Turkey's economy spiraling down as risk indicators growing for the country

Are Erdogan's undemocratic actions taking their toll?

Credit default swaps are a major indicator measuring country risks, denoting the insurance premium on money invested in a country’s government bonds. The higher the credit default swaps, the higher the country risk.

According to economic sources such as Reuters and Bloomberg, Turkey’s credit default swaps reached 250 in October, the second highest among emerging economies after Brazil with 266. South Africa is third, almost neck and neck with Turkey, followed by Russia, whose risk premium has been on the decline, falling to 218 in October.

Turkey’s risk premium has fluctuated over the years. When the global financial crisis erupted in 2008, for instance, it shot up to 321, while falling to 167 in 2010, when economic growth gathered steam. With the recent decline in economic growth, the risk premium has climbed up again, reaching the current level of 250.

Another widely monitored risk indicator is the grade a country receives from credit rating agencies. Two of the top three agencies watched by investors around the world — Standard and Poor’s and Moody’s — cut Turkey’s sovereign credit rating to non-investment grades in July and September respectively, infuriating Ankara and leaving Fitch as the only major agency that keeps Turkey on investment grade.

Downgraded ratings especially sway the movement of “hot money” or short-term investments in stock market shares and government bonds. These types of external funds have become quite important for Turkey, accounting for a portfolio investment stock of between $40 billion and $42 billion.

Pension funds, in particular, heed closely the assessments of credit rating agencies, pulling out from countries downgraded to non-investment level. And indeed, the Turkish Central Bank’s data points to net capital outflows in the wake of the latest downgrades.

The flight of foreign capital was then followed by the Turkish lira tumbling against the dollar. The greenback, which traded for 2.94 liras before the Moody’s move, has climbed up to 3.11 liras in the ensuing weeks, and seems unlikely to retreat from these levels. Given the country’s bulky external debt stock and the significant share of short-term debt it includes, the appreciation of the dollar on such a scale is not something the Turkish economy can easily digest.

 For indebted entities, a more expensive dollar means their debt has now increased in terms of the Turkish lira. And when it comes to imports, which amount to about $200 billion per year, the dollar’s appreciation means an increasing cost for imported inputs, including machinery and equipment, and thus a cost-push inflation.

In its 2017-19 medium-term economic program, the government tacitly estimates the average dollar-lira parity for 2016 at 2.95, but the trend has already surpassed its projection in the first 10 months of the year. The average parity stood at 2.93 in the first half of the year, while reaching 3.00 in the second half so far. A downward trend seems highly unlikely in November and December, meaning the average for the whole year would be no less than 3.00.

This, in turn, would equal to a yearly increase of nearly 10%, given that the average parity was 2.73 in 2015. According to the program, the government projects a consumer inflation rate of 7.5% for 2016, and if this materializes, the increase in the dollar-lira parity would exceed the inflation rate as well.

When it comes to economic growth, the program projects the rate at 3.2% for 2016 and 4.4% for 2017.

The target for next year depends largely on the inflow of foreign capital, something that the program itself admits by projecting that domestic savings would not exceed 13% or 14% of gross domestic product, meaning that the funds needed for investment could be secured only externally. And this brings up the key question: Will the expected inflow of capital materialize? How will Turkey attract foreign funds to stimulate growth while its risk premium is on the rise, coupled with a “non-investment” grade by credit rating agencies?

Turkey’s prevailing conditions and its prospects for 2017 signal heightening rather than easing risks. Economic vulnerabilities are growing, with only a 0.1% increase in investments this year. Atop the investment drought, net external demand falls short of leveraging growth, compounded by rapid declines in domestic demand, the result of growing political and geopolitical risks affecting consumers.

Swelling housing stocks have caused particular concern, leading the government to cut the value added tax on housing sales by 10 percentage points last month at the expense of losing budget revenues. Yet, the construction and housing sector — the driving force of the economy in recent years — appears headed to new bottlenecks in demand.

Rising geopolitical risks are an important factor driving the decline in domestic demand, the backbone of economic growth. Turkey's interventions in Syria and Iraq have painted the picture of a country at war, deterring both foreign tourists and investors. The turmoil in the Middle East and Ankara’s ongoing confrontation with Kurdish actors both at home and abroad represent a major component in the risk factor. The choice of a security-based policy rather than dialogue and negotiations on the Kurdish issue is, no doubt, pushing up the country risk.

In sum, the policies that manage the Turkish economy, already relegated to the “non-investment” league, are bound to heighten rather than lower the risk factors in the coming period. And a meaningful rate hike by the US Federal Reserve in December would intensify the flight of foreign capital from Turkey, further escalating the risks.

Read more: Risk indicators growing for Turkish economy

People Power: People are fed up: "Populism against the Establishment - a Global Revolution in the making?"-by RM

There has never been a greater divide than that of today between the forces of Populism and the Establishment.

Most people are fed up with their corrupt governments and the power of corporations over the political environment, media, etc,  except, obviously, the "1% have all" global elite..

A Harvard University working paper explains this development as follows:"Rising support for populist parties has disrupted the politics of many Western societies. Perhaps the most widely-held view of mass support for populism -- the economic insecurity perspective--emphasizes the consequences of profound changes transforming the workforce and society in post-industrial economies. Alternatively, the cultural backlash thesis suggests that support can be explained as a retro reaction by once-predominant sectors" of the population to progressive value change.

Alternatively, the cultural backlash thesis suggests that support can be explained as a retro reaction by once-predominant sectors of the population to progressive value change. cultural backlash thesis.

Populist leaders like Donald Trump, Marine Le Pen, Norbert Hoffer, Nigel Farage, and Geert Wilders are prominent today in many countries, altering established patterns of party competition in contemporary Western societies. Cas Mudde argues that the impact of populist parties has been exaggerated.

But, nevertheless these parties have gained votes and seats in many countries, and entered government coalitions in eleven Western democracies, including in Austria, Italy and Switzerland.2 Across Europe, as is demonstrated, their average share of the vote in national and European parliamentary elections has more than doubled since the 1960s, from around 5.1% to 13.2%, at the expense of center parties.3 During the same era, their share of seats has tripled, from 3.8% to 12.8%.

Even in countries without many elected populist representatives, these parties can still exert tremendous ‘blackmail’ pressure on mainstream parties, public discourse, and the policy agenda, as is illustrated by the UKIP’s role in catalyzing the British exit from the European Union, with massive consequences. 

The electoral fortunes of populist parties are open to multiple explanations which can be grouped into accounts focused upon (1) the demand-side of public opinion, (2) the supply-side of party strategies, and (3) constitutional arrangements governing the rules of the electoral game."

But unhappiness with their situation and the rise of populism does not only limit itself to Western and Industrial societies.

• Almost half the world — over 3 billion people — live on less than € 2.30 a day.
• The GDP (Gross Domestic Product) of the 41 Heavily Indebted Poor Countries (567 million people) is less than the wealth of the world’s 7 richest people combined.
• Nearly a billion people entered the 21st century unable to read a book or sign their names.
• Less than one per cent of what the world spent every year on weapons was needed to put every child into school by the year 2000 and yet it didn’t happen.
• 1 billion children live in poverty (1 in 2 children in the world). 640 million live without adequate shelter, 400 million have no access to safe water, 270 million have no access to health services. 10.6 million died in 2003 before they reached the age of 5 (or roughly 29,000 children per day).

Why? Behind the increasing interconnectedness promised by globalization are global decisions, policies, and practices. These are typically influenced, driven, or formulated by the rich and powerful. These can be leaders of rich countries or other global actors such as multinational corporations, institutions, and influential people.

In the face of such enormous external influence, the governments of poor nations and their people are often powerless. As a result, in the global context, a few get wealthy while the majority struggle.

And now, here we have the US Presidential elections, with two candidates who in all reality are products of the Establishment, but both courting the populist movement.

Though Clinton has suffered from her perceived coziness with Wall Street, she took a hard line against “those who get rich by cheating everybody else.”

And she warned:“I want to send a clear message to every boardroom and executive suite across our country,” Clinton said. “If you scam your customers, exploit your employees, pollute our environment or rip off the taxpayers, we will hold you accountable.”

Billionaire Donald Trump is even more blunt and probably also slightly more honest when it comes to showing he is standing up for the "have-nots"   But while doing this, he is also demolishing the US Republican party as we know it.  Nevertheless, his most lasting impact may be more substantive — he has pushed the GOP into a much more populist corner on policy, challenging the party’s platform on everything from free trade to entitlements. The Republican party will never be the same again.

And last but not least - Donald Trump boasts he can’t be bought by the special interests and advocacy groups that normally fund political campaigns.   Yes indeed he can now safely label himself the   "billionaire populist".

Whatever the result will be of this totally unorthodox US Presidential election, one thing is clear - a political revolution is in the making around the world, and if we think this is as bad or dangerous as it can get - think again.
©
EU-Digest

Brexit on hold?: May Unbowed by Ruling Pledges to Hold to Brexit Timetable - by Thomas Penny and Kit Chellel

U.K. Prime Minister Theresa May pledged to stick to her Brexit timetable after a court ruled that she needs Parliament’s permission to begin negotiations.

The government immediately said it will appeal the decision, adding that it believes the legal process will allow Britain’s exit from the European Union by mid-2019. The prime minister’s spokeswoman, Helen Bower, said plans to invoke Article 50 of the Lisbon Treaty by the end of March remained unchanged.

“The British people made a decision in the referendum and it’s the job of the government to get on with delivering the decision of the British people,” Bower told reporters in London on Thursday. “Parliament will have a role to voice its views through debates.”

The pound -- the worst-performing major currency of 2016 -- rose to a three week high against the dollar on the ruling even as lawmakers said it didn’t call into question the decision to quit the EU.

Read moreMay Unbowed by Ruling Pledges to Hold to Brexit Timetable - Bloomberg

The Netherlands: Geert Wilders, 'Fewer Moroccans,' and the Question of Hate Speech - by Uri Friedman

In March 2014, during a rally in The Hague, Geert Wilders asked his supporters whether they wanted more or fewer Moroccans in the Netherlands, where Dutch Moroccans constitute 2 percent of the population. “Fewer, fewer!” the crowd chanted. “Then we will arrange that,” the Dutch politician responded, flashing a smile. The remarks lasted only seconds, but they launched a years-long legal battle that resulted, this week, in a trial. Wilders is facing charges of deliberately insulting a group of people based on their race and inciting discrimination and hatred against them.

Over the next few weeks, the trial will revolve around one question, The Wall Street Journal reports: “Is the right of free speech for politicians absolute, or should it be restricted to protect against discrimination?”

Here’s the video when Dutch prosecutors claim Wilders’s free speech veered into hate speech.

Note Almere-Digest: You might like Wilders or you may hate him, but to qualify the above speech as a hate speech, rather than a derogatory political speech, is somewhat far fetched, specially for a nation which respects the right of 'freedom of speech". 

Read more: Geert Wilders, 'Fewer Moroccans,' and the Question of Hate Speech - The Atlantic

Alternative Energy - Windfarms: The Advantages of Floating Wind Farms - Beth Day Romulo

Floating Windfarm Platforms

Clean energy engineers in the United States have been working on a project to make offshore wind farms financially and environmentally viable. At the moment, all offshore wind turbines require a fixed platform, which is built into the seafloor. But floating turbines with anchors would offer more flexibility as to where wind farms could be placed.  

Dr. Habib Dagher, the executive director of the University of Maine’s Advanced Structures and Composites Center, is testing an experiment, which simulates conditions that full-scale floating wind turbines might face off the Maine coast, at an installation near Monhegan Island, in 360 feet of water. For 18 months in 2013 and 2014, a small operating version of the wind farm sat in water off Castine, Maine, sending electricity to the grid. This experiment proved that the technology worked. Now, Dr. Dagher’s team is using the data collected to confirm the final forms of the wind farm.

Conventional offshore wind development, which has its foundation deep beneath the ocean floor, are popular in Europe, but energy companies in the United States are just starting to use offshore turbines. Statoil, a Norwegian oil and gas company, is already developing the first commercial scale floating wind farm off the coast of Scotland.

In the US the Obama administration recently released an updated offshore wind plan, which identifies the floating structures as important in fighting climate change. More than half of the US offshore wind capacity is in deep water. Since floating wind farms are more expensive to build than land-based ones, cost has been obstacle to development.

Dr. Dagher said that if all went well, his team could have two full scale turbines pumping electricity into the Maine grind by 2019, and larger commercial farms starting construction in the Gulf of Maine by the mid 2020s.

Read more:nThe Advantages of Floating Wind Farms » Manila Bulletin Newsbit

Middle East: The War in Syria is out of control: The War in Syria Cannot Be Won. But It Can Be Ended - by  Phyllis Bennis

We need a powerful Global movement demanding an end to the war in Syria. The United States and to some extent the global antiwar movements remain largely paralyzed. There are some campaigns responding to specific congressional and other war moves, with some particularly good work against US support for Saudi Arabia. But as a movement, we seem unable to sort through the complexity of the multi-layered wars raging across Syria, and unable to respond to our internal divisions to create the kind of powerful movement we need to challenge the escalating conflict.

It was easier during earlier wars. Transforming public consciousness, changing US policy—those were all hard. But understanding the wars, building movements based on that understanding, that was easier. Our job was to oppose US military interventions, and to support anti-colonial, anti-imperialist challenges to those wars and interventions.

In Vietnam, and later during the Central American wars, that meant we all understood that it was the US side that was wrong, that the proxy armies and militias Washington supported were wrong, and that we wanted US troops and warplanes and Special Forces out. In all those wars, within the core of our movement, many of us not only wanted US troops out but we supported the social program of the other side—we wanted the Vietnamese, led by the North Vietnamese government and the National Liberation Front in the South, to win. In Nicaragua and El Salvador, we wanted US troops and advisers out and also victory for, respectively, the Sandinistas and the FMLN (Farabundo Martí National Liberation Front). In South Africa we wanted an end to US support for apartheid and we also wanted the African National Congress to win.

The solidarity part got much harder in Afghanistan and especially in the Iraq wars. We stood in solidarity with ordinary Afghans and Iraqis suffering through US sanctions and wars, and some of our organizations built powerful ties with counterparts, such as US Labor Against the War’s links with the Iraqi oil workers union. And we recognized the right under international law for an invaded and occupied people to resist. But as to the various militias actually fighting against the United States, there were none we affirmatively supported, no political-military force whose social program we wanted to see victorious. So it was more complicated. Some things remained clear, however—the US war was still wrong and illegal, we still recognized the role of racism and imperialism in those wars, we still demanded that US troops get out.


Now, in Syria, even that is uncertain. Left and progressive forces, antiwar and solidarity activists, Syrian and non-Syrian, are profoundly divided. Among those who consider themselves progressive today, there is a significant though relatively small segment of activists who want their side to “win” the war in Syria. Only a few (thankfully, from my vantage point) support victory for what they often refer to as “Syrian sovereignty,” sometimes adding a reference to international law, and only sometimes acknowledging that that means supporting the current Syrian government of Bashar al-Assad. (It should be noted that international recognition does not necessarily equal legitimacy; the South African apartheid regime was internationally recognized for decades.) A larger cohort wants to “win” the war for the Syrian revolution, the description they give to the post–Arab Spring efforts by Syrian activists to continue protesting the regime’s repression and working for a more democratic future. There is a deep divide.

Among those who want the Syrian regime to remain in power and the anti-regime opposition to be defeated, some base their position on the belief that Syria leads an “arc of resistance” in the Middle East—a claim long debunked by the actual history of the Assad family’s rule. From its 1976 enabling of a murderous attack on the Palestinian refugee camp of Tel al-Zataar in Beirut by right-wing Lebanese backed by Israel, to sending warplanes to join the US coalition bombing Iraq in 1991, to guaranteeing Israel a largely quiet border and quiescent population in the Israeli-occupied Golan Heights, to its role in interrogating and torturing outsourced US detainees in the “global war on terror,” Syria has never been a consistent anti-imperialist or resistance center.


Outside forces are fighting for various regional, sectarian, and global interests that have little or nothing to do with Syria—except that it is Syrians doing the dying. Saudi Arabia and Iran are fighting for regional hegemony and for Sunni versus Shi’a dominance; the United States and Russia are fighting for global and regional positioning, military bases, and control of resources; secular versus Islamist forces fight for dominance of the anti-Assad front; Turkey was fighting Russia (until recently, when it seemed to settle its differences with Russia before invading northern Syria, where now it is primarily going after the Kurds); the United States and Israel are fighting Iran (unlike in Iraq, where the United States and the Iranian-backed militias are on the same side in a broad anti-ISIS front); Saudi Arabia, the United Arab Emirates, and Qatar vie for dominance among the Sunni monarchies; and while Turkey is fighting the Kurds, progressive Syrian Kurds are challenging the more traditional peshmerga of the Iraqi Kurdish regional government.


It is up to us to build a movement that puts forward what an end to this murderous war could look like, as part of a movement to end the US “global war on terror” overall, and support the refugees created in its wake. The military alternatives now being debated will not end the war, and they do not protect vulnerable populations either. There is no military solution. It’s time we rebuilt a movement based on that reality



To read the complete report click here:  The War in Syria Cannot Be Won. But It Can Be Ended. | The Nation

NATO has outlived it's purpose and it's present anti-Russian rhetoric and moves are dangerous

Provocative statements and  moves by NATO
 could lead to Nuclear war

Alan Kuperman, a Harvard academic, argued some time ago that NATO intervention in Libya extended the war by a factor of 6 and increased the death toll 7 to 10 times; given that Libya is now a failed state, torn apart by warlords, we can safely say that these estimates were too conservative.

President Obama has privately called the situation in Libya a “shit show”. Only last month a report from the Foreign Affairs Committee of the British Parliament found that the humanitarian justification was an insufficient pretext and based on falsehoods, the supposedly limited intervention led “ineluctably” to regime change, and that the (British) government, and by implication other participating Western powers, did not seriously consider diplomatic alternatives to military action.

Twenty-seven years after the fall of the Berlin Wall, NATO is back flexing its muscles as if nothing had changed since the days of the Soviet Union. Defense ministers from the enlarged, 28-member organization agreed recently to strengthen the alliance’s “forward presence” in Eastern Europe. If their new policy is endorsed at a summit in Poland this summer, NATO will begin deploying thousands of troops in Poland and the Baltic states, right up against Russia’s borders.

In other words, the Western alliance will redouble its military commitment to a Polish government whose right-wing, anti-Russian, and autocratic policies are so egregious that even the stanchly neo-conservative editorial page of the Washington Post saw fit to condemn the new leaders’ encroachments on democracy and the rule of law.

Most Americans are unaware that NATO’s policies, reaffirmed by the Obama administration, view nuclear weapons as a “core component” of the alliance’s capacity to repel even a conventional attack on one of its member states.

An accidental clash of forces, perhaps triggered by military exercises gone awry, could potentially lead NATO to use its nuclear weapons against Russian troops on Poland’s borders. Or, just as catastrophically, it could prompt Russian forces to attack NATO’s nuclear stockpiles preemptively.
Either scenario could trigger a much wider nuclear war.

The British television channel BBC Two explored such a scenario, involving Latvia, in a chilling “war game” film that aired earlier this month.

European countries, including, Belgium, Germany, Italy, the Netherlands, Britain and France all have US stockpiles of Atomic bombs (totalling more than 200 bombs)  and would probably face immediate nuclear destruction  if a war broke out.

The EU Commission and Parliament don't seem to be aware, or at least do not openly comment about it, that this NATO sable rattling against Russia which has been initiated by the US and supported by most, if not all, Eastern European countries is not the appropriate way to carry out a productive dialog  with Russia.

It is not only bad policy, but worse, it could lead to nuclear war.

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