Connect with us

Latest

Video

Turkish Lira collapse has Europe worried and Erdogan fighting Trump (Video)

The Duran – News in Review – Episode 76.

Alex Christoforou

Published

on

1,439 Views

According to Zerohedge, just when you thought Turkey’s moment of agony couldn’t get any worse, it got much worse, when watching the collapse of the Turkish Lira and sensing perhaps that Erdogan’s end is near, President Donald Trump blindsided the NATO member state with a tweet, announcing that he is doubling Turkey’s steel and aluminum tariffs to 50% and 20%, respectively. Why? Because as he said “Our relations with Turkey are not good at this time!”

Friday’s Lira collapse came after the Financial Times reported that supervisors at the European Central Bank are concerned about exposure of some of Europe’s biggest lenders to Turkey, including chiefly BBVA, UniCredit and BNP Paribas. The FT reported that along with the currency’s decline, the ECB’s Single Supervisory Mechanism has begun to look more closely at European lenders’ links with Turkey.

Zerohedge notes that the moves also came after the US showed no signs of lifting crippling sanctions despite the visit of a Turkish delegation to the US capital.

According to the FT, the ECB is concerned about the risk that Turkish borrowers might not be hedged against the lira’s weakness and begin to default on foreign currency loans, which make up about 40% of the Turkish banking sector’s assets.

And while it does not yet view the situation as critical, it sees Spain’s BBVA, Italy’s UniCredit and France’s BNP Paribas, which all have significant operations in Turkey, as particularly exposed, according to two people familiar with the matter.

Moscow based Financial Analyst Eric Kraus and The Duran’s Alex Christoforou examine the collapse of the Turkish Lira, and if contagion is something that should worry the fragile economy of the EU and the petrodollar hegemony of the United States.

Remember to Please Subscribe to The Duran’s YouTube Channel.

Daniel Lacalle reports that Turkey could create a larger financial crisis than that of Greece.

The Turkish Lira collapse should have surprised no one. Yet, in this bubble-justifying market, it did.

First and foremost, the lira decline has been ongoing for some time, and has nothing to do with the strength of the US dollar in 2018

The collapse of Turkey was an accident waiting to happen and is fully self-inflicted.

It is yet another evidence of the trainwreck that monetarists cause in economies. Those that say that “a country with monetary sovereignty can issue all the currency it wants without risk of default ” are wrong yet again. Like in Argentina, Brazil, Iran, Venezuela, monetary sovereignty means nothing without strong fundamentals to back the currency.

Turkey took all the actions that MMT lovers applaud. The Erdogan government seized control of the central bank, and decided to print and keep extremely low rates to “boost the economy” without any measure or control.

Turkey’s Money Supply tripled in seven years, and rates were brought down massively to 4,5%.

However, the lira depreciation was something that was not just accepted by the government but encouraged.  Handouts in fresh-printed liras were given to pensioners in order to increase votes for the current government, subsidies in rapidly devaluing lira soared by more than 20% (agriculture, fuel, tourism industry) as the government tried to compensate the loss of tourism revenues due to security concerns with subsidies and grants.

Loss of foreign currency reserves ensued, but the government soldiered on promoting excessive debt and borrowing. Fiscal deficits soared, and the rapidly devaluing lira led to a rising amount of loans in US dollars.

This is the typical flaw of monetarists, they believe monetary sovereignty shields the country from external shocks and loans in foreign currencies soar because no one wants to lend in a constantly-debased currency at affordable rates. Then the central bank raises rates but the monetary hole keeps rising as the money supply continues to grow to pay for handouts in local currency.

Now the risk is rising for the rest of Europe.

On one hand, the exposure of eurozone banks like BBVA, BNP, Unicredit to Turkey is very relevant.  Between 15% and 20% of all assets.

On the other hand, the rise in non-performing loans is evident.  Turkey’s loans in US dollars account for around 30% of GDP according to the Washington Post, but loans in euro could be as much as another 20%. Turkey’s lenders and governments made the same incorrect bet that Argentina or Brazil made. Betting on a constantly weakening US dollar and that the Federal Reserve would not raise rates as announced. They were -obviously wrong. But that erroneous bet only adds to the already existing monetary and fiscal imbalances.

Money supply continues to grow at almost double-digit rates, the government’s outlays exceed the diminishing reserves and capital flight starts to be evident as savers and investors fear that the Erdogan government prefers to take the option of capital controls in order to seize complete power than to restore economic credibility with sound money policies.

Like Argentina before, raising rates too late does not calm the market when the risk is capital controls and a bank run. Raising rates to 18% does not encourage anyone in Turkey to keep money in the bank when the risk is to lose all the money. Rates went from 8 to 17.5% and the crisis worsened. It will not stop because of slightly hgher rates.

Because the problem of Turkey is monetary and fiscal. Turkey will need a massive adjustment program and a credible opening of its institutions and markets to attract capital and restore growth. Unfortunately, the route seems to be more government control of institutions, less investment security and deepening the crisis blaming the inexistent external enemy.

Erdogan is fighting against a very dangerous economic foe. Himself.

For Europe, this is a devil’s alternative. Bailing out Turkey will give further control to Erdogan and increase the imbalances of the economy while imposing higher restrictions to freedom.

Not bailing out Turkey, on the other hand, would cause a  much larger crisis than Greece was. Because too many eurozone funds and bank investments have been directed towards Turkey as a way to get access to some growth and inflation. What they got was a risk of capital controls and currency debasement.

The biggest risk for Europe will be to try to cover this mess with some aid in exchange for refugee and border support. Because what is already a relevant risk, but contained, will likely balloon to unmanageable proportions.

Liked it? Take a second to support The Duran on Patreon!
Advertisement
5 Comments

5
Leave a Reply

avatar
5 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
4 Comment authors
HappyJack1AM HantsJohn MasonBill Spence Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
HappyJack1
Guest
HappyJack1

Let Turks eat Halal shit.

AM Hants
Guest
AM Hants

‘…The Erdogan government seized control of the central bank, and decided to print and keep extremely low rates to “boost the economy” without any measure or control…’

Says it all. Good luck Turkey. How did Iceland turn around, when they went bankrupt?

AM Hants
Guest
AM Hants

There is another article, over on ‘zero hedge’, which flows nicely with the above. Turkish State Media Exposes The American Empire & Its Media Media Links To The Council of Foreign Relations ‘…Harwood continued: “The membership of these journalists in the Council, however they may think of themselves, is an acknowledgment of their active and important role in public affairs and of their ascension into the American ruling class. They do not merely analyze and interpret foreign policy for the United States; they help make it. They are part of that establishment whether they like it or not, sharing most… Read more »

John Mason
Guest
John Mason

Confiscate US assets in Turkey and those nuclear weapons will fetch a princely sum.

Bill Spence
Guest
Bill Spence

The attack on Turkey like the attacks on Russia will persist for a long time. So Turkey can go ahead and cancel all foreign debts made to Turkish corporations or to the state.

In any case Turkey will not be getting more western loans anytime soon. So they will not suffer consequences for cancelling foreign debts. What they do internally about those loans can be worked out.

Once the Turkish economy is stabilized the can join SCO or BRICS.

Latest

US media suffers panic attack after Mueller fails to deliver on much-anticipated Trump indictment

Internet mogul Kim Dotcom said it all: “Mueller – The name that ended all mainstream media credibility.”

RT

Published

on

By

Via RT


Important pundits and news networks have served up an impressive display of denials, evasions and on-air strokes after learning that Robert Mueller has ended his probe without issuing a single collusion-related indictment.

The Special Counsel delivered his final report to Attorney General William Barr for review on Friday, with the Justice Department confirming that there will be no further indictments related to the probe. The news dealt a devastating blow to the sensational prophesies of journalists, analysts and entire news networks, who for nearly two years reported ad nauseam that President Donald Trump and his inner circle were just days away from being carted off to prison for conspiring with the Kremlin to interfere in the 2016 presidential election.

Showing true integrity, journalists and television anchors took to Twitter and the airwaves on Friday night to acknowledge that the media severely misreported Donald Trump’s alleged ties to Russia, as well as what Mueller’s probe was likely to find. They are, after all, true professionals.

“How could they let Trump off the hook?” an inconsolable Chris Matthews asked NBC reporter Ken Dilanian during a segment on CNN’s ‘Hardball’.

Dilanian tried to comfort the CNN host with some of his signature NBC punditry.

“My only conclusion is that the president transmitted to Mueller that he would take the Fifth. He would never talk to him and therefore, Mueller decided it wasn’t worth the subpoena fight,” he expertly mused.

Actually, there were several Serious Journalists who used their unsurpassed analytical abilities to conjure up a reason why Mueller didn’t throw the book at Trump, even though the president is clearly a Putin puppet.

“It’s certainly possible that Trump may emerge from this better than many anticipated. However! Consensus has been that Mueller would follow DOJ rules and not indict a sitting president. I.e. it’s also possible his report could be very bad for Trump, despite ‘no more indictments,'” concluded Mark Follman, national affairs editor at Mother Jones, who presumably, and very sadly, was not being facetious.

Revered news organs were quick to artfully modify their expectations regarding Mueller’s findings.

“What is collusion and why is Robert Mueller unlikely to mention it in his report on Trump and Russia?” a Newsweek headline asked following Friday’s tragic announcement.

Three months earlier, Newsweek had meticulously documented all the terrible “collusion” committed by Donald Trump and his inner circle.

But perhaps the most sobering reactions to the no-indictment news came from those who seemed completely unfazed by the fact that Mueller’s investigation, aimed at uncovering a criminal conspiracy between Trump and the Kremlin, ended without digging up a single case of “collusion.”

The denials, evasions and bizarre hot takes are made even more poignant by the fact that just days ago, there was still serious talk about Trump’s entire family being hauled off to prison.

“You can’t blame MSNBC viewers for being confused. They largely kept dissenters from their Trump/Russia spy tale off the air for 2 years. As recently as 2 weeks ago, they had @JohnBrennan strongly suggesting Mueller would indict Trump family members on collusion as his last act,” journalist Glenn Greenwald tweeted.

While the Mueller report has yet to be released to the public, the lack of indictments makes it clear that whatever was found, nothing came close to the vast criminal conspiracy alleged by virtually the entire American media establishment.

“You have been lied to for 2 years by the MSM. No Russian collusion by Trump or anyone else. Who lied? Head of the CIA, NSA,FBI,DOJ, every pundit every anchor. All lies,” wrote conservative activist Chuck Woolery.

Internet mogul Kim Dotcom was more blunt, but said it all: “Mueller – The name that ended all mainstream media credibility.”

Liked it? Take a second to support The Duran on Patreon!
Continue Reading

Latest

Canadian Lawmaker Accuses Trudeau Of Being A “Fake Feminist” (Video)

Rempel segued to Trudeau’s push to quash an investigation into allegations that he once groped a young journalist early in his political career

Published

on

Via Zerohedge

Canada’s feminist-in-chief Justin Trudeau wants to support and empower women…but his support stops at the point where said women start creating problems for his political agenda.

That was the criticism levied against the prime minister on Friday by a conservative lawmaker, who took the PM to task for “muzzling strong, principled women” during a debate in the House of Commons.

“He asked for strong women, and this is what they look like!” said conservative MP Michelle Rempel, referring to the former justice minister and attorney general Jody Wilson-Raybould, who has accused Trudeau and his cronies of pushing her out of the cabinet after she refused to grant a deferred prosecution agreement to a Quebec-based engineering firm.

She then accused Trudeau of being a “fake feminist”.

“That’s not what a feminist looks like…Every day that he refuses to allow the attorney general to testify and tell her story is another day he’s a fake feminist!”

Trudeau was so taken aback by Rempel’s tirade, that he apparently forgot which language he should respond in.

But Rempel wasn’t finished. She then segued to Trudeau’s push to quash an investigation into allegations that he once groped a young journalist early in his political career. This from a man who once objected to the continued use of the word “mankind” (suggesting we use “peoplekind” instead).

The conservative opposition then tried to summon Wilson-Raybould to appear before the Commons for another hearing (during her last appearance, she shared her account of how the PM and employees in the PM’s office and privy council barraged her with demands that she quash the government’s pursuit of SNC-Lavalin over charges that the firm bribed Libyan government officials). Wilson-Raybould left the Trudeau cabinet after she was abruptly moved to a different ministerial post – a move that was widely seen as a demotion.

Trudeau has acknowledged that he put in a good word on the firm’s behalf with Wilson-Raybould, but insists that he always maintained the final decision on the case was hers and hers alone.

Fortunately for Canadians who agree with Rempel, it’s very possible that Trudeau – who has so far resisted calls to resign – won’t be in power much longer, as the scandal has cost Trudeau’s liberals the lead in the polls for the October election.

 

Liked it? Take a second to support The Duran on Patreon!
Continue Reading

Latest

Why Joe May be Courting Stacey

Joe Biden has a history on compulsory integration dating back to the 1970s that Sen. Jesse Helms called “enlightened.”

Patrick J. Buchanan

Published

on

Authored by Patrick Buchanan via The Unz Review:


Of 895 slots in the freshman class of Stuyvesant High in New York City, seven were offered this year to black students, down from 10 last year and 13 the year before.

In the freshman class of 803 at The Bronx High School of Science, 12 students are black, down from last year’s 25.

Of 303 students admitted to Staten Island Technical High School, one is African-American.

According to The New York Times, similar patterns of admission apply at the other five most elite high schools in the city.

Whites and Asians are 30 percent of middle school students, but 83 percent of the freshman at Bronx High School of Science, 88 percent at Staten Island Technical and 90 percent at Stuyvesant.

What do these numbers tell us?

They reveal the racial composition of the cohort of scientists and technicians who will lead America in the 21st century. And they tell us which races will not be well represented in that vanguard.

They identify a fault line that runs through the Democratic Party, separating leftists who believe in equality of results for all races and ethnic groups, and those who believe in a meritocracy.

Mayor Bill de Blasio has expressed anger and frustration at the under-representation of blacks and Hispanics in the elite schools. But Gov. Andrew Cuomo and the state legislature have ignored his pleas to change the way students are admitted.

Currently, the same test, of English and math, is given to middle school applicants. And admission to the elite eight is offered to those who get the highest scores.

Moreover, Asians, not whites, are predominant.

Though 15 percent of all middle school students, Asians make up two-thirds of the student body at Stuyvesant, with 80 times as many slots as their African-American classmates.

The egalitarian wing of the Democratic Party sees this as inherently unjust. And what gives this issue national import are these factors:

First, the recent scandal where rich parents paid huge bribes to criminal consultants to get their kids into elite colleges, by falsifying records of athletic achievement and cheating on Scholastic Aptitude Tests, has caused a wave of populist resentment.

Second, Harvard is being sued for systemic reverse racism, as black and Hispanic students are admitted with test scores hundreds of points below those that would disqualify Asians and whites.

Third, Joe Biden has a history on compulsory integration dating back to the 1970s that Sen. Jesse Helms called “enlightened.”

Here are Biden’s quotes, unearthed by The Washington Post, that reflect his beliefs about forced busing for racial balance in public schools:

“The new integration plans being offered are really just quota systems to assure a certain number of blacks, Chicanos, or whatever in each school. That, to me, is the most racist concept you can come up with.

“What it says is, ‘In order for your child with curly black hair, brown eyes, and dark skin to be able to learn anything, he needs to sit next to my blond-haired, blue-eyed son.’ That’s racist!

“Who the hell do we think we are, that the only way a black man or woman can learn is if they rub shoulders with my white child?

“I am philosophically opposed to quota systems. They insure mediocrity.”

That was 44 years ago. While those views were the thinking of many Democrats, and perhaps of most Americans, in the mid-’70s, they will be problematic in the 2020 primaries, where African-Americans could be decisive in the contests that follow Iowa and New Hampshire.

Biden knows that just as Bernie Sanders, another white male, fell short in crucial South Carolina because of a lack of support among black voters, he, too, has a problem with that most loyal element in the Democratic coalition.

In 1991, Biden failed to rise to the defense of Anita Hill when she charged future Justice Clarence Thomas with sexual harassment. In the Senate Judiciary Committee, he was a law-and-order champion responsible for tough anti-crime legislation that is now regarded as discriminatory.

And he has a record on busing for racial balance that made him a de facto ally of Louise Day Hicks of the Boston busing case fame.

How, with a record like this, does Biden inoculate himself against attacks by rival candidates, especially candidates of color, in his run for the nomination?

One way would be to signal to his party that he has grown, he has changed, and his 2020 running mate will be a person of color. Perhaps he’ll run with a woman of color such as Stacey Abrams, who narrowly lost the 2018 governor’s race in Georgia.

An ancillary benefit would be that Abrams on the ticket would help him carry Georgia, a state Donald Trump probably cannot lose and win re-election.

Wrote Axios this morning:

“Close advisers to former Vice President Joe Biden are debating the idea of packaging his presidential campaign announcement with a pledge to choose Stacey Abrams as his vice president.”


Patrick J. Buchanan is the author of “Nixon’s White House Wars: The Battles That Made and Broke a President and Divided America Forever.”

Liked it? Take a second to support The Duran on Patreon!
Continue Reading

JOIN OUR YOUTUBE CHANNEL

Your donations make all the difference. Together we can expose fake news lies and deliver truth.

Amount to donate in USD$:

5 100

Validating payment information...
Waiting for PayPal...
Validating payment information...
Waiting for PayPal...
Advertisement

Advertisement

Quick Donate

The Duran
EURO
DONATE
Donate a quick 10 spot!
Advertisement
Advertisement

Advertisement

The Duran Newsletter

Trending