"There was nothing much the Turkish government could do about that."
They can. They can change the "trading while insolvent" rules so that it is in all currencies the firms deals with, not just the reporting currency.
Then if you can't get the forward swaps, the firm is insolvent and has to be put through administration - which will wipe out the dollar debt rather than cause a wave of Lira for dollar selling.
Capitalism without bankruptcy is like Catholicism without hellfire. It stops the control system working.
My point was referring to any companies from emerging countries who need assess to finance ( exporting into the US or Europe which is the case for many Turkish company). Not only the ones being insolvent. They assesment is made at the entity level. The macro effect is not taken into account by them.
They can. They can change the "trading while insolvent" rules so that it is in all currencies the firms deals with, not just the reporting currency.
Then if you can't get the forward swaps, the firm is insolvent and has to be put through administration - which will wipe out the dollar debt rather than cause a wave of Lira for dollar selling.
Capitalism without bankruptcy is like Catholicism without hellfire. It stops the control system working.