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.

LATVIA FOR SALE

This morning a friend of mine in Riga asked me to help him sell some land in the centre of the city. This is adds to the growing amount of real estate I have been asked to help sell in the last couple of months. As usual the fact that I have worked in the British Embassy in Riga and therefore must know lots of rich people says more about a lack of understanding of UK diplomacy and the diplomatic world in general than anything to do with selling land. But diplomacy and the UK Foreign and Commonwealth Office is another story for another day.

Back to land and property. At the moment I have been asked to sell or market: a prosperous potato farm, a mixed dairy and arable farm (both of which I visited recently and got my shoes dirty), 600- hectares of arable land in the rich agricultural area in the South of Latvia and an old manor house badly in need of repair also with 400 plus hectares of land further west. In the centre of Riga I have been offered 5 plus hectares near the centre and a a further 3 hectares upriver near the new South bridge, both apparently with planning permission. All in all, a feast of property and land but in todays market seemingly as much use to potential investors as trying to sell used candles.

One colleague suggested that I should go to the bank and get enough money to buy the land myself. I admit that this is a mouth watering suggestion as in my weaker moments I quite fancy the life of a gentleman farmer, lord of the manor type. Then reality sets in and I have to admit to myself that the only experience I have of farming and the agriculture business is running cross country over ploughed fields in winter and eating root vegetables at Christmas. Cows frighten me - they are so heavy and uncontrollable.

So there we have it, lots of wonderful land for sale but no more rich Russians flush with folding money wanting a quiet bolt hole out of the homeland but still inside the former Soviet Union and speaking the same lingo.

Things will inevitably change for my friends, the only answer is, will they sell before they owe so much the banks have to take it all. I would be interested to see how good the managers of Parex and SEB bank are at milking cows!