Some refer to him as “the Middle East’s new sultan in a neo-Ottoman empire” – yet the truth about Erdogan’s kingdom is utterly different. We are not facing an economic power, but rather, a state whose credit bubble will be exploding any moment now and bringing down its economy.
The budget deficit of the collapsing Greece compared to its GDP stands at some 10%, and the world is alarmed. At the same time, Turkey’s deficit is at 9.5%, yet some members of the financial media describe the Turkish economy as a success story (for comparison’s sake, Israel’s deficit stands at some 3% and is expected to decline to 2% this year.)
While Turkey’s economy grew by some 10% this year, this was merely the result of financial manipulation.
So how does the system work? The banks in Erdogan’s Turkey handed out loans and mortgages to any seeker in recent years, offering very low interest rates; this was in fact a gift. As the interest rate was so low, Turkish citizens used more and more credit, mostly for consumption.
And how did Turkey’s Central Bank finance this credit party? Via loans: Erdogan’s bank borrowed money in the world and handed it out to its citizens. However, Turkey’s deficit kept growing because of it, until it reached a scary 8% of GDP; by the end of the year the figure is expected to reach 10%.
Turkey’s external debt doubled itself in the past 18 months, which were election campaign months. Only a small part of the deficit (15%) was financed by foreign investment. The rest constitutes immense external debts.
Now it’s clear that Erdogan’s regime bought the voters in the recent elections. Most of the Turkish public elected him not because of Islamic sentiments, but rather, because he handed out low-interest loans to everyone. I will provide you with cheap money so you can become addicted to shopping, and you shall elect me.
The Israel diversion
This created Turkey’s credit bubble, which may explode any day now, because the date for returning the loans approaches. Will the Saudis help Erdogan as he hopes? This is highly doubtful. Nobody is willing to pay for attacks on Israel, and the West is annoyed by Erdogan’s thuggery. Why should they help him?
Moreover, Turkey’s unemployment rate is 13% and the local currency continues to plummet vis-à-vis the dollar – it reached its lowest levels since the 2009 global crisis. With a weak currency and with a stock exchange that lost some 40% of its value in dollars in the last six months, Erdogan wants to be the Middle East’s ruler?
Once the bubble explodes, the score with Erdogan will be settled, by the journalists his government ordered to arrest, by army officers charged with imaginary accusations, by the restrained scientists, the politicians, and mostly the general public, which shall be facing an economic disaster.
And this is where Israel comes into the picture. Why talk about the approaching economic catastrophe? Why talk about this disgrace, when it’s better to create an artificial crisis vis-à-vis Israel, a spin that the whole world will be talking about instead of talking about the sinking Turkey? After all, the Marmara raid happened more than a year ago, why did it emerge again now? Is it only because of the Palmer Report?
We shall wait a few more months, and then we shall see what really happens in the new sultan’s kingdom.
I disagree with the idea that economics is not important as a motive for war. It is the most critical and overriding motive that sends nations out to seek conflict. Hitler and fascism was a reaction to the Treaty of Versailles that emasculated Germany’s economy in order to stop further German militarization and wars of conquest in Europe. It was a miserable failure that led to WW II and the Holocaust. Japan’s quest for a way out of the economic problems of the international Great Depression led them to an alliance with the Axis (Germany and Italy) in WW II. Enter the Nuclear Age.
The Ottoman Empire thrived on military conquests that created captive markets for Istanbul. Wikipedia calls this hostage commerce “domestic trade,” and notes that it is much higher than “International trade.” When constraints are imposed on occupied and subjugated peoples, success shouldn’t be measured against free and competitive business. That’s cooking the books. Add to that the strong reliance on slave labor, the “dhimmi” taxes that brought in money from the non-Muslim population and the privileged occupations that were forbidden to anyone but Muslims, and the Ottoman economy looked great. Then migrations and competition from Europe and America (not to mention prolonged periods of plague, pestilence and famine) put the Ottomans into a steep decline. Now Istanbul’s Erdogan has chosen Israel as a target and an excuse for war. It looks like the repeat of an old cycle.
Our Debt Is More Than All the Money in the World
By Kevin D. Williamson
Just a reminder: We are in trouble.
I have argued that the real national debt is about $130 trillion. Let’s say I’m being pessimistic. Forbes, in a 2008 article, came up with a lower number: $70 trillion. Let’s say the sunny optimists at Forbes got it right and I got it wrong.
For perspective: At the time that 2008 article was written, the entire supply of money in the world (“broad money,” i.e., global M3, meaning cash, consumer-account deposits, checkable accounts, CDs, long-term deposits, travelers’ checks, money-market funds, the whole enchilada) was estimated to be just under $60 trillion. Which is to say: The optimistic view is that our outstanding obligations amount to more than all of the money in the world.
Global GDP in 2008? Also about $60 trillion. Meaning that the optimistic view is that our federal obligations outpace the entire annual economic output of human civilization.
So, John Boehner wants to roll spending back to where it was in the last year of the Bush administration. Okay, great. Nice start.
Now, what else have you got?
Budget deficit is the difference between Government budgeted expenditure and revenue (Taxes)
Sovereign debt
A short video explanation of what is Americas economic problems and why?
America owes more money than there is in the whole world and the debt continues to increase every second min. hr. day, week, and month.
There are no good guys here both parties got us into this situation and they don’t have the political will to change it because for them it will be political suicide. “When the money stops flowing to the street the blood will flow in the street” (Celente) Rather than face that they will take us to war.
Currency Wars + Trade Wars = Real Wars
Wen the global financial system finally implodes they will take us to war and that includes everyone especially the USA. Libya may have been the first shot in the next big war. WW3!
As far as I understand it, America’s debt – or is it deficit? – (maybe someone can advise me) now stands at 85% of GDP. This puts America in much worse shape than Greece and Turkey combined.
I wouldn’t be so optimistic. North Korea has been in starvation mode for years and is still dangerous. Egypt is an economic wreck and grows more dangerous by the day. Economic troubles are often addressed by blaming Israel and provoking hostilities.
North Korea has been in worse shape for years, and it has survived and is still a serious threat.