What do you usually do when it comes to find a solution to problems? I’m sure some of you will first prefer to say, “Let’s see if there’s or not an actual problem” Let me make it clear: There is a problem. So, without further ado, I would like to express my intention.
It is totally up to you to choose to bypass the problems or properly address them. As you can see, I don’t mention here anything about a “solution” since the aforesaid approach does not involve any solution intent.
On the other hand, deciding to properly address the issues seems like a more positive step compared to the former approach even though it does not guarantee a permanent solution to the problem.
Here’s my answer to those who insist to solve the problems in time : “Problems need to be solved before it’s too late”. I think it is now your turn to decide to do the right thing.
“Argentina and Turkey… Again…”
Surely, everyone knows better how to deal with their own problems, as we all know; however, desperate times call for desperate measures. Last week, I told you that a super bond supply is absolutely necessary and recently taken steps will not necessarily bring a lasting remedy.
If the Treasury does not take the necessary measures, CBRT may have to follow in the Central Bank of Argentina’s steps. Having taken a rather drastic action by hiking rates by 1500 bps, the Central Bank of Argentina is trying hard to prevent their national currency from further depreciating. In spite of those who are giving a standing ovation to this action by the BCRA, I do not think that this specific measure will not achieve the intended goal. There are so many issues that need to be dealt with in Argentina first that maybe this rate hike measure should have been considered as the last resort.
Now, a quick look at Turkey: I feel like we are headed towards taking an action that it should never be taken in lieu of taking the right action and it is making me worry. We look at some mundane and non-permanent positive news and consider them “victory”.
Here’s an example: last week, Government released a statement saying that Turkey’s foreign account deficit has been reduced. Although it may appear as good news to some of you, we should in fact remember that more than 85% of Turkish imports consist of raw material intermediate goods and investment goods; accordingly Turkey’s economic growth will decrease significantly over the upcoming period. As there’s no drastic increase in value-added in exports, Turkey is obviously facing a decline in production volume.
I am asking one more time, “Should we bypass the problems or properly address them?”