Comments on: Latvia: No victory yet, no defeat either

By: Latvia: Living in the Land of Extremes | afoe | A Fistful of Euros | European Opinion

Tue, 20 Jul 2010 18:22:41 +0000

[...] devaluation continues and the debate is whether the economy is flexible enough for this experiment. I say perhaps it is, Edward says perhaps it isn’t but one thing is for sure: the Latvian economy is (possibly [...]

By: Blaaron

Blaaron — Wed, 10 Mar 2010 08:00:46 +0000

Big Hans – I disagree. Govs tells the truth. The Swedes use this SSE Riga as trojan horse to occupy Latvia and steal all our mineral resources – cow dung & sprats – mark my words.

By: big hans

big hans — Tue, 09 Mar 2010 22:01:56 +0000

govs from latvia wrote:
Normally I do not comment SSE Riga articles, because SSE Riga is a fraudulent vehicle to abuse Structural funds in CEE in favour of the SSE Stockholm.”

this is the dumbest thing you’ve written yet. please provide even a shred of evidence that this latest claim is true, if not then it goes into the dust bin of the latest distortions and otherwise effluvia you’ve written. to whit, that the `butterfly effect’ an effect that deals with time travel, explains the demise of parex banka, the second biggest bank in latvia. its just sad what you write. now, Germany is protectionist?!

big hans

By: Alon Levy

Alon Levy — Tue, 09 Mar 2010 06:44:51 +0000

NikosR: Spain had a smaller economic contraction in 2009 than Germany. But nice try.

And Govs from Latvia: which Krugman are you referring to? Because I can’t find any article of his arguing that the EU has no benefit for CEE, or that Germany has “abundant” export subsidies (what the hell does “4th most protectionist” even mean?), or that trade surpluses are evil.

By: jon livesey

jon livesey — Tue, 09 Mar 2010 00:50:35 +0000

Henrik: “Based on conversations I have had with various persons close to the matter, I firmly believe that none of the Baltic states will be allowed into the EUR in the foreseeable future, no matter what.”

I haven’t seen it mentioned yet, but if the Baltic States try to stay linked to the Euro rate by internal deflation, that must impact their tax revenues negatively. That in turn raises the prospect of default risk down the road. I would say that you are most likely correct, and the ECB will not want to assume new and not very predictable problems in addition to those it already has.

By: govs from Latvia

govs from Latvia — Mon, 08 Mar 2010 11:31:07 +0000

Henrik,

sustainability clause will be not deadly against Estonia because Estonia does not have external debt.

However, internal debt clause is worth of scrutiny, because 3% were attained by massive one-time measures. If ECB will not count them, Estonian debt is around 8% of GDP.

Generally, Estonia is somewhere dangereous to the system, because not having to spend a single sou for banking bailouts (absolutely different from Latvia who has to kill 50% of government budget for that purpose) and not having any other obvious problems, Estonia has shown GDP fall -15% in 2009. There is no logical explanation for that.

By: Henrik Holleufer

Henrik Holleufer — Mon, 08 Mar 2010 10:15:58 +0000

Jüri,
I understand your desire to make a wager. After all, my point of view is definitely in the minority as yet. I don’t think a bet would be practical + the odds you suggest are risible. After all, my point of view IS in the minority, and any odds given to me by a bookmaker (or the financial markets) would reflect this, whereas yours don’t. However, I would like to substanciate my point a little.
Given the trouble EU is in at the moment, I think it is very likely, that Bruxelles and ECB don’t want to widen the circle further, unless they are 100% convinced, that any new members will not be a cause for concern in any way. And given the Greek problem, it is equally unlikely they will allow anybody to fiddle a little with the numbers to gain entry, even if that may seem unfair to the countries outside the single currency, given that virtually all the members of the EUR cheated in the first place (except Finland and Luxembourg). I also know for a fact, that this has been communicated on CB level to the Baltic states and indeed to the other candidate countries. This means that ECB, Eurostat, etc. will go over the numbers of Estonia very carefully. And I have been told by people in the know about these matters, that there are indeed flaws in the Estonian numbers; to be more specific there seems to be some double counting of dividend from government owned entities. Even if that should turn out not to be the case, it is my firm belief, that EU/ECB/Eurostat will use the sustainability clause to strike down any candidates at this point in time.
I may well be wrong about this, though of course I don’t think I am, but at least we will learn about this soon enough.

Henrik

By: NikosR

NikosR — Mon, 08 Mar 2010 09:28:52 +0000

‘Somehow I’m supposed to believe that Germany has been destroying Lithuania, Latvia, Estonia, and Ireland, but not any of the other non-core countries in Europe. What gives?’

Check the currency fluctuations and whether these economies have been pegged (or not) to the Deutsch Mark err… sorry Euro.

By: govs from Latvia

govs from Latvia — Mon, 08 Mar 2010 08:33:45 +0000

Germany has already destroyed Spain and Greece with its export surpluses. See Krugman

By: govs from Latvia

govs from Latvia — Mon, 08 Mar 2010 08:33:09 +0000

Of course, there are abundant schemes of direct and non-direct export subsidies in Germany, this is the 4th most protectionistic economy in the World. Combined with maximum wage dumping this makes a great export nation.

A lot of German goods are reimported in Latvia from Russia.