We are in an interesting period. We are under influences that we are not used to face. It might be quite dangerous to get excited upon each development and try to react to each new development. Periods of crises are not periods for rapid action at all. The approach that shall be pursued is to limit actions to the highest extent possible and try not to waste energy. The important thing to do in busy days with different news flowing in every second is to focus on the question of the day. It is crucial to find out the question of the day for avoiding to get excited by every single development. So, what is the question of the day nowadays? A finding by an American friend summarizes the question of the day: Washington being more important than New York is not a situation we are used to see. Let me talk about this today.

The question of the day is when and how the new American administration will start being in charge of the crisis. The crisis had originated from the US, so the solution shall as well originate from the US. Under this framework, the question "Did Turkey sign an agreement with the IMF?" does not address the essence of the issue. The signing of such agreement can only determine the depth of the adjustment to be necessary for Turkey and provide an answer for the question: "Will the economic slowdown in Turkey be controlled or uncontrolled?" The essence of the issue, on the other hand, is different: In 2009, Turkish economy will slow down one way or another. The length of the period of slowdown will be determined by external factors. Our efforts to control the problem will only determine the depth of the impact of the problem.

Then, when and how the new American administration will take the charge of the crisis? This is the determinant factor that is unknown so far and that shall be elaborated thoroughly.   Along with this unknown factor, there is something we certainly know about Washington: The US is faced with an extraordinary situation, the examples of which were not observed in her history. For the first time in the US history, Washington stands out to be a more influential and important economic actor than New York. You can say anything about the US, but you cannot easily say that in the US there exists a big government tradition in economic issues, except for some certain aspects like cartels etc. However, today, various decisions including the provision of the daily liquidity needs of private corporations are directly made by Washington. The problems of past that were solved automatically during the daily and unnoticed course of the market mechanism are giant questions of today for which no one is able to find a concrete solution. And this is where the essence of the issue and the source of the problem lies; this is what the collapse of the market mechanism means. This is the first point.

What happens if a country that never had a big government tradition encounters the need for an extremely big government? What happens if one day your cardiac muscles quit doing the work there used to do every day without getting your advice or consent? I guess this is what happens. The developments in the US and throughout the world are not at all different than such a situation. In such an environment, the US, lacking the skills to intervene in this crisis, shall first have to develop those skills. This is the second point complicating the solution. And the third point that deepens the severity of the problem is that the US is not prepared for such public intervention intellectually when compared to Europe. This means: The US shall also learn what kind of thinking needs to be employed and how to react against a crisis.

So, what is the conclusion for Turkey, considering this situation in the US? This might take us to the fourth point. But, first let us see the general picture: It would be extremely optimistic to expect that the US policy makers will care about Turkey in such an environment. At this point, they do not have any interest in Turkey, the Middle East or anywhere else. They might be in effort to buy time to think by sending all of the elder officials to distant missions. I do not believe anyone expects that Mitchell will bring peace and solutions to the Middle East and Holbrooke to Afghanistan. The imminent problem of the world is completely different than that of Afghanistan and Palestine and is highly serious.

Ok, so what is the economic outcome of our second point? No one in the US administration knows what should be done in Turkey and similar countries. As a matter of fact, they have not acknowledged the asymmetry between the processes going on in the US and in Turkey and similar countries yet.

Let me state the issue and the reality of today: The world is faced with a serious liquidity crisis.

What we observe is just the smell of the approaching storm.

Where is the solution, then?  We shall come back to it, very soon.

This commentary was published in Referans daily on 29.01.2009