Latvia: Left bloc wins huge vote amid austerity

[Pure ja]

It would be foolish to assume that Estonia would pay back others loans.
At the moment Estonia is mostly only giving loan guarantees. Even with those loan guarantees, the total balance of inflowing / outflowing money between Estonia and the EU is about even. But additional loan guarantees or actual downpayments that would dip the balance would also quickly bring about a negative sentiment and a will to leave the EU. And to not fulfill the given loan guarantees.

What? Did you honestly believe that if other EU states deep in debt would not pay their loans, that Estonia would?
Don't be that naive. It is just a facade, Estonia is just part of the facade. There is no will to actually pay.

[Citizen]

If Parex was the biggest bank in Latvia, then obviously the local Scandinavian banks (which used to be the brances of Estonian banks before they became scandinavian in Latvia) did NOT have the largest impact in creating the bubble.

And the Scandinavian banks did not suffer considerably. One could say that what they reaped in the Baltics as untaxed profits, they invested in Lehman Brothers. So IF those reserves had still been the reserves of Estonian Hansabank, for example, then perhaps nothing bad would have happened. There was overextending going on during the bubble, with branches in the Ukraine and in St. Petersburg, but overall the reserves produced by local Baltic branches were large enough. The Baltics had been insanely profitable for the Swedish banks before the 2008 crisis, much larger profits than what was lost during the 2008 crisis. And it is again already.

It was not biggest but one of the biggest, there is a difference, most people had home loan in scandinavian banks so they fueled the crisis most. Parex made the same mistakes, I recall they had branches in Ukraine and some EU country I believe.

On the other hand, what the Swedish and Finnish and Danish banks (and their pensioners as shareholders) take from the Baltics as untaxed profits, they pay it back via EU subsidies. For now.

Keep telling that to yourself. We have basically become like a colony to them and not in a good way. They dominate sales (Rimi) banking, all the profits flow away from Baltics to Scandinavia. We give them back out timber. Kinda like African states that only export oil and diamonds and are kept that why by western business domination there.

If that is the only mistake you see, then, well, look again.

I can look all I want.

You are deliberately mixing up global crisis with local crisis.
And even the global crisis was only triggered by the US, not entirely caused by it. I am not blaming FSB for creating the global crisis.

I am blaming the mesh of Russian oligarchs / mafia / FSB / Kremlin money, which infiltrated the Latvian banks (including Parex) and caused a considerable part of the local bubble (and some of it was pulled out right before the LOCAL crash). Mind you, the local bubble was later and larger in Latvia than in Estonia. Estonia was cooling down already in 2007. That was again partly the result of the different share of Russian money in action. Estonia continues to be ahead of Latvia in the economic cycle. Estonia's cycle is more aligned with those of Sweden, Finland and Germany, while Latvia's economic cycle is more aligned with that of Russia. I wonder why?

So when the Russians decided to deposit money in Latvia they did so not to make some profit from interest rate but because to fuel property bubble which was no different than the one in Spain or US and this was their secret plan to break Latvia. Did they also saw the crisis coming when nobody did, if that was so why Russia was quit badly kit as well? Also there is no business cycle in Latvia, we had elections in 2006 which the gov. then in power had to win so they boosted deficit spending which fueled the already high inflation of 10% and housing bubble. We are not aligned with Russia in any way more than you.

I actually divided my reserves into 3 banks and soon invested it into a real estate.

But the point was that some of the Russian origin money was pulled out either right before the restrictions by using inside information, or AGAINST the already imposed restrictions. At least that is what I remember to have read in the newspapers of that time. Both would be illegal.

There was a deliberetly left time when our cronies could take their money out and that was used by everyone because it was legal while morally unacceptable. It was not some Russian plot, it was done by a pretty much same gov. we have now.

For several reasons.
Maybe I have read the wrong signals, but to me it seems that you are:
1. supporting the russian-latvian mixed government of Riga.
2. downplaying the influence of Russian money in Latvia
3. being generally anti-EU and anti-Latvian government
4. For some obscure reason stressing you being the Citizen (of Latvia, I assume). Native latvians would not need to stress that.
5. supporting the so-called "centrist" political side. FYI, "centrist" in politics is just a cunning labeling to prevent being called a radical extremist. There are no left and right, really. The parties reside all over the place in a multidimensional issue space. And the "far right" and the "far left" are often closer together than to the centre. So, in a two dimensional space one could envision a circle, with no wings - but in that case that brings the next question where is the centre of a circle? Perhaps the "centrists" are really the wingmen?

1. So its a bad thing that Russians and Latvians can work together for the good of the city?
2. Im downplaying the role of Russian money in Latvian economic crisis, actually there is no role at all.
3. EU is generally anti-Latvian and so is the current gov.
4. I like movie Citizen Kane, do the math
5. I support policies from both right and left.

And that is why I am labeling "centrists" as "centre radicals" - because that is what they are trying to hide.

Im not hiding anything, Im not supporting radical ideas like genocide or anything.

There are "centrists" in Estonia. Very few native estonians support them. About 80% of Estonian russians support them. So I guess you get the hint. You are either among the 80% or among the "very few".

USA democrats are center right party so are most Scandinavian parties. Being in center means something else in the rest of the world. We are not all in Estonia.

But it also further proves MY point that local elections results have very little to do with joining the Eurozone.

No it has everything to do with people telling what they think about the current course to eurozone even if it means little in the end.

That is just for 2010. What about 2008, 2009, 2011, 2012?
Both budgets being separate does not negate the fact that they are summed up by EU and international financial institutions to get the big picture. That is what the EU 3% budget deficit cap is all about.

mostly 2% debt same as central. gov. budget which is a seperate entity.

I agree that the question of whether to be in or out should always be kept alive.

Current Latvian gov. disagrees, they think that citizens are too stupid to decide something so important as currency which affects countries sovereignty. Imagine if that was an argument during "glasnots" when we voted for our independence...

Japan is largely in debt to its own citizens. Not so with Greece or Portugal.
And even Japan cannot really sustain that, not considering the declining population and even less after Fukushima. Why do you think the Japanese government keeps lying to its citizens about the real ramifications of the Fukushima accident? Because admitting the truth would immediately collapse the Japanese economy as we know it.

As long as they are paying their debt it matters little to who it holds it and Japan hasn't defolted or asked for rescue.

I haven't heard Greece paying back any loans, let alone interests. Therefore Greece is not really in austerity mode yet. Greece has to borrow more money precisely because it is not in austerity mode yet - it goes around and around for 6 years now. It has everything to do with being a failed state.

No it pays them all the time, it cant borrow more becauses its credit ratings are worse than some African states, so it funds those repayments with loans from troika. Some of Greece's loans have been reduced but they still have to pay them, that was called haircut.

Estonia has not introduced any government bonds yet.
But Japan has, a lot.

Maybe you should have them and with a big better rates than we have. That would make Eesti less dependent on international lenders.

Again, a large part of the debt (esp in Japan) is to their own citizens.
And the Jupiter (USA) can afford what the ox (Greece / Latvia / Estonia) cannot.
USA can bend the very space-time fabric of the financial universe, to the extent, so far, but not for much longer.
And yes, many consider Japan and USA as already failed states - the so-called living dead.

It doesn't matter who holds the debt, lot of USA debt is from China I believe. As long as their able to pay it its fine to them.

Even that would not make Greeks paying more taxes than Latvians.

Ok, so I pulled some statistics of shadow economy from quick searches.
Latvia 21.1% of GDP
Greece 24% of GDP
Estonia 19.2% of GDP
Lithuania 18.2% of GDP

Not much of a difference if you ask me. You speak of Greece as if its some Afghanistan like place while in fact, even with crisis and recession, it still has 3x the salaries we have in Baltics.
http://financenet.tvnet.lv/zinas/464...usies_lidz_211
http://www.ekathimerini.com/4dcgi/_w...06/2013_502674

France is definitely part of the problem.
Germany does not want to be a problem, but others insist.

Germany is the main driver of idiotic austerity in Europe...

EU border crossings and a common job market are too laxed, EU convergence process is too slow and the EU common market is too restricted.

And?

[Citizen]

It would be foolish to assume that Estonia would pay back others loans.
At the moment Estonia is mostly only giving loan guarantees. Even with those loan guarantees, the total balance of inflowing / outflowing money between Estonia and the EU is about even. But additional loan guarantees or actual downpayments that would dip the balance would also quickly bring about a negative sentiment and a will to leave the EU. And to not fulfill the given loan guarantees.

What? Did you honestly believe that if other EU states deep in debt would not pay their loans, that Estonia would?
Don't be that naive. It is just a facade, Estonia is just part of the facade. There is no will to actually pay.

Ever heard about Greek haircut deals? Thats not paying the debt which caused crisis in Cyprus which loaned money to Greece. If Greece is truely a failed state then it will never pay its debts back, that includes money from ESM as well.

[Pure ja]

Ever heard about Greek haircut deals? Thats not paying the debt which caused crisis in Cyprus which loaned money to Greece.

Now you are contradicting yourself. Does or did Greece actually pay its debt or not?

My response was essentially that Estonia will give loan guarantees to other EU members for as long as Estonia can do it and for as long as EU can sustain its debt economy. With a general collapse, Estonia will not pay, just as all the rest. So those loan guarantees from Estonia are just a facade - there is no will to actually pay.

[Citizen]

Now you are contradicting yourself. Does or did Greece actually pay its debt or not?

My response was essentially that Estonia will give loan guarantees to other EU members for as long as Estonia can do it and for as long as EU can sustain its debt economy. With a general collapse, Estonia will not pay, just as all the rest. So those loan guarantees from Estonia are just a facade - there is no will to actually pay.

What? You think you will not pay into ESM if asked? You have already payed in ESM, Latvia will pay 200 million euros in next few years and guarantee 1.4 billion if needed. Similar numbers probably for you as well, maybe a bit smaller as you are smaller country. And if Germany will decide Greece is too fucked to pay it all back they already got lent by EU they will not pay it, that includes money from you as well because you entered eurozone in 2009 when there was no ESM.

Greece pays its loans with money from EU in doing so making new debt.

[Pure ja]

It was not biggest but one of the biggest, there is a difference, most people had home loan in scandinavian banks so they fueled the crisis most. Parex made the same mistakes, I recall they had branches in Ukraine and some EU country I believe.

And yet it was the Parex bank that went belly up, not the other banks.

Keep telling that to yourself. We have basically become like a colony to them and not in a good way. They dominate sales (Rimi) banking, all the profits flow away from Baltics to Scandinavia. We give them back out timber. Kinda like African states that only export oil and diamonds and are kept that why by western business domination there.

The profits flow away largely because of taxing differences between the Baltic states. Foreign companies can use those differences very easily.

But one can also argue that these differences or "holes" are there intentionally to lure in foreign "investors", with the aim to better integrate the Baltics with the Nordics and via that to raise interest to the Nordic Battle Group and to give incentives to Sweden and Finland to join NATO to better protect theor Baltic interests. Once integration is strong enough, one can pluck the tax "holes".

So when the Russians decided to deposit money in Latvia they did so not to make some profit from interest rate but because to fuel property bubble which was no different than the one in Spain or US and this was their secret plan to break Latvia.

They saw it as an opportunity, yes. But not just that opportunity.
It was also a good investment. Did you think that all the KGB money that bought out many companies in the 1990s was for nothing?

Did they also saw the crisis coming when nobody did, if that was so why Russia was quit badly kit as well?

In Russia, people are for the state, the state is not for the people.
So Kremlin routinely sacrifices the interests of its own people in order to achieve imperial expansions (hard or soft) in abroad.

Also, it is much easier to pull out from a small and open economy like Latvia, than from a large economy such as Russia.

Also there is no business cycle in Latvia, we had elections in 2006 which the gov. then in power had to win so they boosted deficit spending which fueled the already high inflation of 10% and housing bubble. We are not aligned with Russia in any way more than you.

Of course there is an economic cycle in Latvia. It is trailing behind that of Estonia, which is because the economic cycle of Russia is trailing that of Germany and the Nordics and the EU in general, because half of Russia's exports come from exporting fossil fuels (and half of that is to Europe).

There was a deliberetly left time when our cronies could take their money out and that was used by everyone because it was legal while morally unacceptable. It was not some Russian plot, it was done by a pretty much same gov. we have now.

And yet it was the Latvian banks going belly up, not the Estonian ones.
And the ones with evidently more Russian money.
And in a country with more lax banking regulations due to more political pressure from financial stakeholders, of whom more were of Russian origin.

1. So its a bad thing that Russians and Latvians can work together for the good of the city?

Yes, if that means going against the Latvian government AND against the majority opinion of native latvians.
Riga is just a bigger copy of Tallinn.

2. Im downplaying the role of Russian money in Latvian economic crisis, actually there is no role at all.

There you go again.

3. EU is generally anti-Latvian and so is the current gov.

Are you actually claiming that the majority of native latvians DIDN'T want to join the EU?
Joining EU could turn out to have been the wrong choice, but I am pretty sure that the majority of native latvians were initially behind joining EU (even if there was no referendum on that).

4. I like movie Citizen Kane, do the math

You are still either part of the 80% or part of the "very few" by me

5. I support policies from both right and left.

That is also what centre radicals usually claim.
My suspitions will stand for now, but those are just suspicions based on prejudice (on prior probabilities and Bayesian stats ).

Im not hiding anything, Im not supporting radical ideas like genocide or anything.

You effectively could be, if you are against the majority of native latvians.

USA democrats are center right party so are most Scandinavian parties. Being in center means something else in the rest of the world. We are not all in Estonia.

There is no center in the US politics, center is just an artificial construct to keep the two-party system.
Estonian parties have managed to develop a 4-party system, based on the 2-party system.

You can't possibly convince me that a multidimensional issue space can be reduced into a stable 2D representation and that parties are supposedly stable in that 2D view.

I am not sure, but Taagepera has possibly written about that.

No it has everything to do with people telling what they think about the current course to eurozone even if it means little in the end.

It means everything to you. It means nothing to them, at least for now.

As long as they are paying their debt it matters little to who it holds it and Japan hasn't defolted or asked for rescue.

They are not paying back. They are taking more debt from their citizens to restructure the old loans.

No it pays them all the time, it cant borrow more becauses its credit ratings are worse than some African states, so it funds those repayments with loans from troika. Some of Greece's loans have been reduced but they still have to pay them, that was called haircut.

I haven't heard of any payments, just restructuring.
And most of the loans to be restructured are from the EU countries that help to restructure it.
Essentially Greece gets zero-interest loans for restructuring from the EU.

Maybe you should have them and with a big better rates than we have. That would make Eesti less dependent on international lenders.

For the Estonian state that would be useful only if the interest rate was less than what can be got from abroad. I don't know the rates.

It doesn't matter who holds the debt, lot of USA debt is from China I believe. As long as their able to pay it its fine to them.

That is the problem - they are not paying, they are loaning more, partly to restructure the old loans. A pyramid scheme.

Ok, so I pulled some statistics of shadow economy from quick searches.
Latvia 21.1% of GDP
Greece 24% of GDP
Estonia 19.2% of GDP
Lithuania 18.2% of GDP

Not much of a difference if you ask me.

I am 100% sure that those numbers do not reflect the reality.
Because Greece has been caught violating the Benford-Zipf law on numbers in financial reports to EU, so there is false reporting and cooking up numbers. Estonia and Latvia have not been caught.

You speak of Greece as if its some Afghanistan like place while in fact, even with crisis and recession, it still has 3x the salaries we have in Baltics.
http://financenet.tvnet.lv/zinas/464...usies_lidz_211
http://www.ekathimerini.com/4dcgi/_w...06/2013_502674

A bubble based on cooking numbers and unsustainable loan practices.

Germany is the main driver of idiotic austerity in Europe...

Germany has over 80% of cumulative budget deficit - that is not a sign of austerity by any stretch of imagination.

[Pure ja]

What? You think you will not pay into ESM if asked? You have already payed in ESM, Latvia will pay 200 million euros in next few years and guarantee 1.4 billion if needed.

Aha! But that is not real money - it is just a new loan money given to Brussels. Estonia has payed no money, but Estonian foreign debt has increased. Can you see through the facade? I repeat, there is no will to actually pay.

Similar numbers probably for you as well, maybe a bit smaller as you are smaller country. And if Germany will decide Greece is too fucked to pay it all back they already got lent by EU they will not pay it, that includes money from you as well because you entered eurozone in 2009 when there was no ESM.

Greece pays its loans with money from EU in doing so making new debt.

If Greece will not pay their dept, then Estonia will not pay their debt.

[Citizen]

And yet it was the Parex bank that went belly up, not the other banks.

As I said they didn't had a parent Bank to bail them out.

The profits flow away largely because of taxing differences between the Baltic states. Foreign companies can use those differences very easily.

But one can also argue that these differences or "holes" are there intentionally to lure in foreign "investors", with the aim to better integrate the Baltics with the Nordics and via that to raise interest to the Nordic Battle Group and to give incentives to Sweden and Finland to join NATO to better protect theor Baltic interests. Once integration is strong enough, one can pluck the tax "holes".

Can you explain what you mean by those taxes and holes? Which taxes are those and how does this mechanism works exactly. Also, assuming this is correct which it isn't, what is the benefit of being some Scandinavian colony if that means having your money pumped out and leaving you poor? Thats not really independence, sounds worse that soviet days. The real reason why we have such a Scandinavian domination is that we lack capital and they don't.

They saw it as an opportunity, yes. But not just that opportunity.
It was also a good investment. Did you think that all the KGB money that bought out many companies in the 1990s was for nothing?

I dont fallow, what do you mean by 1990's companies?

In Russia, people are for the state, the state is not for the people.
So Kremlin routinely sacrifices the interests of its own people in order to achieve imperial expansions (hard or soft) in abroad.

Also, it is much easier to pull out from a small and open economy like Latvia, than from a large economy such as Russia.

You do understand that under this "Russian money" there are thousands of depositors and businesses, its not one guy, its thousands of individuals each with its own head on shoulders and own property which this person does not want to loose. Are you suggesting that FSB/GRU individually contacted all those people and forced them to take out money? That is tinfoil hat 101.

Of course there is an economic cycle in Latvia. It is trailing behind that of Estonia, which is because the economic cycle of Russia is trailing that of Germany and the Nordics and the EU in general, because half of Russia's exports come from exporting fossil fuels (and half of that is to Europe).

How are you aligned with German business cycle when Germany has almost 0 growth now but you have highest growth in EU like Latvia? Seems more aligned with us. Gimme more on this Latvia aligned with Russia info, maybe some credible source, sounds really silly so far.

And yet it was the Latvian banks going belly up, not the Estonian ones.
And the ones with evidently more Russian money.
And in a country with more lax banking regulations due to more political pressure from financial stakeholders, of whom more were of Russian origin.

A lot of Russian money is in Scandinavian branches of banks in Latvia as well, we still have 50% of deposits in banks from none residents, mainly CIS countries. Your impression is just wrong.

Yes, if that means going against the Latvian government AND against the majority opinion of native latvians.
Riga is just a bigger copy of Tallinn.

So the goal in Riga isn't the benefit of city and its citizens the main goal is whatt Latvian gov. thinks? Gov. of Latvia has approval of 10% of population atm. Majority of Latvians are against Latvian gov.

Are you actually claiming that the majority of native latvians DIDN'T want to join the EU?
Joining EU could turn out to have been the wrong choice, but I am pretty sure that the majority of native latvians were initially behind joining EU (even if there was no referendum on that).

The support was barely over 50% and that was done with aggressive campaign in media for months. Now majority views it as a big mistake.

You are still either part of the 80% or part of the "very few" by me

We are not as divided as Eesti, Latvians are not Estonians, have you even been in Latvia?

You effectively could be, if you are against the majority of native latvians.

Wait what?

There is no center in the US politics, center is just an artificial construct to keep the two-party system.
Estonian parties have managed to develop a 4-party system, based on the 2-party system.

You can't possibly convince me that a multidimensional issue space can be reduced into a stable 2D representation and that parties are supposedly stable in that 2D view.

Left means socialist policies, more subsidies, more gov. intervention, more taxes for the rich. Right means more free market less benefits to boost emplyment and productivity. Center means not leaning to any of those extremes and taking whats good from both sides.

They are not paying back. They are taking more debt from their citizens to restructure the old loans.

Where do you got this info from, because thats just wrong.

I haven't heard of any payments, just restructuring.
And most of the loans to be restructured are from the EU countries that help to restructure it.
Essentially Greece gets zero-interest loans for restructuring from the EU.

Restructuring means changing the loan deal and reducing the debt payed back, basically forcing losses on the lender. Gov. takes all kinds of debt every year they run a budget with deficit. Some of them are 10 year bonds some less, like 1 year bonds. The total gov. debt as % of GDP you see is a cummulative debt of all those debts taken during many years, they have different maturity. But I can assure you Greece has paid several of them during crisis of the last 6 years because most of them are 10 year bonds and Greece has been borrowing for many decades. Because its economy is falling and it cant borrow in markets EU and IMF lends Greece money to pay those debts and additional budget expenses in doing so the total debt actually increases.

For the Estonian state that would be useful only if the interest rate was less than what can be got from abroad. I don't know the rates.

You mean higher because if you invest money as deposit or gov. bond you want a higher yield from it not lower, at least if youre not insane.

That is the problem - they are not paying, they are loaning more, partly to restructure the old loans. A pyramid scheme.

Yes, they take money from EU and IMF to pay other loans to big banks in EU for example Germany. If EU stops the money flow those banks will go bust and Germany and some other old Europe countries will be hit.

I am 100% sure that those numbers do not reflect the reality.
Because Greece has been caught violating the Benford-Zipf law on numbers in financial reports to EU, so there is false reporting and cooking up numbers. Estonia and Latvia have not been caught.

Yeah, its all cooked numbers, you think that 20% shadow economy is not an indication of failed state?

Germany has over 80% of cumulative budget deficit - that is not a sign of austerity by any stretch of imagination.

Yeah they support it elswhere, while Merkel is promising to introduce minimal wage in Germany after elections now...

[Citizen]

Aha! But that is not real money - it is just a new loan money given to Brussels. Estonia has payed no money, but Estonian foreign debt has increased. Can you see through the facade? I repeat, there is no will to actually pay.

No, if asked you will pay it, same as you cant exceed 3% budget deficit, you signed the treaty so you are gonna do it. Also you are already paying into ESM there is the part you have to pay in every year and the part your gov. guarantees in case the current paid in money is not enough, for Latvia it will be 1.4 billion, but in next few years we will phisically have to pay in 200 million thats not a guarantee, thats a money we will put in.

If Greece will not pay their dept, then Estonia will not pay their debt.

Remember in 2011 your parliament voted to give your money in European Financial Stability Facility (EFSF), Slovakia's government fell because of this vote. That was your money that already went to Greece and there is a chance your not gonna get it back.

[Pure ja]

No, if asked you will pay it, same as you cant exceed 3% budget deficit, you signed the treaty so you are gonna do it. Also you are already paying into ESM there is the part you have to pay in every year and the part your gov. guarantees in case the current paid in money is not enough, for Latvia it will be 1.4 billion, but in next few years we will phisically have to pay in 200 million thats not a guarantee, thats a money we will put in.

Remember in 2011 your parliament voted to give your money in European Financial Stability Facility (EFSF), Slovakia's government fell because of this vote. That was your money that already went to Greece and there is a chance your not gonna get it back.

Estonia has paid nothing from the state budget (from the tax money, so to speak), so far.
The amount that was "paid" was at first taken as a new loan and then given to Brussels.

The only real money that Estonia has "paid" so far to the EU is the currency reserves used to cover the 110% of M0 money of Estonian kroons. And I am not even quite sure if that was paid or if it still sits in the chambers of the Bank of Estonia. So what Estonia has actually paid, was 100% related to Estonia joining the Eurozone, and 0% related to any "payments" to any money lending fund, be it ESFS or ESM or whatever.

Let me try to make the point again in the most simple terms.

Estonia is willing to borrow money for Greece, on behalf of Greece - that will possibly raise Estonian foreign debt from 10% up to 100% in the future.

But Estonia is NOT willing to actually pay real money for Greece, nor to actually pay on behalf of Greece - such abovementioned new loans will only be paid by Greece, if at all.

The end result is that Estonia is only losing its money loaning ability and financial reputation, not any actual money. And it will make more sure that when Greece fails, the rest of the EU (and Estonia) will fail as well.