Wednesday, July 1, 2009

Live blog from post-crisis global economic order and Turkish economy conference (III)

Erdem Basci noted that CBT's goal was to decrease market rates, and they have succeeded. But Seyfettin Gursel noted that recently, market rates are not following policy rates. Why? EB: yield curve steepens in crises, this is normal. Maturity premium is prices. The same holds for deposits and credit. In maturity premium, there is credit and inflation risk. For Treasuries, you need fiscal framework for credit risk. Now, people are afraid of inflation and deflation (but not for Turkey, so...)- ED (that' me): overall, I believe CBT's cuts just helped finance Treasuries.

Erdem Basci put the loose credit blame to CDSs. I am not sure, as there was a liquidity flush at the time.

Cevdet Akcay questioned the export-led growth model. Exports could only be financing for imports, in the short run. Similarly, savings will not go up by themselves. Overall, I found his comments thoughtful- what he said is non-consensus and definitely deserves more attention.

I also felt a tiny bit of sarcasm when Cevdet Akcay asked Ziraat CEO Can Akin Caglar why they had advanced credit while other private banks weren't. Was it that the private banks missed an opportunity? Caglar kind of dodged the question...
Sent by BlackBerry Internet Service from Turkcell

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