• Latest
  • Trending
TURKEY’S DREAM, EU’S NIGHTMARE

TURKEY’S DREAM, EU’S NIGHTMARE

October 29, 2020
CNN Türk: “One night all the Greek islands will become Turkish”

CNN Türk: “One night all the Greek islands will become Turkish”

March 5, 2021
Turkey hires U.S. lobbying firm to return to F-35 jet programme

Turkey hires U.S. lobbying firm to return to F-35 jet programme

February 20, 2021
Turkey: Hundreds arrested after PKK’s execution of 13 hostages

Turkey: Hundreds arrested after PKK’s execution of 13 hostages

February 16, 2021
Turkey strikes PKK in Iraq, losing 3 soldiers in clashes

Turkey strikes PKK in Iraq, losing 3 soldiers in clashes

February 11, 2021
What de-escalation? Turkey violates Greek airspace over 100 times in January

What de-escalation? Turkey violates Greek airspace over 100 times in January

February 2, 2021
Terrorist Organization, Grey Wolves, Announce School Opening in Nagorno-Karabakh

Terrorist Organization, Grey Wolves, Announce School Opening in Nagorno-Karabakh

January 28, 2021
Why is Erdoğan suddenly “flirting” with the EU?

Why is Erdoğan suddenly “flirting” with the EU?

January 25, 2021

Turkish media: Greek-Saudi military exercise a “threat” to Turkey

January 7, 2021
264 children aged 12-14 stood trial for ‘insulting’ Erdoğan in six years

264 children aged 12-14 stood trial for ‘insulting’ Erdoğan in six years

December 19, 2020
Turkey Flaunts Human Rights Violations During Baku Visit

Turkey Flaunts Human Rights Violations During Baku Visit

December 19, 2020
Trump approves sanctions on Turkish individuals for the purchase of Russian S-400 missile defense system

Trump approves sanctions on Turkish individuals for the purchase of Russian S-400 missile defense system

December 14, 2020
Erdogan’s Poetry

Erdogan’s Poetry

December 14, 2020
  • EnglishEnglish
    • ՀայերենՀայերեն
    • РусскийРусский
    • FrançaisFrançais
    • العربيةالعربية
Boycott Turkey
Saturday, March 6, 2021
Subscribe
No Result
View All Result
  • Home
  • Breaking news
  • Political news
  • Economic news
  • All Media
  • #BoycottTurkey
  • Make change
  • Donate
  • Contact us
Boycott Turkey
No Result
View All Result

TURKEY’S DREAM, EU’S NIGHTMARE

October 29, 2020
in Economic news

Erdogan’s dream of Pan-Turkism is turning into a nightmare for foreign investors.

Turkish President Recep Tayyip Erdogan is not usually known as an economic innovator, says Chris Miller of Foreign Policy. But for the past year, his government has been running a high-stakes economic experiment. The test: How long can Turkey hide the fact that it is spending far beyond its means? Normally when governments spend more than they tax, the difference appears as a budget deficit. They fund that deficit by issuing bonds, which are traded on international markets and so are easy to track. If the debt load grows too large, and if borrowing costs spike, then the country must default or seek a bailout. This type of debt crisis isn’t pleasant, as Argentina or Greece or Pakistan could attest, but it is at least straightforward and familiar.

 

Turkey has also spent well more than it should, but it has done so in a way that hid the costs deep in its financial system, leaving them invisible to all but the most committed financial sleuths. There’s relatively little sovereign debt. The big borrowing has been by the country’s banks, including both private and state-owned banks which funded Erdogan’s expansionist ambitions. However, the country still needs capital to operate internally and with lack of monetary resources, there is no other option but devaluation of its own currency. And that’s where the problem begins.

 

 

To raise the needed capital, Turkey has offered several high yielding bonds to the international markets with the latest $2.5b, 6.375% 14oct2025, USD bond. But who buys and owns these bonds? According to the IMF, the EU has the most exposure to these bonds and therefore Turkish Lira which has plummeted 33.36% year to date.

The head of macro strategies at Record Currency Management, which oversees $63 billion in assets, is shorting government bonds of Spain, France and Italy — as well as the euro itself — on the expectation that Turkey’s market ructions will soon be felt on the balance sheets of European banks. Foreign bank exposure to Turkey has fallen since the 2018 currency crisis, but overseas lenders still had a total of $166 billion of claims on Turkey at the end of 2019, with European banks accounting for the lion’s share, according to data from the Bank for International Settlements. In the chart below, we can see the massive money outflow from Turkish bonds.

 

 

“Nobody wants to buy long-dated bonds in Turkey anymore. It’s one of the signs of stress,” said Jan Dehn, head of research at Ashmore Group, who has sold Turkish debt holdings in recent years. Regardless of this outflow, the size of EUs exposure to Turkey is threatening for bond holding nations such as Spain, France and Italy. These countries were hoping for more QE and fiscal policies from the IMF to recoup some of their losses.

There’s an old banking proverb: “If you owe the bank thousands, then you have a problem. If you owe the bank millions, then the bank has a problem.” The proverb is also given as: “If you owe the bank thousands, then the bank owns you. If you owe the bank millions, then you own the bank.” And Erdogan is well aware of this! He uses EUs exposure to Turkish bonds to enforce a deadly neutrality and silence towards Turkey’s crimes against humanity.

No one knows for how much longer can Erdogan play this game, but one thing is for certain, the risk of a disastrous outcome is increasing.

Sources:

Foreig Policy

Wall Street Journal

Bloomberg

CB Bonds

Tags: ArtsakhStrongBoycottAzerbaijanboycottTurkeyLowLiraNagornoKarabakhRecognizeArtsakhStopAlievStopAzerbaijaniAggressionStopBuyingTurkishStopErdoganStopInvestingInTurkeyStopinvestinginwarStopTurkeyStopTurkishAggression

Categories

Tags

Armenia Artsakh ArtsakhStrong Austria Azberbaijan Azerbaijan BoycottAzerbadian BoycottAzerbaijan boycottTurkey BoycottTurkishProducts Brussels CYPRUS Erdogan EU European Parliament European Union (EU) France Germany Greece InvestinTurkey LawLira LowLira MACRON NagornoKarabakh Nagorno Karabakh NATO Recep RECEP TAYYIP ERDOGAN RecognizeArtsakh sanctions StopAliev StopAzerbaijaniAggression StopBuyingTurkish StopErdogan StopInvestingInTurkey Stopinvestinginwar StopTurkey StopTurkishAggression Tayyip terrorism Turkey USA Viasat Inc war warcrime

Get Connected

Boycott Turkey

© 2020 Boycott Turkey.

No Result
View All Result
  • Home
  • Breaking news
  • Political news
  • Economic news
  • All Media
  • #BoycottTurkey
  • Make change
  • Donate
  • Contact us
  • ՀայերենՀայերեն
  • РусскийРусский
  • FrançaisFrançais
  • العربيةالعربية

© 2020 Boycott Turkey.