Tuesday, September 22, 2009

Valdis, Valdis, what the fuck?????

If high EU and IMF officials could write what they really thought about Latvia's political bardak*, the headline is how they might address Latvian Prime Minister Valdis Dombrovskis in a confidential e-mail. To be sure, neither the former MEP nor his party wewre involved in it, but basically, one of the coalition parties, the People's Party (Tautas Partija/TP) has opted out of the letter it signed with international lenders.
That would be bad enough -- the TP prevented a bill proposing a tax on housing from being moved into the legislative process in the national parliament, the Saeima. So instead of voting on some kind of tax on residential properties, there will be no vote or parliamentary discussion, essentially reneging on the promises made to international lenders to implement such a tax.
But there is more. The TP has expelled, without any hearing, the Saeima deputy and party member Dzintars Ābiķis, who voted against blocking the bill from the legislative process. He didn't vote for raising taxes, he didn't vote in favor of the residential housing tax, he simple voted for letting the legislature discuss, amend and put to a vote a bill drafted in an effort to comply with international lenders.
The TP has also suggested that it wants to talk to the IMF and other lenders in what very much sounds like an attempt to renegotiate a done deal, putting forth their own terms (whatever they may be). To be sure, the international lenders' terms are harsh, they allow absolutely no spending of the loaned funds for economic stimulation (that is left to EU structural funds, which Latvia has CharlieFoxtrotted** so far). And oh yes, the TP has a bit more current voter support (around 1.7 %) than Stalin would get. Just the guys to talk on behalf of the Latvian people.
And yet that is not the end of the story. The government has drafted a budget that simply doesn't cut spending by the amount agreed with international lenders (by around LVL 271 million instead of the required LVL 500 million).
So what is happening? EU and IMF honchos are soon descending on Riga to ask the headline question in person. The opinion, already widespread earlier -- that the Latvian government is a bunch of untrustworthy, capricious fuckwits-- is crystallizing even more. And that means, we may not get the next tranche of international loans no matter what anyone does. I mean, when the signature of a major coalition party amounts to goatfuck a few months later...
Where do we go then? -- probably devalue the lat, print cash (could have been done earlier to spare everyone the agony of salary cuts and firings) and buy time through the winter, possibly with Dombrovskis being pushed out of office or resigning (getting off the tracks before the train hits). After that, with the TP zoonoids in charge, you can write your own black comedy...

* Russian-derived word for total chaos, literally, a honky-tonk whorehouse in chaos
** clusterfucked

8 comments:

eurochild said...

Hahaha! I just can´t wait to see where this is going. What the fuck!!! It is almost amusing in a morbid kind of way when you see that they take every possible wrong turn there is.

rusantro said...

I have already tired of the stupidity of the government. It is unclear how long it can endure. Frankly, I would resets management and began recruiting new employees. Because, on the other can not get or get slow.

Jānis said...

TP saw what happened in Russia in august 1998 when russian goverment rejected IMF demands for restructuring spendings and the same wants TP here in Latvia. I would like to see just died several politicians

Glen Grant said...

Good Blog. Read my Latvia Blog on www.ggconsulting.lv

Anonymous said...

Read Jānis comment and think why do they made theater show "Vadonis" ("The leader") which is now being played in the largest Latvian theater...

Anonymous said...

Janis, thanks for the reminder of 1998...NOOOOOOT! Man, what a nightmare that was. I lost savings for the second time in 7 years. I actually thought my country will go the way of the Soviet Union. Thank Heavens that bastard Yeltsin was sober long enough to realize it's time for him to ride into sunset. I just regret Putin gave him immunity from prosecution. If it were up to me I would've hung Yeltsin by the balls for what he's done to people and country. After the 1998 my family were totally destitute. I would not wish anything like that to an enemy. I doubt EU will allow Latvia to declare default because too many creditors, Swedish in particular, will get seriously hurt. At least, Russia had natural resourses to pull it out of the deep hole. Latvia as far as I know has almost none. Where are the money going to come from to repay the debts? I keep asking this question and keep looking for an answer but yet unable to see one. I don't think Russian "occupants" will take a debt away like they did in 91.

Adam Mullett said...

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Cheers

Bleveland said...

Swedish finance minister Anders Borg also starts to worry : (sorry, in Swedish - use google translate)

A somewhat late wake-up, but I do understand his worries. Sweden is one of the largest contributers when it comes to emergency loans for Latvia.
The whole thing has been obvious from the early beginning. After the debacle with "nothing special" Slakteris, the oligarchs realized that a somewhat more clever individual was need to fool IMF and EU-officials.