Tuesday, October 6, 2009
First Iceland, now Latvia?
Banks brace for Latvia's collapse
The Baltic states are once again in the eye of the storm after leaked reports that Sweden is bracing for a full-blown economic and political "breakdown" in Latvia. Latvia has failed to deliver draconian spending cuts demanded by the EU and the IMF. The ruling coalition voted against austerity measures last month, raising concerns that the country is ungovernable. Latvia's economy contracted by 18.2pc in the twelve months to June. Youth unemployment in Latvia is already 31pc, and concentrated among ethnic Russians. Premier Valdis Dombrovskis said his chief task is to "preserve social peace". The Baltic states financed property booms in euros (and swiss francs) because rates were lower. It was taken for granted that eventual euro entry had eliminated the exchange risk. This has become a trap
Posted by drewster @ 12:44 AM (865 views)
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uncle tom says:
I wonder what Moscow’s thoughts are on all this…