Ask anyone in Wall Street. You could be surprised how this humour video ir faithful.
Popularity: 4% [?]
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There was an article published in the Herald Tribune (click here) reproducing the ideas that are being widespread by serious publications as The Economist, by the European Central Bank and even by some local economists. The ideas may be divided in three groups: a) The Latvian economy must slow down in order to contain the inflationary process; b) The Latvijas Banka should devaluate the national currency; c) The global credit crunch initiated in the United States will result in panic when its effects reach Scandinavia and the Baltic Countries. I’m very concerned to see how the Neoclassical Orthodoxy, the main religion in Economics and, unfortunately, a religious denomination in the Social Science as Political Science, International Relations, Sociology, only to cite few, affected the mind of the social scientists, including economists. The limitations of this approach, which elected the market and liberalism as its golden calf, are destroying the analytical skills of some of our best scientists. I’m sorry to say that Economics by its foundations isn’t a hard Science. The market is made by people and people fail. In terms of social sciences, there aren’t some immutable laws as in chemistry or in physics. In order to understand what are really behind these arguments, we must go to their essence avoiding their outlook. Although the three statements are interconnected, let’s start with the first one, addressing a question: Why should the Latvian economy slow down? To be eternally an underdeveloped country? Or in order to fulfil her role of provider of cheap workforce and raw materials to the European Union? Or just because is written in the neoclassical bible that inflation is the personification of Satan in Economics? A good start to understand the inflationary process in countries with huge economic growth is to read Keynes, specially the debate about inflation of the 1920′s as the “Economic consequences of the peace” and “How to pay for the war”. There is an obvious conclusion: if an economy is growing fast, it’s impossible to not have inflation. The policymakers must choose which do they prefer: a) to grow and to improve the living conditions of the population or b) to provoke a recession and, probably, an economic crisis, penalising real people who will loose their jobs and, in the case of Latvia, will not be able to pay the credit they borrowed, resulting in social problems? An annual rate of 13% of inflation isn’t so bad, if there is economic growth. Inflation is a problem when it’s 13% a month. Before achieve a rate of 2-3%, Latvia must develop her economy first. But what is pressuring the inflation rate in Latvia? Certainly it isn’t the increasing wages, in the sense that the workers are receiving bigger wages and this fact will result in an increase of the costs of production, thus resulting in inflation. This analysis is naïve. The fact that Latvia has a very big deficit in the trade balance shows that most of what is consumed in the country is imported. In this way, an increase of the wages may affect the costs of circulation and internal transport resulting in inflationary pressures, which in the Latvian case are irrelevant. At the same time, as there is a virtually infinite supply of goods and services from the EU and the rest of the world through imports, the argument that the demand is surpassing the supply is completely false. Instead, there are four factors: a) the increase of the monetary basis, b) the positive expectations about the future as result of the perception of the increase of personal wealth, consequence of the availability of cheap credit, c) inertial movements and d) the alignment of prices with the level of the EU. To be continued Popularity: 3% [?] To start the week with positive vibrations, here is a promotional video about Latvia, produced by the Latvian Institute. In my opinion it’s beautiful and positive, showing nice things of and about the country. However, some pseudo-intelectuals wannabes and other people desliked. Maybe they were aiming to see not a nice video but something showing prostitutes, british tourists urinating in national monuments and drunk people fighting on the streets. The Latvian version to the Brazilian trio semi-naked women on the beach, carnival and caimans (the Brazilian alligator) that the Brazilian government insists to widespread around the world, contributing to encourage, among other things, sexual tourism in Brazil.
Popularity: 5% [?] By Robert Anderson Latvia, Europe’s most overheated economy, has plunged into political crisis, making it even more vulnerable to fragile global financial sentiment. Aigars Kalvitis, the prime minister, on Tuesday survived a vote of no-confidence but his unpopular government is expected only to stagger on until parliament approves a belt tightening budget that it will begin debating on Wednesday. Mr Kalvitis – a former dairy manager who after just three years in office has become the country’s longest-serving premier – has lost the confidence of party bosses after bungling the dismissal of Aleksejs Loskutovs, the country’s top anti-corruption investigator. He last week had to fly back early from the European Union summit in Lisbon after the largest demonstration since the country’s independence in 1991 forced two rebel ministers from his People’s party to leave the cabinet. Mr Kalvitis rejected calls for his own resignation on Friday, saying: “We have to take responsibility … the coalition has decided to move ahead.” Ironically, the political turbulence has struck just as leading economic indicators have begun to improve and the government appears to be finally getting serious about tackling macroeconomic imbalances. Latvia, which suffered a domestic run on the currency, the lat, in February, is considered one of the economies in Europe most vulnerable to worsening global credit conditions. Few lat-denominated assets are held by foreigners, making a speculative attack difficult but the size of the economic imbalances has forced the authorities to deny rumours that an adjustment of the exchange rate peg is imminent. A consumer boom financed by foreign banks has built up a gross external debt that reached 117 per cent of gross domestic product at the end of last year and a current account deficit that hit 11 per cent of GDP in the second quarter. Following an anti-inflation package in March and slower bank lending growth, the economy appears to be cooling rapidly. Property prices have been falling for half a year, while retail sales, new car registrations and monthly current account deficit figures have recently begun declining. “The adjustment started to happen later than it should have, therefore it will probably be more compressed and harsh than we would like to see,” says Erkki Raasuke, chief executive of Hansabank, the Swedbank subsidiary that is Latvia’s largest bank. “Nevertheless, we are still seeing a good orderly adjustment going on. “We expect a fairly quick recovery and then fairly sound growth over the coming years, though not at the rates of previous years.” Mr Kalvitis has belatedly thrown his weight behind the anti-inflation drive by speaking out against excessive private consumption and wage demands, and moving to tighten fiscal policy. The government now expects to run a budget surplus of 0.4 per cent of GDP this year, rather than the forecast deficit of 1.4 per cent. Next year it plans a surplus of 1 per cent, followed by 1.2 per cent in 2009 and 1.5 per cent in 2010. Government working groups also aim to produce a battery of supply-side proposals at the end of the year, focused on improving export competitiveness, productivity and labour supply. “They have done enough,” says Kenneth Orchard of Moody’s rating agency, which changed its outlook to stable from positive in September but retains an A2 rating two notches above its peers. “For many years it was all talk and no action. Finally they are doing something.” However, further reform is now in doubt because of the political turbulence, which will damage domestic and foreign confidence. Mr Kalvitis demanded the dismissal of Mr Loskutovs because of minor financial irregularities at the anti-corruption office. However, most observers believe the real reason was due to the office’s threat to impose a large fine on the People’s party for rampant over-spending in last year’s general election campaign. The anti-corruption office has also worried politicians by pursuing investigations into Aivars Lembergs, the powerful mayor of Ventspils, as well as a digital television scandal, in which Andris Díçle, a former People’s party premier, is a witness. The fall-out from these two affairs could have wide repercussions. After last week’s rally parliament looks unlikely to approve Mr Loskutovs’ dismissal, sealing Mr Kalvitis’s fate. The coalition will probably try to nominate a new premier once the budget is passed next month, though there is no obvious candidate. Given that trade unions are demanding higher public sector wage rises and are collecting signatures for a referendum on early elections, any successor may find staying in power as daunting a challenge as Latvia’s economic woes. Good times over for property speculators The Green City development in exclusive Purvciems, north-east Riga, would have been an impossible dream for Latvians during five decades of grey Soviet rule . But perhaps more tantalising are the estate agents’ images of luxury apartment blocks set amid plush lawns. The reality is somewhat different: it remains an empty plot, a digital mirage, in the wake of the 15 per cent fall this year in Riga real estate prices. For now, at least, the project has been postponed. In the past few years, many Latvians made small fortunes speculating on real estate. They also enjoyed wage rises of as much as 35 per cent a year as the economy boomed and the labour market tightened because of migration to western Europe. But the boom times are now over for the real estate sector after banks tightened lending, interest rates rose and the government insisted that mortgages must be based on proof of taxable income and could not include “envelope salaries”. Nevertheless, for many inhabitants of Riga the good times are still rolling and they see little need to tighten their belts. Those who missed out are also demanding their share, with public sector unions insisting their workers catch up with the private sector. Standing up to the demands will be a huge challenge for the government. Copyright The Financial Times Limited 2007 Popularity: 3% [?]  When I made the inverse way of my family, coming back to Latvia in 2005, I chose Hansa Banka to open an account. I asked some friends and all of them recommended the former Estonian and now Swedish Bank. My experience with the bank is nice, although sometimes some of the attendants are rude (mainly the barbies), indifferent and snobbish, as some untrained workers in Latvia and Eastern Europe use to be. They reproduce the patterns of the USSR, where clients were the problem and not the solution. Some fossils are still alive. However, I have to say this is not a rule but an exception and the bank is very nice.Of course the image of an institution is one of the most important assets it has. That’s why is difficult to understand why the bank is adopting what would be called as a marketing anti-campaign. Although the idea of the anti-campaign is nice, the 21th century, trying to connect the bank’s image with the future, there are some problems. The first one, because of us: the clients. The campaign is explicitly calling the clients of technological fossils. I will give a practical example. Friday, near midnight. A man need to meet his friends and relax after a working week. I went to Hansa Banka’s cash dispenser on Tirgoņu iela, inserted my card, waited for the money and surprise! Instead of the money I needed and my card back, due a mechanical problem, I received a paper saying my card was retained. A receipt. However, on the other side of the receipt was wrote that it was my fault, that I was a looser of the 20th century and that instead of go to a cash dispenser I would use my card. In the bank’s own words: Of course I am only a cash dispenser and maybe that’s not my business, but surely is more convenient to pay with card instead of every time get cash with me. Sorry for the intrusion, but it is the 21th century. Very rude and snobish. The question is that at that time I needed cash. Taxis, some bars, club entrance fee, florists, shoe shiners, parking, beggars, must be paid in cash. Beside, this is a free country and if I need cash (I know it results in operational costs to the bank), the bank has not the right to use the rhetoric of modernity in order to make me feel a dinosaur and to not withdraw my own money. This campaign is not only impolite and offensive, but also disrespectful. A good friend scanned the receipt, which is this post’s image, and I’ve sent it some friends. Everybody agreed that this anti-campaign is very impolite. Another point to be issued is the fact that my card was not given back because of mechanical problem: a bank talking about the 21th century and probably using already depreciated equipment bought from the United States or some country of the “old” European Union. Maybe transferred from Sweden. The second point is a new advertisement of the same campaign. In this case, the commercial explains to us how inflation is generated. The worker asks the boss to raise his wage. Doing this, the boss increases the prices. With higher prices, the worker asks again to the boss to raise his wage. The boss again raises the prices. In other words, the problem in this case is not the clients but the workers. Naturally, a first year’s student of economics already knows that more significant than raising wages to pressure the inflation is the increase of the monetary base, exactly what the banks in Latvia are doing through credit lines. The point is that the bank is permitting the issue of inflation to be completely falsified only to have a pseudo-nice commercial, where the miserably paid workers of Latvia are responsible for the inflation. This is lamentably, because in this way people are getting misinformed. A nice bank as Hansa should care for a nicer marketing campaign. Popularity: 3% [?]
By Jonathan Marcus
BBC diplomatic correspondent President Vladimir Putin’s decision to suspend Russia’s participation in the Conventional Forces in Europe, or CFE, treaty is a potent political signal.
It is yet another sign of the worsening relationship between Moscow and the West. It shows that this relationship was not improved in any substantial way by the informal meeting at the start of this month between the US and Russian presidents at the Bush family’s holiday home at Kennebunkport in Maine. It is another diplomatic warning shot from Mr Putin across the bows of the Bush administration. And with crucial issues like Iran’s nuclear programme and the political future of Kosovo looming at the United Nations, it raises a new set of questions about how far Russia might go to block initiatives backed by Washington and its key allies. The Russians have been threatening to suspend their participation in the CFE treaty for several months. An emergency meeting in mid-June to discuss the issue made little if any progress. The CFE treaty of 1990 was one of the most significant arms control agreements of the Cold War years. It set strict limits on the number of offensive weapons – tanks, aircraft, artillery and so on – that the members of the Warsaw Pact and Nato could deploy in a broadly-defined Europe, stretching from the Atlantic to the Urals. In the wake of the collapse of communism, the treaty was revised in 1999, in part to address Russian concerns. This revised treaty has never been ratified by the Nato countries who first want Russia to withdraw all of its forces from the former Soviet Republics of Georgia and Moldova. Now Russia’s patience has run out.
President Putin’s decree to suspend application of the treaty is not the same as a full-scale withdrawal – that would require a formal notification of the other parties. This suspension is a unilateral Russian measure and its practical impact will be limited. Various routine inspections, exchanges of data, and so on will presumably be halted. Irrelevant? In many ways the CFE treaty is not hugely relevant today. The Cold War is over and whatever new tensions there may be between Russia and the West, nobody envisages a return to an armed stand-off on the European continent. Nonetheless Mr Putin’s decision matters.
For a start it raises questions about yet one more arms control treaty at a time when disarmament experts fear that the whole network of arms control treaties established during the Cold War years is increasingly under strain. The United States pulled out of another key agreement, the Anti-Ballistic Missile treaty, in December 2001. In a sense Mr Putin is just demonstrating that what the Americans can do in the name of their vital interests, so Russia can also threaten in the name of its national interest. President Putin’s move will be taken as yet another sign of a more assertive foreign policy – a policy buoyed up by Moscow’s rising income from oil and natural gas. But analysts wonder if this is really a sign of strength. For all its energy revenues, Russia remains a shadow of the former Soviet Union in the superpower stakes. Russian experts argue that Mr Putin realises this. But in certain key areas, not least missile defence, he wants to be treated by Washington as an equal. Russian opposition to US plans to deploy limited missile defence in Poland and the Czech Republic is at the heart of their current disagreements. But Russia’s ever more muscular noises that it might block a proposed United Nations deal on the political future of Kosovo adds a worrying dimension to what up to now has been largely a rhetorical row. Add in “local difficulties” like the dispute between London and Moscow over the murder of a former Russian agent living in Britain and there is real danger that relations between Russia and the West could be heading back to the freezer. It is clearly nonsense to speak of a new Cold War. But several Russian foreign policy experts have expressed concern that relations could deteriorate significantly. Mr Putin’s position, they say, is more sophisticated and perhaps more nuanced than some Russian spokesmen’s pronouncements might indicate. Mr Putin has gone some way, for example, in acknowledging that Iran does represent a potential missile threat. But Mr Putin is drawing on a strong well of anti-Americanism in Russia’s military and foreign policy establishment. That is why Mr Putin’s whole approach risks sounding, and indeed becoming, blunter and more dogmatic than even he probably wants. Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/europe/6898897.stm Popularity: 3% [?]  Diena: The votes were not sufficient, but the signal rangNeatkarīga: President Zatlers is greeted with ovation Estado de São Paulo: Unions’s offensive will claim for real increase of the salaries The Washington Post: Job vacancies at DHS said to hurt U.S. preparedness Le Figaro: Sarkozy defends his plan to Brussels The Guardian: Campbell: cabinet’s severe doubts on Iraq Popularity: 3% [?] Na primeira noite eles se aproximam
(In the first night, they approach)
e roubam uma flor do nosso jardim. E não dizemos nada.
(and we don’t say a word)
Na segunda noite, já não se escondem; pisam as flores, matam nosso cão, e não dizemos nada. Até que um dia, o mais frágil deles entra sozinho em nossa casa, rouba-nos a luz, e, conhecendo nosso medo, arranca-nos a voz da garganta. E já não podemos dizer nada. Veiko’s nice translation to Latvian: Pirmajā naktī viņi ierodas nemanot, Popularity: 3% [?] Folha de São Paulo: Distribution of PAC’s resources privileges PT municipal administrationsEstado de São Paulo: Embezzlement of verb addressed to NGOs achieves R$ 1,5 billion (€ 560 millions) Washington Post: Suicide attacks kill 144; 8 U.S. troops die in Iraq The New York Times: Youth groups created by Kremlin serve Putin’s cause Le Monde: Sarkozy proposes Strauss-Kahn to IMF The Guardian: New health fears over big surge in autism Der Spiegel: The price of the anxiety Carta Capital: The life after being president of the Central Bank is very easy Le Monde Diplomatique: Al-Qaida against the talibans Popularity: 3% [?] |
 
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