What the Greek crisis has to make us understand is this: the Greek issue got out of control because Angela Merkel, the Chancellor of Germany, did not act fast enough because of the elections in North Ren-the state of Westphalia. Since the politics has made the behaviors of electors in a state of Germany its main priority, financial markets all around the globe have started to fluctuate. An incident that could have been overcome with a low budget and limited inside regional borders, spread to the whole continent just because political remarks delayed the interventions and thus, the precautions that should have been taken could not have been. Are you aware of the lesson that should be learned from this? From this point on, politics is going to be considered of primary importance for economics. Politics, because it entails the potential of increasing the obscurities against financial decision-makers, appears as if it is going to become of more and more important for the economy in the upcoming period. Let's have a look at the issue.

The issue is most definitely not related to politics becoming important to economy while just yesterday it was not. The issue is related to decision-makers in financial markets suddenly noticing the significance of politics. There are two main reasons for this: the first one is, with the crisis in 2008, the public sector has restarted to play an important role in the process of making financial decisions. This is exactly what Muhammed El Arian, who is among the executives of PIMCO, which runs one of the world's biggest stock portfolio, underlined in one of his letters that he recently sent to his investors. The world is trying to define a new concept of 'normal', leaving the old 'normal' behind. This 'new' normal points to a new period in which the decisions that the public and the public sector make will be important in means of the course of economy. Whether the public sector will be able to make the decisions that it is supposed to make on time or do its part, is of more importance today than it was yesterday. The fact that Paulson, the former Treasury Secretary of the United States, could not have made on time the decision that he was supposed to make on the matter of Lehman Brothers, and the fact that he only did this for personal political reasons, in order not to be recalled as 'Mr. Bailout', is still on people's minds. In this period that we are in, the decisions of the public sector and the government, due to the nature of the precautions that are needed to be taken, are more important than they used to be. This is the first point.

The second point is the fact that in a lot of countries, the ratio of Government Debt Securities (GDS) portfolios to the national income has risen due to the decisions made in the last crisis. This rise is the second reason why the sensibility in the markets towards public decisions and public policies has increased. Even the GDS portfolios that had not risen during the intervention in the 2008 crisis have dramatically gone up for this reason. The interest rates will go up in general. The steps that either need to be or must not be taken to keep the public debt stock on its feet are now much more visible to everyone. This is the second point.

The third point has already been mentioned by Nesim Talip, the author of the book 'Black Swan (Kara Kuğu)'. According to this, the more complicated the system becomes, the harder it gets to guess what is going to happen next. See, the perception of rising political risk brings out one more decision-making parity that needs to be considered. Decision-making does not get any easier as the number of parities increase.

Mr. Kılıçdaroğlu's taking over the CHP administration has put the argument of carrying out the election on time, more upfront. It seems the presence of Mr. Kılıçdaroğlu has more significance than what Distinguished Prime Minister says on this matter. Now let's see, referendum in 2010, general elections in 2011, presidential elections in 2012, and local elections in 2013. In a period where the perception of political risk has risen throughout the world, Turkey, for four years, is going to be in an environment in which there is an increasing political obscurity. It is no longer only the ruling party that has to take steps to manage the political risk. It is beneficial that the fiscal rule law draft is shaped and opened to discussion immediately. Mr. Kılıçdaroğlu and Mr. Bahçeli should make their parties' positions on economic matters clearly visible as soon as possible. Probably what our government needs to understand is this: A new period of exhaustion, in which the decisions need to be taken more quickly, is commencing.

Regards

This commentary was published in Referans daily on 25.05.2010