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Saturday, September 17, 2011

Turkey's economic lie

Just another reminder that I'm in Boston where the Sabbath has not started yet.

There's a certain Muslim commenter on this blog who keeps telling us how Turkey has a better economy than the European Union, and how they're such an economic powerhouse that no one can stand up to them, etc. Investigative Reporter Guy Bechor says it's all a lie.
Some refer to him as “the Middle East’s new sultan in a neo-Ottoman empire” – yet the truth about Erdogan’s kingdom is utterly different. We are not facing an economic power, but rather, a state whose credit bubble will be bursting any moment now and bringing down its economy.

The budget deficit of the collapsing Greece compared to its GDP stands at some 10%, and the world is alarmed. At the same time, Turkey’s deficit is at 9.5%, yet some members of the financial media describe the Turkish economy as a success story (for comparison’s sake, Israel’s deficit stands at some 3% and is expected to decline to 2% this year.)

While Turkey’s economy grew by some 10% this year, this was merely the result of financial manipulation.

So how does the system work? The banks in Erdogan’s Turkey handed out loans and mortgages to any seeker in recent years, offering very low interest rates; this was in fact a gift. As the interest rate was so low, Turkish citizens used more and more credit, mostly for consumption.

And how did Turkey’s Central Bank finance this credit party? Via loans: Erdogan’s bank borrowed money in the world and handed it out to its citizens. However, Turkey’s deficit kept growing because of it, until it reached a scary 8% of GDP; by the end of the year the figure is expected to reach 10%.

Turkey’s external debt doubled itself in the past 18 months, which were election campaign months. Only a small part of the deficit (15%) was financed by foreign investment. The rest constitutes immense external debts.

Now it’s clear that Erdogan’s regime bought the voters in the recent elections. Most of the Turkish public elected him not because of Islamic sentiments, but rather, because he handed out low-interest loans to everyone. I will provide you with cheap money so you can become addicted to shopping, and you shall elect me.
If you think Obama's America has high unemployment, Turkey's is 13%. Their currency has plummeted against the dollar (which has actually strengthened over the last few months), and the Turkish stock exchange has dropped 40% in the last six months.

From here on, I'm afraid, Bechor may be engaging in some wishful thinking.
Once the bubble explodes, the score with Erdogan will be settled, by the journalists his government ordered to arrest, by army officers charged with imaginary accusations, by the restrained scientists, the politicians, and mostly the general public, which shall be facing an economic disaster.

And this is where Israel comes into the picture. Why talk about the approaching economic catastrophe? Why talk about this disgrace, when it’s better to create an artificial crisis vis-à-vis Israel, a spin that the whole world will be talking about instead of talking about the sinking Turkey? After all, the Marmara raid happened more than a year ago, why did it emerge again now? Is it only because of the Palmer Report?
Yes, but... now that Erdogan has established total control over the army, isn't it more likely that he will use to prevent the journalists, officers, politicians and general public from exacting revenge on him?

Turkish spring anyone? What could go wrong?

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At 1:18 AM, Anonymous Anonymous said...

If most of the loans are to foreign creditors than it probably won’t be that bad. All he has to do is not re-pay them. After all agreements made with the kaffars aren't enforced in sharia law. With Turkey cozying up to Iran, I am sure Iran will help to repay any loans to Islamic countries or their allies.

At 10:24 PM, Blogger Mark said...

Hi Carl.
My name is Mark. I read your blog every day and I think it is fair to say that it provide the most comprehensive and correct coverage of Jewish/Israeli news on the web. Sometimes I wonder how do have time for all of this. :)
I live in Boston too. On the border of Brookline an Brighton.
Will be glad to meet you face to face to say shalom and chat a little bit.
My email is mark_chlenov@yahoo.com
Shavua Tov

At 4:59 AM, Blogger Sunlight said...

I agree with Mark from Boston.

At 11:38 PM, Anonymous Anonymous said...

Guy Bechor says it's all a lie

He didn't say that. He tries to predict the future. It's all hot air and supposition. The Ynet thing had no sources,

but rather, a state whose credit bubble will be bursting any moment now and bringing down its economy.

It is a FACT that Turkey is a leading econonomy today. A tiger. Forbes listed it as the 4th place in the world with the most billionaires.

Guy Bechor's wet dreams won't change that. Everything he said is a prediction, and that too because he wishes it.

Mark and Sunlight, I proved you both wrong.

The problem here is that since Turkey dumped Israel, all the anti Turkish propoganda will come out now, when before even the Armenian Holocaust was a taboo subject. Aren't you a hypocrite Sunlight?

At 11:49 PM, Anonymous Anonymous said...

16th largest economy and counting..... :)


The visible improvements in the Turkish economy have also boosted foreign trade, while exports reached USD 114 billion by the end of 2010, up from USD 36 billion in 2002. Similarly, tourism revenues, which were around USD 8.5 billion in 2002, exceeded USD 20 billion in 2010.

Significant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional emerging economy, the 16th largest economy in the world and the 6th largest economy when compared with the EU countries, according to GDP figures (at PPP) in 2010.

Prior to the recent global recession which hit all economies throughout the world, the Turkish economy sustained strong economic growth for 27 quarters consecutively, making it one of the fastest growing economies in Europe. However, the global financial crisis has considerably challenged the macroeconomic and financial stability of many economies by adversely affecting financing facilities and external demand, thus causing a significant slowdown in all global economic activities.

While the financial markets in Turkey proved resilient to the crisis, the decrease in external demand and slowing international capital flows have had a negative impact on the economy, thus causing an economic contraction in 2009. However, the perceived positive developments in the economy showed signs of a fast recovery beginning as early as the last quarter of 2009, with an impressive 5.9 percent economic growth rate, hence making Turkey one of the fastest recovering economies in the world. Its robust economic growth continued in 2010 as well, having reached 12 percent, 10.3 percent, 5.2 percent and 9.2 percent in the first, second, third and fourth quarters of 2010 respectively, thus achieving an overall growth rate of 8.9 percent throughout 2010. Turkey, with such a robust economic performance, stood out as the fastest growing economy in Europe and one of the fastest growing economies in the world.


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