Economists joining the Istanbul Finance Summit underline that the slower US economy is raising the anxiety in markets. Still, Turkey is firm, Economy Minister Çağlayan says
With the number of jobless increasing and investor confidence continuing to drop in the United States, the world financial markets await a light at the end of the tunnel, according to experts speaking at the 2nd Istanbul Finance Summit on Wednesday.
“Extending the payroll tax credit to put a thousand dollar in the pocket of the average American worker will not solve the unemployment problem as U.S. President Barack Obama imagines,” said Anthony Randazzo, director of U.S. Economic Research at the Reason Foundation, speaking on the sidelines of the finance summit held in Istanbul.
“The unemployment rate is 5 percent higher than in 2007,” Randazzo told the Hürriyet Daily News, noting that millions of people have been left jobless since the housing bubble burst.
“Most importantly, U.S. unemployment will affect the rest of the world,” Randazzo said, adding that it could even trigger a second crisis similar to how the housing crisis resulted in a global crisis and eurozone crisis a few years ago. “The U.S. will pay approximately $200 billion to $300 billion to support unemployed people, which will not encourage them to rejoin the work force eventually.”
He said the slow growth in the U.S economy would increase anxiety in the global markets.
“The collapse of the eurozone would have disastrous results globally,” said Dr. Vince Cable, the U.K.’S secretary of state for business, innovation and skills. “We hope eurozone countries will solve the ongoing problem. This would be in our best interest despite the U.K. not being a eurozone member. It would also be in the best interest of Turkey,” Cable said.
Cable said a vast liquidity fund needs to be collected for possible emergency actions in debt-stricken countries such as Greece, Italy and Spain.
As the world storms through the global crisis that has hit European countries particularly hard, Turkey has managed to do well, said Zafer Çağlayan, Turkey’s economy minister, addressing participants at the summit. “Turkey continues to attract investment and continues to grow amid the financial tsunami.”
“If Turkey had the same global economic crisis in 2001 – the year that Turkey experienced one of the worst banking crises in its history – we could have been even worse off than Greece is in its current situation,” said Çağlayan. The Turkish minister also noted that Europe’s leading powers, Germany and France, have “their own wrongdoing” in Greece’s economic problems. “Rather than solving the problems and working on precautions, they preferred to just talk,” Çağlayan said.
“Greece and Europe are paying the cost of their rakishness, they are paying the cost of the meals they ate before,” said Çağlayan, adding that Turkey would not desire its closest neighbor to be in such a hard situation economically.
‘Unfreeze Libyan assets’
Nearly $168 billion of frozen assets of the Libyan interim government are being used as leverage in some countries without interest in return, said Çağlayan, calling for the assets to be unfrozen.
“When we look at the Middle East and Libya, we are not seeing the natural resources of those counties, just the people,” said Çağlayan, urging countries to unfreeze Libyan assets. “Nearly $168 billion would be equal to credit worth $1 trillion,” he said. “So-called civilized nations are using the Libyan money to leverage their economies.”