RECESSION - THE PACE GATHERS!

After a week of looking for my own evidence of what is happening in the Latvian recession, the Internet portal Delphi said this evening that 14% are now unemployed.

But before I comment on what is happening, thank you to everyone who expressed worry about my fall on the ice last week. I still have the last bits of the bruise on my hip but I feel fine now and am back running. Not a nice happening though. Its lucky I am a young thing!

OK back to the recession - well one clear change has been the improved traffic flow as the number of cars in Riga has dropped. The notoriously narrow WEF bridge (VEF to you foreigners - it was next to a huge Soviet electronics factory (Fabrika) in Soviet Times) where we have a daily bottleneck has become no more than a blip on the regular journey. The buses are more full too. The shops are still reducing prices in the sale although a couple of days ago I walked along one of the mains streets at lunch time and over 50% of the shops had no shoppers in at all. Chilli Pizza was full mind. There are still some shops trying to sell goods at hugely unrealistic prices but they are now always empty. I give them two months at most. The number of empty shops is increasing slowly. And to cap it all, yesterday we seem to have had a bank raid in the middle of town. Crime is probably coming back.

But on the good side, a couple of new white goods shops have opened and people are still using expensive Stockmans store, and going to the cinema. A major out of town shopping mall is set to open in July on the main Tallinn road. One friend on Saturday was looking for a summer house to buy. Those who have, clearly still shop!!

Apparently in the Russian press yesterday one commentator said that Latvia would be bankrupt in 2 years. I think that any country that has to borrow seven and half Billion from its friends is pretty much there already. But I am told by my political friends that the Prime Minister thinks the real truth of the situation is too awful to tell the public. I have mixed feelings on this. I think the days of treating the people as serfs has gone, except in Russia that is. Latvians have been free of the Soviet yoke for 17 years so it is time they had a real democracy, not a joke one like now.

The President has also apparently bottled on his promise to get rid of the government if they fail by March 1st. He has realised that a new Team would get rid of him pretty sharpish too. His standing this week has not been helped by the fact that people have found out that he has been supporting his household to the tune of a BMW and a few other extras from the (obtuse) Defence Budget.

The big questions now are what will be cut to cope with the national deficit, how will the government afford the extra and unplanned for unemployment that only they have failed to see coming, and will crime rise to mid 90s proportions? And the real biggie of course is, what can possibly get us out of this ever deepening hole?

Hopefully investors will see the benefits of buying up every bit Latvia they can and making it work to their and our advantage. There are many benefits. The population is highly educated, the countryside and the ladies beautiful and the beer is excellent. Thankfully there is some small evidence that they might, as even today I have had a phone call from a Barcelona firm wanting to put me in touch with European hedge fund investors who deal in distressed properties. We do have some of these unfinished projects on view. There is a fast spreading joke that the national sport is now building a fence and then digging deep holes inside for people to look at.

I have yet to identify what my role is going to be in all this mess. I have no desire to join the unemployed so I need to persuade firms that my excellent advice is what they need. One of my consulting colleagues got a lovely reply from a large Latvian firm to his business offer. It said, sorry we cannot afford to hire consultants to get us out of trouble as we are in a financial mess!