Is the worst part over?
Fatih Özatay, PhD
31 July 2012
With the high budget deficit and public debt, the perception that the existing fiscal policies were not sustainable became prevalent. ECB President Draghi declared on Thursday that high returns on government securities of some European countries weakened the influence of monetary policy on the economy. He reminded that among the ECB’s duties were to clear up the channels through which monetary policy influences the economy. He thus gave a clear message: if the hike in security returns eliminates the influence of monetary policy efforts, the ECB will take action to lower interest on securities. In other words, the Bank will purchase securities in the secondary market until interest rates decrease to acceptable levels. Analysts who closely monitor the developments in Europe – even those who
[More]
Switching from national currency to Euro
Fatih Özatay, PhD
28 July 2012
Will sound Nordic countries switch back to their national currencies letting the others stew in their juice? They were quite angry at us and they reacted “kindly” expressing their resentment. It was after the Turkish crisis of 2001 and before the global crisis of 2008. Working at the Central Bank of Turkey (CBT), I used to attend the semiannual meeting of the Bank of International Settlements, which is in a way the bank of central banks. Each one of these meetings was held with a focus on a Central and Eastern Europe countries, Turkey among them. Meetings were attended also by bureaucrats from the European Central Bank (ECB) and Brussels.
[More]
Lessons from the exchange rate policy
Fatih Özatay, PhD
26 July 2012
When implementing such policy, anti-inflationary efforts mustn’t be decelerated – or steps to create an impression as such must be avoided. For a couple of weeks I have been discussing if it is possible to implement a monetary policy that focuses on price stability as well as the value of the lira against FX. Now it is time to address lessons I learned from the Central Bank’s (CBT) policy between the late 2010 and August 2011 to lower the value of lira against FX.
[More]
The meaning of the Syrian civil war for the PKK
Nihat Ali Özcan, PhD
26 July 2012
Strong links were formed between Syria’s intelligence service and the outlawed Kurdistan Workers’ Party (PKK) in the 1970s. Father [Hafez] al-Assad was one of the prominent sponsors of the PKK. He had to give up his policy of sponsoring the PKK in October 1998 when he was “clearly threatened.” Although al-Assad deported PKK leader [Abdullah] Öcalan from Syria, he was careful not to confront the PKK directly. He continued his relationship with the PKK behind closed doors.These days, the al-Assad regime has been losing control in some parts of Syria where Kurds live. In the region, it seems that the PKK’s front organization the Democratic Unionist Party (PYD) has taken control. These developments will have a military, political and psychological impact on Turkey. This article aims to e
[More]
Saving is the worst thing to do nowadays
Güven Sak, PhD
24 July 2012
I believe that the biggest loser of the current era will be the savers. The crisis of 2008 continues to shake our faith in the system. Recently, another supporting column of the system collapsed. It has been revealed that the calculation of the London Interbank Offered Rate (LIBOR) was being manipulated. You must be kidding! Daily transactions worth trillion dollars are priced on the basis of LIBOR, as a reference interest rate. British Barclays’ former chief operating officer, forced to leave office by the Bank of England (BoE), stated that the bank had declared borrowing rates lower than the LIBOR back then and that the BoE had been aware and even supportive of their actions. Then all Hell broke loose. This Barclays incident is really bad for us all. It has tempted us to question the sys
[More]
Turkey’s desperate housewives
Güven Sak, PhD
21 July 2012
When compared with EU countries, the FLFP in Turkey is lower at every level of education. The size of the labor force is roughly the same in Turkey and South Korea: 25 million. Yet the populations differ enormously, with Turkey’s 73 million to 50 million in South Korea. We have a larger population but a smaller labor force. Why? The female labor force participation (FLFP) rate is around 50 percent in Korea while it is below 30 percent in Turkey. But the FLFP in Turkey is not only lower when compared to South Korea, it is also lower in comparison to many Muslim-majority countries as well, not to speak of Europe. For some reason women in Turkey, unlike their sisters in comparable environments, stay at home.
[More]
But fewer people own cars
Güven Sak, PhD
20 July 2012
The municipality approach in Turkey is based on building roads and then throwing us all into the street and saying “every man for himself.” I generally read the comments to my columns. Though I don’t like most of them, I read them all. Feedback is good. One comment to my column on Tuesday made me reconsider my argument. Today I would like to share a couple of figures with this perspective.
[More]
Did it really work?
Fatih Özatay, PhD
19 July 2012
The intentional depreciation policy on lira did not contribute to Turkey’s competitiveness for the current period. Now we can discuss it comfortably. Inflation performance in the recent months was better than expected. Accordingly, analysts lowered their year-end inflation estimates. On the other side, the Central Bank (CBT) became more confident and assertive that its year-end estimate at 6.5 percent will be fulfilled. Meanwhile, severe criticisms on this column about the CBT’s policies became less probable to lead to a “defense reflex.” Maybe what I am going to say makes those who discuss the issue almost at the “those who like the CBT” vs. “those who don’t like the CBT” level rethink the issue on the table.
[More]
Erdoğan’s Russia visit and the Syria issue
Nihat Ali Özcan, PhD
19 July 2012
Information about and comments on Turkish Prime Minister Recep Tayyip Erdoğan’s visit to Russia have been debated in the media. One of the reasons this visit is so important is Russia and Turkey opposing policies on Syria. Sharing their views on Syria will force both sides to make important decisions. In light of what he learns on this visit, Erdoğan will make significant decisions about his Syria policy.The prediction that Russia will not change its approach towards Syria and will not support Erdoğan will not be an overstatement, because there are various reasons behind Russia’s support for [Syrian President Bashar] al-Assad’s regime. These reasons are ideological, geopolitical, economic, military, and psychological. Thus, it is not possible for Russia to change its position, at le
[More]
Toilets at each end of the bridge: kill me now!
Güven Sak, PhD
17 July 2012
As one of the main arteries is closed, they have no option but put portable toilets at each end of the bridge, right? Last week I wrote how the Turkish Housing Development Administration (TOKİ), which dates from the 1930s, has been affecting our lives. I argued that the modus operandi and the organization of TOKİ have caused an uncontrolled concentration of power, and I emphasized the potential loss of resources to which this might lead. I believe that the TOKİ approach harms both growth prospects and the urban structure. I complained about the automobile-dominated urban structure. Then I saw the new measures the Istanbul Municipality and Governorate initiated upon the maintenance work on the Fatih Sultan Mehmet Bridge that will reduce traffic to a single lane. To what point does the domin
[More]
