Contagion effect of the Greece crisis will not be similar with that of the previous crises
08 May 2010
The day before Dow Jones had a historic hiccup attack. We witnessed a development from which many lessons can be learned. Nowadays everyone's discussing 'How can the stocks of Accenture fall to one penny even for seconds?' They argue that there certainly is an error and that trading errors shall be monitored by a program. It was even discussed that stock exchange executives started to sort out the erroneous transactions. Whatever the reason is, US stock exchanges and trading systems went through a rapid fall in prices. In the meanwhile, billions of stocks were traded. Then prices surged a little. But actually this was a fortunate development. This way we all saw in advance how tense the nerves of the markets were. Trading errors are always seen in stock exchanges. However it is most likely
Debt stock of Greece will grow further with the unlawful bailout package.
06 May 2010
European Union is going through hard times. There are three recent challenges the Union is faced with. First, €80 billion of €110 billion bailout plan prepared for Greece will be financed by EU countries and the rest will be financed by the IMF. So, where is the challenge? It is quite simple: As per the Lisbon Treaty, the constitution of the EU, bailout plans cannot be implemented. The 'every man for himself' provision in the Article 125 of Lisbon Treaty was revoked with the bailout plan for Greece. So, the bailout plan for Greece is unconstitutional. Thus, it is necessary to revise the EU constitution which was adopted after a long period of efforts. Life has superseded the constitution. This is the first challenge the Union is faced. There exists a constitutional crisis.
Can a bailout plan be based on market interest rate?
04 May 2010
No it cannot. The ratio of domestic debt stock to Greece's GDP is around 120 percent. The public has learned that the budget deficit, which will intensify the domestic debt stock, was not 6 but 14 percent recently when Papandreu administration came to power. Now, to issues shall be highlighted. First question to ask is as to why Greece is the problem of foreigners. Second question is closely related with the first one. Shall the support to Greece be provided at a rate close to market interest rates as precious consultants of German's President insists? The answers to these questions will set forth clearly the problems we are facing.
Sunday Times Rich List breaks the recovery record
27 April 2010
The Sunday Times daily of Britain announces a Rich List every year since 1989. The list gives the ranking of the richest 1000 people living in Britain. Rich List 2010 was announced last weekend. According to this, collective wealth of the richest 1000 increased by 29.9 percent from 2009 to 2010. This is the biggest annual rise in the list since the first year of its publication. Those monitoring the indicators to figure out the momentum of the recovery process; please note that things go well in the rich's side. This is always the case, is not it?
From Glass-Steagal to 'Volcker Rule’: What about the financial reform discussions?
24 April 2010
Agenda of the US is occupied once again with reform discussions. We are talking about comprehensive and well designed radical and systemic steps; not deceiving political steps. They have completed the health reform and how it is time to deal with the financial sector reform. It is correct that this issue was not much featured here in Turkey. In fact even the financial sector officials in the USA might be stealing a glance at the discussions not paying much attention and waiting for the talks to get serious. But I believe that we should as well start glancing at the discussions and developments already. Today let us put the issue on a framework; we can discuss the details next week. Let us see what President Obama tries to do on the way toward by-elections. This by-election issue seems to
80 percent of Chambers says yes to the Prime Minister
20 April 2010
Last Thursday I have watched the entire meeting of Union of Chambers and Commodity Exchanges of Turkey (TOBB) with executive branches of chambers and commodity exchanges. To be honest, the impression I got was quite different from what the newspaper captions implied. 80 percent of the chambers said yes to the suggestion of H.E. Prime Minister of Turkey. But let us analyze what exactly those 'yes's imply.
We still deal with virtual issues
13 April 2010
Today let us continue with the unemployment issue, which was explained to be virtual not structural, by Mr. Erdogan, the Honorable Prime Minister of Turkey. What do you remember about the part we have seen so far? First, we said "Turkey's most vital problem is unemployment"; and it still is. Second we argued "unemployment is a structural problem" and it still is. Now let us state the third point: unemployment is directly related with the education system of Turkey: unemployment rate rise among middle-aged people with weak education background. So, this problem is nothing but structural. This is what figures tell us. Then, is Mr. Erdogan wrong? Yes he is. He speaks politically. Sometimes what figures tell and what the politics require might not match up with each other as such. Therefore, w
Negative differentiation in the economics is not a good thing
06 April 2010
Now it is the best of times, and it is the worst of times again. For some, the economy goes like clockwork. The main feature of the economic recovery process we are in is its dual structure. On the one hand economic recovery prevails while a deep depression is felt on the other hand. There exists a so-called "good" and "bad" firm differentiation. And this negative differentiation is not a good thing. Credit interest rates are lower than ever. Banks has liquid funds to extend whereas; some firms are thirsty for liquidity. However, these two parties cannot meet. A while ago, I maintained it is possible that the fall in interest rates is not a good sign. In fact, it became more evident that it was a sign of the "dual differentiation", i.e. the negative differentiation in the economy. The pace
Those with no internet literacy cannot find a job anymore
01 April 2010
Turkey's most critical problem is unemployment. This was the case in 2002; and this still is the case in 2010. In fact, no fundamental change took place since 2002. The striking issue concerning the discussions on unemployment is the fact that the emphasis is put generally on the unemployment among young people. News featured on the media with the caption "One out of four young citizens of Turkey is unemployed" grabs attention. But this statement is correct and incorrect at the same time. This is exactly what the figures tell us. Unemployment is really prevalent among young people; however the biggest group across the total number of unemployed is constituted by middle-aged people. If you want to learn about the structure of unemployment, please keep reading.
Activity in bank stocks may be a good sign
30 March 2010
Last Thursday Istanbul Stock Exchange (İMKB) was in a strong rise. The stocks of almost four banks were traded; and the İMKB had a historic day in this sense. Sabah daily published a story on this issue on Friday with the heading 'Istanbul Banks Exchange'. The interesting side of this movement is that it was unique for Turkey. Developing countries' stock markets were mild. Developed countries' stock markets were mild as well. And on the agenda of Turkey was a constitutional amendment package which would crystallize the social polarization and which in fact seemed to be designed for this purpose. It appeared that there is no apparent reason to justify the rise in stocks market. The comments delivered in news channels therefore seemed as commentators were also surprised. To be honest, I thin