Turkey Isn't the First Domino in an Emerging Markets Bust
Erdogan is a one-of-a-kind autocrat who doesn't understand economics. That means contagion should be limited.
One of a kind.
Photographer: ADEM ALTAN/AFP/Getty Images
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Recep Tayyip Erdogan, Turkey’s increasingly autocratic premier, inflicted a vintage emerging markets crisis on us over the weekend. Four months after ousting his previous central bank governor, he fired Naci Agbal, who had raised rates by 200 basis points last week, and replaced him with Sahap Kavcioglu, who apparently agrees with Erdogan’s novel theory that higher interest rates cause inflation. It’s plenty possible to be an effective political leader while having eccentric views about economics — but not if you are able to fire and replace central bankers at will.