A NOVEL WAY TO SOLVE THE FINANCIAL CRISIS.

Edward Hugh has been doing fantastic work (available at Fistful of Euros) describing the challenges presented by the financial crisis to various European economies. He suggests that Latvia (along with several others) will be forced to devalue its currency in response to the crisis. Unfortunately, it appears that voicing such an opinion in Latvia incurs a visit from the State Security Service:

According to the Baltic Course online newspaper Ventspils University College lecturer Dmitrijs Smirnovs was detained for two days recently on suspicion of spreading rumors about the devaluation of the Latvian currency. He was detained in connection with an opinion that he had expressed during a debate about the development of the Latvian economy and the future of the Latvian banking and credit system. His arrest followed the publication of his opinion in Ventspils’ local newspaper Ventas Balss.

Dmitrijs Smirnovs appears to have been detained by members of the Latvian Security Police, who seem to have been charged with the special mission of protecting the integrity of the Lat at this very delicate point in Latvian history.

At least a couple of other commentators have been visited by the police, including the lead singer of a rock band who publicly opined that Latvian bands weren't safe. The issue, as Hugh points out, is that comments about the fragility of the Latvian financial system could spur a panic, making things much worse. The problem is that the Latvian financial system is really, really fragile. Aside from the fact that democratic states shouldn't be in the business of arresting people for expressing opinions on devaluation, I'm inclined to doubt whether such arrests will have a calming effect; if the situation were secure there would be no need to arrest people for suggesting it isn't.

--Robert Farley

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