Connect with us

Government

Why The SLR Is All That Matters For Markets Right Now

Why The SLR Is All That Matters For Markets Right Now

One of the biggest buzzwords in finance right now is the three letter acronym SLR, which stands not for a discontinued and particularly expensive Mercedes model, but for Supplemental Liqui

Published

on

Why The SLR Is All That Matters For Markets Right Now

One of the biggest buzzwords in finance right now is the three letter acronym SLR, which stands not for a discontinued and particularly expensive Mercedes model, but for Supplemental Liquidity Ratio - a limit on how leveraged US banks can get - and whose fate could mean the difference between a stabilization in the bond market a violent, marketwide crash.

Here's what's going on.

Back on April 1, 2020, just as the market was crashing and one week after the Fed unleashed its bazooka to avoid a total systemic collapse, the Fed announces temporary change to its supplementary leverage ratio (SLR) rule "to ease strains in the Treasury market" and "increase banking organizations’ ability to provide credit to households and businesses." Specifically, the Fed change would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for holding companies. The change would be in effect until March 31, 2021.

By adjusting the SLR, the Fed enabled enabled banks to hold more "no-risk" securities such as Treasuries without having to add the assets to calculations of how indebted they are. In doing so, the Fed effectively permitted banks to massively expand their leverage and hold as many Treasurys and deposits on their books as the market demanded without punishing them for being in breach of various SLR thresholds. This was critical because at roughly this time, the Fed also unleashed $3 trillion in QE as Helicopter Money was launched in the US, as a result of which banks would end up holding far more bonds and deposits than usual. In total, the SLR adjustment cut the capital demand on big banks by an estimated $55 billion and allowed more than $1 trillion in additional activity.

The problem however, is that in four weeks this temporary adjustment to the SLR is set to expire. This comes at an extremely sensitive moment for banks and the bond market.

We first explained why one month ago in our post explaining why "Mind-Boggling Liquidity" was about to be unleashed on the markets: "Nobody Is Paying Attention To The $1.1 Trillion Flood About To Hit Markets." As a reminder, as a result of reduced US funding needs, the Treasury forecast that its cash balance held at the Fed (also known as the TGA or Treasury General Account) would plunge by $800 billion, from $1.729 trillion at Dec 31, 2020 to just $800 billion.

At the time, we also said that "the plunge in short-term debt (Bill) issuance - since there will no longer be an urgent need to keep cash balances in the $1+ trillion range - will compress short-term spreads (effective FF through 3M) to zero - or even negative - as there is suddenly a flood of liquidity which could prompt the Fed to engage the fixed-rate borrowing facility or even nudging the IOER higher." Sure enough, last week the Overnight General Collateral Repo rate did dip negative for the first time since last year's covid turmoil, a harbinger of the reserve deluge that is set to hit the market.

And while the Treasury has been slow in draining the cash held at the Fed, the pace is starting to pick up and on Tuesday the TGA declined by $38 billion to $1.463 trillion...

... meaning that there is still some $663 billion to go until march 31, when the Treasury previously indicated it intends to have a cash balance of $800 billion.

Ok fine, but what does the SLR have to do with any of this?

The answer was given by former NY Fed repo market guru (currently at Credit Suisse), Zoltan Pozsar who wrote last week, "Banks don’t have the balance sheet at the bank operating subsidiary level to add $1 trillion of deposits, reserves, and Treasuries: J.P. Morgan can’t grow more due to G-SIB constraints; Citibank flat-lined its balance sheet growth already; Bank of America has the capacity to add only $150 billion of deposits and HQLA; and Wells Fargo’s $500 billion capacity is constrained by its asset growth ban."

The market-clogging expert elaborated further:

Unless we get SLR relief at the bank opco. level, or Wells Fargo’s ban is lifted, banks will have to turn away wealthy households’ and institutions’ deposits, which will then go to money funds. But money funds will face a constraint too: the marginal asset they will direct inflows into – the o/n RRP facility – is capped; each money fund can place only $30 billion into the facility, which is too little.

Banks’ balance sheet constraint becomes a collateral constraint for money funds, and collateral constraints may surface in both the spending and paydown scenarios. Collateral supply from coupon issuance will absorb this cash over time, but money markets react to what happens now, and with $1 trillion of new cash, there may be many pockets of collateral scarcity as these flows play out in real time.

Then, pointing to a cautionary slide from JPM's Q4 presentation deck which warned very clearly that negative deposit rates are coming in 2021 should "excess liquidity" and "higher capital" become a fixture - which is about to be the case...

... His conclusion dealt with the impact the SLR cap would have on rates:

If U.S. banks are full and money funds can’t take new money either, foreign banks will warehouse reserves at rates below those of J.P. Morgan but above those available in the bill market – and both are negative. The price of warehousing is a fee, i.e. a negative rate…

All this took place ahead of last week's rate rout (some say Pozsar's explanation of what is going on may have in fact precipitated it). So, in a follow up note on Thursday just as the 10Y blew out to 1.61%, Pozsar explained why the SLR is also critical to alleviate the Treasury market crunch - simply said without SLR relief, banks will not only be capped to accepting new money, but will be forced to sell even more Treasurys:

Fed Chair Powell and Governor Quarles passed up two opportunities this week to offer much needed clarity on the SLR treatment of reserves and treasuries.

  • If SLR relief is made permanent, banks can go ahead and buy more treasuries, and they can also resume buying back their own stock. That’s clear and simple.
  • If SLR relief ends and the buyback ban stays in place until the pandemic is over, banks have no choice but to buy treasuries. That’s pretty clear and simple too.
  • What’s not clear and simple is the current state of affairs: the Fed already lifted the buyback ban but has still not provided any clarity on SLR relief, and if SLR relief does not happen, buybacks mean that banks will trim their balance sheet on both sides, shedding deposits, reserves, and also treasuries.

Accumulating low-yielding reserves and treasuries is dilutive to banks’ RoE, so buybacks are a top priority for banks’ management teams, and buybacks that come with trimming balance sheet are best done with light duration “loads.”

We are agnostic about whether the SLR relief will be made permanent or not, or if the buyback ban gets reinstated. Both will provide more balance sheet, but the former without a cost to shareholders and the latter at their expense. Regardless of the starkly different outcomes to bank shareholders, the system would end up with more balance sheet to fund the coming rounds of stimulus and both would offer clarity and direction to the rates market. Uncertainty does not.

His punchline was clear enough: "We’ve fielded many calls from clients during the day asking whether the sell-off in rates will force the Fed’s hand regarding SLR. That would be a terrible precedent but we need clarity regardless. And if the Fed’s choice is SLR relief, it needs to clarify whether reserves only or both reserves and treasuries will be exempt – concerns that only reserves will be exempt could also weigh on treasuries."

And here is where Zoltan shines: while pointing out that "for every macro narrative that explains why U.S. treasury yields are rising, there is also a plumbing narrative that can explain things with equal persuasion." And, as we noted earlier today, the treasury curve is now steep enough for most FX-hedged foreign investors to step in and harvest the slope....

... But as Zoltan puts it vividly, "no one likes to step in front of a freight train."

His conclusion is simple enough that even Fed president will get it:

For long-term treasury yields to stabilize, either the dollar has to weaken so foreign central banks buy or the Fed has to talk rates down, do operation twist (selling $1 trillion of front-end paper and buying $1 trillion of long-term paper), or provide closure on SLR relief. If there’s stability, carry traders will do the rest…

Well, with risk assets sliding and financial conditions suddenly tightening - in large part as a circular result of the lack of SLR clarity which has led to even more forced Treasury selling - the dollar has been rising (as a reminder, the dollar is first and foremost a barometer of systemic funding stress, and it always goes up when the market sniffs out a plumbing issue). Which leaves the Fed with three options:

  • Talk rates down, which it has tried and failed to do for the past two weeks, so this is unlikely to work
  • Announce that Operation Twist is coming, taking the opportunity during his video conference tomorrow to say something like "the Federal Reserve might consider extending the average maturity of bond purchases and will discuss this at the next FOMC meeting" or
  • Announce that the SLR exemption will be extended, either for another 6-12 month, or permanently.

Which, if any, of these will Powell pick?

Earlier today we presented a case first made recently by BofA rates strategist (who like Zoltan also worked at the NY Fed) Mark Cabana, and who warned that "the Fed is simultaneously losing control of both the U.S. front end and back end rates curves for different reasons" and that the Fed "should" revive the Operation Twist to effectively address key issues dealing with market functioning. According to Cabana, a new operation Twist "kills three birds with one stone: It pulls up front end rates, it stabilizes back end rates, and it does so in a reserve neutral way that lessens bank SLR pressure to hold more capital."

However, there are challenges: launching Operation Twist, would prompt question just how fragile is the financial system if the Fed panics after a modest 50bps move higher in yields. After all, the 10Y yield is still well below where it was one year ago before the Covid crisis erupted. Second, a Twist 3.0 - which is effectively Yield Curve Control - would remove the last bullet the Fed has left for when yields really spike, not to mention would mean full-blown nationalization by the Fed of the entire yield curve (although neither the ECB nor BOJ have any concerns about being permanently cornered).

As for SLR there are mounting political challenges. Last week, Senators Elizabeth Warren and Sherrod Brown urged U.S. regulators to reject lenders’ appeals to extend the SLR exemption. In a joint letter to the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, the Democratic Duo argued that the banking industry is taking advantage of the coronavirus crisis to “weaken one of the most important post-crisis regulatory reforms.” Warren of Massachusetts and Ohio’s Brown, who took over the Senate Banking Committee this year, said granting the extension would be a “grave error.”

Perhaps, but a bond market crash and deeply negative short-term yields would be a far more grave error, especially to the Democrats who are demanding that the Fed monetize trillions in debt in 2021 to fund Biden's trillions in fiscal stimulus bills, something the Fed would not be able to do if the SLR exemption was not indefinitely extended.

Curiously, as Warren and Brown urged the Fed to let the SLR provision expire as scheduled on March 31, Republican lawmakers repeated encouragement during Fed Chairman Jerome Powell’s congressional testimony last weeks that the Fed do the banks' bidding.

“Banks have taken very large reserves against losses and so have proven themselves pretty resilient,” Powell said to Brown during the Feb. 23 Senate hearing, citing intervention to limit bank dividend growth and share buybacks. “And the result, what you see now, is a banking system that has higher capital than it did going into the pandemic, and particularly for the largest banks.”

Meanwhile, Bloomberg reports that as the biggest banks lobby urgently for a deadline extension while the pandemic’s economic headwinds continue, Brown and Warren argue that if they need more of a safety cushion, the banks can find it by retaining some of the capital they’ve been returning to shareholders.

Ultimately, Powell declined to say whether the Fed favored the current expiration date, saying the Fed is still considering it.

"It's something we're in the middle of thinking about right now … we'll be making a decision and announcing it pretty soon"

Alas, with Treasurys selling off every day and now dragging stocks lower with them, Powell's time for consideration is now up.

And since we appear to have two opposing views - one from Zoltan who favors an immediate SLR extension and one from Cabana who urges a new Operation Twist, we give the final word to another repo guru, Curvature Securities' Scott Skyrm, who in his latest repo market commentary wrote:

We are waiting to hear from the Fed about two pending issues right now: the SLR and an IOER/RRP rate increase. US Treasurys are currently exempt from the SLR at the large SIFI banks and that exemption ends on March 31. This month!

Our guess is the exemption will be extended between 3 and 6 months and announced at the March 17 FOMC meeting statement.

We believe there's a good chance of an IOER and/or RRP rate hike on March 17. We believe the Fed SHOULD raise the rates and the decision not to raise the rates is only due to political considerations. Ultra low GC rates are a consequence of too much QE for too long. Too many Treasurys were removed from the market and placed on the Fed's balance sheet. This is reminiscent of May through July of 2013. Back then, the Fed's QE buying created a shortage of Treasurys in the market. That August, the Fed began the RRP program as a mechanism to put collateral back into the market. It seems like it's time to start using the RRP program again!

Bottom line: Powell will extend the SLR exemption by 6 months at the March 17 FOMC meeting... and while the Fed may hold off on launching Operation Twist 3.0, it will hike IOER rates and also reactivate the Reverse Repo program to "put collateral back into the market." Of course, since the Fed is likely to proceed with tapering QE later in 2021 (absent another major financial crisis which triggers more QE instead), Powell will still have to launch Operation Twist ahead of the first taper hint or else suffer a historic Taper Tantrum which could lead to a loss of control over the long-end.

In any case, at this very moment, the SLR remains the most important variable for both the stock and bond market, and since Powell now has no choice but to unveil his thoughts on the matter on March 17 (when he will extend its exemption by another 3-6 month), he may very well hint at what will happen tomorrow during the Wall Street Journal virtual event set to begin tomorrow at noon. Needless to say, any favorable mention of the SLR exemption will spark marketwide short covering and send both stocks and Treasurys soaring.

Tyler Durden Wed, 03/03/2021 - 19:20

Read More

Continue Reading

Government

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

Published

on

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

Read More

Continue Reading

Spread & Containment

‘I couldn’t stand the pain’: the Turkish holiday resort that’s become an emergency dental centre for Britons who can’t get treated at home

The crisis in NHS dentistry is driving increasing numbers abroad for treatment. Here are some of their stories.

This clinic in the Turkish resort of Antalya is the official 'dental sponsor' of the Miss England competition. Diana Ibanez-Tirado, Author provided

It’s a hot summer day in the Turkish city of Antalya, a Mediterranean resort with golden beaches, deep blue sea and vibrant nightlife. The pool area of the all-inclusive resort is crammed with British people on sun loungers – but they aren’t here for a holiday. This hotel is linked to a dental clinic that organises treatment packages, and most of these guests are here to see a dentist.

From Norwich, two women talk about gums and injections. A man from Wales holds a tissue close to his mouth and spits blood – he has just had two molars extracted.

The dental clinic organises everything for these dental “tourists” throughout their treatment, which typically lasts from three to 15 days. The stories I hear of what has caused them to travel to Turkey are strikingly similar: all have struggled to secure dental treatment at home on the NHS.

“The hotel is nice and some days I go to the beach,” says Susan*, a hairdresser in her mid-30s from Norwich. “But really, we aren’t tourists like in a proper holiday. We come here because we have no choice. I couldn’t stand the pain.”

Seaside beach resort with mountains in the distance
The Turkish Mediterranean resort of Antalya. Akimov Konstantin/Shutterstock

This is Susan’s second visit to Antalya. She explains that her ordeal started two years earlier:

I went to an NHS dentist who told me I had gum disease … She did some cleaning to my teeth and gums but it got worse. When I ate, my teeth were moving … the gums were bleeding and it was very painful. I called to say I was in pain but the clinic was not accepting NHS patients any more.

The only option the dentist offered Susan was to register as a private patient:

I asked how much. They said £50 for x-rays and then if the gum disease got worse, £300 or so for extraction. Four of them were moving – imagine: £1,200 for losing your teeth! Without teeth I’d lose my clients, but I didn’t have the money. I’m a single mum. I called my mum and cried.

Susan’s mother told her about a friend of hers who had been to Turkey for treatment, then together they found a suitable clinic:

The prices are so much cheaper! Tooth extraction, x-rays, consultations – it all comes included. The flight and hotel for seven days cost the same as losing four teeth in Norwich … I had my lower teeth removed here six months ago, now I’ve got implants … £2,800 for everything – hotel, transfer, treatments. I only paid the flights separately.

In the UK, roughly half the adult population suffers from periodontitis – inflammation of the gums caused by plaque bacteria that can lead to irreversible loss of gums, teeth, and bone. Regular reviews by a dentist or hygienist are required to manage this condition. But nine out of ten dental practices cannot offer NHS appointments to new adult patients, while eight in ten are not accepting new child patients.

Some UK dentists argue that Britons who travel abroad for treatment do so mainly for cosmetic procedures. They warn that dental tourism is dangerous, and that if their treatment goes wrong, dentists in the UK will be unable to help because they don’t want to be responsible for further damage. Susan shrugs this off:

Dentists in England say: ‘If you go to Turkey, we won’t touch you [afterwards].’ But I don’t worry because there are no appointments at home anyway. They couldn’t help in the first place, and this is why we are in Turkey.

‘How can we pay all this money?’

As a social anthropologist, I travelled to Turkey a number of times in 2023 to investigate the crisis of NHS dentistry, and the journeys abroad that UK patients are increasingly making as a result. I have relatives in Istanbul and have been researching migration and trading patterns in Turkey’s largest city since 2016.

In August 2023, I visited the resort in Antalya, nearly 400 miles south of Istanbul. As well as Susan, I met a group from a village in Wales who said there was no provision of NHS dentistry back home. They had organised a two-week trip to Turkey: the 12-strong group included a middle-aged couple with two sons in their early 20s, and two couples who were pensioners. By going together, Anya tells me, they could support each other through their different treatments:

I’ve had many cavities since I was little … Before, you could see a dentist regularly – you didn’t even think about it. If you had pain or wanted a regular visit, you phoned and you went … That was in the 1990s, when I went to the dentist maybe every year.

Anya says that once she had children, her family and work commitments meant she had no time to go to the dentist. Then, years later, she started having serious toothache:

Every time I chewed something, it hurt. I ate soups and soft food, and I also lost weight … Even drinking was painful – tea: pain, cold water: pain. I was taking paracetamol all the time! I went to the dentist to fix all this, but there were no appointments.

Anya was told she would have to wait months, or find a dentist elsewhere:

A private clinic gave me a list of things I needed done. Oh my God, almost £6,000. My husband went too – same story. How can we pay all this money? So we decided to come to Turkey. Some people we know had been here, and others in the village wanted to come too. We’ve brought our sons too – they also need to be checked and fixed. Our whole family could be fixed for less than £6,000.

By the time they travelled, Anya’s dental problems had turned into a dental emergency. She says she could not live with the pain anymore, and was relying on paracetamol.

In 2023, about 6 million adults in the UK experienced protracted pain (lasting more than two weeks) caused by toothache. Unintentional paracetamol overdose due to dental pain is a significant cause of admissions to acute medical units. If left untreated, tooth infections can spread to other parts of the body and cause life-threatening complications – and on rare occasions, death.

In February 2024, police were called to manage hundreds of people queuing outside a newly opened dental clinic in Bristol, all hoping to be registered or seen by an NHS dentist. One in ten Britons have admitted to performing “DIY dentistry”, of which 20% did so because they could not find a timely appointment. This includes people pulling out their teeth with pliers and using superglue to repair their teeth.

In the 1990s, dentistry was almost entirely provided through NHS services, with only around 500 solely private dentists registered. Today, NHS dentist numbers in England are at their lowest level in a decade, with 23,577 dentists registered to perform NHS work in 2022-23, down 695 on the previous year. Furthermore, the precise division of NHS and private work that each dentist provides is not measured.

The COVID pandemic created longer waiting lists for NHS treatment in an already stretched public service. In Bridlington, Yorkshire, people are now reportedly having to wait eight-to-nine years to get an NHS dental appointment with the only remaining NHS dentist in the town.

In his book Patients of the State (2012), Argentine sociologist Javier Auyero describes the “indignities of waiting”. It is the poor who are mostly forced to wait, he writes. Queues for state benefits and public services constitute a tangible form of power over the marginalised. There is an ethnic dimension to this story, too. Data suggests that in the UK, patients less likely to be effective in booking an NHS dental appointment are non-white ethnic groups and Gypsy or Irish travellers, and that it is particularly challenging for refugees and asylum-seekers to access dental care.


This article is part of Conversation Insights
The Insights team generates long-form journalism derived from interdisciplinary research. The team is working with academics from different backgrounds who have been engaged in projects aimed at tackling societal and scientific challenges.


In 2022, I experienced my own dental emergency. An infected tooth was causing me debilitating pain, and needed root canal treatment. I was advised this would cost £71 on the NHS, plus £307 for a follow-up crown – but that I would have to wait months for an appointment. The pain became excruciating – I could not sleep, let alone wait for months. In the same clinic, privately, I was quoted £1,300 for the treatment (more than half my monthly income at the time), or £295 for a tooth extraction.

I did not want to lose my tooth because of lack of money. So I bought a flight to Istanbul immediately for the price of the extraction in the UK, and my tooth was treated with root canal therapy by a private dentist there for £80. Including the costs of travelling, the total was a third of what I was quoted to be treated privately in the UK. Two years on, my treated tooth hasn’t given me any more problems.

A better quality of life

Not everyone is in Antalya for emergency procedures. The pensioners from Wales had contacted numerous clinics they found on the internet, comparing prices, treatments and hotel packages at least a year in advance, in a carefully planned trip to get dental implants – artificial replacements for tooth roots that help support dentures, crowns and bridges.

Street view of a dental clinic in Antalya, Turkey
Dental clinic in Antalya, Turkey. Diana Ibanez-Tirado, CC BY-NC-ND

In Turkey, all the dentists I speak to (most of whom cater mainly for foreigners, including UK nationals) consider implants not a cosmetic or luxurious treatment, but a development in dentistry that gives patients who are able to have the procedure a much better quality of life. This procedure is not available on the NHS for most of the UK population, and the patients I meet in Turkey could not afford implants in private clinics back home.

Paul is in Antalya to replace his dentures, which have become uncomfortable and irritating to his gums, with implants. He says he couldn’t find an appointment to see an NHS dentist. His wife Sonia went through a similar procedure the year before and is very satisfied with the results, telling me: “Why have dentures that you need to put in a glass overnight, in the old style? If you can have implants, I say, you’re better off having them.”

Most of the dental tourists I meet in Antalya are white British: this city, known as the Turkish Riviera, has developed an entire economy catering to English-speaking tourists. In 2023, more than 1.3 million people visited the city from the UK, up almost 15% on the previous year.


Read more: NHS dentistry is in crisis – are overseas dentists the answer?


In contrast, the Britons I meet in Istanbul are predominantly from a non-white ethnic background. Omar, a pensioner of Pakistani origin in his early 70s, has come here after waiting “half a year” for an NHS appointment to fix the dental bridge that is causing him pain. Omar’s son had been previously for a hair transplant, and was offered a free dental checkup by the same clinic, so he suggested it to his father. Having worked as a driver for a manufacturing company for two decades in Birmingham, Omar says he feels disappointed to have contributed to the British economy for so long, only to be “let down” by the NHS:

At home, I must wait and wait and wait to get a bridge – and then I had many problems with it. I couldn’t eat because the bridge was uncomfortable and I was in pain, but there were no appointments on the NHS. I asked a private dentist and they recommended implants, but they are far too expensive [in the UK]. I started losing weight, which is not a bad thing at the beginning, but then I was worrying because I couldn’t chew and eat well and was losing more weight … Here in Istanbul, I got dental implants – US$500 each, problem solved! In England, each implant is maybe £2,000 or £3,000.

In the waiting area of another clinic in Istanbul, I meet Mariam, a British woman of Iraqi background in her late 40s, who is making her second visit to the dentist here. Initially, she needed root canal therapy after experiencing severe pain for weeks. Having been quoted £1,200 in a private clinic in outer London, Mariam decided to fly to Istanbul instead, where she was quoted £150 by a dentist she knew through her large family. Even considering the cost of the flight, Mariam says the decision was obvious:

Dentists in England are so expensive and NHS appointments so difficult to find. It’s awful there, isn’t it? Dentists there blamed me for my rotten teeth. They say it’s my fault: I don’t clean or I ate sugar, or this or that. I grew up in a village in Iraq and didn’t go to the dentist – we were very poor. Then we left because of war, so we didn’t go to a dentist … When I arrived in London more than 20 years ago, I didn’t speak English, so I still didn’t go to the dentist … I think when you move from one place to another, you don’t go to the dentist unless you are in real, real pain.

In Istanbul, Mariam has opted not only for the urgent root canal treatment but also a longer and more complex treatment suggested by her consultant, who she says is a renowned doctor from Syria. This will include several extractions and implants of back and front teeth, and when I ask what she thinks of achieving a “Hollywood smile”, Mariam says:

Who doesn’t want a nice smile? I didn’t come here to be a model. I came because I was in pain, but I know this doctor is the best for implants, and my front teeth were rotten anyway.

Dentists in the UK warn about the risks of “overtreatment” abroad, but Mariam appears confident that this is her opportunity to solve all her oral health problems. Two of her sisters have already been through a similar treatment, so they all trust this doctor.

Alt text
An Istanbul clinic founded by Afghan dentists has a message for its UK customers. Diana Ibanez-Tirado, CC BY-NC-ND

The UK’s ‘dental deserts’

To get a fuller understanding of the NHS dental crisis, I’ve also conducted 20 interviews in the UK with people who have travelled or were considering travelling abroad for dental treatment.

Joan, a 50-year-old woman from Exeter, tells me she considered going to Turkey and could have afforded it, but that her back and knee problems meant she could not brave the trip. She has lost all her lower front teeth due to gum disease and, when I meet her, has been waiting 13 months for an NHS dental appointment. Joan tells me she is living in “shame”, unable to smile.

In the UK, areas with extremely limited provision of NHS dental services – known as as “dental deserts” – include densely populated urban areas such as Portsmouth and Greater Manchester, as well as many rural and coastal areas.

In Felixstowe, the last dentist taking NHS patients went private in 2023, despite the efforts of the activist group Toothless in Suffolk to secure better access to NHS dentists in the area. It’s a similar story in Ripon, Yorkshire, and in Dumfries & Galloway, Scotland, where nearly 25,000 patients have been de-registered from NHS dentists since 2021.

Data shows that 2 million adults must travel at least 40 miles within the UK to access dental care. Branding travel for dental care as “tourism” carries the risk of disguising the elements of duress under which patients move to restore their oral health – nationally and internationally. It also hides the immobility of those who cannot undertake such journeys.

The 90-year-old woman in Dumfries & Galloway who now faces travelling for hours by bus to see an NHS dentist can hardly be considered “tourism” – nor the Ukrainian war refugees who travelled back from West Sussex and Norwich to Ukraine, rather than face the long wait to see an NHS dentist.

Many people I have spoken to cannot afford the cost of transport to attend dental appointments two hours away – or they have care responsibilities that make it impossible. Instead, they are forced to wait in pain, in the hope of one day securing an appointment closer to home.

Billboard advertising a dental clinic in Turkey
Dental clinics have mushroomed in recent years in Turkey, thanks to the influx of foreign patients seeking a wide range of treatments. Diana Ibanez-Tirado, CC BY-NC-ND

‘Your crisis is our business’

The indignities of waiting in the UK are having a big impact on the lives of some local and foreign dentists in Turkey. Some neighbourhoods are rapidly changing as dental and other health clinics, usually in luxurious multi-storey glass buildings, mushroom. In the office of one large Istanbul medical complex with sections for hair transplants and dentistry (plus one linked to a hospital for more extensive cosmetic surgery), its Turkish owner and main investor tells me:

Your crisis is our business, but this is a bazaar. There are good clinics and bad clinics, and unfortunately sometimes foreign patients do not know which one to choose. But for us, the business is very good.

This clinic only caters to foreign patients. The owner, an architect by profession who also developed medical clinics in Brazil, describes how COVID had a major impact on his business:

When in Europe you had COVID lockdowns, Turkey allowed foreigners to come. Many people came for ‘medical tourism’ – we had many patients for cosmetic surgery and hair transplants. And that was when the dental business started, because our patients couldn’t see a dentist in Germany or England. Then more and more patients started to come for dental treatments, especially from the UK and Ireland. For them, it’s very, very cheap here.

The reasons include the value of the Turkish lira relative to the British pound, the low cost of labour, the increasing competition among Turkish clinics, and the sheer motivation of dentists here. While most dentists catering to foreign patients are from Turkey, others have arrived seeking refuge from war and violence in Syria, Iraq, Afghanistan, Iran and beyond. They work diligently to rebuild their lives, careers and lost wealth.

Regardless of their origin, all dentists in Turkey must be registered and certified. Hamed, a Syrian dentist and co-owner of a new clinic in Istanbul catering to European and North American patients, tells me:

I know that you say ‘Syrian’ and people think ‘migrant’, ‘refugee’, and maybe think ‘how can this dentist be good?’ – but Syria, before the war, had very good doctors and dentists. Many of us came to Turkey and now I have a Turkish passport. I had to pass the exams to practise dentistry here – I study hard. The exams are in Turkish and they are difficult, so you cannot say that Syrian doctors are stupid.

Hamed talks excitedly about the latest technology that is coming to his profession: “There are always new materials and techniques, and we cannot stop learning.” He is about to travel to Paris to an international conference:

I can say my techniques are very advanced … I bet I put more implants and do more bone grafting and surgeries every week than any dentist you know in England. A good dentist is about practice and hand skills and experience. I work hard, very hard, because more and more patients are arriving to my clinic, because in England they don’t find dentists.

Dental equipment in a Turkish treatment room
Dentists in Turkey boast of using the latest technology. Diana Ibanez-Tirado, CC BY-NC-ND

While there is no official data about the number of people travelling from the UK to Turkey for dental treatment, investors and dentists I speak to consider that numbers are rocketing. From all over the world, Turkey received 1.2 million visitors for “medical tourism” in 2022, an increase of 308% on the previous year. Of these, about 250,000 patients went for dentistry. One of the most renowned dental clinics in Istanbul had only 15 British patients in 2019, but that number increased to 2,200 in 2023 and is expected to reach 5,500 in 2024.

Like all forms of medical care, dental treatments carry risks. Most clinics in Turkey offer a ten-year guarantee for treatments and a printed clinical history of procedures carried out, so patients can show this to their local dentists and continue their regular annual care in the UK. Dental treatments, checkups and maintaining a good oral health is a life-time process, not a one-off event.

Many UK patients, however, are caught between a rock and a hard place – criticised for going abroad, yet unable to get affordable dental care in the UK before and after their return. The British Dental Association has called for more action to inform these patients about the risks of getting treated overseas – and has warned UK dentists about the legal implications of treating these patients on their return. But this does not address the difficulties faced by British patients who are being forced to go abroad in search of affordable, often urgent dental care.

A global emergency

The World Health Organization states that the explosion of oral disease around the world is a result of the “negligent attitude” that governments, policymakers and insurance companies have towards including oral healthcare under the umbrella of universal healthcare. It as if the health of our teeth and mouth is optional; somehow less important than treatment to the rest of our body. Yet complications from untreated tooth decay can lead to hospitalisation.

The main causes of oral health diseases are untreated tooth decay, severe gum disease, toothlessness, and cancers of the lip and oral cavity. Cases grew during the pandemic, when little or no attention was paid to oral health. Meanwhile, the global cosmetic dentistry market is predicted to continue growing at an annual rate of 13% for the rest of this decade, confirming the strong relationship between socioeconomic status and access to oral healthcare.

In the UK since 2018, there have been more than 218,000 admissions to hospital for rotting teeth, of which more than 100,000 were children. Some 40% of children in the UK have not seen a dentist in the past 12 months. The role of dentists in prevention of tooth decay and its complications, and in the early detection of mouth cancer, is vital. While there is a 90% survival rate for mouth cancer if spotted early, the lack of access to dental appointments is causing cases to go undetected.

The reasons for the crisis in NHS dentistry are complex, but include: the real-term cuts in funding to NHS dentistry; the challenges of recruitment and retention of dentists in rural and coastal areas; pay inequalities facing dental nurses, most of them women, who are being badly hit by the cost of living crisis; and, in England, the 2006 Dental Contract that does not remunerate dentists in a way that encourages them to continue seeing NHS patients.

The UK is suffering a mass exodus of the public dentistry workforce, with workers leaving the profession entirely or shifting to the private sector, where payments and life-work balance are better, bureaucracy is reduced, and prospects for career development look much better. A survey of general dental practitioners found that around half have reduced their NHS work since the pandemic – with 43% saying they were likely to go fully private, and 42% considering a career change or taking early retirement.

Reversing the UK’s dental crisis requires more commitment to substantial reform and funding than the “recovery plan” announced by Victoria Atkins, the secretary of state for health and social care, on February 7.

The stories I have gathered show that people travelling abroad for dental treatment don’t see themselves as “tourists” or vanity-driven consumers of the “Hollywood smile”. Rather, they have been forced by the crisis in NHS dentistry to seek out a service 1,500 miles away in Turkey that should be a basic, affordable right for all, on their own doorstep.

*Names in this article have been changed to protect the anonymity of the interviewees.


For you: more from our Insights series:

To hear about new Insights articles, join the hundreds of thousands of people who value The Conversation’s evidence-based news. Subscribe to our newsletter.

Diana Ibanez Tirado receives funding from the School of Global Studies, University of Sussex.

Read More

Continue Reading

International

Beloved mall retailer files Chapter 7 bankruptcy, will liquidate

The struggling chain has given up the fight and will close hundreds of stores around the world.

Published

on

It has been a brutal period for several popular retailers. The fallout from the covid pandemic and a challenging economic environment have pushed numerous chains into bankruptcy with Tuesday Morning, Christmas Tree Shops, and Bed Bath & Beyond all moving from Chapter 11 to Chapter 7 bankruptcy liquidation.

In all three of those cases, the companies faced clear financial pressures that led to inventory problems and vendors demanding faster, or even upfront payment. That creates a sort of inevitability.

Related: Beloved retailer finds life after bankruptcy, new famous owner

When a retailer faces financial pressure it sets off a cycle where vendors become wary of selling them items. That leads to barren shelves and no ability for the chain to sell its way out of its financial problems. 

Once that happens bankruptcy generally becomes the only option. Sometimes that means a Chapter 11 filing which gives the company a chance to negotiate with its creditors. In some cases, deals can be worked out where vendors extend longer terms or even forgive some debts, and banks offer an extension of loan terms.

In other cases, new funding can be secured which assuages vendor concerns or the company might be taken over by its vendors. Sometimes, as was the case with David's Bridal, a new owner steps in, adds new money, and makes deals with creditors in order to give the company a new lease on life.

It's rare that a retailer moves directly into Chapter 7 bankruptcy and decides to liquidate without trying to find a new source of funding.

Mall traffic has varied depending upon the type of mall.

Image source: Getty Images

The Body Shop has bad news for customers  

The Body Shop has been in a very public fight for survival. Fears began when the company closed half of its locations in the United Kingdom. That was followed by a bankruptcy-style filing in Canada and an abrupt closure of its U.S. stores on March 4.

"The Canadian subsidiary of the global beauty and cosmetics brand announced it has started restructuring proceedings by filing a Notice of Intention (NOI) to Make a Proposal pursuant to the Bankruptcy and Insolvency Act (Canada). In the same release, the company said that, as of March 1, 2024, The Body Shop US Limited has ceased operations," Chain Store Age reported.

A message on the company's U.S. website shared a simple message that does not appear to be the entire story.

"We're currently undergoing planned maintenance, but don't worry we're due to be back online soon."

That same message is still on the company's website, but a new filing makes it clear that the site is not down for maintenance, it's down for good.

The Body Shop files for Chapter 7 bankruptcy

While the future appeared bleak for The Body Shop, fans of the brand held out hope that a savior would step in. That's not going to be the case. 

The Body Shop filed for Chapter 7 bankruptcy in the United States.

"The US arm of the ethical cosmetics group has ceased trading at its 50 outlets. On Saturday (March 9), it filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk including those in a distribution center that still holds millions of dollars worth of stock," The Guardian reported.

After its closure in the United States, the survival of the brand remains very much in doubt. About half of the chain's stores in the United Kingdom remain open along with its Australian stores. 

The future of those stores remains very much in doubt and the chain has shared that it needs new funding in order for them to continue operating.

The Body Shop did not respond to a request for comment from TheStreet.   

Read More

Continue Reading

Trending