Do not banks’ shareholders have any fault in this?
Güven Sak, PhD
22 August 2009
Federal Reserve (FED) brings together twelve regional central banks. Among these, Kansas City Central Bank has been organizing a professional conference in Jackson Hole for thirty one years and convenes economists and central bank officials. Last week, various people from FED Chairman Bernanke to European Central Bank Chairman Trichet started to convene in this holiday resort in the Wyoming province. Kansas City Central Bank Chairman Hoenig, inaugurating the meeting, mainly put the question at the title on the agenda: Are not banks' shareholders among the convicts of the economic crisis that led to extensive use of the financial resources of taxpayers? And did not they have to pay a price for this? This is the topic we will deal with this weekend. If you are interested; please proceed.
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Eximbank is more important than the Central Bank
Güven Sak, PhD
20 August 2009
Central Bank of Republic of Turkey (CBRT) goes on to cut interest rates. But, does the Bank do this because things are on track? No, it does not. On the contrary, CBRT goes on to cut interest rates because things are not on track considering the real sector. What else would it do? It has only one instrument; so it uses that instruments whether or not it works. We believe that, for the going period, Eximbank (Export Credit Bank of Turkey) is more important than the CBRT in terms of the recent period growth of the real sector. Or, to put it differently, we believe that the CBRT is not as important as Eximbank. Let us show why.
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Problem in the quality of education
Fatih Özatay, PhD
17 August 2009
Economic theory says that enhancing the skills and knowledge of people to a higher level is the most important factor that will improve the level of per capita income and economic growth. Of course this cannot be accomplished overnight. Long term is in question. Let us leave aside the foundation universities that do not rank at top in quality listing and take a look at those at top. You possibly read about this issue on the education pages of daily papers. Let us take the minimum score that will enable admission with scholarship to any department in any of the top ranking foundation universities and the minimum score for admission without scholarship. You will see that there is a huge difference. There might be a couple of departments for which this does not apply, but is widely valid. T
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False interpretation
Fatih Özatay, PhD
16 August 2009
Probably the depth and duration of the latest crisis have depressed us so much that we have gone back by at least 15 years in the interpretation of simple production increases. We started to talk about the rise in industrial production in comparison to the month before to show that production has been increasing. For instance, it is announced that in July industrial production increased by 7.3 percent. This does not have any meaning at all. In fact, when compared to the year before, production in July was 9.7 percent lower.
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Have you visited Sankopark?
Güven Sak, PhD
15 August 2009
Have you recently gone to Gaziantep? And if you have, have you also visited Sankopark? I have. Sankopark seemed to me as a sign that the efforts to spread industrial activities around Anatolia are paying. It stood up as an indicator that Turgut Ozal reforms have taken root around the region. When I saw Sankopark, I understood once more the Smart Industry Project of the Chamber of Industry of Gaziantep.
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Rate of contraction decreased
Fatih Özatay, PhD
13 August 2009
In June fall in industrial production has lost pace and realized at 9.7 percent making us happy. Industrial production has been falling since 2008 August; of course compared to the same period in the previous year.
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Chickens have come home to roost
Güven Sak, PhD
13 August 2009
We are going through complicated times. Interesting things happen. In June, we say "Oh! Thank God the economy contracted only by 10 percent" and cheer up. On the one hand, "Masallah! You are doing very very well" propaganda goes around whereas on the other hand prevails a "we are ruined, we are done" climate. In such an environment, it is of importance to decide what to do. However, the information pollution prevents not only making a decision but even thinking on one. Therefore it becomes impossible to set priorities. Today, let us examine why protecting export markets is the priority for Turkey and reach a conclusion: Turkey needs an intensive export incentive system. What matters today is protecting the already existent. It is not time to leap forward. Let us see why.
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Being not ready for rainy days
Fatih Özatay, PhD
12 August 2009
September 12 coup led to a severe destruction in universities. Among the most destructed was Ankara University Faculty of Political Sciences (Mulkiye). Yilmaz Akyuz, a professor in Mulkiye back then unfortunately found himself out of the university in his most productive age like numerous other professors. Maybe, this was good for him, because he went to Geneva as chief economist of UNCTAD. However, Turkey lost one of the most important macroeconomist - in my consideration the most important.
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Concepts are not the same anymore
Güven Sak, PhD
11 August 2009
Last week we started to emphasize that in the going period of economic depression, the meaning of concepts is not the same anymore. In the past, we lived in a world we know. The meaning of a fall in inflation was definite. We would know what happens if interest rates go down. Even appreciation of Turkish lira had a specific meaning about stability. Each tool and/or indicator has a meaning within a generally accepted conceptual framework. But it was yesterday; and now it ended.
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Is the fall in interest rates a good sign?
Fatih Özatay, PhD
09 August 2009
In my last article, I argued that the reason behind appreciation trend of Turkish lira or the downward trend in interest rates is the absence of a solid economic policy framework. I said this was an outcome of the economic contraction and the rising unemployment mainly, and of the recently rising global risk appetite to a certain extent.
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