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Turkey's Financial Crisis

116 points by jseliger 5y ago

hereforphone 5y ago
Erdoğan claims that lowering interest rates to zero or near zero is more in line with Islamic principles, which may be true (according to interpretation of Islamic principles, I assume). This is a bold move that reinforces what was already suspected: he is continuing to solidify his power by appealing to Islamic sympathies. During the recent coup calls to resist the belligerents were broadcast over mosque loudspeakers and throats were being slit in the street. Praises to Allah could be heard. Ataturk strengthened Turkey by moving it away from the regional Islamic influences. He changed the alphabet and implemented laws to guide Turkey toward a secular culture. Islam was acceptable (as Turkey was attempting to be a "free" republic), but not compulsory. If Erdoğan continues to mold Turkey's future Turkey will soon look more like Syria in terms of culture, and less like Western Europe, which it recently did.
- midasuni 5y ago
  Paradox of tolerance.
- beebeepka 5y ago
  Heh. I wasn't aware religious beliefs include monetary policies. I just hope they don't start another war out of desperation.
  - hereforphone 5y ago
    One big concern is that Erdoğan will likely hold on to power however he can. He's already circumvented the constitution (and changed electoral law). I believe he will fight to maintain his reign if necessary. He has about 50% of the country behind him, and as far as I can tell the allegiance is based on religious principles, which makes it a strong allegiance indeed.
    - 1cvmask 5y ago
      Donald Trump only won 46.1% of the vote in 2016 and that was enough. In fact no one got over 50%. Hillary Clinton had a plurality with 48.2% https://en.wikipedia.org/wiki/2016_United_States_presidential_election https://en.wikipedia.org/wiki/2016_United_States_presidentia... In England David Cameron had a parliamentary majority with only 38% of the vote.
      - adventured 5y ago
        That's actual voters of course, a subset of how many people support a candidate or President in the US. The parent has no idea how many people support Erdogan (the claimed 50%), nobody does. It's just a guess in the wind (if it's 42% that's a massive difference from 54%, as to whether Erdogan remains standing). Like trying to guess how many Russians really support Putin's dictatorship. Getting honest answers on such questions is quite difficult, as is accurately polling in nations the size and complexity of eg the US, Russia or Turkey.
      - eynsham 5y ago
        In England in 2015, Cameron had 40.9% apparently (https://www.statista.com/statistics/717022/general-elections-voter-turnout-by-party-england/ https://www.statista.com/statistics/717022/general-elections...). The point still stands—he had far more than 40.9% of English seats! On the other hand, the Turkish electoral system can fail even more bizarrely than a simple single-member constituency FPTP system—in 2002, only the CHP and AKP cleared the 10% threshold, so the AKP had ⅔ of the votes. However, at the moment, the president is directly elected, so anything <50% wouldn’t suffice. (How those votes are obtained, of course, is another matter.)
  - thatguy0900 5y ago
    Many religions have laws about interest and usury. Catholics were unable to lend with interest between each other for a very long time. I suppose it's not a stretch to say if a person can't charge interest the government shouldn't be doing it either.
    - beebeepka 5y ago
      Your last sentence makes sense
- DSingularity 5y ago
  Throats were slit? I never read that. If you believe in democracy you would celebrate the failure of a coup. Even if you hate the surviving leader, you ought to prefer defeating him within the frameworks of democracy. You seem to really dislike Muslim culture. If the people of Turkey want their culture to closer to that of Syria instead of Germany, what’s the problem?
  - nickff 5y ago
    >"If you believe in democracy you would celebrate the failure of a coup. Even if you hate the surviving leader, you ought to prefer defeating him within the frameworks of democracy." You are supposing that the once freely-elected leader will permit a reversion to 'free' democracy. In fact, rigged elections form the basis of stable autocracies. Outright juntas and dictatorships are actually more likely to transition to 'free' democracies.[1] [1] https://en.wikipedia.org/wiki/The_Logic_of_Political_Survival https://en.wikipedia.org/wiki/The_Logic_of_Political_Surviva...
  - grenoire 5y ago
    The problem is that people suffer the transition's consequences. The current state of affairs has driven a rather large part of the country's population, who share Western ideals and want to pursue them for their nation, prefer a coup over whatever this ongoing messy loss of wealth and human capital is (certainly not 'democracy,' though). That should be telling, but it's hard to have Westerners empathise, I guess?
  - wheelerof4te 5y ago
    Westerners think that their culture is the greatest of all time, how could you not accept it? They are even exporting it together with their bombs and missiles in case you don't comply /s But seriously, if their "culture" consists of gender theories, Holywood movies, superhero novels and the like, they can keep their culture.
    - lostlogin 5y ago
      You’ve picked a subset of a subset of a subset. There is a little more to it than that, and a similar style summary of your preferred culture would be pretty dark.
- forvelin 5y ago
  It has nothing to do with religious beliefs, its all about gathering capital on his side. He is just abusing peoples' religious beliefs. Everybody knows the new savings scheme he introduced is essentially increasing interest rates. Contrary to popular belief, I do not think that Erdogan will continue to mold Turkey's future. So far Turkey always had 40-50% opposition which could not unit, but now they are all united and next time it is certainly going to tip the scale in the right way. He will do everything to delay the elections or call them at the right time -like now ?- but his plans don't always work out -not far, look to recent Istanbul elections he lost.
  - 1cvmask 5y ago
    He lost all three of the biggest cities of Istanbul, Ankara and Izmir. Yet his coalition actually increased their total votes in the municipal elections by getting more votes in other cities.
  - costac 5y ago
    > Everybody knows the new savings scheme he introduced is essentially increasing interest rates. This is not true. Raising interest rates would mean raising the cost of funding for the banking system. Under the new saving scheme, since the Treasury pays depositors the extra yield, the cost for banks remains unchanged. As does the marginal cost of borrowing from the central bank. The new saving scheme is a free dollar call sold by the country's Treasury to depositors. And it will pay it out by printing money.
    - howmayiannoyyou 5y ago
      > printing money Something it cannot do without increasing its own borrowing costs, and reducing the import purchasing power of its currency. This has been tried and doesn't work: https://en.wikipedia.org/wiki/Black_Wednesday https://en.wikipedia.org/wiki/Black_Wednesday
      - selectodude 5y ago
        Anybody with even a cursory knowledge of macroeconomics knows it won’t work. Erdogan just doesn’t happen to be one of those people. It’s tragic.
- smnrchrds 5y ago
  > Islam was acceptable (as Turkey was attempting to be a "free" republic), but not compulsory. Until Erdogan overturned it, there was a ban on women wearing hijab (the head covering , that the vast majority of Muslims consider a basic tenet of their religion) in universities in Turkey. I leave the judgment to you, but personally I wouldn't consider asking millions of people to choose between adhering to their religion and getting a higher education to be treating their religion as "acceptable, just not compulsary". https://www.bbc.com/news/world-europe-11880622 https://www.bbc.com/news/world-europe-11880622
  - Andrew_nenakhov 5y ago
    - Cyph0n 5y ago
      And the solution to that imaginary problem is.. to ban all women from wearing hijab? Excellent logic.
      - istinetz 5y ago
        Well, yes. What solution do you propose? Mass propaganda? Perhaps possible in 2021, but it wouldn't have been as effective in the 1930s.
        Cyph0n 5y ago
        Why did you use the word “propaganda”? Why not “education”? Regardless of the time period, I would simply propose focusing on educating current and future generations that men and women have equal rights. If you dig into history a bit, you’ll find that state-sponsored persecution - ethnic, religious, or otherwise - is almost always guaranteed to backfire in the long run.
        worik 5y ago
        But what is the problem? It may have a religious origin but a headscarf is a fashion accessory. Like trousers or shirt buttons. We could ban them too, just for fun! Up with skirts! Down with trousers! See? What fun!
- wheelerof4te 5y ago
  Syria was a prosperous and deeply secular country, with many cultural sites dating back to the ancient world. At least it was until imported wahabbi terrorists from you know where started to split the country up, turning parts of it into a Islamic State caliphate. Today, Syria is being plundered by the same countries that helped the terrorists sell the stolen oil. We all know which country smuggled truckloads worth of oil then, and which country does the same now. Comparing Turkey's and Syria's cultures is like comparing an ugly frog to a beautiful marmaid.
  - justicezyx 5y ago
    That country is Russian, right? Or Saudi Arabia? I am not very familiar with Syria situation. Purely a honest question.
    - pphysch 5y ago
      Northeastern Syria (major agriculture/oil region) has been actively occupied by USA for the better part of a decade. Turkey occupies Northwestern Syria (Idlib) along with US-backed HTS. Arguably the only reason Syria didn't collapse like Libya/Iraq is because Russia was there to balance against US interests.
    - lucian1900 5y ago
      Saudi Arabia as the direct source of Wahhabis, with the US funding and arming them. Russia has been supporting the secular Syrian government.
      - AnimalMuppet 5y ago
        I fail to see how the US is funding the Saudis. Arming, maybe. Funding? Not so much.
        objektif 5y ago
        Not necessarily Saudis but the so called "rebels". Turkey openly aided ISIS and other violent rebels in the region. I can tell you Turkey did not do this alone as a Nato member.
- csomar 5y ago
  Erdoğan is a Ottoman and not an Islamic leader. He is using Islam to reach his goals but he is not married to it. He'll move away from Islam as soon as it no longer serves his purposes.
  - justicezyx 5y ago
    Even a fictional character, Paul Atriades, knows that religious zeal is a beast that cannot be contained. I am more inclined to believe that as a skilled politician erdogan should be well versed in history and politics to see that danger. And I believe that he indeed is a believer of Islamic religion.
  - midasuni 5y ago
    But will the country. Like other populists found out, once you unleash the beast you have a job on taming it again
    - csomar 5y ago
      Islam is flexible. He'll bullshit his way out of it. Seen it first hand. Also most of his target countries for influence are already Muslim Sunni. So that should work out.
  - hereforphone 5y ago
    What is an "Ottoman leader"?
    - throwaway123x2 5y ago
      Essentially a Turk first and then a Muslim. Ottoman because it allows him to project hegemony because the Ottomans were the last Islamic "Caliphs".
    - csomar 5y ago
      Basically he still believes in the Ottoman empire and that his country should turn into a super-power that controls the Mediterranean. Many Turks share this idea, too.
- azth 5y ago
  > according to interpretation of Islamic principles, I assume It's literally in the Quran: * https://quran.com/2/275 https://quran.com/2/275 * https://quran.com/3/130 https://quran.com/3/130 And the Hadiths: * https://sunnah.com/riyadussalihin:1615 https://sunnah.com/riyadussalihin:1615 * https://sunnah.com/bulugh/7/62 https://sunnah.com/bulugh/7/62 This isn't a matter of interpretation.
  - tim333 5y ago
    Ah - I hadn't realised God himself took a position on interest rate policy.
DSingularity 5y ago
> The one thing that the central bank is not doing is raising interest rates. This is at the heart of the entire crisis. Okay am I missing something here? Europe has negative rates. The US has negative rates. But when Turkey lowers rates from 19% (!!?!!) to 14% it creates a “crisis”?
- lumost 5y ago
  there is a "natural" interest rate which is roughly what a lender would expect to earn when lending to a reputable borrower. The Federal Reserve/ECB may lend at a slightly lower/higher rate than this natural rate - but going far away from it leads to a crisis as the money supply becomes distorted. There is a big difference between lending at 0% when "natural" interest is .25% and lending at 14% when natural interest is 20%. If inflation is 18% you're effectively giving consumers 4% return on borrowed money, which means everyone will borrow as much money as they possibly can and use it to purchase goods.
  - jbay808 5y ago
    > Lending at 14% when [...] inflation is 18% In the US, inflation is nearly at 7%, while savings accounts yield around 0.05%. Doesn't that mean Americans are discouraged from keeping money in savings accounts about the same amount as Turks are?
    - JumpCrisscross 5y ago
      > Doesn't that mean Americans are discouraged from keeping money in savings accounts about the same amount as Turks are? If you believe American inflation will remain there, yes. Few do. (Also, the Fed is tightening.)
    - lumost 5y ago
      Quite possible that the US is going down the same route Turkey is. The US has an entrenched financial system that might take an extra 6 months to enter a crises. The current belief is that the fed will manage inflation appropriately, and that the 7% headline number will vanish in a few months. Housing increasing 20% last year is a sign that the same incentive is there, getting a mortgage at 2% and then earning a free 5% interest is too good a deal to pass up.
1cvmask 5y ago
I looked up the core values of Turkey. And their debt to gdp ratio is 40%. Neighboring Greece is 200%. The Turkish economy was the second fastest growing economy last year in the G20 and is on pace to be the one of the fastest growing economies this year. Turkey has had record exports and been one of the most successful in tourism both last year and this year helping the current account deficit. Yet bankrupt Greece can borrow at almost 1% interest rate with over 200% debt-to-GDP ratio. Meanwhile there is an unofficial blockade on international lending to Turkey from the US and its cluster of allies/subjects. That is the real story of the attack on the currency and the financial system. The US did the same to Chile by undermining its economy and killing its financial system before staging a coup (Obama attempt to kill Erdogan and stage a coup in Turkey failed in 2016): https://youtu.be/EYrznlDTE_M?t=7576 https://youtu.be/EYrznlDTE_M?t=7576
- mghfreud 5y ago
  Dept to gdp of Turkey is 40%, if you believe official numbers. But they are not publishing numbers for dollar denominated guarantees to PPPs. This is only one of the many unpublished “dept”s. The more the Turkish lira devaluates, the more the public has to pay for the PPPs. Hence, when considering for creditworthiness, you need to account for all, not a single number.
- forvelin 5y ago
  is this unexpected ? erdogan literally buys weapons from russia as a nato member, allies with putin at every occassion and disregards any civilized values. he'd like to squeeze minorities as he wants, oppress the opposition as he wants and ally with whoever he wants. at that point, people might not want to cooperate with you, a bit of diplomacy eh ?
  - wheelerof4te 5y ago
    So, he is acting like a leader who puts his country first? How is that bad? If US doesn't want to sell weapons to Turkey, its NATO ally, is Turkey supposed to give up and stay defenceless against terrorists that attack its borders?
baxtr 5y ago
Just a question: would it have been a good idea for a Turkish person, say, a year ago, to invest in stable coins to prevent suffering from Lira depreciation? PS: This is a sincere question… EDIT: some are asking why not real Euros or Dollars? I was thinking convenience and availability. I’m not sure if you could just easily get dollars in Turkey.
- TimVulcanus 5y ago
  Well you could if you are talking about usd stablecoin, but you could have also simply buy another currency be it euro, US dollar... as long as its value compared to the turkish lira was greater.
- dehrmann 5y ago
  Nit: buying currencies shouldn't be an investment, but it can be speculation or a hedge.
- theNJR 5y ago
  Turkey banned crypto https://fortune.com/2021/04/30/turkey-crypto-ban-erdogan-cryptocurrencies-investors-losses-thodex-vebitcoin/amp/ https://fortune.com/2021/04/30/turkey-crypto-ban-erdogan-cry...
  - 1cvmask 5y ago
    Fake news. Turkey has some of the most active crypto exchanges in the world. https://www.reuters.com/markets/us/exclusive-turkeys-cryptocurrency-trades-top-1-million-day-amid-lira-woes-2021-12-21/ https://www.reuters.com/markets/us/exclusive-turkeys-cryptoc...
- mertd 5y ago
  What extra advantages do they get from stable coins over simply walking to an exchange kiosk and buying Euro or USD?
  - dehrmann 5y ago
    Bonus: local merchants are going to get really used to seeing those currencies soon.
marsven_422 5y ago
selimthegrim 5y ago
Azerbaijan v. Georgia? To heal? Tooze is good but needs to hire an amanuensis.
- kingofpandora 5y ago
  Indeed ... that's a sizeable error and it jumped out immediately. Hope the rest of the article is free of such mistakes!
kw-maller 5y ago
Keep wondering if this is a panicking move or some weird long-term strategy. Are there any benefits to what they're doing, short- or long-term?
deleted 5y ago
[deleted]
lvl100 5y ago
This is why you always hold real assets. And, no, crypto is not real.
- azth 5y ago
  Hopefully crypto will become more real in the future and offer a way out of the corrupt usurious fiat system.
  - imtringued 5y ago
    Crypto ala Bitcoin is built on the same usurious model but worse. The only solution is negative interest on cash.
    - azth 5y ago
      How is it usurious?
grouphugs 5y ago
Andrew_nenakhov 5y ago
The worse crisis Turkey has now, the better it is for its future. The policies of a charismatic autocrat must publicly and catastrophically fail, vaccinating the country against such types and returning the county on the secular track. In democratic countries, people can rebuild from any crisis, so any dark period is temporary. In theological autocracies darkness has no end, and future gives no hope.
- kranke155 5y ago
  This is the whole point of democracies, you can throw people like this out. Unfortunately for the Turkish people, you can push people pretty far in a well managed dictatorship - ie Belarus, Venezuela - and continue in power. This is why having dictators is never a good idea, you can’t replace them when they stop having any purpose.
mrtksn 5y ago
Erdogan pulled a huge pump and dump scheme a few days ago. He kept repeating everything that makes the Turkish Lira weaker and weaker, he and his government claimed that the plan is to lower the lira and compete on price and the lira is not weak because they failed but because that's the plan. We will be the next China, they said. Then on the night of Dec 20, he introduces a financial instrument where the government offers %14 interest and guarantees to pay the any difference if it happens that the lira devalues. With a coordinated effort, government banks start selling $USD the whole day and whole night when the markets are shallow and Turks are asleep, selling off at least 7B$ of the reserves of the central bank and who knows how much of other banks, lowering the $USD from 18 the night Turks went to bed to 11 at the morning. Look at that graph: https://twitter.com/tashecon/status/1473065067914702852 https://twitter.com/tashecon/status/1473065067914702852 Then they continued to sell off the national $USD reserves, conducting a full blown media propaganda operation including advertisement that is obviously produced at least days before the event. Looking back, just the day before the stock market crashed with %10 and there are rumours of certain businessman being informed that the government will change it's stance and intervene strongly. Then we had the Economy minister bragging how they screwed up the little guy who bought $USD at over 14 in an attempt to protect their savings, adding that no institutional investors were harmed in the process. It's just a crypto-bros level of shake off organised and executed by the government. They claim that the orthodox economists are to be blamed for the losses, how silly they are for not accounting for the government tricking the people. Imagine FED giving guidance for interest rates decrease then out of the blue dramatically increasing the rates at midnight once the pals of the president position themselves correctly and saying that the public shouldn't have listed to the economists. At this very moment, Erdogan is having an "interview" that is broadcasted by multiple TV channels and as expected they again started selling off $USD as he began speaking, pushing the dollar from about 12 to 10. Take a look at that chart: https://imgur.com/a/CxYYfyL https://imgur.com/a/CxYYfyL That's %20 daily volatility.
- janmo 5y ago
  I wonder how long their pump will last, their USD reserves are now exhausted, their new savings plan will also cost a fortune.
throwaway123x2 5y ago
Can anyone cite Muslim economists or theorista who endorse Erdogan's scheme? A vague "we don't do interest because Islam bans usury" hardly sounds like good policy. What is the Islamic alternative to the current macroeconomic framework?
- kranke155 5y ago
  They charge interest through other ways in “Islamic banking”. That’s all I know about it. Basically financial engineering, ends up in a be same way. Afaik there is no Islamic economics, just a bunch of funny business to avoid going against the religion. Same system in most places.
  - azth 5y ago
    Those schemes that attempt to bypass usury by calling it something else are not Islamic. Many scholars have called them out. Proper Islamic finance involves risk from both parties. E.g. one party provides funding, the other provides labor, if the project succeeds, they both reap the rewards. If it doesn't, then the first party loses money and the second the labor. Islam very clearly calls out schemes to construct loopholes to bypass prohibition. One such transaction is that of the Einah sale: one party sells an item for a certain amount to be paid by installments (say sells a car for $12,000 to be paid $1000 per month over the next year), then the same party buys the same car for $10,000 cash. What ended up happening is that party B owes party A $12,000 to be paid over the year, but they received $10K cash. This is absolutely forbidden. Similarly, any scheme that stitches together a series of individually permissible transactions to come up with an overall transaction that mimics interest is absolutely forbidden as well. We don't have loopholes in Islam.
    - throwaway123x2 5y ago
      Yeah but on a macroeconomic level, if say Pakistan needs to take a loan from Turkey, how does that work without interest?
    - aliswe 5y ago
      aswrwb, care to hook up?
markvdb 5y ago
Large movements, high volume, in currency not stock. The powers that be know the direction. How difficult could it be for them to make piles of money out of this? How difficult would this be to cover up? I'm not very familiar with the mechanics of forex markets, but I'm fairly certain that a small circle of well-connected people has made a killing out of this. Which raises a question... To what extent was plain and simple greed part of the motive for setting up this unorthodox policy? Insider trading.
darkhorn 5y ago
In recent months it has appeared that some high ranking members of AKP is taking over private businesses by arresting, threatening or even killing the owners. Biggest media company in Turkey was bought by Erdoğan without spending a penny. They still didn't pay. https://www.ft.com/content/3273aafc-4317-11e8-97ce-ea0c2bf34a0b https://www.ft.com/content/3273aafc-4317-11e8-97ce-ea0c2bf34... Also watch this one https://www.youtube.com/watch?v=dvWOVToEmsA https://www.youtube.com/watch?v=dvWOVToEmsA
pmayrgundter 5y ago
Nice up-to-date overview of Turkey/US relations: https://sgp.fas.org/crs/mideast/R44000.pdf https://sgp.fas.org/crs/mideast/R44000.pdf
aaron695 5y ago

116 points by jseliger 5y ago

Erdoğan claims that lowering interest rates to zero or near zero is more in line with Islamic principles, which may be true (according to interpretation of Islamic principles, I assume). This is a bold move that reinforces what was already suspected: he is continuing to solidify his power by appealing to Islamic sympathies. During the recent coup calls to resist the belligerents were broadcast over mosque loudspeakers and throats were being slit in the street. Praises to Allah could be heard. Ataturk strengthened Turkey by moving it away from the regional Islamic influences. He changed the alphabet and implemented laws to guide Turkey toward a secular culture. Islam was acceptable (as Turkey was attempting to be a "free" republic), but not compulsory. If Erdoğan continues to mold Turkey's future Turkey will soon look more like Syria in terms of culture, and less like Western Europe, which it recently did.

midasuni 5y ago
Paradox of tolerance.
beebeepka 5y ago
Heh. I wasn't aware religious beliefs include monetary policies. I just hope they don't start another war out of desperation.
- hereforphone 5y ago
  One big concern is that Erdoğan will likely hold on to power however he can. He's already circumvented the constitution (and changed electoral law). I believe he will fight to maintain his reign if necessary. He has about 50% of the country behind him, and as far as I can tell the allegiance is based on religious principles, which makes it a strong allegiance indeed.
  - 1cvmask 5y ago
    Donald Trump only won 46.1% of the vote in 2016 and that was enough. In fact no one got over 50%. Hillary Clinton had a plurality with 48.2% https://en.wikipedia.org/wiki/2016_United_States_presidential_election https://en.wikipedia.org/wiki/2016_United_States_presidentia... In England David Cameron had a parliamentary majority with only 38% of the vote.
    - adventured 5y ago
      That's actual voters of course, a subset of how many people support a candidate or President in the US. The parent has no idea how many people support Erdogan (the claimed 50%), nobody does. It's just a guess in the wind (if it's 42% that's a massive difference from 54%, as to whether Erdogan remains standing). Like trying to guess how many Russians really support Putin's dictatorship. Getting honest answers on such questions is quite difficult, as is accurately polling in nations the size and complexity of eg the US, Russia or Turkey.
    - eynsham 5y ago
      In England in 2015, Cameron had 40.9% apparently (https://www.statista.com/statistics/717022/general-elections-voter-turnout-by-party-england/ https://www.statista.com/statistics/717022/general-elections...). The point still stands—he had far more than 40.9% of English seats! On the other hand, the Turkish electoral system can fail even more bizarrely than a simple single-member constituency FPTP system—in 2002, only the CHP and AKP cleared the 10% threshold, so the AKP had ⅔ of the votes. However, at the moment, the president is directly elected, so anything <50% wouldn’t suffice. (How those votes are obtained, of course, is another matter.)
- thatguy0900 5y ago
  Many religions have laws about interest and usury. Catholics were unable to lend with interest between each other for a very long time. I suppose it's not a stretch to say if a person can't charge interest the government shouldn't be doing it either.
  - beebeepka 5y ago
    Your last sentence makes sense
DSingularity 5y ago
Throats were slit? I never read that. If you believe in democracy you would celebrate the failure of a coup. Even if you hate the surviving leader, you ought to prefer defeating him within the frameworks of democracy. You seem to really dislike Muslim culture. If the people of Turkey want their culture to closer to that of Syria instead of Germany, what’s the problem?
- nickff 5y ago
  >"If you believe in democracy you would celebrate the failure of a coup. Even if you hate the surviving leader, you ought to prefer defeating him within the frameworks of democracy." You are supposing that the once freely-elected leader will permit a reversion to 'free' democracy. In fact, rigged elections form the basis of stable autocracies. Outright juntas and dictatorships are actually more likely to transition to 'free' democracies.[1] [1] https://en.wikipedia.org/wiki/The_Logic_of_Political_Survival https://en.wikipedia.org/wiki/The_Logic_of_Political_Surviva...
- grenoire 5y ago
  The problem is that people suffer the transition's consequences. The current state of affairs has driven a rather large part of the country's population, who share Western ideals and want to pursue them for their nation, prefer a coup over whatever this ongoing messy loss of wealth and human capital is (certainly not 'democracy,' though). That should be telling, but it's hard to have Westerners empathise, I guess?
- wheelerof4te 5y ago
  Westerners think that their culture is the greatest of all time, how could you not accept it? They are even exporting it together with their bombs and missiles in case you don't comply /s But seriously, if their "culture" consists of gender theories, Holywood movies, superhero novels and the like, they can keep their culture.
  - lostlogin 5y ago
    You’ve picked a subset of a subset of a subset. There is a little more to it than that, and a similar style summary of your preferred culture would be pretty dark.
forvelin 5y ago
It has nothing to do with religious beliefs, its all about gathering capital on his side. He is just abusing peoples' religious beliefs. Everybody knows the new savings scheme he introduced is essentially increasing interest rates. Contrary to popular belief, I do not think that Erdogan will continue to mold Turkey's future. So far Turkey always had 40-50% opposition which could not unit, but now they are all united and next time it is certainly going to tip the scale in the right way. He will do everything to delay the elections or call them at the right time -like now ?- but his plans don't always work out -not far, look to recent Istanbul elections he lost.
- 1cvmask 5y ago
  He lost all three of the biggest cities of Istanbul, Ankara and Izmir. Yet his coalition actually increased their total votes in the municipal elections by getting more votes in other cities.
- costac 5y ago
  > Everybody knows the new savings scheme he introduced is essentially increasing interest rates. This is not true. Raising interest rates would mean raising the cost of funding for the banking system. Under the new saving scheme, since the Treasury pays depositors the extra yield, the cost for banks remains unchanged. As does the marginal cost of borrowing from the central bank. The new saving scheme is a free dollar call sold by the country's Treasury to depositors. And it will pay it out by printing money.
  - howmayiannoyyou 5y ago
    > printing money Something it cannot do without increasing its own borrowing costs, and reducing the import purchasing power of its currency. This has been tried and doesn't work: https://en.wikipedia.org/wiki/Black_Wednesday https://en.wikipedia.org/wiki/Black_Wednesday
    - selectodude 5y ago
      Anybody with even a cursory knowledge of macroeconomics knows it won’t work. Erdogan just doesn’t happen to be one of those people. It’s tragic.
smnrchrds 5y ago
> Islam was acceptable (as Turkey was attempting to be a "free" republic), but not compulsory. Until Erdogan overturned it, there was a ban on women wearing hijab (the head covering , that the vast majority of Muslims consider a basic tenet of their religion) in universities in Turkey. I leave the judgment to you, but personally I wouldn't consider asking millions of people to choose between adhering to their religion and getting a higher education to be treating their religion as "acceptable, just not compulsary". https://www.bbc.com/news/world-europe-11880622 https://www.bbc.com/news/world-europe-11880622
- Andrew_nenakhov 5y ago
  - Cyph0n 5y ago
    And the solution to that imaginary problem is.. to ban all women from wearing hijab? Excellent logic.
    - istinetz 5y ago
      Well, yes. What solution do you propose? Mass propaganda? Perhaps possible in 2021, but it wouldn't have been as effective in the 1930s.
      - Cyph0n 5y ago
        Why did you use the word “propaganda”? Why not “education”? Regardless of the time period, I would simply propose focusing on educating current and future generations that men and women have equal rights. If you dig into history a bit, you’ll find that state-sponsored persecution - ethnic, religious, or otherwise - is almost always guaranteed to backfire in the long run.
        worik 5y ago
        But what is the problem? It may have a religious origin but a headscarf is a fashion accessory. Like trousers or shirt buttons. We could ban them too, just for fun! Up with skirts! Down with trousers! See? What fun!
wheelerof4te 5y ago
Syria was a prosperous and deeply secular country, with many cultural sites dating back to the ancient world. At least it was until imported wahabbi terrorists from you know where started to split the country up, turning parts of it into a Islamic State caliphate. Today, Syria is being plundered by the same countries that helped the terrorists sell the stolen oil. We all know which country smuggled truckloads worth of oil then, and which country does the same now. Comparing Turkey's and Syria's cultures is like comparing an ugly frog to a beautiful marmaid.
- justicezyx 5y ago
  That country is Russian, right? Or Saudi Arabia? I am not very familiar with Syria situation. Purely a honest question.
  - pphysch 5y ago
    Northeastern Syria (major agriculture/oil region) has been actively occupied by USA for the better part of a decade. Turkey occupies Northwestern Syria (Idlib) along with US-backed HTS. Arguably the only reason Syria didn't collapse like Libya/Iraq is because Russia was there to balance against US interests.
  - lucian1900 5y ago
    Saudi Arabia as the direct source of Wahhabis, with the US funding and arming them. Russia has been supporting the secular Syrian government.
    - AnimalMuppet 5y ago
      I fail to see how the US is funding the Saudis. Arming, maybe. Funding? Not so much.
      - objektif 5y ago
        Not necessarily Saudis but the so called "rebels". Turkey openly aided ISIS and other violent rebels in the region. I can tell you Turkey did not do this alone as a Nato member.
csomar 5y ago
Erdoğan is a Ottoman and not an Islamic leader. He is using Islam to reach his goals but he is not married to it. He'll move away from Islam as soon as it no longer serves his purposes.
- justicezyx 5y ago
  Even a fictional character, Paul Atriades, knows that religious zeal is a beast that cannot be contained. I am more inclined to believe that as a skilled politician erdogan should be well versed in history and politics to see that danger. And I believe that he indeed is a believer of Islamic religion.
- midasuni 5y ago
  But will the country. Like other populists found out, once you unleash the beast you have a job on taming it again
  - csomar 5y ago
    Islam is flexible. He'll bullshit his way out of it. Seen it first hand. Also most of his target countries for influence are already Muslim Sunni. So that should work out.
- hereforphone 5y ago
  What is an "Ottoman leader"?
  - throwaway123x2 5y ago
    Essentially a Turk first and then a Muslim. Ottoman because it allows him to project hegemony because the Ottomans were the last Islamic "Caliphs".
  - csomar 5y ago
    Basically he still believes in the Ottoman empire and that his country should turn into a super-power that controls the Mediterranean. Many Turks share this idea, too.
azth 5y ago
> according to interpretation of Islamic principles, I assume It's literally in the Quran: * https://quran.com/2/275 https://quran.com/2/275 * https://quran.com/3/130 https://quran.com/3/130 And the Hadiths: * https://sunnah.com/riyadussalihin:1615 https://sunnah.com/riyadussalihin:1615 * https://sunnah.com/bulugh/7/62 https://sunnah.com/bulugh/7/62 This isn't a matter of interpretation.
- tim333 5y ago
  Ah - I hadn't realised God himself took a position on interest rate policy.

DSingularity 5y ago

> The one thing that the central bank is not doing is raising interest rates. This is at the heart of the entire crisis. Okay am I missing something here? Europe has negative rates. The US has negative rates. But when Turkey lowers rates from 19% (!!?!!) to 14% it creates a “crisis”?

lumost 5y ago
there is a "natural" interest rate which is roughly what a lender would expect to earn when lending to a reputable borrower. The Federal Reserve/ECB may lend at a slightly lower/higher rate than this natural rate - but going far away from it leads to a crisis as the money supply becomes distorted. There is a big difference between lending at 0% when "natural" interest is .25% and lending at 14% when natural interest is 20%. If inflation is 18% you're effectively giving consumers 4% return on borrowed money, which means everyone will borrow as much money as they possibly can and use it to purchase goods.
- jbay808 5y ago
  > Lending at 14% when [...] inflation is 18% In the US, inflation is nearly at 7%, while savings accounts yield around 0.05%. Doesn't that mean Americans are discouraged from keeping money in savings accounts about the same amount as Turks are?
  - JumpCrisscross 5y ago
    > Doesn't that mean Americans are discouraged from keeping money in savings accounts about the same amount as Turks are? If you believe American inflation will remain there, yes. Few do. (Also, the Fed is tightening.)
  - lumost 5y ago
    Quite possible that the US is going down the same route Turkey is. The US has an entrenched financial system that might take an extra 6 months to enter a crises. The current belief is that the fed will manage inflation appropriately, and that the 7% headline number will vanish in a few months. Housing increasing 20% last year is a sign that the same incentive is there, getting a mortgage at 2% and then earning a free 5% interest is too good a deal to pass up.

1cvmask 5y ago

I looked up the core values of Turkey. And their debt to gdp ratio is 40%. Neighboring Greece is 200%. The Turkish economy was the second fastest growing economy last year in the G20 and is on pace to be the one of the fastest growing economies this year. Turkey has had record exports and been one of the most successful in tourism both last year and this year helping the current account deficit. Yet bankrupt Greece can borrow at almost 1% interest rate with over 200% debt-to-GDP ratio. Meanwhile there is an unofficial blockade on international lending to Turkey from the US and its cluster of allies/subjects. That is the real story of the attack on the currency and the financial system. The US did the same to Chile by undermining its economy and killing its financial system before staging a coup (Obama attempt to kill Erdogan and stage a coup in Turkey failed in 2016): https://youtu.be/EYrznlDTE_M?t=7576 https://youtu.be/EYrznlDTE_M?t=7576

mghfreud 5y ago
Dept to gdp of Turkey is 40%, if you believe official numbers. But they are not publishing numbers for dollar denominated guarantees to PPPs. This is only one of the many unpublished “dept”s. The more the Turkish lira devaluates, the more the public has to pay for the PPPs. Hence, when considering for creditworthiness, you need to account for all, not a single number.
forvelin 5y ago
is this unexpected ? erdogan literally buys weapons from russia as a nato member, allies with putin at every occassion and disregards any civilized values. he'd like to squeeze minorities as he wants, oppress the opposition as he wants and ally with whoever he wants. at that point, people might not want to cooperate with you, a bit of diplomacy eh ?
- wheelerof4te 5y ago
  So, he is acting like a leader who puts his country first? How is that bad? If US doesn't want to sell weapons to Turkey, its NATO ally, is Turkey supposed to give up and stay defenceless against terrorists that attack its borders?

baxtr 5y ago

Just a question: would it have been a good idea for a Turkish person, say, a year ago, to invest in stable coins to prevent suffering from Lira depreciation? PS: This is a sincere question… EDIT: some are asking why not real Euros or Dollars? I was thinking convenience and availability. I’m not sure if you could just easily get dollars in Turkey.

TimVulcanus 5y ago
Well you could if you are talking about usd stablecoin, but you could have also simply buy another currency be it euro, US dollar... as long as its value compared to the turkish lira was greater.
dehrmann 5y ago
Nit: buying currencies shouldn't be an investment, but it can be speculation or a hedge.
theNJR 5y ago
Turkey banned crypto https://fortune.com/2021/04/30/turkey-crypto-ban-erdogan-cryptocurrencies-investors-losses-thodex-vebitcoin/amp/ https://fortune.com/2021/04/30/turkey-crypto-ban-erdogan-cry...
- 1cvmask 5y ago
  Fake news. Turkey has some of the most active crypto exchanges in the world. https://www.reuters.com/markets/us/exclusive-turkeys-cryptocurrency-trades-top-1-million-day-amid-lira-woes-2021-12-21/ https://www.reuters.com/markets/us/exclusive-turkeys-cryptoc...
mertd 5y ago
What extra advantages do they get from stable coins over simply walking to an exchange kiosk and buying Euro or USD?
- dehrmann 5y ago
  Bonus: local merchants are going to get really used to seeing those currencies soon.

marsven_422 5y ago

selimthegrim 5y ago

Azerbaijan v. Georgia? To heal? Tooze is good but needs to hire an amanuensis.

kingofpandora 5y ago
Indeed ... that's a sizeable error and it jumped out immediately. Hope the rest of the article is free of such mistakes!

kw-maller 5y ago

Keep wondering if this is a panicking move or some weird long-term strategy. Are there any benefits to what they're doing, short- or long-term?

deleted 5y ago

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lvl100 5y ago

This is why you always hold real assets. And, no, crypto is not real.

azth 5y ago
Hopefully crypto will become more real in the future and offer a way out of the corrupt usurious fiat system.
- imtringued 5y ago
  Crypto ala Bitcoin is built on the same usurious model but worse. The only solution is negative interest on cash.
  - azth 5y ago
    How is it usurious?

grouphugs 5y ago

Andrew_nenakhov 5y ago

The worse crisis Turkey has now, the better it is for its future. The policies of a charismatic autocrat must publicly and catastrophically fail, vaccinating the country against such types and returning the county on the secular track. In democratic countries, people can rebuild from any crisis, so any dark period is temporary. In theological autocracies darkness has no end, and future gives no hope.

kranke155 5y ago
This is the whole point of democracies, you can throw people like this out. Unfortunately for the Turkish people, you can push people pretty far in a well managed dictatorship - ie Belarus, Venezuela - and continue in power. This is why having dictators is never a good idea, you can’t replace them when they stop having any purpose.

mrtksn 5y ago

Erdogan pulled a huge pump and dump scheme a few days ago. He kept repeating everything that makes the Turkish Lira weaker and weaker, he and his government claimed that the plan is to lower the lira and compete on price and the lira is not weak because they failed but because that's the plan. We will be the next China, they said. Then on the night of Dec 20, he introduces a financial instrument where the government offers %14 interest and guarantees to pay the any difference if it happens that the lira devalues. With a coordinated effort, government banks start selling $USD the whole day and whole night when the markets are shallow and Turks are asleep, selling off at least 7B$ of the reserves of the central bank and who knows how much of other banks, lowering the $USD from 18 the night Turks went to bed to 11 at the morning. Look at that graph: https://twitter.com/tashecon/status/1473065067914702852 https://twitter.com/tashecon/status/1473065067914702852 Then they continued to sell off the national $USD reserves, conducting a full blown media propaganda operation including advertisement that is obviously produced at least days before the event. Looking back, just the day before the stock market crashed with %10 and there are rumours of certain businessman being informed that the government will change it's stance and intervene strongly. Then we had the Economy minister bragging how they screwed up the little guy who bought $USD at over 14 in an attempt to protect their savings, adding that no institutional investors were harmed in the process. It's just a crypto-bros level of shake off organised and executed by the government. They claim that the orthodox economists are to be blamed for the losses, how silly they are for not accounting for the government tricking the people. Imagine FED giving guidance for interest rates decrease then out of the blue dramatically increasing the rates at midnight once the pals of the president position themselves correctly and saying that the public shouldn't have listed to the economists. At this very moment, Erdogan is having an "interview" that is broadcasted by multiple TV channels and as expected they again started selling off $USD as he began speaking, pushing the dollar from about 12 to 10. Take a look at that chart: https://imgur.com/a/CxYYfyL https://imgur.com/a/CxYYfyL That's %20 daily volatility.

janmo 5y ago
I wonder how long their pump will last, their USD reserves are now exhausted, their new savings plan will also cost a fortune.

throwaway123x2 5y ago

Can anyone cite Muslim economists or theorista who endorse Erdogan's scheme? A vague "we don't do interest because Islam bans usury" hardly sounds like good policy. What is the Islamic alternative to the current macroeconomic framework?

kranke155 5y ago
They charge interest through other ways in “Islamic banking”. That’s all I know about it. Basically financial engineering, ends up in a be same way. Afaik there is no Islamic economics, just a bunch of funny business to avoid going against the religion. Same system in most places.
- azth 5y ago
  Those schemes that attempt to bypass usury by calling it something else are not Islamic. Many scholars have called them out. Proper Islamic finance involves risk from both parties. E.g. one party provides funding, the other provides labor, if the project succeeds, they both reap the rewards. If it doesn't, then the first party loses money and the second the labor. Islam very clearly calls out schemes to construct loopholes to bypass prohibition. One such transaction is that of the Einah sale: one party sells an item for a certain amount to be paid by installments (say sells a car for $12,000 to be paid $1000 per month over the next year), then the same party buys the same car for $10,000 cash. What ended up happening is that party B owes party A $12,000 to be paid over the year, but they received $10K cash. This is absolutely forbidden. Similarly, any scheme that stitches together a series of individually permissible transactions to come up with an overall transaction that mimics interest is absolutely forbidden as well. We don't have loopholes in Islam.
  - throwaway123x2 5y ago
    Yeah but on a macroeconomic level, if say Pakistan needs to take a loan from Turkey, how does that work without interest?
  - aliswe 5y ago
    aswrwb, care to hook up?

markvdb 5y ago

Large movements, high volume, in currency not stock. The powers that be know the direction. How difficult could it be for them to make piles of money out of this? How difficult would this be to cover up? I'm not very familiar with the mechanics of forex markets, but I'm fairly certain that a small circle of well-connected people has made a killing out of this. Which raises a question... To what extent was plain and simple greed part of the motive for setting up this unorthodox policy? Insider trading.

darkhorn 5y ago

In recent months it has appeared that some high ranking members of AKP is taking over private businesses by arresting, threatening or even killing the owners. Biggest media company in Turkey was bought by Erdoğan without spending a penny. They still didn't pay. https://www.ft.com/content/3273aafc-4317-11e8-97ce-ea0c2bf34a0b https://www.ft.com/content/3273aafc-4317-11e8-97ce-ea0c2bf34... Also watch this one https://www.youtube.com/watch?v=dvWOVToEmsA https://www.youtube.com/watch?v=dvWOVToEmsA

pmayrgundter 5y ago

Nice up-to-date overview of Turkey/US relations: https://sgp.fas.org/crs/mideast/R44000.pdf https://sgp.fas.org/crs/mideast/R44000.pdf

aaron695 5y ago