Learning from mistakes…


Legendary Manchester United Coach Sir Alex Ferguson says in his book that “You should always contact young football players through their mothers”. Because fathers are much less sensitive than mothers. Because fathers mostly aim for the child to transfer to a good team and to earn money, rather than being interested in the child’s health and well-being.

Maybe that’s why we see many young and successful footballers completely moving away from the pitch due to injuries or their inability to handle the pressure. Fathers choose to forcefully send them to competitions, thus attracting the attention of managers and even entering into inappropriate commercial relations with them, whereas they should tell their sons to rest or receive the proper medical care in order to help heal minor injuries.

For the last 15 years, I have been involved in football in various capacities. I often heard with my own ears people say: “I spent a lot of money on this kid, I put a lot of effort into his future. I obviously do not want anything bad happen to him, but he needs to make a breakthrough in his career already! I do not care if he’s injured or not! He will get to the pitch and play!”

When we look at the monetary policy in today’s Turkey from the same perspective, we could see that the government is mostly aiming to maintain a good growth performance by ignoring or covering up problems such as soaring inflation, high cost of living, and the rise in exchange rates. Like the fathers of those young footballers, the economy officials in Turkey wants to win at all costs. But, sometimes, instead of winning, you must seek to protect, watch, maintain, prepare for competition, and be extremely patient to achieve all this. We must accept the truth that victory is never guaranteed, even if we prepare properly and display patience.

When we do not learn from the mistakes we made before, but act only to win, when we try to treat a serious disease with minor medical care and force things to happen, just as people do in Nasreddin Hodja stories (one of Turkey’s best-known fictional characters with his legendary wit and droll trickery), the only result we will guarantee is losses with greater costs. No need to tell the whole story, but here’s the end of it: “Our donkey was just getting used to hunger, I wonder why it died?..”

As I always say, when the deposit interest rates are kept low, loan rates rise in an environment that moves away from the market realities, and the steps taken by the CBRT yields no fruit. This being the case, citizens and institutions resort to foreign currency. However, this situation does not harm private banks. They sell the cheap money they collected with very high interest rates now and they have made astronomical profits from the “payables and receivables maturity mismatch. They do not lose money while they abstain from providing loans because now, they can easily repay the deposit they accept with a single loan they give out.

Alex Ferguson’s universal determinations…

When we allow deposit interest rates to increase and we bring them closer to loan rates, maybe there will be a decrease in the loan volume, but the maturity will be a little longer and lending behaviour will become more rational. This time, private banks will compete to lend money, which will of course reduce their profitability, but we could all see that their current profitability is not normal either.

If it is allowed, rising deposit interest rates will help prevent the flight to foreign currency, inflation will slow down faster than expected, and Turkish economy will eventually reach a state of balance. All of this can be achieved without the need to raise the policy rate. But, sadly, the CBRT’s hands are tied due to political pressure.

In short, the Turkish economy does not gain anything at all while banks keep making astronomical profits as a result of the CBRT’s and the Treasury’s current policy, which is being stubbornly implemented regardless of loss or deficit. If the objective is to win here, it should be known that, at the end of this game, nobody will win, not even the banks. Just like the ill fate of footballers’ fathers, they will lose both their dreams and their children. I think Ferguson’s determinations apply to this instance as well…