Hello! It’s rant time!
My carry trade account holds positions in Indian Rupees, Turkish Lira,
and South African Rand at the moment, so I tend to keep an eye out
for developments in those countries. Over the past week we’ve had
significan events in two of them.
The election process has been going on for quite some time in India,
and yesterday morning I woke up at about 5:30 am to the happy news
on NPR that Narendra Modi had won the Prime Minister’s race in a
Happy because this is a guy who is apparently very pro-business, and
much more amenable to capitalist ideals of liberty and responsibility
than the long ruling Congress party dominated by the Nehru-Gandhi
family. The working class son of a tea-stall owner, Modi pulled himself
up by his bootstraps to finally arrive at this moment.
India has a lot of problems which have prevented it from realizing its
full economic potential; crumbling infrastructure, corruption at every
level of a government too long entrenched, and ongoing tensions with
Pakistan. These are big problems, but Modi’s big win gives him a lot
of momentum. Pakistan’s Prime Minister has already reached out with
an invitation to visit.
History shows that no matter how optimistically a new leader is
received at first, there comes a time when the honeymoon is over and
the pendulum begins to swing the other way. Note the way Reagan’s
legacy has been under attack for years and his achievements in rolling
back big government have been all but swept aside under the
onslaught of the Obama regime. So I’m not getting my hopes up too
high, but it still calls for a celebration when one of these corrupt, long
-ruling entrenched revolutionary parties from the neo-colonial period is
finally toppled by a true defender of freedom and capitalism (I’m
looking at you ANC in South Africa!).
Turning to Turkey, the news there isn’t nearly as positive.
Along with the obviously tragic loss of life in the coal mining disaster
this week, we see the related tragedy of a leader for whom the
description “out of touch” would be the understatement of the century.
Oh, no, they say he’s got to go
Go go Godzilla!!
Oh, no, there goes Tokyo
Go go Godzilla!!
Ok, so if you’re familiar with that old Blue Oyster Cult song, it should
be stuck in your head for at least a week now.
I don’t know about Tokyo, but when it comes to Ankara, I’ve been
saying for the last couple of years that Erdogan has got to go. His
breathtakingly whackadoodle response to the Soma mining disaster is
just the latest in a series of bizarre episodes with this guy and his
Forget about the mundane stuff like the Orwellian crackdown on
protesters and the paranoid purges of the military, the bedrock of
secularism and stability in the country. Forget about sending warships to Gaza to tweak Israel’s nose. I’m talking about the downright bat-poop crazy stuff like believing that people are trying to kill him with telekinesis and throwing these public temper tantrums all over the place.
And then there’s Erdogan’s theories on interest rates. Not only does he believe that high interest rates are a cause of inflation (instead of a response and a countervailing force) but he’s got a conspiracy theory about some interest rate lobby that’s trying to damage Turkey’s economy or some such thing.
I guess that last part refers to me and my fellow carry traders, since high rates in Turkey are actually good for my income. However, I expect that high Turkish interest rates will come as the result of high growth in their economy, which is what everyone wants.
That goal is increasingly threatened with each new outrageous episode of the Recep Tayyip Erdogan show. Eventually, one of these incidents is going to push people over the edge, and it’ll be chaos time. Please…go away Mr. Erdogan before you do any more damage. Just go.
Anyway, this has been a rant, so I’ll relax now and just say…keep pipping up!by