Michael Roberts — Turkey: total meltdown

How can Erdogan get out of this currency crash? The capitalist solution is to hike interest rates to an astronomical height so that further borrowing is stopped. Then the government should dramatically cut government spending and raise taxes (ie fiscal austerity) and use the ‘savings’ to bolster the banks and meet foreign debt repayments. Turkey should also turn to the IMF for a loan – Greek style. Under IMF rules, it could borrow up to $28bn to fund future debt repayments but then be subject to the dictats of IMF austerity measures. This capitalist solution means an outright slump in the Turkish economy, hitting its citizens hard and seriously damaging Erdogan’s support in the country.

The government could introduce capital controls and block any money leaving the country. But this would mean that foreign lenders would just stop lending, driving the economy into a slump anyway. Or Erdogan could try to get funding from Russia, China or Saudi Arabia (as Pakistan has just done). Unfortunately, he is on bad terms with all these countries. Erdogan is resisting all these options so far, telling his supporters to ‘trust in God’ and him.

The bigger issue is the growing emerging market debt crisis. This is what I said in May after Turkey’s general election. “Rising global interest rates and the growing trade war initiated by US President Trump are going to hit the so-called emerging capitalist economies like Turkey. The cost of borrowing in foreign currency will rise sharply and foreign investment is likely to reverse…..Turkey is now near the top of the pile for a debt crisis, along with Argentina (already there), Ukraine and South Africa.”
So there’s more to come.

What's the lesson likely to be drawn in the emerging world? Capitalism doesn't work and comes with the price of Western control of the emerging country and exacting of tribute.

The bottom line is that the price of entry into the US market is US control of your country's entire policy.

The alternative its that countries can ally with Russia and China and face off with the US military.

That's empire and the extracting tribute in contemporary form.

Who is this an opportunity for?

Maybe China, which is proposing a different world order?

Does the US really think that the emerging world is going to roll over and acquiesce in re-colonization?

This is what the US is aiming for with Russia, too, in order to encircle China using economic warfare while also ramping up US military dominance, now also in space.

Donald Trump aiming to become the new Caesar Augustus?

WWIII anyone?

Michael Roberts Blog
Turkey: total meltdown
Michael Roberts

See also

Although the US was essentially defeated in its attempt to remove Assad, the US leadership has not given up on the plan to extend US hegemony to the entire Middle East (MENA).

The attempted coup against the democratically elected government in Turkey failed. This is the next iteration on "humanitarian" pretexts.

Defend Democracy Press
The Empire Hits Turkey. Opening the way to Teheran, Cutting Russia from Syria