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Turkish Lira under attack as U.S. halts shipment of F-35 jet equipment (Video)

The Duran Quick Take: Episode 127.

Alex Christoforou



The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the weakening Turkish lira which dropped more than 2 percent on Tuesday, after reaching 5.6125 against the US Dollar. Lira volatility comes after the United States halted delivery of equipment related to the F-35 fighter aircraft to Turkey.

Erdogan continues to push forward with the purchase of Russian S-400s, against US and NATO warnings to halt the order of the advanced Russian air defense system.

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Via Reuters

The disagreement over the F-35 is the latest of a series of diplomatic disputes between the United States and Turkey, foremost among which are Turkish demands that the United States extradite Islamic cleric Fethullah Gulen, differences over Middle East policy and the war in Syria, and sanctions on Iran.

U.S. officials have told their Turkish counterparts they will not receive further shipments of F-35 related equipment needed to prepare for the arrival of the stealth fighter aircraft, sources told Reuters on Monday.

Washington’s step to block delivery of the jet comes amid fears in the United States and other NATO allies, that radar on the Russian S-400 missile system will learn how to spot and track the F-35, making it less able to evade Russian weapons.

“The lira is under pressure as now the focus is back on structural problems for the Turkish economy,” said Nikolay Markov, a senior economist at Pictet Asset Management.

Is Turkey “City Zero” in Global Contagion, via Tom Luongo:

Last year Turkey’s lira crisis quickly morphed into a Euro-zone crisis as Italian bond yields blew higher and the euro quickly reversed off a major Q1 high near $1.25.

It nearly sparked a global emerging market meltdown and subsequent melt-up in the dollar.

This week President Erdogan of Turkey banned international short-selling of the Turkish lira in response to the Federal Reserve’s complete reversal of monetary policy from its last rate hike in December.

The markets responded to the Fed with a swift and deepening of the U.S. yield curve inversion. Dollar illiquidity is unfolding right in front of our eyes.

Turkish credit spreads, CDS rates and Turkey’s foreign exchange reserves all put under massive pressure. Unprecedented moves in were seen as the need for dollars has seized up the short end of the U.S. paper market.

Martin Armstrong talked about this yesterday:

The government [Turkey] simply trapped investors and refuses to allow transactions out of the Turkish lira. Turkey’s stand-off with investors has unnerved traders globally, pushing the world ever closer to a major FINANCIAL PANIC come this May 2019.
There is a major liquidity crisis brewing that could pop in May 2019.

Martin’s timing models all point to May as a major turning point. And the most obvious thing occurring in May is the European Parliamentary elections which should see Euroskeptics take between 30% and 35% of seats, depending on whether Britain stands for EU elections or not.

That depends on Parliament and the EU agreeing to a longer extension of Brexit in the next two weeks.

Parliament has created “Schroedinger’s Brexit,” neither alive nor dead but definitely bottled up in a box no one dares open. And they want to keep it that way for as long as possible. Their hope is outlasting Leavers into accepting staying in the gods-forsaken fiscal and political black hole that is the European Union.

But back to Turkey. To me this looks like a very dangerous game that Erdogan is playing with the markets to remind everyone just how fragile the financial system is. Now that a real Brexit back on the table thanks to the British Parliament his gambit takes on even more significance.

I don’t credit Erdogan with understanding this complexity anymore than I credit most Remainer MP’s understanding the true stakes of defying Brexit.

If he did he wouldn’t lift this foreign investor trap until Jean-Claude Juncker drank himself to death after a Hitlerian tirade of memetic proportions.

Juncker after Merkel’s Deal Failed a Third Time

That’s the problem with politicians. Their own narrow interest has out-sized effects on the rest of the world because of the power they wield.

The core problem is that Turkey’s companies owe an enormous sum in corporate debt that is payable in dollars. What Erdogan has done is prioritize lira for them to pay their dollar obligations while barring anyone else from attacking the lira at the same time.

This morning at Money and Markets I talked why this is happening:

I don’t know for sure what’s happening here but I do know that the U.S. is playing hardball on anyone who is maintaining any economic ties to Iran, criticizing Israel and/or backing President Nicolas Maduro of Venezuela while we try and regime change him.
Turkey is doing all three of these things. And the combination of U.S. anger at Turkey’s sliding into the BRICS orbit, Turkey’s indebtedness and EU contagion risk creates a potentially explosive situation in credit and currency markets that Armstrong is now warning could become ground zero for the next financial crisis.

Erdogan’s proxy weapon in this fight is zombie banks in Europe. And not just any banks, some of the biggest banks in Europe. Zerohedge put out the list of the five European banks most exposed to Turkey according to Goldman Sachs.

With that disclaimer in mind, Goldman claims that Turkey exposure of EU banks is “limited in scope and scale” as Turkey accounted for <1% of total EAD and c.1% of Net Profit for Goldman’s EU banks coverage in 2018: of more 50 banks under Goldman coverage, five have Turkey exposure of >1% of total EAD, with gross exposure ranging from 10% of EAD for BBVA, 5% for Unicredit to 2% or less for ING (2%), BNP (2%) and ISP (1%). Also worth noting that European banks tend not to have 100% ownership of Turkish subsidiaries, so one needs to adjust for the actual shareholding.

The biggest banks in Italy, France and the Netherlands have multi-billion dollar exposure to a default on Turkish corporate debt.

Bank Total EAD (billions) Turkey
BBVA 699.8 68.2
Unicredit 837.9 41.1
BNP Paribas 1559 24.6
ING 890.3 15.3
Intesa San Paolo 616.5 3.9


Erdogan is staring at a major push-back from the U.S. and the EU over cozying up to Russia and it will not stop until he is removed from power.

As all of these interdependent systems, unintended consequences and perverse incentives have brought us to a very precarious moment in time.

Unspoken during all of the Brexit talk is the potential for real dislocation in the financial markets if the divorce is finalized to Brexiteer’s satisfaction. But the costs will be born hardest not on the working class but the financial and political class.

This is what is behind Project Fear and the slow motion betrayal of the Brexit Referendum of 2016. It is not the temporary inconvenience of having to pay 3% more for Italian wines or an extra ten minutes in line to take a holiday in France for the middle-class Briton Remainers who marched on London last weekend.

It is The Davos Crowd and their quislings in the British Civil Service and Brussels Byzantine Bureaucracy are the ones with trillions in assets at risk.

It is the British Deep State, so committed to the EU it helped back a coup against the President of the U.S. framing him as a Russian stooge straight out of a John LeCarre novel.

The mandarins who run the EU see their political project at risk. Turkey was a country slated to be subsumed by the murk of the EU.

And Erdogan put the kibosh on that after his country was nearly destroyed by U.S. incompetence in atomizing Syria. He has now emerged as a key political opponent of Brussels, as important as Viktor Orban in Hungary, Matteo Salvini and Luigi Di Maio in Italy or Vladimir Putin in Russia.

So it should come as no surprise that Turkey is emerging as the emerging market that comes under currency duress during this period of great uncertainty about the EU’s future.

Markets are finally taking these threats much more seriously now than they did last year. I told you then Turkey would survive. Qatar, China and Russia all came to Erdogan’s side to help Turkey through the shock.

But it was only a test of his resolve. It was a crucible to see if he could be brought back on side. And once Pastor Andrew Brunson was returned, the pressure on the lira mysteriously subsided.

But it’s clear with the way things have gone in Syria and with his opposition to Israel’s decisions recently that Erdogan is not redeemable as a NATO asset anymore. And the only reason Turkey hasn’t been kicked out of NATO is because treaties outlast leaders.

That’s why Brussels wants this Brexit deal and none other. It is a treaty which ensures the U.K. as a vassal state in perpetuity.

The U.S. equity markets just ended Q1 with the S&P 500’s highest closing quarterly price in history. The Dow Jones Industrials rallied to close just shy of 26,000. U.S. Treasuries are trading below the Fed’s benchmark rate throughout most of the yield curve.

And gold is holding onto $1300 despite furious selling above $1325 as traders scramble for dollars.

Since the equity markets peaked near the end of Q3 of last year, more than $5 trillion in debt globally has been pushed to negative yields as of Monday.

The number is not near a record $10 trillion.

The German yield curve is negative out to 10 years.

The sound you hear is the air leaving the room as the world wakes up to the fact that no one in charge has any clue as to how to fix any of the messes they have created.

The mad scramble for collateral has begun. And the zombie plague may have been unleashed in Istanbul.

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Cudwieserregolo gellinicymaticsSmoking Eaglejoseoh cachia Recent comment authors
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Olivia Kroth

Erdogan is fed up with Nato, and rightly so. Let’s hope that Turkey will leave Nato soon.

joseoh cachia
joseoh cachia

This gives you reason never to import anything from the USA.
You will always remain at its mercy (if it has any).

Smoking Eagle
Smoking Eagle

Turkey (and other countries) should buy from Russia instead because Russia honours its agreements whereas the US time and time again does not. The US cannot be trusted..


Be kind. Americas lack of commitment to a deal is often a blessing in disguise. I took the US to Prove Russian tech by failing when Russia succeeded.


This is completely off topic, please forgive me, but i have been wondering about whatever happened to Mark Sleboda who was a regular on crosstalk. Does anyone know why he doesn’t appear anymore?


Let me see. Wait for parts for a flawed aircraft that’ll bankrupt a fickle economy or buy proven tech cheaper and re-allign the economy…? And we’re discussing Eddies buying habits…Why?

regolo gellini
regolo gellini

The US will not deliver the F35 to Turkey ? It’s a good job that will rejoice the Turks because that “lemon” is a poisonous one and many countries are experiencing reality and regret to have been bribed by Lockheed once again 🙂


Putin meets Kim for the first time (Video)

The Duran Quick Take: Episode 151.

Alex Christoforou



The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a look at the historic meeting between Russian President Vladimir Putin and North Korean leader Kim Jong Un in the city of Vladivostok in the Russian Far East.

The meeting marks the first ever summit between the two leaders.

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Via RT…

Leaders of Russia and North Korea sat down for a historic summit in Vladivostok, expressing hope it will revive the peace process in the Korean Peninsula and talks on normalizing relations with the US.

The summit on Russky Island, just off Vladivostok, started a little late because President Vladimir Putin’s flight was delayed. North Korean leader Kim Jong-un had made the trip by train, arriving on Wednesday.

In brief public remarks before the talks, the two leaders expressed hope the summit will help move forward the reconciliation process in the Korean Peninsula. Putin welcomed Kim’s contributions to “normalizing relations” with the US and opening a dialogue with South Korea.

Kim said he hoped the Vladivostok summit would be a “milestone” in the talks about denuclearizing the Korean Peninsula, but also build upon “traditionally friendly ties” between Russia and North Korea.

The North Korean leader also made a point of thanking Putin for flying all the way to Vladivostok for the meeting. The Far East Russian city is only 129 kilometers from the border with North Korea.

The historic summit takes place less than two months after Kim’s second summit with US President Donald Trump in Hanoi fell apart without a breakthrough on denuclearization. The US rejected North Korea’s request for partial sanctions relief in return for moves to dismantle nuclear and missile programs; Washington insists on full disarmament before any sanctions are removed.

Denuclearization of the Korean Peninsula is the main subject of the Kim-Putin summit, but there will also be talks about bilateral relations, trade, and humanitarian aid. The first one-on-one meeting is scheduled to last about an hour, followed by further consultations involving other government officials.

Following the summit, Putin is scheduled to visit China.


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Kim And Putin: Changing The State Of The Board In Korea

The future of Korea could be decided by these two men today.




Authored by Tom Luongo:

Today is a big day for Korea. The first face-to-face summit of Russian President Vladimir Putin and North Korean Leader Kim Jong-un takes place.

At the same time the 2nd annual Belt and Road Forum kicks off in Beijing.

This meeting between Putin and Kim has been in the works for a while but rumors of it only surfaced last week. But don’t let the idea that this was put together at the last minute fool you.

It wasn’t.

The future of Korea could be decided by these two men today.

I know that sounds bold. But hear me out.

And while no one seems to think this meeting is important or that anything of substance will come from it I do. It is exactly the kind of surprise that Putin loves to spring on the world without notice and by doing so change the board state of geopolitics.

  • Russia’s entrance into Syria in 2015, two days after Putin’s historic speech at the U.N. General Assembly
  • 2018’s State of the Union address where he announced hypersonic missiles, embarrassing the U.S. Militiary-Industrial Complex which accelerated the Bolton Doctrine of subjugating the world
  • Flying 2 TU-160 nuclear-armed bombers to Venezuela, creating panic in D.C. leading to the ham-fisted regime change operations there.
  • Nationalization of Yukos.
  • The operation to secure Crimea from U.S. invasion by marines aboard the U.S.S Donald Cook during the Ukrainian uprising against Viktor Yanukovich.

Both Putin and Chinese Premier Xi Jinping are angry at the breakdown of the talks in Hanoi back in February. It was clear that everyone expected that meeting to be a rubber stamp on a deal already agreed to by all parties involved.

In fact the two meetings between Kim and Trump were only possible because Trump convinced them of his sincerity to resolve the ‘denuclearization’ of North Korea which would clear a path to rapid reunification.

It’s why they went along with the U.S.’s increased sanctions on North Korea as administered through the U.N. in 2017.

That John Bolton and Mike Pompeo destroyed those talks and Trump was unwilling or unable (who cares at this point, frankly, useless piece of crap that he is) to stop them embarrassed and betrayed them.

They are now done with Trump.

He’ll get nothing from either of them or Kim until Trump can prove he’s in charge of his administration, which he, clearly, is not.

And they will be moving forward with their own agenda for security and Asian economic integration. So I don’t think the timing of this meeting with that of the Belt and Road Forum is an accident.

And that means moving forward on solving the Korea problem without Trump.

It is clear from the rhetoric of Putin’s top diplomat, the irreplaceable Sergei Lavrov, that Russia’s patience is over. They are no longer interested in what Trump wants and they will now treat the U.S. as a threat, having upped their military stance towards the U.S. to that of “Threat.”

If Bolton wants anything from Russia at this point he best be prepared to start a war or piss off.

This is also why Russia took the gloves off with Ukraine in the run up to the Presidential elections, cutting off energy and machinery exports with Ukraine.

To put paid Putin’s growing impatience with U.S. policies, he just issued the order to allow residents of Lugansk and Donetsk People’s Republics to apply for Russian passports.

This will send Bolton into apoplexy. Angela Merkel of Germany will be none too pleased either. Putin is now playing hardball after years of unfailing politeness.

It’s also why Lavrov finalized arms and port deals all over the Middle East in recent weeks, including those with Lebanon, Egypt, Turkey and India.

Bolton, Pompeo and Pence are ideologues. Trump is a typical Baby Boomer, who lives in a bubble of his own design and believes in an America that never existed.

None of them truly understand the fires they are stoking and simply believe in the Manifest Destiny of the U.S. to rule the world over a dim and barbaric world.

Putin, Xi, Rouhani in Iran and Kim in North Korea are pragmatic men. They understand the realities they live in. This is why I see Putin willing tomorrow to sit down with Kim and flaunt the U.N. sanctions and begin the investment process into North Korea that should have begun last year.

Putin would not be making these moves if he didn’t feel that Bolton was all bark and no bite when it came to actual war with Russia. He also knows that Germany needs him more than he needs Germany so despite the feet-dragging and rhetoric Nordstream 2 will go forward.

Trade is expanding between them despite the continued sanctions.

Putin may be willing to cut a deal with President-elect Zelensky on gas transit later in the year but only if the shelling of the LPR and DPR stops and he guarantees no more incidents in the Sea of Azov. This would also mollify Merkel a bit and make it easier for her politically to get Nordstream 2 over the finish line.

There are moments in history when people go too far. Bolton and Pompeo went too far in Hanoi. He will pay the price now. Putin and Kim will likely agree to something in Vladivostok that no one is expecting and won’t look like much at first.

But the reality is this summit itself marks a turning point in this story that will end with the U.S. being, in Trump’s transactional parlance, a “price taker” since it has so thoroughly failed at being a “price maker.”

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Can Zelensky bring peace to a Ukraine torn apart by Obama’s Maidan coup? (Video)

The Duran Quick Take: Episode 150.

Alex Christoforou



The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a look at Vladimir Zelensky’s landslide victory against incumbent Petro Poroshenko in Sunday’s historic Ukraine, second round, Presidential election.

Not much is known about Zelensky’s political acumen, but the job of uniting a country torn apart by an Obama funded Maidan coup in 2014, will prove to be a daunting task for the comedy TV star.

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Via TASS News…

Ukraine’s ‘Opposition Platform – For Life’ party will support Ukrainian president-elect Vladimir Zelensky only if he takes practical steps to bring peace to Donbass, Chairman of the party’s Political Council Viktor Medvedchuk said in an interview with the Rossiya-24 TV channel on Monday.

“Today, we can’t say that we support him because support is only possible if he truly wants peace in Donbass, if we see that he is taking actual steps to achieve this goal,” he said.

According to Medvedchuk, this is the only condition on which the ‘Opposition Platform – For Life’ party is ready to provide assistance to Zelensky if the need arises.

Ukraine’s presidential runoff took place on April 21. With 99.53% of the vote counted, leader of the Servant of the People political party Vladimir Zelensky has received 73.23% in Ukraine’s presidential runoff, while incumbent President Pyotr Poroshenko gained 24.45%.



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