The crisis in Turkey

Saudi Arabia has led a boycott against modernist Qatar. Qatar is lending money to Turkey to stabilize the currency. Turkey has deployed troops to Qatar to help protect the country.

Therefore Erdogan not only has a major economic crisis on his hands, he is also embroiled in some major foreign issues as well.

How might the crisis evolve? Here are four speculations:

1. The crisis could trigger another global financial crisis; the global banking system is still weak (mainly because banks have resisted fundamental reforms), and governments have run out of financial ammunition (printing extra money).

2. Erdogan backs down: lets Brunson go back to the US, accepts International Monetary Fund (IMF) aid (and the tough "austerity conditions" that usually get imposed) and is possibly punished by the voters later.

3. Turkey withdraws from NATO. There is a risk of NATO's splintering. Putin and Erdogan would challenge US's primary role in regional affairs (especially now that Trump does not know what role he sees for the US in those affairs).

4. Erdogan is removed by some form of military coup (this was the standard system for stabilizing the country but Erdogan has tried to weaken the military to reduce this risk).

Whatever happens, Turkey is in for a bumpy ride.