#Weekly #Review - Financial Markets & Economics: Commentaries by Fabian Wintersberger

Recep Tayyip Erdogan was born on February 26 in Istanbul. According to him, his family immigrated from Georgia to Turkey before he was born. In his youth, Recep was religiously shaped and visited an Imam-Hatip school (a religious high school) after he finished elementary school. His deeply religious beliefs are shaping his views until today, and even his views on monetary policy have become more and more spiritual these days. Erdogan started his political career in the 1980s, where he became heavily engaged within the National Welfare Party. One decade later, in 1994, Erdogan became mayor of Istanbul (which was mostly seen as a surprise), and after being imprisoned in 1998, he became prime minister of Turkey in 2003. On August 10, 2014, he was elected president for the first time. When Erdogan became prime minister, Turkey suffered from a decade-long lasting economic and currency crisis. He promised the Turkish people that, if they elect him, economic mismanagement and recessions would...

This week's commentary will be a potpourri of several topics that I've come across this week and caught my attention. And, of course, because I am writing from the first country in Europe that returns to complete lockdown again, I have to start with corona. Many people were fearful of it, and so did it happen. Corona is back in Europe, especially in the German-speaking area. Austria is on the top when it comes to new daily positive test results, and, as media outlets report, a collapse of the Austrian health care system is imminent. Yesterday (Nov. 18th), Upper Austria and Salzburg declared to return to total lockdown (vaccinated and unvaccinated) for at least two weeks. The rest of Austria will follow soon, and so will Germany.  Of course, pushing for a higher vaccination rate of the population will not help to relax the situation soon, but over the medium term. However, over the long term, it is still uncertain, as we see in other countries. Even those with high vaccination r...

Have you ever heard of the Cobra-Effect? It describes how a certain measure to solve a specific problem leads to various unintended consequences, worsening the situation. The effect was firstly described by German economist Horst Siebert's book The Cobra-Effect,  who used the analogy to show the consequences of wrong economic incentives, or put otherwise: Well meant is poorly done . The story Siebert told goes like this (and I am not sure if this actually happened): Back in the days when the British Empire was reigning in India, the country suffered from a vast plague of cobras. A local British governor tried to solve this problem and offered a premium for every cobra delivered to local authorities. In the beginning, everything went according to plan: People started to hunt cobras and delivered them to the authorities. However, after a brief period, the government found out that the total amount of cobras had increased instead of decreased. How so? In prospect of income, people sta...

It was 1958 when Mao Zedong, Chairman of the Chinese Communist Party and Founding Father of the Peoples Republic of China,  initiated Chinas Great Leap Forward . Mao's goal was to transform the Chinese economy from an agricultural economy into an industrial economy and make China one of the big global players.  Three-quarters of all Chinese have worked in agriculture back in those days, and a n expansion of agricultural production was challenging due to the lack of further cultivation areas. For this reason, the Communist Party wanted to promote industrialization.  Mao took a decentralized approach: The municipalities should push local industrial development forward to produce a) agricultural tools and b) machines. Mao ordered masses of workers to quit their agricultural jobs to shift to working in industrial production.  Especially concerning steel production, Mao's goals were ambitious. Within a couple of years, so was his plan, China should become one of the leadi...