Friday, 4 April 2008

Why, for Russia, Turkey is an issue

Discussion over dinner, in Moscow, "we were looking to like Turkey" but... based on this news...

Of course, I am no Turkey expert, but would consider that – in an environment of global credit restriction, ‘religious risk’ is just a punt too far (apropos the recent State Prosecutor’s play) and while these games might seem logical - politically, locally - they have played massively badly, globally. As bad as Russia’s politics can do, of course, but the world is robust to Russia risk these days: and Turkey isn’t 15% of the world’s proven hydrocarbon reserves.

On any meaningful econometric and trade analysis of Turkey we should be saying ‘wow, what opportunistic treasure here lies’. But, in a world where once-mighty Bear Sterns got sold for a song, Wall Street, with its deeply-embedded fear of Islamic-exposed markets, may find global chief investment and credit risk officers will be giving Turkey an investment pass…that hits Turkish inter-bank markets fast and hard.

…logically, IMHO, Turkey should be a neo-BRIC market. Actually, however, I think investment in Turkey in the next 12 months will be tough to obtain, except out of the middle east and, hmm, Russia…. But in the next 8 weeks (for technical reasons) you will read about ‘credit crunch hits Russia’… So don’t bank on that Russian ‘deep pocket’ of last resort, which global banking markets would like to get hooked on, for Turkish banks….

…when global capitalism tries to figure out ‘economic misery’ it tries to refer back, like a prophet to the Old Testament – which is why macro-economists try to make comparisons again to the 1973 oil crisis (high fuel prices + bubble (property-related) indebtedness +‘culture clash + war in the middle east)’. Except this is unknown territory. The primary markers of geo-political-economics are unique, today. For the first time, actually, in my adult life.

Post-modern capitalism has never known High oil price + banks scared to lend to each other, let alone *you* + consumers *drowned* in debt + massive geopolitical (war-related) risk + ‘now is when the cost-base differential of globalization hits us domestically in the west’ + a crisis in western democratic consensus (I mean, if there was consensus, the DEMS, in the US primaries would have a candidate by now)…nor is there the ‘left-right’ western political debacle which, strangely, we see now, as if for the first time, benignly, underpinned 1970s economic risk analysis.

No, there is no handbook for this one.

Sadly, since 1918, it has been Turkey’s fate to be on the shit-end of this, and every, geo-political and economic stick.

On a purely numbers basis? TUR real economic growth is likely this year to be half that of Ukraine’s – inflation however will also likely be half Ukraine’s. Not so bad huh? Way bad! Ukraine isn’t what a Global Risk Officer, in New York or Frankfurt or Zurich, would call ‘at Islamicist risk’, nor are they scared of its long-term macro-social story. That changes the investment dynamics 180 degrees. These (men) are scared of Turkey. Like they were of Russia.1998-2002? 2004?

To be a Global Chief Investment Officer, right now, looking at Turkish stock, would be really interesting. 'Cos I am fascinated, precisely because I don't know if - should I have that job - I would decide buy Turkish or 'avoid exposure to Turkey like the plague'...

I guess, for the good ones, that is how intelligent CIOs earn their money...


ideaprovider said...

I came upon your blog a while ago and I wanted to let you know that it is great. I was drawn in by accident - I also had tickets to Tosca and Nabucco and I have tickets to Romeo & Juliet on the 18th. But yeah - I have been inspired to start up a blog of my own and I was hoping you could check it out and if you liked it - to post it on your sidebar. Many thanks and keep up the great work!

Here is my site:

- your reader

Red Exile / Красная Ссылка said...

Hi - welcome to the neighbourhood!

If you like national security issues, you will love the blog on Russian nukes:

And welcome, also, to my blogroll. I look forward to reading more posts from you. The obligatory passport carrying is such that, after 4 years of living in Moscow, I now carry my passport with me *all the time*, *whichever country I am in*, it has become such a habit. Even if I am back in the UK...


I think the danger is Islamic Extremism is a risk people cannot quantify or at least afraid the number they assign will be greatly wrong. In doing so, they stand to lose or gain a tremendous amount of money to invest in a country leaning toward extremism. The one thing a risk officer must factor in is how strong or I should say how supportive is the military to maintain a secular Turkey.

Another interesting tidbit, you probably know, with the previous crisis in the 90s with a private financial institution potential bringing down the financial markets is Bear was the only big bank not to help the Federally orchestrated bailout of LTCM. I mentioned this because their models factored in human panic, but did not sign it a greater value. Obviously, it is not an exact since when you are dealing with humans.