Dear All, I refer those of you who don't know about this recently discovered psychic condition called Blogorrhoea to the web page of Rob Schaap. The address of his page is below:
http://blogorrhoea.blogspot.com/ I had been in Turkey until yesterday and before I left for Turkey in early July, I promised Michael Perelman a summary of my observations there. Below is not only the first part of the summary I promised but, being a long-time Blogorrhoea patient, also an attempt of autotherapy as prescribed by Rob (see the above web page). To start with good news, the Turkish food is still wonderful and the raki, white cheese and mellon sessions in the company of good friends is still the best psychotherapy one can get around the world. Unfortunatelly, this is the only goods news I can convey. The rest varies from bad to worst. The first bad news is that Turkey is on its way to default, unless she can find foreign credit. As argued by Gungor Uras, a respected (at least by me) neoclassical economist, in his daily column in the Turkish daily Milliyet on August 8, 2002, in the absence of foreign credit, Turkey will have to choose between defaulting on its internal debt (given that defaulting on foreign debt is unacceptable for obvious reasons) and not paying the salaries of public employees. To see why, let us look at the below table, miserably translated by me and hopefully correctly converted into US dollars using an exchange rate of 1,650,000 Turkish liras to the dollar, from his article. January-July 2002 Treasury Cash Flow (in billions) ____________________________________ Revenue (R) $23.28 ____________________________________ Payment (P) $33.39 Interest Payments (IP) $15.73 Other Payments (OP) $17.67 ____________________________________ Primary Balance (R - OP) $5.60 ____________________________________ Cash Balance (P - R) -$10.12 ____________________________________ Deficit Financing (DF) $10.12 _____________________________________ Total Net Borrowing(TB) $11.67 Foreign Net Borrowing $8.34 Borrowing $11.68 Payment $3.34 Domestic Net Borrowing $3.33 Borrowing $31.78 Payment $28.45 ____________________________________ Balance (DF - TB) -$1.55 ____________________________________ Sadly, 71% of the above deficit financing comes from foreign borrowing and as a scrutiny of the above table, together with the already scarce domestic credit (note the sizes of the domestic borrowing and payment)and Turkey's drying income from other sources, indicates, if the foreign credit dries up, then Turkey will soon default. Unfortunatelly, with the increasing risk aversion towards emerging markets arising from the ongoing Latin American troubles and the fact that we had already been bailed out by the IMF very recently, not to mention the coming economic earthquake which will most likely emanate from the US, the likelihood of foreign credit dry-up is very high. A worse news is that none of the political parties entering into the election coming on November 3, 2002 has any idea of how to deal with the coming default, nor do they show any interest in concerning themselves with the problem. They are busy with other important problems such as defining social liberalism, mild islamic fundamentalism, "adjectiveless" democracy and the like. In the mean time, the consensus is continuing with the ongoing IMF program, presented to the public as going very well both by the IMF and their domestic clowns including almost all of the government officials as well as several economists such as Deniz Gokce, Asaf Savas Akat and the like, who regularly lie to the public with the talkshows and interviews on TV and in their daily columns in the newspapers, all of which are owned by several members of the Turkish Industrialists and Businessmen Association (TIBA). In passing I should mention that TIBA is the most powerful "civil society organization" in the country and it should not come as surprise that TIBA and the Turkish Military has historically been closely linked. After all, it was the generals of the Ottaman era who, obviously not so successfully, engineered our national bourgeoise out of the ashes of the Ottoman Empire. Also worth noting is that the so-called Armed Forces Pension Fund (OYAK), whose supposed primary function is to provide social assistance to the retired members of the Turkish Military, is one of the largest and growing holding companies in the country. It is incorporated as a private entity under a special law and has equity investments in 25 companies, concentrated in the automotive, cement, financial and service sectors. Its financial arm consists of a commercial bank, an investment management company, an insurance company (joint venture of OYAK and AXA Group of France) and a leasing company, each of which has been growing rapidly in recent years. Hence, it is in the interest of the Turkish Military to continue with the ongoing IMF program, as well. I cannot say that the Turkish bourgeoise and the Military are doing well but the rest of us are doing even worse. Thefts, muggings, suicides, husbands leaving their families, babies dying of hunger and other usual stories we keep getting from countries like Argentina, Brazil, Indonesia and the like are on the rise. Morales are low, hopes are dead and majority of people have no projects regarding the future. Luckily, with the backing of TIBA and the Military, the Turkish Parliment very recently and very heroically approved a series of EU "adjustment laws", that is, reforms, aimed at meeting the so-called Copenhagen criteria the candidate countries required to meet for accession to the EU. Almost every Turk now happily expects to be a part of the great European community to become rich and free in the next fifteen to twenty years, and although I also like to be rich and free in the same time frame, I have a problem. This bloody Copenhagen criteria includes this: "The existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union" At this point I have to stop to attend other business. All the best and hope to continue later, Sabri
