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<a href="http://michael-hudson.com/2011/01/the-spectre-haunting-europe/" target="_blank"><font size="4">http://michael-hudson.com/2011/01/the-spectre-haunting-europe/</font></a></div>
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The Spectre Haunting Europe</h1><div style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 11px; color: rgb(68, 68, 68);"><div style="margin-bottom: 5px; font-style: italic; color: rgb(136, 136, 136);">
January 22, 2011</div>By <a href="http://michael-hudson.com/author/karl/" title="Posts by Admin" style="text-decoration: none; outline-style: none; color: rgb(32, 91, 135);" target="_blank">Admin</a></div>
<div style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 11px; color: rgb(68, 68, 68);"><span style="font-size: 21px; font-weight: bold; line-height: 18px; font-family: 'Times New Roman';"><br>
</span></div><div style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 11px; color: rgb(68, 68, 68);"><span style="font-size: 21px; font-weight: bold; line-height: 18px; font-family: 'Times New Roman';">Debt
Defaults, Austerity, and Death of the “Social Europe” Model</span></div>
<div><h3 style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Jeffrey Sommers and Michael Hudson</h3><p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">
A spectre is haunting Europe: the illusion that Latvia’s financial and
fiscal austerity is a model for other countries to emulate. Bankers and
the financial press are asking governments from Greece to Ireland and
now Spain as well: “Why can’t you be like Latvia and sacrifice your
economy to pay the debts that you ran up during the financial bubble?”
The answer is, they can’t – without an economic, demographic and
political collapse that will only make matters worse.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Only a year ago it was recognized
that decades of neoliberalism had crashed the U.S. and several European
economies. Years of deregulation, speculation and lack of investment in
the real economy had left them with rising inequality and little
consumer demand, except for what was financed by running up debt. But
the financial press and neoliberal policymakers counterattacked, using
the “Baltic Tigers” as an exemplary battering ram to counter Keynesian
spending policies and the Social Europe model envisioned by Jacques
Delors.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Analysts have viewed Latvia’s
October election results as vindication of the efficacy of austerity for
solving the economic crisis. The standard narrative is that Latvia’s
Prime Minister won re-election even after imposing the harshest tax and
austerity policies ever imposed during peacetime, because voters
realized that this was necessary. On politics, the standard narrative
(as recently rolled out in The Economist) is that Latvia’s taciturn and
honest prime minister, Valdis Dombrovskis, won re-election in October
even after imposing the harshest tax and austerity policies ever adopted
during peacetime, because the “mature” electorate realized this was
necessary, “defying conventional wisdom” by voting in an austerity
government.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The Wall Street Journal has
published several articles promoting this view. Most recently, Charles
Doxbury advocated Latvia’s internal devaluation and austerity strategy
as the model for Europe’s crisis nations to follow. The view commonly
argued is that Latvia’s economic freefall (the deepest of any nation
from the 2008 crisis) has finally stopped and that recovery (albeit very
fragile and modest) is under way.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">This view appeals to bankers
looking to prevent defaults on private and public debt, hoping that
austerity can lead to economic recovery. But Latvia’s model is not
replicable. Latvia has no labor movement to speak of, and little
tradition of activism based on anything other than ethnicity. Contrary
to most press coverage, its austerity policies are not popular. The
election turned on ethnic issues, not a referendum on economic policy.
Ethnic Latvians (the majority) voted for the ethnic Latvian parties
(mostly neoliberal), while the sizeable 30% minority of Russian speakers
voted with similar discipline for their party (loosely Keynesian).</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Twenty years from independence, the
consequences of Russian emigration to Latvia under Soviet occupation
still shape voting patterns. Unless other economies can draw upon
similar ethnic division as a distractive cover, political leaders
pursuing Latvian-style austerity policies are doomed to electoral
defeat.
</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">While the economic crisis was deep
enough to drive even Latvia’s depoliticized population into the streets
in the winter of 2009, most Latvians soon after found the path of least
resistance to be simply to emigrate. Neoliberal austerity has created
demographic losses exceeding Stalin’s deportations back in the 1940s
(although without the latter’s loss of life). As government cutbacks in
education, health care and other basic social infrastructure threaten to
undercut long-term development, young people are emigrating to better
their life rather than to suffer in an economy without jobs. Over 12% of
the overall population (and a much larger percentage of its labor
force) now works abroad.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Moreover, children (what few of
them there are as marriage and birth rates drop) have been left orphaned
behind, prompting demographers to wonder how this small country can
survive. So unless other debt-strapped European economies with
populations far exceeding Latvia’s 2.3 million people can find foreign
labor markets to accept their workers unemployed under the new financial
austerity, this exit option will not be available.
Latvia’s projected
3.3% growth rate for 2011 is cited as further evidence of success that
its austerity model has stabilized its bad-debt crisis and chronic trade
deficit that was financed by foreign-currency mortgage loans. Given a
25% fall in GDP over during the crisis, this growth rate would take a
decade to just restore the size of Latvia’s 2007 economy. Is this “dead
cat” bounce sufficiently compelling for other EU states to follow it
over the fiscal cliff? </p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Despite its disastrous economic and
social results, Latvia’s neoliberal trauma regardless is idealized by
the financial press and neoliberal politicians seeking to impose
austerity on their own economies. Before the global crisis of 2008, the
“Baltic Tigers” were celebrated as the vanguard of New Europe’s free
market economies. Critics of this economic “miracle,” built on foreign
currency loans financing property speculation and privatization buyouts,
were dismissed as naysayers. Without missing a beat, these commentators
have branded the present Latvian option of austerity as policies for
other nations to adopt.</p>
<p><font color="#444444" face="'Times New Roman'"><span style="font-size: 14px; line-height: 18px;">The Latvian option serves
several masters. The financial press pines for the fairytale that
markets self-correct and austerity brings prosperity. Latvia’s Central
Bank (about which even the IMF has expressed concern over its neoliberal
stridency) wishes to run a victory lap, absolving itself for policies
that imposed massive suffering on Latvia’s people. And Washington and EU
neoliberals want other countries to adopt Latvia’s version of China’s
colonial “Open Door” matched with a Dickensian welfare system. Openness
to economic penetration is the standard on measure, and the Balts have
this in spades, ergo, they are “successes,” regardless of how well or
bad their economy serves its people’s needs.</span></font></p>
<p><span style="color: rgb(68, 68, 68); font-size: 14px; line-height: 18px; font-family: 'Times New Roman';">Given the geographic proximity of
Latvia and Belarus, it is illuminating to compare how neoliberals have
assessed their respective economies. Latvia suffered Europe’s largest
economic collapse in 2008 and 2009, with continuing double-digit
unemployment. Its economy will show no growth until this year (2011),
and its modest growth likely will remain accompanied by double-digit
unemployment. Much of its population has evacuated the country, leaving
many children with relatives or to fend for themselves. Neighboring
Belarus, with few of Latvia’s geographic advantages (ports and beaches)
or high-tech background, has a per capital GDP not too far behind
Latvia’s. Belarus had a boom with double-digit growth before the crisis,
and kept its economy at full employment during the crisis rather than
collapsing by the 25 percent rate that plagued Latvia. Belarus also has a
GINI coefficient (inequality) roughly on par with Sweden, while
Latvia’s is closer to the widening inequality levels that now
characterize the United States.</span></p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Yet neoliberal Latvia is declared
an economic success model and Belarus a failure. The CIA’s World
Factbook reminds its readers that Belarus’s performance occurred
“despite the roadblocks of a tough, centrally directed economy.” This is
the standard characterization of Belarus. But one needs to ask to what
degree its success may reflect its central planning. Latvia has produced
greater political freedom for dissidents, but Belarus has less economic
inequality and foreign debt.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Every economy in history has been a
mixed economy. We are not defending Comrade Lukashenko’s media and
political repression in Belarus. We simply are not going to the opposite
extreme of applauding Latvia’s neoliberal model. One can reject
Belarus’ political system without endorsing the electoral oligarchy that
characterizes much of Latvia’s political life. Yet win or lose on
economic outcomes, Latvia and the Starving Baltic Tigers will be
declared the winners, while Belarus always will be declared the loser on
economic performance, regardless of achievement. You will not see a
measured look at both nations’ economies to examine objectively where
they are succeeding and failing (including by sector) with an eye for
what lessons might be derived from such an investigation. Economic
comparisons are entirely political.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Our intention is not to blame the
Latvian nation for the cruel neoliberal policy experiment to which it
has been subjected, to question the global community of policymakers,
intellectuals and some of Latvia’s own elites that persist in pursuing
this failed policy and even recommend it to other countries as a path of
growth rather than economic and demographic suicide. Latvia’s people
have suffered from the ravages of two World Wars and two occupations,
capped by neoliberalism dismantling its industry and driving it deeper
and deeper into debt – indeed, foreign-currency debt – since it achieved
independence in 1991. Neoliberalism has delivered poverty so deep as to
cause in an exodus of Biblical proportions out of the country. To call
this a forward economic step and a victory of economic reason reminds
one of Tacitus’ characterization of Rome’s imperial military victories,
put in the mouth of the Celtic chieftain Calgacus before the battle of
Mons Graupius: “They make a desert and they call it peace.”</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">In the several years that we both
have been visiting Latvia we have seen an industrious and talented
people, with many displaying integrity despite being immersed in a
corrupt environment. Our aim here is to explain why the failed “Latvian
model” should be seen as a warning for what other countries should
avoid, not a policy to be imposed on hapless Ireland, Greece and other
European debtor countries. In fact, we both have worked to encourage a
policy reversal in Latvia itself. What now is at stake, after all, is
the future of European social democracy and the continuation of peace in
a region plagued by war for a millennium prior to the 1950s.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The problem is that Europe’s
economic difficulties are rooted not merely in profligacy, as the press
and many politicians typically claim. Debt is a consequence of
structural financial, economic and fiscal faults built into the design
of post-Soviet Europe. In a nutshell, the European Union never developed
sustainable mechanisms to transfer capital from its richest economies
to poorer countries, especially on the periphery.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The Bretton Woods order after World
War II was part of a more workable system for reconstruction lending
and capital transfers between war-torn Europe and the United States.
Marshall Plan aid, accompanied by capital controls and government
investment to encourage economic development and monetary independence,
enabled Western Europe’s national economies to buy imports from the
United States while building up their own export capacity and raising
their living standards. The system was not without fault, but the desire
to avoid the previous half-century cycle of economic depression and war
(and mounting Cold War concerns) led Western Europe’s economies to
develop and pave the way for subsequent continental integration.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The post-Cold War period since 1991
reflects similar patterns of underdevelopment in the relationship
between rich Western Europe and its poorer East and Southern European
counterparts. In contrast what was done after World War II, sustainable
structures were not put in place to make the latter economies
self-sustaining. Just the opposite outcome was structured in: foreign
currency debt, especially for domestic mortgage loans, without putting
in place the means to pay it off.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Today, the wealthiest EU states are
high-value added manufacturers. EU expansion twenty years ago was
marked by rising exports and bank loans from these nations to what have
become today’s crisis economies – and by rising debt levels in the
context of privatization sell-offs without progressive income taxation
and with little property tax (a major factor in promoting local real
estate bubbles).</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The Baltics and East European
countries have financed their trade deficits over the past decade mainly
by Swedish, Austrian and other banks lending against real estate and
infrastructure being sold and resold with increasing debt leverage. This
has not put in place the means to pay off these debts, except by a
continued inflation of a real estate bubble to sustain enough
foreign-currency borrowing to cover chronic trade deficits and capital
flight.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The Baltic States have since
brought their current account into line, not by producing more goods and
services, but by impoverishing their people. Their neoliberal planners
have slashed consumption – not to create capital for investment, but to
pay down debts to bankers. This is how they are adjusting to the
cessation of capital inflows from foreign banks now that real estate
Bubble Lending has dried up (the Bubble Lending that was applauded for
making their property markets “Baltic Tigers” to the banks getting rich
off the process). Bankers and the financial press depict this austerity
program to pay back banks as the way forward, not as sinking into the
mire of debts owed to creditors that have not cared much about how the
Baltic economies are to pay – except by shrinking, emigrating and
squeezing labor yet more tightly.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The fiscal burden falls much more
heavily on employment than it did in Western Europe sixty years ago
during its period of reconstruction. Insider dealing and financial fraud
was widespread. To cap matters, euro-denominated debt for associate
members was secured by income in their own local currencies. Worst of
all, banks simply lent against real estate and public infrastructure
already in place instead of to increase production and tangible capital
formation. In contrast to the Marshall Plan’s government-to-government
grants, the ECB’s focus on commercial bank lending simply produced a
real estate bubble. Bank lending inflated their real estate bubbles and
financed a transfer of property, but not much new tangible capital
formation to enable debtor economies to pay for their imports. Just the
opposite: Their debts rose without increasing foreign-exchange earning
power. So it was inevitable that this house of cards would collapse.<br>
<br>In setting up the EU’s economic relations, free-market
trade theory assumed that direct investment and bank lending would
provide the capital needed to help Europe’s poorer regions catch up.
This assumption turned out to be unwarranted. Banks lent against real
estate and other assets already in place, inflating their prices on
credit. It is the debt overhang and related aftermath of this
narrow-minded economic philosophy that now needs to be cleaned up.
</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">These arrangements served the major
EU exporters but did not develop European-wide stability based on more
extensive economic growth. Without the looming threat of war or
political threat from Russia, Europe’s richest nations pushed for trade
liberalization and privatizations that accelerated de-industrialization
in the former Soviet bloc. Southern European members were brought into
the Eurozone with its strong currency and strict limits on government
spending that failed to enable these countries to develop their
manufactures in the way that Western Europe (and the United States) had
done.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">This state of affairs could only be
temporary, because the East was reconstructed in a way that made it
import-dependent and financially subordinate to the West, treated more
as a colony than as a partner. And as in colonial regions, the West
became a destiny for capital flight as property was sold on credit and
the proceeds moved out of the post-Soviet and southern European
kleptocracies and oligarchies.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The foreign currency to pay banks
on the loans that were bidding up real estate prices was obtained by
borrowing yet more to inflate property prices yet more – the classic
definition of a Ponzi scheme. In this case, European banks played the
role of new entrants into the scheme, organizing the post-Soviet
economies like a vast chain letter, providing the money to keep the
upward-spiraling flow moving.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The problem was that credit only
was extended to fuel real estate and to finance the exportation of goods
from the industrial export dependent Western Europe (with its Common
Agricultural Policy crop surpluses) a de-industrialized and
agriculturally unmodernized East. The expanding debt pyramid had to
collapse, as no means of paying it off were put in place.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">There was a vague hope that levels
of economic development eventually would equalize across the EU, as if
bank lending and foreign buy-outs would lead to greater homogeneity
rather than financial polarization. The problem was that the EU viewed
its new members as markets for existing banks and exporters (including
as dumping ground for its agricultural surpluses), not to help these new
members become economically self-sustaining or set up viable national
financial systems of their own.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Given the restrictions the euro
places on its member countries, the path of least resistance EU’s
creditor nations and banks understandably would like to resolve this
crisis is “internal devaluation”: lower wages, public spending and
living standards to make the debtors pay. This is the old IMF austerity
doctrine that failed in the Third World. It looks like it is about to be
reprised. The EU policy seems to be for wage earners and pension savers
to bail out banks for their legacy of bad mortgages and other loans
that cannot be paid – except by going into poverty.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">So do Greece and Ireland, and now
perhaps Spain and Portugal as well, understand just what they are being
asked to emulate? The EU policy seems to be for wage earners and pension
savers to bail out banks for their legacy of bad mortgages and other
loans that cannot be paid – except by plunging their economies into
poverty. How much “Latvian medicine” can these countries take? If their
economies shrink and employment plunges, where will their labor
emigrate?</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Without public investment, how can
they become competitive? The traditional path is for mixed economies to
provide public infrastructure at cost or at subsidized prices. But if
governments “work their way out of debt” by selling off this
infrastructure to buyers (on credit whose interest charges are
tax-deductible) who erect rent-extracting tollbooths, these economies
will fall further behind and be even less able to pay their debts.
Arrears will mount up in an exponential compound interest curve.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The EU’s creditor nations and banks
are seeking to resolve the crisis in way that will not cost them much
money. The best hope, it is argued, given the inability of the crisis
countries to depreciate their currencies, is “internal devaluation”
(wage austerity) on the Latvian model. Bankers and bondholders are to be
paid out of EU/IMF bailout loans.
</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">The problem is the austerity
imposed by existing debt levels. If wages (and hence, prices) decline,
the debt burden (already high by historical standards) will become even
heavier. This is what the United States suffered in the late 19th
century, when the price level was driven down to “restore” gold to its
pre-Civil War (and hence, pre-greenback) price. Presidential candidate
William Jennings Bryan decried crucifying labor on a cross of gold in
1896. It was the problem that England earlier experienced after the
Treaty of Ghent ended the Napoleonic Wars in 1815. Aside from the misery
and human tragedies that will multiply in its wake, fiscal and wage
austerity is economically self-destructive. It will create a downward
demand spiral pulling the EU as a whole into recession.<br>
<br>The basic problem is whether it is desirable for
economies to sacrifice their growth and impose depression – and lower
living standards – to benefit creditors. Rarely in history has this been
the case – except in a context of intensifying class warfare. So what
will Latvians, Greeks, Irish, Spaniards and other Europeans do as their
labor is crucified by “internal devaluation” to shift purchasing power
to pay foreign creditors?</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">What is needed is a reset button on
the EU’s economic and fiscal philosophy. How Europe handles this crisis
may determine whether its history follows the peaceful path of mutual
gain and prosperity that economics textbooks envision, or the downward
spiral of austerity that has made IMF planners so unpopular in debtor
economies.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">Is this the path that Europe will
embark on? Is it the fate of the Jacques Delors’ project of a Social
Europe? Was it what Europe’s citizens expected when they adopted the
euro?</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">There is an alternative, of course.
It is for creditors at the top of the economic pyramid to take a loss.
That would restore the intensifying GINI income and wealth coefficients
back to their lower levels of a decade or two ago. Failure to do this
would lock in a new kind of international financial class extracting
tribute much like Europe’s Viking invaders did a thousand years ago in
seizing its land and imposing tribute in the form of land. Today, they
impose financial charges as a post-modern neoserfdom that threatens to
return Europe to its pre-modern state.</p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">As published <a href="http://www.counterpunch.org/hudson01182011.html" style="text-decoration: none; outline-style: none; color: rgb(204, 0, 0);" target="_blank">in Counterpunch</a></p>
<p style="color: rgb(68, 68, 68); font-family: 'Times New Roman'; font-size: 14px; line-height: 18px;">*Prof. Hudson at UMKC and Prof.
Sommers at the University of Wisconsin-Milwaukee are advisors to the
Renew Latvia Task Force.</p></div><br><br><div class="gmail_quote">---------- Forwarded message ----------<br>From: <b class="gmail_sendername">Dante-Gabryell Monson</b> <span dir="ltr"><<a href="mailto:dante.monson@gmail.com">dante.monson@gmail.com</a>></span><br>
Date: Thu, Feb 10, 2011 at 12:28 AM<br>Subject: Article : Debt Defaults, Austerity, and Death of the “Social Europe” Model<br>To: <a href="mailto:econowmix@googlegroups.com">econowmix@googlegroups.com</a>, <a href="mailto:sustainable_solidarity@yahoogroups.com">sustainable_solidarity@yahoogroups.com</a>, <a href="mailto:hc_ecology@yahoogroups.com">hc_ecology@yahoogroups.com</a><br>
<br><br><h1 style="margin: 5px 0px 0px; padding: 0px; line-height: 38px; font-family: Georgia,Times,serif; font-weight: normal; color: rgb(34, 34, 34);">
<font size="2">excerpt from article below :</font></h1><h1 style="margin: 5px 0px 0px; padding: 0px; line-height: 38px;">
<span style="font-size: small;"><font face="arial, helvetica, sans-serif"><i>"<span style="line-height: 18px;">Economic comparisons are entirely political."</span></i></font></span></h1>
<div><span style="font-size: small;"><font face="arial, helvetica, sans-serif"><i><span style="line-height: 18px;"><br></span></i></font></span></div>
<div><span style="font-size: small;"><font face="arial, helvetica, sans-serif"><i><span style="line-height: 18px;">"</span></i></font></span><span style="color: rgb(68, 68, 68); font-size: 14px; line-height: 18px; font-family: 'Times New Roman';">Washington and EU neoliberals want other countries to adopt Latvia’s version of China’s colonial “Open Door” matched with a Dickensian welfare system. Openness to economic penetration is the standard on measure, and the Balts have this in spades, ergo, they are “successes,” regardless of how well or bad their economy serves its people’s needs.</span></div>
<p><span style="color: rgb(68, 68, 68); font-size: 14px; line-height: 18px; font-family: 'Times New Roman';">Given the geographic proximity of Latvia and Belarus, it is illuminating to compare how neoliberals have assessed their respective economies. Latvia suffered Europe’s largest economic collapse in 2008 and 2009, with continuing double-digit unemployment. Its economy will show no growth until this year (2011), and its modest growth likely will remain accompanied by double-digit unemployment. Much of its population has evacuated the country, leaving many children with relatives or to fend for themselves. "</span></p>
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<font size="2"><a href="http://michael-hudson.com/" target="_blank">http://michael-hudson.com/</a></font></h1><h1 style="margin: 5px 0px 0px; padding: 0px; line-height: 38px; font-family: Georgia,Times,serif; font-weight: normal; color: rgb(34, 34, 34);">
<font size="2"><a href="http://en.wikipedia.org/wiki/Michael_Hudson_%28economist%29" target="_blank">http://en.wikipedia.org/wiki/Michael_Hudson_(economist)</a></font></h1>
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<font size="2"><a href="http://www.youtube.com/watch?v=sjV5FEKVs8A&feature=related" target="_blank">http://www.youtube.com/watch?v=sjV5FEKVs8A&feature=related</a></font></h1>
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