Strange things going on in markets…

Yesterday, something like a phenomenon occurred in markets. Stock exchange, exchange rates and interest rates all went up together, which recently became so frequent in Turkey. There are several reasons this could be happening:

  • The fact that Turkey’s credit rating only allows for capital market investments
  • The fact that the majority of daily trading and transactions are made by type of investor who does not like tying up too much money
  • Public sector’s borrowing appetite
  • Political tensions in the US and the world

As you can see, I put ‘political tensions’ at the bottom of the list. In Turkey, there are certain fundamental issues that require attention such as the fact that Turkish markets are experiencing a strange quartet called ‘high growth rates-high inflation rates- high unemployment rates-high interest rates.

The last time we face a similar situation was in 1990s. Back then, public sector was in desperate need of borrowing. Turkey was still fighting against terrorism, carrying out cross-border military operations while trying to put its complicated relationship with America back on track.

But there were several facts that made 1990s different: First, banks thought borrowing loans to the public sector were considerably more profitable than borrowing loans to businesses. However, today, it looks like those banks had learned their lesson. Also, back in the day, coalitions were governing the country, whereas today there is one-party rule. While in the 1990s, fixed exchange rate regime was dominating the markets, today’s floating exchange rates change freely and are determined by trading in markets.

“What should the State do? What should the citizen do?”

However, I need to remind you that when Turkey was most determined in terms of taking strong steps towards growth and development was the time when it had maintained good relations and strong ties with the EU while, on the other hand, keeping itself at a distance from the US and, acting well-disciplined in terms of public expenditure. Even the State itself had become more substantial when it succeeded in establishing strong infrastructure investments which put a smile on the producers of goods and services, meanwhile, speeding up investments in education.

Listen to this wise advice: “State must carry out its fundamental duties without poking into details like educational life, social or business life, or attempting to take individuals’ places. Instead of fulfilling its fundamental duties, if the State starts to show up in areas where it has no business, then there will be a flaw in each fundamental duty it is carries out. And if individuals attempt to mend these flaws, it will eventually lead to chaos.”

These are the wise words of Mustafa Kemal Atatürk, not mine. This was the way he had established the fundamentals of the Republic in 1923. So what we need to do is to keep this stance forever and walk proudly towards the future. In this way, we will be talking more about science and art while market fluctuations and others problems will slowly diminish. We will also find the chance to make a broader analysis in economic issues, instead of looking at them from a narrower perspective.