Daily Archives: June 11, 2009

Richard Corbett, a well-liked British Labour MEP who won’t be coming back to Brussels, has a few harsh words for the national politicians whose shenanigans sealed his political fate. “Losing is one thing – ceding a seat to the BNP is another,” he says.

Margot Wallstrom, the Swedish commissioner in charge of communications strategy, is clear that the low turnout is not Brussels’ fault. “A hunt for someone to blame will also no doubt start and some will look to blame the Commission, which would be absurd.  The main responsibility for persuading people to vote lies with the political parties.  … It is for others to learn the lessons for the next few years.” 

There are two schools of thought on whether Latvia should devalue the lat, or fight tooth and nail to keep its currency peg to the euro.  One, espoused by the Latvian government, the International Monetary Fund  and the European Commission, is that devaluation would destabilise the Latvian banking system, wouldn’t really address the long-term challenges facing the Latvian economy, and would risk spreading shock waves beyond Latvia across the Baltic and into other parts of central and eastern Europe.

The other view, espoused by some of the world’s leading economists, such as Paul Krugman and Nouriel Roubini, can be summed up as: “Get Real”.  Without devaluation, the only path that Latvia can go down to extract itself from crisis is massive deflation, through spending cuts and sharp falls in wages that will inflict terrible damage on society and will unnecessarily prolong Latvia’s recession.