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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. [More]
    Is it necessary to sign an agreement with the IMF?
    Fatih Özatay, PhD 14 June 2009
    Current state of affairs in Latvia proposes solid grounds for those who consider not signing an agreement with the IMF and who recommend us not to sign an agreement with the IMF. Foreign currency denominated debts of banking, corporate and household sectors have reached unprecedented levels. Public budget performs badly. Latvian Treasury tried to sell t-bills to finance budget deficit last week; but failed. The auction did not receive sufficient demand. The country implements fixed exchange rate regime; Latvian currency unit lat is pegged to euro and is allowed to float within a very narrow interval (minus-plus 1 percent). These circumstances put lat under the pressure of a significant devaluation. The interesting thing is; Latvia has a stand-by agreement with the IMF. That is, all of thes [More]
    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] [More]
    High interest rate policy of the USA
    Fatih Özatay, PhD 11 June 2009
    Some developments about the Treasury bill market of the USA and the news about the said market has become quite interesting lately. Interest rate of long term USA bills has risen significantly in the week before. This rise was also addressed by FED President Bernanke who pointed out the relationship between the rise and the unsustainability of the current fiscal policy and made a speech on the importance of fiscal discipline. Yesterday, prominent economics news channels announced this: T-bill tender hold by the US Treasury received a considerable demand. This way, US Treasury easily made borrowing. [More]
    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 [More]
    Which is the keystone?
    Güven Sak, PhD 09 June 2009
    In the past, news about the Amazon region was seen in dailies. The news that always reflected the usual Western arrogance read "There is a new tribe in the Amazon which is no civilized at all and which does not know what goes on in the external world".  Have you ever wondered how such a life would be? But there is no need to wonder, we all have already been living such a life. Indeed, this is valid at least since 2006. What would an alien observer group evaluating the life on out blue planet would think when it visited Turkey after wondering around a little bit? They would need to carry out comprehensive studies on our social organization. Don't you think that we are gradually turning into a living form "who does not have time to service as the time is spent to win the elections to service [More]
    While everyone is moving in the right direction…
    Fatih Özatay, PhD 08 June 2009
    FED President Bernanke's speech delivered in the House of Representatives budget committee was quite interesting. His speech was addressed in Turkey under the framework of the answer for the question 'Did we hit the trough?' However, the speech involved findings beyond that. [More]
    Latest developments
    Fatih Özatay, PhD 07 June 2009
    Table 1: Automobile production and import levels (units)   [More]
    Let’s see how the dance will be
    Güven Sak, PhD 06 June 2009
    Those visiting the United States of America (USA) nowadays see a uniform sign next to roads being built, at the most prominent point of the bridges that are repaired and at the location of any activity carried out with public funds. The sign, with big font sizes, says "funded by the funds transferred via the Recovery and Reinvestment Act introduced in the context of the program to tackle the crisis". Why do they do so? First of all, to thrust under the eyes of the public masses that something is done. Second, to enable everyone to regain their self-confidence and excitement. Third, of course to support domestic demand and limit the damage caused by the crisis with fiscal expansion. "If there is crisis, there is remedy" campaign launched in Turkey must be evaluated exactly within this frame [More]
    So, how do Turkish companies perform?
    Güven Sak, PhD 04 June 2009
    World Bank made a statement about Latin America on June 2nd. The statement reads: Latin America is performing well compared to previous crises. The region is foreseen to contract by 0.9 percent in 2009. Economic bounce back and recovery in Latin America will follow those in the developed countries. Unlike in the previous crisis, Latin America will easily follow the developed countries in the occurrence of the positive trend. This is the case, because Latin America, before the emergence of the crisis, saved when things were on track, and then started to spend the amounts saved in the right direction under the scope of economic support packages. This is what we get from the statement of the World Bank. Now, let us assess the situation for Turkey along with this statement and go on further wi [More]