Protest and Nationalism in Eastern Europe

Since the possibility of further social tensions leading to nationalism is something on my radar screen, I thought I would post these videos from Euronews. In a good economy, these issues are nothing to get concerned about. But in a bad economy, especially one wracked by austerity and unemployment, tensions will have political consequences

Bank run in Latvia

Rumors of an impending bank failure in Latvia over the weekend led to a run on bank machines. In many places it was impossible to get money

Estonia is also part of the Eurozone periphery

It is far from clear that the current level of Estonian CDS prices risk in in any more satisfactory way than they did at the height of the crisis, since membership of the Eurozone has brought with it both positives and negatives. The 0.28% contribution of the country to any future EFSF bailouts may not seem like a very big deal, but in comparison to Estonian GDP the sums involved may well be far from trivial. The country does not have, and is not likely to have, either a fiscal deficit or a sovereign debt problem, nor does it have a home grown banking system which might need bailing out. The risk to Estonia comes from elsewhere, from its association with Ireland, Spain, Greece, Portugal and Italy. Depending on how far the core EU countries are willing to finance debt and absence of growth in those countries the Eurozone’s future is far from clear

Smoke On Europe’s Eastern Horizon?

Edward Hugh writes of an unstable combination which make the countries in Eastern Europe highly vulnerable to both a renewed deterioration in sentiment and an external economic slowdown of the sort we could see following a disorderly Greek default, and yet markets in general seems to be shrugging off the risk as almost non existent

BELLS in Hell that Don’t Go Ting-a-Ling-a-Ling

The BELLS are a group of four countries (Bulgaria, Estonia, Latvia and Lithuania) who in their wisdom decided to adopt and then stick “come hell or high water” to a currency peg with to Euro. Thus was opened one of the more interesting and lively chapters in modern macroeconomic debate

Will Iceland Vote ‘No’ on April 9 or commit financial suicide?

A year ago, in March 2010, Iceland’s economy was so small that it did not warrant much attention when 93% of its voters rejected the Social Democratic-Green government’s surrender to demands by Gordon Brown and the Dutch, the European Union (EU) bureaucracy and IMF that the island nation impose austerity. Britain and the Netherlands wanted to be reimbursed for having paid out more than $5 billion to some 340,000 of their own depositors – whom their own bank oversight agencies had failed to warn about the looting that was going on.

Iceland’s taxpayers were told to bear the cost, as virtual tribute. In effect, it was to be penance for believing the neoliberal fairy tales about how bank deregulation and “free markets” would make it the richest, happiest country in the world. Indeed it seemed to be, according to United Nations data. But the dream was dashed after the Icesave electronic Internet bank branches abroad were emptied out by their proprietors.

Debt Defaults, Austerity, and Death of the “Social Europe” Model

By Jeffrey Somers and Michael Hudson A spectre is haunting Europe: the illusion that Latvia’s financial and fiscal austerity is a model for other countries to emulate. Bankers and the financial press are asking governments from Greece to Ireland and now Spain as well: “Why can’t you be like Latvia and sacrifice your economy to

And Then There Were Seventeen…

By Edward Hugh “If you know your Thucydides and the Melian dialogue you know that small countries rely most on everyone following the rules. That’s why we follow the rules. If there are no rules, then the big will do what they want,” -Estonian President Toomas Ilves in an interview with the EU observer In

Schemes of the Rich and Greedy

The 30-year campaign of the wealthy to rig our economic system – especially the tax component – for their own benefit will accelerate with the GOP capture of the House of Representatives and the likely capture of the presidency and Senate in two years. For a foreshadowing of what is to come, a dress rehearsal has been conducted in Latvia, Iceland, Ireland and other financially strapped countries. Latvia has been burdened with the world’s most regressive tax system, while Iceland and Ireland have become record setters in tapping taxpayers to bail out financial crime syndicates, a.k.a. banks

After bailouts and austerity, Latvia calls for European fiscal discipline

I think this trio of videos from Latvia really puts the whole Irish crisis in perspective. After a spectacular property bubble, Latvia imploded in 2008. I was calling the Baltics the next Argentina. Indeed, by early 2009 we eventually saw Argentine-style riots on the streets of Vilnius. Nouriel Roubini’s group talked about an "Asia-style crisis." Latvia got a bailout though and went into a deep depression, the deepest in the euro zone, due in part to its refusal to devalue and the harsh austerity measures the bailout mandated

Estonia’s Now-You-See-Me Now-You-Don’t Inflation Rate

by Edward Hugh Just to follow up on my recent long Estonia post, a couple of new data points have caught my attention recently: the sharp rise in Estonian inflation and the ongoing goods trade deficit. In the first place it is worth noting that Estonia’s trade deficit went UP again in August. Of course,

Estonia’s Long Awaited Recovery May Still Be Delayed Yet Awhile

In a recent FT Op-ed, entitled "Estonia’s recovery defies economists and academics", columnist John Dizard argued that "the “internal devaluation” policy, which means cuts in nominal costs such as wages and rents, was very hard on the population, but appears to have worked ahead of even the Estonian government’s schedule". But as I said to