(Un)real money

14. februāris, 2011


Vjačeslavs Dombrovskis

Today’s Neatkariga Rita Avize, also sometimes referred to as Lembergs Times, has a big interview with Armands Strazds. Mr Strazds is an ex-musician who lately joined the swelling ranks of Latvia’s many self-styled economists. He is also a coordinator of RTFL, a Harmony Center think tank, and as I understand it, a devout disciple of Mr. Hudson. Knowing all this, I had certain expectations for what Mr. Strazds had to say. And yet, Mr. Strazds did manage to surprise me. Astonish, even, I’d say. Here are my favorites.

First, according to Mr. Strazds, Parex was a perfectly fine, “strong” bank who just had a bit of short term difficulties. Mr Strazds has an unbeatable argument here – after all, Parex was one of the largest banks, he says. It would do fine if the Swedish government wouldn’t see a good chance to get rid of a competitor.

Second, for the Latvian state to default on its loan from the international community, according to Mr. Strazds, is “normal”. Everybody is doing it, and everybody, Latvia, IMF, EU – everybody, would be better off as a result of this.

Why? Here comes the greatest one. This [lenders’] loan “is not real money”, says Mr. Strazds. “International lenders have not earned this, but taken out of thin air…” Here I have to say that first part of this statement is technically correct. IMF, for example, lends out of contributions my member states – shareholders, including Latvia. So, if Mr. Strazds is right, I suggest you check your wallets. I mean, Latvian government borrowed all these billions of euros made out of “thin air”, which were then used to pay public sector salaries, pensions, etc., which were then spent and received by some other people and so on. So who knows, maybe some of these money found their way into YOUR wallet. So be careful – they might not be real!!!

There is obviously little point in arguing with Mr Strazds on issues of significance. I might suggest him reading up on some Econ 101, but he would probably dismiss it as “neoliberal” propaganda.

What is of real significance in this story is that this interview appeared in Neatkarigai, and everything appears there for a reason. That Greens and Farmers made a step to embracing the rhetoric of Mr Strazds and the likes suggests there is hardly a limit on how low they’re prepared to go. And we haven’t even got to any real consolidation yet…

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