How does risk appetite rise in the world we know?
Güven Sak, PhD
09 July 2009
If Adam Smith made a short visit to the world; wouldn't he think that the prophecy the stated around two hundred years ago was coming true? Yes, he would. What was that he said? He has foreseen that West's advance through the East which seems to be the misfortune of the east will result in the East's strengthening. The outcome would be the equalization of powers. Is this exactly what has been happening nowadays? Is it a head becomes foot, foot becomes head situation? Oh my God, or is the world we know coming to an end? Maybe this must be the question of the day: How does risk appetite rise in the world we know?
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Why are they more pessimistic now?
Güven Sak, PhD
07 July 2009
Is it because the wind now blows more rapidly? Or is it because suddenly clouds coated the sky? Is it because the news started to be worse? Or is it because analysts were suddenly surged up with pessimism? Or is it because "the steps taken proved unsuccessful"? We do not know yet. But one thing is apparent: the weather is turning around for the last month. More and more adverse news has been covering the air. The green shoot talks of yesterday that "pretended everything will suddenly be all right tomorrow" is replaced with a more pessimistic climate. Of course this does not have a direct relation with Turkey yet. However, it anyhow is related because there are things to do. Today let us make an assessment on the current state of affairs.
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Can we focus on our work if we hold the elections right away?
Güven Sak, PhD
02 July 2009
We put our signature under another global "success" story. Turkey's economy has broken the world record of economic contraction in the first quarter of 2009. Contraction is a problem all around the world in this period; however no one has experienced such a significant contraction. Besides, there are economies that without a shame experienced growth in the first quarter of the year. So, why did Turkey encounter such a result? The relative stability ensured by the program implemented after the 2001 crisis coupled with the Customs Union agreement rapidly turned Turkey into an integrated part of the global economy. Now, however, we seriously feel the contraction. We wanted to be and become world citizens; and now we are paying the penalty. Doubtlessly, the rapid contraction in the European ma
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Does it become hard to enable global growth it the bride shortage in China is not solved?
Güven Sak, PhD
27 June 2009
This week 2009 Global Development Finance report of the World Bank was discussed at TEPAV. Here you are three conclusions to be drawn from the meeting: First, 2010 will be better than 2009. Second, the recovery to take place in 2010 will not offset the damage created over 2009. Third, the source of global growth will be domestic markets; in particular Chinese and American domestic markets. If you like, let us switch to a more amusing topic. Source of growth will be domestic markets, and to this end consumers of countries with large domestic markets and in particular Chinese consumers will have to consume more and save less. However, a study published in June 2009 expressed that high domestic savings rate of China stemmed from a highly structural factor. High savings rate of China was clo
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Why is it necessary to be on the safe side in 2010?
Güven Sak, PhD
25 June 2009
This week we have been touching upon the question "How will 2010 be in global terms?" We have first addressed the issue with some information took place at Reuters: the IMF has revised upward the global growth estimate for 2010. This was the fifth revision by the IMF about growth rate in 2010. Estimates have been revised three times since April 2008, all downward. Now, for the first time the estimate was revised upward. A while ago, IMF expected 1.89 percent growth for 2010. Now, it says 2.4 percent growth is expected. In the meanwhile, the World Bank announced that they expect 2 percent growth in 2010 (By the way, the World Bank revised 2009 growth estimate for Turkey to 5.5 contraction. Remember that the estimate announced by TEPAV in March 2009 was also 5.5 percent contraction.). Now,
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How will 2010 be?
Güven Sak, PhD
23 June 2009
People go on not liking the economists. Admit that no one knows how we will exit from this phase. And we naturally do not like the economists who somehow cannot tell us the exit. But nowadays, there spread glimmers of hope. It is wise to evaluate this issue on a solid basis. What do people want to say by cherishing hope for 2010? A couple days ago, IMF's 2010 growth estimation to be announced at the G-8 meeting took place on Reuters. According to the estimation, world's national income will go up by 2.4 percent in 2010. Let's see what this number means and make an evaluation about 2010.
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What if surveys steer the economic administration?
Güven Sak, PhD
20 June 2009
What do you think? What happens if public opinion surveys would be indicative about how the economy will be administered? According to the article Professor Christina Romer, Chair of the US Council of Economic Advisers, wrote in the English the Economist this week, bad things happen. Furthermore, as Romer suggests, this was already observed in the past, in 1937's America. And the results were bad. Unemployment, which began to fall down as of 1932, go back to rise again due to the introduction of contractionary policy, which was "wrong". Recovery was pushed back to the end of Second World War. According to Professor Paul Krugman, on the other hand, there is no need to go back to 1930s: Check the Japan of 1996 and the expansion of the depression period because of "wrong" decisions. But, what
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Made up public budget devours the only fiscal rule
Güven Sak, PhD
16 June 2009
It is just like a joke; the issue occurs as in the Hodja Nasreddin story. We are referring to the rapid deterioration in the 2009 budget and saying "there is a need for a fiscal rule that will state how the existing deficits will be closed"; and look what we heard: the government has sent a law draft to the Great National Assembly (GNA) to violate the only fiscal rule in effect. As per the 31st article of the law also known as "mixture law", it is at issue to rise the "borrowing limit" introduced under the No 4749 Law on Public Finance and Debt Management up to five times. The draft is now examined by the CNA Budget Planning Commission and will be submitted to the General Assembly next. In the meanwhile, let us tell you what we think: This approach is not favourable. Let us see why.
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Pakistan is a normal but an unlucky country
Güven Sak, PhD
13 June 2009
Peshawar Continental Hotel in Pakistan Peshawar was next to the Castle Bala Hisar close to the Khyber Pass. Pakistan was again top topic at the latest news. Peshawar Continental was attacked with a suicide bomb. According to latest news, ten people were killed and over seventy people were injured. And the hotel became wreckage. However, the Swat Valley close to Peshawar was used to be called as the Switzerland of the region and remembered with its national beauty. Now, national beauty and tourism are not mentioned at all. Domestic tourism has dropped by 85 percent; no need to mention foreign tourists. Currently the hotels and the clubs at the region operate with zero reservations.[i]
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Credit guarantee mechanism is necessary but not sufficient alone
Güven Sak, PhD
11 June 2009
We can sure discuss whether the decision was in time or late. However, we must not be mesmerized by the passion of this discussion. At this point the only thing that matters is that a series of measures have been introduced. It is a better thing that a series of measures to tackle the crisis are introduced compared to the case where no measure is introduced. Furthermore, the portrait drawn by Ali Babacan, State Minister in Charge of Economy, in speeches he delivered since the last weekend is highly favorable. It creates a nice difference. It is good to discuss collectively a problem felt all around the country clearly and with courage. Today, let us address the measures that are being introduced. And let us begin with the credit guarantee mechanism, which in our consideration must rank the
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