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When will Turkey's economic bubble burst?

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When will Turkey's economic bubble burst?

Postby Demonax » Wed Feb 27, 2013 2:14 am

Watch this space...

Erdogan's Growing Economic Woes

Some would call this a bubble:

Since late 2009, Turkey has lost $20 billion of foreign bank assets and taken on $50 billion of foreign bank debt

As we reported Aug. 3, Turkey's banks are still churning out consumer loans at a 30% annual rate, probably to capitalize the interest on loans bearing an 18% interest rate. The current account deficit is running at about $70 billion a year, which means that Turkey's banks will have to double their net external debt position to finance it. The Bank for International Settlements data (whence the chart was drawn) show no lending to Turkey from the rest of the OECD. We believe the money is coming from the Gulf states, whose largesse is not infinite.

Worst, exports fell sharply in July year on year:

Turkish exports declined last month as contracting European markets and adverse exchange rates mainly affected the performance of key automotive and textile sectors.

Turkey's exports declined 5.5 percent year-on-year in June to $10.85 billion, the Turkish Exporters Association (TİM) revealed yesterday, while exports posted a year-on-year increase of 3.6 percent in June.

"The biggest reason for exports decline in June was the shrinking demand in the automotive market. Automotive exports plunged by 22.3 percent. Also the ready-to-wear [retail] sector declined 12 percent as a result of shrinking demand. We are carefully following the declines in our flagship exports," Economy Minister Zafer Çağlayan said yesterday, according to Anatolia news agency.

Erdogan's authority stems first of all from his reputation as an economic wizard, a story which the world continues to buy. Why anyone would buy Turkish banks under the circumstances is a mystery to this former banker, but bubbles, as they say, last until they feel like fundamentals.

An imploding domestic credit bubble, constraints on foreign borrowing, soaring food prices and declining exports look like a toxic combination.


http://www.gatestoneinstitute.org/3265/ ... ing-bubble
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Re: When will Turkey's economic bubble burst?

Postby Maximus » Wed Feb 27, 2013 10:42 pm

Turkey has also taken on other new debts and liabilities, specifically the costs mounting as a result of her foreign policy and the increasing number of refugees crossing over from Syria.

Pride comes before a fall or destruction and these Turkish actors [Mr Erdogan & Co] are certainly full of it. Morally and ethically, they run a huge deficit which compliments their trade balance. They have been running high on this sin and extreme arrogance for some time now but they will fall faster and harder than those they mock.

It is in my opinion more likely that Turkeys economic bubble will burst sooner as a result of war because Turkey is potentially on the verge of being pulled in to two of them. It will feel like the rug has just been pulled out from under their feet, with a mountain of humility left over to climb.
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Re: When will Turkey's economic bubble burst?

Postby Viewpoint » Wed Feb 27, 2013 11:16 pm

Total rubbish, loans in Turkey no longer run at 30% this was the rate 5 years ago, to find out what the bank rates are read the Central Bank of Turkeys web pages.

The doom and gloom merchants are out in force tonight.
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Re: When will Turkey's economic bubble burst?

Postby Pyrpolizer » Thu Feb 28, 2013 12:25 am

Viewpoint wrote:Total rubbish, loans in Turkey no longer run at 30% this was the rate 5 years ago, to find out what the bank rates are read the Central Bank of Turkeys web pages.

The doom and gloom merchants are out in force tonight.


Yes VP perhaps you should take your own advice and visit their web page here.
http://www.tcmb.gov.tr/yeni/eng/index.html

No need to go deep in there just tell us what you see on the left column, there where it says
CBRT Interest Rates (%)
Borrowing Lending
Overnight....

I AM WAITIIIIIIIIING :mrgreen:
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Re: When will Turkey's economic bubble burst?

Postby Viewpoint » Thu Feb 28, 2013 12:30 am

Pyrpolizer wrote:
Viewpoint wrote:Total rubbish, loans in Turkey no longer run at 30% this was the rate 5 years ago, to find out what the bank rates are read the Central Bank of Turkeys web pages.

The doom and gloom merchants are out in force tonight.


Yes VP perhaps you should take your own advice and visit their web page here.
http://www.tcmb.gov.tr/yeni/eng/index.html

No need to go deep in there just tell us what you see on the left column, there where it says
CBRT Interest Rates (%)
Borrowing Lending
Overnight....

I AM WAITIIIIIIIIING :mrgreen:


Lending Rate 8.5% not 30%
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Re: When will Turkey's economic bubble burst?

Postby boomerang » Thu Feb 28, 2013 12:37 am

Will Turkey become the next Black Swan?

By Luis Riestra Delgado — 8 hours ago
Luis Riestra Delgado is an economist whose blog Macro Matters runs on Voz Pópuli.

The new Turkish Lira could only bring economic stability for so long. AP Photo/Burhan Ozbilici


In the minefield of the global arena, Turkey, the 15th largest economy in the world, should be marked as the next contender for a financial crisis. If the past is the prologue of its economic disequilibrium, demography trend and history announce loud and clear a future destabilization that could beyond a financial crisis.

An unstable economy

Turkey has had record of high inflation and high public debt, but in 2003 it eliminated six zeros in its currency by issuing a redenominated Turkish Lira, commonly known as the second Turkish Lira, which brought a period of temporal stability to the economy.


The economy booms

The second Turkish Lira brought price stability and global investment to Turkey carrying the illusion that lower interest rates, higher fiscal income and lower public debt to GDP positioned the country as a stable nation. Turkey has even been qualified as emerging economy by the IMF, but the truth is that its economic disequilibriums are unsustainable and growing.



From emerging to emergency

Such a high growth track is not sustainable because their Current Account suffers a massive trade deficit, which jumped to 10% of GDP in 2011. That has been attenuated by an initial devaluation of the Lira making it close to 7% of the GDP but growing indicating that the problem is structural. This path is leading to a currency crisis that will bring higher inflation and unemployment, a higher public deficit and higher public debt putting the country at the doors of a sovereign debt crisis. In fact, the figures of Current Account deficit, Public Debt and Public Deficit are almost a mirror image of the Spanish ones during the year its real estate bubble burst.

The day of reckoning will bring to Turkey a strong devaluation of its currency, which could have at least two devaluation stages with a loss pattern close to 0.4 Lira per dollar, until the economy stabilizes if it finally does. I don’t think that Turkey’s $118 million dollars in reserves, $18 million in gold, with a Current Account deficit close to $60 billion per year will be enough for an orderly devaluation without a strong fiscal adjustment to reduce consumption and imports.



The population bomb is ticking

In 1945, Turkey had a population similar to Spain’s in 1905; now it has almost doubled and will soon be larger than Germany. The necessary adjustment will probably leave the country with a structural unemployment that could be over 15%, if we believe the official figures. This will aggravate a per se unstable nation that has a young population and additionally suffers the costs of a refugee crisis from the Syrian war.



In modern times, Turkey has always seen the European Union as a solution to its need for growth. But the truth is, the EU cannot absorb the cost of its full membership, which is something that Turkey does not seem to understand. Meanwhile, the problem grows and the solutions frustrate Turkish citizens, pushing them to refuse membership to the West and radicalizing the Otomanism of the current government if a Turkish Spring were to explode.

In the middle of nowhere?

It remains even more uncertain how Turkey will react to a large succession of adverse events given its geopolitical situation, its long history of changing alliances (of which the flotilla is just a small appendix), its frustration with the EU rejection after 54 years of negotiation, and its renewed sight to the East,

Imagine that a Turkish Spring radicalizes the government and induces it to join the Shangai Cooperation Organization, which may induce it to leave NATO, where Turkey is, by now, just a mere observer. It could transform a financial crisis into a major geopolitical shift for the world. That would be a Black Swan.

http://qz.com/#55186/will-turkey-become-the-next-black-swan/


lets not forget 10 odd years ago everyone in turkey was a millionaire... :lol:
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Re: When will Turkey's economic bubble burst?

Postby Maximus » Thu Feb 28, 2013 12:59 am

Viewpoint wrote:
Pyrpolizer wrote:
Viewpoint wrote:Total rubbish, loans in Turkey no longer run at 30% this was the rate 5 years ago, to find out what the bank rates are read the Central Bank of Turkeys web pages.

The doom and gloom merchants are out in force tonight.


Yes VP perhaps you should take your own advice and visit their web page here.
http://www.tcmb.gov.tr/yeni/eng/index.html

No need to go deep in there just tell us what you see on the left column, there where it says
CBRT Interest Rates (%)
Borrowing Lending
Overnight....

I AM WAITIIIIIIIIING :mrgreen:


Lending Rate 8.5% not 30%


the article was published in august of last year and makes reference to a 30% annual lending rate. that 8.5% is the overnight rate, interest paid daily at 22:00 GMT for the pro-rata amount for holding new Turkish Lira.
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Re: When will Turkey's economic bubble burst?

Postby Viewpoint » Thu Feb 28, 2013 8:34 am

Maximus wrote:
Viewpoint wrote:
Pyrpolizer wrote:
Viewpoint wrote:Total rubbish, loans in Turkey no longer run at 30% this was the rate 5 years ago, to find out what the bank rates are read the Central Bank of Turkeys web pages.

The doom and gloom merchants are out in force tonight.


Yes VP perhaps you should take your own advice and visit their web page here.
http://www.tcmb.gov.tr/yeni/eng/index.html

No need to go deep in there just tell us what you see on the left column, there where it says
CBRT Interest Rates (%)
Borrowing Lending
Overnight....

I AM WAITIIIIIIIIING :mrgreen:


Lending Rate 8.5% not 30%


the article was published in august of last year and makes reference to a 30% annual lending rate. that 8.5% is the overnight rate, interest paid daily at 22:00 GMT for the pro-rata amount for holding new Turkish Lira.


You are grasping at straws, the articles credibility has just been shot to pieces by quoting inaccurate information and you are still trying to make excuses this says a lot about your own ethics as well.
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Re: When will Turkey's economic bubble burst?

Postby Pyrpolizer » Thu Feb 28, 2013 12:18 pm

Viewpoint wrote:
Pyrpolizer wrote:
Viewpoint wrote:Total rubbish, loans in Turkey no longer run at 30% this was the rate 5 years ago, to find out what the bank rates are read the Central Bank of Turkeys web pages.

The doom and gloom merchants are out in force tonight.


Yes VP perhaps you should take your own advice and visit their web page here.
http://www.tcmb.gov.tr/yeni/eng/index.html

No need to go deep in there just tell us what you see on the left column, there where it says
CBRT Interest Rates (%)
Borrowing Lending
Overnight....

I AM WAITIIIIIIIIING :mrgreen:


Lending Rate 8.5% not 30%


Ha, ha, ha, I knew it you would quote the 8.5%. I knew you would never even wonder what the hell this OVERNIGHT means.
You are such an easy bird to catch VP. :lol: :lol: :lol:

Now make a google search what "overnight interest rate" means. Is it the rate that people borrow from Banks? Or is it something else? How much bigger is the actual rate at which people borrow from Banks compared with the "overnight interest rate"?

To make things easier for you here is some clue. The overnight interest rate in the UK is currently 0.48% :!:

Now after you get all your facts straight come back and give me the answers to my questions.

I AM WAITIIIIIIIIING :mrgreen:
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Re: When will Turkey's economic bubble burst?

Postby Pyrpolizer » Thu Feb 28, 2013 12:25 pm

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