Leading waves of crisis, not recovery


Recently, U.S. President Donald Trump said that the U.S. economic data is good and the state of the stock markets is inapprehensible. In fact, the situation is quite inapprehensible for us. We do not see this movement – as is often said – as a simple correction. The sharp sales wave that has started in the U.S. and spread to Asian and European stock exchanges is one of the most obvious and hardest fits of the crisis that shows that such convulsions will shake the system more frequently now.

That is, the system is bringing up its demand for change through such fits of crisis. The crisis reveals itself more in the two basic areas. First, the monetary system has not been left with much way to go. Second, the dollar-based monetary system is both consuming itself and shaking capital markets and the foundations of the real economy by metastasizing. In fact, signals coming from China have already begun to show that this wave is the deepest sign of a very severe systemic crisis. Lastly, China has leaked that they will demand fewer dollar-based U.S. bonds and that it is even working on a substitution strategy. In fact, China has been leaking this at certain intervals since the 2008 crisis. However, this recent leak corresponds to the most astonished period for the U.S. both politically and economically, and has been taken too seriously. After all, at such a time when the global growth has started to recover accompanied by wage increases, China, a power that finances the U.S. and will soon outperform it, has come to voice that new global growth will not occur through the U.S.-based financial system and the U.S.-built monetary system.

On the other hand, U.S. technology firms, which were regarded as the dynamics of overcoming the 2008 crisis, have started to rapidly lose their markets to Asian rivals and the technology they produce has fallen behind. It is now certain that technology revenues will be taken away from the U.S. This is the dynamic that will accelerate the unrecoverable decline in profits in traditional sectors on the technology side as well, and is the reality behind the current rapid sales.

Where are things heading? The fact that growth and inflation have started to appear in the U.S. and other developed countries is not a sign of overcoming the crisis, but the beginning of a new one. So, the end result is the stagflation process in which both inflation and unemployment will rise rapidly.

What will happen to emerging economies? Undoubtedly, it would not be realistic to say that no one will be affected by such a subversion. However, it is not hard to say that Eurasia will quickly adjust itself to Asia's moves that will accelerate new transformation, and the countries in the region, especially Turkey, will put forward a new path (narrative) for growth and development. In this respect, we are on the verge of a new era both economically and politically and this beginning presents a great opportunity for Turkey. At this very point, I would like to move on to the issue of interest that President Recep Tayyip Erdoğan emphasizes on all occasions. This emphasis is undoubtedly the formulation of the demand for a production-oriented, human-centric, fair welfare economy through the issue of interest.

Here, interest is the key concept. In fact, an economy where interest rates stand out cannot make humanity its center and cannot highlight inclusive growth. It leads to a monopolistic economy that is not open and competitive. As such, it cannot meet the requirements of the global economy and lags behind in technological terms. As opposed to the oft-told story, interest is not an inevitable global economic reality, but an exploitation mechanism and a great deception. High interest rates do not serve industrialists or bankers who try to perform banking in the real sense. It is time to give up incorrect monetary and fiscal policies that generate high interest rates. Turkey will determinedly carry out reforms in this area and will be one of the leading countries of the current, great global transformation.

Meanwhile, I would like to touch on a failed understanding that should be abandoned all over the world. We have to change the outmoded concept of privatization. The approach to privatize something by selling it to those with the best offer without caring about the markets has gone bankrupt, not only in Turkey, but also around the world. Even the U.K. is suffering the consequence of this now. One of the most important reasons why the U.K. is lagging behind the global technological transformation is the unplanned and shortsighted wave of privatization made during former British Prime Minister Margaret Thatcher's era.

In Turkey, the most concrete example of this is the privatization of Türk Telekom.

The Türk Telekom case alone is proof of the fallacy of the understanding of privatization. In addition, such block sales are becoming a thing of the past. Here, the falsest move one can make in a world where the financial architecture is so advanced and capital markets have deepened is to sell one's strategic asset as a block for a mere song.

What should be done, then? Countries should supply such strategic assets through securitization in global markets. This should replace block sales. This method is also a way to prevent monopoly, distorted markets and false inflationary pricing. We have come to the end of the reductionism suggesting that if the state runs such assets, it will incur a loss, and if the private sector runs them, it will make a profit. The form of ownership behind a business no longer matters. What matters is to effectively manage that business in market conditions.

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