The mainstream media has finally turned its attention to celebrate Turkeys magnificent credit card bubble. This page joins the chorus of well-wishers and wishes Turkey Happy Allahu Akbar. Thank you Spengler for this one. *** Ozcan Yuksel’s descent into debt began with a stroll down Istiklal Caddesi, a popular Istanbul promenade teeming with shops and restaurants. “They were asking people to sign, and I did,” he said. Within a week he had a card and a spending limit many times his paycheck. That was in 2001. Today, Mr. Yuksel, a 32-year-old father of two, owes more than $8,000, much more than his annual income and an amount that will take him more than a decade to repay. He is among millions of Turks who are in over their heads in debt they incurred after local banks aggressively marketed credit cards to low-income people. Mr. Yuksel’s tale of living on borrowed money illustrates one of the ills plaguing the country’s economy and threatening a new financial debacle in an unstable region. It echoes the subprime mortgage calamity in the United States in 2008, in that the Turkish banks often seemed oblivious to the risk that their new customers might not pay them back. ..... Much of Turkey’s rapid growth in the last decade came from consumer spending based on credit. Debt from credit cards rose 31 percent nationwide in 2012. In 2013 it rose an additional 22 percent. From practically nothing a decade ago, consumer debt in Turkey now equals 55 percent of household disposable income, according to Oxford Economics, a research organization in Britain. Until the Turkish government recently curtailed the practice, stores habitually offered to sell almost anything on installment, even a pair of jeans. The debt overhang adds to the stress on the Turkish economy, which is already intense. Debt by the Turkish private sector, including businesses other than banks, totals more than 60 percent of gross domestic product. That is one of the highest levels among developing countries, according to Oxford Economics. ...... Some analysts say the amount of consumer debt in Turkey, about $131 billion, is not big enough to threaten the country’s banks in the way that subprime mortgages, and securities tied to them, undermined the health of banks in the United States and other nations. They say that because Turkish banks are considered well capitalized and the number of problem loans, at less than 5 percent of the total, is considered low. But S.&P. warned in its report that the official numbers may understate the scope of problem loans. Banks may be allowing debtors to take out new loans to repay old ones, rather than classifying the loans as being in arrears. (By JACK EWING and SEBNEM ARSU) *** Aymenn Dr. Bein Al-Khassakah Abu Raccoon
Posted on: Wed, 05 Mar 2014 09:47:11 +0000
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