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The Erdogan family are big property developers in Turkey. And property developers hate high interest rates on financing... They also don't mind inflation, as it's easier to attract investors and buyers who are looking to convert their increasingly worthless currency into hard assets like property.
While Turkey may be experiencing the most severe degradation right now none of us should take this lightly as inflation is a real problem in many countries. I wish the people of Turkey better lives in the near future.
What you say is true but Turkey has had inflation problems for a few years before the pandemic, and that just worsened it to 11. Mind you I 100% that nobody should underestimate inflation at the moment.
Please stop with this nonsense OP, turkey people were voting for erdogan and his team of dumbasses for far too long. Let them harvest what they sow. Everybody good at bitching on central banks but noone points fingers at idiots playing god and giving their votes to imbeciles... smh
Man, I love how well you did your research. And - and I can't say this loud enough - I think it is FANTASTIC that you didn't catastrophize this topic. Your summary ending and reminder that this is a solvable situation was a call for calmness that needs to be put on the end of every news report these days.
This exact same situation has been happening in Argentina for a number of years now. The pandemic accelerated everything, the country is ahead of Turkey in its road to complete collapse. Its amazing how these populist leaders take the exact same measures, use the same propaganda, etc. Great video!!
Which is why as a low-income retiree traveller exploiter of opportunities for budget living will next visit Argentina! I suspect however that Turkey is a better deal for foreigners who are not carnivores.
if argentina and turkey are at the same situation, it means argentinean kids’ childhood are sadly stolen too. hoping for everbody in these kinds of situation to get better soon! love frok turkey
As a Turk, I can attest to the fact that everything said is 100% true. You have done and admirable job of summarizing all that is wrong with the Turkish economy and Turkey in general.
Turkum diye otuyon ama , ekonomiden anladigin yok, Turkiye nin ekonomik tarihinden haberin yok. Turkce de de dingdong diye sadece senin adin var. Kendine Turkum deyip otecegine, ilk once kendine bir Turk adi koy. Kendi ulkene laf atan, soven herkese kucak acma. Bu adamin dediklerinin sadece yarisi dogru ve bu bir taktiktir. Ilk once dogrulari soylemeye basla ondan sonra da attigin herseyi insanlar dogru zannetsin. Yani senin anladigin dilden soylersek " oldest trick in the book". Simdi As a TUrk (eger gercekten oyleysen ki, turk olan birisinin kendisine dingdong diyebilecek bir turk'e ilk defa burda rastliyon. Dingdong cugum umarim anlamisindir, hani as a turk diyon ya.
@@ldemiral Evet, ekonomi uzmani oldugun belagatindan da belli oluyor zaten. Birlesmis Milletler'e gore per capita GDP siralamasinda Turkiye 90. sirada. Memleket itin gotune girdi cikti, sen daha kimin borazanini otturuyorsun?
@@ldemiral knk senin kadar boş yorum yapanı görmedim. Nickinin yabancı olması değildir bir insanı Türk yapan. Ülkesi için endişelenmesidir. Şu an görüyorum ki sen hala uyuyor ve boş boş algılar yapıyorsun. Linç yememek için sil bence. Bu kadar boş olunmaz.
How much has the Turkish central bank increased the lira supply over the last 2-years? Here in the U.S. the Federal Reserve has increased the base currency supply by 40% over the last 2-years. The result is rapidly rising prices in the U.S.
I don't understand why Turks allow him to stay. He's a fucking dictator. He's the same as Xi and Putin. Exact same. Why do turks put up with this shit.
I'm a Zimbabwean trillionaire. I probably paid too much for the privilege of obtaining the bills on ebay, but it was an investment opportunity that I couldn't resist.
I had some i left out in my apartment, I thought it was cool to have big notes hanging around and someone actually stole them. I love dead currency, it may not be money but the stories they tell.
@@DJCannon5 I stole your currency. When I got home I realized it was Zimbabwean. I left 5 quadrillion dollars on my doorstep planning to throw it in the recycling. When I came back from inside to throw it out, someone had left another 500 trillion in Zim bucks. I took it to Starbucks and handed it over, they gladly accepted it and 6.78 USD in exchange for a macchiato.
The video explains and sums the current situation of Turkey's economy with enough and simple background information. It is so clear. Thanks for the video.
Wow, such an informative video of a country that gets little exposure, especially on a financial frontier. Found it fascinating. I appreciate the background info and political dynamics at play. Thanks for producing this!
Erran Zimmerman! Totally agree. Hopefully, they would recover from this as quickly as possible as it'd winter there and especially Syrian refugees would be the most effected.
turkey gets no coverage? have you ever seen the news these last 4 5 years? they are the only country who made ALL of their neighbours enemies and even pissed all the major powers.
Turkey is going down a little bit more everyday and as a Turkish i watch it in tears and stress . What the government is doing to our country is so cruel and it's so sad we still have people who support Erdoğan
I feel you I pray do you think there’s any chance we can save the lira anymore ? I’m pretty young and stressing I don’t understand the economy in turkey that much .I feel like that we’re gonna end up like Syria or Iraq no knock on those countries.
@@ishumaeruharaorda217 No. It should be left to qualified appointed professionals just like central bank governance or medicine. It's academically qualified work being left up to politically qualified people. Erdogans insane interest rate policies are a perfect case in point.
@@amorosogombe9650 Or just left to the market. With no intervention from central banks at all populations and markets have thrived for millennia. This is a failed experiment, so what do we still need them for?
I was deep in the Lira many years ago on the carry trade. I remember like yesterday when it blew up. It feels like this has just been a continuous disaster since like 2015.
Turkey's currency is so volatile at the moment. Its just rocketed upwards in value all of a sudden. Must be a really tough country to do business in at the moment.
That wasn't coincidence. We were Robbin-Hooded. They closed the market in the middle that selloff, then for a few hours we could only close orders, but not open any. Now we continually see large moves with virtually no volume, and then at other times massive volume spikes with little to no price movement. It's very tightly manipulated on a algorithmic level, and Turkey doesn't have the resources to do that on their own. My purely speculative guess would be the JP Morgan servers in New York, but that's just a guess.
@@RealShawnPate It is weird you use the term Robbin-Hooded. It seems you have some misconceptions about what happened there. They had a liquidity problem and buying stocks temporarily (two bussiness days) requires more liquidity from the company. This has nothing to do with what happened in Turkey.
I never thought I'd enjoy economic material like this. The evergrande stuff got me here because I like to stay up on current events as the effects echo around the world in our era. Now I enjoy trying to model what's occurring and trying to figure it all out. Thanks.
The situation he made us come to is really sad. Turkey didnt deserve this, he disgraced our country. What makes me angry is that elder turkish people are letting themselves being manipulated by him with his islamic image. I know a country needs an identity to hold its community together but they should realize he is abusing everything with islam to brainwash them. He is the sole reason why we are in this awful state, and people still believe that he is going to be the one who will fix it all.
Lets be honestly here. If the Turkish Lira would go down 0.1% for every Kurdish Civilian they've killed. Lira would be equivalent to Iranian Rial or if they were lucky, Iraqi Dinar
I think in the historical context, it would have been beneficial to point out what happened with the first Turkish Lira which thanks to insane levels of inflation became the least valuable currency from '99 to '04. They switched to the New Turkish Lira (YTL) in '05 with a conversion ratio of a million Lira to one YTL, effectively removing six zeros from their currency. This is not their first rodeo with high inflation and now it looks to me they're on their path to the third Turkish Lira in the next 10 years or so.
I remember a local radio show in Scotland had a phone-in competition called "Who wants to be a (Turkish) millionaire", maybe in the early 2000s. The top prize was, of course, a million lira, which was about £20 at the time.
It is not just happening in Turkey. There will be a meltdown of the entire world's currency, which will be followed by the rise of Antichrist and a world currency. This is all prophesied in the Bible. Now is the time to come to faith in Christ or be swept away for all eternity with Antichrist.
@@dsmhiggins67 You won't be in His presence for 10 seconds before you realize your blindness. What evidence would it take for you to believe? What would you need to see?
What a sad state of affairs for the Turkish people as a whole. As a North American I can’t relate to situation as nothing like this is going on in Canada (for now). However, is there anyone else here who is getting a very uneasy feeling about what is going on outside in the world right now? Feels like we just on the edge of a cliff some days!
You don't feel it but it is happening everywhere. Any low interest rate will debase the currency. Like frogs sitting in water slowly boiling. Canada is abundant with resources but it's leadership isn't much better than this guy when you separate out the policy vs the natural resources. As a Canadian
Just you wait. There are marxists in US government. Canada is no different.
2 года назад
Canada is a hell hole for a normal American. If you give a chance to an average Canadian to move to warmer and beautiful America Canada would be vacated in 24 hours. The only reason people stay in Canada is that America won't let them in. People migrate to Canada because it is easier to move to Canada and Canada looks good when you compare it to Syria or Bangladesh. I hope now you feel better.
Great content as usual. I have lots of Turkish colleagues and very good friends. I have been there many times. Never saw anything else than very friendly people, a great sense of hopitality, delicious food and amazing historical and natural sites. It makes me sad to see large part of the population suffering because of a stubborn president....
"Smoll huh? You want eat my bolls?" Said the massive chef behind the counter, it felt like a challenge on my manhood as the balls were huge but when in Istanbul... Not much to not enjoy about turkey other than the politics, I had mixed feelings about the failure of the coup as that was a completely normal thing to happen when a Turkish president overstepped the mark, looking back it seems it could have been better for the people if it had worked.
@@randomlygeneratedname7171 How long is he in power? He made most of the debt with his big ego, among which the dumbest expenses are a big costly palace (building and maintaining) and lately an extra redundant canal. You cannot spend someone else's money and then say "tired of slavery". The bad thing is that he is not alone, and even in denial he isn't alone,. My country also have ex-ministers claiming that they did not create the debt nah it was magically there when they were in power. And now 20% or more of my taxes are just repaying interest on that debt as it is not diminishing. Most countries in the west overspend and even China does, and then the people suffer. The Fed clearly overspent with massive inflation now, but at least they changed course. Erdogan not and he even fired the last critical voices.
Turkey is a pretty radicalized country right now, because of Erdogan. I am from India and it is the same story here, with radical hindutwa fanatics (coz of Modi).
Great video as always, Patrick! As an avid fan, I'd be happy to provide an on-the-ground perspective, should you ever need one. I'm sure you're already aware but yesterday we pushed the unorthodox monetary policy experiment even further. Banks will offer deposit accounts that compensate TL savers for any losses due to exchange rate fluctuations using funds from Turkey's treasury. It is, in effect, somewhat of a massive variable interest hike, but given our fiscal deficit, also somewhat of a ponzi scheme that'll probably lead to an inflationary death spiral with more money being printed to compensate savers for their losses. We had the USD/TRY rate fall 25% after Erdoğan revealed this plan in a press conference. Truly fascinating stuff, even if it is a bit morbid. Looking forward to hearing your thoughts on this in the near future!
Anybody remember Howard Stern's Who Wants to be a Turkish Millionaire? I think this was when Turkey's money was at the worst state as I believe a million Turkish Lira was only like 12 US Dollars or something ridiculous.
I really liked your analysis and the history you displayed. Since you did Turkey, you should do one about Greece from 2008, their political parties and the EU handling of the crisis
Hey Patrick, thanks for the video. It would be great to see coverage of Erdogan's recent gaurentee to lira depositors in Turkey's banks. He's basically offering a vanilla/domestic FX swaption. I'm puzzled about the implications. It seems like it would potentially contribute to inflationary pressures (if the swaption is executed & settled with new money), but at the same time, it would bolster confidence in the currency. My guess: there is an arbitrage-parity effect in place with this new policy--hence the sudden boost & surprising stability of the lira ex-post announcement--but I just can't put my finger on it ...
The increase in Turkey's CDS might be an indication of the final cost of this policy which, and I can't quite understand it right now, might be looking like the one that bankrupted Lebanon: guarantee an exchange rate, but, when the music stopped, only in banks, not in the ability to transfer foreign currencies out of the country or to obtain them in cash, meaning in fact that bank deposits in foreign currencies will be valued increasingly as if they really were in local currency. This happened in Lebanon because banks could not go bankrupt in a legal sense due to the size of the problem and it might happen in Turkey because the guarantee will be given by the State and not by banks. In the end, it will spell disaster
@@philippeyared2050 thanks for the reply. Yes, as you expanded upon, the famous 'Impossible Trinity' in action--that also ended up hurting Lebanon's coffers badly. I personally didn't see this as a fixed-rate regime, but I admit, I could be wrong! (there is certainly a payoff like a fixed-rate regime) It's like some sort of policy 'superposition' of fixed-rate regime and interest rate policy--if you'll excuse the analogy. Regardless, this is certainly an experiment & so very interesting! I do hope the best for the people of Turkey.
@@austinmoore2946 the analogy if any would be in an exchange rate guarantee / promise which can appear to work as long as the promised currency remains largely a promise (normal for a bank as a bank cannot pay all deposits at once but with a very powerful motive to liquidate a foreign currency deposit which is to get the actual foreign currency in your hands and so it can become the driver of a banking system collapse or insolvency). When you have 2 secs, it'd be great if you could explain your swaption analogy
@@philippeyared2050regarding the swap piece: It really isn't an analogy, Erdogan's policy (or at least my reading of the overview provided in the announcement) is offering equivalent "long USD swap-options" for lira depositors. That is, a financial option (potential) to settle on the differences in FX changes over a set period of time, where the forward rates for each currency in the swap are future-valued by the risk-free interest rates of those currencies (FVing is due to 'interest rate parity' to avoid arbitrage). Overall & importantly, the forward rate pricing for the swap (which determines whether the option has value at expiration) is bounded by arbitrage. So, with this swap-option overview, if we can safely approximate USD @ 0% (risk free), then a USD/Lira swap-option only has value to exercise for a long USD position when the lira has depreciated beyond Turkey's interest rate over the term of the swap. As you may have noted, these are precisely the terms Erdogan set out! Ha! If you are interested, there is a pricing section on FX swaps in Wikipedia with the arbitrage conditions explained further.
hey Patrick, great video and I've shared it with multiple i know. i feel like you did a great job of describing the situation in turkey without getting too politically entrenched (i am a turkish-american and an fervent opponent to erdogan). However, I wanted to ask you about your one comment on 10:07 which caught me a bit off guard. you stated erdogan's policy of never raising interest rates is rooted in islamic economics and marxism? for sure there seems to be an "islamic" element to his opposition to interest or "riba" (although one can't help feel that's just a convenient cover-up for other hidden economic convictions and motivations. if his motivation is islamic, why not ban "riba" altogether, an action which has never even been teased as a possiblity). the part I really didn't get was the marxist part. erdogan, whether you reference his more islamic roots, or his slightly more "secular" statesman profile, has never had any marxist inclinations at all. in fact, as im sure you're fully aware, erdogan's party, akp, has fully embraced neo-liberal policies from day one. their economic policy has almost exclusively been about inviting foreign capital into the nation. furthermore, his conservative right-wing background and base see communism as nothing but militant atheism designed to sow chaos. much respect
Yeah, Marxism does not prescribe any kind of commentary on Monetary Policy AFAIK. I was hoping for an explanation but he seems to be using it like it is a catch-all term for bad economic policy.
@@g3ndim Classical Marxism doesn't say things on many issues. I think it mostly has to say things about capital ownership. I am not sure if "Communist Economics" is a thing lol. There's a diverse and broad understandings on many issues, including monetary policy.
thanks for the summary. crazy that you cant find an expert to talk about it from inside the country. i wonder how much we dont know about thats kept inside the country. also thank you to all the turkish citizens replying to this video. its good to hear your opinion and your reaction to this video. hope the situation gets better over there. i cant imagine what it feels like to live through this
Feels like hell, to be really honest. I have been working as a translator for 5 years now and seeing my salary decreasing day by day is really backbreaking. Young people are looking for ways to get out of the country but at this point our money is so valueless as against dollar/euro/pound that we are essentially stuck in this hell. Memes are getting funnier though, as it is the only way of expressing our frustrations.
@@aylaktavsan true that. Im now calculating my scholarships from italy trying to figure out if i can survive without my parents' help in college cuz the rent price of a cheap af dorm in italy is about 2 months of minimum wage salary in turkey.
It sucks for the people who are affected, but it'll be a great experiment to see if growth can outrun inflation. All other strategies seem to fail and usually end up with the country losing its own currency (like Zimbabwe).
Wait a minute! Patrick releases a video about Turkey and within hours the government announces a rescue plan and the Lira rallys hugely?! Patrick Boyle, influential indeed!
I went to Turkey in 2009 and 2019. Beautiful scenery, nice food, wonderful people! Visible change from personal observation: 1. More apartments ( house bubble ) 2. More National flags hanging out (nationalism) 3. More mosques ( away from secularism). Wish Turkey all the best!
Hi. i am a Turkish citizen. Most of the comments in this video are true, especially about Erdogan's Alice in Wonderland dream fantasy economics theories. There are minor errors, like cryptocurrencies being banned or actual inflation being %40 (it's more than %100) etc... And one big issue of 5 million Syrian immigrants and a couple millions of other nations being taken care of by Turkish people is never mentioned. At the end of the day, all of the problems are solvable i think but for the men who want them to be solved. if Turkish people insist selecting Erdogan again and again like idiots, they will lose everything for sure. Well, let's wait and see what happens next...
Erdogan has a choice to raise interest rates slow economy and then take loan from IMF? Do you think that's better solution than now??? What is your suggestion for new president???
@@taterkaze9428 yes, Turkey receives payments from the EU budget as pre-accession support, currently 4.5 billion allocated for the 2014-2020 period (about 740 million Euros per year). But maybe Erdogan is spending it on his war? :D
so turkey is part of NATO and being democratic country is a requirement to join NATO but China isn't a democratic country but in the mean time people in turkey are afraid to interview about their economy with foreign guy but in China they can interview ?? that's odd
This is brilliant!!! I would happily watch and share an economic series where Patrick goes throughout the world and explains the current and historical state of their economy and markets.
I wouldn't consider the 2016 "coup attempt" to ever have happened before we can get independent research into the matter. It's just too perfect for Erdogan to get an excuse to grab more power.
Excellent video, there are however a few other factors at play in Turkey. Firstly, I must comment on the official rate of inflation, it's a nonsense. It's actually running at something in excess of 80%, with prices rising on a daily basis, in fact there are those here that believe it to be more in the region of 100%. Another major problem here is the massive levels of personal debt. When Mr. Erdogan was elected, he pulled the oldest trick in the political handbook, the deregulation of the credit market. A smoke and mirrors exercise, the filling of pockets with money pulled out of the future. Turkey was previously a relatively cautious, conservative, debt free nation. The Turks, unaccustomed to the wicked ways of the west, were like children let loose in a candy store. They greedily gorged themselves on cheap, readily available credit like there was no tomorrow. That tomorrow has now arrived and the chickens are coming home to roost. The middle class aspirational dream has now turned into a complete enslavement nightmare. Further add to the mix a lethal cocktail of cronyism, and fractional reserve banking, and the picture is complete. Who knows if there is even enough money in the system should things deteriorate further. I'm afraid to say, in my opinion, all it's going to take is one run on a major bank, and this house of cards could come crashing down.
@@RealShawnPate It's probably been spirited away to Switzerland. Turkey has form when it comes to fingers in the till. For example, Boris Johnson, the entire Johnson family fortune was founded on money filched from the Ottoman treasury by their ancestor, Ali Kemal.
Well in that case Turks weren't really conservative, were they? :) If they were conservative with their finances, an abundance of cheap credit would not really affect them.
Hi Patrick. Thanks for this interesting video. Would you consider doing an analysis of South Africa's economy? Another interesting emerging market case study.
As much as I enjoy the thorough and very clear analysis (I can follow most of it even as a complete economics newbie), I would love to see Patrick's hour-long meme-filled tea rant.
3 years ago I flew into Turkey on a whim. I was gobsmacked by the modern massive airport , the fancy new high rises and the beautifully landscaped highway into the city. All I knew before of Turkey was a dusty Mideast country poorly depicted by American media. Then I noticed one could see through the empty skyscrapers. Hmmm? Nonetheless, I would like to go back.
Unfortunately, there is a lot of misinformation and lack of information about Turkey. Very undermarketed, truly a gem for any visitors, all around: food, people, geography, history, activities, shopping...
@@belisdemirci the EU doesnt just block based in emotions for sanctions real procedures have to be gone trough with evidence and backed up by alot of people in the EU. Its not like one person in EU just wakes up and sanction some country because of emotion of because he or she doesnt like Turkey. When the EU does something there has to be real factual good reasons for it.
@@belisdemirci you are delusional, you are blaming Greeks and Cypriots (both of which are EU members) for Turkey's failure? Get real. Peace and good luck. You'll need both to recover.
An ignorant leader, leads ignorance with his ignorant followers. It always ends up like this in any country in the world if you let the power be in one hand. Very well done video Patrick. Thank you.
... wait a moment, I got stuck at the 1 minute 20 part... Did he just say that he was able to talk to people on the ground in Communist China about the economic situation around Evergrande, but he found it impossible to talk to economists in Turkey about what is going on economically... because they are afraid to have a straight talk about it ?! WOW ! Good Job Sultan Erdogan & CO. .... wow.
Turkey is well on its way of becoming an absolutist neo-Sultanate. Which means that the worse the news from Turkey are, the better is for the countries that neighbour it, and especially for those located Westwards of Bosphorus -- Greece and Bulgaria (both are amongst Turkey's oldest and most pronounced enemies, historically).
@@stanislavstoimenov1729 Indeed its looking pretty grim for Turkey, from a freedom loving point of view - and so from all points of view in modern world. But reality is his or my comparison to China is still a bit misleading . The truth is people on the ground in China are allowed to talk about it because they dont really know anything that the communist party is doing in the background anyway.... The Chinese Communist Party always says something publicly and then does whatever it wants hidden from anyone's view. And anyone that has the insider information of what is going on will never say anything for 2 reasons, he is a CCP member, and if somehow that wasnt enough he doesnt want to be disappeared... Either way Turkey is not far behind. P.s. Wouldnt be too surprised if Erdogan attempted some day to make Turkey a nuclear power, since it follows in the footsteps of China, not caring how many enemies they have and still make. Sometimes it seems similar the way Turkey and China treat their neighbors ...
Journalists, economists, and even Turkish youtube personalities are afraid to talk. This is why I don't want Erdogan to die from natural causes or any other way. I want him to lose the elections and then get investigated and deal with karma. He's destroyed so many lives.
@@QUINTUSMAXIMUS Erdogan is not losing elections again. Ever. That's like saying that Putin, or better yet that one North Korean cretin-in-chief, is about to lose elections. It is not even a theoretical possibility, in my mind. Then again, I could be wrong. I have been wrong before...
@@L2Xenta The largest implication of Turkey's "new course" geostrategically is that Erdogan has out-right denounced "the American way" -- i.e. the open society functioning in a market system, with all political, societal and civic freedoms AND responsibilities that implies -- by adopting "the Chinese path" (a one party dictatorship). Which means that he singlehandedly erased the efforts of many generations of Turks -- the ones who believed in the Kemalist dream of a Westernized, free and prosperous Turkey. As long as Turkey remains outside of Pax Americana, and as long as the Western dream that until recently Turkey shared remains replaced by Erdogan's Islamist lunacy, Turkey's future is going to be... truly grim and medieval. The neighbouring countries ought to be growing VERY nervous right about now.
@@thesoundinyourhead1782 Let them be. Everyone gets the government they deserve. Long live Erdogan. He is just as impactful on Turkey as communism was on Eastern Europe.
@@asafnisan Thank You for your thoughts... Myself I probably would not invest in Turkish Property or Real Estate at rhe cost, maybe Istanbul??? However I cannot help but think that when the powers that be in Turkey run out of money, then obviously they will look at where they can take it from ? The small foreign people who have invested at the coast ??? Just a thought... Do you think that this could be possible?
@@markdowns9607 Well I don't think that they will go that far and confiscate foreigner's assets. Moreover, elections will be held soon, it's likely that the current political party will lose. The only risk I see would be the inflation of the housing bubble with no end in sight. As a side note, it's said that when locals run out of money, foreigners come and keep investing in the turkish housing market and further perpetuate the growing bubble. We can't know for sure, but it sounds like a plausible theory.
@@asafnisan thank you again Asaf... What you say on this one makes a sense. For the Turkish people there I hope the foreigners bring jobs rather than money... The only time you truly know the value of money is when you have had to work hard for it yourself. If money is given away to a person it is easy money and the person who receives the easy money will loose it just as easily. (One of my life stories/ observations)
And you thank, as a Turk, to a charlatan who tries every single trick to belittle and humiliate YOUR OWN country to the world ! Have some pride, have some honour! Your country could, indeed have some issues but shouldn't you keep its good and/or bad internal affairs inside, try to resolve nationally only and defend it against ill-intented clowns like this?? You should judge your soul my friend, you should ask WHO you are supporting by thanking this biased so called economist!
Agla agla. Bide Atatürkcü olacaksiniz. Atatürk zamaninda herkesten hersey canini istemisti. Sen ve senin gibiler 3 kürüş için ağlıyorsunuz. İdam sizin gibilere şart.
@@Dawizard1985 Exactly! And the person to whom he cries and complains is the one who actually wants destruction to HIM and HIS country! This is disgrace at its peak!
Please cover the Indian stock market when can. Foreign investors have withdrawn over 18billion dollars from the market over last 20 trading sessions, and no one is really talking about it.
Most likely tax disputes. India still has backdated British bureaucratic taxation system that is not favourable to foreign investment. Also the chain of bribes and non-transparency of the Indian market makes it very risky to invest. It can be more profitable if the market is developed properly.
I had no idea Turkey was so beautiful of a country! @ 16:28 : holy moly is that a real location or an artistic impression? If they can get this mess sorted out reasonably, I would love to visit there and invest into their tourism industry. Great episode!
I had to pause this video, because I was laughing at the monkeys when Patrick was back to serious. In the best possible way Patrick's farcical rhythm through his vlogging is for me the most entertaining pick me up of the day. Cheers Patrick, keep going strong. Alan
Good overview. You may shoot a follow up, now that Erdoğan is coming up with something like Dollar pegged interest rate on TL accounts. It would be nice to hear your thoughts about that.
I live in the Turkish Republic of northern Cyprus. We are definitely feeling the effects. We run a cat sanctuary and the increased costs are crippling.
Yes you are right about that and it goes way back to Nixon taking the US dollar off the gold standard , soon all countrys followed and the US currency is the number 1 fiat currency which yes is worth less and less each year ; the US has been running deficits since taking currencys off the gold intrensic value and the rest of the world had no other way to go but follow because fiat currency’s are not tied to intrensic values
@@iamasmurf1122 Well but it also allowed more spending for the government, which would have been really good if it would lead to more social spendings and building infrastructure and not in to wars.. Which was also profitable, but just not for the average american and more for wealthy investores.
Thanks, you covered the essential tea-based digs, as well as some really important information and analysis about Turkey’s political and economic situation.
One of the next videos could be about other, younger european autocratic governments, Hungary and Poland. There are so many similarities to what Erdogan did in Turkey. Comparison of these two to Turkey could be eye-opening for some
Hi there. Thanks for the well researched video. But I believe you missed considering a key part of the situation. Here is my 2 cents. The government started talking of reducing rates again in September -they did so before previous months but did now follow thru-They started reducing officially next meeting. At the start of their talking the USD rate was around 8.5. Later announced -as numbers come officially later- was that the current account went positive- a surplus not a deficit-in August first time in a while. Later in September and October surplus remained reaching 3 Billion USD in October -a two year high. Exports reached over 20Billion USD for the first time in history. Please note this is a level close to Brazil a much bigger and naturally richer nation. Also note this trade surplus was reached at USD rate 9.2 average in October. The rate has been higher since then benefiting exporters. Also note tourism revenue which was only 8 Billion USD for 2020 due to pandemic was 11 Billion just in 3rd quarter 2021. Second what you say about property values stocks are outdated. Prices recovered this year even in USD. And it is hard to find rentals in cities. May be it is the recovery, maybe lower rates, or post pandemic openings, existing housing stock in 2020 seems to be finished. Third maybe you followed up with recent developments but if you did not: Government actually increased interest rates and drastically. In an orthodox way of course. First they announced a Lıra deposit product with existing CB rate: 14 %. They attached to it a free put-that gives holders the difference between the USD value increase over time of the deposit and deposit rate in TL, if it is a positive number. This put value was calculated to be around 400-500 bps by some option experts. Then they announced the deposit rate can be up to 300bps OVER CB official rate. Hence can be 17%. Obviously since this deposit with a put is more valuable than a vanilla TL deposit, normal TL deposit rates increased to 19-20 as opposed to 15-16 before. So actually rates have been increased. Then what actually happened- forget about rhetoric - just look at what is done. 1. Lower announced rates drove investors outside of TL. To FX, Gold and as traditionally they do to property. 2. TL lost value so exports/tourism boomed and will stay buoyant as long as USD stays above 9-10 at current price levels. 3. Lowering rates in that 3-4 month period caused a stampede to property, many unsold properties got snatched up. A new housing building boom probably started-please note Turkey has still a rising population. 4. rates eventually increased . It is early dates but most people seem to find the new instrument appealing . The goal is not to turn FX accounts to TL IMO- with FX deposits at a record high of around 67% most people who do not believe in TL are already in FX anyways. IF the marginal buying of FX slows, TL starts to appreciate from the lows. As it did so far. Also note Turks have significant gold and fx holdings outside banking system-under the pillow as they say. 5. Turkey does not have energy resources but its is connected with pipelines bringing energy from 4 of its neighbours Russia Azerbaijan Iran and Iraq. for 2 of these countries Azerbaijan and Iraq-northern part- it is the only outlet to rest of world and sea. So Turkey can find energy relatively securely and cheaply-compared to Europe now for example. 6. Logistics -especially after pandemic seems to have benefited Turkey, as China seems to have become more expensive/remote for supply chains. Please note Turkey almost never closed during pandemic. And Turkish Airlines for example did not have a huge hit like other major liners because it managed to grow its profitable Cargo business. 7. Inflation is ongoing problem. Here the defacto rate increase and sudden stop during these events may help in near term. But it is a question what will happen if an export lead growth -as govt says it wants put more pressure on prices. Plus the effect of wage increases. So this recent policy changes are unlikely to be helpful in this area. With all these points what matters most is CA , if there will be a continuing even rising surplus. Question is can it be yearly-very very big change if that happens- even with these TL rates imports will remain down for a while. And tourism anecdotally is booming even in winter months and is now much diversified. The newly opening Galataport in Istanbul is teeming with Arabs Russian/ukrainians Iranians even Chinese. A Starbucks tall latte is around 1.2 USD compared to over 3-4 in Russia or Saudi Arabia. Tourists are seen almost marauding the clothing stores in malls-where unlike places like Dubai the merchandize is 90% made in Turkey. Lets see what happens..
One problem that is not mentioned is Turkey is running on CA deficit (which you point out), and as the time passes it increases risks and blows up sooner or later (every 6-10 years). There is always some political views mixed making analysis hard. But as i see it: - Tukey will prob. be less effected from fed; because there are hardly any foreign investment that can escape atm, -As Tukey reaches an equlibrium on CA (0 deficit), need for currency (hot money) will be less, So the expectation seems right, at least not irrational: Turkey will either produce more and consume less or things will be balanced with increasing inflation and fx rates, no deficit will be allowed and no increase in external borrowing. Short term you cannot change the production structure so not to give deficit you need to increase fx rates, hoping structural parts will fix themselves. If all good then it will work but if no fix is achived in the structural parts it will increase inflation and it will become chronic. But the thing is; if all done same with positive and rational messages instead of political rethoric the pain could have been avoided (indeed if the man never had spoken so far but done the same things, it would have been way way better). For example TCMB could have said deficit and structural problems are pressurising the system for the past 40 years; so it will use its powers to reach the goals for long term stability; 0 CA deficit, 10 or lower unemployment, 8 or less inflation; fx rates would prob. never go above 10. Instead the guy said we are doing it because Islam tells so; well Islam never mentions any tax except the yearly 2.5%, also strongly forbits stealing money which all governments do by having a managed inflation, so it is not Islam when printing money and collecting taxes but Islam when spending, actually noone bought it, he forgot at the end of the day people decide with whats on the menu when they sit on the table...
@Maik Müller Don't be too quick to jump on the 'hate train' train! Erdogan's religious views do have a strong influence on his decisions, and it is rarely a positive one. When the leader of a democracy introduces theocratic policies, it is not unfair or hateful to consider (and criticise) his religious motives. Islam, and the views of its adherents, are no more above criticism than Christianity or any other religion. That said, I agree it's rather sad that Omar's comment has received so few likes in comparison with some crap ones, but YT is still social media - not as shitty as Twitter, but still the majority of comments are still infantile pap.
Turkey is a G20 nation, and it was elevated to that status since 1975. Erdogan started as a mayor of Istanbul when he cleaned it up and people could see the difference what the city was and what it became, and that is why they trust him and love him. I'm not saying all Turks love him, but the religious Muslims do, The EU does not want Turkey into its union, yet Turkey has the largest army in NATO protecting EU after the USA. Economically, Turkey is right after Germany and the UK, but it has one advantage that is its population is still increasing which those two do not! So the future is bright for Turkey. once Turkey starts extracting oil and gas from the Mediterranean Sea, Turkey will be a true economic force to reckon with. The EU knows that and are in a dilemma, whether to let it in the EU now before it becomes a more powerful nation or not. Ironically Turkey later on might not even need to be in the EU mess if it becomes rich with natural oil and gas resources.
Seeing a country with such a rich history, and so much potential, fall so much because of corruption well and truly hurts. I'd also like to add that it's supposed to be usury, not interest, that's evil: the two are often conflated, but the distinction should still exist.
Very sad for the Turkish people. It shows how important it is to keep the name of your country as clean as possible. In Australia we are increasingly being seen as environmentally irresponsible and our freedoms are being pared away. To quote GK Chesterton “When you break the big laws, you do not get liberty; you do not even get anarchy. You get the small laws.”
I've been to Turkey several times, Istanbul is one of my favorite cities and the people are great (& cat lovers!), so the well-being of the country is always of interest to me. Thanks for another breakdown of what's going on there.
I'll explain Turkey's economic status today in one sentence: "The bread i could buy with 1 Lira like 10 months before, is 5 Lira now." Like hell, before this Covid 19, i could go into a supermarket with 20 Lira and it would do enough to give me and 3 of my cousins an absolute feast on snacks. Now that 20 Lira, i can barely even buy the cheapest snacks and i am high school student. And 30 lira is like the best money my parents can give a week going through school. But still, thank God for not making us poor like child slaves that still exits today. And hope child slavery ends and those poor children can get happy lives. Edit: Sorry if my English was too bad.
From a neighbouring country regular citizen point of view, appart from corruption, polical voluntarism and malinvestments in expensive megaprojects there are some other reasons for value of investments in turkish economy to fall. Competition of chinese products that threw turkish cheap industrial products out of european and middle east markets and chinese taking share in market of midle range and expensive products. Another reason is lowering the quality and price grouth of turkish agricultural products that reintroduced production and export of the same products from semi-collapsed farmers of south and eastern Europe countries many of which are now in EU thus in domestic market. All these factors together combined with lower demad in pandemia and withdraw of foreign capital investments that provided large portion of fresh money appart from export tipped off currency balance, but the debts in foreign currencies have to be paid.
This was so absolute and on point. All I can say about the "vision" and completely empty promises and expectations of a dying future is: A man can dream aye. Not going to babble on and on about anything political. Great video.
@@vitawater4259 Fed Funds Rate is 0.25 and in the EU it's near zero, while in Turkey it's 14 percent. Are the US and the EU more Islamic than Turkey? No obviously.
Thanks, Patrick. I now understand Turkey's situation much better. Since they are a member of NATO, their geopolitical location between the Black Sea and Mediterranean is critical. Also, their moderate version of Islam, compared to many Muslim countries, should help when they need to interact with non-Muslim nations. I hope they can get some help from the IMF.
today the Turkish lira has gone up from 18/USD to 13/USD, based on some measures to be taken by Erdogan to protect the TRL , do you have any comments on that?
The Turkush central bank needs to turn off the printing presses. The same can be said of the Federal Reserve here in America. We Americans will be in the same boat as Turks in a few years time.
I just asked the same it blew my mind that it made such massive gains even if Erdogan announced he'd back Lira deposits. Even banking intervention wouldn't give such a gain. Did he just deplete all their reserves gold and FX or a hidden tax/capital control we don't know about.
@@BringTheRains so i was gonna buy a pair of jordans for my birthday which are almost a full minimum wage amount of money here. then i realised that a dollar was 18 liras. Omg it was 12 or something a week ago imma go mad
This is a very complete and accurate analysis of the Turkish economy. However, besides Erdogan's "Islamic" approach to interest rates, we must not forget two other things that have impacted every single citizen of Turkey. 1) The many threats of incoming Syrian and Afghan refugees who have not only resulted in a sudden boom in population, but also lesser jobs and fraud in the job market. These "refugees" were also given Turkish citizenship without any naturalisation process, leading to national security threats but also another unfair practice to get more voters for the current coalition. 2) Perhaps this also caused the fact that Turkish citizens don't have trust in their economy anymore. We know that after electing a new government, typically people's trust in the economy restores. That hasn't happened in Turkey for over 20 years. I will always fail to understand why Erdogan and his nepotistic surroundings are still where they are. Turkey has lost so much of its potential, it's really just mind-blowing.
Thank you sir for your brilliant and comprehensive analysis. I am liking this video and subscribing to your page. I look forward to more insightful content from you in the future.
I visited Turkey in 2019 right before the pandemic and found an extremely beautiful country and the most amazing people. It bleeds my heart to see them in this mess. I hope they find a solution to this problem and make Turkey the place Ataturk dreamt it to be.
