Real estate - April 1st edition

To those who read in Latvian, this collection of real estate ads may be quite hilarious.

Latvian political realignment, an update

By next election, the Latvian political scene will probably look very different from what it was in 2006. The situation is still very fluid. We have several new parties forming (at least 2, possibly even 4) and it's not clear which of them will succeed and which will fail.

The two confirmed new parties are:
- The "Democratic Patriotic Union" consisting of Sandra Kalniete's group that left New Era Party on January 31 and Girts Kristovskis group that left Fatherland and Freedom about a week later. The party claims to be right-of-center and patriotic but not nationalist. (The exact semantic of "patriotic but not nationalist" keeps escaping me. I think it's just an attempt of gaining nationalist-minded voters without alienating ethnic Russians.) The party also continues New Era's anti-corruption and clean government rhetoric. (As this opinion poll shows, they might effectively destroy New Era Party by taking over its voters.) Personality-wise, the party is heavy on creative intelligentsia and Latvian Popular Front/Latvian Way politicians of early 1990s.
- The "Society for Different Politics" of People's Party defectors Aigars Stokenbergs and Artis Pabriks. Although defecting from right-of-center party, they've quickly moved to left and now support a referendum on major increase in old-age pensions. Shades of the recent Hungarian referendum. Stokenbergs also supports other increases in social spending and higher taxes on rich. Sometimes he sounds unabashedly leftist but then he says that he is "not left-of-center, just left of other Latvian parties". (Again, the usual Latvian strategy of trying to appeal to all constituencies simultaneously.) Behind the leaders, there is a collection of former high-level managers from both public and private sectors, which suggests that the party might be quite pragmatic if it gets to power.

Two new parties that may or may not materialize:
- "Christian Social Union", lead by PR specialist Kristians Rozenvalds (I've heard the name more than once, but I've forgotten in what context) and supported by the leadership of Latvian Catholic Church. They haven't yet decided about forming the party but they already have a blog for it (in Latvian).
- An unnamed group lead by Guntis Ulmanis who was Latvia's president from 1993 to 1999. During his presidency, Ulmanis was more an object of jokes than respect. That was, however, a while ago and he is now viewed more like a respected retired politician. And he claims to be leading a group of mostly young academics and small-business people. They don't know if they want to be a party but they are trying to work out a 20-30 year plan for Latvia's future.

And a group of people who are concerned about "excessive social liberalism and its destructive influence" intend to establish an Institute for Support of Conservative Ideas. The institute is supported by prominent People's Party's members and is supposed to counter the influence of liberal Soros-funded thinktanks and activist groups. It's a change for People's Party. Until now, they looked like an amorphous group promising everything to everyone (and, according to their critics, serving interests of a group of agrobusiness people behind the scenes). Now, they are suddenly interested in developing an ideology.

I don't know how this all will end but we are certainly witnessing an early stage of a major political realigment.

Positive Latvian economy statistic

Latvian exports grew by 18.1% year-on-year in January 2008 while imports grew by 3.1%. As a result, the Latvian trade deficit is now at 247.5 mln lats (353 mln euros) per month, the lowest level since May 2006.

So, the Latvian trade imbalance is correcting itself but slowly. The multi-billion-dollar question is: will Scandinavian banks have the patience to provide enough credit for Latvia until the trade balance is fine? Given the recent developments, I have some doubts about that...

Latvians to be able to travel to US without visa? Maybe, it will happen...

Today, Estonia and Latvia signed a memorandum of understanding with US which "sets the two countries on a path of entry to US visa waiver program". The memorandums do not contain an explict date when visa-free travel will start. But there is a chance that it may happen already at the end of 2008.

I've written about visa horror stories a few times on this blog. By now, US is the only Western nation that requires visas from Latvian citizens. Canada and Australia have added Latvia to their visa-free travel programmes over the last year and they have not seen much of illegal immigrants. (The fear of illegal immigration is the main reason for requiring visas.) Why work illegally in a faraway country if UK, Ireland, Sweden and many other European high-income countries allow Latvians to live and work there legally?

Hopefully, we will be able to travel to US without a hassle of getting visa soon...

Song festival: sold out

Latvian Song Festival is the biggest cultural event that Latvia has. It is rooted in Latvian national movement of late 19th century and is held once in 5 years. Choirs and folk dance groups from all over Latvia come to Riga for concerts featuring joint performances by 12,380 singers and 13,400 dancers (numbers from the 2003 festival). Almost everyone in Latvia who sings in a choir or dances in a folk dance group is there. It's very large and very impressive.

The tickets for this year's festival went on sale on Monday. I learned about it Monday afternoon. But then, most of the tickets were sold out. Every ticket allocated for sales over Internet was gone. Ticket offices had long lines. 36,000 tickets sold out by 3pm on the first day.

The Song festival has always been a popular event but not like this. Five years ago, I was able to get good tickets just a few days in advance (and, for one event, even a few hours before). Now, with everyone rushing to get the tickers... I'll be left with watching all the main concerts on TV.

Latvia is in recession

Today, Latvian Statistics office revised its estimate for economic growth in Q4 2007 downward to 8%. It sounds still good but only until you look at it in the right way....

The right way is to break down the growth by quarters of 2007, as Edward Hugh did in this post. Doing that with the revised estimate gives:

• Q1 2007 (compared to Q4 2006): +2.4%
• Q2 2007 (compared to Q1 2007): +2.7%
• Q3 2007 (compared to Q2 2007): +2.8%
• Q4 2007 (compared to Q3 2007): 0.0%.

Our prime minister is still predicting 6% growth (down from his earlier 7.6%) for 2008 but I think it's a major overestimate.

Latvia is in an extremely sharp economic slowdown. It's not yet felt here in everyday life, but, soon, it will be.

In another bad news story, Latvian Statistics estimates that inflation is at 16.7%/year now. Most of last month's inflation is, however, taxes on tobacco and higher heating costs. So, the local inflationary spiral may be just simply bad, not horribly bad.

From a joint press conference of Latvian and Estonian PMs

Andrus Ansip, Prime Minister of Estonia:

I do not see in Latvian statistics transit flows that have been redirected from Estonian ports to Latvia. So, probably they won't build a monument to me in Ventspils [the main Latvian port city] - no reason for that.

Sure, it's just an accident that transit flows through Latvian ports started growing right around the Bronze Soldier incident in April 2007:
A matching denial from our PM, Ivars Godmanis:

I have never said that [when asked whether Latvia could become a new "window to Europe" for Russian investors who can't use Estonian ports for political reasons]

Aaah, the illusion of united Baltics standing up to Russia...

Consumption boom? What boom?

This is a few days old but I have not seen it covered elsewhere. Latvian Statistics office reports that retail sales in Latvia decreased by 0.7% in January 2008 (compared to January 2007).

Just a half year ago, sales were growing by 24%/year and every area of the Latvian economy was booming. Now, the boom is over and the economy is slowing down at a breathtaking speed. I suspect nobody has a good idea what will happen next.

Estonia is heading in the same direction. Lithuania is still booming. My guess is that they are about half a year behind Latvia.

Devaluation fears? What devaluation fears?

For last 3 weeks, Bank of Latvia has intervened into the currency market to maintain the currency peg of 1 euro=0.7028 lat (+/- 1%). They've bought a total of 24 million euros in 3 weeks, to prevent the lat from rising against euro.

Economists are still discussing whether the imbalances in Latvian economy could lead to a devaluation of the lat in the future. But, despite those discussions, it's now the euros that are being changed into lats, rather than the other way around. And, in the streets of Riga, currency exchanges are selling euro banknotes for 69.8-69.9 santims, about half percent below the Bank of Latvia official rate.

Two months ago, I wrote that people are starting to disregard devaluation rumours as background noise. It's even more true now.

Pirates of the Sea

This is the Latvian song for 2008 Eurovision Song Contest:

I think it was one of better songs from a selection which could have been better. We had the most complicated multi-stage selection process ever this year and all that we got was a pretty mediocre group of songs for the national finals.