Turkish Lira Collapse

[bucket]

I haven't figured out how charging more for products like gas and food and then raising interest rates helps the economy....

People then have to get a raise and the cycle starts again or you go to mass layoffs because no one can afford to buy...

100000 half tons doesn't make sense....

[furrowtickler]

Could this be the canary? A deflationary collapse? Housing collapse? Trump led depression and does history repeat.?

This was coming way before Trump was even in . Errol has been calling this for several years . Not defending Trump just saying the reality of it .

[ajl]

I haven't figured out how charging more for products like gas and food and then raising interest rates helps the economy....

People then have to get a raise and the cycle starts again or you go to mass layoffs because no one can afford to buy...

100000 half tons doesn't make sense....

A market rate of interest would be much higher than prevailing rates with this amount of outstanding debt. Central banks one purpose is to suppress interest rates. Rates are this low only because that is as much suppression that they can do without unleashing hyper inflation. It was hyper inflation that drove rates up in the early 80's.

[bucket]

i would call a combine worth 155000 in 1997 being worth 600000 plus hyperinflation....wouldn't you????

[farmaholic]

I will repeat the question I've been asking almost everytime this topic comes up....

"Is anyone doing, or have done, anything different in regards to a worldwide economic crisis? Or is it business as usual?

[agstar77]

The only way to correct excess is a massive correction. Pain for the next 5 years. Those speculations in land and housing won't look very good . The Baby Boomers have done spending and there are not enough millennials.

[errolanderson]

A lot of people are getting tired of my comments (my apologies, but it is what it is). The Turkey fallout is likely even larger than the Lehman Bros collapse of 2008. This is now starting to ripple rapidly across emerging markets. Turkey's impact is about 10X that of Greece.

Central bankers in their failed can kicking policies (Keynesian economics) have made the economic fallout risk far greater (IMO). And in the next crisis (which may be now), central bankers, including the U.S. Fed are powerless to stop. Deflation is their worst enemy, but they don't want to even talk about it. Deflation doesn't exist in their view, because it 'scares the hell' out of central bankers. It's all about controlling inflation and keeping investors engaged.

[AlbertaFarmer5]

A lot of people are getting tired of my comments (my apologies, but it is what it is). The Turkey fallout is likely even larger than the Lehman Bros collapse of 2008. This is now starting to ripple rapidly across emerging markets. Turkey's impact is about 10X that of Greece.

Central bankers in their failed can kicking policies (Keynesian economics) have made the economic fallout risk far greater (IMO). And in the next crisis (which may be now), central bankers, including the U.S. Fed are powerless to stop. Deflation is their worst enemy, but they don't want to even talk about it. Deflation doesn't exist in their view, because it 'scares the hell' out of central bankers. It's all about controlling inflation and keeping investors engaged.

I'm certainly not tired of your comments, really appreciate you making posts that directly relate to marketing.

It appears that the US fed doesn't want to stop the current crisis, they are starting to concentrate on their own affairs, at the expense of everyone else. They are probably even the trigger, by raising rates, which makes the US denominated debt of these countries untenable.

I would add one caveat to your last statement. Most central banks are powerless against deflation, but have unlimited tools to fight inflation. The US would be the exception, being the reserve currency( and quickly reverting to being the only viable currency), can fight deflation with very few negative consequences, as they have been for years already.

Which begs the question, will Canada continue to hitch it's horse to the US economy, and survive, or continue to thumb our nose at them and join the rest of the world in crisis? Does the US still want or need Canada tagging along for the free ride? I don't think this is a simply an issue of the two current administrations and their obvious shortcomings, but a much longer term trend, regardless of political stripes in office.

As for the proverbial can kicking making the eventual fallout so much worse, I think that is exactly the reason why the can will continue to be kicked, at least in the core economies, much longer than we think possible(already has), simply because the consequences are so dire. Look at Japan as a prime example of how long the patient can be kept on life support.

[macdon02]

Claudio Borghi**of Italy is not real popular in Brussels right now for they feel he spilled the beans warning that the ECB must support the bond market of the Eurozone will break apart. I have been warning that Draghi has kept the 28 member union together only on life-support. Stopping QE will expose Europe to the reality that a single currency DOES*NOT mean a single interest rate for all.

The Euro has continued to fall dropping at the time of this post to 11343. The bottom of this channel on the daily level lies at the 11315 area. Our Weekly Break Line lies at 11332 and a closing beneath this warns that the Euro may fall to the NEXT Weekly Bearish Reversal which lies at 11165. Break that level and we are then looking at a test of the 10500 area. We also have 11553 as a Monthly Bearish. The fact that this same number appears on our radar in Daily, Weekly, and Monthly, stressed just how significant this number was. Our next Monthly Bearish lies at 10523 so this is confirming that after 11165, we have thin air.

Turkey has been the lynch pin as we have been warning and it would be the first to collapse in the main Emerging Market sector. Foolish banks and pension funds simply assumed that government would NEVER default and the IMF would prevent such events. That is absolutely bullshit!!!!!!!! The IMF cannot prevent this crisis from unfolding. The markets and the people have simply lost all confidence in the Turkish government. Erdogan appears to have gone to Qatar asking for financial help and was turned away. He can pretend to be the rising star that will restore the glory of the former Ottoman Empire all he wants in his own mind. That will NEVER become reality.

I have warned that we were entering the crisis phase. We do have a Daily Bearish Reversal at 11313 and a close below this could result in the test of the 11100 area. We have a Directional Change due tomorrow. A closing below 11313 today may signal a low due tomorrow so stay nimble. It is not likely that we would move below the 11165 area.

Keep in mind many European banks and pension funds bought Turkish debt to get 20% interest returns BECAUSE the ECB maintained its QE.

Armstrong

[MBgrower]

no signs of deflation at the parts department yet.

[macdon02]

no signs of deflation at the parts department yet.

These days I swear if you gave the drug dealer behind the dumpster at the 7-11 $1000 and gave the @JohnDeere parts guy $1000 you would get a bigger bag of goods from the drug dealer.

On Twitter

[furrowtickler]

The only way to correct excess is a massive correction. Pain for the next 5 years. Those speculations in land and housing won't look very good . The Baby Boomers have done spending and there are not enough millennials.

There are not enough millennials paying their way as well . Living in mommy’s basement

[ajl]

There are not enough millennials paying their way as well . Living in mommy’s basement

Government should not have inflated real estate so much through the use of artificial low interest rates. Baby boomer generation real estate speculators are the beneficiaries which are like most on here, that is one of the fall outs.

[furrowtickler]

Government should not have inflated real estate so much through the use of artificial low interest rates. Baby boomer generation real estate speculators are the beneficiaries which are like most on here, that is one of the fall outs.

Those with the gold make the rules ...

[macdon02]

Those with the gold make the rules ...

The guns not the gold. Only thing worse then being a US soybean farmer these days is a gold miner