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    ‘If you are in debt, you are in trouble’ period begins for the corporate sector
    Güven Sak, PhD 30 December 2008
    Honorable businessman Mr. Tuncay Özilhan said "Ankara residents do not feel what goes on in Anatolia". He was right. The subject was on the headlines of this daily yesterday. Today let me examine the problems the corporate sector encounters in daily life. The topic is 'if you are in debt, you are in trouble'. [More]
    Who helped Bernard Madoff?
    Güven Sak, PhD 27 December 2008
    Bernard Madoff shock in the capital markets take place on December 11, 2008. According to the statement of the website of Securities and Exchanges Commission (SEC), Mr. Madoff, founder of Bernard L. Madoff Securities Investment and board of executors of the company for 48 years, was arrested. The cause of investigation was the statements Madoff made to his sons, who are senior executives in the company. Our successful businessman said his fellow colleagues: "What we are doing is nothing but fraud; you can only call this Ponzi financing". And the fellow colleagues, without wasting time, reported their father/boss to the SEC. [More]
    What does ‘no money circulation in the market’ mean?
    Güven Sak, PhD 25 December 2008
    Last Tuesday we said "Let go the empty talks and see what we should do." In this context, we first focused on the corporate sector. It seems that the current conditions will first affect the corporate sector regardless of what we want. Until today, we in a polite and technical manner said "It is critical to prevent any obstruction in the credit channel"; but no one understood anything. Therefore, today it is time to explain what is going to happen concretely. Do you remember the first example? The question we asked was quite simple: What happens if banks tell companies 'The collateral you supplied for the credit you received is not sufficient anymore. Either supply additional collateral or return the part of the credit not covered by the collateral'? The answer was that bad things happened [More]
    How can resources be transferred to the corporate sector?
    Güven Sak, PhD 23 December 2008
    IMF Managing Director Dominique Strauss Kahn underlined three points in his speech in Spain: first is the banks shall be recapitalized in a coordinated way to re-ensure the operation of the banking system. Second is that it was time for expansionary fiscal policy to tackle the approaching depression. Any country that has the capacity should expand public expenditures. Third, emerging market economies should be provided with liquidity support without questioning. The aforesaid statement of the IMF Managing Director in fact shall make us sweat suddenly and profusely. We are not used to hear this kind of statements from the IMF. However, this makes sense as we are faced with unusual conditions. In such a period where no one has time to think for any other, everyone shall start evaluating his [More]
    Would the IMF lend the US?
    Güven Sak, PhD 20 December 2008
    Central Bank of the USA, FED cut down the interest rates to zero. Furthermore, it announced that the expansion in its own balance sheet is a long-term trend. Balance sheet of the FED has tripled times in the last year. Now, they announced that this was not a short-term step and the trend would continue. Instead of asking "What does this mean", we will assume another approach. We will ask: If the US government applied to the IMF and enumerated the steps taken, would it be able to sign an agreement? The answer is, no it would not. Then, if the US was not monetizing and was dependent on the IMF for foreign funds, what would be done in such hard circumstances? It should have first taken the steps initiated today and then apply to the IMF. And this brings us to the topic of today: In the recent [More]
    Chavez, making effort to protect the revolution, does not have time for making a revolution
    Güven Sak, PhD 16 December 2008
    Avila Mountain is almost 3000 meters high. At one side of el Avila, there stands the Caribbean Sea and at other side stands the Caracas city. Caracas is the capital city of Venezuela. For the last decade, Caracas is the capital city of Chavez. It might sound new, but it has been 10 years since Chavez has taken the office. In the 10th year of his rule, Chavez, once more is trying to amend the constitution of Venezuela. As per the current constitution, he cannot be elected as the president again. However, he, probably "for the sake of the revolution" wants to be elected as a president for more than three times. Venezuelan people responded this demand with a "no" in the referendum held the year before. It appears that the issue will again be subject to referendum at the beginning of 2009. The [More]
    Our problem is that we now recognize empty talks
    Güven Sak, PhD 06 December 2008
    Almost two thirds of the national income of the world (according to the development indicators of the World Bank) originates from two countries: the US and China. Thanks to the high paced growth performance of the US and China in the previous decade, world economy as a whole demonstrated a rapid growth performance. However, two developments announced the week before showed that nothing will be the same anymore. First was announced by the National Bureau of Economic Research of the US (NBER) and second by the World Bank. Let us see what were those about? [More]