To the great dismay of the IMF, the ECB, and proponents of austerity everywhere, the world is in danger of finding out the truth about Latvia. The austerity gang has been touting Latvia as a model of successful austerity hoping that no one would be able find the tiny country on a map.
But, the game is over. Mark Weisbrot pointed out that Latvia both did not really follow the austerity plan (the IMF went along with a weakened plan) and is not much of a success story. Its GDP is still well below its pre-recession level and close to 10 percent of its workforce left the country in search of work elsewhere. In addition to Mark, Paul Krugman and Ronald Janssen of European Trade Union Confederation are on the job.
Sooner or later the austerity crew will find a successful model to tout, right?