Lessons learned from the May 14 election and its economic implications

The Turkish voters once again confronted politicians with a message-filled outcome. In every election, they load their votes with messages before casting them. And after each election, politicians make cliché comments like "the message has been received." However, even if they claim to have received the message in reality, one side of politics never really receives it. They don't want to receive it. They stubbornly close their ears. Half of their consecutive losses stem from this reason. The other half comes from the fact that the other side of politics truly receives, interprets, internalizes, and responds to the message.

I believe that the fate of the message given with the May 14th election will be the same.

I would like to share a striking anecdote related to the clearest message of the election. Then I will move on to the economic side. Here it goes: a representative of a party with terrorist links calls a relative who is a victim of the Adıyaman earthquake and knows that his house has collapsed, saying, "Give us your vote, and we will build you a house." Our 90-year-old uncle, who has lost all his possessions in the earthquake, responds meaningfully, saying, "I may remain homeless, but I will not be without a homeland."

Now let's look at the economic implications of the election results. Firstly, it was already evident during the day that followed the election when the markets opened that no aggressive reactions, whether downward or upward, should be taken.

Last week was a complete anecdotal week for me. Let me share another anecdote with you under this heading.

A friend of mine was negotiating for a valuable real estate property worth 5 million for his business. The property owner said he would raise the price to 6 million after the election. It seemed reasonable to demand a difference of 1 million in just one day. My friend hung up the phone and said, "I'll buy it for 4 million after the election."

The reality of the market is that short-term sharp movements, whether upward or downward, will eventually balance out. I am waiting for the outcome of this negotiation.

Thus, the very short term can pass like this, but there is also a buildup of pressure from behind.

After commemorating the conquest of Istanbul at Hagia Sophia, we will need to focus on these issues.

The rental problem comes first. Regulatory solutions will not be sufficient for this problem. Finding a more suitable solution than providing social housing and land for those who want to build their own homes is difficult because the problem is supply-driven. It is necessary to increase and accelerate the number of social housing units, but it can be challenging to expedite the construction of permanent housing in earthquake-prone areas. Focusing on a model that can be called social land has the potential to yield much more efficient results under these conditions.

If there are those who would say, "But the real issue is the tightness of the housing market caused by the tightness of the money markets, we should start from there," I would evaluate that they completely disregard the supply side of the issue and market negligence.

With this statement, I am actually distinguishing capital markets from money markets. That's correct. Because the tightness is in the money markets, not in the capital markets. Although there are reflections in the capital markets as in the real market, the tightness is in the money markets.

The money market cannot determine the value of money. More precisely, it evaluates that money is not valuable according to today's interest relationships, but it will be valuable according to tomorrow's interest relationships.

"They say, 'Let's not sell cheap, let's wait and sell at a higher price.' But for each day they do not sell, they suffer income loss. This tightness comes from this income loss. In recent times, the tightness has reached a level that will take away the possible return of expectations. When I say take away, let me describe it with an example that many people might be familiar with: someone who wants to rent their house for 10,000 lira and rejects offers of 8,000 lira or more for more than 2 months, will incur income loss for that year. The situation I mentioned above about the state of the money market is similar to this. (Note that this example is susceptible to misunderstanding in one aspect, so let me note that I do not see interest and rent as the same things.)

"But the mathematical problem in the money market is not a problem of 10 to 8," one might say. "Any kind of TL credit can be given at rates in the 30s." I give this answer. The aggressive pricing proposals made on behalf of the opposition after the election are now behind us.

With this evaluation, I am aware that I am saying the market has somewhat squeezed itself.

But while squeezing itself, it also squeezed the real sector.

Now, in order to compensate for their losses, good or bad, it seems that a small step from the new government might convince itself to get out of the tight spot it got into.

The fact that the Nation Alliance did not embrace the economic proposal shows this.

If the goals are to be achieved in these five years, there is no day to lose in the economy. The intention of reconciliation, even if it is from the macro-prudential side, will quickly reconcile the state with other economic actors.