Jamie Powell and Colby Smith write
on FT Alphaville that the Turkey crisis looks like a classic
emerging-market meltdown: a rapidly growing economy funded by
short-term, dollar-denominated liabilities, fronted by a strongman
leader with a penchant for appointing insiders to key government
positions. As such, it is evocative of the Asian currency crises of 1997
and 1998, which hold lessons for Turkey.
Brad Setser thinks
instead that while Turkey has some similarities with the Asian crisis
countries of the 1990s, it also has important differences. Turkey’s
banks are the main reason why the currency crisis could morph into a
funding crisis, one that leaves Turkey without sufficient reserves to
avoid a major default. But,..read more..
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