Turkey in Flagrante Occasio

A bigger splash

Those of you who have followed my work for any length of time will know that my starting point for looking at any economy is to generate a series of indicators which act as a sort of proxy for ratios comprising Dupont Analysis of companies: asset turns, leverage, margins. I complement these with by looking at cashflows between the private sector and the financial system. Where possible, I’ll then go on to compile profits trends, using the foundational Kalecki insight that profits are flow which ultimately must be mirrored by all other savings flows (corporate, household, government, foreign) affecting the economy.

The main purpose of this work is to determine what position the economy occupies in a business cycle and so its likely near and medium-term trajectory. The signals also give quite direct clues on what pressures (or opportunities) are likely to bear on the vector that business cycle is likely to evolve.

But this set of signals and traps sometimes offers additional insights beyond what are straightforwardly observable in the ‘official data’. Sometimes, it tells you the economy you are looking at is not, actually, the economy described in, say, the national accounts. A case in point is Turkey.