Saturday, July 11, 2009

Cry, the beloved country

A friend of mine sent me this link (sorry no hyperlink, as I am on the Bberry) in the morning with the following note:

"In a world where Newsweek publishes articles by people who decide how a country is doing by visiting the most expensive clubs on the coast of the Bosphorus and collecting information during dinner chats with "businessmen" who are probably buddies, the people who work hard to get an article published after much research can only despair..."

My friend is only half right. As a former bank economist who used to shuttle hedgies around town in these so-called information trips, I can confirm that not only these guys talk to a few people over dinner at Reina, they also invariably talk to the same guys, ending up with a consistent misrepresentation of the economy. In terms of econometrics, their Turkey estimator has low (actually zero) variance, as they always get told the same story, but is biased! Even the respectable WSJ and FT, who have embedded journalists in the country, can not avoid this error...

Coming to specifics, here are a couple of points my friend brought up, with my (and his) comments:

"The federal budget is a shambles, "
We call that the central government here, buddy...

"In recent weeks, Istanbul buzzed at its usual frenetic pace and the Bosporus was jammed with tankers, freighters, and cruise ships. The hotels on the coast were packed with Germans, Russians, and Israelis working on getting tans and skin cancer."
Kudos for inventing new economic indicators that we Turkish economists did not know about. BTW, I was in Suada (aka saibesaray island) the other day, and it was packed as well.

"Signs that the local economy is rebounding include increasingly busy factories, with capacity-utilization rates at 70 percent in May, up from the trough of 64 percent in February"
See yesterday's post on what to make (not too much) out of the latest CUR and IP figures.

"Domestic demand is clearly improving,"
It is clearly improving very slowly from a very low base. All we are see is the limited effects of tax cuts. If you don't believe me, check out consumer credits data.

I think I should be the one to be despairing (at least that's what my buddy was implying), but hey: At least, guys like Barton Biggs provide me with entertainment on a one and a half hour ferry:)...
Sent by BlackBerry Internet Service from Turkcell

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