Ambrose Evans-Pritchard: Mad Latvia defies its own people to join the euro
EU finance ministers have just given the go-ahead for Latvia to join the euro in January 2014.Lietuva.
No matter that the latest SKDS poll shows that only 22pc of Latvians support this foolish step, and 53pc are opposed.
This is a very odd situation. The elites are pushing ahead with a decision of profound implications, knowing that the nation is not behind them. No country has ever done this before.
The concerns of the Latvian people are entirely understandable. Neighbouring Estonia found itself having to bail out Club Med states with a per capita income two and a half times as high after it joined EMU. Latvia may find itself embroiled in an even bigger debacle if the contractionary fiscal and monetary policies of the eurozone push Slovenia, Portugal, Spain, and Italy over a cliff, and push Greece and Cyprus into yet deeper crisis.Apsimetame, kad krizė nesisteminė, nuostolių galimybę neigiame. Priešingu atveju tektų pripažinti savas klaidas.
It is worth reading the European Commission's report earlier this year on poverty and social exclusion.(Tekste grafikas visoms EU-27 valstybėms. Lietuvos skurdo rodikliai penkti nuo galo.)
Latvia stands out – with Bulgaria – as the country that has seen worst increase in "severe material deprivation", with the rate surging from 19pc to 31pc since 2008. (Bulgaria also has a fixed exchange rate, by the way).
While Latvia's unemployment rate has dropped to 11.7pc from a peak of 20.5pc, this is not the full story. Another 7pc have dropped off the rolls (one of the highest rates of discouraged workers in the EU). Roughly 10pc of the population has left the country.Analogiška situacija. Ironiška, bet pas mus fašizmu vadinamas tautiškumas. Dešimtadalio gyventojų emigracija daro įspūdį nebent kokiems nevykėliams. Išvažiavo ir išvažiavo, ar jau nėra apie ką daugiau kalbėti?
The blue collar working classes have borne the brunt of the deflation strategy, while the affluent middle class with foreign currency mortgages have been protected. Policy has been shaped for the class interest of the elites (sorry to sound like a Marxist, but Marx was good at spotting this kind of abuse). Many who lost their jobs in the crisis – often Russian ethnics – have not found work, and may never do so again in Latvia if they are over 50.
This is how internal devaluations work. They break the back of labour resistance to pay cuts by driving the jobless rate to excruciating levels. The policy is a moral disgrace. Mussolini pulled it off in 1927 with his Blackshirts to secure the Lira Forte, but is that supposed to be a pedigree?
The country's recovery does not vindicate EMU austerity doctrine in any way at all. It merely shows that states with low debt and high exports can survive such a policy.
A low bar, surely?
As for joining the euro, you must be mad.
