

Turkey steps into currency warfare - jballanc
http://www.hurriyetdailynews.com/n.php?n=turkey-takes-a-step-into-currency-warfare-2010-10-06

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devmonk
'Speaking to the Financial Times on Oct. 5, Dominique Strauss-Kahn, chief of
the International Monetary Fund, or IMF, said economies should not use
exchange rates as a weapon.'

Is it a weapon, or are they preparing for something to happen to the U.S.
economy?

The U.S. has just been "printing" money without it being backed by something
tangible of worth, while spending like crazy without raising taxes.

The U.S.'s National Debt is somewhere around $13,554,861,000 USD and growing (
<http://www.usdebtclock.org/> <http://zfacts.com/p/gross-national-debt.html>
), and the answer we come up with is "printing" more money, spending more than
we'll ever have, and borrowing even more.

A major chunk of that debt is owed to China whose economy is primarily based
on producing goods for purchase by U.S. consumers. China may at the moment be
unable to afford to make the U.S. pay up, but all it takes is for something to
happen to the U.S. economy such that the U.S. consumers slow purchasing even
more, the Targets/Walmarts start closing, and China will drop us before we
have a chance to ask for more money from them.

It doesn't matter how this happened right now (politicians afraid to tax and
afraid to cut spending across the board) as much as what we are going to do
about it.

Turkey's currency warfare is a small issue compared to this mess, but I think
it could be a signal that they know something that we haven't yet.

~~~
guelo
Your economics are just wrong. Inflation is non-existent, the markets are
willing to lend to the U.S. government at all time low rates, the effects of
the first stimulus are over, the economy is barely moving and is in danger of
double-dipping. The correct prescription is a giant second stimulus and more
quantitative easing by the Fed. The time to worry about debt was when the
economy was growing (i.e. back when W was doubling the debt). Now we should
worry about growth.

~~~
devmonk
Inflation may be non-existant now, but you can't owe forever, otherwise the
concept of debt and the money you owe is imaginary and useless. When those we
owe are tired of us owing and not paying and they are able to live without us,
where are we then?

Growth implies that we are making money. We aren't. Our country is bankrupt so
many times over, it would be hilarious if it weren't so freakin' pathetic. Go
ahead an vote Democratic if you want to focus domestic growth and large gov't,
and increase debt. Go ahead and vote Republican if you want to make cuts, but
then reinvest those cuts back into other programs, and increase debt. Go ahead
and vote Libertarian if you are allowed to or want to write them in; they
won't get anything done because there aren't enough of them, and the only ones
that make it into office are going to want to play politics like everyone
else. Or find out who the deficit hawks that you find in our gov't and vote
for them.

~~~
cschneid
As of July 28, 2010, the "Total Public Debt Outstanding" was approximately 93%
of annual GDP. -- Wikipedia

It'd suck, but we could pay that off in 20 years if we cut the budget to
something maintainable. Not optimal, but nowhere near your "so broke hurf
durf, never pay it off".

~~~
technomancy
> if we cut the budget to something maintainable

... which would be in the best interests of the country, but against the best
interests of a given single politician, so it's very unlikely.

~~~
cschneid
I agree, it'd be a very hard political decision. But the hurf-durf about us
being beyond-broke is overblown, at least currently.

I do however agree that the trajectory we are on is going to screw us.

------
shimin
From the article, Turkish currency is increasing in value relative to the
dollar, but is flat relative to the Euro. Why is that?

If it is because Turkey is increasing exports to the US, then this would
indeed be "currency warfare", holding the lira down so as to maintain exports.
But from a quick search, Turkey is rapidly increasing its exports to
"developing nations," not to the US.

So it would seem as though the cause of the exchange rate increase is that
dollar-laden speculators are suddenly investing heavily in Turkish markets (or
merely Turkish currency). By buying back dollars, the Turkish government is
curbing this speculation, and placing themselves in a position to profit if
the speculation suddenly stops. (Albeit by selling dollars, which could be
considered an aggressive move.)

From the information I have, it looks like Turkey is merely defending its
currency/economy, and this sort of article may very well be a piece of
propaganda meant to shame Turkey into not defending its currency.

But my information may be off, and I don't actually know much about currency
markets. I'd welcome a better, more enlightening explanation.

~~~
aduric
That's because Turkey keeps their currency artificially bound to the EURO. 2
lira ~ 1 EURO.

