Saturday, October 25, 2008

Famous blue raincoat

it's four in the morning, the end of december
i'm writing you now just to see if you're better
new york is cold, but i like where i'm living
there's music on clinton street all through the evening.

i hear that you're building your little house deep in the desert
you're living for nothing now, i hope you're keeping some kind of record.

yes, and jane came by with a lock of your hair
she said that you gave it to her
that night that you planned to go clear
did you ever go clear?

ah, the last time we saw you you looked so much older
your famous blue raincoat was torn at the shoulder
you'd been to the station to meet every train
and you came home without lili marlene

and you treated my woman to a flake of your life
and when she came back she was nobody's wife.

well i see you there with the rose in your teeth
one more thin gypsy thief
well i see jane's awake --

she sends her regards.

and what can i tell you my brother, my killer
what can i possibly say?
i guess that i miss you, i guess i forgive you
i'm glad you stood in my way.

if you ever come by here,
for jane or for me
your enemy is sleeping,
and his woman is free.

yes, and thanks,
for the trouble you took from her eyes
i thought it was there for good so i never tried.

and jane came by with a lock of your hair
she said that you gave it to her
that night that you planned to go clear

sincerely, l. cohen

sometimes, the beautiful things I discover (no matter what they are about, their beauty lies in their truth) makes me wonder what there is to come. there are so many beautiful things out there for me to discover. only if I'm brave enough.

I also wonder how I lived all those years without knowing them. how poor I was.

I guess I lived just like how I'm living now.

Monday, October 20, 2008

Burn after reading

I saw Coen brothers' new movie Burn After Reading over the weekend. It was really funny, but it left a bitter aftertaste in my mouth, I felt really down on my way home. I read some reviews and saw that some critics agree with me.

Then I started wondering what makes us like a movie. And I decided it should either make us forget about the ordinary-ness of our lives. Or it should go ahead and bring us face to face with our misery, but at least give some hope for some meaning. The miserable character transforms and ends up a hero, or finds love, something like that. I, personally, don't want to see miserable people ending up miserable.

Bir de bu haftasonu çok uzun zamandır görmediğim bir arkadaşımı gördüm. Yakında gidiyormuş, burdan gitmek istiyormuş. Onu görmek, kısacık zamanda neden, nasıl kendini o kadar sevdirdiğini hatırlamamı sağladı. Bütün kalbimle dilerim ki gitmesin.
Global financial crisis and Turkey

When there is a global financial crisis going on, our small daily duties may seem even pettier than usual. This is what happened to me – digging up data and news reports about Turkey as usual, I had an urge to drop what I’m doing and understand what is really going on in the global economy.

Unfortunately (or luckily) not everyone’s job involves developing a good understanding of the dynamics of the global economy. Even academics or finance professionals do not have to consider the currents of the global economy or how their area of research or daily tasks fit into the macro picture. Even central bankers focus on their own country, but not on global imbalances. The trade-off seems to be between joining the machine by specialising in a small, manageable section (this is what the overwhelming majority of us do) or becoming more of a popular intellectual, who is watching the great currents without going into specific knowledge of technicalities.

More extensive media coverage and analysis about financial markets, especially during this crisis, makes academics and technocrats household names, and leaves people wondering how the crisis could affect their lives directly. People grow more curious about how this crisis came about, and what its resolution will take. The public seems to have renewed interest in the regulation of the economy, a phenomenon that is reversing the neoliberal populism trend. We can say that politics is re-coupling with economics. I will use this post to think through the situation myself, largely drawing upon a special report that appeared in the Economist recently.

It might be surprising to some, including myself, to see how defaults on subprime mortgages, spurred by the bust of a bubble in the housing market, could spread to the entire financial system. The answer lies in the structure of financial markets. Using the opportunities provided by technology, banks created complicated products to pass on loans to other investors, rather than keeping them on their books (securitisation). This way, a very small amount of capital can be lent and re-lent multiple times. The extensive trading of these products, such as the infamous credit-default swaps, spread the risk across the financial system. In the end, nobody knew whether their counterparty held these toxic products or how each product was valued, and this led to widespread panic. Banks stopped lending to each other, and the leveraging trend of the past few years was reversed: Now everybody wanted to de-leverage, not only refraining from extending new credit, but also trying to get their cash back as soon as possible. That’s what spurred governments to bail-out their troubled financial institutions with public money, as these institutions were not able to obtain funding from markets. The argument for government intervention goes that these institutions were systematically too important (too inter-linked to every other institution in the system) to fail.

With hindsight, critics claim that financial engineering and innovation got out of hand, leading banks to take on risks they could not manage, with dire consequences for the whole system. The ideological underpinning for a free market economy is de-regulation, which supposes that market forces will allocate resources most efficiently if left on their own. However, economic theory calls for regulation when part of the costs of an economic activity are not internalized by the company or country undertaking it. As the crisis has demonstrated, more effective regulation and oversight are needed in financial markets. What shape the new regulations will take, and which new national and international institutions will be responsible for implementing them, is unclear at the moment. To fight with over-leveraging, the Economist calls for an overhaul of regulatory and oversight institutions (especially in the US), increasing the banks’ capital ratios, and changing tax codes that favour debt over equity for companies and households.

But bankers and regulators are not the only ones to blame. The monetary policy of central banks, most notably the Federal Reserve, exacerbated the bubbles in the economy. Low short-term rates, for example, inflated the housing bubble by making adjustable-rate mortgages cheaper. Moreover, high savings of emerging markets like China and Russia, as well as the Gulf states (due to export revenues, thanks to currency management in the Chinese case and the surge of oil prices in Russia and the Gulf) flooded into the US and Europe, driving long-term interest rates down. Meanwhile, emerging markets, which pegged their currencies to the dollar, suffered from the Fed’s loose monetary policy, leading to overheating in their economies. Even countries with a floating exchange rate, such as Turkey, enjoyed significant capital inflows.

How will the crisis affect an emerging market like Turkey? Very shortly, the reversal of capital inflows will expose the structural weaknesses of our economy. We enjoyed tail winds until 2007, but now we are faced with strong head winds. The difficulty, however, does not stem from the banking sector. Our banking sector is relatively shielded thanks to regulatory reforms introduced following the 2000/2001 banking crisis, which established the independent Banking Regulatory and Supervision Agency (BDDK) and brought more stringent capital requirements and internal auditing standards for banks. However, foreigners hold a large share of the Turkish banking sector (around 40%), a channel through which the crisis could spread into Turkey.

The main problem for us is the large external financing needs emanating from the current account deficit and large external debt. Rollover of foreign debt will be more costly, and finding FDI and portfolio investments will be more difficult from now on. The Istanbul stock market (IMKB) was down by 10% last week, and 21 % last month alone. The lira is also depreciating rapidly against the dollar and the euro, and this coupled with global credit crunch leaves the corporate sector, which holds a lot of FX-denominated debt, and local banks, vulnerable.

The slowdown in the world economy will influence the size of our trade deficit. Our exports to the European Union, our main trading partner, have already slowed down considerably. This effect, however, will be offset by several factors. Domestic demand for consumption and industrial inputs will decline. Significantly, our imports will also cost less, thanks to the diminishing price of oil and other commodities. (By the way, the Economist thinks earlier surge in oil prices was more due to rising demand and government subsidies than speculation on commodity futures. Food prices rose due to biofuel production and export bans.)

The crisis will force everyone to take a good look at themselves, reflect on what went wrong and clean up their act. For Turkey, this will mean addressing the structural problems in the economy. If it leads to meaningful reforms geared towards reducing the administrative and tax burden on the private sector, increasing the domestic saving and investment ratios, and improving the efficiency and value-added in the economy, then we can really look back and remember the crisis as an opportunity. This would also mean sustainable growth and less unemployment, which lingered around 10% even as our economy was growing by 9.4%, 8.4% and 6.9% in 2004, 2005 and 2006 respectively.

The same goes for every country in the world. A crisis situation presents the opportunity to build a system that is more consistent and coherent, and hence more stable. We learn more about human nature and economics as time goes by, we are not nearly there yet. We have to do our best and go forward.

Friday, October 17, 2008

A new equilibrium

Have you ever wondered how your life would look like if a camera followed you around? All day? Showed all your facial expressions? (Even those you make looking at yourself in the bathroom mirror?) What you said and what you didn't? And you would have to watch it at the end of the day? I would like to add the absence of such an arrangement to the things that save us.

That said, without the social interaction I've been addicted to, I feel like a fish out of water. Unspoken words fill my mouth like fresh air. I can see that most of my so-called friends were in my life out of circumstance, and I just don't have the energy to keep them there (or compete with other priorities in their lives).

But, as all changes take some time to adjust to, I will adjust to this new lifestyle, too. Change my expectations, find a new equilibrium...

Friday, October 10, 2008

Random thoughts

What is a blog for, anyway? To be able to write stuff without thinking about it that much! I will use this opportunity, to end this wonderful week in a high note, to write in my blog as I please.
And talk about myself.

On the tube from Charing Cross to my place, I was thinking about the events of this uneventful week. And these little random abstract thoughts began shaping up in my head (clearing all the fog that seemed to block the tiny channels in my brain.) Now - as we all know, anger (resulting from disappointment) is a sharp, clear feeling. Like a crisp blue winter day. One thing it is not - it leaves no room for confusion and mushy clouds. We get angry usually when we are FINALLY faced with reality. What is important, is to keep your cool for a few minutes, and you will see that giving an angry response (to what you just found out) is nothing but hoping that what you just found out isn't actually true. Because we are afraid of reality (namely - that we are not as important as we wished/wanted to be), we cry like a baby until they hear us - and hopefully tell us that we are actually important and ask for forgiveness.

And the second point - sometimes we don't ask questions because we are afraid of learning the truth, only to be able to continue assuming. If you are curious about the answer of a question, go ahead and ask it.

And people must have a way to sense when you need them and disappear right at that moment!

And fuck it - maybe I'm not that important, after all.

I started to sound like Oprah (except for the sentence before this), and sorry if you already knew all these things (including the sentence before this). They should teach this kind of thing in school. I promise, this is my last loserish post. You know, I have waves of these. They come and go. What comes around goes around. Etcetera.

Thursday, October 09, 2008

In the middle

Have you ever felt like you have departed from somewhere, but haven't arrived at your destination? And you don't even know where your destination will be? And anything you can imagine seems either dull or unlikely?

I'm reading Orhan Pamuk's Masumiyet Müzesi and watching Gossip Girl all the time, any time I'm not working, that is. I can focus on those better than I can focus on work, that's for sure. When I'm reading the book, when it describes the weather or children playing in the backyard of a building I can feel it. My parents were here last week, and I felt somehow departed from them. I felt the obligation to be ok on my own. And I haven't seen most of my extended family in six months or more. I miss the old days. I miss going to lunapark in Akçay and buying tulumba halkası or lokma. I miss the old apartment building in Göztepe. I miss even Halilrıfatpaşa. I miss going to Bandırma. I considered going back, soon, for sure, but if I went back, I would be scared that it's the last time. I would feel like a tourist. I changed, everything changed, I grew up.

I don't know, I just feel like a letter en route, and it feels a bit lonely among all these other strange letters in a pile. I hope I'll arrive at my destination soon.