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Sunday, 16 August 2015

"A Locally Produced Hitler Or Stalin": Lawmakers Blast US Ally For Staging "Coup"

Last week, we notedthat the Turkish lira had plunged to a record low against the dollar as coalition talks between the country’s two largest political parties broke down, setting the stage for snap elections later this year. 

As we’ve detailed over the past several weeks, President Recep Tayyip Erdogan is keen on sending the country back to the polls in an effort to nullify a stunning ballot box victory by the pro-Kurdish HDP in June.

Ankara’s renewed battle against the PKK is a rather transparent attempt to undermine support for the Kurds ahead of the next election which he hopes will see AKP regain its parliamentary majority, a precondition for his plans to rewrite the constitution, creating an executive presidency. In other words, Erdogan is more than willing to plunge the country into civil war if it means beating back opposition and clearing the way for his power grab.

With the deadline to form a governing coalition just days away (August 23), new elections look all but inevitable and now, opposition leaders are openly accusing the President of staging a "coup" on the way to rewriting the country’s laws and overhauling its political system. 

"Accept it or not, Turkey’s governmental system has become one of an executive presidency," Erdogan said on Friday. "What should be done now is to finalize the legal framework of this de facto situation with a new constitution." 

"He’s now saying 'I won’t listen to the laws or constitution.' This is a very dangerous period," warns Kemal Kilicdaroglu, leader of the Main Republican People’s Party. "He wants to give a legal foundation to this coup he’s carried out. Those who carry out coups always do this: First they carry out the coup, then they give it a legal foundation.’"

But the most pointed criticism came from Nationalist opposition leader Devlet Bahceli who took to Twitter, and accused Erdogan of being a "locally produced Hitler, Stalin or Qaddafi.’"

Meanwhile, fighting between Ankara and the PKK has escalated in the guise of a fight with ISIS. As The Economist notes, "many warn that the situation could spin out of control." Here's more:

Yet every day is carrying Turkey further away from peace. The funerals of security personnel, broadcast on television, inflame Turkish tempers. Some Turkish nationalists vilify Kurds as terrorist sympathisers, deepening the polarisation. Human-rights groups say over a thousand Kurds have been detained in the south-east in the past few weeks. Allegations of maltreatment are spreading.

Many warn that the situation could spin out of control. Young Kurds born in families displaced by the earlier conflict tend to support the militants. In October 2014, protests against Turkey’s lack of support for the Syrian Kurds fighting Islamic State (IS) led to street violence in which nearly 40 people died. Meanwhile the autonomous area carved out by Kurdish fighters in Syria, which they call Rojava, is fuelling dreams on the Turkish side of the border too. In Kurdish towns, the fresh graves of young fighters killed in Rojava, festooned with flowers and flags, testify to the growing numbers joining the struggle.

Civil-society organisations say there is little time left to avert disaster.  

But it won't be a disaster for Erdogan. The more intense the fighting, the more support AKP will likely garner. If the President gets the outcome he wants in a new round of elections he will have succeeded not only in subverting the democratic process but of rewriting the constitution in blood - literally. 

And this, ladies and gentlemen, is the type of regime that Washington considers a strong regional "ally."

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Bonus: Some recent color from Barclays on politics and the economy in Turkey

Our macro team notes downside risks to economic growth due the ongoing political uncertainty and external risks. They have revised Turkey GDP growth for 2015 to 2.8% from 3.1%, despite the stronger than expected Q1 15 GDP growth of 2.3%. One of the key reasons is that the strong private consumption growth in Q1 15 is not sustainable and partly due to base effects and carry forward demand due to the TRY sell-off. Additionally, key export markets such as Russia and Iraq are expected to continue to weigh negatively on export performance due to weak growth outlooks.

Politics and geopolitics have also taken a central role in economic growth assumptions. The current uncertainty has the potential to dampen private consumption and investment, ultimately affecting the growth outlook. The recent attacks on PKK and ISIS have inflamed political rhetoric and already tense coalition talks, raising risks significantly of snap elections in November. Escalating security risks are perceived to work in favour of AKP in a snap election as it could tilt the electorate’s preference towards strong leadership and a one party model. A snap election coupled with rising domestic security and external risks will effectively mean an extension of the current investor uncertainty. This in turn would weigh on consumer and business confidence, reducing domestic demand and private investments and ultimately pressuring economic growth. 

Hundreds Of Thousands Take To The Streets In Brazil Demanding President's Impeachment

Protests are underway in Brazil as hundreds of thousands take to the streets to call for the impeachment of President Dilma Rousseff. Here's Bloomberg:

An estimated 25,000 protesters in Brasilia marched toward Congress, chanting against Rousseff and corruption, carried a long banner demanding “Impeachment Now.”

Rouseff monitored proceedings from her official residence, due to meet with some of her cabinet in the afternoon, said Justice Minister Jose Eduardo Cardozo.


When the world’s foremost mainstream media outlets begin to run stories with titles like: "How to Impeach a Brazilian President: A Step-by-Step Guide", you know your political career may be in trouble. 

Brazil’s Dilma Rousseff - who recently became the country’s most unpopular democratically elected president since a military dictatorship ended in 1985, with an approval rating of just 8% - faces a litany of problems, not the least of which are accusations around fabricated fiscal account data and corruption at Petrobras where she was chairwoman from 2003 to 2010. 

But beyond that, Brazil is mired in stagflation and, as Morgan Stanley recently noted, is at the center of the global EM unwind triggered by falling commodity prices, slowing demand from China, and an imminent Fed rate hike. Underscoring the depth of the economic malaise is the following graphic from Goldman which shows that when it comes to inflation-growth outcomes, it doesn’t get much worse than what Brazil suffered through in Q2. 

Now, frustrations have apparently reached a boiling point (again) and mass demonstrations are planned for Sunday. Here’s Bloomberg with more:

As allegations of corruption and incompetence swamp Brazil’s government, and plummeting commodity prices sap its economy, hundreds of thousands of angry citizens are expected to descend on central squares across the country on Sunday, posing a key test for President Dilma Rousseff.


This will be the year’s third mass protest against Rousseff, who is facing growing calls for her impeachment. A strong showing could help support her ouster and deepen a sell-off on financial markets.


The Free Brazil Movement, one of the groups organizing the demonstrations, says rallies are confirmed in 114 cities.


Congress is watching the turnout both to judge the support for impeachment proceedings and to measure the level of discontent in their home districts.


Since narrowly winning reelection last October, Rousseff, Brazil’s first female president, has embarked on an austerity program that has cost her political capital. Her popularity has plummeted to 8 percent, a record low, and more than two-thirds of Brazilians support impeachment, according to Datafolha, a polling firm. The economy in 2015 is forecast to post its worst performance in 25 years amid ongoing corruption probes into politicians and executives.


Rousseff has reversed herself on some popular but expensive measures such as caps on electricity and gasoline prices. The middle class that doesn’t qualify for subsidies has been hardest hit as power bills rose an average 23 percent, and more than 50 percent in some regions. Higher interest rates are restricting consumer credit, unemployment has hit 6.9 percent and inflation is rising, inching toward 10 percent.



Rousseff won election in 2010 following Luiz Inacio Lula da Silva, the central figure of the Workers’ Party. She rode his popularity for most of her first term until demonstrations in 2013 brought millions to the streets protesting corruption and spending on the World Cup hosted by Brazil last year.


Rousseff recovered enough to win reelection but protests in March and April took aim at her.

Renan Machado, a 29-year-old lawyer from Sao Paulo said Sunday’s rallies will be an opportunity to demonstrate the outrage shared by many Brazilians.


“I’m going to protest to end this wave of corruption because I can’t stand this incompetent government any longer,” Machado said.

And more from AP:

Demonstrators are taking to the streets of cities and towns across Brazil for a day of nationwide anti-government protests.


Sunday's protests, which were called mostly via social media by a variety of groups, are seen as a barometer of popular discontent with President Dilma Rousseff. Her second term in office has been shaken by a snowballing corruption scandal involving politicians from her Workers' Party, as well as a spluttering economy, spiraling currency and rising inflation.


Thousands of people brandishing green and yellow Brazilian flags streamed onto Rio's Copacabana Beach, and smaller demonstrations were under way in the Amazonian city of Belem and the central city of Belo Horizonte.


It was the third large-scale anti-government demonstration this year.

Top executive at Hillary's server company was sued for 'fraud' after 'receiving proceeds' from $500m Ponzi scheme run by Backstreet Boys impresario

A top executive at the Internet company hired by Hillary Clinton to manage her private email server is an alleged fraudster who was an executive for one of the most notorious Ponzi fraudsters in recent history.

David DeCamillis is said to have been paid $1.5 million as a director of a company run by Lou Pearlman, the disgraced music impresario who discovered The Backstreet Boys and NSync.

DeCamillis was accused of 14 counts of fraud and one count of unjust enrichment when Pearlman’s business was exposed as a $500 million scam.

DeCamillis then got a job at Denver, Colorado, based Platte River Networks as their vice president of sales and marketing whilst Pearlman began serving a 25 year jail term.


TROUBLE IN CHAPPAQUA: Hillary Clinton faces new questions and new levels of outrage as messages on her private email server were found to contain top-secret signal intercepts and information from spy satellites

TROUBLE IN CHAPPAQUA: Hillary Clinton faces new questions and new levels of outrage as messages on her private email server were found to contain top-secret signal intercepts and information from spy satellites

MAN BEHIND THE MUSIC: Lou Pearlman poses with N'Sync (from left) Chris Kirkpatrick, JC Chasez, Lance Bass, Joey Fatone and Justin Timberlake seen at N.Y.P.D. pizza in Miami, in 1996

MAN BEHIND THE MUSIC: Lou Pearlman poses with N'Sync (from left) Chris Kirkpatrick, JC Chasez, Lance Bass, Joey Fatone and Justin Timberlake seen at N.Y.P.D. pizza in Miami, in 1996

Platte River was later hired by Clinton to manage her ‘homebrew’ computer system which she used whilst Secretary of State between 2009 and 2013.

But DeCamillis’ colourful past raises questions about whether or not somebody with his background should have been involved in dealing with Clinton’s classified emails in any way.