Sunday, April 11, 2010

EconNews Roundup

February Industrial Production comes out higher than expected: But I maintain my stance that signs on the speed of recovery are mixed and high growth this year can not be taken for granted.

Having said that, I should also warn you that there are many who disagree with me. But let me be clear: The March Industrial Production and 1st quarter GDP will come out high on year on year basis because of a base effect- the economy contracted 14.5% yoy in 1Q09!

Rising steel prices worry carmakers: I'll admit, I have a pet project of doing sectoral leading indicators for autos and a few other sectors involving TAYSAD and other associations, so including this news serves as a self-reminder.

I don't want to blame the Daily News too much, as they made the same mistake (as all the other 666 media outlets) of ignoring the most vital part of Econ. tsar Babacan's Haberturk interview: That municipalities will be part of the fiscal rule as well. That addresses one of my key criticisms to the fiscal rule, but Babacan did not confirm that the famous formula will involve consolidated government deficit, not just the central government. But even then, I have some other doubts on the fiscal rule, such as whether the coefficients in the formula are conservative enough, or whether this is the right rule for Turkey (I would prefer an expenditures cap). Then, I have some serious doubt on the implementation as well. Contrary to what many think, this is not Turkey's first attempt at a fiscal rule: You could think of the ill-fated borrowing limits in the fiscal control law, which were being cropped or even nullified with subsequent laws, as a fiscal rule. So the same fate awaits the NEW fiscal rule unless it is hammered into the constitution and credibilized (I know there is no such word) with an independent and authoritative fiscal monitor or budget council. Anyway, you can see a sum-up of my thoughts and writings on the fiscal rule in a recent blog post. By the way, David always likes to humble himself as an ignorant agricultural reporter, but I thought the Daily News editorial on the fiscal rule was quite good.

TSKB REIT comes to ISE: Again, a personal post, as I used to go there a lot when I was a little kid, when my mom used to work there. They had to keep my away from the computers (mind you, this is late 70s, so the computer I am talking about is about the size of a room) by saying that they would snap my fingers, so I used to call them the finger-snapping machines. Leaving this personal anecdote aside, the growth of REITs in Turkey is a interesting development that needs to be followed up.

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