Foreign Capital

In one of my previous articles, I examined what floating money does.

https://strasam.org/ekonomi/turkiye-ekonomisi/sicak-para-ne-ise-yarar-993

Today, let's take a look at foreign capital.

Yes, unfortunately, we need foreign currency as a country, mostly for our energy needs. Unfortunately, fossil fuels, which are today's major source of energy, are not extracted from our country sufficiently. Unfortunately, the governments in power have not thought of investing enough in other energy sources. When I say investment, I include the development of technology with our own means. If we try to do it now, we need to make huge investments. As I have written before, that is why we need to start as soon as possible, I think this country cannot afford to waste any more time.

In addition to this, unfortunately, there are many things that we have to import. Especially since we have been transformed into a consumer society, we procure almost everything from needle to thread from abroad. We have to pay for these in foreign currency. 

Moreover, we buy the raw materials and intermediate goods of many products that we produce and export ourselves. The balance of foreign exchange income and expenditure is constantly deteriorating in the direction of debt. Our foreign debt is constantly increasing.

We can say that tourism takes the lead among our general foreign exchange revenues. Of course, we also have foreign exchange income from the products we produce and export. However, since these two main income items are not enough for our expenditures, we have to cover the difference by borrowing from abroad. 

Swap agreements are a story, swap is a system designed for mutual trade, trade between two countries should be balanced so that swap can be useful. Supposedly you remove the US dollar and both countries can trade in their own currencies. But at the end of the day, at the end of the day, you still do the offsetting in US dollars, and usually we are the debtors again because trade is not balanced. So the foreign exchange reserves in the central bank's coffers due to the swap are just a deception.  

There was a time when our citizens who went to Europe to work used to save the money they earned in Turkey. These savings used to play a significant role in the state's foreign exchange inflow. Now I think that this kind of income has decreased considerably. The abuses of the past have a big share in this. The employees whose money was abused through Deniz Feneri etc. now prefer to keep their money in European banks. Most of them have already acquired dual citizenship, not even dual citizenship, but new generations have become citizens of the country they live in directly and are planning their future in Europe. I don't know how much our third and fourth generation compatriots living abroad feel spiritually connected to Turkey anymore. So I have serious doubts about whether such an income can be taken into account as foreign exchange income.

Once upon a time, even the foreign exchange earned from textile products that were taken abroad and sold through the suitcase trade amounted to a serious amount. Suitcase trade has also been terminated. Now, as a result of the measures taken, there is no such thing as shuttle trade. Therefore, there is no such income.

Once upon a time, a friend of ours in Russia used to bring sausage, olives, tahini and molasses from Turkey in suitcases. Even though it was expensive, almost everyone at the construction site would buy something. One misses the flavors of home. Now there are stores selling Turkish goods in one or two places, and I see advertisements on the internet offering similar services, but it is not the same anymore. Maybe we have gotten used to the flavors of these places.

I will say that although the foreign currency inflow to the country has increased because exports have increased compared to the past, our current account deficit in foreign currency is increasing every day because the foreign currency is not enough for our expenditures.

The foreign currency brought in by foreign investors for stock market investments, what we call hot money, also involves the risk of leaving the country instantly once a favorable gain is achieved in the stock market. Foreign investors have already left the market altogether. No one is bringing in any hot money. And we usually walk away from the table with a loss from these hot foreign currency inflows. Under the conditions of our weak market, as a result of various games played by expert foreign speculators, domestic stock market investors are left with stocks whose prices have plummeted to the bottom with huge losses without understanding what is going on. Moreover, our own speculators are also ripping off the local investors. I guess you have heard about the games going around.

Let's talk about foreign capital. Foreign capital is supposedly a permanent inflow of foreign currency. Investment costs enter the state's coffers in foreign currency and are freely spent on foreign currency expenditures. The state likes this kind of foreign exchange inflow because there is no obligation to pay it back. Fresh blood, spend it as you like. 

However, the earnings from the investment are now the earnings of the foreign investor. The state may collect taxes on these earnings, but the foreign investor controls the market for whatever the investment is made in. The foreign investor now determines the price of the goods it produces and transfers the profits to its own country. In other words, you are happy that you no longer have to import that product from abroad, but you don't gain anything except being a consumer. You are now a market where the castle has been conquered from within, to use a bad analogy, but you are now being milked like a cow. 

So how logical are the incentives given to foreign investors? As I said, the investment money that comes in for the urgent needs of the state maybe helps a little bit, but that's it. Yes, at the beginning it seems like an advantage because the foreign currency brought in is not paid back. But in my opinion, you are paving the way for years of exploitation. 

You can say that technology transfer is a gain. Employment may seem like another gain. But believe me, in this capitalist system, especially when it comes to foreign investors, nobody spends a penny without earning more. If you start from the cost of investment and look at the total at the end of the day, you can perceive that foreign investment actually harms the country.

Therefore, I do not think that foreign investment is beneficial in the long run.

It does not contribute much to the country's foreign exchange needs. After all, investment capital does not come every day. Just like a Ponzi scheme, the governments that have been in power for years have sold off all the achievements of the republic under the name of privatization. Almost all of them were bought by foreign capital, and even though there were a hundred local investors, the money they paid was paid with loans from abroad. There are many times more foreign bank capital under the iceberg. 

Despite all these privatizations, the state of the country is obvious. We have not been able to get back on our feet, and day by day we are being crushed under the swamp of debt. Our debt is constantly increasing. There was a time when we were able to roll over the debt, but now we can no longer find foreign debt to cover our debt with debt. I won't go into the ratings given by credit agencies for the country. The government says it is none of our business, as if these ratings are given to us, but this is a reaction like a cat calling a lump of dirt where it cannot reach. The ratings are given to investors for information, not to us. That is why not a single foreign investor is coming anymore.

We have been floundering in this spiral for years. Those in power sometimes call it interest lobbies, sometimes call it nas, but the interest we pay on foreign debt has almost exceeded the principal. They try to think of all kinds of solutions to get out of this spiral, sometimes they think they have the situation under control by pulling rabbits out of hats, but each time it gets worse. It is as if we are in a swamp, sinking deeper and deeper.

I felt constricted while writing.

Well, let's say I have spilled my guts a little bit, but I think you are also aware that our situation is not at all encouraging.

The important question is what is the solution to get out of this situation? Is there a solution? How do we get out of this spiral?

For example, let's close all our relations with the outside world, let's declare bankruptcy, let's say we can't pay our debts. Is that okay? They will pounce on us. War will break out! Unpaid debts are the cause of many wars in history. No!

So let's build a life for ourselves like a closed box. Let's not borrow any more money from outside. Let's not spend foreign currency either. Let's find a way to pay off the debts slowly, and then we can live on our own. 

Is this a solution? Of course not, especially in today's globalized world order. 

The Union of Socialist Republics (Soviet means Soviet Union, I don't understand why we call it the Soviet Union! Even I sometimes call it the Soviet Union out of habit. Wrong, it's the Union of Socialist Republics.)

In the end, one way or another, there are things you have to buy from the outside world, and the money you can print in the printing press and give is useless. If you borrow money, which most governments have resorted to until today, the debt snowballs and after a while you can't get out from under it. This is actually what is happening today.

So what is the solution? 

The solution is actually clear, you will use national and domestic production as much as possible, you will produce a lot and sell the surplus abroad and earn foreign currency. What you produce will be value-added products, that is, things that are light in weight and heavy in cost, technological products. In other words, you will invest in technology, invest in roads and bridges, but don't overdo it, don't forget technology. So you will earn enough foreign currency, your earnings will be enough to cover the necessary foreign currency expenditures. You will balance your income and expenditure in foreign currency.

You will live as economically as possible, you will not be wasteful. You will do this together, from every individual to every public institution. You will instill this awareness in new generations at a young age. Children will grow up with this awareness. Luxury life is forbidden for people like us!

If something is useful, you don't throw it away and buy a new one, you don't waste money. If it's broken, you repair it, fix it and keep using it.

You will not live in debt, you will not borrow, you will live within your means. 

Your budget will be a balanced budget. You will even have a surplus budget to save for hard times. A drop of water becomes a lake. You will not spend the reserve fund out of the blue. 

And is there any government that does this? No! 

Has anyone promised this? 

There was once Erbakan, who set out with the idea of a "just order", but he had other drawbacks. He used a lot of religious rhetoric. The deep state saw the danger of irtica and he was removed from power. Even though many politicians today remember him with respect, in his time he could not drag people behind him enough. As I said, he also had other disadvantages. Maybe he had good intentions, maybe he really posed a danger in terms of reaction. Today's people have brought a lot of trouble to the country. They came to power as three "Ys", I don't know how many "Ys" there are now.

Let me not beat around the bush, I will say that the great genius Gazi Mustafa Kemal Atatürk actually showed the right path in his time. 

You will say that the conditions then and today are not the same, you are right. Maybe there were more difficult conditions in those days, but today is not the same as then. The conditions have changed a lot.

But it may be possible to get out of the difficult situation we are in today by at least examining well what could be done in the conditions of that day and adapting how it was done and the road map to today's conditions. Can't we? I think so!

Not by pulling rabbits out of hats. Not by running after debt. Not with foreign capital. Just like how it was done once upon a time. 

With savings, with the national economy, with self-sacrifice. With our own labor and production as much as possible. With hard work. With hope, wisdom and knowledge. 

I have written in detail about what needs to be done in terms of energy supply and production methods in my previous articles, I will not repeat them.

Why not? The young Republic of Turkey was able to pay off all the debts left over from the Ottoman Empire and developed a lot. 

I think we can do the same today. With good planning, we can once again make a development move. We will soon enter the second century of the Republic. We can pay off our debts and make our own way as we did at the beginning of the first century. As I always say, together with our brothers and sisters, stronger than before. I don't think we need anything more. 

It is not difficult to do this, as long as cadres who love this country are in charge. Not cadres who look into the mouths of others for a few pennies of money, not cadres who are obsessed with some meaningless issues. Not cadres who, under the guise of being religious, are actually interested in filling their own pockets by exploiting religion.

I am talking about conscious cadres who love their country, who have merit and who can see the big picture. 

I tried to explain the real problem and its solution in my own way. That's all I can think of. If you have any other ideas, write in the comments. Goodbye for now.

Love and respect to everyone from Moscow.