Erdogan causes severe jitters in Turkish economy

"... Turkish markets fell sharply after the speech. The benchmark Bourse Istanbul 100 index extended its losses to 8% from 1.3%, entering bear-market territory after a 22% drop since May 22. The lira lost almost 1% against the dollar. Benchmark two-year government bond yields rose 0.59 percentage point to 6.91% as investors increasingly worried about Mr. Erdogan's ability to resolve tensions drove up Turkey's borrowing costs."That Erdogan stuck to his more combative tone has disappointed the markets," said Inan Demir, chief economist at Finansbank in Istanbul. "His defiant tone and possible resumption of heavy-handed police response could undermine lira-denominated assets, particularly if the adverse sentiment against emerging markets continues."..."