Is the IMF money laundering?

It is entirely possible that by accepting the money from the IMF the Latvian govenment is breaking its own laws on money laundering. As we all know, the IMF is bankrolled by the USA. The rumour has it that the USA sees the loans to the Eastern European countries as a clever way of handing over paper money produced for the magic "quantitive easing" and totally unsupported by any collateral, and later getting back good money (plus interest) in return. Now if this is true then the Latvian govenment is supporting a highly questionable and probably illegal act. If this "clear money" came from Russan business serious questions would be asked!

The really bad news though is that the crisis has officially worsened - the Hammock shop on Brivibas is going to close. As regular readers will remember, I mentioned the shop on April 12th and questioned how it survived. Well it hasnt. I saw the Prime Minister on television this morning. He looked more smug than usual as he commented that the government recovery plans were working. Not from where I look they are not. I predict that a lot more shops and companies will follow Hammocks into oblivion this winter.

And judging by the growing queue of beggars outside the free food places, a few souls will disappear in the cold as well. I see and hear of no plan how to deal with the homeless. Perhaps there is one, but it is being kept as secret as all the other government plans. Democracy currently has no home here in Latvia.

PRICES - DOWN DOWN DOWN!

I hope that my mum doesn't read my blogs or she will be wanting to visit Riga again to spend my money shopping.

There is no doubt now that major change is taking place. Some of the main streets are now full of empty shops (and it is creeping into the Old Town too) and in the main shopping centres prices have nosedived. I have even seen 90% reductions in one place. But still there is no understanding either of customer thinking or what a "sale" is for. All to often there are signs saying "up to 80% reductions" and then you have to search hard to find anything with a cut like that. It becomes annoying when shoes or clothes are still being sold at less than 50% off from what was a totally stupid and unreal price in the first place. Still, one shoe shop in Alfa Centre had a real sale with shoes at 7Ls and the place was full. The next door shop was empty. I bet they did not draw any conclusions from that!! But for any followers with cash, Riga is now well worth a shopping visit. Pass it on.

It is difficult now to see where Latvia goes next. We are still on the downward path with the next round of school and hospital closures to come. There is still no developed logic behind the cuts and personal interests are driving things in the regions. Unfortunately corruption still abounds, it just appears in new, nasty and more insidious forms. Perhaps the worst was hearing that the National bank staff, including the boss Rimcevics were still taking home obscene salaries. He had no remorse and showed a level of lack of understanding of what he had done equal only to a US banker. It was embarrassingly reinforced by the PM who said that salaries were the bank's business. Again we have weakness from a national leader. It seems to be a trait. The whole of the bank staff should be cleared out and new people hired from abroad.

But on the surface in Riga there is far less to see. Shoppers are still out and cafes are being used, just a bit less than before. The fact is that 20% may be unemployed but 80% are still in work, even if they are getting 25% less money than this time last year. The real crunch will come when the unaffordable heating bills arrive in the autumn. Many pensioners get less money each month than their utility bills. But the general atmosphere is a stoic determination that all will come well in the end. That is a Soviet legacy. There has been worse here before. At least no-one is being carted off to Siberia - they have all gone already to UK and Ireland.

What is obvious now are the numbers of heavy drinkers on the public transport. More and more you can smell alcohol addiction. It permeates everything. There are also more people with unwashed clothes and bodies. It is the unpleasant aroma of poverty!

Latvia - Twitter, Blogs, Writing

I have been overwhelmed in recent weeks by business emails, Twitter followers and helpful blogs telling me about the new art of media marketing using Web 2 tools. I am supposed to want to get hundreds of people to follow me and what I write and somehow this breeds money. The key appears to be that we should all deliver some sort of marketing training package, or new way of improving our media offering that others then buy from us to make - yes you have guessed it! - their own way of delivering marketing training and better media packages. Hardly anything seems to be real goods and services.

This spiral of activity must of course stop when everyone has sold training and media tools to everyone and they are all perfect. One of the major contributors even admits that his business is a spiral sales package and that it relies totally upon pyramid selling - as if that was somehow a positive benefit.

So far Latvians seem to have used these tools to practice their favourite sport of creating new political parties and doing een more political complaining, rather than for productive business. But it set me to thinking if we could deliver better business from Latvia using these tools and I think we can.

The keys of course are that:

1. they have to be aimed at selling to and informing the rest of the world, not to Latvians,

2. they must be written in English, not Latvian or Russian.

So far the majority of Latvia Twitter posts I get are rarely in English and I think that they are much poorer value for this. This is especially so as most people here seem to have better English than me. As a country Latvia has so much to offer and it does no-one any good by hiding the beauty and possible business opportunities from others when there is simply no need.

SHRIMP SALAD

I was shopping in Alpha Rimi last night and heard the wonderful exchange

Girl: Can I have some shrimp salad please.

Shop assistant: I wouldn't if I were you.

Girl: Why not?

Shop assistant: The Chef forgot to put the shrimps in when he made it!

Bliss.

The real thing to see yesterday were the prices in the Alpha clothes shops. They have dropped seriously to levels unseen here for 10 years. But still there were few people buying. Even I just window shop now. New clothes will have to wait a while. More water in the soup please!!

JANI

Trips to Finland, Estonia and another trip to UK have reinforced my view that Latvia really is in worse condition than the rest of Europe. Not that I needed much convincing. Tuesday morning at Stanstead airport was hectic and the number of travellers was huge. It makes Riga airport look even more rural than it is.

But at least I manged to get back for midsummer celebrations in Mazsalaca. Jani is special for Latvians and when I got back into Riga it was empty like the city of London on a wet November Sunday. Everyone seemed to have left for the country. The Jani evening was warm and bright. It never really got fully dark. The only difference this year was that the table was not groaning under food as previous years. Eating is now expensive and money must be preserved. But there was still enough meat for all, including the dogs and cats, who must think Jani is gods answer to them. they sit round the bonfire poised and watching for any plate that touches the ground - and becomes officially theirs!

So back to work. Gatis Kokins has highlighted the long Economist article about the Baltics on Twitter. I think that people do not realise how precarious the Baltic States are in security terms at the moment. I hope that we get through the coming months without unwelcome visitors from next door.

Hammocks, queues, deceit and Cardiff

On Brivibas Iela there is a Hammock shop. Yes I did write Hammocks! What it is doing there I have no idea. Who buys Hammocks in the winter for goodness sakes? I pass it daily, indeed for 6 months I lived just a block away from it, and I have never seen anyone in there. No-one. It is always bright and colourful with lots of lights on, so the electricity bill won't be small. It has appeared so resilient that I had decided that if that shop closed we were all in trouble. Its still there, but there is a ''30%'' off sign in the window. I predict that 50% will soon follow - SO IF YOU CAN BEAR TO WAIT A FEW WEEKS, THERE WILL BE HAMMOCK BARGAINS TO BE HAD BY ALL.

YOU HEARD IT HERE FIRST.

The recession effects continue to add up steadily. Today I noticed for the first time that the evening queue at WEF bridge has gone. Well not quite true, it was there on the other side, but surprise surprise, it was caused by the traffic police doing whatever it is that traffic police do to create havoc at the busiest times.

Not surprisingly the government withheld the true cost of the recession and the cuts required until after the election. ''Just normal'' was the most heard comment. It is sad that even in a time of world crisis the Latvian governing class is still totally self serving rather than caring for their own people. I hope they are ashamed of themselves. Somehow I doubt it though - abusing the people of your own nation is a national sport here. I heard that one of the Ministry of Transport appointees was getting 18K a month. In USA or Britain that might be acceptable. Here that is obscene and totally corrupt. Sadly the law allows it.

So I end with Cardiff. I was there last Thursday. I was overwhelmed by the activity, vitality and sheer shopping energy. As I have said before, the effects of depression in UK are very very hard to see, and in Cardiff they were totally invisible.

Urine Soaked Trousers

I was on the number 40 bus yesterday. An old man got on and using his walking stick stumbled along to the seat adjacent to me. He had visibly urine soaked trousers and the stench was truly awful. I am not proud of my immediate thoughts because they were not charitable. On looking more closely I could see that he was really well dressed with a good jacket, shirt and tie and he clearly had the mark of intelligence about him. No one wants to be like that. Certainly no one who takes the effort to put on a tie before they go out! He must have prostrate problems and the embarrassment for him of being like that must be awful, especially in a country like this where to be sick means to pay money, and in most cases money you simply do not have. But he was clearly still proud. I found it quite hard.

The IMF have told Latvia they must reform the medical system. But this is not good enough. The IMF needs to define the word reform in great detail (it is not understood here. Most politicians think it means cuts not service improvement!), they need to spell out in great detail what they mean and want and then they need to pay for and send experts to make sure that it happens. This man needs help, but I see absolutely no chance that anything that Latvia does in the coming months called ''health reform'' is going to deliver it.

The rumours are beginning to grow that one or two serious companies in Latvia may go under in the next month or so. As I try to find shops for my new shopping complex in Adazi I am seeing clearly that the screws are turning tighter. It is proving hard to convince firms to expand now, although it is certainly a good time as they can screw really great terms out of the market. It will be much harder later. Another growing rumour is that the Government is considering dropping the VAT rate. Even if they do, it will only be effective if they also do some serious confidence boosting measures.

My highlight of the week was chairing an IT security conference for the Latvian subsidiary of headtechnology from Germany. We had great day with good speakers from UK, Luxembourg, Israel and Germany and loads of new things to think about. I enjoyed the enthusiasm of the attendees and the quality of questions. Clearly the IT sector in Latvia has some very bright boys and girls in it. I enjoyed dinner too. Thank you Andris.