[LINK] "Europe's once-booming Baltics sink deep"

[rfmcdonald]

Nerijus Adomaitis and Patrick Lannin' Globe and Mail article concentrates on Latvia, where the economic crash is such that Edward Hugh wonders about the sustainability of the Latvian state.

Wconomists say the worst may be over for the Baltics, but the human cost has been high: Unemployment in Latvia is now the highest in the European Union, at 22.8 per cent in December 2009. Estonia has the third highest, after Spain, Lithuania the fourth.

Even if some kind of recovery is on the way, it would need to be a very high tide to lift the boats of people like Ms. Garniene or, in Latvia to the north, Valentina Pankova, who works in the laundry of an old people's home near Riga, the capital.

She earns just 100 lats a month, or just over $200 (U.S.), on a government scheme to help the unemployed.

As an unenviable crown from the crisis, Latvia set a world record by losing more than 24 per cent of its economy in just two years - a sharper contraction than America's during the Great Depression, according to U.S. analyst Mark Weisbrot of the Washington-based Centre for Economic and Policy Research.

[. . .]

Latvia is the only European Union country outside Romania to carry a “junk” bond rating. Its government has created a “100 lat” scheme, giving people work at a set wage of 100 lats.

“It is the absolute minimum,” said Ms. Pankova, adding she was lucky she had no family to support and her flat - with few modern comforts - is relatively cheap to run.

Even if a hoped-for moderate recovery materializes in 2011, the Baltic economies remain fragile at best - Latvia's is still shrinking. The speed of a recovery will determine when Nordic banks like Swedbank and SEB - the region's major financial players - begin to cut their loan losses.

Latvia had to make its spending cuts to secure a €7.5-billion bailout from the International Monetary Fund and EU.

[. . . T]he suburbs that can show most how property and construction, shops, restaurants and car dealers have been really hit.

At the Saliena property project just outside Riga, sales director Barny Edis points to empty, unsold houses. The ground is still muddy; pipes and construction material have been left lying around. Evidence of the past boom is down the road, where 200 houses that did sell are still occupied.

“It is tough. It's been tough for me, it's been tough for my family, but what doesn't kill you makes you stronger,” said Mr. Edis, a Briton who brought his wife and two children to Latvia in 2007, just before the property bubble burst.