Erdogan's flying carpet unravels

http://atimes.com/atimes/Middle_East/MID-01-230914.html



Erdogan's flying carpet unravels
By Spengler
Sep 23, '14

Turkey's President Recep Tayyip Erdogan has a growing list of enemies. "Among his targets" at a recent address to a Turkish business group "were The New York Times, the Gezi events of 2013, credit rating agencies, the Hizmet movement, the Koc family and high interest rates," Zaman reported September 18. Erdogan earlier had threatened to expel rating agencies Moody's and Fitch from Turkey if they persisted in making negative comments about Turkey's credit.

Turkey's financial position is one of the world's great financial mysteries, in fact, a uniquely opaque puzzle: the country has by far the biggest foreign financing requirement relative to GDP among all the world's large economies, yet the sources of its financing are impossible to trace. I have analyzed sovereign debt risk for three decades - including stints as head of credit strategy at Credit Suisse and head of debt research at Bank of America - and have never seen anything quite like this.





At around 8% of GDP, Turkey's current account deficit is a standout among emerging markets. It is at the level of Greece before its near-bankruptcy in 2011. Where is the money coming from to cover it?

A great deal of it is financed by short-term debt, mainly through borrowings by banks.