A huge financial bubble has been growing in Latvia since 2004, creating serious imbalances in the economy. The bubble exploded last year, which should not have surprised anyone, since one of the main features of a market economy is that excessive development leads to corrections. The imbalances could be corrected in one of two ways, both of them creating equally tough times for the population: either through a devaluation of the currency or through an internal devaluation, i.e. through a reduction of local costs. In Sweden, the standard way of resolving crisis situations has been a deva...
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