16 October, 2009
International Monetary Fund 16/10/2009
1900 Pennsylvania Ave NW
My family and many others in Latvia are sufferring from the negligence the IMF and its partners like the EU and the ERBD. The average Latvian has more common sense than the IMF with regards to how to manage the Latvia economy. These letters I have sent to the IMF I intend to be latter used in a court of law as part evidence to prove the IMF's gross negilgence towards the people of Latvia through the IMF's continued mismanagement in the face of all advice it has received. Most specifically the people with the IMF that choose to hide behind the three letters of I,M, and F that behave like professors who theorise but can not take action will be shamed and brought to justice.
The IMF has vast experience in dealing with economies and as a result should have a pool of experience and resources to draw upon to more comprehensively assist the Latvian economy to recover. Anyone that has a basic understanding of statistics and probability could reasonably predict that the Parex Bank bailout would have been full of monetary leakages that the IMF should have prevented as part of its financial assistance to Latvia.
The State Audit Authority of Latvia for many years has written many reports pointing to inefficiencies and corruption that the IMF could use to plug holes and improve the Rule of Law in Latvia. The IMF trying pouring money in to Latvia without making an effort to improve the management of that money is part of the gross negligence towards Latvia. The IMF fly-in / fly-out policy towards Latvia is further evidence.
The IMF itself is treating the sections of the Latvian economy as a set of numbers and is ignoring the human aspects that are part of any economy. There are clearly areas where budget cuts and new taxes are destructive to families and undermining businesses. If the IMF had contributed more expertise that is expected of it by all people worldwide then monetary leakages would be plugged a lot sooner negating the need to be so destructive to businesses and families.
The IMF has to start performing in Latvia with full capability in Latvia to get off of the path of being grossly negligent towards the people of Latvia.
Australian Chamber of Commerce in Riga
Suite 11, Krisjana Barona iela 25
Riga, Latvia, LV-1011
Mob +371 2639 4789
11 June, 2009
Jens Henriksson, and
International Monetary Fund
1900 Pennsylvania Ave NW
Washington DC, 20431
In addition to my previous letter highlighting the need for the IMF to reduce corruption in Latvia I would like to point out the following:
I have been informed that some of the IMF legal changes requested within Latvia have been nieve and have assisted debtors to avoid their contracted obligations. For example an IMF regulation that at least 50% of creditors must agree to new repayment terms simply enables debtors to take on new creditors and have an agreement with them that results in evasion of debt repayments to the true original creditors.
Then there are changes to the legal system in Latvia that the IMF could influence that would provide immediate benefit to Latvian families. For example currently in Latvia a debtor that defaults on one property will lose all properties. There is not the opportunity under Latvian law for a debtor to separate one property and continue to service the debts on remaining property. If the IMF influenced this simple change then there would be less loss to the economic base of Latvian society and therefore an increased ability for the Latvian state to repay IMF loans.
The Latvian government is adopting budget cuts that seem to be unfairly weighted against the common folk eg pension reductions. There are other taxes that could be adopted like takes on interest paid on deposits in banks. Furthermore, the government has passed laws that leave a window of opportunity for the wealthy to transfer their funds out of the country.
The Court system in Latvia does not seem to uphold the rule of law to the extent that it can be relied upon to encourage sustained business investment that otherwise Latvia could attract. There are businesses that are established in Latvia yet prefer to unwind their investments from Latvia because they can not rely on the rule of law. It is too common practice in Latvia that court rulings are given to the party that pays for it. Right from the heads of the Supreme Court down there is blatant unprofessional manipulation of the ruleof law that discourages investment in Latvia.
The IMF would be able to provide realistic assistance to the people of Latvia if it gained advice from the many parties interested in seeing Latvia become a more ethically economic viable country. The IMF provides an opportunity for the implimentation of long awaited laws that previous governments have not been motivated to pass. The IMF should be communicating more with the true representatives of the peopleof Latvia and not be fooled by those parties that are not performing their duties as their position would expect in the western world.
Director Australian Chamber of Commerce in Riga
07 May, 2009
Latvia 8 years later still does not have such a thing as Insect killing surface spray let alone flea bombs. On that first visit Latvia did not even have mosquito repellent so I packed that for my second visit. In fact this year for the first time the local Tops supermarket is selling mosquito repellent! How exciting it is :-)
So what is going on? Why do Latvians accept living with fleas? Why are there not shops that want to make money selling flea killing products?
One possible explanation is that if there is a purpose for the fleas then why kill them. Latvians say you are cursed if fleas get in to your house. So is the purpose of fleas to make you feel part of the Latvian superstitious culture?
Older Latvian folk talk about the years past when there was a warm winter and fleas were really bad in Spring. So the now generation wants to feel part of that history?
In Easter it is difficult to find chocolate easter Eggs. Possibly because Latvian culture uses real eggs that are used for various Easter games like egg rolling. So is culture winning out over commercialisation in Latvia?
The Christmas market in the Old Town of Riga is started and mostly funded by an American. Does this support the idea that Latvians reject commercialisation of superstitious events?
With every flea bite and every Easter I can not find chocolate eggs should I rejoice at living the Latvian life?
It seems to me that there are many Latvians - usually older and retired - that would like to be able to rely on the capable Latvians to improve Latvia and the standard of living for all. I mean, isn't this what happens in all advanced economies? Doesn't Latvia seek to become an advanced economy as the basis for joining the EU?
You may say that fleas and chocolate are minor issues but I say they are symptoms of deeper causes that are the same cause for innumerable deficiencies. Both lifestyle and income is decreased when the people of Latvia do not make an effort to supply products and service. Latvia has moved towards a higher percentage of services to generate export income but this does not mean Latvians are profiecient at service provision.
As you can read in my many the blogs below. My personal experience is that Latvians waste opportunities to improve Latvia. Part of this is that Latvians do not accept, do not like and reject many opportunities presented to them from foreigners. Furthermore, foreign investors and their foreign managers do not want to live in a Latvia that has a pathetic attitude towards them.
It is very publically known that Latvians generally don't like non Latvians. One of the arguments against foreigners is that 'they try to tell us how to live our life.' A visitor to Latvia is not long at the airport before they start to recognise obvious deficiencies that give the impression that foreigners are not welcome. Where is the 'Welcome to Latvia' sign? The Mecedes Benz taxi company at the airport is out to rip off every guest to Latvia. So a foreigner finds out very quickly that Latvians don't have enough pride to care about their country enough to do something to fix the situation.
One foreigner is not expert in all things but the consensus from many foreigners is that they would not recommend Latvia to their friends and acquaintances.
Live in Latvia long enough and you will want to influence change but you will be told that it is your fault and you are the first to bring up an issue. So then you know Latvians indirectly accept a low living standard by not raising an issue. This is reinforced when you witness Latvians feeling superior by not complaining!
Have you ever thought how good it would be to go back in time 100 or 1000 years with some of the gadgets and knowledge of today? Well living in Latvia is a lot like living that experience. Latvian culture does not seem too far away from accusing people as being witches. Life in Latvia is largely dependent on hope and luck instead of cooperation and goals. The new things that come to Latvia dazzle Latvians and they get distracted by the excitement.
To finalise this blog I would say that there are benefits to living in Latvia that have a lot to do with being established in a country over time. The location of Latvia is good but if transport links are too few or too expensive then the location benefit is removed. There are many benefits that can be imported but why come to invest in Latvia if there are other options where the people are causing the economy to improve?
See the New York Times article on the Latvian economic situation right now. It is 99% accurate http://www.nytimes.com/2009/05/24/world/europe/24latvia.html?_r=2&hpw
01 May, 2009
Then there are those folk that have chosen to organise their finances according to the law and contracts. But the rule of law in Latvia lets them down. The legal system in Latvia is full of lawyers that focus more on how to milk their clients rather than professional representation. The result of this is that there are increasingly fewer business-people wanting to do business with or in Latvia. Russia is an example of where Latvia is heading. The leadership fools of Latvia would argue that a serious business in Latvia finds its own way forward with the best lawyers etc. But they are fools because the best business for Latvia are small businesses. Small businesses employ the most amount of people, are most innovative and lead to the most diversification in export income. But these same small businesses are easily strangled by a legal system that milks them and does not result in the remedy they expect and would achieve in another European country.
Personally I am heading towards the first year anniversary or a court case that should have had a preliminary decision at the first hearing. The judge contradics himself frequently requests information for the next hearing that he does not even look at and then postpones decisions without any request for further information and having a translator translate in the court is forbidden by the judge. This is a ridiculous situation as I initiated proceedings to give the other party increased rights under law. I would have been better to behave like a local and sit on my first court ruling that gave me all the rights instead of trying to do the right thing in Latvia. If the next hearing does not provide the remedy then I will simply withdraw my submission.
Business people are fed up with this. I have recently met business people in Warsaw, Krakow, and Prague that are sufferring from similar lawless environments. The consensus is to move business to somewhere like Berlin where there is the rule of law and prices for property and supplies are lower there. Automation removes the higher labour costs.
Just to emphasise the point here. One friend in Krakow won a government tender to set up a small zoo in a location that was failing. It has become so successulfull that the locals have put an injunction on further development. He will win the legal battle but the fact that the injunction was allowed in the first instance is sheer corruption. It is the children of Poland that benefit from this zoo as it will be years befre my friend will get back the million plus euros he invested. So for the Polish legal system to restrict something that educates their children is a disgrace. These same shameless acts are being allowed all over New Europe by the people of New Europe.
One thing for ceratin is that the shoot to kill business people would not be as successful in New Europe. If Latvia does not improve I know where I would prefer my business to expand in. Why surround yourself by people that do not care about their country and their children and is in debt to its eyeballs. All this would not be such an issue if Latvian leaders gave priority to people like myself that can access resources that can make a positive difference to the country.
03 April, 2009
Jens Henriksson, and
International Monetary Fund
1900 Pennsylvania Ave NW
I write to the International Monetary Fund to communicate the responsibility the IMF must have with regards to its monetary support for the economy of Latvia. I request a reply to this letter.
I am very concerned that the IMF is issuing loans to Latvia without taking the opportunity to protect the people of Latvia whom are the people whos taxes must be collected to repay the loans. My own children ar amoungst this group.
The Rule of Law in Latvia is under-developed for the benefit of the ministers of Latvia with whom the IMF is dealing with. Latvian leaders in government have a proven track record of not performing professionally and the IMF is contributing to this culture by providing money to them. There is no doubt that the Latvian leaders will further waste Latvian money and then seek to fill the gap with IMF money.
The citizens of Latvia do not have strong anti corruption laws to rely on to be able to do enough to prevent corruption. But the IMF will expect these same citizens to repay the IMF loans. The IMF must be more responsible before issuing loans to Latvia and impose conditions on the Latvian government to impliment extensive anti corruption laws drafted by the IMF.
I therefore strongly recommend that the IMF only issue loans with conditions that provide Latvians the protection of the Rule of Law. I further strongly suggest that the IMF loans are denominated in Latvian Lats as the IMF is imposing currency restraints on Latvia.
I will pursue a legal claim against the IMF if I and my children and all residents of Latvia are not given extensive legal rights in Latvia to prevent corruption in Latvia. Without these rights the IMF is fueling corruption and making the situation worse for us all.
07 March, 2009
So are the leaders to be praised for their work especially now when Latvia is probably the worst performing member of the EU? I as a business man, family man, and a benevolent man that has spent a lot of time and effort to provide answers to make Latvia economically strong. I can tell you that my experience and of every other interested person I discussed this with - The leaders that praised themselves did so to mis-lead the public.
One day Latvia will have a Book of Shame that will name the leaders that did not perform as their office dictated. Most likely the book will list the opportunities missed during their leadership.
Joining the EU provided an economic structure for Latvia to operate within. Now Latvia is at risk of being segregated and treated as an undesirable member of the EU.
08 February, 2009
Both these ladies are credible to the majority but do not know what they are saying. What a brainless thing to say. Why should we expect the current bunch of leaders to have the capability to rectify the disaster they have spent 15 years getting us in to???
I met Vaira's daughter 5 years ago in London and had a private uinterrupted meeting with her. Indra asked me what I thought of how her mother was as a President. I told Indra that Vaira did next to nothing to attract business to Latvia and as a result she was neglecting her responsibility. Indra got angry and ended the meeting. Indra's current work peers say that Indra has no interest to do her job effectively.
My wife was the Press Secretary for Ingida Sudruba and she was bullied out of her job so that Ingrida could give the job to her friend that was a Professor at Latvia University. I consider this sort of behaviour to be one that comes from an insecure person that is now not secure enough to take a stronger leadership position to become a Minister.
Exactly what we need is government to disolve so that a new government can be elected and the Anti Corruption Law can be accepted in Latvia.
The economic situation in Latvia is dire but with hope for better times in the future we the people of Latvia can be more motivated to fight through the tough times with optimism in our step instead of depression.
23 January, 2009
16 January, 2009
Mr Slesers is the first in government to suggest something be done to stop the Swedish banks profiteering on the economic crisis at the expense of Latvians. You would have thought this would have been done long before now - but better late than not at all. Each month 100's of families default on their mortgages so time can not be wasted.
With a very large protest in Riga this week against the incompetence of the government you would think that Ainars suggestion will be followed through by the government. But don't hold your breath as leaders in Latvia seem to be going for the Biggest Fools In The History Of Latvia award.
Mr Slesers seriously has instigated some good business policies for the benefit of Latvia. Freeing up the passenger port and substantial development and air links at the Riga Airport are his biggest successes so far.
04 January, 2009
Latvia exports 95% of the wood chips and pellets created in Latvia so there is an abundance of it making gas imports not necessary. Considering the lack of regulation with the forrestry industry one can easily see that tighter regulation would facilitate the sourcing of pellets within Latvia that would not decrease exports of pellets and ensure tax income from the bulk of the forrestry industry is collected by government.
in 2009 the EU is allocating funds so that 30 to 50% of the conversion costs can be obtained to move boilers from gas to bio mass. Latvian councils just need to apply for the funds.
As an example saw-dust pellets cost around 1/2 as much as gas for a Mega Watt Hour (mwh).
gas costs 34 euro mw plus carbon tax of 20 euro tonne. This money goes out of Latvia and is as good as burning hard earn't money coming in to Latvia from exports.
Many arguments as to why the Lat can not be depreciated are based on the supposed increase in the cost of heating. Whereas, in reality already people are refusing to pay their heating bill because they can not afford it. In one of my businesses the heating costs have gone up 300% within 5 years which is the equivalent of 3 staff salaries. I have fired 5 staff as of the start of 2009 the other 2 staff can be contributed to fewer tourists travelling to Latvia.
The gas price Latvia pays is linked to the oil price and can be paid from the IMF euros. Therefore, a depreciation in the lat would have no impact on the cost to Latvia for the gas in the short run. With a conversion to bio mass pellets that have no carbon tax the cash flow for Latvia would not be exported and can be partially used to repay the IMF loan as Latvia would not be sending hard currency outside of Latvia to pay for gas.
Latvia has acccepted an IMF loan because the leaders of Latvia did not make sensible and obvious decisions in previous years. Now further poor decisions will just delay the inevitable devaluation of the lat.
01 January, 2009
The UK pound has lost around 30% of it's value while Latvia's Real Effective Exchange Rate of the Latvian lat shows that the Lat if not pegged would have depreciated around 40%.
Here is the best detailed analysis I have found http://fistfulofeuros.net/afoe/economics-and-demography/why-the-imfs-decision-to-agree-a-lavian-bailout-programme-without-devaluation-is-a-mistake/#comment-23006
My answers to the above are following:
What loan defaults? The banks are not so concerned about defaults.
1. The central bank in Latvia charges 3 x higher Rigibor interest on Lat loans versus Euribor loans so they are encouraging a move to euros.
2.The Latvian branches of Scandinavian banks are charging at least 3 x times higher base rates on euro loan restructuring. So if families are supposedly hurting, then banks don’t agree, or they are taking advantage of people in distress.
3. Scandinavian banks have already accounted and budgeted for defaults in Latvia. so for them the risk has passed.
The IMF is culpable as many Latvians expected the Lat to depreciate and salted away funds to get through the adjustment. Now with a high lat making Latvia uncompetitive these saved funds will be drawn on until depleted.
I have substantial euro loans and I want the Lat to depreciate. A depreciation in line with the UK and Poland etc would keep Latvia competitive and me in business. But now the IMF idea will cause Latvia to go in to a depression.
Having loans in euros and not lats means more than the theory of having favourable exchange rates. Being subjected to eurowide professional policy is the advantage and not the exchange rate. A pegged rate never did provide any exchange rate advantage.
The IMF debt has to be denominated in Lats so that repayment is in lats. I for one will protest an IMF expecting a euro repaymant when the lat finally crashes.
How could there be inflation in Latvia when PVN is going up 16% for my businesses?
The problem has always been that the Latvian government has done next to nothing to improve exports. The Foreign Investors Council in Latvia has a Board member that openly stated that they do not want to go to the effort to attract any members that export as their objective is to feather their own nests.
The IMF should force policy that makes Latvia competitive and stop with the silly theory about loans in euros.