Because Turkey

[Josh]

11 hours ago, Mistral said:

Yep, from 11 to 12 liras in 3 days. Record smashed.

Had a professor who used to say that it always amazed him how monetary crises are always so slow to get rolling even though all the signs are there for people to see, but how fast they move when they finally get started.

Already pushing towards 13 now, with actually physical runs on the banks starting to occur. At this point even with an interate rise I think the currency goes into free fall as everyone withdraws and exchanges as fast as they can. Plus servicing foreign debt is going to be nigh on impossible.

[Ivanhoe]

On 11/21/2021 at 12:03 PM, RETAC21 said:

Erdogan not worried, believes he needs a bigger boat:

https://www.memesita.com/turkey-is-considering-ordering-an-aircraft-carrier-and-a-submarine-from-navantia/

It would be smarter for Erdogan to be shopping for bigger wheelbarrows.

 

[sunday]

That could help to develop a worthy replacement for Príncipe de Asturias, however.

[DB]

Erm. Was that (Dostoevsky) piece intended to be a sardonic look at Russia's opinion of itself and its claimed motives, or was it just an overwhelming message of "Russia knows what's good for you" stated without irony?

Edited November 24, 2021 by DB

[Ssnake]

I'm afraid, it might be the latter.

[RETAC21]

6 hours ago, sunday said:

That could help to develop a worthy replacement for Príncipe de Asturias, however.

At the Armada HQ, 24th Dec 2021

"Dear Santa..."

Unfortunately, this is a pipe dream, the Harriers are going to run out of hours, and despite "interest" there's unlikely to be money to buy F-35s in the next 20 years, so a bigger deck won't be needed. Drones and UCAVs I suspect are going to be the replacement, with luck, and losing capabilities.

[BansheeOne]

Quote

Imagining Life after Erdoğan

Turkish Economic Woes Fuel Speculation of Early Elections

A lira in freefall and skyrocketing prices: Turkey's economy is in poor shape and much of the population is suffering. President Erdoğan's weak response is strengthening the opposition and fueling speculation that elections may be held sooner than planned.

By Sebnem Arsu und Maximilian Popp

25.11.2021, 14.45 Uhr

For years, Hasan Karavus’ career only went in one direction: up. Like millions of other Turks, Karavus moved to Istanbul from southeast Anatolia in the 1990s, and his brother got him a job with a textile merchant. Later, Karvus went into business for himself, selling cheap clothes in Istanbul, Izmir and Antalya. It was the early 2000s and Turkey experienced an enormous economic boom under its new prime minister, Recep Tayyip Erdoğan. Karavus expanded abroad, and his company, which he named after his daughter Sima, grew two dozen employees.

Today, Karavus lives in a one-room apartment in Istanbul's poor Tarlabaşı district. The cold and damp of a late autumn evening in Istanbul creep through the window. On the street, prostitutes wait for customers as young people sniff glue.

He lights a cigarette. In the past three years, he says, his company went broke before he then had to sell his apartment and his car. To top it all off, his wife left him. "I’ve hit rock bottom,” he says.

Karavus blames one man in particular for his plight: Erdoğan, who has since become the country’s president. As much as Erdoğan strengthened the Turkish economy at the beginning of his term in office – by expanding infrastructure and liberalizing the labor market – he is also responsible for ruining it again through mismanagement and corruption.

Many in Turkey hold the same view as Karavus. According to one survey, eight out of 10 Turks are dissatisfied with the government’s economic policies and Erdoğan’s approval ratings have likewise plummeted. In fact, the coalition between Erdoğan’s Islamist Justice and Development Party (AKP) and the far-right MHP party has now fallen behind the opposition alliance of Social Democrats and Nationalists in the polls. The next presidential and parliamentary elections aren’t scheduled until 2023, but rumors are growing in Turkey that the vote could be brought forward to next year as a result of the devastating economic situation.

Erdoğan has ruled Turkey for almost two decades now and has taken control of just about every institution in the country, including the judiciary, the police and the media. But he hasn’t found a way to fix the economic crisis, and Turkey’s currency, the lira, is in free fall, with the current exchange rate at 13.68 lira to the euro. In 2007, two lira would still get you a euro. Meanwhile, prices are continuing to rise, with inflation skyrocketing to 20 percent since September. Many food items cost almost a third more than they did just one year ago. Recently, thousands of contractors went on strike in protest against cement prices, which have tripled since the beginning of the year. In Istanbul, students took to the streets over high rents.

[...]

Large swaths of Turkish society seem to be in the same state of shock that has gripped Karavus. In the 20 years of AKP rule, many Turks grew accustomed to the fact that their standard of living continued to improve. They were even prepared to accept Erdoğan’s dismantling of democracy for that bit of extra prosperity. Now, though, they are coming to the realization that it was all a sham.

The president fueled the upswing in his first years in office largely by investing billions in the construction industry. He built roads, hospitals and high-rise housing developments. One of the largest airports in the world opened in Istanbul in 2018.

The government's growth policy went well as long as the lira was stable and money continued flowing in from abroad. Now, thought, the country is caught in a downward spiral. Unlike Russia, for example, Turkey barely has any raw materials and is thus dependent on investment. With his authoritarian-style of rule, his persecution of opposition figures and his interventions in interest rate policy, however, he has frittered away investors’ trust. Direct investment from abroad plummeted from $19 billion in 2009 to $5.8 billion last year, while rating agencies have downgraded Turkey’s creditworthiness to junk status. The country’s foreign debt has grown to $422 billion.

Erdoğan Can't Accept that the Economy Doesn't Obey Him

Erdoğan apparently refuses to accept that the global economy doesn’t obey him the way his voters at home have long done. He believes he can simply carry on as before despite the crisis. The president continues to claim, for example, that low interest rates will lead to lower prices. But pretty much all economists agree that the exact opposite is the case.

This spring, Erdoğan fired the third head of the central bank in two years because he refused to go along with the government’s low interest rate policy. The country’s most important financial institution is now headed by Şahap Kavcıoğlu, a man notable primarily for his energetic defense of the president’s crude economic theories in guest editorials for the pro-government newspaper Yeni Şafak.

[...]

Erdoğan has weathered a number of crises during his time in office – from the mass protests around Istanbul’s Gezi Park in 2013 to the failed military coup in 2016. But the current crisis goes much deeper. When Erdoğan experienced domestic pressure in the past, he always managed to distract people – by invoking the threat to Turkey posed by foreign powers, as he did before the 2017 constitutional referendum, for example. But that strategy doesn’t appear to be working any longer. People in Turkey feel they have less in their wallets with each passing day.

Even those close to Erdoğan are starting to wonder just how lucid he still is. Recently, Erdoğan has fallen asleep repeatedly at public events. To counter speculation about the state of his health, advisers to the president recently felt compelled to post a video on the internet showing Erdoğan playing basketball.

Meanwhile, the opposition is displaying more self-confidence and unity than it has at any time since the AKP took power in 2002. For years, the Republican People’s Party (CHP), in particular, has been looking for a way to get rid of Erdoğan. But their criticisms of the president's authoritarian style of government, of his restrictions on freedom of the press and freedom of opinion, and of his religious fundamentalism never gained much traction with large sections of the Turkish population. It took the poor economic figures to shake Erdoğan’s system.

Given his party's rising fortunes, CHP party head Kemal Kılıçdaroğlu is in a good mood when he sits down for an interview at party headquarters in Ankara on a November afternoon. A portrait of party and state founder Mustafa Kemal Atatürk hangs on the wall of his 11th-floor office. To this day, the CHP regards itself as the guardian of the Kemalist legacy. For a long time, though, few in Turkey seemed interested and the CHP looked like a party that was stuck in the past. The future seemed to belong to Erdoğan and his AKP. That’s is now changing.

[...]

It will probably be much more difficult for the opposition to win nationally than in some of Turkey's large cities. Despite his declining health, Erdoğan remains Turkey’s most gifted campaigner. The opposition hasn’t even managed to find a common candidate yet. Kılıçdaroğlu, it is said, wouldn't mind taking on the role, as would the mayors of Istanbul and Ankara.

The opposition alliance, though, is fragile. The CHP and İyi Party are relatively close, but without at least indirect support from the Kurds, they wouldn’t have enough to beat Erdoğan.

There's also the question of how fair and free the election will ultimately be. Erdoğan ordered a revote in the 2019 Istanbul mayoral vote because he didn’t like the result. The CHP is already training election monitoring teams to prevent any attempts to manipulate the presidential election.

If the social democratic CHP win the election, Kılıçdaroğlu is promising to scrap the presidential system Erdoğan introduced in a referendum in 2017 and return to parliamentary democracy. The CHP is already in talks with other opposition parties, including the Deva Party of former Minister of State for the Economy Ali Babacan.

Babacan once founded the AKP together with Erdoğan and is viewed as the architect of the party’s once successful economic policy. He left the party following a dispute in 2019. Now Deva, together with the other opposition parties, is pushing for a return to the parliamentary system. "This is not just about beating Erdoğan,” Babacan tells DER SPIEGEL. "It’s about creating democratic institutions that will last beyond 2023.”

The fact that politicians in Turkey are even talking openly about the time after Erdoğan – that, too, is a novelty.

https://www.spiegel.de/international/world/imagining-life-after-erdogan-turkish-economic-woes-fuel-speculation-of-early-elections-a-3df2a622-3491-4c42-8d91-e062eff1f419

[Josh]

Lira blew through 13:1 USD today and is in the 13.4 range right now.

[Mikel2]

3 hours ago, Josh said:

Lira blew through 13:1 USD today and is in the 13.4 range right now.

 

An impressive race to the bottom for two currencies.

[Ivanhoe]

2 hours ago, Mikel2 said:

 

An impressive race to the bottom for two currencies.

The Wile E. Coyote School of Economics.

[Josh]

4 hours ago, Mikel2 said:

 

An impressive race to the bottom for two currencies.

Not sure what you're referring to concerning the USD.

[Mikel2]

25 minutes ago, Josh said:

Not sure what you're referring to concerning the USD.

The very picture of health.

[Ivanhoe]

10 hours ago, Mikel2 said:

The very picture of health.

Its been decades since I worried about this stuff, but we live in a time when the talking haircuts tell us inflation is good for the little buy and bad for the 1 percenters, and currency charts look like this;

 

 

[Mikel2]

IIRC something like 40% of all dollars ever printed were created in the last year.    But other than energy, food, services, raw materials and housing, the purchasing power of my dollars has remained quite stable.

 

Edited December 1, 2021 by Mikel2

[glenn239]

On 11/23/2021 at 3:28 PM, Josh said:

Already pushing towards 13 now, with actually physical runs on the banks starting to occur. At this point even with an interate rise I think the currency goes into free fall as everyone withdraws and exchanges as fast as they can. Plus servicing foreign debt is going to be nigh on impossible.

Seemed strange that the Lira is falling because here,

Turkish exporters lock on $211 billion year-end sales target | Daily Sabah

It suggests that Turkish exports are skyrocketing due to global conditions with an export target of 230 billion in 2022.  But I see the trade balance is slightly in the negative, as imports exceed exports.  However, exports for Turkey are to the West, (paid cash on the barrel head in USD).  Imports for Turkey are from Russia and China, (probably also paid in USD, but Turkey can negotiate for alternative methods of payment with these countries by bartering political favors).

Turkey might have to reign in imports in order to put its foreign currency balance into the positive, but with the Chinese export situation being as bad as it is, ($20,000 for a container out of China to Canada, $7,900 out of Turkey to Canada) Turkish exports should boom, meaning that Erdogan can survive this crisis of the Lira, whose origins are not exactly clear.

 

Edited December 1, 2021 by glenn239

[Josh]

The bigger problem for Turkey is that it has a huge amount of outstanding debt in foreign currency.

[Mistral]

7 hours ago, Josh said:

The bigger problem for Turkey is that it has a huge amount of outstanding debt in foreign currency.

That too, but the biggest problem is that over 60% of deposits are in USD, which the central bank has borrowed from the local banks the last two years in an effort to prop the lira, they are at a point where their reserves are 25 billion but if you include the swaps they are negative. No one dares talk about it or you get arrested as a member of the coup…

Yesterday the central bank started spending what little USD they have to prop the lira again as it reached 14 to the dollar, a few hours ago the finance minister resigned.  If the bank run happens it will dwarf the Argentinian of the 90s. The central bank will have to forcibly convert USD deposits to lira thus depreciating it even more.

 

[Ivanhoe]

9 hours ago, Mistral said:

 

Yesterday the central bank started spending what little USD they have to prop the lira again as it reached 14 to the dollar, a few hours ago the finance minister resigned.  If the bank run happens it will dwarf the Argentinian of the 90s. The central bank will have to forcibly convert USD deposits to lira thus depreciating it even more.

 

Man, I'm so old I can remember when pegging 3rd world currencies to the USD was considered a Good Thing.

There is a certain karma, at least for certain countries. Everybody hated Trump and wanted him out, now they are getting it good and hard.

[Josh]

34 minutes ago, Ivanhoe said:

Man, I'm so old I can remember when pegging 3rd world currencies to the USD was considered a Good Thing.

There is a certain karma, at least for certain countries. Everybody hated Trump and wanted him out, now they are getting it good and hard.

Turkey's problems have absolutely nothing to do with Trump or American politics. It is pure bad finance policy on the part of The Sultan and him overriding/firing all of his bankers when they tell him what he doesn't want to hear.

[Josh]

dollar to lire 1.00 - 14.40 now. Breaking through 14 took a lot longer than thought.

[Mistral]

On 12/14/2021 at 10:22 PM, Josh said:

dollar to lire 1.00 - 14.40 now. Breaking through 14 took a lot longer than thought.

That was because the central bank burned over 4 billions USD to prop it and failed. It's over 16 now.

But don't worry, the sultan announced a 50% increase to the minimum wage to a whopping 240 USD.

[Soren Ras]

Erdogan is going to need a really big distraction very soon the way things are going...

--
Soren

[Josh]

it is insane that in the face of rampant inflation and devaluation, the Turkish central bank lowered interest rates *AGAIN*. All the currency reserves they spent might as well have been set on fire at that point, not that they were going to hold back the trend indefinitely anyway. But cutting rates ensured that the lira was going to fall off a cliff. At this point I think we will see hyper inflation. I can't for the life of me understand what The Sultan thinks he's doing - it's almost like he's trying to sink his own economy.

[Ssnake]

The Sultan asked long enough for spineless Yes men that he is now completely surround by them.

Let that be a lesson for anyone in a leadership position seeking short-termed comfort against cognitive dissonance.

[DB]

How does Erdogan get on with the Saudis? It's the usual place for despots who survive the lamp-post treatment isn't it?

Provided they've offshored all the cash, of course.