SLOW SLIDE DOWNHILL CONTINUES

The slide downhill continues. Prime Minister Godmanis has left the government and the bargaining has begun, still without the Russian party of course. They will be in the government because they have too many seats not to be, but unlike America which has now officially embraced minorities, the idea of the Russian speakers being in control was too much for president Zattlers who even refused to see their candidate. But it will be interesting to see as the financial pips squeek how many of the anti Russian policies last. Not many is my guess.

Shops continue to close, especially in the expensive areas near the centre. When I told my sister about this, she said quickly "just like Swansea then!". So perhaps my trip last weekend to Surrey which still looks as prosperous as ever should have been to Wales to look at things there.

There is a bit of a fightback though. Tomorrow there will be a mass networking event for 2000 Latvian business leaders in Arena Riga. Apparently the President will attend as will VVF the last President. I shall go - and report back.

CALM BEFORE THE STORM

President Zattlers has gone on record now saying that he thinks people do not trust him. Well no one that I speak to thinks of him as anything other than a puppet of the ruling Tautas Party. They have now dropped in the polls to a little over 2%. If I recall rightly, this is even less than Mugabe gets in Zimbabwe and that must be saying something. At least unlike that unhappy country, we do not seem yet to be on the way to a million Lat note to buy a pack of chewing gum. In my local food shop prices this week have actually dropped for staples like milk and Cadburies fruit and nut chocolate, and supermarket chain Rimi are price busting hard by bringing in their own brands for coffee and cereals. The coffee was half the price of other brands. I just wish they were running the heating company for Riga. Heating prices are absurd and getting worse.

Whilst people watching this week, it is clear that we are becoming a nation of haves and have nots. The haves are still spending like there is no future. In the Spy Bar (which was full) on Thursday, students were happily drinking beer at 2 lats 50 a litre and did not seem as worried as I was about the prices. And the cafes are still full of people eating out. But the real cuts have not yet come. The government have announced that the public kindergartens will close for a month in July. That will have an immediate effect on the pockets of many families - or there will be a lot of grandmas on childminding duty.

My feeling now is that we will have another month or two at this stage of the recession. Then the high level of unemployment payments will drop dramatically and the national money flow will reduce. It will take two months or so for this to have an adverse effect on small companies and then another round of redundancies will start. June and July are the test months. If we get lots of tourists we might survive, but if not then I predict that the number of "for sale" and "for rent'' signs will climb dramatically.

HOT STUFF

There is a sign on the communal front door of our house advertising seminars for locals to come and talk about the awful heating costs demanded by Riga's heating company. Here in Riga most buildings are on the central heating network. It is always one day behind the curve, so it is cold when it is cold and hot when it is hot - simple really! You can see where the pipes go because they heat up half of the countryside and roads as well. No matter how cold it is there are broad swathes of Riga that snow never covers because they are simply too warm from the pipes running underneath.

This is party of a national problem - government monopolies! A few weeks ago I attended a meeting with the national electricity company who also have the same disease. When I suggested that there were available better local finance and social models for power (like Flensburg in Germany who are bidding for the Ventspils heating contract for example) the head planner answered me as though I was from the moon and quickly found it was time to leave! We still have a deep official culture of "mummy knows best" here and anything not agreeing with official plans must be wrong.

Sadly I doubt that our seminars will do much. I will try to attend because my last bill was extortionate by any standards. This is hurting me too, but not as much as the other tenants who are unemployed and get less pension each month than the cost of the bill. They cannot pay!

REZEKNE JAM

After my comments about the awfulness of Latvian radio two yesterday, which by the way, is in no comparison to the awfulness of Suffolk radio, I went to the spy bar in Old Riga yesterday evening to listen to a group of youngsters from Rezekne playing Latgalian music. It was really magical stuff. The youngsters play a combination of violins, bagpipes, accordions and drums and they sang really haunting Latvian, Russian and particularly Latgalian melodies. The sounds and harmonies were amazing and totally different from anything I have heard before. They play every Thursday and I shall be going there again..

TRANSPORT OF JOY

The bus and tram drivers of Riga are a breed apart. Most of them have been to the misery school of social interaction and are highly skilled in working all day without smiling at all. They are also skilled at driving with one hand and peeling 50 Centime tickets like a card sharp sliding the ace of hearts off the bottom of the pack. They force us all to listen to their music and this can be acutely depressing on a cold morning. This runs the full range of tastes from hard modern Russian pop to Latvian radio 2 that features some of the most depressing music known to man. It could be from any European country and usually features the accordion in full flow.

But today when I got on the number 6 tram at the stop by the wonderfully cheap Nelda supermarket in Teika, it was Opera blasting out loud from the loudspeakers. And it was good singing too. The journey was considerably more uplifting than normal.

Then I heard the rumour that two thirds of Latvian families have not paid their heating bills this month. As mine is higher than my usual UK bill I am not surprised.

A lull in the battle

I have not had much to write the last few days. There appears to be a lull in the battle. Not of course for the Agriculture minister Mr Roze who got his marching orders after the Government caved in to protesting tractor driving farmers invading Riga to the tune of 22 Million lats. It will not do much except keep the protests at bay for a while longer.

I sat in on a meeting with the head of the national bank yesterday. He did not give a sterling performance but that is probably understandable. he is in deep trouble and everyone knows it. he talked about where the government intends to place the loan, devaluation and Euroisation. Conclusions were hard to find but he did stress the need for stability. What was not clear was how much the shortfall will be in the national budget next year. He seemed to have few real solutions except hope.

I was interviewed by a remarkably bright young Swedish freelance journalist this morning. It was interesting because his questions showed that he, and clearly others in his country see Latvia as a modern democracy with similar values to their own. My Latvian colleague soon put him straight as to why this crisis was so bad and whose fault it was. Examples of corruption and inefficiency were on the tip of his tongue. I just listened and understood again the depth of contempt in which PM Godmanis and his government, including the President Zattlers, are held.

Another small bit of evidence of the growing recession is that now at the supermarket checkouts there are always small piles of unbought goods that have been left at the till or even in the baskets. These piles are growing noticeably larger each visit.

Tomorrow I am going to talk to some investors about making a new business web portal. Might be interesting.