“I think the end of the world is coming,” one Ankara street vendor told the New York Times.
The autocratic Erdogan — who ascended to power during George W. Bush’s first term as U.S. president — has effectively declared war on financial orthodoxy, throwing fuel on the fire of a currency crisis by lowering interest rates when economists argue he should be doing exactly the opposite: jacking them up to defend the lira.
But Erdogan, who claims to have studied economics, says he knows best. Asking Turks to be “patient,” he insists a weaker currency and lower interest rates will boost Turkish exports, create jobs, spur growth and beat back inflation. What he neglects to mention, economists say, is that such a policy, especially in the throes of crisis, will also cause the price of essential imports to soar, frighten away foreign investors, drain Turkish banks and impoverish the population by propelling inflation rather than taming it. On Thursday, a fresh rate cut — the fourth in four months — sent the lira plunging to a record low. On Friday, investors voted with their feet, triggering stock market circuit breakers that halted trading twice within an hour amid steep sell offs.
Having accumulated power over the years, while purging those who questioned him from the government’s ranks, Erdogan, critics say, is now surrounded by yes-men. He has fired free thinkers in Turkey’s Central Bank, leaving experts fretting there may be no one left with the president’s ear to say the sultan has no clothes. As the lira continues to plummet — it has lost half its value against the dollar this year — poor and middle-class Turks are paying the highest price, as the cost of staple goods double and fuel costs surge by 40 percent.
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