Latvia’s Economic Collapse Pulls Down Sweden

riga_latviaIn a similar economic meltdown like Iceland, Latvia is pulling down all systems attached to it or surrounding it.  Unlike Iceland, which is an island, Latvia is part of the Baltic States and was once a window dressing for how much nicer the EU/US economic system was compared to Russia.  Now, it is going rapidly bankrupt in less than a year and a half of bad economic news and it is also pulling down the Bank of Sweden,the Riksbank.  This is nearly identical to how the Great Depression caused creditor banks to collapse.

By the way, Latvia is a very lovely place.  I never got to travel there due to the Cold War heating up tremendously when I was trying to get to Eastern Europe.  But leafing through photos, I can see it is very panoramic and has lots of beautiful lighting effects just like St. Petersburg, for example.

Panoramio – Photo of Swans in Latvia

Picture 4

Failed Auction Rattles Sweden –

The failure of a bond auction in Latvia is making bankers in Sweden quake in their boots.

Shares in Swedbank, the biggest lender to Latvia, dived 15.9%, to 38 Swedish Kronor ($4.92) after the Latvian government failed to sell any of its government debt securities on Wednesday. Skandinaviska Enskilda Banken–better known as SEB–fell 11.0%, to 30 Swedish kronor ($3.88). The Swedish kronor meanwhile fell to 10.91 against the euro, from 10.71.

The US should shake in its own boots, too.  The failure in the Latvian auction was so scary, Japan had to reassure the US that they will still buy US bonds.  China didn’t say anything.

The failed auction has raised fears that Latvia may have to devalue its currency. That could have a major impact on Scandinavian lenders who had flooded the Latvian market with euro-dominated loans that let borrowers take advantage of better interest rates. A devaluation of the kroon essentially makes it harder for them to repay their debts, sending the number of bad loans higher….

Classic credit squeeze.  All across Eastern Europe, this same game is unfolding.  It is weakening all the biggest banks in the EU as well as places like Sweden.  This is what happens when too much lending at too low interest rates creates too much principal being created and no one being able to pay off even the interest, much less, any principal.

The Swedish economy is expected to contract 5% this year, and grow by 0.5% in 2010, according to BNP Paribas estimates. The country has been hit by its dependence on exports (which make up half its GDP) and a freeze in lending by the troubled banks, according to BNP Paribas Scandinavian economist Gizen Kara.

The major export countries are all in the same boat: they lent money to all and sundry so long as these sundries turned around and bought lots of Swedish manufactured goods.  This feedback system works really well until the nation running the trade deficit with the nation lending the money, which comes from the profit of trade and thus, is the capital supporting the loans, when the lending is too great and the principal is too large, it collapses.

Worse, as the principal swells in size, the manufacturing export nation will DROP interest rates to the borrowing country that is accumulating too much principal charges, in order to keep the trade imbalance going.  So, instead of fixing a trade imbalance, it gets much worse and the trade deficit swells even as credit gets cheaper and cheaper.  The champion ‘cheap interest lender’ on earth, of course, was Japan which grew to be the world’s #1 or #2 trade profit nation, competing with Germany for that top position until China muscled its way in.

There is this dynamic at work here which I would suggest the Bank for International Settlements, the IMF and other international bodies should understand and then, regulate.  Here it is: Any trade surplus nation that continuously drops interest rates on loans to a trade deficit partner, in order to keep the deficits going or making them greater, should be forced to raise the value of their own currency vis a vis the deficit partner and raise the interest rate on the loans until trade is more balanced.

This is not to punish trade surplus nations but to prevent credit bubbles that end up hurting or even destroying, the trade surplus nations. The main and perhaps only role of any international settlement organizations must be to prevent credit bubbles.  This is why, when Japan was running an immense trade surplus with the world, while running a ZIRP lending system, the world organizations protected Japan’s imbalances and only attacked China’s imbalances.  This was due to a desire to exploit the Japanese credit bubble so the top financial organizations could suck down immense seas of credit and then dump it all on everyone, while taking in fees and making immense profits.

I am always curious about how something works and like to publish tidbits of data just to give a bigger picture.  The Riksbank is floundering badly:

Sveriges Riksbank/Riksbanken – In English

logotypeRiksbank borrows euro from the ECB

10/06/2009 The Executive Board of the Riksbank has decided to borrow EUR 3 billion from the European Central Bank, ECB. This is being done to ensure that the Riksbank is well-prepared to continue safeguarding financial stability. Read more

All the major central banks are ‘borrowing’ money.  The IMF is broke.  This is why the IMF begged the US for $100 billion.  The IMF begged the Riksbank for money, too. Then, both the US and Sweden go into the world banking markets to get immense loans.  In the case of the US, a trillion more dollars this six months alone.  This is ‘circular logic systems’ and thus, immensely unstable. That is, there isn’t even remotely enough capital on earth to fund all this borrowing.  This borrowing is actually ‘creating money out of thin air’ which means, it all comes from that evil strumpet, the Goddess of Infinity.

We can borrow infinite sums from her.   She loves this.  She just adds zeros to what we owe in the casino of wealth.  And we discover the money is increasingly worthless.  All over the place, I read people engaging in wishful thinking, for example, ‘Why can’t the government give us all x-number of dollars!  Then, we can all go shopping and pay off all our debts!’  Why not, indeed?

The problem is, once we resolve all our debts this way and are free and clear and we buy up all the available goods, we have 10,000%+ inflation and the money is utterly worthless and the economy collapses and we go into a very deep hole.  This happens all the time to smaller nations.  When an empire does this, the world economic system collapses and a free-for-all ensues as everyone goes to war.

I like to read reports by central banks.  The Riksbank has annual reports.  Here is the latest report:

Sveriges Riksbank/Riksbanken – Wickman-Parak: The financial crisis – where do we stand today and where are we heading?

Several explanations for the crisis

One usually says that the crisis began in 2007 with problems in the US mortgage market and that this gradually developed into a global financial crisis, which became acute in autumn 2008 in connection with Lehman Brothers filing for bankruptcy. But the picture is more complex than this. The origin and course of the crisis will be analysed thoroughly and we probably will not have a complete history of it until much later.

Why the time delay in trying to understand this collapse?  It is pretty obvious, how it developed.  But then, like Japan and Germany, Sweden is a nation that makes most of its money via a huge trade surplus connected directly to a huge lending surplus aimed at keeping customer nations afloat so they buy more Swedish products.

However, we can already note that there are several explanations as to why the crisis arose and why it became so widespread. One circumstance that probably played some role is that growth had long been good in many countries, at the same time as inflation was low – quite simply, things had gone unusually well for an unusually long period of time. And when things have gone well for a long period of time it is probably human nature to relax and become slightly incautious. This is what appears to have happened this time in various ways and places, not solely in the US mortgage market.

HAHAHAHA.  How very funny!  So, things were going ‘well’—Sweden ran big trade surpluses!  So someone became ‘incautious’—Sweden lent more and more to its customers abroad at cheaper and cheaper interest rates.  This is exactly how the housing bubble operated, too: the lenders found all sorts of radical and novel ways to keep on lending to more and more people in order to get greater and greater profits.

The Riksbank author is correct in noting that the US mortgage market didn’t create this mess.  I have pointed out frequently, it was the tsunami of easy lending from trade profit nations that created an immense, global credit bubble.

One factor that probably also contributed was that there was a global saving surplus that meant there were large capital sums to be invested in the financial markets. This surplus pushed down the interest rate on risk-free assets. The combination of a lot of money to be invested and low risk-free interest rates contributed to an increase in the demand for assets that were profitable to invest in and led to an intensified hunt for high yield. This type of environment often inspires great inventiveness in the financial markets and many new financial instruments were also created. These were often complex and difficult to valuate correctly. But in the optimistic climate prevailing then – everything had gone so well for so long – it was nevertheless easy to sell them. Those who invested in the new instruments disregarded, or failed to sufficiently understand, the risks that were “inbuilt” in them. The financial supervisory authorities and regulations also lagged behind this development.

Sweden’s ‘savings glut’ was really their trade surplus.  All trade surplus nations needed to keep these not only existing but growing.  The best way to do this was to lend immense sums to all trade partners running in the red such as Latvia, Estonia, Romania, the US, the UK, etc, etc.  This way, the trade deficit nations could consume the goods produced by the trade profit nations.  This became increasingly unbalance for the one thing the trade profit nations did not want was, competitors.  So pouring this loot into real estate deals or corporate take overs is very lucrative for the trade profit nations who even built factories in the trade deficit nations [Toyota in the US, for example] so long as the manufacturing PROFITS would flow back to the trade surplus nations.

The problems in the international financial markets began to be more apparent in the summer of 2007. –when the Japanese carry trade abruptly ended—But the Swedish economy and the Swedish financial markets long appeared able to manage fairly well, despite the fact that the turbulence was having more and more effects on the world around us. Of course, economic activity in Sweden began to weaken as international economic activity declined, but this did not initially seem to entail any very serious downturn. However, when Lehman Brothers filed for bankruptcy in September 2008 the situation worsened dramatically. The confidence that had existed between financial institutions was shaken to its foundations when no one was certain who might be next in line to default on their payments. Now the Swedish financial markets were also hard hit and some sub-markets were practically at a standstill. The earlier expectations that the decline in economic activity would be fairly mild were replaced by a much more negative view of future developments, both in Sweden and abroad. The Lehman Brothers crisis was also the prelude to a series of measures to stabilise the Swedish financial markets. At the same time the Riksbank took several rapid and resolute steps down the interest ladder to alleviate the effects of the crisis on economic activity.

That last sentence says it all: the trade surplus nations, to keep this wretched mess going, are all dropping interest rates to zero in the hopes that this will create more buying of excess manufactured goods.  The trade surplus nations are most desperate to get the unbalanced trade running again.  This is why all the G20 meetings have been utterly useless.  Instead of talking about balance, they discussed resuming the impossible status quo.

Household indebtedness in Sweden and implications for financial stability – the use of household-level data

Picture 5

This graph shows how debt took off in all of Sweden’s trade/finance partners.  Estonia is by far, the worst and is in very deep trouble.  Now, let’s go to Latvia again:


riga_latvia.jpg 500×332 pixels

Latvijas Banka

Key objective of the monetary policy

The key objective of the central bank’s monetary policy is to facilitate favourable macroeconomic environment for growth of the national economy in the long term. The course of the global economic development suggests that the monetary policy can best contribute to the economic growth, employment and financial stability by ensuring low inflation rate. By maintaining price stability, the central bank creates a stable and predictable business environment. For this reason, the majority of sovereign central banks across the world have declared maintenance of a low and stable long-term inflation rate as their principal goal.

Pursuant to the Law “On the Bank of Latvia”, the primary objective of the Bank of Latvia’s monetary policy is likewise to maintain price stability in the country.

I see in the news that the Federal Reserve is going to be the regulator of the top 5 investment banks which happen to also own the Federal Reserve.  In Latvia, I am assuming the people who are destroying its financial systems are the same people running the central bank.  This is due to everyone copying the Bank of England model.  All these banks claim, they want ‘low and stable long-term inflation rate’ as their goal because this is the philosophical model of modern banking: there MUST be inflation.  The trick is, how to keep it down somewhere where it can continue to eat up worker’s wages but not cause the economy to crash.

When workers can get pay hikes to keep up with or even slightly surpass the banker’s inflation rate goals, the central banks have to stop them from doing this.  Outsourcing jobs, for example, or bringing in a flood of alien workers to depress wages.  These overt manipulations are excused with words like, ‘But there aren’t enough workers!  We need more!’  During downturns, this becomes difficult.  In the US, tech workers saw a total collapse in wages and job security thanks to a flood of aliens brought in to prevent wage pressure, for example.

Like all central banks in trouble, the Latvian central bank has less and less information and fewer press conferences as the crisis deepens.  Eventually, the site will be shuttered like the Bank of Zimbabwe that doesn’t exist anymore and has no web service.  Here is the last pronouncement by the Latvian bankers, way back in March:

Recent Economic Developments and Banking in Latvia | Bank of Latvia

Ilmars Rimsevics
Governor, Bank of Latvia

March 2009

General Economic Developments

The key macroeconomic indicators of the beginning of 2009 as well as business and consumer survey data suggest that Latvia’s economic downturn is gaining momentum.  Having started in the second half of 2008 when the domestic demand dropped sharply, the downturn was aggravated by weakening trade conditions in almost all export markets of Latvia.

According to the data officially released by the Central Statistical Bureau of the Republic of Latvia (CSB), real gross domestic product (GDP) decreased by 10.3% year-on-year in the fourth quarter of  2008 and by 4.6% in the year as a whole.

With new orders falling dramatically in both domestic and external markets, the extremely buoyant downfall in manufacturing spilled over to January 2009. Year-on-year, the working day adjusted volume index of manufacturing output decreased by 27.2%. The index decreased in mining and quarrying (by 12.7%), and in electricity, gas and water supply (by 13.3%). In contrast to the previous periods, the decline in manufacturing affected almost all sectors, with the annual decrease in the total volume index mostly on account of shrinking output in the production of wood and products of wood and cork, except furniture, food products and beverages, non-metallic minerals, fabricated metal products, except machinery and equipment, electrical machinery and apparatus n.e.c. as well as chemicals, chemical products and man-made fibres.

On the backdrop of currently shrinking income and uncertainty about the future income growth due to the rising unemployment rate and wage and salary cuts, household spending was contained and large purchase plans were postponed. These ongoing processes are confirmed by the latest data on retail trade turnover and consumer confidence indicators. Although trade slowed down in all commodity groups, the observed sharp drop in retail trade at constant prices (29.9%) was primarily triggered by contracting demand for motor vehicles and other non-food commodities, hardware, paints and glass in particular, and was also affected by retailing in computer hardware, software and telecommunications equipment. Deteriorating consumer confidence implies that retail trade turnover kept on contracting also in February.

Latvia is a manufacturing country that needed the credit of greater manufacturing powers.  This meant, even as Latvia exported goods, they couldn’t keep up with all the creditor nations that were exporting even more goods.  The US exports far more today, than any time in history.  We hyper-export but find ourselves in a particularly deep trade deficit.  This bizarre free trade system was made worse and worse as free trade rules destroyed more and more native barriers to trade.  So everyone was doing maximum trade but the profits from this trade were increasingly concentrated in fewer and fewer hands.  The list of trade profit nations was short and the amounts created this way grew greater, very fast, during the WTO push to create totally free trade.  Here is an article from 2007 from the Bank of Latvia:

Standing Firm Against Manipulations with Lats’ Exchange Rate | Bank of Latvia

Economists are currently discussing ways to improve the ability to compete of the Latvian economy and they are right to do so because it is being undermined by high inflation. Morten Hansen from the Riga School of Economics has also devoted this issue a great deal of thought, sharing some of his insights with the readers of the newspaper Diena (10 February).

In other words, ‘if only Latvia could be more competitive and have more international trade in the free trade system, they would have no economic problems!’  This is logical and in the long run, impossible.  All competing nations do not want Latvia to succeed in this.  And all nations want the US in particular, to fail in this.

There is this race to the bottom: to get rid of ‘inflation’, they all kill worker’s wages.  This way, the workers have less and less money to spend and prices go down.  Of course, what we see in ‘stagflation’ economies is raging inflation with dropping wages.  A disaster, of course.

I would suggest that ‘stagflation’ is the result of Keynesian economics.  Ever since all the central bankers embraced his methodology, we no longer have ‘depressions’ with dropping prices.  We have stagflation where necessities shoot upwards while all other things fall.  A horrible solution.

The Latvian economy is still the fastest growing economy in the European Union and that should make us happy because our standard of living is raised. The downside, from the macroeconomic perspective, is that the speed at which we are traveling can be compared to driving at 200 kilometers an hour, because it is accompanied by high inflation, record high prevalence of imports over exports (current account deficit), decreased ability to compete, a fast growing foreign debt. For quite a while now, the main problem of the Latvian economy has been the overly high domestic demand that exceeds supply; the economists call it “overheating” of the economy. The budget deficit is also too high for this juncture in our economic development: we are not saving for the moment when the pace of the economy will abate. Estonia, where the situation is very similar, last year recorded a budget surplus of 3% of GDP.) If we fail to have a firm grip on the steering wheel and we dismiss the danger of driving too fast, our breakneck speed can land us in a ditch!

This growth was obviously very unhealthy!  Back in 2007, the bank recognized something was very wrong with the growth.  For imports were growing faster than exports!  They couldn’t compete with the creditor nations flooding them with exports!  Foreign debt ballooned!  So, the ‘growth’ was actually a dumping operation, not growing but wrecking things.

We can only regret that Mr. Hansen has not applied his theoretician’s savvy to come to the aid of the Latvian economic policy makers: to specify the list of tasks that would allow the excessively rapid development to slow down so that Latvia would continue to develop in the long term with a yearly growth of 6-7% instead of running the danger of overheating as is obvious from the estimates of the last quarter of last year. It would have been wonderful if Mr. Hansen had made use of his teaching skills, which involve the ability to get things across with ease, to remind us that in the marathon distances – in our case, approximating the level of European standard of living – sprinter’s tactics are of no use.

What was really growing was debts and deficits.  The illusion of ‘growth’ is what afflicts US statistics.  When we see deficit bubbles taking off, if we assume this is ‘growth’ we end up with massive credit bubbles destroying the underlying, capitalist parts of the economic systems.  This is why the terms concerning ‘growth’ must take into account, all trade and government spending deficits.  That is, if both are running in the red, this means the domestic economy is shrinking, not growing at all!

I wish the US would do this.  We have seen less and less growth each year since 1974 and it was hideous during the Bush years.  Our red ink was immense.  The only times our trade deficit shrank was during grinding recessions.  The minute commerce resumed, the deficits were much worse than during the previous deficit periods.



The 2000 bubble popping caused a mild drop in US trade red ink.  Then it instantly took of and shot to new highs. After this dizzy global collapse, it is still higher than at the height of the last run up that ended in 2001!  And is already resuming!  Like Latvia, we are trapped in a dynamic we can’t seem to escape if we wish to keep this status quo or view this as a LACK of credit rather than TOO MUCH credit from trade rivals running surpluses with us.  Now, back to Latvia in 2007, during the run up to the present collapse:


No Time to Celebrate

Despite the positive signs that Latvia has seen in FDI, it is clear that the government has to continue working on anti-inflation measures. While the initial anti-inflation plan adopted in April 2007 has brought a much expected cooling of the real estate market and decreased the level of consumption, there is still plenty of work to be done.

Therefore, at the end of November a working group on the macroeconomic stabilization plan from the Ministry of Economics prepared a new proposal for the Government to battle the current issues. The new action plan contains a number of instruments for cooling down the economy, but the most important is a proposed reform of the taxation system which will stipulate a full corporate income tax rebate or decreased tax rate for investments in R&D, as well as changes in Competition law which will facilitate a more efficient battle against competition violations.

As far as the manufacturing sector is concerned, the Ministry of Economics is going to put more emphasis on promoting export by implementing an export guarantee loan system for which 30 m LVL (42 m EUR) for 2008 and 45 m LVL (64 m EUR) for 2009 have been already allocated.

So, did Sweden want Latvia to export more to Sweden?  No!  Latvia, like all trade deficit nations and obviously, all trade surplus nations, wanted to fix their business via exporting to someone and this someone is painfully obvious: the US has been destination #1 for everyone!  Below are some graphs from the Latvian government:

FDI in Latvia, investing countries

Picture 1Picture 2

Roubini has covered the Latvian story so it is good to go visit him for more information and graphs:

RGE – Latvia: Will It Start A Dangerous Domino Effect?

Problems in Latvian banks can therefore spillover to banks in Estonia and Lithuania through Swedish parent banks. That is, losses in Latvia will likely eat into Swedish banks’ capital causing them to cut back on lending to the other Baltics, potentially contributing to financial crises there.


The dominos began to fall instantly in the summer of 2007 when the Japanese carry trade vanished and the flood of easy credit suddenly was constricted.  The imbalance between credit and borrowing nations can’t increase further.  It can either constrict further or collapse, totally, via bankruptcy.  The entire system is being propped up by fake loans.  The IMF lending with no new credit coming in is a prime example. The debtor monster nation, the US, is funding lending while having zero profits.  Here is something from the Riksbank of Sweden, talking about how the average Swede has increased personal debts even though the nation runs a surplus:

Household indebtedness in Sweden and implications for financial stability – the use of household-level data

Two factors that have probably been important in the increase in indebtedness are financial deregulation, which has decreased the level of credit rationing, and lower interest rates, in both nominal and real terms. These two factors, combined with such other factors as an overall benign economic environment and demographic pressures, can probably go a long way towards explaining the rapid growth in household indebtedness in Europe. At present, aggregate household indebtedness in Sweden is slightly over 70% of GDP, nearly double the level in 1970. The upward trend in household indebtedness in Sweden during the last decade parallels that of many other European countries (see Graphs 1 and 2). While the general upward trend is clear, notwithstanding a few exceptions such as Germany, it is also worth noting that there are significant differences in the level of household indebtedness among the surveyed countries. These differences are, of course, due to differences in owner occupancy rates, but differences in national housing finance markets also play an important role.

Both Germany and Japan did NOT see increases in consumer or housing debt during the 20 year period that both ran bigger and bigger trade profit margins.  This is not accidental.  The world’s top two trade profit nations were the ones spending the least on consumer credit!  This is the ‘savings glut’ all the economists like to talk about.  So, did the US imitate them?

No, except in one regard: restricting wages.  This didn’t fix the problem, it caused the debt accumulation to rise thanks to artificially low interest rates!  This, in turn caused housing inflation and then, commodity inflation.

house inflation

The global housing bubble was worse in Australia, France, New Zealand, the UK and Spain.  The US numbers don’t look so bad but this is due to the immense size of the US compared to all the other nations.  That is, housing prices were being depressed in all US manufacturing communities like Detroit, while just a very few states saw bigger bubbles than all the other nations in this list.  So our own housing bubble was regional and this was bigger in size than most of the other bubbles put together.  The collapse of this lending spree is due to the fact, it should have never happened.  The UK and Spain both ran big trade and budget deficits during the bubble just like the US.  Japan isn’t even on this list since its own home markets shrank during the 2000-2007 time frame.  But they were the #2 export power during all this!  And this is the true riddle here.

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Filed under .money matters, Free Trade

7 responses to “Latvia’s Economic Collapse Pulls Down Sweden

  1. CEO Nutcracker

    Dubai’s banks are failing too. They’ve begged for $10B from Rothschild who will get the money from none other than the US taxpayer via the Federal Reserve Bank NY.

    This said Rothschild is not getting directly involved but will act through commercial banks in which it has equity or has connections with, like JP Morgan and other ones. Moreover, through the same commercial banks, Rothschild has a say, and a powerful one, over the Federal Reserve Bank of New York (FRBNY).

    By law the latter plays a key role in the Federal Open Market Committee (FOMC) and thus has a crucial role in making key decisions about interest rates and the US money supply.

    Through the FRBNY Rothschild is in a privileged position to influence US monetary policy and shaping US monetary supply, crucially important since the US dollar remains the main reserve currency in the world.

    Dubai’s choice is also part of a ongoing dispute between the Saudis and the Emirates over the location of the single central bank of the Gulf States and what direction to give it.

    The United Arab Emirates (UAE), especially Abu Dhabi, has recently put the brakes on the whole thing, and in the short run no solution seems to be in sight.

    The Saudis are considered too close to the United States and thus indirectly to Israel. Gulf States, especially the UAE, favour a Euro-Asian axis that runs from China to Russia that includes Germany, a relationship best illustrated by Opel’s sale to the Austro-Canadian Magna group, which stands in for the Russian state bank Sberbank.

    The Rothschild family has have been closely associated with the Zionist Movement. The 1917 Balfour Declaration was in fact addressed to Lord Rothschild in which the British government committed itself to the establishment in Palestine of a national home for the Jewish people.

  2. petronorway

    Not all exporters went down this path i.e. Norway comes to mind as an exception. It uses most of its export earnings to buy foreign assets rather their foreign debt.

  3. emsnews

    Yes, that is true. Norway also didn’t have a housing bubble, too. Like Germany and Japan.

  4. nah

    yes china makes a great deal of our cheap goods… however low prices do not a good lender make… or really high prices do not a good lender make ‘hi morons’… we can pretend growthnupths have been in controll for 20 years or so and making everything pegged to inflation… or we could say minimum wage ‘the kinda’ job out can get’ havent gone up 15% in 10 years… but prices are EEEEasily up 50-80% ‘at least in my neck of the woods and they have come down 30%’… so ok… the dollar is not strong we are debt whores… but who set the price… i see a dirty equilibrium comming at some point ‘6% 30yr fixed’… rising to 8-10 on LOWER PRICES… theres 10% unemployment, MAASSSS bad investment, and low savings… so savings will ‘at some point’ be rewarded, wages will be lower, the market will find a new floor ‘notice equities as in banks and other government bailouts GM anyone’… but we will continue to reward management with high pay which is criminal in this time

    thout shalt reap thine rewardz

  5. JT

    I don´t know Elaine,
    Latvia´s trade balance with Sweden is pretty much even. Latvia´s main export is forestry products, clothes etc.
    Swedish companies have moved their production to Latvia for cheaper labour (especially clothing) and then they are exported to Sweden.
    It i s the exact same dynamic as with US and China only on a smaller scale (with Sweden being the US, without the trade deficit though).
    Somehow your claim that the world trade is warped in favour of Japan, Germany, Korea and China is a bit silly.
    What if it just so simple that US wants all the goods of the world for free (paid by digital dollars)? And as long as the dollar holds it can do this. Your claim that US is the victim of evil exports powers, I don´t now. US holds all the power so it decided it would be nice to have everything on credit.
    All the wealth in the US is exactly the same as all the wealth in UK, swindled from the natives with beeds and viral blankets.
    And US is too far gone already, this cannot be fixed anymore.
    I firmly believe US will not voluntarily crash it´s economy, this will go on as until some other empires money is though of as gold. How long does this take who knows.

  6. emsnews

    JT, reread my article. Latvia had a trade deficit WITH THE WORLD. This meant, they were running IN THE RED. This meant, they had to devalue their currency to balance trade. This meant, they couldn’t pay back SWEDISH LOANS with a devalued currency and this meant the banks of Sweden would then be taking a massive hit.

    See? Simple, isn’t it?

    About the US ‘getting everything on credit’: this isn’t a boon. Throughout history, all industrialized nations knew that deindustrializing while sucking in imports leads to the complete destruction of both economic and military power. It kills empires.

  7. I like sweden culture. I belive that swedia will be the great country. Bay the way how about the islamic developing at there. Is islam describted as violence religion? Do you want to know about islam in true, Visit my blog : Here I will give you the true information about islam.

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