Don't trust a moneylender

  • 2009-01-14
One of  the more enjoyable things about a festive lunch with friends is that after a few glasses of favored liquid, people who are usually reticent will voice opinions and concerns about things affecting their lives - be it family, job or economic issues, with alacrity.
It's a pity recent contributor Renolds Crumins was not sitting at the same table, his forthrightness would have been refreshing, because inevitably the conversation turned to the global financial crisis in general and Latvia's problems in particular.

Questions such as: why do they need to borrow so much? How will the money be distributed? How does the Saeima intend to repay it - with exports static and tax intake declining?  Will the distribution of the money be tightly supervised, and by whom? How much will be misappropriated? Will the public be treated to some transparency during the spending spree - or will it be a closely guarded secret in the interest of national security....?

It was interesting to note that some people felt much of the money would find its way into the coffers of foreign banks such as Swedbank, who, with their subsidiaries, are guilty of reckless lending and have large exposure in Latvia. If that is the case then it would seem the beleaguered residents of Latvia will, through higher taxation, be compensating the very people who started the snowball rolling in the first place.
The IMF seems content to throw huge sums of money at countries who have no experience in fiscal management. In Britain, the present PM, Gordon Brown, was chancellor of the exchequer (finance minister) for eight years, and yet today that country is the most indebted in Europe. So what chance has our esteemed Mr Slakteris got?

One thing's for sure - people are becoming increasingly angry and frustrated with their Government, and if these loans are spent without wisdom or thought then Latvia will indeed become just another EU lame duck. And if the IMF continues to hand out money like confetti without supervision then they must also bear some responsibility if it is squandered. But then, they are just another money lender, with their own agenda. Furthermore, it's worth remembering that the IMF, like the World Bank, depends for its funds on contributions from the taxpayers of the richer nations of the world.

In a crisis reputations can be made or destroyed. Step forward Mr Zatlers. Time to earn your spurs. Your country is at war: with inflation, unemployment, national debt, contrary markets, uncertainty and incompetent ministers. Get amongst them, show some leadership, and let your legacy be that of a man who saved a country from itself.

Harry Gaffney
Riga, Latvia
 

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