Latvia set for devaluation?

Also note the chart of house price falls at the bottom.

Latvia down 50% in a year, Dubai 35%…

Bad news for Irish specuvestors presumably.

just got in there in the nick of time

Just got right back out again if these 4 websites are anything to go by 8)

amcredit.lv/

amcredit.lt/

amcredit.ee/

and

amcredit.com/

More apocalyptica:
ftalphaville.ft.com/blog/2009/06 … continued/

The dominoes seem to be lining up again. I imagine the ECB will be desperate to avoid a collapse in ERM2, not for the sake of the ERM system, but because there is a trillion euros at stake for eurozone banks. The scenario that I see is:

  • Latvia involuntary devaluation
  • Latvians unable to pay foreign currency mortgages default in large numbers
  • Foreign & local banks make FX losses on Latvian assets and on foreign currency defaults
  • Swedish banks come under pressure. Sweden devalues? Or raises interest rates?
  • Contagion from Latvia to Lithuania, Estonia and maybe Poland? In bits anyway, as the pressure of Latvia’s devaluation grows on anyone who hasn’t devalued.

The bond markets seem to think so:
ftalphaville.ft.com/blog/2009/06 … re-begins/

This should fix things! :stuck_out_tongue:
telegraph.co.uk/news/worldne … ation.html

Blondes march in Latvia ‘to cheer-up nation’
Several hundred blonde women marched through the Latvian capital Riga yesterday in a bid to cheer up the crisis-hit Baltic nation, suffering the worst recession of all 27 EU member states.

https://www.telegraph.co.uk/telegraph/multimedia/archive/01413/blondes3_1413753c.jpg

https://www.telegraph.co.uk/telegraph/multimedia/archive/01413/blondes5_1413757c.jpg

https://www.telegraph.co.uk/telegraph/multimedia/archive/01413/blondes_1413756c.jpg

https://www.telegraph.co.uk/telegraph/multimedia/archive/01413/blondes8_1413755c.jpg

Sweden ready to take over banks if required:
tickerforum.org/cgi-ticker/a … post=97538

Really quite frightening when you consider that the consequence of their asset bubble was intervention by an inflexible and unsympathetic IMF. This scenario is quite plausible here in Ireland of course.

ft.com/cms/s/2/021831a2-4e5c-11de-a0a1-00144feabdc0.html

Now where else does that remind you of (for point 6 read Ireland’s entry into the Euro in 1999)?

What intrigues me is what will happen elsewhere in the Eurozone banking system when Latvia and the other EU accession states begin to default on their Euro denominated loans maturing during the second part of this year.

Merged.

I think you are being a little unfair on the IMF in this case Rialtas, they have been suggesting that Latvia depeg and devalue. Politically this is a no-no in Latvia as it has been sold as the end to all fear…

YM, not trying to be unfair, just my impression from article. Can you explain why this is considered a no-no in Latvia, it would seem to me to be the right thing to do (in Ireland as well for what its worth!)

I believe all political parties see their future prosperity as tied into the euro. They are probably right, by some accounts, as short-term devaluations don’t solve structural problems. But what they do is give breathing room to some degree. In Latvia’s case, there is also the dimension that a devaluation would surely lead to rolling devaluations across the rest of ERM2 with the result that euro entry would become a distant prospect.

PS. I’m not sure whether the IMF are calling for an outright free float, or a move to an exchange rate band of 15% which is permitted under ERM2. There seems little doubt that the Lat would head to the bottom end of its range pretty sharpish and remain under pressure, though. The Soros-types must be having a field day!

PPS The danger of contagion also shows the risks associated with a touchy-feely IMF that is trying to do what’s right for the country rather than for the international financial system. I believe this was on of Mr. Stiglitz’s criticisms (that the IMF took an international rather than a country specific perspective), but I may not be reading through the bluster correctly.

Thanks. Rialtas.

The solution here is to either devalue the euro, which would not go down well in DE, or float these currencies (including our own)

PPPS This is mostly guesses! But referenced from the usual reliable sources - NakedCapitalism, RGE Monitor, and others.

telegraph.co.uk/news/worldne … ation.html

The photo is worth seeing. down with this sort of thing.

I saw that a few days ago.
Its a pity they didnt advertise it worldwide … would have been a great tourist money-spinner.
Of course I wouldn’t have gone myself :angry:

Maybe look at the 8th post on this thread :angry: