Turkey’s Financial Crisis Surprised Many. Except This Analyst.

.. The stock prices of European banks, which have been big lenders to their Turkish counterparts, dropped sharply on Friday, with investors worried that a wave of corporate bankruptcies in Turkey would lead to a banking bust in the country. The currencies of China, Brazil and Mexico also weakened. And in the United States, major stock-market indexes fell more than 1 percent before recovering slightly.

Suddenly, Mr. Lee’s largely ignored prophecy — that a decade of Turkish companies and real estate developers gorging on cheap foreign debt would end badly, not just for Turkey but for the world — does not seem so outlandish.

“Turkey is the canary in the coal mine,” said Tim Lee, an analyst who warned of Turkey’s trouble in 2011. “We are going have another crash that will be worse than 2008 in certain ways.”

.. Mr. Lee, 58, made his initial call — that Turkey was in deep financial trouble — in 2011.

.. Mr. Lee noticed that Turkish banks were borrowing in dollars to make other loans to fast-growing Turkish companies. He also saw that, over all, Turkey’s economy was growing more reliant on financing from foreign investors. It struck him as similar to what had happened to Thailand in the years before the Asian financial crisis in 1997.

.. The threat is that as the lira loses value, it becomes more expensive for Turkish companies to repay their dollar-denominated loans.

.. Turkey could be a signal for what lies ahead for assets and economies that were inflated by cheap debt.

.. “It has been some hard sledding,” Mr. Lee admitted. “I have lost a lot of clients because I have been too bearish.”

.. Yet he is doubling down on his doomsday message: The river of global cash will dry up, the dollar will spike and there will be a series of financial seizures. Investors, he thinks, will flee developing economies, then Europe and eventually the American stock and bond markets.