Cant be true, a failed state after all? (updated)

The news came this morning from LETA about limits imposed on money withdrawals from the Parex Bank. " The Financial and Capital Market Commission prohibits all companies to withdraw money from the Parex Bank, if it is not determined for fostering business. For private citizens and legal entities there are monthly withdrawal limits set at Ls 35 000 (50 000EUR), if the number of company employees ranges from one to ten, and Ls350 000 if the number of employees ranges from 11 to 250." ("Parex bankai" aizliegts veikt debeta operācijas klientiem juridiskām personām, ja šīs operācijas nav paredzētas saimnieciskās darbības veikšanai. Savukārt minētajām operācijām saimnieciskās darbības veikšanai juridiskām personām ir noteikti ierobežojumi - 35 000 latu (ar darbinieku skaitu līdz desmit) un 350 000 latu (ar darbinieku skaitu no 11 līdz 250) kalendārajā mēnesī.)

Such news did not come from an empty space, because for months now Latvian public is kept vigilant with surprising news from the Latvian wayward governing clique. I do not know whether it is the "nature" of the present governing coalition or the public relations folks in the government house are to be blamed, but official announcements of different government officials contradict each other lately. Such contradictory announcements only fosters rumours spreading. For example, such text (see below) is lately on screens of the Parex Bank telling machines. The government keeps strangely silent, because there has not been a single official announcement concerning Parex nationalization on the Ministry of Finance and the Cabinet of Ministers official webpages. Such contradiction makes rumours spread quickly about an empty shell left over from the once second biggest Latvian bank.


Text in Latvian: We are sorry, but there is no cash in the telling machine now - would you like to perform another operation? YES/NO

Photo: Raitis Puriņš

Diena reports that the government still has not agreed on the new head of the Corruption Prevention Bureau, and the deadline for the new candidate to be presented is pushed ahead for another two weeks. There are several candidates on the list but the PM foolishly does not take the veil of secrecy away from the procedure of choosing the new head of the Latvian prime anti-corruption warrior. Whenever journalists address questions about the new head of KNAB, the PM Ivars Godmanis abruptly retorts that he does not have time.

Actually for about three month in a row now the Latvian head of the cabinet excuses his bad mood and erratic behaviour with the financial turmoil at home and internationally. I already wrote earlier, that working alone could simply burn Mr Godmanis out and he should better get a sensible minister of finance. The latter person has lately accepted the role of court jester, and nobody really believes in his pronouncements (actually it also makes one wonder why is there need for PM if there is no coherence in ALL cabinet ministers pronouncements).

Just last week the governor of the Bank of Latvia and Mr Slakteris announced that government would borrow EUR3 billion at most. Yesterday, as a snow from the clear sky came an announcement that government would need to borrow EUR5 billion after all!!! And this sum is almost a half of the annual Latvian GDP, thus making me to reckon that Latvia wants to borrow more than Iceland. If we trust IMF then Iceland would like to borrow only USD 2,1 billion. Actually, Irish Times reports that in order to avoid bankruptcy Iceland plans to borrow as much as 10billion USD. If this information would turn out to be true, then I do not really want to mention Latvia anymore...because the way the former PM Kalvītis finds excuses gives another proof about present governing clique living in a bubble.

And the bad news from international money markets probably explain the erratic behavior of Ivars Godmanis now. To devote all his time just to Latvia Ltd. financial woes could be detrimental to any body's health after all. Therefore, at least I am happy to hear our PM on the radio SWH airwaves, where the leader of the cabinet has his weekly rock music show. It saves this poor man from his public office frenzy, and from honestly uttering the news of Latvia being led to the verge of bankruptcy. Pssst, the b-word is not my invention (remember our vigilant secret police), because in his latest blog entry it is exact wording of the opposition party member Mr Aigars Štokenbergs. Opposition parties must position themselves somehow after all. Thus, Aigars Štokenbergs, being a former employee of the World Bank, probably knows the level of rot in Latvian public finances, and he is not constrained by the heavy weight of the public office. There is nothing more left now, except to wait for these news to be discredited or approved.

Updated

Diena just reported that the Union of Greens and Farmers (ZZS) preferred yesterday to have a coffee with their own party leaders instead of having the coalition parties meeting with the Prime Minister. The fact that such "naive disagreements"resurface into public domain make me reckon that that the coalition member stirred soup a'la letton is slowly boiling over. Toppling the Maire of Riga is not an easy task, and also ZZS do understand that they could suffer in these party political games, thus what could they propose in order to change the simplistic plan of People's Party (TP)?

It is Tuesday evening already, and all the major Latvian media channels just reported, that the former owners of the Parex Bank, Messrs Viktor Krasovicky & Valery Kargin gave up all their ownership (34%) in the bank to the Republic of Latvia. It is too early to judge how much the Latvian taxpayers will pay for this failed bank, but so far about Ls 400 million of taxpayers monies are already flooded into the bank. The news are not rosy. The fact that the government appointed Mortgage Bank governor Mr Inesis Feiferis refused to become the governor of the new entity, that should have been created after officially merging Parex and Mortgage banks, are not particularly encouraging either. Economic crisis that IMF and other agencies warned about is now definitely here. The Christmas holiday season is open and lets see how merrily the Latvian government would celebrate it.

Text in Latvian: "Aye, old chap, its crisis."

Cartoon: Gatis Šļūka