Counterparties: The revolt of prosperity
What began as a four-person protest over the planned destruction of a small park has turned into a battle for the future of one of the world’s great economic success stories.
Thousands have been arrested in cities across Turkey in protests over the authoritarian bent of Prime Minister Tayyip Erdogan. The spark, at least initially, was urban development: Erdogan’s government had a plan to turn “the last significant green space in the center of Istanbul” — a park with a long history of protest — into a luxury mall and apartments.
Just don’t call this the Arab Spring, Pawel Morski writes. First, unlike many of its neighbors, Turkey’s got a booming middle class,
low falling income inequality, and has been the fastest growing OECD country since Erdogan’s government took power in 2003. GDP per capita has tripled under Erdogan. “Having become wealthy in the past decade, the people are now embracing a new attitude toward capitalism,” one expert told Bloomberg Businessweek. “They are telling the government, ‘We do not need shopping malls instead of parks.’”
As Reuters writes, the Taksim Square development “is one of a few huge government projects that include the world’s biggest airport, a $3 billion third bridge across the Bosphorus and a $10 billion shipping canal that would turn half of Istanbul into an island.” Beyond the government’s religious conservativism and its new restrictions on alcohol, Turkey’s populace is bristling at Erdogan’s economic policy. “Istanbul is seen as a place where you earn a living, where you get rich. It is a gold rush,” a professor and lifelong Istanbul resident told the NYT. The urban poor meanwhile, are being paid to leave so that contractors can build gated communities.
Erdogan’s economic successes, the always excellent Dani Rodrik writes, aren’t quite what they seem:
On the economic front, the best that can be said is that his government avoided big mistakes. Growth is based on unsustainable levels of external borrowing, and has not been particularly distinguished by emerging-market standards. Public works have been marked by widespread cronyism.
The protests, Emre Deliveli writes, come at the worst possible time economically. Emerging markets have been crushed lately — and Turkey’s markets tend to do worse when its peers struggle. Turkey, which also is heavily reliant on short-term debt, saw its stock market fall 10.5% on Monday, the biggest drop one-day drop in a decade.
Investors are pulling an estimated $3.5 billion out of SAC Capital – WSJ
Blackstone intends to “fully redeem” most of the $550 million it has invested with SAC – Reuters
After years of short-selling in China, Carson Block turns to rooting out all the posers in Silicon Valley – WSJ
Carson Block’s problematic Standard Chartered short – Euromoney
The SEC is, um, “bringin’ sexy back” to accounting fraud – DealBook
The lawyer-heavy commission’s new algorithm “applies high-tech quantitative methods to, basically, close reading of dense texts” – Matt Levine