How long did it take them? Could you have gone in bought a ton of stock at old prices and gotten at least some of your 15% back? Apple stuff resells pretty well
The USD$ went from 9.50 to 12.50 in a month and I believe the last adjustment they did was at 8.5. Apple had 2 days of no online sales but the sales in the shops continued until the inventory depleted.
I was also going to grab a Macbook Pro when the price dropped below the US price but I wasn't decisive enough and missed the opportunity. I bet a lot of people bought MacBooks just to re-sell.
An interesting detail, in Turkey they are allowed to sell laptops with only Turkish keyboard layouts due to some law on protecting the language. Only German and Arabic layouts are excepted due to some trade agreements.
On the iPhones, the Turkish prices are never good due to very high taxation(about half of the price is tax). Turkey even pioneered the IMEI registration process where you can't use foreign device for longer than a few month in Turkey. If you like to bring a device from abroad, you need to register the device and pay a hefty registration fee and you can do it only once in two years. Officially, the registration is to prevent terrorist from using the devices as burners. The fee was 10 liras at the beginning but now it's over 2000.
I remember the process of getting a SIM in turkey was super annoying.
I had to physically go to a store where they needed BOTH of our passports and a second form of ID (so had to go back to the hotel and return with my traveling companion) and a decent 30 minute process of entering our information into databases and making copies of IDs. Compare that to most countries where I can either trivially pop into a local store and pick up a prepaid sim in a few minutes, or, for most of my travel I can have them shipped to me at home in advance so I can land in country with a local sim.
I definitely like using turkey as an example of how quickly a relatively healthy democracy can turn into an opressive theocratic regime when pointing out how close the USA became a similar nation just this past year and warning friends to not be complacent in upcoming election cycles.
> Western capitals were dead silent during the 2016 coup attempt.
Yeah, and for the better. The coup attempt is very controversial and it's not good guys vs bad guys situation.
To be fair, the west cheered for Erdogan up until Erdogan completely abandoned his initial positions. Later, the west simply worked with Turkey and Erdogan was properly elected through the years.
What the West was supposed to do? Invade Turkey? Assassinate the politician who consistently got about %50 of the vote of the Turks on elections with no less than %85 voter turnaround?
The way Fethullah Gülen got red-carpet immigration treatment in the US stinks to high heaven, though. It seems suspicion the US was behind the coup attempt is widespread in Turkey and not limited to AKP supporters.
Well, for once the CIA agent Graham Fuller[0] actively supported Gulen's green card application[1]. I don't know if Gulen was a CIA himself but there are ample clues that he is at least involved with the US government. CIA has a rich history of pulling such operations. That's Fascinating read actually.
He was given a green card as a "prominent educator" despite not having a degree himself. Anyone who's been through the US immigration wringer knows the process is very strict, and prima facie Gülen was not eligible.
The only similar case that springs to mind is the maid of the former Indian vice-consul in NY's maid:
That's not me. You can tell by the way the letters in the username are arranged. My point is that the guy behind the coup has known ties to the CIA and in my opinion that stinks. Of course I wouldn't know if or what role CIA had in the coup but I find it fair to ask the questions due to the established links.
My mistake, I was browsing through the user page so I didn’t see the name of the user I originally replied to.
Sorry.
However, I bet someone like Gülen would get red carpet immigration treatment even if the CIA wasn’t involved. I don’t necessarily doubt CIA involvement, I just doubt that his immigration treatment is indicative of anything.
They did all that but Turkey is also a powerful country and important ally.
EU can stall Turkey's admission in the EU and they did that however they also need Turkey to tackle the refugee crisis, Russia and other issues.
EU got to the brink of collapse with 1 million Syrian refugees, Turkey is hosting 5 million of them. EU and Erdogan got a deal, EU turns blind eye to some of Erdogan's stuff and Erdogan takes back all the refugees that EU sends back.
Similar agreements are in place with the USA. US lowers the heat under Erdogan and Turkey keeps the peace in Kabul. Stuff like that.
> EU got to the brink of collapse with 1 million Syrian refugees
That's overblown. Support for the EU is the highest for a decade and close to all time highs. Brexit seems to be proving something of a cautionary lesson.
Now the support is strong, it wasn’t as strong in 2016 when refugees were marching in Europe and EU’s proposed solution for the refugees was to distribute them evenly to all states.
EU managed to sign(actually, re negotiate the one signed in 2013 that Turkey no longer wanted) a send back deal with Turkey, now it’s all good.
> EU got to the brink of collapse with 1 million Syrian refugees (...)
That's quite the extraordinary claim. Can you offer any extraordinary evidence that supports your claim? Because from what I've gathered, it barely holds any bearing with reality.
Yes, check Brexit and Marie Le Pen, politics in Poland, Hungary, Germany back in 2016. The refugee crisis was a central theme back then and anti-EU politics managed to gain significant grounds thanks to it. In UK, they even passed the mark narrowly and left the EU.
Sure, the refugees are never the only EU issue but the 2016 crisis pushed EU to its limits and even chopped of part of it. That's why EU was at the bring of collapse and if it continued there was as strong probability that anti-EU politics would prevail in other(than UK) EU states too.
One country left the EU and was made an example. Britain is worse off for it and didn't gain anything. The entire world had the pendulum swing to conservative governments, including the US which had even less refugees at the border.
I don't appease bigots. We are going to see many more refugees within our lifetime and the "1st world" cannot ignore the problem forever by sending them to different poor countries.
It's not the number of refugees that the EU can't handle, it's the fact that they're not white, english-speaking christians. We can bullshit around that, but statistically refugees commit fewer crimes and attain higher education in larger numbers than native-born citizens.
Germany, to give an example I can speak to, has a fertility rate around 1.5. Quite frankly most of the EU could really use the new blood if they could only get over the fact that those people weren't born on magical "EU soil"
You mean Brexit, which started 3 years before the Syrian refugee crisis and Marie Le Pen, whose support numbers moved from 17.8% to 21.3% after the Syrian refugees? That's your "major fracturing"? Meanwhile Poland and Hungary have been moving to a far right dictatorship pretty steadily.
> Turkeys' EU accession plan went nowhere, despite Turkey being genuinely serious for years on end.
Only the Turks are to blame for this. Maybe they were serious, but they did a shit job.
Had Turkey quit their bullshit regarding Cyprus, things would probably have gone very differently. Turkey has no legitimate claim to any of Cyprus, as evidenced by literally nobody wanting to live in the Turkish controlled shithole.
From a purely pragmatic point of view it’s hard to imagine a world in which northern Cyprus is genuinely worth more to Turkey than EU membership would be.
Well, I beg to disagree. There are millions of Turks living in Northern Cyprus. Prior to Turkey's military intervention, the Turkish people were being massacered. If Turkey ever ceases to support Northern Cyprus, there needs to be some sort of military presence to keep peace.
Northern Cyprus is not just a lifeless island, it's a place that has been the home for many Turks for hundreds of years. If having lived in the same country for hundreds of years after conquering it doesn't give you a legitimate claim to reside there, I don't know what will.
I think the value of human life is much more important than getting into a union. The EU shouldn't have pushed this requirement.
Devices, SIM cards and identities must be matched in Turkey, so that nobody does anything naughty. They also make the service providers keep tower signal logs worth of many years, so it's common to prove your whereabouts in courts by requesting these logs.
On the plus side, you can see and manage all your data from the government portal. It's rather convenient to be able to see all the subscriptions(GSM, TV and so on) on your name and cancel them from there if you wish. Totalitarian control has its perks.
Ah yes, now I know why all of those shootings and mass murders happened in the Turkish airport-- there was no system for mapping identities to SIM cards!!
The security aspect was more of a pretext to force people purchase the heavily taxed officially imported mobile phones.
Obviously, the usefulness for prevention of such attacks would be limited, it's more about identifying the offenders. It's also useful for surveillance, as you would expect a totalitarian state would like.
Of course they will take your passport. First time I bought sim in store, it was illegal to use foreign phones, and shop owner had to fake his IMEI. Airports never had this restrictions or asked for IMEI.
AFAIK foreign IMEI was never illegal in Turkey. The registration requirement started in 2011, before that you could just pop a local SIM and use it.
Any IMEI can be registered within a specific timeframe(they change it from time to time but it's usually 3 weeks to 12 months) or the GSM operator will deny service to your device. It could be that you missed your deadline because to register an IMEI you need to do it within certain timeframe after you enter the country, there was even a business of paying tourist to use their passports for registering IMEI of black market imports.
Those who legally import phones for sale in Turkey also register the IMEI of every device but at different and much lower rates than the individual registrations(they pay other taxes).
That's probably it. Instead of you paying this ridiculous registration fee, the clerk probably offered you a cloned Turkish IMEI. That's another popular workaround!
If you knew in advance that it was going to crash, there's better ways to profit more directly. If you didn't, seems unlikely you'd be ready to capitalize.
Besides, not sure how it works in Turkey, but most places at least: retailers can cancel orders for little to no reason, if you bought a bunch of crap right before such an event, I bet they'd cancel it.
Apple apparently canceled some orders, the social media was full of people complaining about it however the laws don't allow you to cancel orders just like that(when you order something the company and the customers are obligated to sign purchasing agreements that provides ether party with rights and obligations) and many people were quite motivated to sue Apple. Some contacted Apple and the official response was that the cancellations are due to unrelated reasons.
Turkish consumer protection laws are not bad, there are arbitration tribunals and consumer courts that quickly and cheaply resolve that kind of disputes. People use these all the time.
My brother snapped an iPad Air for the equivalent of 450$ and is expecting the delivery anytime now.
Hyper inflation drives people to buy goods that can be resold later for more. This happened in CCCP while it was falling apart. People would show up with all their money every morning at their local stores, buying whatever was available no matter what it was. They could resell it later for more money (effort to preserve the value of the currency they held). Apple products are a safe bet as they typically hold on to their value well, are small and convenient to hang onto (refrigerators are more difficult), and can be sold abroad, etc.
It's very odd to write CCCP in an otherwise english paragraph in latin alphabet. YOu would be better understood to write USSR or better just write Soviet Union.
(For those unfamiliar, CCCP is SSSR in cyrillic alphabet).
Folklore: in Italy, at the time the USSR was a real football power (Euro finalist etc), CCCP was often used for kids jokes as meaning "Col Cazzo Che Perdiamo" ("we ain't fucking losing").
If you stop to think about it yes it is pretty odd, but enough people do this that I don't have to think twice when I see it. You'd definitely wouldn't see it in formal writing, but informally it's not uncommon. A quirk of cross-cultural transmission maybe?
If I use CCP instead of China it's not to signal morality/superiority myself, it's to fend off people that are going to get all fussy and misinterpret and declare themselves moral/superior.
Even here in Europe this is a thing now because they seem intent on making our money worthless with negative interest rates. As a consumer I have very little financial confidence left.
Nothing is stopping us, in fact the dolarisation of savings hit 67% (if I'm not mistaken). People keep their savings in gold and fx. But your salary is fixed in Lira, the cost of living increases. Each month you see that you are getting poorer and poorer (and by poorer I mean 10-15% each month). It's really hard right now.
We were just starting a startup, and bought all computers, monitors, chairs, desks etc. when $/TL was around 8.5. Now one dollar is 12.5 TL. At least our rent for 140m2 is around 1000$ in a very good spot.
Yes, exactly. I just wanted to emphasize the increase amount and what we would pay if we were not fast. We saw the increase miles ahead and bought all the stuff out of our own pockets.
Well I was confused too. And for exactly the same reason as the other commenter. For a minute I assumed they were in the US buying furniture and equipment from Turkey and they were complaining about not waiting enough to get a better deal.
Is the cost of living (food, rent, price of a coffee at a bar ...) in lira going up at the same pace? Or is the inflation only felt in imported goods suchs computers, gasoline ...
It used to be OK. However, recent increase and the longer increase with start of Covid started to amplify in all goods. Even bread is now 1.5/2x more expensive, restuarants are 2x expensive compared to 1YR, because of cascading increases in every industry, mostly transportation and goods. For instance, the wood for the kitchen is increased almost 3x in 6 months according to our guy.
Tech workers are mostly in good spot, (great if working remote). However, in Turkey, minimum wage is almost average wage. I feel very bad for most people, and try to give anyway I can.
Car prices are ridicolous. I could almost buy a Tesla Plaid in US at the price of a BMW 320 here. But it's due to high taxes. These taxes were introduced in the '99 earthquake, meant to be temporary. But those taxes are everywhere, named like "Luxury Consumption Tax".
I think in general luxury goods taxes are underexploited. People normally want to buy expensive things so they can show off how much money they have. May as well make them more expensive, and divert some of that cash to useful purposes.
Maybe... My point was that often these taxes are actually targeting imports, and not necessarily "luxuries".
Well, that also depends on how you define luxuries :)
I personally don't mind taxes, but consumption taxes, even on "luxury items" are generally likely to be regressive in nature. So maybe don't use them...
I'm not sure. I was just looking for some points of comparison, and as far as I can gather, tampon tax (the standout example for regressive luxury taxation) wasn't actually a luxury tax, but rather a tax on 'unnecessary' items. Which is - ech - but, you know, it's not an extra tax.
I think explicit taxes on higher-price items within categories (so like, expensive cars) would be kinda nice, because it avoids all of the fiddly questions over what is and isn't an luxury item.
> May as well make them more expensive, and divert some of that cash to useful purposes.
It’s very easy to wipe out an entire market by over taxing it, and lose not only the luxury tax, but also all the normal taxation. Not to mention all the black and grey market activities you incentivise.
> Are those taxes effectively targeting products that are imported?
Nope, pretty much anything that is not deemed basic biological need has some amount of Luxury Consumption Tax, or ÖTV.
Alcohol, electronics, cars, fuel ,communication services, communication devices, cola and similar drinks, cosmetic, newspapers etc.
The rate and the items will change all the time. Especially for the fuel, it's used as a buffer to keep gas prices stable as the Turkish lira and oil prices fluctuate. Currently the luxury tax on gas and diesel is 0 because they gradually reduced it to keep the price somewhat stable as the oil prices soar and the Turkish lira falls. When the oil prices were low and the lira was strong, Turkey had the most expensive fuel prices in the world. Currently, it's the cheapest in Europe.
Ostensibly, goods imported and bought with USD will have their prices inflated, while locally produced goods and services should remain more or less unchanged.
This also means that exported goods are effectively cheaper for international buyers, so export volume goes up.
> while locally produced goods and services should remain more or less unchanged.
This is not true for Turkish Lira because EVERYTHING is dependent on foreign currencies at some point. For example local agricultural goods shouldn't be affected, but all the machines in production line are imported, all their servicing equipment are imported. If one simply goes unofficial (e.g. Finding someone to service their machines totally in Turkey), even iron is based on foreign currencies as almost everything is either imported or owned by a foreign company (as the government sold everything to non-Turkish entities). Fuel is also imported and is directly correlated with foreign currencies. At the end of the day, everything, even local goods, is tied to foreign currencies.
It's not a one time thing. It's a convergent process.
It provides advantage as long as the currency is in that deprecated state. Basically the same work will cost less in the depreciated currency. This causes demand for that work, which causes appreciation of the currency.
> This also means that exported goods are effectively cheaper for international buyers, so export volume goes up.
That's Erdogan's theory. However in reality nothing stays cheap because anything Turkey produces has large component of imports, be it energy, parts or machinery etc. because the country is not a petrostate.
The only thing that can stay cheap is the labour but that labour can stay cheap only if it sees huge drop in life quality since the stuff the people consume(petrol, cars, electronics etc.) see huge price increases.
You simply can't keep the wedge of a worker at 5000 when the iPhone prices increase from 7000 to 11000, car prices jump from 200K to 300K and gas from 6 to 9.
> while locally produced goods and services should remain more or less unchanged.
What usually happens is that since oil is denominated in USD, the price of fuel and transportation rises when a currency weakens and that increases the price of locally produced goods as well.
This is felt especially acutely because most Turkish debt is denominated in foreign currency (~70%) and the vast majority of trade is as well (I remember 85% but can't find a source). So inflation is felt immediately.
Question is - if/when the lira rises 15% (#1), will Apple respond as timely to adjust prices cheaper? Mindful that companies are quick to point to a reason to increase prices yet when that same reason goes the other way, not so quick (if ever) to adjust down.
Is Black Friday sales a thing in Turkey? As can imagine many who would of banked to buy then, only to get hit with the polar opposite in this instance.
#1 - (maybe in a day with things settling out, dunno about specific reasons for the crash but mindful the whole Omicron dram and market magnification/snowball effect could be factor here as been so with some share prices past few days).
(Sure it is just an expression, but: here is a reminder that is something falls 15%, it recovers previous state through gaining ~17.5%; if it falls 20%, it needs to increase 25%; if it falls 50%, it then has to double...)
> will Apple respond as timely to adjust prices cheaper?
Well in one case you have arbitrage and are actively losing money, in the other case you are potentially losing sales due to the product being too expensive. So no I don't expect as Swift of an action.
> if/when the lira rises 15% (#1), will Apple respond as timely to adjust prices cheaper? Mindful that companies are quick to point to a reason to increase prices yet when that same reason goes the other way, not so quick (if ever) to adjust down.
I certainly don’t ask to have my wage lowered in months where inflation is negative. I’m not sure why anyone would ever negotiate against themselves. Apple will lower prices if their customers demonstrate they are not willing to buy at the offered price.
>"I certainly don’t ask to have my wage lowered in months where inflation is negative."
1) How often does that happen?
2) This is very hypocritical. People ask for things what benefit them. Why the fuck they should worry about corporations. If corps have problems it is up to them go and "ask".
1. Most recently in the US, half of 2015 and most of 2009.
2. That’s my point. Apple is looking out for Apple. I look out for me. If Apple can get a higher price, they’re going to stick with it if they can. Same as I would with a higher wage.
I mean, it's not Apple's fault Turkey's currency is unstable. Why would it be their responsibility to take the exchange risk? I wouldn't be surprised if in response to future events like this they stopped accepting payments denominated in TRY altogether.
It's been a few years since I was in Turkey, but at the time, most stores took Euros. And street vendors even preferred it.
However, whether Apple is allowed to use Euros for the retail prices in store or not may be a legal matter. There are plenty of countries where it's illegal not to price and sell in the government's preferred currency.
There are capital controls, it would be illegal to sell in Euros to non-foreigners. There isn't anything stopping you from increasing the prices by indexing it to Euro though, you just have to announce it. Most consumer electronics markets use digital price tags for this reason. They update all prices in TL regularly (once a day etc.). Apple has this strange policy that it uses a fixed rate. They pick a high fx rate and stick with it until Lira depreciates to absurd amounts again.
A perfectly reasonable thing for Apple to do would be to buy foreign exchange options to hedge out the risk of currency fluctatuions, passing the cost on to consumers. So it'll cost a percent or two more in the price of a new Apple product, but that means Apple isn't exposed to risk of currency fluctuations. Having said that, Apple is probably a big enouhg company to just accept the risk itself and not pay for options to hedge that risk.
Apple usually lags a bit in both directions. During the previous fluctuations Apple again had a period of extremely cheep prices, then raised the prices to match the dollar value and once the lira stabilised a bit they adjusted the prices again. In general, Apple gives quite a bit of buffer before adjusting the prices.
If Turkey is anything like eastern Europe, I’d be pretty confident that the people buying Apple stuff don’t have their salaries or bank accounts denominated in Lira.
For example in Ukraine anything that matters is priced in USD
Companies can’t be competitive, nor reach sales goals when prices are artificially high. Similarly they also lose sales to neighbouring countries - making price consistency important.
Despite it not fitting the evil megacorp narrative, good business requires prices to follow the currency changes - but not super tightly as that’s also harmful to business and consumers alike. Each company establishes their product margin and excess to that is not desirable - lost sales are invariably more costly than a small % gain in margin.
The other issue is that currencies usually drop quickly but recover slowly, it takes time to undo the instability in the currency and then attract investment to strengthen the currency. In the case of Turkey it’s due to their recent decisions to lower interest rates despite soaring inflation (the opposite of good fiscal policy). This will absolutely prevent any kind of bounce happening and psychological barriers to the currency have already been passed - meaning the currency (and with that the population) is likely to suffer further.
I don't think so, and I don't remember that ever happening. Turkish Lira has always been devaluating. Black Friday is a thing here (with a different name but basically the same thing) but things were already at a skyrocketed price that only some items just went down to a "still expensive but sane" level.
If the currency changes rapidly, it will have effects across the supply chain.
On sales during Black Friday / Black Weekend / Cyber Monday - this type of sales become common across multiple countries, including Turkey. But not nearly as famous.
During the Asian economic crash from 1998s, things like PC parts were priced in USD, and to get the local price, the shopkeeper would multiply the day's USD rate with the gadget's price, and show you the price on her calculator... but 2 decades later the currencies of the region have stabilized enough that this is no longer the case.
The Turkish lira has been plunging vs. the US dollar for 14 years straight. It has fallen by 90% in dollar terms. All foreign retailers must be constantly readjusting prices, right?
Actually, it was fairly stable between 2003-2013. Then the hardcore political stuff began happening, Erdogan won the political fight to become a popular autocrat assuming all power in 2017 by changing the constitution through a referandum then winning the elections - all fairly.
When he got free from any checks and balances he was free to implement his unorthodox ideas on economics. He put his son in law in charge of the economy, things accelerated but he still had some rebels around him and they took the son in law out of the picture, stabilised the economy just before shit hit the fan. Erdogan proceeded getting rid of everyone not supportive of his ideas and that's when stuff actually hit the fan.
BTW, there's uncovered corruption on a scale unheard in history. Seriously, Turks are no longer impressed by sums less than a billion of dollars. A mayor purchasing insurance from his own son for 10 million $ a year is something that will entertain you for a few seconds as an interesting detail, what keeps coming is the mayor spending 1 Billion $ on dinosaur statues.
The parent was probably talking about not that single statue, but a whole theme park dedicated to dinosaurs, which costed 750M dollars, and opened only for a few months (1). But a bigger (albeit cheaper) wtf in my opinion is a village entirely made of castle-like houses (2)
This kind of thing is common in China. I'm not sure why this would seem very impressive, it isn't even on nearly on the same scale. It is all money laundering of course (or to say, transforming public money and credit into private money).
This is when in my minds eye flashed some sort of trailer for an as-of-yet un-produced Turkish adaption of The Wolf of Wall Street, hilarious hijinks on a never before seen scale centered around Erdogan as the surprisingly likable protagonist.
This is exactly what has happened :). People close to the government made unbelievable profits at the expense of the people. If you're interested look up the story of the evoparated 128 billion USD of the Turkish Central Bank.
Our central bank sold 128 billion USD to friends of the son-in-law of Erdogan at a ridiculously low interest rate last year (1 usd = 6 Lira, now it is 14 Liras) with a confidential protocol. People have noticed it through the balance sheet of the Central Bank. Government officials refused the comment first, then they admitted that 128 billion USD were in fact sold. We still do not know to whom it was sold.
This is probably the fraud of the century.
I still have a 500,000 TL note from Turkey's hyperinflation days in the early 2000s. Back then it was just about enough to buy a loaf of bread. Looks like those days are coming back.
I have a 100 trillion Zimbabwean dollar note, which apparently would buy 2 eggs at the time of issue. It’s actually increased 10x in value since I bought it on ebay though. :)
I think it's a combination of the speed/magnitude this time. The TRY has been plunging for a good amount time now but it has been doing that regularly and with smaller adjustments. Having a 15% single day crash seems to have caught lots of people off-guard.
For the same reason that low positive inflation is good, as long as the volatility around the inflation rate is low (so expected value of price is in tight ranges)
Shorting involves finding someone willing to bet the opposite way. If you think a pattern is obvious, other people will too, and that will make options expensive, reducing your gains.
If you can convince someone in Turkey to lend you money at a cheap rate, then you can pay it back later in inflated currency. Of course, banks generally jack up interest rates when inflation gets high, but sometimes they are forced not to (and it is usually the ruling class that is allowed to take advantage of those loans).
In general, you can only make money on these things either via information asymmetry or flat out corruption.
Maybe? If you had bought USD/TRY two years ago you would have doubled your money by now. But the same is true if you had bought shares of Google. Nobody can predict the future.
No. There is very little downside left to profit on at this point. The time to short has already passed, there’s better opportunities out there. Be bullish about something.
Cheapest Netflix country often. Must now be even better. UK scroungers often use a VPN to switch their payments to the Turkish Netflix while watching in the UK. Makes it half price.
Through this lens "supply chain problems" starts looking like a rather convenient scapegoat for preventing consumers from purchasing your wares before their currency becomes realized as worth less and your prices go up accordingly.
This is effectively what's happened with my inability to buy an IKEA table for months... it was constantly out of stock, and it's still out of stock, but its price has increased 15% from when I first attempted buying.
Well there was an incredible increase in the price of wood for a while there (futures tripled normal prices for a while there) from both the supply and demand side (not to mention labor and shipping concerns). If you're Ikea you can either double your prices or severely limit production.
You say "convenient scapegoat", but I think people were going to be mad about something regardless of how Ikea responded.
Except it is the other way around, currency becomes worth less because people are willing to exchange more of it for the same item (eg ikea table). Demand -> inflation.
And it would be 22% compared to something with a more fixed value (like gold). Value is stable, the USD fell 7% and the lira another 15% for 22% total.
Looks like the lira is down 31% compared to my own currency (gbp) so far in 2021.
Why don't they just sell in Euro/USD? That's what people did a few decades ago a bit further north, when the local currency wasn't trusted (even if it was rather stable).
But yeah, inflation in Eastern Europe is pretty bad, and if you voted for a bunch of dumb assholes who don't care about you or the nation, you're multifucked.
I worked for an e-commerce site that sold cars in Turkey in Euros. Sometime in 2018 I think it was, Erdogan made a new law that said everything had to be traded in Lira.
There are ways to go around. Last year I bought a car (not in Turkey, but very close) and the price was in EURO converted to local currency at the rate of the last payment. I ordered with a downpayment and I got it 3 months later (supply chain slowness) and I paid in local currency the converted price of that day. The car was not sold in EURO, but the price was linked to it.
Rio de Janeiro was Brazil's capital for centuries (even before it became an independent country), it only changed to Brasilia in the 1960s, well within living memory of many people, so that one is justifiable.
I personally don't see anything as "unjustifiable" - modern states can (and arguably should) be multipolar. Dedicating a city to administrative bureaucracy is not a terrible idea, in the same way as you'd separate salespeople offices from the factory floor. It's just a very modern concept.
I was just listing a few other famous "unintuitive" capitals. Another one would be Milano vs Roma, although the two are evenly matched on the cultural level.
Probably some forced course laws that demands prices be defined in local currency.
If you ever lived in countries with irresponsible central banks like Brazil or Argentina you'll notice there are often laws to dissuade you from using the crappy local currency.
Same reason you cannot pay in euros in US. Lira is a legal tender. Company can peg prices internally to a spot rate to whatever, but if exchange turns to fast volatility, what else can you do?
There is no law preventing one to sell in Euro in US and there is no law mandating a seller to accept USD as payment. "Legal tender" does not mean what most people think.
A supermarket could refuse to sell you something unless you pay in Mario coins, but I beleive a restaurant is forced to accept your dollars to settle the bill you incurred for the food, and can't insist you pay your bill in Fallout Bottlecaps. Is this right?
As long as they tell in advance (before you order), they can have any rules like any contract. It is extremely rare to have weird rules, but more common sense ones like "exact change or card only", "card only" are fairly common.
This quite possibly varies by jurisdiction, but at least in the UK they do have to take legal tender in the GP's case. In a restaurant where one pays after receiving the food and a petrol station where one pays after receiving the fuel, you have no way to give back what you've taken and leaving without paying is illegal. So while it would be foolish of the retailer to attempt to refuse payment in local currency, if you try to pay in legal tender then they are obliged to accept.
Having said all that, the largest denomination that's legal tender where I am (Scotland) is £1, filling up with fuel today cost me £100, and I'm not in the habit of carrying around that much loose change.
Also, it's absolutely the case that a store where you receive the goods after paying for them may accept (or decline) whatever they choose. Many shops on Edinburgh's High Street, for example, have signs in their windows saying they are quite happy to accept Euros or Dollars. Not that you'll get a particularly good exchange rate, mind.
Why do you point to UK as an argument about US? Different countries, different laws, no argument. Most of Europe is very different versus US, there is no doubt about that.
You have to ultimately pay taxes in USD and have to accept settlement for debts in USD, but otherwise you're free to accept anything else you'd like, really.
That's quite a difference than compared to most, if not all, european countries. There are certain exceptions for outside.of borders payments, but even then local and legal currency has to be accounted. Retail no way.
Is like to hear about this from somebody living in Turkey but maybe shop prices must be in Lira. I don't even know if in my country it's mandatory for physical shops to display prices in Euro or if a price could be only in Dollars.
Even if you have to quote prices in lira, could they internally model the price in euros or dollars and adjust the lira price multiple times a day if necessary? I’ve heard that this is what most shopkeepers did during the hyperinflation in Yugoslavia (with German marks as the reference currency).
I've bought a beer ~7 years ago with btc. They just wanted for 1 confirmation (~10m), not that it mattered since we could drink in the mean time anyway.
That's the same thing as pricing in dollars. If you haven't noticed, Bitcoin is as valuable as the usd/btc pair. It's why every bitcoiner knows what the price of Bitcoin is every day.
So, is Turkey and Venezuela the two major countries that are actively going through a currency crisis?
What are they doing that’s so different from everyone else? Drop interest rates, print more money.
I don’t know what Erdogan’s plan is, but unless they find strong export partners, devaluing the currency isn’t going to work out. We expect everything coming out of Turkey to be cheaper now, but who’s buying (importing)?.
>What are they doing that’s so different from everyone else? Drop interest rates, print more money.
Having an even more dysfunctional government with leaders that cannot be trusted. Currency is only worth as much as the people using it can produce desired goods/services.
> What are they doing that’s so different from everyone else?
Erdogan thinks that high interest rates causes higher inflation, while it is generally agreed that it's the other way around, so every time that he speaks in public and says that the rates will fall (the Central Bank is nominally independent, but in practice will do what he wants) or the CB follow on his promise, the markets react accordingly. The last crash was one of such cases.
I think the official rates are about 15%, with an official inflation of 19% (in practice it's at least double, so much that when the government announced new prices for a number of taxes and fines, they were increased by more that 35%), and a Lira that lost half of its value in a years, who is going to buy Turkish currency ?
You don't get runaway inflation if the value of your imports is somewhere in the neighborhood of the value of your exports (a fairly large imbalance is fine).
You do get runaway inflation when your import needs far exceed your export ability, you print money but prices rise continually faster than you print, regardless of how fast you print.
Um. Please go do a little research about Venezuela's situation before proposing a simple, wrong solution. They have badly mismanaged their financial and political situation for a long time and are not equipped to make the necessary changes to remedy this (whether the answer be "print more money").
If you'd like to know more about their situation, I recommend reading "The Prize" and "The Quest". Much of the root of their problems come from nationalizing their oil industry and subsidizing local oil, although that's not the entire explanation.
> Wouldn't stealing all the foreign assets of Venezuela by US and UK also affect the Venezuela economy?
There are a number of things wrong with this statement.
1. Timing is off. The U.S. didn't freeze Venezuelan assets until 2019 after Chavez died and the economy had already collapsed.
2. $342 Million in cash was frozen and 1.1. million barrels of oil were seized, the rationale being that this was a small dent to offset the amount of Western assets that Venezuela nationalized without compensation.
3. For years before the US responded, Venezuela nationalized foreign investment in its oil industry, gold mining, agriculture, telecomm, banking, auto manufacturing, paper products, Satellite communication, pharmaceuticals, and many other industries - most seized without compensation. Prior to the 2019 action, the US basically left foreign investors without recourse, as they had to file lawsuits in courts in order to try to obtain compensation.
The value of the foreign assets seized by Venezuela far exceeds the value of Venezuelan foreign holdings seized in response.
The real problem for Venezuela is the flight of human capital by those with skills. Venezuela lacks the skilled workers to operate the industries it has nationalized, which is part of the reason for the economic collapse - the other part being simply the usual effect of socialism on reducing productivity due to the breakdown of the price-system.
Why does it sound wrong? Just off the top of my head (not an exhaustive list), Venezuela was ordered to pay $1.6 Billion to compensate Exxon in 2007[1] (and that doesn't include Conoco-Phillips or other oil and gas companies). Of course that payment was never made, as Venezuela paid only $255 million.
But that's just one case.
Solely in Oil and Gas, Venezuela nationalized $30 Billion worth of investment in 2007, and paid out only $1 Billion.[3]
You can read more in this 2012 summary[3]
Of course there were many more nationalizations after 2012, e.g. the GM plant they seized in 2017[4]. You can do your own googling for more fun about everthing from DishTV to telecom equipment, gold mines, etc. Venezuela seized virtually all foreign investment in the country. They owe the international community a huge debt. The diversion of those 4 tanker ships and freezing a couple hundred million is just the first of many, many payments that Venezuela needs to make.
The dollar holdings that were seized were used by Venezuela for purpose of purchasing imports and also funds squirreled away by various government officials. My assumption is that it was the latter that was the main motivation as the U.S. is trying to squeeze the government. This is similar to freezing assets of certain Russian officials.
Venezuela has shifted to a semi-barter system sending oil to Cuba in exchange for doctors and military personnel/secret police who can fight the domestic rebels - even the enforcement of authoritarianism is being outsourced to more competent nations.
Venezuela is a poster boy for technical incompetence - a warning lesson to any nation that thinks they can eliminate their professional and managerial classes while still remaining a functional society. This should serve as a warning sign to many (myself included) who think the PMC class is the heart of our current troubles.
Cuba, on the other hand, still maintains technical expertise in several areas. They still have a functioning medical/biotech/military complex, at least when it comes to small arms and intelligence. They can still provide electricity, roads, schools, and they are not starving, either.
Yet Cuba has been the subject of much greater boycotts than Venezuela, so it really does boil down to human capital and effective administration. Cuba still has some, but Venezuela no longer does. I think understanding this difference is very important.
Freezing, not stealing, because the chances those assets would be used for the actual benefit of Venezuelans is pretty much zero. They will be returned when Venezuela has a legitimate government.
This is propaganda. The US sanctioned Venezuela to because they do not want anyone in their sphere of influence nationalizing important export industries like oil.
Opposing parties choose to come to the US for that very reason. They trust the US courts to uphold contracts more justly relative to other jurisdictions. The US’s trust is it’s most important asset.
In the modern world we primarily have banking systems that are based on fractional reserve banking and currencies without any explicit backing. This means that from a forex point of view the currencies are only worth as much as there is confidence in them. (National currencies often derive power in a practical sense due to taxes having to be paid in those currencies even without any explicit backing of the currencies value). Because of these dynamics if everyone were to try to withdraw their money from the bank at the same time there would be a major problem because the banks don't have the money to cover it. An event that makes people in a country all want to withdraw their money will cause a crisis just about everywhere at the moment. Sure you'll get people from the central bank saying they can create enough money to pay everyone out, which they can pretty easily do due to the fact that most money now is just entries in a database. But the problem in all modern banking crisis situations isn't so much the act of giving people money its what you can buy with that money. (A caveat, when things get really bad like they did in Venezuela the currency degraded so much that the government had problems paying for the printing and transport of new banknotes with even more zeros, but that's a rather exceptional case that occurred very late in a crisis, again the money was buying less)
Banking crisis conditions can come about for a variety of different reasons but they all involve some lack of confidence in the ability to be able to exchange money for goods at a later point in time. This can come about because people aren't able to access their money in the banks (Eg Cyprus crisis) or because the value of the money is rapidly deteriorating (Eg Yugoslavian Hyperinflation) or because there's some event that devalues the currency. This is by no means an exhaustive list, but it shows that different things in different places can cause crisis situations to emerge. There's some interesting work that was done by the Bank of International Settlements about the early warning indicators for systemic banking crises. Seeing what was happening in Turkey inspired me to write about bank bail ins. Along with bail outs this is something that you'll likely see in banking crises. More detail about the early warning indicators and bail in mechanisms here: https://www.lesinskis.com/bank-bail-ins.html
I also talk about this in the article but I don't think it's easy to neatly determine where currency crisis situations "start". There's at least 14 countries in the world that are in what could be the early stages of a banking and currency crisis but it's likely that people will only say they are in a crisis at a much later stage where the problems are so big they are impossible to ignore. Other places like Canada get ignored routinely but the situation there could rather easily turn into a major crisis unless something changes there.
I'm aware that capital requirements have mostly taken over from reserve requirements over time (in such a way that the banking system is even less sound than the average person assumes), but the point I was making is that in all these these systems there will be liquidity issues if all the depositors were to try to withdraw their money to spend it on something at the same time.
Next downturn when everyone wants to cash out all their investments at once so they can pay rent and such. BTC has yet to experience a downturn, I don't think it will be pretty.
Its not a real black swan because it's so painfully obvious to anyone who's looked at it in depth but the demise of Tether will have an enormous impact on BTC.
There's absolutely no reason I can think of for doing that - instead of posting a price if USD or EUR and accepting paying in TRY. They'd have to exchange that Bitcoin for TRY anyway to pay their local staff, and they'd have to convert the balance to USD or EUR anyways. It's just extra lossy steps with huge volatility.
