Grey Nation Down

I'm playing on the title of a 1970s disaster film, Gray Lady Down, about a nuclear submarine that collides with a freighter and sinks to beyond where it can be rescued. But what I really mean is that Latvia is more and more a gray nation -- in terms of aging, the weather, the unique gray light of November -- and it is down in several senses, depressed economically, depressed psychologically, and headed for stagnation -- a state of, for the foreseeable future, permanent down.

I don't mean to disparage the gray of age, but this is an aging nation and probably was even before the economic crisis. Now the gray scale is being cranked up by the emigration of the young, among other things, because they see the growing hopelessness of the old and gray. Those are the ones with no option, the ones whose entitlements can be cut with relative impunity and probably will be cut. A family in Ireland or Great Britain can at least financially support its gray generation which will get little or nothing for years of social taxes paid. Indeed, Latvia if not now, then soon will be a country with a high negative return on taxation. Instead of getting some kind of services for taxes (the schools work, the police come, there is health care), Latvians will be paying more for less and subsidizing out of pocket what their higher taxes no longer support.

One need only to look at Latvia's foreign trade statistics (despite fanfares about approaching balanced trade, the current account and all that) to see that this is a country in economic depression. Almost all imports (a sign of the health of the domestic economy) are down by huge double digit figures. The same for exports . Imports of manufactured goods in September were down by 53.3 % from the year earlier, imports of clothing (textile and textile articles) down by 37 %.

Exports rose for such seasonal and world-market affected categories as foodstuffs (mainly grain), but even here, the fish and pharmaceutical exports that had been rising were off again. The country, according to some statistics, is maintaining a good trade surplus in manufactured goods, but at a depressed level and only because imports in these categories have collapsed. As indicators of domestic purchasing power, the trade statistics show that, like a wounded submarine, Latvia is plummeting to the bottom and will probably stay there for the next decade. The 2011 budget, which has to pass the Saeima probably weeks after next year's general election, MUST cut at least another LVL 500 million if there are no surprises. This year, according to how one counts, LVL 500 million were cut, but the international lenders objected, and another 50 plus millions had to go. So with tax revenues mechanically depressed (down) because of salary cuts. So for all we know, the new, very likely populist and inexperienced new government that will be clunkered together in the fall of 2010 will face demands to cut, perhaps, LVL 600 million. Who knows?

All of this is quite justifiable grounds for down as in depression. OK, there is probably nothing to gain from wallowing in this emotion, neither is there reason for euphoria because of occasional statistical blips. Emigration -- both foreign (as in leaving the country) or internal (refusing to cooperate with a failed system) is certainly not an irrational step and it is at least some kind of action, rather than passive acceptance of the consequences of an prolonged economic stagnation exacerbated by gross misgovernance.