lira Markets Recep Tayyip Erdogan turkey

Meanwhile, In Turkey: Toothpaste Police


Last week, a reader e-mailed me and asked how I decide what to post on any given day.

The answer is simple. I comment on the stories that matter the most in geopolitics and finance and then, once those stories are exhausted, I apply the Neal Page (Steve Martin) test from Planes, Trains and Automobiles.


That’s critical, because what I’ve found in the short time I’ve been producing online content for public consumption is that there are a ton of sites out there masquerading as news wires when in fact, they are not news wires.

News wires are for news. Alternative sites, on the other hand, should rely heavily on the editor’s ability to convince readers that he/she has the ability to “discriminate and choose things that are funny, or mildly amusing, or interesting.” If you find yourself on an alternative site (i.e., a site that is not affiliated with a major news organization) and they are churning out content at the same clip as a global media outlet, chances are they are copy/pasting and chasing clicks with no regard whatsoever for the Neal Page test.

Well, on Tuesday, I found something that is most assuredly “funny” or at the very least, “mildly amusing.”

If you, like me, enjoy documenting or otherwise reading about the intersection of geopolitics and finance, you know there’s no more reliable a source for tragicomedy than Turkish autocrat/President Recep Tayyip Erdogan.

Erdogan is a special obsession of mine for any number of reasons, not the least of which is that he is the quintessential example of what happens when someone is allowed to indulge unbridled political ambition unchecked. Absent any semblance of resistance, people like Erdogan have a tendency to become caricatures of themselves, as their worst and/or most prominent features are magnified by the power they acquire.

This year, Erdogan’s autocratic tendencies culminated in his consolidation of power in a new executive presidency and as it happens, Turkey descent into one-man rule coincided with a collapse in the Turkish lira. Of course those two things (the path to autocracy and the collapse of a currency) are rarely mutually exclusive, and in the case of Turkey, they’re inextricably bound up with one another thanks to the fact that Erdogan espouses his own version of economics whereby higher interest rates cause inflation.

Erdoganomics is farcical in the extreme, and while the rest of us are free to laugh at it, Turks aren’t so lucky. When Erdogan commandeered the central bank following the June 24 election and installed his son-in-law as economic czar, it effectively meant that his perverse views on inflation, rates and FX would be enshrined in the country’s monetary policy. That, in turn, suggested a financial crisis was imminent.

Read more

Turkey In Crisis: A Narrative History And An Annotated Chart

Turkey’s Erdogan Will Now Tax American Liquor And Cars, Will Also Prosecute People For Talking Bad About His Lira

With Lira Now More Volatile Than Bitcoin, Here Are Turkey’s Options For ‘Exiting The Vortex’

Fast forward three months and things in Turkey are out of control. Inflation jumped to 24.5% in September, printing above even the highest analyst estimates (Bloomberg median was 21.1% YoY increase):



If you think back to the August inflation data, the real shocker wasn’t CPI, but rather PPI, which surged to a truly laughable 32%. That got worse in September, with producer prices soaring 46% YoY last month:



Turkey delivered a larger-than-expected rate hike last month, alleviating concerns that the central bank is completely beholden to Erdogan, but as ever, nobody should pretend that CBT’s hands aren’t tied.

In other words, the chances that Erdogan is going to countenance further draconian hikes are slim, which means that once the central bank exhausts the bevy of “alternative” mechanisms at its disposal to stem declines in the lira and once the expected boost from the assumed resolution of the Andrew Brunson issue runs its course, Turkey will be right back to square one when it comes to currency pressure and FX pass-through inflation.

Well, Erdogan being Erdogan, he has another solution when it comes to arresting rising prices: Toothpaste police.

In a highly amusing article out Tuesday, Bloomberg documents a day in the life of a “zabita”, municipal officers in Turkey who are now tasked with making the rounds at retail outlets to ensure stores aren’t gouging customers in the face of soaring inflation.

This is one of those cases where you really need to read the original, so I’ll just excerpt a couple of short passages here and leave it to you to peruse the full piece from Bloomberg’s Taylan Bilgic and Firat Kozok. To wit:

On a sunny October morning in Gungoren, a working class Istanbul neighborhood and a stronghold of Erdogan’s Justice & Development Party, members of the zabita, as they are known in Turkish, were paying surprise visits to supermarkets in their municipal van, perusing the shelves and issuing warnings to shop managers suspected of price-gouging.

Officers use their mobile phone to check prices for toothpaste and toiletries.

“We compare price labels with prices at the cash register,” says Ahmet Ergal. “We also check product weights. We go to a few stores every day.”


But short of delivering another wallop of monetary tightening in the face of Erdogan’s distaste for higher borrowing costs, policy makers are left to watch the zabita do what it can. The inspections started soon after Erdogan’s appeal on Sept. 14 for authorities to “work out control mechanisms” against price hikes. They took off in earnest this month, when the president specifically called out the zabita.

So that’s what it’s come to in Turkey. Just three months after consolidating power, Erdogan finds himself forced to dispatch teams of police officers on price check missions at local retailers.

Don’t let the joke here be lost on you. The whole reason this is necessary in the first place is because Erdogan refuses to admit that his views on economics aren’t just “unorthodox”, they are patently absurd. They have absolutely no basis whatsoever in reality.

This, in short, is what happens when an entire country is forced to live out one man’s fantasy. The more detached he becomes from reality, the more Turkey will approximate a theatre of the absurd.



1 comment on “Meanwhile, In Turkey: Toothpaste Police

  1. Sad but soo true….

Speak On It

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Skip to toolbar