Classic economic theory holds that when the value of a country´s currency falls, its economy should expand. So relax, Turkey. The lira´s 40% plunge against the dollar since the beginning of this year? It should be a sign of impending growth. But regardless of what the economic textbooks might predict, the history books foretell a much grimmer future for Turkey and its ilk. In the 1990s alone, sharp currency drops in Asia, Latin America, and Russia set off a rash of banking crises and economic slumps. This is why investors are panicking about Turkey right now-and feeling growing unease about South Africa, Colombia, Indonesia, Lebanon, and a slew of other countries. (Argentina, whose peso has...
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