Latvia: on the brink of collapse (The Torygraph)

Sir_Humphrey

Generali wrote: »

The list you link to seems to show that a bunch of Socialist (not comunist) counries are most 'democratic' (given a socialist definition of democracy) and that a bunch of hopeless basket cases are a bunch of hopeless basket cases. I don't see how that advances your case in any way.

No, the list is one drawn up by The Economist magazine, who are not exactly left-wing. I am pointing out that countries can be neo-Liberal and very democratic (Iceland) and Social Democratic and very democratic (Sweden).

Also, countries can be very Capitalist yet a dictatorship (Saudi Arabia) or very Socialist and a dictatorship (North Korea).

So equating democracy with any particular economic system is very flawed. Free markets do not equal democracy.

Afriend_2

Sir_Humphrey wrote: »

Which is why they have been unable to force through the necessary cuts! That is exactly my point! Jesus Christ, are you completely unable to follow an argument?!?

The Civil service doesn't help either. I trust you remember this episode?

3 "The Economy Drive" Hacker plans to slim down the civil service

A despondent Jim Hacker listens with Bernard as his political advisor, Frank Weisel, reads a damning press report detailing a series of government inefficiencies. When Sir Humphrey Appleby arrives, Hacker immediately demands a slimming down of his department. Sir Humphrey argues that its staff is "small", numbering some 23,000

Sir_Humphrey

Afriend wrote: »

The Civil service doesn't help either. I trust you remember this episode?

3 "The Economy Drive" Hacker plans to slim down the civil service

A despondent Jim Hacker listens with Bernard as his political advisor, Frank Weisel, reads a damning press report detailing a series of government inefficiencies. When Sir Humphrey Appleby arrives, Hacker immediately demands a slimming down of his department. Sir Humphrey argues that its staff is "small", numbering some 23,000

The size of a department can vary from around 50 to many thousands. The real biggies are the DWP (includes JobCentre staff so it is always going to be huge - they foolishly laid off loads of staff before the recession then had to re-recruit when the recession hit - very wasteful), the MoD (I am happy to admit the MoD is pretty useless) and HMRC (this is large as it is two departments merged during the last efficiency drive a few years ago).

Headcount reductions will probably start before the election (plans are advanced enough for me to know my division is safe) and of course will concentrate on not replacing staff as this is the cheapest way of reducing staff numbers (no redundancy payments).

The running joke in Yes Minister was that Jim Hacker thought he could fund any project with efficiency savings which would be impact-free. This is nonsense even without the intervention of Sir Humphrey Appleby. It is fantasy politics. The civil service simply does not spend enough money running itself to save more than a certain amount of money.

zappahey

Sir_Humphrey wrote: »

The running joke in Yes Minister was that Jim Hacker thought he could fund any project with efficiency savings which would be impact-free.

Of course, the best jokes in that series were never too far from the truth.

Wookster

I've just read on the Guardian website that the Latvian Government plans to introduce legislation to reduce Latvian creditor's payments to offshore banks.

Incredible! That sort of measure is pretty much taken from Mugabe's "Economics for Dummies and Despots"

More here: http://www.guardian.co.uk/business/2009/oct/07/latvia-crisis-mortgage-debt

purch

Incredible! That sort of measure is pretty much taken from Mugabe's "Economics for Dummies and Despots"

I guess they are already thinking about the design for the 1,000,000 LAT note :eek:

Treadmill

I read somewhere else that mortgage liabilities where to be INCREASED by law to the full value of the property, now let me find that.

Wookster

purch wrote: »

I guess they are already thinking about the design for the 1,000,000 LAT note :eek:

Perhaps I should scan the 100 Trillion Zimbabwe Dollar note I have been using as a bookmark and email it to their Finance Minister?

Mr_Mumble

Latvia is running a lower fiscal deficit than Britain. It's the dumb currency peg that's killing 'em. Just like Blighty back in 1992. Hmm, the Latvians are making Lamont look good!

Things got worse Wednesday:

- The government’s latest debt auction fell flat on Wednesday, with investors picking up only 2.04m of the 24m lats worth of debt on offer.
- Five-year credit default swaps for Latvia CDS widened to 513.8 bps from 479.8 bps the day before.
- The country still has to pass fiscal reforms necessary to meet IMF conditions for aid.
- Fitch has warned the country risks a further ratings downgrade.
- Government: one administration already lost, latest coalition reportedly cracking up.

The CDS spreads are getting closer to the levels of Iceland (around 800bps iirc) just before it went belly up.

PolishBigSpender

Latvia is in all sorts of trouble, there's no doubt about it. The currency peg is almost certainly going to be lost at this rate - Latvia just doesn't have the money to defend it, and there is considerable amounts of money to be made if Estonia and Lithuania lose their pegs too.

The problem with Latvia is that any non-EU country would look after themselves. But if they do, they run the risk of getting into all sorts of trouble with other EU members - and thus their options are extremely limited.

I agree with what someone said above - it's going to be a very cold winter in Latvia.