Turkey is no Egypt
Güven Sak, PhD
25 August 2018
Just before Turkey’s holiday week, the Emir of Qatar was in Ankara for a short visit. The news eagerly reported that at the hour of Turkey’s need, the Emir pledged to invest $15 billion into the Turkish economy. Turkey’s international investors might have been happy to hear this, but I am deeply saddened that it has come to this. It gives the impression that Turkey is like Egypt, a country that is frivolous with its money and, then travels around the neighborhood, hat in hand. But why Turkey now?
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With a friend like Trump, who needs enemies
Güven Sak, PhD
18 August 2018
There are two types of countries in the world. Countries that have current account surpluses and countries that have current account deficits. The former lend money to the latter. Both and Turkey and the States are in the second category. But Turkey has periodic currency crises, as happened in 2001 and is happening again this week, while the US looks safe. Much of it is because Turks are not able to borrow money in Turkish liras, while the Americans borrow in their own currency. When Turks borrow in dollars and their currency devalues, they have to pay more. This should not be news to anyone. The advantages of having the global reserve currency is referred to as “exorbitant privilege,” a term first used by the French in the 1960s, at the dawn of the Bretton Woods system.
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Turkey is part of Europe
Güven Sak, PhD
11 August 2018
What surprised me most this week was not the depreciation of the Turkish lira against the US dollar. That was to be expected. What surprised me was the simultaneous depreciation of the Euro against the US dollar. The Euro-USD rate was at 1.16 on Thursday, and declined to 1.14 on Friday. Why did this happen?
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Eat that frog now
Güven Sak, PhD
04 August 2018
Mark Twain once said “if it's your job to eat a frog, it's best to do it first thing in the morning.” Why? Because then you can go through the day knowing that the worst thing that can possibly happen to you has already in the past. It’s a perfect way to start a new era. That’s the wisdom to follow in dealing with Turkey’s mounting economic problems. Turkey has procrastinated enough in a rapidly changing world. Now is the time to stop delaying any further.
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