Turkey's Crisis

[HeSaidSheSaid]

President Trump has already decided a regime change in Turkey!

"
These vulnerabilities aren’t new. Turkey has long looked vulnerable to an Asian style financial crisis—one triggered by a loss of access to bank funding and a bank-corporate doom loop from the private sector’s foreign currency debts. And it has some of Argentina’s old vulnerabilities too, with roughly $200 billion in domestic foreign currency deposits (data from Turkish Central bank)) in addition to $400 billion plus in external debt (see this classic book on emerging market crises for background on the Asian and Argentine crises)."

https://www.cfr.org/blog/turkey-cou...ves-and-somewhat-less-creative-banking-system

 

[Amahrix]

Peace,

Raise rates & stay committed to it, slow the local economy down, reorganize, and move forward again in the future, God willing.

So easy, but why so hard to execute? Perhaps... ego, arrogance and stubbornness or am I being shortsighted here?

Peace,
Amahrix

 

[heartyfellow]

Thanks for the useful post!

 

[MidwesternTrader]

From the linked article, the greatest threat in the Turkey Crisis is that Erdogan imposes capital controls where monies will not be allowed to exit the country. This would in effect cause immediate default on the the $500B of credit assets financed by the international financiers as debt repayments would not be allowed to leave the country to maintain loan solvency. This would create the largest Emerging Market default of all time.

This scenario would not only create a massive debt failure mostly owned by European banks, but begin an emerging market contagion event. The theory being that if Turkey blows up, then the risk consideration for funding all emerging market debt changes dramatically and all EM countries would see a slow down / outflow of foreign capital as risk is adjusted.

https://www.zerohedge.com/news/2018-08-13/russell-napier-turkey-will-be-largest-em-default-all-time

 

[JSOP]

From the linked article, the greatest threat in the Turkey Crisis is that Erdogan imposes capital controls where monies will not be allowed to exit the country. This would in effect cause immediate default on the the $500B of credit assets financed by the international financiers as debt repayments would not be allowed to leave the country to maintain loan solvency. This would create the largest Emerging Market default of all time.

This scenario would not only create a massive debt failure mostly owned by European banks, but begin an emerging market contagion event. The theory being that if Turkey blows up, then the risk consideration for funding all emerging market debt changes dramatically and all EM countries would see a slow down / outflow of foreign capital as risk is adjusted.

https://www.zerohedge.com/news/2018-08-13/russell-napier-turkey-will-be-largest-em-default-all-time

Looks like Europe can never catch a break these days, first default problems with Greek's debt and now Turkey's debt plus the migrant crisis...

 

[Amahrix]

Peace,

From the linked article, the greatest threat in the Turkey Crisis is that Erdogan imposes capital controls where monies will not be allowed to exit the country. This would in effect cause immediate default on the the $500B of credit assets financed by the international financiers as debt repayments would not be allowed to leave the country to maintain loan solvency. This would create the largest Emerging Market default of all time.

This scenario would not only create a massive debt failure mostly owned by European banks, but begin an emerging market contagion event. The theory being that if Turkey blows up, then the risk consideration for funding all emerging market debt changes dramatically and all EM countries would see a slow down / outflow of foreign capital as risk is adjusted.

https://www.zerohedge.com/news/2018-08-13/russell-napier-turkey-will-be-largest-em-default-all-time

What I got out of your post is basically that Erdogan is de facto the most powerful human in the world right now.

What I mean is that he has leverage in his favor, for he can decide to implode his country, and other emerging markets plus their currencies amongst many other 2nd order effects, or take the bullet, shrink his own economy (raise rates, commit to it etc) and attempt to stabilize. Until then he can use his position to negotiate whatever he can.

In other words, he's holding a ticking time bomb on his lap that I don't think he wanted to hold. Now that he has the ticking time bomb... he can use it as leverage... kinda/sorta lol.

Your thoughts?

Peace,
Amahrix

 

[MidwesternTrader]

Your thoughts?

Peace,
Amahrix

I have no clue who would gain anything in a lose-lose scenario like that. Hopefully the Lira is stabilized so better decisions can be made by all parties involved.

 

[SunTrader]

Peace,



What I got out of your post is basically that Erdogan is de facto the most powerful human in the world right now.

What I mean is that he has leverage in his favor, for he can decide to implode his country, and other emerging markets plus their currencies amongst many other 2nd order effects, or take the bullet, shrink his own economy (raise rates, commit to it etc) and attempt to stabilize. Until then he can use his position to negotiate whatever he can.

In other words, he's holding a ticking time bomb on his lap that I don't think he wanted to hold. Now that he has the ticking time bomb... he can use it as leverage... kinda/sorta lol.

Your thoughts?

Peace,
Amahrix

for the post and the sign off at the end. Ignore the critic trolls.

 

[SunTrader]

USDTRY gave back, if it holds, 7% today