New regulation on credit cards: What does it bring and what does it take away?

PART 2

Through which facts, values of justice, and principles can the issue of credit cards be examined? Regarding the problem of credit cards and  its solution, what path does science—that is, facts, principles, and values of justice—show us? What solution does it suggest?

The first fact is the disaster at the gold mine in Erzincan.

The second fact: Credit card debts. Citizens' credit card debt has reached unsustainable levels. Individual credit card debts have increased by 157% compared to last year, rising to 1 trillion 247 billion liras.

The third fact: Korkut Boratav says the following: "There is no economic crisis; they are taking from the poor and giving to the rich." 

Fourth fact: The social crisis will not end without a revolutionary transformation.

Fifth fact: As long as a political cadre cloaked in capital ideology remains in power, capital will always have the advantage.

The guiding principle in evaluating credit cards Prof. Dr. İzzettin Önder's words should be: "Capital knows very well that it will take back with a ladle what it gave with a teaspoon. As long as a political cadre cloaked in capital ideology remains in power, capital will always have the advantage." (Evrensel newspaper)

Turkey is governed by a political power cloaked in the ideology of capital. As long as this political cadre remains in power, the service of taking from the poor and giving to the rich will continue. Capital will benefit from every action and transaction of the government. Labor will become even more impoverished. The opposition is also cloaked in the ideology of capital. A pro-people opposition exists at a level of three to five percent, if at all. 

The Erzincan gold mine incident how is it analyzed in light of the above principle? This disaster is concrete proof of the reality of taking from the poor and giving to the rich. The rich are being enriched at the cost of the poor's lives. And this is done through international capitalist solidarity... With domestic political support and collaborative partners, people and the environment were massacred. It is a complete capitalist and imperialist tyranny and oppression. 

When we look at the credit card issue based on these facts, principles, and values—that is, with a scientific understanding—how will the credit card application turn out? It is quite clear how it will turn out: In regulations regarding credit cards, it will be whatever the interests of big capital require.  

Banking sources are discussing that new practices regarding credit cards, such as limitations on interest, limits, or installments, are coming. Bankers are warning that measures must be taken regarding the rapid increase in credit card usage.

Banks Association of Turkey President Alparslan Çakar, emphasized that while there is a slowdown in loans, there is an increase in credit card spending. In other words, credit card debts have reached dimensions that will cause major economic crises. 

Prof. Emre Alkin also stated, "I must say that taking steps without realizing that the increase in credit card spending is due to rising prices would be a huge mistake and would naturally create great dissatisfaction." he said.

Central Bank Governor Karahanalso stated at the meeting he held that they would not allow any excesses that might occur in credit growth.

It appears that the CBRT is working on  introducing new restrictions on credit card shopping as part of the fight against inflation. However, experts are of the opinion that this step will not solve structural problems and will only deepen the crisis. Prof. Dr. Mehmet Şişman states that such a restriction could bring the economy to an immediate halt.

Economist Prof. Dr. Mehmet Şişmanpoints out that consumers use credit cards for essential expenditures, adding, "If they want to curb inflation by suppressing demand, this is not the right path. It is not something that will solve the problem structurally." he says.

"Sixty percent of tax revenues are covered by indirect taxes. New restrictions would pull indirect taxes downward. This creates a danger for the budget." Şişman continues as follows:

"Trying to lower inflation by imposing restrictions on credit cards is not the right path."

Believing that credit card interest rates will increase after the elections, Mehmet Bülent Deniz, "I believe this shows that credit card interest rates are heading in a directly negative direction. Of course, theoretically, a credit card is a payment instrument, not a credit instrument. But due to the current state of the Turkish economy, the credit card has become a lifeline for the wage-earning segment." he says.

Widening the gap without establishing a balance between incomes and the cost of living would be a mistake. Not just for the citizens, but for themselves as well.

The rise in credit card debt has prompted the Central Bank to take action. It is being discussed in political circles that the regulations regarding credit cards will be implemented after the local elections. So, when will the credit card regulation be made? What are the details of the credit card regulation? How will the credit card regulation affect the citizens?

The steps considered to be taken by the Central Bank regarding credit cards include the following:

• Reducing or eliminating the installment limit

• Restricting or banning cash advances from credit cards

• Reducing the number of people issued credit cards

• Increasing minimum payment amounts

• Increasing the late interest rate

The purpose of these steps is to reduce credit card spending and lower inflation. This is because credit card spending is showing an increase above inflation, which creates pressure on inflation.

It is not yet clear when the credit card regulation will be implemented. Behind the scenes, it is being discussed that the regulations will be introduced after the local elections. Some sources claim that the regulations have been postponed to avoid upsetting consumers before the elections. Other sources suggest that the regulations will be announced as part of an economic reform package after the elections.

The timing of the credit card regulation is significant from both an economic and political perspective. The credit card regulation is expected to lower inflation and reduce the current account deficit. However, it is also possible that the credit card regulation could put consumers in a difficult position and reduce spending. This could slow down economic growth.

When the credit card regulation will be enacted and how it will be implemented will become clear in the coming days. Credit card users, meanwhile, are waiting with curiosity to see how they will be affected by the regulations.

We arrive at the same point: The Central Bank's focus is on curbing inflation by suppressing demand... Indeed, a measure regarding credit cards is on the way. There is a significant increase in credit card balances, yet in the presentation, not a single word was mentioned about its connection to the cost-of-living crisis that households are facing.

“Thus, we do not see the slightest deviation from the belief that wage increases and domestic demand are responsible for inflation. However, the mantra that 'inflation stems from monetary expansion or wage increases' does not align with the realities of either the central sovereign economies of the global economy, such as the US or EU countries, or Turkey as a peripheral economy. This obsession, which has almost been turned into a dogma, completely ignores the dynamics underlying inflation and reduces the fight against inflation to a demand-suppression prescription. Monetary contraction, fiscal austerity, and the suppression of wages are the three tools of this prescription.” 

This path is a path to disaster. The only path is the path of more production and fairer distribution. Producing more and sharing more fairly does not cross the government's mind. The government is the government of capital. Expecting this government to take on the task of curbing class exploitation would be extreme naivety and foolishness. The duty and reason for existence of this government is not to serve the people. 

Central Bank of the Republic of Turkey (CBRT) Governor Fatih Karahan, stated that they are monitoring the rise in credit card spending and that they are working on this issue. Karahan said they believe a regulation on credit cards is necessary.

He said it, but this is not a solution. The goal is to curb demand and primarily transfer credit to energy and construction companies. It is to transfer resources. This is their path. And this path will lead our country into greater crises.

Korkut Boratav says the following: “There is no economic crisis; they are taking from the poor and giving to the rich. The social crisis will not end without a revolutionary transformation. It is still early, but this is the only way to salvation for our people who are overwhelmed by the crisis. To act together, we must think openly, discuss methods, explain, and organize as much as possible from now on.”

No matter what regulation you introduce regarding credit cards, nothing will change; the economic crisis will only increase and become more rampant. The new regulation on credit cards will bring nothing, but it will take away a lot.

The working class and the strata that make up this class will become even more impoverished in the coming years under this economic system and current trajectory. The gap between classes will deepen further.

The working class must rid itself of the lethargy it has fallen into under the influence of neoliberalism as soon as possible.

Based on these realities, the only apparent solution is revolution.