Turkey's Bubble Is Bursting
Jesse Colombo
For the past five years, I've been warning about a dangerous credit bubble that has been developing in Turkey's economy. Ultra-low interest rates led to a borrowing binge that created an artificial economic boom that most people thought was a legitimate, sustainable boom. Since the summer of 2018, however, Turkey's central bank was forced to raise interest rates dramatically to stem the sharp decline of the lira. At the time, I cautioned that those aggressive rate hikes would be the pin that pops Turkey's long-lasting credit bubble, which has proven to be correct, so far.
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