http://www.telegraph.co.uk/finance/economics/11660864/Turkey-becomes-first-domino-for-emerging-market-debtors-as-politics-split-country.html
Turkey's currency plunges to all-time low after electorate vote for change in move that has exposed 'existential' threat to the country's debt-laden economy... Turkey’s currency has plunged to an all-time low as the country slides into political turmoil and its foreign debts turn toxic, becoming the first big casualty of the gathering storm in emerging markets (EM). The lira slumped 5pc to 2.81 against the US dollar after President Recep Tayyip Erdogan’s AKP party lost its decade-long majority in parliament, leaving the country bitterly polarised and without a clear government. The currency has now fallen 60pc since 2008.
Turkish companies were left heavily exposed as they grapple with record levels of hard currency debt left from an unchecked credit boom. Borsa Istanbul’s 100 index of Turkish equities fell 6pc.
“This is shaping up to be the proverbial perfect storm,” said Neil Shearing from Capital Economics. “In emerging markets (EM) you can get away with bad macro-fundamentals if the politics are good, but once the politics turn ugly you can’t muddle through any more. We think Turkey is the most vulnerable of the EM countries,” he said.
Data from the Bank for International Settlements show that Turkey’s foreign liabilities have reached a net $430bn. Turkish banks alone must roll over $95bn in external debt over the 12 months. They may have to refinance just as the US Federal Reserve starts to raise rates for the first time in eight years and transmits a tightening shock through the global financial system.
“This is going to be existential for the Turks and I am afraid the crunch is coming soon,” said one hedge fund specialist.
SO THIS IS WHY RUSSIA EXTENDS JUICY CONTRACTS TO GREECE AND TURKEY...BECAUSE THE WEST IGNORES AND BELITTLES AND STIFLES AND RIPS THEM OFF....
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