The price of uncertainty (63)
Autors: Mortens Hansens
Publicēts: 2009. gada 16. novembris 22:55
Atslēgvārdi: , , , , , , .
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One of the main questions in the economic-political debate right now is how to jump start the economy. Unfortunately, it is a question with preciously few answers to it, in particular in the short run. But there are two simple suggestions that I think have received far too little attention.

It is hard to convince consumers to start spending. Many are loaded with debt, very many are fearful of unemployment and almost everybody seems gloomy.

Some have asked for “Obama-type” stimulus package which ignores the fact government does not have a single santim to spend beyond what it borrows from the IMF and the EU.

Exports still have to wait for recovery in trading partner countries. What about the investment?

Latvia should be a much more attractive place for companies to produce goods in than it was just a few years ago. Today available labour is plentiful and can be obtained at a much more attractive price since wages are on a steep downwards trajectory.

Nevertheless, investment into new companies, equipment etc. contracted by no less than 38.1% in the 2nd quarter of this year (compared to the same quarter last year). OK, companies are about as gloomy as consumers but I think there is more to it.

Firms need certainty to make proper business decisions. It is lacking in two ways that should be addressed more aggressively.

Sometimes when I wake up I think: “What will be today’s tax proposal? And will it be implemented or shot down?” Why should companies want to invest if they do not know what next year’s tax regime will be?

We are all aware that the collapsing tax revenues have made it a Herculean effort to limit the budget deficit. But certainty about the tax regime of not just next year but the next several years is necessary for the companies  to make their long-term decisions on whether to come here: or to leave.

In that respect 2009 has also been a lost year and I can fully understand if the companies are sitting on their hands.

The second area of uncertainty is the never-ending, never disappearing issue of the exchange rate. From my reading of news from abroad the fixed exchange rate has little credibility. Just witness the Swedish or the British media that will immediately link a political crisis and/or budget crisis to a potential devaluation.

If the companies believe in devaluation they may hold back investment thus having a detrimental impact on the current state of the economy. But how to prop up the credibility of the exchange rate? Bank of Latvia can repeat for the umpteenth time that it is committed to a fixed rate and that devaluation is not an option but this just lacks credibility abroad.

Just like with the tax system I would look for a stronger political commitment to the exchange rate via a fiscal policy that is firmly behind the IMF-EU package.

In a fixed exchange rate system fiscal policy is the main economic policy. But the policy pursued failed Latvia in the boom years by being far too procyclical and it fails it now by not providing unity.

In just 13½  months Estonia might be in the eurozone. I could imagine an “investment stampede” as firms ditch an unpredictable Latvia and scramble for the calm and certainty in Estonia, thereby creating even bigger disparities between the two countries.

Morten Hansen picture Morten Hansen is Head of Economics Department, Stockholm School of Economics in Riga


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(30 balsotāji )
Komentāri
41.

Runājot latviski.
Jebkurā gadījumā tā ir kārtējā skandināvu saucēja balss Latvijas tuksnesī,kuru neviens nesadzirdēs un arī negrib sadzirdēt.

Ja bez devalvācijas,ar nodokļu paaugstināšanas izdosies izvilkt no krīzes un atgriezt valsti pirmskrīzes stāvoklī,tad cepure nost pašreizējās varas elites priekšā.

Rīt Latvijai ir Dzimšanas Diena.
Apsveicu visus Valsts svētkos.

Morten,
I have some suspicion that the internal devaluation as it is popularly being called will fail. The reason is that major part of the work force will leave to the relatively open EU labour market. In the past workers left Latvia if their salary was not raised. The current plan is to cut the costs as much as possible. The result is obvious – close to 200 thousand people left Latvia in 2009.
The tragic thing is that there is no real answer to this problem and it does not seem that anyone is able to deal with it.

Devaluation is both impossible and impossible for several reasons. 1. Swedes will not let that happen, because a high risk credit portfolio is more than a safe empty portfolio. Would be interesting to see how many people of the population have liabilities – my wild guess is >50%. 2. Fiscal policiy I think is both impossible due to the lack of money and exempted creditability. And as we see, due to political reasons fiscal policy is highly ineffective because of duties payable to “Orange baron”.
Solutions: Increase income from taxes to have ability for fiscal policy that would not be backed up by heavy loans. How to do that – say at the first of january everbody starts to pay taxes. on the second of January first 10 smugglers are at the court for avoiding taxes. On the third day the first 10 receive jail penalty, and the addiotional 5 are brought to court. On day 4, we reduce VAT to 18%, impose progressive personal income tax starting from 500LVL, increase untaxable income, reduce tax on retained earnings, etc. After a year should consider mandatory income decleration.. Sounds impossible? No!

Internal devaluation is happening already!! At least in the private sector. Although its speed is directly linked to what whas mentioned reagring the firms’ thoughts of additional investments. If they would want to increase production, add people – then we could see a real devaluation. Right now, since there is NO demand, the price of labor can formally be zero to infinity.

22.to riepa
2009. gada 17. novembris, 09:46

lūk, vēl viens kaunīgā letiņa gadījums: nav pat sapratis, par ko oponents runā, bet par katru cenu cenšas par kaut ko kaunināt un kaunēties. Gļēvs tik ļoti, ka nespēj pat pievienot kādu niku, kam adresēt atbildi šai anonīmajā sarunvietā.
Ja, gadījumā, vēl arvien nav skaidrs, atšifrēšu, ka stāsts it nemaz nav ne par raksta autoru, kura uzskatiem man nekas nav iebilstams, ne par faktu, ka viņš rakstu uzrakstījis, kā jau minēju, mūsdienu lingua franca (liekas, dažam labam tas šķiet kāds lamuvārds). Stāsts ir par jums, dārgie visiem d.rsā līdēji, kas atradīs, kur ielīst pat tad, kad nav nekādas vajadzības, un, kā šajā gadījumā, īsti nav kur, bet lunkanā mugura liecas pēc ieraduma. Laikam tomēr taisnība, ka tam, kas dzimis rāpot, nekad nelidot. Tikai tādiem nekad nepiederēs zeme, pa kuru rāpo.

Sanita Jemberga

“When it comes on commenting in English, I must confess I do have a habit to answer people in the language of the conversation.”
Tagad aizstāsim English ar Deutsch, svensk, russkij, un pasakiet, lūdzu, kam mums šeit sava valsts, ja mēs, tāpat kā bauru laikos, esam gatavi locīt mēli vienalga kā, lai tikai sarunu biedrs justos, mūsuprāt, labi.
Habit, kā zināms, ir otrā daba, tomēr ne visi habiti ir veselīgi. Vai, jūsuprāt, jūs, kam šādi habiti, būsiet tie, kas šo valsti nosargās latviski runājošām nākamajām paaudzēm? Tikai neglaimojiet sev, ka ar Dienas lunkanajām “vērtībām” pietiks.

47.
pmlks > piekrītu riepai
2009. gada 17. novembris, 16:42

sevišķi muļķīgs bija Sanitas Jembergas Burkānu Edžum adresētais posts angļu valodā :(

Goda vārds, šis jūsu, pārgudro ekonomistu, čats angļu mēlē man atgādina tipisku sapulci latviešu darba kolektīvā, uz kuru ieradies kompartijas instruktors, krievs, no rajona partijas komitejas. Tad arī visi letiņi kā jau kalpiem pienākas lauzītā krievu mēlē par savām darba uzvarām vāvuļoja :( Nu tieši kā Mirtas tante no Limuzīna: “A u meņa dokumenti vjo porjadke!”

Vai tiešām jūs visi esat šī cienījamā REA pasniedzēja studenti, ka, rakstīdami angliski, gribat, lai viņš labāk saprot un augstāku atzīmi ieliek? Vai varbūt mums latviešiem pašiem vajadzētu par savu ekonomiku diskutēt savā valodā, pat tad, ja diskusiju iniciējis svešzemnieks?

P.S. Pirms kāda laika bij gods padzīvot Dānijā. Dāņi diskusijās runāja tikai dāniski un tā bija mana problēma kā saprast viņu runāto, jo galu galā es atrados Danijā un spriests tika par viņu pašu ikdienas lietām

no lending, no investments. that simple. un skaidrs, ka smagi iegrābušās skandināvu bankas tik drīz Latvijā kreditēt nesāks.

Starp citu, uz mana tīkla pārlūka zem rīku rindas kopš kāda laika parādījies Googles tulkošanas palīgs, kurš vienmēr piedāvā laipni pārtulkot latvisku vai jebkādu citā valodā rakstītu tekstu angliski. Esmu mēģinājis to darīt, par kvalitāti spriest neesmu kompetents, bet jēgu izlobīt var.

atverot šo rakstu šis brīnumrīks pazuda! :(
Te varētu gluži kā pans Kleksis uzdot jautājumu: “Vai nav dīvaini, ka…?”

50.
Burkānu Edžus - Tulkojums ar Google
2009. gada 17. novembris, 16:55

Viens no galvenajiem jautājumiem ekonomiskās politiskās debates šobrīd ir, kā lēkt sākt ekonomiku. Diemžēl, tas ir jautājums ar preciously dažas atbildes uz to, jo īpaši īstermiņā. Bet ir divi vienkārši ieteikumi, ka es domāju, ka saņēmis pārāk maz uzmanības.

Ir grūti pārliecināt patērētājus, lai sāktu izdevumus. Daudzi ir piekrauts ar parādu, ļoti daudzi ir šausmīgs bezdarbs un gandrīz ikvienam šķiet drūms.

Daži ir uzdevuši jautājumus par “Obama tipa” stimulu paketi, kas ignorē faktu valdībai nav vienota santīmu tērēt tikai to, ko tā aizņem no SVF un ES.

Eksports vēl ir jāgaida, kas paredzēti reģenerācijai tirdzniecības partnervalstīm. Ko par ieguldījumiem?

Latvija būtu daudz pievilcīgāku uzņēmumiem ražot preces, nekā tas bija pirms dažiem gadiem. Šodien pieejamā darbaspēka ir bagātīgas un var iegūt daudz pievilcīgāku cenu, jo alga ir par stāvu uz leju trajektorijā.

Tomēr investīcijas jaunu uzņēmumu, aprīkojumu uc līgumus ar ne mazāk kā 38,1% no 2.ceturksnī šogad (salīdzinot ar to pašu ceturksni iepriekšējā gadā). OK uzņēmumiem ir aptuveni tikpat drūms kā patērētājiem, bet es domāju, ka tur ir vairāk uz to.

Uzņēmumiem ir nepieciešama skaidrība, lai pienācīga uzņēmējdarbības lēmumus. Tam trūkst divos veidos, kas būtu jārisina vēl agresīvāk.

Reizēm, kad es pamostos, es domāju: “Kāda būs šodienas nodokļu priekšlikumu? Un vai to īsteno, vai notriekts? “Kāpēc uzņēmumi vēlas investēt, ja viņi nezina, ko nākamā gada nodokļu režīms būs?

Mēs visi zinām, ka sabrukums nodokļu ieņēmumi ir radījušas milzu pūles, lai samazinātu budžeta deficītu. Bet noteiktību par nodokļu režīmu ne tikai nākamajā gadā, bet tuvāko gadu laikā, ir vajadzīgi uzņēmumiem, lai tie-vai ilgtermiņa lēmumus par to, vai nākt šeit: vai atstāt.

Šajā ziņā 2009 ir arī zaudēts gads, un es var pilnībā izprast, ja uzņēmumi sēdē viņu rokās.

Otra šā nenoteiktība nekad nebeidzas, nekad pazušanu jautājums par maiņas kursu. No mana lasījums ziņu no ārzemēm fiksēto valūtas maiņas kurss ir nedaudz ticamību. Tikai liecinieks zviedru vai Lielbritānijas plašsaziņas līdzekļiem, nekavējoties saite politisko krīzi un / vai budžeta krīzes iespējamo devalvāciju.

Ja uzņēmumi tic devalvācija tās var kavēt investīcijas un tādējādi tā negatīvi ietekmē pašreizējo situāciju ekonomikā. Bet kā sliet ticamību kursu? Bank of Latvija var atkārtot, lai umpteenth reizi, kad tas ir izdarīts, lai fiksētu likmi un ka devalvācija nav risinājums, bet tas vienkārši trūkst ticamības ārzemēs.

Tāpat kā ar nodokļu sistēmai es meklēt stingrāka politiskā apņemšanās, lai valūtas kursa, izmantojot fiskālo politiku, kas ir cieši aiz SVF un ES paketi.

Kas fiksēta valūtas kursa sistēmas fiskālā politika ir galvenais ekonomikas politiku. Bet politiku nav Latvija ir uzplaukuma gados, ja to pārāk ciklisku un tā nespēj tagad ne sniedzot vienotību.

Tikai 13 ½ mēnešus Igaunija varētu būt eirozonai. Es varētu iedomāties “ieguldījumu paniska bēgšana”, kā uzņēmumi, grāvja neparedzamu Latvija un motokross par mieru un drošību Igaunijā, tādējādi radot vēl lielākas atšķirības starp abām valstīm.

Kalvis

Tieši tā, mēs grašu ietaupīšanas vārdā erodējam savu bērnu nākotnes izredzes šai zemē. Tā turpinot, mums nekas neatliks, kā vecumdienās iet uz kebabnīcām, jo Ķirsonu beidzot būsim izēduši, darbā nāksies ņemt turkus, indiešus, ķīniešus un, protams, krievus, jo tiem nevajadzēs ne tik spīdīgus autiņus, ne tik lielas mājas kā letiņiem, lai sāktu sevi cienīt.
Citos laikos šādā ekonomiskajā situācijā sāktos kari, tikai mūsdienās prastu karadarbību aizstājušas ekonomiskās invāzijas. Un šādā kontekstā, katrs uzņēmējs ir līdzīgs lielākam vai mazākam veco laiku labietim, kurš ir atbildīgs par saviem padotajiem un, ja grib “sargāt tēvu zemi”, viņam sava teritorija jāsargā ar latiem un nodokļiem.

52.
angry>Burkānu Edžus
2009. gada 17. novembris, 17:04

šitas ir labs! vismaz kāda jautrība drūmajā ikdienā.

Yep – hard to feel optimistic. Whatever the cost of (unproductive, underskilled & underqualified) labour falls to in Latvia, why would anyone invest here? As Morten notes, the daily new suggestions for tax increases, which never quite reach the statute books, will deter investors. As will the inability of the government to decide how to balance the books, 11 months after signing up for IMF loans.

I’m glad Morten is still blogging. He know’s his economics every which way. Shame the locals usuall disregard anything foreigners say, especially when it’s not in the precious state language. There are plenty of young university students who know their ecnomics, but those in government do not.

So, I’m struggling to see Latvia’s situation as anything other than a total write off. I hope I’m wrong. Luckily, the Latvian economy is very open. I say ‘luckily’ because since no good will come from inside Latvia (due to its uniformly apalling politicians) any future improvements (expertise, investments etc) are likely to come from abroad.

Btw Morten – your English is immaculate. Respect!

Well, the answer to the second uncertainty would be simple, given the people in Frankfurt would not be so busy to sort out the already messy Eurozone. Just admit the Eastern European countries to the Eurozone! No more separation between the ‘other Europe’ (except for GB, SWE, developing Europe) and ‘normal Europe’ (countries having euro – even Spain, Greece and Portugal are perceived better than the best of Eastern European countries). True, such move would cause even more emigration (the problem we have to deal with sooner rather than later anyway). True, Latvian nationalists would moan more about selling out Latvia to foreigners. However, they did not say anything when they were too busy to make easy money on real estate operations, buying and selling property with money they did not have. I’d rather see myself working for a foreigner with state-of-the-art technology and living in 21st century rather than working for myself (or my neighbor) in a manufacture of 16th century and ‘enjoy’ the living conditions as of 16th century, because me (or my neighbor) took loads of loans we could not afford and now we cannot get anything better than a sickle and hammer… I am exaggerating of course, to make my point.

It’s kind of gratifying the dumb grasshopper, though. Obviously, noone wants to create moral hazard issues other countries later could refer to. Even now, why would Estonia need to comply with the rules if Latvia does not and still is admitted to the Eurozone? A bit unfair.

P.S. Glad that I found this place. I have to admit I had this thought for a sec (a couple of hours frankly :) that you’d actually quit blogging at all. Happy to see I was wrong. Thank you for that.

P.P.S. To the angry teacher – sorry for my bad English :)

55.
Nemesis -> angļu valodas skolotāja
2009. gada 17. novembris, 17:22

offtopic:
angļu valodas skolotāja: “…un izlabošu visiem kļūdas!”
kļūdas, varbūt, labot nevajag- gari sanāks, bet atzīmes, teiksim atbilstoši vidusskolas prasību līmenim, par angļu valodas lietošanu pašmāju ekonomikas ekspertiem salikt varētu, nu tā pārdomām…

56.
Burkānu Edžus - Tulkojums ar Google
2009. gada 17. novembris, 17:49

Bet kopumā mister Morsen ir labs.
Palasiet,ko viņš ir publicējis par mūsu zemes ekonomikas attīstību un kādus secinājumus izdarījis.
http://www.sseriga.edu.lv/node/383

Kronis visam ir Burkānu Edžus apsūdzība Hansenam par viņa angļu valodas saprotamību.

As to the whole idea – I largely agree. That is why it is very important, as soon as the 2010 budget is in place, to indicate how we would get the next 500 million for 2011. To make some 3-year program or whatever with measures to be implemented. That may also allow to include nice measures for more remote years… This year show that all the crap about deflationary spiral and bla, bla turned out to be not true. Basically, Latvia is going according to the plan and a bit better. Therefore, there are no uncertainties about the economic outlook, what is left is just to do what is promised and planned. However, considering Latvian politics, I cannot imagine how could that be donein an election year. Therefore, I think we just have to relax and enjoy low real estate prices and no-traffic-jam environment until autumn 2011. :) …. Still, I do not quite understand Latvian politics, they think people respect weak polticians, not able to do anything and looking like puppets of the IMF? I think, it is more rational to say yeah, there will be two more harsh years but we will do this, this, and this, to bring the country back on track than do it the usual Latvian way – try to “negotiate with the IMF” and afterwards look ridiculous.

Apologies, of course, the nice stabilty of flat “bottoming out” will last until autumn 2010 (elections), not 2011… I still hope that parties will engage in some activities to make a 3-year plan or something right after the 2010 budget. Or do they really hope to be re-elected on a purely populistic platforms trying to talk total bullshit like in Ukraine and showing-off as some kind of oligarch-visionaries? I would not rely on that. We have seen it all and the oligarch niche will be pretty crowded in the next elections. For the People’s Party that would be a sure road to oblivion. Slesers and Lembergs may be more successful.

Latvia will simply become the new Moldove, where 1/3 of population has simply LEFT, and you can guess that those people weren`t pensioners.

That is almost impossible. EU membership guarantees that we don’t fall in a black hole. Being heavily overrepresented in the EU guarantees that living here will always provide better opportunities than in Moldova, in many ways.

[...] un ieteikumiem ekonomiskajai politikai, tomēr vēlētos oponēt dažiem vērtējumiem rakstā „The Price of Uncertainty”. Man šķiet, ka mans draugs ir pārāk ļāvis ietekmēties no sabiedrībā valdošās [...]

‘Just like with the tax system I would look for a stronger political commitment to the exchange rate via a fiscal policy that is firmly behind the IMF-EU package.’

The package that has gone, predominantly to Parex and the banks’drošības spilvēns? Received on condition of implementing a policy of cuts already proving too hard to take for many of the population (you know – teachers, nurses, doctors, pensionners, the unemployed, anyone with kids etc etc)?

OK, you may have heard this line before, but I would welcome some solid argumentation as to why the banks should be bailed out with EU/IMF loans that the state (taxpayers) will have to eventually pay back.

At the very least, I would be happy to see some more backbone when dealing with, for example, Parex creditors/shareholders (or would that be a deterrent to future ‘investment’?).

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