Turkish Forum

Tag: IMF

  • Turks aim to emulate Israel tech

    Turks aim to emulate Israel tech

    By Bloomberg News

    Prime Minister Recep Tayyip Erdogan wants to catapult Turkey into the top 10 of the global economic elite over the next decade. To get there, he may need to spend more time mimicking the country he’s been feuding with.

    While Turkey and Israel have both shifted to manufacturing from farming since the Jewish state was established in 1948, it’s Israel that has succeeded in building high-margin industries. The tech index on Turkey’s Borsa Istanbul has 16 members and a market value of about $790 million. Israel’s TA BlueTech-50 Index, in an economy less than one-third the size, is valued at $16.5 billion.

    During Erdogan’s decade in power, which followed years of unstable and short-lived coalitions, inflation and interest rates plunged from more than 30 percent as the budget deficit and national debt shrank. The gains from that good housekeeping may be running out of steam, with economists and ministers saying Turkey needs an industrial breakthrough to achieve the next stage.

    “Turkey is nearing the limits of what it can do with macroeconomic stability,” said Serdar Sayan, a professor of economics at the TOBB University of Economics and Technology in Ankara. The country “really needs to switch to higher value- added exports” and improve its education system to “compete with innovative countries like Israel,” he said.

    Structural Work

    Bulent Celebi, executive chairman and co-founder of AirTies, an Istanbul-based maker of wireless routers and Internet television technology, is one of the businessmen trying to push Turkey in that direction. While he’s optimistic about Turkey’s 2023 goals, “there’s a lot of structural work to do,” he said, including resolving the current-account deficit and producing energy domestically while economizing on its use.

    Celebi said his company has been developing products with Israeli companies including France Telecom SA’s Orca Interactive Ltd. unit, a maker of software for interactive televisions, because “they are good at innovative solutions.”

    “We are importing many high-tech and low-tech parts,” Celebi said in a phone interview. “We need to be able to produce them locally like China and also increase production of value-added products. Turkey needs to focus on specific sectors, like China, Taiwan and South Korea.”

    Turkish-Israeli ties are in the spotlight after Israeli Prime Minister Benjamin Netanyahu phoned Erdogan on March 22, in a call arranged by President Barack Obama, to apologize for the killing by Israeli commandos of nine Turks aboard an aid ship bound for Gaza in 2010.

    U.S. Aid

    That incident, and Erdogan’s criticism of the Israeli military operation in Gaza that began in December 2008, strained a decades-old relationship between two of the main U.S. allies in the Middle East. Ties were built around defense, where Turkey benefited from Israel’s technological advances, buying drones and upgrading tanks.

    Israel receives about $3 billion a year in U.S. military aid, of which close to 75 percent must be spent on equipment or services from U.S. companies, a rule that fosters joint technological research by the two countries. Among the largest American suppliers to Israel are Chicago-based Boeing Co., Bethesda, Maryland-based Lockheed Martin Corp. and Raytheon Co. in Waltham, Massachusetts.

    Trade between Turkey and Israel has largely survived the diplomatic standoff, though it declined to $4 billion last year from a record $4.5 billion in 2011, according to Turkish government data. A decline in Turkish imports of chemicals used in manufacturing is one of the reasons, Joseph Avraham, Israel’s consul for economic affairs in Turkey, said in an e-mail.

    Turkey Growth

    In the Erdogan decade, Turkey became the world’s 17th- biggest economy, according to the International Monetary Fund. It posted annual average growth of 5.1 percent, compared with 4.1 percent for Israel. That’s reflected in stock-market gains, with Turkey’s benchmark index rising about 700 percent, compared with about 300 percent for the Israeli equivalent. In the previous decade, Israel, whose population is less than one-tenth the size of Turkey’s, was ahead on both counts.

    Turkey hasn’t moved upwards in the global league when measured by per-capita GDP, though. In the 10 years through 2013, Turkey’s ranking by that measure remained at 67th in the world, according to the latest IMF data. Israel climbed six places to 27th.

    Israeli assets are ranked as less risky by analysts, and the country was upgraded to developed-market status in 2009 by MSCI Inc., whose stock indexes are tracked by investors with about $7 trillion of assets. Israeli debt is classed as investment grade by the three main credit-rating companies, while only Fitch Ratings has given Turkish bonds that accolade.

    Hot Money?

    The IMF data highlight the Turkish economy’s biggest weakness, too. Since Erdogan’s party came to power in 2002, Turkey has run up a deficit on the current account, the broadest measure of trade, of about $353 billion, compared with a $32.6 billion surplus in Israel.

    That’s a measure of the greater competitiveness of Israel’s economy. The gap leaves Turkey more dependent on volatile movements of short-term foreign capital to finance growth. When that so-called hot money is flowing to emerging markets, Turkish growth typically outpaces Israel’s. When investors favor safety, the Israeli economy is more resilient.

    Turkish Economy Minister Zafer Caglayan says producing higher value-added goods is the only way to cut the current- account deficit. “Last year, for every kilogram of exports, Turkey’s added value was $1.58,” he said in an interview last month. “For Germany it was $4 and for Japan it was $3.50. The solution is there.”

    Ballistic Technology

    Turkey needs to grow at least 6 percent a year to meet the top-10 target by 2023, the centennial of the republic, Caglayan said on April 1. Growth eased to 2.2 percent last year, the slowest since a recession in 2009, after the central bank raised borrowing costs to rein in a credit boom.

    Nurol Holding, based in Ankara, is one of the Turkish companies waiting for better ties with Israel so it can resume partnerships. It was an Israeli company that supplied the ballistic protection technology that Nurol’s unit FNSS Savunma Sistemleri AS used to equip the armored vehicles it makes against land mines, said Feyiz Erdogan, senior legal counselor for Nurol, in an interview.

    “Israeli companies have always came up with innovative technologies,” said Erdogan, who’s no relation to the prime minister. “If relations are normalized, why shouldn’t we benefit?”

    Innovative Companies

    Turkey’s biggest exporters such as Vestel Elektronik Sanayi & Ticaret AS, which has about one-fifth of the European LCD television market, often import some of the highest value-added components to make their products.

    “Israel has a high-tech export-oriented economy,” said Alon Liel, former director-general of Israel’s Foreign Ministry and ex-chairman of the Israel-Turkey Business Council. “Turkey, though also focused on exports, isn’t as technologically advanced as it should be.”

    Government incentives are aimed at shifting some of the production, such as engines for cars, to local industry. Between 60 percent and 85 percent of the parts for Renault SA’s Turkish unit are made locally, according to the company.

    An overhaul of Turkey’s education system is needed to generate more innovation, economist Sayan said. Turkey currently has a “poorly educated population” and a system that doesn’t encourage creativity, he said.

    Even with success in those areas, Erdogan’s 2023 goals may be too ambitious, Sayan said: “It’s good to set targets for the country and it serves to boost public morale.” Entering the top 10, though, is probably “a dream.”

  • A Devil’s Island off Turkey

    A Devil’s Island off Turkey

    By Hermes SolomonPublished on March 31, 2013

    GIDEON John Tucker (1826–1899) was an American lawyer, newspaper editor and politician. In 1866, he wrote, “No man’s life, liberty or property is safe while the Legislature is in session.”
    Tucker’s statement is certainly true of our legislature, who betrayed citizens by failing to observe laws governing our membership of the European Union. In turn, Cyprus was punished by the troika group, which comprises the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB).
    Today, the word ‘betrayal’ is on everybody’s lips – demonstrators, bank employees and politicians to name but a few. But the hard facts of the Cyfi-prob suggest otherwise. Comparing President Nicos to Judas is unjustified.
    I’ve been living here for ten years and have yet to receive a straight answer to any question posed to officialdom. I initially put their evasiveness down to deviousness/artfulness, but now suspect it might be due to excessive in-breeding and autism.
    Historically, our ancestors were known as scavengers of shipwrecks – our inlets/harbours used as ports of convenience for pirates pilfering Ottoman seafaring wealth. The island’s hillbilly farmers survived impoverished on scrubland, bedevilled by disease and plagues of locusts.
    Since 330AD we were a people loosely unified under the guidance of the Greek Orthodox Church, and have, in 1700 years, failed to adapt to other than the spiritual. We are still living in trust of yesterday’s Constantinople sustained by easily accessible dosh. After all, what else could our banks have done with those Russian billions other than chuck them at irresponsible scavengers at high interest rates who, like vultures, tore the corpse of this economy to shreds, failing abysmally to invest a single cent in the island’s future and the security of our grandchildren?
    Our past sins have now returned to haunt us.
    My book, Cyprus on the Rocks, published over two years ago, more than aptly presaged today’s catastrophe. Even the title should have made the literate sit up and take notice. But which politician or economist predicted our own impending doom when we were gloatingly dispatching food parcels to Greece? The cost of fuel has doubled since, during which time our banks persisted in throwing somebody else’s money at an already hugely financially overstretched populace?
    There are more black holes in our banking and financial services sector than in the entire universe – so many in fact that our legislature doesn’t even know where to start. Numbers are meaningless; how to resolve bad banking practices and self-inflicted poverty, unanswerable.
    How much of depositors’ deposits will be frozen. What will be the eventual limit on withdrawals from ATMs? Who will and who won’t be permitted to transfer ‘their funds’ abroad in what was, up until recently, a ‘free movement of capital’ EU member state? And for just how long will restrictions last?
    Ten years ago, passenger ferry services from Piraeus to Limassol were abandoned. Cyprus, without realising it, became an island prison facing Turkey, like Devil Island in French Guiana.
    The illegal way out of the Republic is through Ercan Airport or Girne (No, not Tymbou and Kyrenia which, like Constantinople, no longer exist). Those of you with pots of cash at home, and who now hate Cyprus, please leave!
    Cyprus has been driven down the drain by powers beyond the ordinary man’s control. She is now floating out to sea. But you could, like me, stay onboard and fight to drop anchor.
    The Attorney-general’s job is to protect the innocent at the expense of the guilty and not permit those criminals to escape with their euros, gold bars or dollars to other tax free havens, which will shortly come under the scrutiny of EU officialdom anyway. Passports of all suspects responsible for this mess should be confiscated until an investigation into their presumed illegalities is satisfactorily concluded. This island must be sealed tight, and with the co-operation of the Turkish Cypriot authorities, flight of criminal phoenixes grounded.
    It is pointless arguing the legality of recent legislation – fighting for our human rights since 1974 has dug too many of us into the ground on both sides.
    But today’s financial fiasco can in no way be compared to 1974. Today, we are stony broke with a declining tourist industry, virtually no manufacturing base and a bankrupt financial services sector.
    We must expect to be drip stolen of what money we have left by further devious legislation (taxes) and our banks. Our standard of living will fall rapidly to resemble that of Greece.
    We will endure eternal poverty if we continue sending our kids on the streets to demonstrate with placards insisting that the ‘troika get out of Cyprus’, we ‘leave the Eurozone’ and ‘return to the Cyprus pound’ – all nonsense and brainwashing by teachers who should know better.
    But where does the island’s future lie? And that is the only question now worth asking and answering.
    We will never see the benefits from our gas wealth unless there is a settlement with Turkey over the Cyprob. We must solve the Cyprob yesterday for the sake of the economy tomorrow. This is the only way forward. Accepting a revised Annan Plan, precipitating closer ties with Turkey, will mollify both Israel and the US, even if it leads to weaker ties with Russia and Europe. We are, after all, central to the Near East, at present floating awkwardly in the middle of ‘no-man’s’ sea!
    All nationalism has its price and we’ve paid for ours many times over – 1821, 1931, 1960, 1974 and 2013. Enough is enough! Let’s start living in the real world and stop living in the ephemeral (of no lasting significance) past! We have been staring in the wrong direction for far too long.

  • Turkey to clear IMF debt by May

    Turkey to clear IMF debt by May

    6ISTANBUL (AFP) – Turkey is set to make a “clean break” with the International Monetary Fund by paying off its remaining debt by May, Prime Minister Recep Tayyip Erdogan said on Saturday.

    “We have been paying and paying… Right now the debt stands at $860 million (643 million euros),” Erdogan said in televised remarks.

    “When we pay the last slice in May, we will zero out the debt and make a clean break,” he added.

    Erdogan said his Islamic-rooted Justice and Development Party (AKP) government, which took over a $23.5 billion IMF debt when it came to power in 2002, was in talks to loan five billion dollars to the the global institution.

    The pay-off would mean a “new era” for Turkey where taxes can be put toward expanding national infrastructure once the debt is cleared, Finance Minister Mehmet Simsek was quoted as saying by Anatolia news agency.

    “We have somehow maintained a debt deal (with the IMF) since 1958,” he said. “Turkey is now entering a new era by not signing into any programs and clearing its debt completely…Turkey will be climbing up the ladder in a sense.”

    Over the decades, Turkish governments have signed 19 stand-by agreements with the fund for over $50 billion to meet financial challenges.

    In 2008, Ankara managed to complete its last stand-by with the IMF, signed in 2005, and refused its aid in 2010, following two years of negotiation with the Washington-based institution.

    During that period, the Turkish economy staged a spectacular recovery despite the global financial crisis, growing by 8.9 percent in 2010 and by 8.5 percent in 2011.

    Its growth has however slowed down significantly since late 2011, with government forecasting a growth of five percent each for 2014 and 2015 amid its plans for a “soft landing.”

    via Turkey to clear IMF debt by May: Erdogan – The West Australian.

  • What Goes Around Must Come Around Chapter16

    What Goes Around Must Come Around Chapter16

    WHAT GOES AROUND MUST COME AROUND

    IT CAN NOT HAPPEN TO ME. GUESS WHAT? It will !!!

    Chapter 16

    On February 10, 1941 then Senator Harry S Truman made a speech telling the [1]Senate what he had found on his investigations of government waste in the war effort.  The Senate passed his resolution and authorized $15,000 and made him Chairman.

    That was the beginning of the “Truman Commission.” It saved the taxpayers over $15 BILLION dollars and saved thousands of soldiers lives. FDR even encouraged Truman to look into certain areas. Every report made by the committee was unanimous. During the course of the war the committee’s budget was increased from the initial $15,000 to $300,000. That is amazing considering how today this congress is so divided.

    Because of his positive efforts as a fine senator FDR chose him to become his vice President when he ran for a fourth term.

    Truman felt that people dealing with government funds , whether they are local, state or national have very little respect for those funds.

    It is my belief that when you have a boom period, people become very sloppy because IT IS NOT THEIR MONEY.   Then when times are tough which is usually the case after a boom period- good times can not last forever-they get too dependant upon those loose funds and create clever schemes to cover up their begotten gains.

    A perfect example of this is what went on with Fannie Mae and Freddie Mac the two giant government mortgage agencies that are now controlled by the Federal Housing Finance Agency at the cost of over $150billion. They (bureaucrats) are trying to figure out what to do with them.  These entities should be closed down immediately. The mortgages, if found, should be returned to the originating bank and serviced there interest free. I believe this is one of the reasons Collateralized mortgages (CMO”s) and derivatives were created as another way to fleece the public. The firms that created these monster fraud vehicles should be the ones to pay and forced to leave the business. This is a process of power and corruption. What goes around comes around. Too big to Fail should mean too big to save. The public worked hard to save and invest for a home, it is the politicians and the bureaucrats that squandered their savings and ruined their dreams. They are trying to muddy the thought process by bringing up the fact that there are some folks who have been paying. If they can pay the principal then forgive the interest payments. Give them a second chance – not the politicians.

    Some of these instruments have been traded into oblivion and should be trashed with the creator of these funny money obligations taking the loss. That is if they can be found. This will ultimately be a good savory bone for the beleaguered savings industry.

    When a mortgage was submitted to the Fannie Mae or Freddie Mac those funds left the local community and fleeced the pockets of bureaucrats inWashingtonD.C…Simply put – more fingers tasting the pie.

    IT BEHOOVES EVERY NEWLY ELECTED POLITICIAN IN EVERY DECOCRATIC FORM OF GOVERNMENT WORLDWIDE TO INVESTIGATE FOR WASTE AND CORRUPTION IN THEIR COUNTIRES.  Some agencies should be dropped and other downsized and maybe some increased. The main purpose is to recover ill-gotten gains even if they were transferred to other entities. This will help bring down government deficits and reduce government debt. If Harry Truman’s committee saved billions of dollars in the early 1940’s; think of all the moneys that can be saved today. One of the wealthiest cities in the world today is WASHINGTON.DC.

    Governments should not get into the people’s business, but they must set fair and honest rules so the participants are guaranteed an equal chance. Participants that break the rules should be severely punished.

     

    [1] Plain Speaking An Oral biography of Harry S Truman, Chapter 13

    Merle Miller

  • It CAN’T HAPPEN TO ME. GUESS WHAT? IT WILL!!!

    It CAN’T HAPPEN TO ME. GUESS WHAT? IT WILL!!!

    IT CAN’T HAPPEN TO ME.   GUESS WHAT?   IT WILL!!

     

    Chapter 12

     

    The Flow of Money

     

    Money goes where it is treated best.  This really means money goes where the owner of money is treated best.

    States that have low taxes have the lowest unemployment rate because there is less money for bureaucracy and more for investments. Investment means jobs for the individual.

    Now doing business with an honest profit motive versus wiping out the spread between profit and loss sounds good, but in reality can be the cause of the opposite result.

    Case in point is the Stock commissions. When the authorities moved to the decimal system versus fractions the middleman was wiped out. Investments now became gambles. Many firms sprung up over night advertising first 100 trades free. So the unwary would buy 10,000 shares of a penny stock.

    Volume exploded on the upside. So did volatility because the  “pros” did not have the funds available, made possible by market spreads, to support stocks.

    To supplement lost income the “street” invented ways to fleece the unwary and line their pockets. Instead of working with clients and protecting them; it became an all out war.

    First it was the Options market. In the beginning over 80% of all trades were losers; I do not know if it has improved much over the years. Number one rule is: There is no such thing as a free lunch!

    Then came the big bombs. So called “bunker busters” under the guise of derivatives and collateralize mortgage obligations or CMO’s.

    One can collateralize anything providing they have a willing buyer. The “spread” is humongous versus the honest stock exchange commissions of yesteryear. This is why some firms have billion dollar earnings QUARTERLY.

    This fiasco has become such a financial nightmare there is no easy way out except to ban all future trades and let the existing ones wind down under their own steam.

    The markets have become giant casinos for daily trading.  Increasing the cost of investments will cause one to invest versus trade for penny profits.

    By raising margin rates across the whole spectrum of investments will stall SPECULATION.

    This experiment in negotiated rates to benefit the little guy has backfired. The little guy is dead and buried. The survivors are petrified.

     

  • IT CAN’T HAPPEN TO ME. GUESS WHAT? IT WILL !!

    IT CAN’T HAPPEN TO ME. GUESS WHAT? IT WILL !!

    IT CAN’T HAPPEN TO ME. GUESS WHAT?  IT WILL!!

     

    Chapter 13

     

    QUANTITATIVE EASING: (QE) WAKE UP!

     

    Quantitative easing one and two have sent us down the path the Japanese have trudged. It is well worn with no weeds or grass, just plain old dirt.

    We had a depression right after WWI. Warren G. Harding was president. He said we could earn our way out. Harry Truman lost his men’s store and went to the library and read every book in it.  Herbert Hoover tried the same thing, but when it came to his programs the democrats stalled his programs waiting for a new president. The new president (FDR) and his “New Deal” were working until he raised taxes in 1938. Someone had to pay.

    My contention is this. The government is our parent or umpire. It sets the rules of “Fair Play”. They should be enforced and violators banned.

    QE’s are a bureaucracy. This is how they started way back when.

    When Marco Polo came back from China, he was imprisoned because the Chinese were so far ahead of the rest of the world. He wrote notes on toilet paper that were sneaked out and read by the public. He was eventually released and the rest is history.

    So what happened to China? They had the wheel, gunpowder and paper before the rest of the people on earth- way before the year one.

    I think it started in the Chi dynasty. They wanted the best and brightest of all of China to run the country. So they gave tests to every child all over the country and the winners were brought to the capital to learn and study. That they did.  Then as they grew up they married. Their children were then sent to special schools so they could do better than the average Chinese child.

    Guess what?  The Chinese also invented bureaucracy!  So the way we are going in the year 2012 we will be like China in 4025!

    To jumpstart the economy we must institute a “FAIR PLAY” AND this will send 100,000’s of dollars to every citizen living in the United States of America. The proviso is that they must pay down all debts minus interest. Bring back the USURY Laws and spend the monies as they see fit while saving 10%.

    Thus banks that are “TOO BIG TO FAIL” will all of a sudden be divesting themselves. Too many companies have over expanded and therefore they became protected by the government, because they were “TOO BIG TO FAIL”. BALDERDASH!!!!

    If your neighbor borrowed money from you and was in trouble, would you not be happy to receive the principal BACK?

    A BANK IS SUPOSSED TO BE THE PROTECTOR OF ONE’S MONEY.  All those monstrous salaries could be used to pay dividends and interest on deposits. Banks who have honest earnings should then meet a standard where they qualify for salary increases based upon performance of the bank – not the stock price.

    Our banking system needs reform from the bottom up. The Federal Reserve Act does not cover how banks are run internally. That is a positive.

    We must self-regulate so that Congress is a happy bystander.

    These chapters are “food for thought”. I try to keep them concise and swift in thought. It is up to you, dear reader, to embellish upon the themes.