Here's my take, as promised, on some of the key Econ. news of the last few days:
On unemployment, the Daily News made the same mistake as almost all the others in calling the latest (March) figures a drop over the previous month- interestingly, they had got it right in the early reporting, so it's a pity they changed it in the full article. All I will say is that when I do my Economics trainings (more on that in a separate post in a couple of days), the examples I choose to depict seasonality in Turkey are in unemployment and tourism revenues because they are the easiest to grasp for a layman. Moreover, in terms of unemployment, this effect gets magnified because you are actually comparing two time periods three months apart: This is because TURKSTAT reports the average of three months. The March figure is the average of February-April and the February figure January-March. Therefore, disregarding month to month measurement errors, the difference between the two reads boils down to the difference between January and April. This is no rocket science, but nevertheless all but a couple of columnists got this wrong as well. Spare yourself the misery, and just have a look at Seyfettin Gursel at Referans after the employment statistics come out (if you speak Turkish); he's one chap who knows what he is talking about on employment.
Babacan stole the show on Monday, announcing easing of restrictions of Turkish companies for borrowing from abroad and credit card restructuring relief. Again, I was disappointed for the relative positive reporting mood for the latter. We are all humane do not want to see anyone committing suicide over credit card debt, but almost all the newspapers/commentators are missing the big picture: This is virtually a repeat of past tax and social security premium amnesties. Basically, the government has been punishing those who have been paying up on time and therefore creating moral hazard big time. In fact, it has come to such a point that paying up on time has definitely become time inconsistent. Keep up the good work, Babacan...
As for the easing of borrowing limits, although they will polish the external debt statistics and enlarge bank balance sheets a bit (but not too much), I am not sure how they will affect FX liquidity and the FX market. There could be some pressure, theoretically at least, on FX liquidity, but we'll just have to wait how this works out in practice.
Speaking of the highly esteemed Econ. Minister, since he is back on the job as Econ. Minister, articles commending his 2002-2007 performance are popping up like mushrooms. This is a topic I have been dying to go into for some time, so here's my brief take: 2002-2007 was a time when the government managed to practice considerable fiscal restraint for the first couple of years and put a crisis-struck economy back in order. But contrary to the consensus view, fiscal easing started as early as 2005-2006, as looking at the discretionary spending figures attest. Basically, since the economy was growing, it was easy to get high primary surpluses. But this is a time when the government also missed on a very good opportunity to enact the structural reforms it is quarreling with the IMF on and really save for the rainy days. This would make a perfect Hurriyet column, and if I decide to do that, you'll be able to judge Babacan more objectively.
Speaking of structural reforms, I really felt like an idiot last week: For some time, I've been straining to understand why the government would be vehemently opposed to an independent tax administration. Then, I saw the owner of Hurriyet win an award and lightning stroke in my head: This is exactly what I had written about following the infamous Dogan tax levy.
That's all folks; I'll return to my daily commenting starting tomorrow...
On unemployment, the Daily News made the same mistake as almost all the others in calling the latest (March) figures a drop over the previous month- interestingly, they had got it right in the early reporting, so it's a pity they changed it in the full article. All I will say is that when I do my Economics trainings (more on that in a separate post in a couple of days), the examples I choose to depict seasonality in Turkey are in unemployment and tourism revenues because they are the easiest to grasp for a layman. Moreover, in terms of unemployment, this effect gets magnified because you are actually comparing two time periods three months apart: This is because TURKSTAT reports the average of three months. The March figure is the average of February-April and the February figure January-March. Therefore, disregarding month to month measurement errors, the difference between the two reads boils down to the difference between January and April. This is no rocket science, but nevertheless all but a couple of columnists got this wrong as well. Spare yourself the misery, and just have a look at Seyfettin Gursel at Referans after the employment statistics come out (if you speak Turkish); he's one chap who knows what he is talking about on employment.
Babacan stole the show on Monday, announcing easing of restrictions of Turkish companies for borrowing from abroad and credit card restructuring relief. Again, I was disappointed for the relative positive reporting mood for the latter. We are all humane do not want to see anyone committing suicide over credit card debt, but almost all the newspapers/commentators are missing the big picture: This is virtually a repeat of past tax and social security premium amnesties. Basically, the government has been punishing those who have been paying up on time and therefore creating moral hazard big time. In fact, it has come to such a point that paying up on time has definitely become time inconsistent. Keep up the good work, Babacan...
As for the easing of borrowing limits, although they will polish the external debt statistics and enlarge bank balance sheets a bit (but not too much), I am not sure how they will affect FX liquidity and the FX market. There could be some pressure, theoretically at least, on FX liquidity, but we'll just have to wait how this works out in practice.
Speaking of the highly esteemed Econ. Minister, since he is back on the job as Econ. Minister, articles commending his 2002-2007 performance are popping up like mushrooms. This is a topic I have been dying to go into for some time, so here's my brief take: 2002-2007 was a time when the government managed to practice considerable fiscal restraint for the first couple of years and put a crisis-struck economy back in order. But contrary to the consensus view, fiscal easing started as early as 2005-2006, as looking at the discretionary spending figures attest. Basically, since the economy was growing, it was easy to get high primary surpluses. But this is a time when the government also missed on a very good opportunity to enact the structural reforms it is quarreling with the IMF on and really save for the rainy days. This would make a perfect Hurriyet column, and if I decide to do that, you'll be able to judge Babacan more objectively.
Speaking of structural reforms, I really felt like an idiot last week: For some time, I've been straining to understand why the government would be vehemently opposed to an independent tax administration. Then, I saw the owner of Hurriyet win an award and lightning stroke in my head: This is exactly what I had written about following the infamous Dogan tax levy.
That's all folks; I'll return to my daily commenting starting tomorrow...
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