

          Don’t disagree…but, in the end, it is the G who is printing the money (diluting, and therefore at least incrementally defrauding prior earners/savers) and the G is doing it in order to maintain/extend their power (using at least questionable, more likely dubious, and possibly illegal means).

          And, once such money printing reaches a level at which it is destabilizing the macro-economy (although often mis-characterized as “fixing” the macroeconomy) then the motivations/competence of the G *really* have to be called into question.

          Are citizens complicit for taking the fraudulent fiat? Sure.

          Are private actors (banks, etc) partially to blame…sure, possibly.

          But it takes a government, acting at a national scale to turn a problem into a disaster, and a disaster into a catastrophe.

          And, is it far from uncommon, that foolish/corrupt gvt policies are the *initiators* of the problem.

          Gvts have long, deep relationships with ostensibly independent MSM outlets…which they not infrequently use to frame other actors for their own mistakes.

        • Mira says:

          Isn’t government money actually hard earned tax dollar ??
          The peoples money.
          Though the chances that you will get any are slim .. never the less .. in the end .. isn’t it stealing from yourself ??
          If only governments would use it wisely .. it might make the difference.

      • Implicit says:

        Income disparity is one of the highest in Europe. Too many Lira, but not for some.

      • KGC says:

        Certainly they existed without all the imports. But they had considerably fewer people, shorter lifespans, and a drastically lower standard of living. Nobody’s willing to go back to that, and it’s not politically correct to suggest that’s what’s required.

        Take a good look at where Turkey (indeed, the whole Middle East/SW Asia) was only 50 years ago.

        • cas127 says:

          ” But they had considerably fewer people, shorter lifespans, and a drastically lower standard of living.”

          I think you may be overestimating how long truly deep trade imbalances have existed in Turkey and how unquestionably necessary most imports are for healthier or longer lives.

          Meds make up a relatively tiny slice of imports.

          And nobody will die if they have to pay more for a Mercedes or a cell phone for a few years.

          That is how intl trade balances out…and it is far superior to having the G trigger huge macroeconomic dislocations in a doomed effort to avoid such transient adjustments (or just to buy power for the G).

    • raxadian says:

      Take a look at Argentina and cry. Real inflation last year was close to 50% no matter what the government says. In a country that produces and exports cow meat, cow meat in 2020 rose in prize more that the dollardid.

      • Frank says:

        It also exports excellent wine. I did my part yesterday by buying half a case.

        • Gandalf says:

          Absolutely! Argentine Malbecs are the among the best red wines out there, and fantastic values, helped along no doubt by Argentina’s decades long currency crises. You can easily get some fabulous Argentine Malbecs in the $10-15 range.

    • Brant Lee says:

      If Turkey measures inflation the same way the U.S. does it’s probably more like 40%.

      Owning physical precious metal is a whole nother argument in Turkey than in the U.S., right? I’m glad currency crises couldn’t happen here, just ask the Fed and Congress.

    • cb says:

      more debt helps a debtor to function, like more heroin helps an addict to cope

      no real fix in either case. just magnifying the inevitable.

  2. YuShan says:

    “Despite last year’s currency crisis, Turkey’s economy grew by 1.8% in 2020, emerging as one of only a handful of countries in the world to avoid a contraction in GDP.”

    GDP may be up because it is measured in depreciating Lira. I think Turkey’s GDP is down when measured in USD or in EURO.

    • cas127 says:

      And why should governments known to heavily manipulate their interest rates/money supply be automatically trusted to compile accurate GDP figures in the first place?

      • Brant Lee says:

        I caught that.

      • max says:

        John Mauldin :
        So how did this nonsensical measure we call GDP come about? Fact is, you actually do have to try to measure an economy if you are going to be a government and especially a wartime government. Without such a measure, how do you know how much you can actually tax and produce for the war effort, let alone for welfare and other services?

        But the issue really came down to the political argument: If you do not include government spending in GDP, the economy will appear to be shrinking in the middle of a war or in a recession, even though the government is spending money hand over fist. From the point of view of politicians who wanted the government to spend more on goods and services (and yes, war), including government spending in GDP made total sense, because you want to be able to tell the citizens the economy is growing. Politicians have been spinning data and news for ages. Whether we’re talking about the results of reading sheep entrails or of dicing modern economic data, the information is spun to make the politicians look good. The controversial decision to include government spending in GDP was a political move made by President Roosevelt and the Democrats, who were in charge during the Great Depression.
        Within a short time, the inclusion of government spending in GDP was accepted as economic dogma by all major economic institutions. This of course made it easier to argue for and act on Keynes’s assertion that a government should spend during recessions, stimulating the animal spirits of consumers and driving up consumption.

        • Cashboy says:

          I never understand why GDP growth is so important.
          Most of the GDP growth is created by more debt.

          If a customer doesn’t pay my company and my company pays a lawyer to take legal action against my customer and my customer appoints a lawyer to defend my claim; aren’t those both an increase in GDP?

        • Mira says:

          “the information is spun to make the politicians look good”
          Not the average Joe on the street .. spin all you like he is not fooled .. he gets to look out the window each day & see reality.
          so .. spun for who ??

  3. Nicko says:

    Cheap holidays to Turkey.

    • YuShan says:

      It’s a wonderful country with great food and friendly people. I backpacked there back in 1997. It was dirt cheap too. I would love to visit again :)

    • MonkeyBusiness says:

      It’s a great country … to visit.

      So many things to see, from history to nature. I would suggest googling Cappadocia.

      If you are after a traditional beach vacation, then you can go to Bodrum, one of the favorite destinations of British vacationers.

      I hope I can go again someday. Crossing the straits of Bosporus dividing the old and new city in Istanbul in the morning never got old somehow.

      And of course there’s the food. ….

    • cas127 says:

      Such is the natural process of adjustment that tends to bring intl trade imbalances back into balance…unless governments interfere with an eye towards propping up doomed/failed agendas.

  4. stan6565 says:

    What do the Turks use to pay for Russian S400s. They have no surplus oil, no surplus gold, no surplus..mmmm….anything.

    • MCH says:

      They have Incirlik. And they have a nice location for pipelines.

      I am curious about how the Turkish middle class is surviving all of this. The funny thing is, while we hear about the collapse of the American middle class, not much is heard about the rest of the middle class around the world.

      Wonder if that mythical beast (like the Unicorn) still exists.

      • stan6565 says:

        My apologies, I forgot the Syrian oil. A handy tax free kitty.

        As for the middle class, I am with you on that. I am one of those, getting it in the neck, no vision going forward.

      • cas127 says:

        Historically, LDN middle classes around the world have tried to survive the economic stupidities and depredations of their governments by means of things like dollarization and capital flight.

        In the US, it will be called BitCoinification.

        Also, there are reasons why LDNs tend not to have middle classes…there is the tiny, money printing elite…and the vast bulk of citizens that the elite view/treat as cattle through threats and manipulation.

        • Depth Charge says:

          “In the US, it will be called BitCoinification.”

          Sorry, disagree. Bitcoin and all crypto are 100% speculation. It has nothing to do with flight to safety, etc. 100% speculation ie. expecting some greater fool to come along and pay you more than you paid. All of these people are blinded by greed.

        • cas127 says:

          Depth,

          I’m not a BitCoin fanatic…but the (very) important point is the source of the impulse behind *all* NotDollars…the ongoing degradation/diluation of the dollar as a trustworthy store of value.

      • raxadian says:

        It’s number keep being reduced with each economic crisis.

        • MCH says:

          well, can’t wait until we hit that magical number of zero. Yet, I keep hearing our politicians yammer endlessly about protecting the middle class. They’ve done such a great job so far that they can launch an endangered species act with the Middle Class to show how serious the problem is.

          Remember the scale for the Middle class:
          1980s: least concerned
          1990s: conservation dependent
          2000s: we jumped from Near threatened to vulnerable
          2010s: Vulnerable and moving to Endangered
          Figure by the end of this decade, the Middle class with be fully endangered or listed as critically endangered.

          can’t wait until they become “extinct in the wild”

          Here kids, you can visit the Middle Class and learn about them in the zoo.

    • Seneca's cliff says:

      Perhaps The Chinese will pay the Russians for the S400s then they will hold a marker with Turkey that they can redeem to buy the ports and rail connections they will need on the western end of the belt and road project. Right now Turkey has become the geopolitical battleground between East and West and this currency crisis is very much a part of the tug-of-war.

      • MCH says:

        I expect Turkey to go with the winner. At least they will eventually, the region has that history.

    • nick kelly says:

      They have very good agriculture. Don’t know how sanctions are affecting things now but they used to supply Russia with lots of fruit and veg.

    • KGC says:

      They control Russia’s access to the Med. And they can always lose NATO technology that could find its way North or East.

    • char says:

      Think of Turkey as the Mexico of Europe. Also a billion is a big number but not for a state like Turkey and its 80 million people. It is only 12.50 per Turk. Peanuts.

    • Cashboy says:

      As far as I know Turkey got quite a bit of gold and did very well from Qatar when Turkey helped them out during the Saudi Arabia sanctions of Qatar.
      I understand that those monies have helped Turkey go to warmonger against everyone including Libya, Syria, Greece and Cyprus recently.

      Warmongering is usually a sign of desperation to get people on the side of the leader when they are on their way out. Wasn’t that the reason that Argentina invaded the Falklands?

    • Frederick says:

      They export a lot of agricultural products to Russia during the winter months that’s for sure and import lots ofRussian tourists

  5. Jdog says:

    Canary in a coal mine? Rising inflation and rising interest rates often go together…. I would not be surprised to see this spread to other countries…

    • TimTim says:

      I wondered if anyone would go there. Nick mentions European banks.

      Mainstream media that I have seen seem convinced contagion is impossible…

      Hmmm….

      • char says:

        Contagion is a problem. MSM has written stories about it being not a problem and that only happens when people think it is a problem. But we life in covid time so central bank will print. This would be used as an excuse to print

  6. Daniel says:

    This is just a preview of what will eventually hit the major industrialized nations. Trillions of dollars of debt on top of trillions more is just unsustainable. The day of reckoning is just around the corner.

    • Mira says:

      Do you think it will be a day of reckoning ??
      And not some kind of reworking .. a configuration of procedures .. maybe.
      It is always said as reckoning because we expect punishment .. but will it be.

      • Mira says:

        See .. I think that everyone is terrified of a tragic crisis striking the world .. & therefore consciously or not .. everyone is unconsciously treading around carefully & fearfully to prevent shutdown .. while talking up the survival of one if we are stricken.

  7. Micheal Engel says:

    1) QQQ a bull trap day.
    2) Trap #2, might happen before the weekend.
    3) Take Martire bridge to Martire airport (AtaTurk) to escape QQQ fake
    coupe attempt, because the British are gone.
    4) Turkey great soccer players. You can’t stop Turkey.
    5) Huge inroad in almost every US liberal states.
    6) Antifa useful idiots built Turkey a grouse road in Portland.
    7) Turkey inflation is band aid. Turkey care about domination.
    8) Turkey compete with the other “good guys” for US penetration.
    9) US penetration is not a comic book.

  8. nick kelly says:

    ‘Meanwhile, the latest weekly data point as of 12 March showed that Turkish residents’ FX deposits held at local banks had declined to USD 230.3bn, down from the peak of USD 236.1bn registered in January.’

    Jees! These are trusting folks to have US$ or euros in Turk banks. They should see Argentina where the gov swooped on same. Bank of Nova Scotia had ladies banging on pots outside for months and then exited the country.

    BTW: there are many parallels between Turkey and Russia. Both have autocrats that dream of previous empires, Putin has actually said this re: USSR. Turkey’s Ottoman empire ruled a swath of east Europe before backing Germany in WWI. Both have disfunctional economies that can’t afford the arms buildups inspired by these dreams. This brings them into conflict with their finance depts. The latest Turkish one is described above in NC’s piece. Putin fired Alexie Kudrin for telling him that Russia could not afford a 500 billion $ arms build up. He was later partially ‘rehabilitated’, brought back as an advisor when Russia had one its ongoing ruble crises.

    No doubt Russia weapons are good. But check out their car industry where thousands of mostly women hammer out a version of the Fiat at the Togliatti works. Almost unbelievably, it takes 20 times as long to make one as world standard. The results are so problematic that good used ones are preferred to new, in the expectation that the owner will have got the bugs out.

    • Seneca's cliff says:

      Nick, You might want to update your knowledge of the european and Russian car industry. The Togliatti works has been owned by Renault for several years now, and they stopped making the Fiat based Ladas over a decade ago. Now among other cars they make the XRAY which is based on a world standard platform and comes equipped with Apple Airplay. Russia does suffer from ups and downs in the ruble but unlike the U.S. it has no government debt and the second largest stock of gold in the world.

      • Wolf Richter says:

        Seneca’s cliff,

        Russia’s debt is carried by its state-owned companies (oil and gas giants, defense giants, mining giants, etc.), and they borrow in foreign currency, and they have to provide certain social services and other services. Russia has trouble borrowing in rubles because no one trusts it.

        • timbers says:

          “and they have to provide certain social services and other services.” But are Russian social services outlayed is USD? Doubt it, certainly in their own sovereign currency. Don’t go all neo liberal on us and imply she needs to cut her version of Social Security because “deficits.” :-).

        • Wolf Richter says:

          timbers,

          Just explaining the often cited fact that Russia has relatively little government debt: its debt is carried by the state-owned companies which are heavily indebted, but they export a lot of their production, so they CAN borrow in hard currency because some of their revenues are in hard currency, which makes large amounts of debt possible for Russia. I’m not saying it’s good or bad. From a financial point of view, it makes sense. But it needs to be pointed out.

        • Lisa_Hooker says:

          How does Russian state-owned company debt compare to US government debt plus US corporate debt?

      • nick kelly says:

        Fair point. I almost added the data was about 10 yrs old from a book “The Russians”

        Pretty gutty of Renault. A lot of joint ventures and investors have fled, e.g., BP.

        Re: Russia’s so- called ‘social programs’ Compared to the developed world, they barely exist. The pensioners struggle to survive on about $110 a month. Of course, they don’t get that in dollars.

    • Bobby Bittman says:

      “Both have autocrats that dream of previous empires”

      Isn’t that the same dream that was being peddled by the elderly candidates from both parties in the United States? The primary debate podiums last year looked eerily similar to the Moscow May Day parade podium circa 1981.

    • timbers says:

      “Putin fired Alexie Kudrin for telling him that Russia could not afford a 500 billion $ arms build up.” …. Doubt very much this accurately describes Russian defense thinking. She spends abt $30 billion/yr and studiously avoids an arms “race” with US because she knows she can’t win it, and it’s cheaper to develop actual defense & counter weapons aimed at our vulnerable points, so much so she recently cut defense spending… because she can. Her defensive systems are beyond anything US has.

      • cas127 says:

        And Russia has to worry about China on the same landmass too.

        The amount of deterrence that other countries buy for 5% to 10% of US military outlays really suggests the extent of corruption/stupidity involved in a $700 billion US defense budget (that ain’t been able to definitively win two wars against 6th tier powers in over 15 years)

        • Lisa_Hooker says:

          If you win a war you can’t continue to fight it. It’s the US strategy.

      • nick kelly says:

        According to Wiki, Russia spent 61 billion in 2019.
        They undoubtedly get a bigger bang for the buck than the US at over 700 billion, but don’t forget the difference in salaries.

        • Lisa_Hooker says:

          Exactly. The US DoD budget is what supports what’s left of the US engineering middle class. Thankfully not all are writing social apps for an IPO.

    • Cashboy says:

      I understand that Putin was not happy that the Soviet Union was broken up.
      I read that when East Germany was given back to West Germany, the deal was that the EU would not interfere with the Soviet Union which it immediately did.
      What I find hilarious is that the west led by the USA gives the impression that Russia wants to invade Europe.
      What resources does the EU zone have? None!
      The EU is now over populated and full of immigrants of the wrong kind.
      Why would Russia want to raid the EU when it gets wealthy from the sale of gas and oil to the EU?
      The more I see Putin act, the more I believe that he is one of the last real state leaders.

      • Lisa_Hooker says:

        Putin is planning a lightning strike through Ukraine, Poland, Germany, France, Spain, and Portugal to capture Lisbon. He wants a warm water Atlantic port.

    • Mira says:

      The good ol’ days of yore .. hey !!
      They should manufacture EV’s .. they are much simpler to assemble & cheaper to make & they world needs them sooner rather than later.

  9. Jezabeel says:

    Does anyone actually study Austrian economics anymore?
    All I see is gold/BTC appreciated nicely against another fiat currency run into the ground.

  10. Micheal Engel says:

    1) The British, the French and the Russian sandwiched mighty Germany. Germany chose the dying Ottoman empire, for gold.
    2) The crypo’s were were the best general. After the Slav beat them, the
    the looter cannibalized themselves. After Gallipoli Germany and Bulgaria sandwiched Zagreb. The Russians eastern front disintegrated.

  11. polistra says:

    Erdogan used to be pretty smart. He did the right things to advance the working people of Turkey. Good industrial policy, good financial policy, non-intervention. His slogan was Zero Problems.

    After the Soros color revolution a few years ago he got dumb and started acting like NYC. Zero interest, infinite debt, infinite wars, infinite problems.

    Apparently Soros won.

  12. Micheal Engel says:

    1) Turkey “cancelled” the crypto’s from every corner. Turkey became a strict religious country.
    2) Cryptos names, book, airport and statues…even coins, are gone.
    3) Turkey used to have a magnetic power and inspiration on US leadership, until recently.
    4) No more. They hedge their bets on both sides, flirt/ threat them for
    power and money.
    5) Its all about power. They will survive as they survived the
    battle of Zakarya against the Greek.

  13. Stephen C. says:

    ” {Turkey’s} . . . debt-dependent economy cannot grow without strong growth of debt.”

    Author needs a citation acknowledging Jay Powell???

  14. coboarts says:

    The Turkish military has arguably mastered the use of battlefield drone warfare, as made clear in Nagorno. Perhaps they should make their money the old fashioned way – steal it.

  15. MiTurn says:

    Might China benefit from this, since Erdogan has so few allies left.

    • Wisoot says:

      Is that you Soros? Turkey’s Istanbul has ancient allies. Its in the DNA of Europe Scandanavia, Rome and Arab peninsular. Good luck.

      • nick kelly says:

        Read Wiki’s long read: Struggle for Greek Independence ( from Ottoman Turkey)

        It ends with joint French, British, Russian fleet defeating Turk/Egyptian fleet.

        Rightly or wrongly, the cultural roots and sympathies of the West especially originate in Ancient Greece, not 600 AD Islam.

        I was a little surprised when France actually sent a warship to the Med in recent Greek/Turk dustup.

        But I also think it’s odd that Greece claims as its waters around an island hundreds of miles from its mainland that is a mile or two off Turk mainland. ( France briefly tried to claim big areas of ocean around two of its tiny islands off Canadian coast. Didn’t happen,)

  16. marc says:

    If Turkey is experiencing inflation, Lebanon is in hyperinflation.

  17. Petunia says:

    The web is bustling with real estate ads for Turkish real estate. I guess it just got a lot cheaper for anybody with Euros or USD.

    • WES says:

      Seriously doubt real estate prices dropped at all. Still takes same number of Euros or dollars to buy. Just like in the US.

    • Frederick says:

      No actually it hasn’t My wife wants an apartment in Istanbul and the price in dollars keeps going up so we haven’t bought Crazy but it’s true

    • nick kelly says:

      The head of Remax Turkey warned that a lot of condo projects are Ponzi schemes. A lot of imported stuff is needed once they get past ‘lock up’. With the lira crash they don’t have the money to finish one so they start another. The object is to get a big deposit, rinse and repeat.

      Back a while, the scamming of Brits in Spain got so bad, it was taken up at the highest level by then PM Tony Blaire. One huge project of several hundred condos was built but was completely illegal and I believe was never occupied. The city council had been bribed and it was built in a park. They were arrested but don’t know their fate.

    • Mira says:

      I just had a quick look .. Real Estate Turkey Istanbul .. I travelled street view .. an apartment filled area by the beach ..
      Boy .. our parking attends would have a picnic there.

  18. Groucho says:

    “…people will turn to the dollar or other hard currencies to protect their savings”. LoL!

  19. timbers says:

    “and they have to provide certain social services and other services…” Silly Turkey. Doesn’t she know inflation is for The Little Central Banks that haven’t figured out how to fraudulate away inflation to less than 2% like the Federal Reserve has?

    • Javert Chip says:

      According to Erdogan, rising interest rates cause inflation (seriously).

      • char says:

        Is he wrong?

        • cas127 says:

          It is interesting, Erdogan’s perspective certainly isn’t mainstream (mainstream believes that higher interest rates choke off invt and therefore inflation) but…higher interest rates do also put more money into the hands of savers, who could choose to spend the increment.

          (Although I suspect that E really hates higher rates because of the higher pressure it puts on his gvt finances)

          I wish more economists would actually step through alternate channels of monetary flow and evaluate/discuss them rather than simply sneering and acting as though any perspective other than their own is self evidently insane.

          Not saying E is right, just pointing out that discussions/examinations are worthwhile.

    • Mira says:

      😁

  20. 2BFrank says:

    Time for a Turkey Greece conflict, take the Turkish peoples mind off their problems and try and seize some age an under sea hard assets. Germany will back the turks, and the UK and Israel will back the Greeks, suddenly the Brits will realise how important Gibraltar is, along with Cyprus

  21. Micheal Engel says:

    1) The British should have invaded Iskanderun instead of Gallipoli, because
    Iskanderun was mostly Armenian and very friendly, but the British were seeking for a glorious victory.
    2) Turkey stole Iskanderun. Turkey want to grab whole Syria.
    3) Putin is the only one who can stop them from coming closer to Israel and Egypt.
    4) US involvement in eastern Iraq control the flow of oil, troops, logistic and
    missiles flights to Syria and Lebanon.
    5) You can’t sack Erdogan. You can’t sack Nasrallah in Lebanon. Trump is gone.
    6) Israel mosquito bites protect Syria Bashar Al Assad.
    7) Israel new leaders might sign a peace treaty with Dr. Al Assad, conducted by Biden and Putin. Iran hopefully will turn around, Israel will survive the Iranian tightening noose and Asma Assad will be back in west London to visit her family..

  22. 2BFrank says:

    Unobtanium, for all those who say just buy gold, have you tried it?, there is very very little available, at least physical gold, none at my local bullion dealer, and on ebay UK just 63 coins total at an average 33% premium over spot.

    • Richard says:

      There’s *some* available – but yes it’s getting much harder to come by because the price is too low (causing people to buy and hoard it).

      If Gold and Silver prices were allowed to rise naturally – the market would be much healthier.

  23. cb says:

    The article said: “Turkey’s debt-dependent economy cannot grow without strong growth of debt.”
    ____________________________________

    Support for this assertion would be appreciated. It sounds like one of those continuously repeated fallacies.

  24. Mira says:

    “The concept of information is a very strange one .. it’s actually a very difficult idea to get your head around .. but, in the journey to try & understand it .. scientists would discover that information is actually a fundamental part of our universe.”
    Spoken by Physics Theorist Professor Jim Al-Khalili

  25. Mira says:

    I was curious about Russia ..
    Alexey Zhikharev .. sees renewable energy in Russia as a sustainable & developed market today .. the renewable energy supports adopted by Russian gov. in 2013 targets installation of 5.5GW of solar, wind & small hydropower plants by 2024 .. driven by desire to stimulate the & development of a local industry base for renewable energy technologies & to promote the exports of local producers.
    [But that the Australian gov. was as forward thinking of us]
    Russia’s first mass-produced EV will cost less than $7,000 but you can’t buy it .. they are mostly being exported to Africa, Middle East & Kazakhstan.

  26. Auldyin says:

    Erdogan fired him. So?
    We only get rumours over here, but didn’t one of your presidents choke-hold his central banker against a wall for low rates before an election once?
    Nixon maybe? It couldn’t be Trump again for that as well, could it? It’s a serious business for these guys.
    re Russia, I’ve just had a 5% sterling ‘dividend’ on a well diversified Russian managed fund. I’m running it as a trial against 0.01% in UK national savings. To see which one blows my money fastest. I don’t gamble, so I can’t touch US tech. I’m too old to wait 100 years to get my money back in earnings.

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