Tuesday, May 19, 2009

Devaluation would hurt the Baltic elite

According to the Finnish business newspaper Kauppalehti, the Baltic States have postponed the devaluation of their national currencies to avoid hurting their elite.

The article also explains that instead of devaluing currencies to overcome the current crisis, Baltic governments prefer to implement "soft devaluation" by cutting state budgets. By doing so, they hurt mainly the poorer classes since the unemployment rate is increasing very quickly and it is also affecting public sector employees such as civil servants, teachers, policemen, but also disabled people, families with several children, pensioners, sick people...

"Baltic governments say that they cannot devalue since it would affect foreign investors and the European Union. The real reason is that devaluation would hurt those classes in the Baltic states who have borrowed extensively from abroad to build up property empires at home. In other words, the Baltic elite."

The newspaper also claims that because of this high bank exposure, Baltic states are much riskier for Sweden and Finland than Iceland for example.

0 comments - React: