New York Times: For the past seven years, Tim Lee has been warning that a financial crisis in Turkey would set off a wider calamity in global markets.
Just about nobody listened — until now.
A plunge in the Turkish lira and the prospect that the country might soon need a bailout has spurred an investor exodus in Turkey, one that gathered steam on Friday as the currency dropped as much as 16 percent. Relative to the dollar, the lira is now down 70 percent this year; one dollar buys 6.4 lira, the most ever.
There are signs of the rout spreading beyond Turkey. The stock prices of European banks, which have been big lenders to their Turkish counterparts, dropped sharply on Friday, with investors worried that a wave of corporate bankruptcies in Turkey would lead to a banking bust in the country. The currencies of China, Brazil and Mexico also weakened. And in the United States, major stock-market indexes fell more than 1 percent before recovering slightly.
The NYT reports that suddenly, Mr. Lee’s largely ignored prophecy — that a decade of Turkish companies and real estate developers gorging on cheap foreign debt would end badly, not just for Turkey but for the world — does not seem so outlandish.