Today the Hindu community of Bangladesh are celebrating Saraswati, the goddess of knowledge, music and the arts. She is the consort of Brahma and considered to be the “mother of the Vedas”. Dhaka, Bangladesh. 08/02/2011
The bottom line is that populism is not very popular in a serious crisis. The public understands the severity of the situation and wants a sensible and resolute government that can handle it as forcefully as necessary. Therefore, radical crisis resolution is likely to be a more successful political strategy in a time of economic trouble than populism, as shown by the victory of the Latvian government coalition in the parliamentary elections on October 2, 2010, and of the center-right parties in Lithuania two years earlier. The radical free-market government in Estonia sat safely throughout the crisis. Democracy has not impeded, but in fact has facilitated, crisis resolution. In this part of the world, free-market, center-right governments have never been stronger. A final observation concerns the international macroeconomic discussion, which has been superficial and even harmful, indicating an intellectual and moral crisis. Whenever a crisis occurred, a choir of international economists claimed that it was “exactly” like some other recent one. Prominent economists led by New York Times columnist Paul Krugman claimed that, “Latvia is the new Argentina.” A fundamental problem is the inclination to accept a brief list of stylized facts, without bothering to take into account the most elementary facts, which distinguish one crisis from another. Consequently, Estonia, Latvia and Lithuania can offer Greece and other crisis countries in the Euro-zone lessons of radical internal devaluation, because for the European and Monetary Union members of the EU, devaluation is not an option. Today, the Baltic crisis resolution exemplifies how it should be done: early, fast and surgically.