I have never remembered the days that we evaluate every financial development according to data flew to fınancial market. PMI, jobbless claims, house price index, 10 year TIPS auction, unemployment rates are the indicators that give a way to people in the process of deciding their actions at the financial market. Whereas 15. and 16. century culturel movement resulted with Renaissance and Reforms make a difference in people minds about the future insight. People were getting more importance to their future, "austerity" and "regimen" concepts came to live. Short term and living the going on time was not the important anymore. They lost their importance with the conceptual amendment. People started to be acquainted with the future and long term priorities. But, started from 2009 last until today There is de javu in people minds. Instant pleasure and short term is getting more important than long term. Thinking ahead and making plans are thought as cumbersome as trying to divine about the future. Because, ambiguity has been never seen as open as today's world and nobody wants to take a place in history scene in bad reputation. So radical movement to change the world's macroecenomic view has not never came to live. Nobody who has the power to make a way to economy does not take to initiative to speak out and stand out to change something in a better way. They are just putting the problems off the future.
There is famous motto in the trailer of TV series-Game of Thrones to make a stress for coming dangerous days: "Winter is coming". It reminds me the economic condition of developing countries whenever I saw the trailer in these days.
In this macroeconomic view, The developing countries are feced three way problems. One aspect of it is Quantitive Easıng led by FED, another European countries forthcoming debts and fınally social discomfort resulted from income inequality.
Quantitative Easy 3 led by FED
2008, Global Economic Crisis proclaimed itself with the bankruptcy of Lehman Brothers has maintained its fatal effects until today. It must be seen an opportunity to make structural reforms giving a way economy through tangible investments creating employment, value added product or service. FED injected huge amount of money to finance market buying scrap mortgage bonds. The problem is that real economy had not taken an advantage from this liquidation. This money was not used by venture capital or corporate funding creating new jobs. Replacing with it, money break into finance market instruments S&P 500, Dow Jones, Bovespa, Dax, BIST 100. All the equity index had a peak point in short term. Especially tremendous amount of money flow to the developing country stock markets. This huge amount of money made developing country' s economy fragile to possible money outlet from the country. Firsthand investments flew from QE3 making a balance in trade deficit of developing country economies.(I: investment). This developing countries has trade deficit because of unsufficient export to compensate import. So, Firsthand investments are getting importance to keep economic growth in desired range and not to effect the economic growth in a negative way.
GDP= C + I + G + (X-M)
X: Export Amount
M: İmport Amount
Altough we though that QE operations will harm all the countries' economy. It worked in favor of U.S.A. . So what is the point that propelled all of the economists in a delusion ? How do the Quantitative Easy operations work? and make a stronger position to USA in world economy.There is a widespread proverb accepted all around the world: "If you want to control a country, you must prevail in economy first of all. I can say without doubt that U.S.A. made it with the Quantitative Easy operations successfully. Prelude of QE3, firsthand investments basis on money created on QE3 flow to the developing countries stock markets. That was the exactly what developing countries want. Because they have deficit trade year over year and do not have enough austerity to foster investments. Besides of this, developing countries do not have global brand to make an addition to their export volume. So, they need to global capital to make a growth. But, keeping global money in their economy is getting more importance day by day. Because, the developing country economies have the import trade 200 Billion Dollar and export trade 130 million Dollar at most in a year.(Except India and China). They need to compensate deficit trade with global capital investments. But there is one problem at this point. Global capital make investments only to financial market instruments not to real economy. If they invest the money in manufacturing' retail or service industry, they need to stay in this country in long range. Besides of it, needs to spend time and effort to plans the future. But, global capital does not like to make an effort. It wants to go to anywhere, at anytime (when the time is up to get maximum profit.)
After the money came to developing country and show itself as upstrem in Stock market. Dollar has falled against all the major currencies. So, U.S.A. has taken an advantage on export trade. Export benefit makes American Economy more reliable and robust. So, It came to a center of attraction again in global capital market. It is proclaimed in September that monthly quantitative easing amount has been decresed when jobbles rate at U.S.A. is went down under 7 %. So, global capital has started a new journey with the route from developing countries to U.S.A. So, we saw the downturn in developing economies. Stock market declines, currency shrinks etc. At first Currency shrink seems to be good for developing country for overlapping deficit spending. But. developing countries do not have export-driven economy. It works against to developing economies. The import amount rise up day by day until demand declined. So, QE3 gives enormous advantage tu U.S.A. economy to take over to control of world economy.
European Countries' forthcoming debts
European Union coastal region countries Portugal, Spain, Italy and Spain has tremendous amount government and private enterprise debts with maturity 2014. We will see how this debts will be paid at time. Otherwise, we will be witness another debt crisis 2014. I do not understand how European countries thinks that the worst in economy has been achieved in 2012. I am afraid of the future whenever I smell such a good mood in economy. If the European countries have difficulties to pay debts, it cause to decrease in household consume. So it will effect the developing countries' export in a negative way.
Social discomfort, income inequality
Developing countries like Turkey and Brazil has the social discomfort, (started in a very similar way) at the end of the May has been triggered from excessive force to young people who want to protest Government politics. It permeate the different social and religious blocks of countries. Especially in Turkey. In May 2013, We have the best days with regard to economic condition in Turkey. Indicator interest 4,62 , our trade deficit is declining, The country economic grade is upgraded by 4 credit rating agencies in a positive way. The stock market beats records.In these days we were sitting in the office and say that we will see the lower rates in indicator interest and our financing cost will be lower from budget target. But everthing has changed, The protestors are encouraged by some social groups. So much so that, English channel BBC broadcast 24 hour to protests although there is nothing to exaggerate. They show the protest as rebel to the world. They mislead the investor in the rest of world.Sometimes I wish that there is like a hippocratic oath in media and press. But not available yet. The underlying cause of this protests was the ecomomic and political. I put the political way one side. It is not of our business to examine politic aspect in there. In economic way, young generations is not satisfied from the living conditions. They oppose to huge income difference in society. They have the assumptions about life needs to be come to life
*If a young person graduted from university, he should earn living in a good condition.
*Education, ambition, intelligence, good behaviour must be the only factors in work life to taking promote. Not the seniority.
*Fredom must be applied in all aspect of life. It must not change according to view of person.
Developing countries has to make reforms in fredoms and young generations views needs to be regarded in future design. Otherwise the near future will be harder for developing countries.
In a nutshell, 2014 will be harsh for developing countries. They need to clear away politic and social risk to take minimum damage.
I think Winter is coming through to developing countries. What do you think ?
_______________________________________ZEKERİYA BİLDİK______________________________________
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.JPG)
