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    Exchange rate and exports in the last two crises
    Fatih Özatay, PhD 17 May 2010
    Many economists argue that the problems facing Greece can no longer be solved via fiscal discipline and foreign credits. The underlying justification of such views is that even if the announced plan is implemented, Greece's economy will contract in 2010 and therefore the ratio of the debt to the national income will increase further. Therefore, economists argue that the debt of Greece will eventually be restructured. [More]
    Exchange rate and GDP in the last two crises
    Fatih Özatay, PhD 16 May 2010
    I am going back to the "in the last two crises" commentary series. Today's topic is the exchange rate movements. I want to analyze how much the Turkish lira depreciated in real terms and to what extent this was translated into export gains and therefore GDP growth. [More]
    Why couldn’t Ivan Prado enter Israel?
    Güven Sak, PhD 15 May 2010
    This was featured on the Israeli Haaretz newspaper, last week. According to this, Spanish Ivan Prado was intervened at the Ben Gurion Airport and was denied entry Israel. The news said Ivan Prado was a famous Spanish clown and he did not go there to do sightseeing in Israel. What he wanted to do was to go to Ramallah, the capital of Palestine. His intention was to organize an International Clowns Conference. He was going to see an authorized person for this intention. There were various comments on the matter on the internet: On the one hand there were the ones who found it tragic that a clown was not let inside Israel and Ramallah while there were already so many of them around, and the ones who tried to make people notice Prado's anti-Israeli opinions, on the other. Everything I could fi [More]
    Dilemma of the President of ECB
    Fatih Özatay, PhD 13 May 2010
    Would you like to be in the shoes of the President of the European Central Bank (ECB) Mr. Trichet? I believe the answer of those who follow the recent developments would be no. Do you know now many times he retracted from a statement he made and even had to do the exact opposite during the crisis?  I do not know exactly, but it certainly is a lot. [More]
    The timing of the fiscal rule is quite correct
    Güven Sak, PhD 13 May 2010
    A spectre is haunting Europe: the spectre of the debt crisis. Despite the trillion dollar bail-out package which is not known how to make operational and the functions of which have still not been understood, there is no change in the Western front. The only operational result of the trillion dollar bail out package is the fact that the European Central Bank has started to make some moves in order to buy the Greek government debt securities (GDS) in secondary markets. This also counts, but there still hasn't been a structural attempt towards the public finances of problematic countries. Under these circumstances, the 'Fiscal Rule Law' draft that State Minister and Deputy Prime Minister Ali Babacan explained via a press meeting the other day is a right step taken to limit the effects of the [More]
    Is this the first step of the Greece’s ‘Brady Plan’?
    Güven Sak, PhD 11 May 2010
    A serious step is eventually taken to prevent the crisis in Greece to spread all around the Eurozone. The first package of €110 billion was not enough. Now a second package of €750 billion is provided; €440 billion from the European Union member countries, €60 billion from the Commission, and €259 billion from the IMF. As a result, a liquidity package of almost $1 trillion, even bigger that the US bailout plan, was announced. So what happened? Is the Greek crisis solved now? Is not Portugal in danger anymore? Did the problems of Spain disappear? No; all problems still exist. But they are not reflected in the magnifying mirror now. With this package European Union saved time for pulling the Eurozone together. Measures that will prevent the transmission of the crisis rapidly all around the r [More]
    Great EU 'leaders'
    Fatih Özatay, PhD 10 May 2010
    European Union (EU) is suffering from a severe leadership problem. They are doing everything contained in the 'not to do list for a financial crisis'. They still could not put into practice the economic program which will relieve a member country with high budget deficit and debt. First they announced in public that they are against bailout plan arguing that it will set a bad example for countries which lived within their means. They said that the EU legislations do not allow bailout operations. On the other hand they also rejected the idea of one EU member country signing an agreement with the IMF. [More]
    Which EU?
    Fatih Özatay, PhD 09 May 2010
    For a while how I have been writing a series of commentaries with the theme 'in the last two crises'. I will continue with this series. But I am not sure what the 'last two' refer to anymore.  Are they the 2001 crisis and the global crisis as was used in the previous commentaries or are they the 'old' global crisis the 'new' global crisis? In fact, there probably is no old and new; they are most likely continuous. Thanks to the great and genius leaders of EU who did/could not make any decision for months and 'managed' to put the global system into trouble, we are now lucky to have the opportunity to chit-chat about this issue. [More]
    Contagion effect of the Greece crisis will not be similar with that of the previous crises
    Güven Sak, PhD 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 [More]
    Debt stock of Greece will grow further with the unlawful bailout package.
    Güven Sak, PhD 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. [More]