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.