Joining the euro

Komentāri (18)

baibabruvele 08.02.2011. 13.54

oh yes, in English “trekgnie gadi” in the biblical sense ( and that´s how Kalvitis meant it in his speech) are translated as “years of abundance” and not “fat years”. Translated as “fat years” people who don´t speak Latvian might not get the allegory with the story from the Bible about Joseph in Egypt and 7 years of abundance.

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Le 07.02.2011. 15.03

Kopš kura laika Ir.lv ieviesis otru valodu? Līdz šim viņi vērsās pie latviešu lasītāja, bet tagad? Ne jau tas, ka neprotu izlasīt angliski, bet princips. Angliski var lasīt arī citur. Jau tā latviešu valodas telpa tīmeklī nav diez ko plaša, bet tagad paši vēl vairāk to sašaurinām. Ja jau autors neprot latviešu valodu, tad raksts ir jātulko, lai var izlasīt visi, ne tikai angļu valodas pratēji. Jāciena arī tie Ir.lv lasītāji, kas angļu valodu neprot.

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ArmL 06.02.2011. 23.09

This article is a small step towards a problem solving in a logical way. First of all, we need to know what we want to achieve, then think about how to do that. Consolidation of 50m or 250m, whatever, is the last step.

FYI Latvia is in top25 of Nomura Food Vulnerability Index
The coming surge in food price(September 2010)
http://www.nomura.com/research/getpub.aspx?pid=390252(pdf)

IMHO it’s not finance, energy and food. It’s all about supply chains – finance, energy, transport.
“Scientists who study complex systems have been warning that ever-tighter coupling among the world’s finance, energy and food systems would result in waves of political instability. Some say that is now happening in the Middle East.”
Can complexity theory explain Egypt’s crisis? (03 February 2011)
http://www.newscientist.com/article/dn20082-can-complexity-theory-explain-egypts-crisis.html

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harijs_m 05.02.2011. 14.34

Let’s wait and see till the end of 2011 if there will be any EUROZONE to join at all. Depends on big guys on girls… The same with joining the EUROZONE.

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rafiks119 05.02.2011. 13.44

Un visi jāņi mierīgi ļaujas. Smalki laikam skaitās.

-8

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harijs_m > rafiks119 05.02.2011. 14.36

Ja diskusija ir uzsākata angļu valodā, tad ir tikai pieklājīgi to tā arī turpināt.

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baibabruvele > rafiks119 08.02.2011. 13.57

Tu laikam nemaki angliski un tev pilnigi pamatoti par to ir kauns.

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rafiks119 05.02.2011. 13.43

Tas ārvalstu āksts latviski nemāk rakstīt? Pie mums no viena grāvja otrā- obligāti vajag otru valsts valodu.

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UgisB 05.02.2011. 13.35

***More budget measures aiming at lowering inflation, please!

Yes, and rethinking the criteria for joining the eurozone. The latter one is not for Latvia to decide of course. But those do look like a loophole for a smartass. And that’s not for the sake of Latvia joining! Let Latvia fulfil all criteria, that’s only for Latvia’s own good.

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janis_znotins 04.02.2011. 18.41

An additional interesting aspect with the inflation criterion is that the ECB and the EC have the liberty to decide which countries are “three best performing Member States in terms of price stability” in the sense of the Maastricht Treaty for the calculaton of the inflation criterion.
So, in May 2010, the ECB included in this calculation THREE Member States with NEGATIVE HICP (Portugal (-0.8%), Estonia (-0.7%) and Belgium (-0.1%)) and excluded only Ireland (-2.3%) which was “judged to be an outlier as this inflation rate is significantly lower than those of the other Member States due to the accumulation of a number of country-specific factors.” As a result, the inflation criterion was set at 1.0=(1/3*[(-0.8)+(-0.7)+(-0.1)])+1.5
So, in May 2012, who knows which countries might be judged to be outliers?…

See ECB Convergence Report (May 2010), page 9
http://www.ecb.int/pub/pdf/conrep/cr201005en.pdf

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loptik 04.02.2011. 16.39

I don’t quite understand the argument. The logic goes like this: “since we have problems with the inflation criterion we should jump on the eurozone train while we have low inflation. We should hurry because we all know that after 2012 we are going to have a prolonged period of high inflation”. Sorry but that goes against the whole idea of Maastricht criteria! Which is: countries’ inflation rates should not diverge too much from the other eurozone countries’ inflation rates since such divergence poses risks to competitiveness, and as a result, to the stability of the eurozone.

If we continue with this attitude, I am afraid the Lithuania’2006 type of disappointment awaits us in the future.

But the Latvian authorities should definitely be concerned. I haven’t looked into the problem recently but my intuition is that the problem is structural. Which is: we have more weight on tradables, especially food, in CPI than developed countries. And money printing in the US, inducing commodity inflation and inflation in emerging markets (which produce most of the imported goods in our shops), is a trend which is going to continue in the future.

How to solve it? Difficult. But the near 20 percent unemployment is a clear sign that we can do a lot to increase labor market flexibility. E.g. why haven’t we seen a rise in the number cheap barber shops during the crisis? Yep, because the rents are high and regulation is excessive. Why rents are high? Because commercial real estate taxes are low and it does pay off to keep rooms empty. Why the regulation is excessive? Because nobody is aware that there is a problem. We can go sector by sector and we will see similar problems everywhere.

+13

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loptik > loptik 04.02.2011. 20.16

Un tad? Neesmu dzirdejis, ka LB tiktu pieprasita 100 procentiga viedoklu konvergence. Noraadu uz riskiem, kas saistiti ar so argumentaciju. Ir, protams, ari pretarguments: galu gala lemums ir politisks kaa redzam pec Igaunijas un gruti ir kadu valsti nelaist eirozona, ja ir izpilditi visi kriteriji (ar merenu rezervi). Tachu vel ir janem vera, ka var gadities situacija, ka tas “window” vispar nav un mes jau tulit aiziesim kartiga inflacijaa. Butu svetigi sakt domat, ko darisim un vai kaut ko var darit…

Par Igauniju un Lietuvu ne parak sapratu, ko gribejat teikt, bet Igaunijas pasreizeja gandriz 6% inflacija, domaju, tiks izmantots kaa arguments pret Latvijas dalibu eirozona, ja mums bus lidzigas problemas. Un burbula laika, cik atceros, mes isteniba diskutejam ljoti daudz, negribas to vesturi atkal atkartot, bet varat paskirstit atpakal LETA.

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baibabruvele > loptik 04.02.2011. 20.22

What you said is basically what Morten said. Economy is picking up everywhere, so why are we the ones who are again about to have the highest inflation in Europe? And the answere was in the structure. In the 1001 things that could be done to work more efficiently, produce more value for same money etc. Some of these things you mentioned. And this is the most difficult part, because it won´t be enough simply to cut expenses or increase taxes. This will take lots of thinking day after day, step by step and we might suceed after, but Morten apoints very well – we might fail.

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baibabruvele > loptik 04.02.2011. 20.30

I can only agree. Eurozone is a weird “zone”, the harsh criteria are only for countries outside the “zone”, the ones inside have no criteria at all in reality. How wrong is that? Most of the euro countries not only now but in forseeable future would not be able to join the Euro if they had to. Their economies including the big core countries are simply not fit enough. And euro is as fit as its member countries.

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loptik > loptik 05.02.2011. 23.48

Nu pati vairak vai mazak atbildejat uz jautajumu. Bridinaja jau 2005. gada. Un bridinaja ari velak, noteikti vairak kaa jebkursh. Ieksheja diskusija LB, cik atceros, ipashi nebija, jo tas, ka bus krahs bija skaidrs un tur nebija, ko diskutet. Savukart 25% kritumu es, personigi, neparedzeju (domaju par kadu 5% kritumu), jo nespeju paredzet Lehman krahu, un vel jo mazak, taa sekas. Neatceros gan nevienu, kursh speja. Bet visu cienju, ja kads vareja. Ar tadam zinashanam var sapelnit miljonus. Tas, kam ticet, savukart, ir katra briva izvele, ko nedomaju, ka vajadzetu ierobezhot. Daudzi toreiz ticeja Kalvitim… Un kapec nee?

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Dzintars > loptik 06.02.2011. 15.16

Gundars, you fail to take into account that the Maastricht inflation criterion uses the whole consumer price index where a much fairer criterion would be related to inflation in tradable goods only. Since the Latvian price level is still relatively low we must expect more price convergence as the economy develops – the Balassa-Samuelson effect. This is primarily a convergence of nontraded prices (hair cuts, public transportation etc etc), all of which are NOT relevant for competitiveness but matter for inflation.

This effect ensures that Latvian inflation in the very long catch up phase will be above EU27 inflation on average, making it more difficult to join the eurozone.

Thus it makes a lot of sense to try to join the eurozone while this small window of opportunity exists.

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