Turkey is in trouble because the Turks aren’t very good at anything in particular, but acted as if they were the next China. They borrowed vast sums from the international market against a glorious future that was never to be. Among all of the world’s big economies, Turkey has the worst current-account deficit, at nearly 8% of economic output, roughly where Greece was before its national bankruptcy. Investors reckoned that with high economic growth, Turkey would have no problem carrying its debt; what they did not take into account is that the growth itself was largely an illusion, a carnival of consumption and construction that depended on increasing debt in the first place,” he concludes.
History has shown that even boosting short-term interest rates by more than half rarely is a sufficient bribe to foreign investors to pour money into an economy that is fundamentally untenable. The extra 425 basis points (4.25 percentage points) in annual yield on the overnight lending rate can be erased, well, overnight. It may punish traders who have shorted the Turkish lira (which means borrowing the currency, now at a higher interest cost) for a time. But it doesn’t address the fundamental problems that beset the Turkish economy.
It’s been suggested that the MINTs–the acronym for Mexico, Indonesia, Nigeria and Turkey–are supposed to be the successor to the BRICs–Brazil, Russia, India and China. Sometimes, MINTs can leave a bad aftertaste.
Mon 27 May 2019 AAGB/US- Holiday Tue 28 May 2019 A 14:00 US- Consumer Confidence C 13:00 US- Case-Shiller Wed 29 May 2019 A 08:55 DE- Employment AA 18:00 US- BOC Decision A 18:30 US- EIA Crude Thu 30 Mar 2019 AAEZ/CH- Holiday A 12:30 US- Weekly Jobless Fri 31 Mar 2019 AA 10:00 EZ- Flash HICP A 12:30 US- Personal Income, Spending, Deflator AA 14:00 US- Final Univ of Michigan
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