Some Wisdom on How to Deal With An Economic Crisis

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By Barry Rubin

I'm in Riga, Latvia today, where my grandfather was born and my great-grandparents lived. It is a charming city and I hope to write more about it later. But I wanted to share with you a little story that you might find relevant.

Whether or not you know it, Latvia has gone through one of the most difficult economic situations of any European country, though things are a bit better now. A major bank failure forced a massive increase in government spending and the national debt last year.

One of my conversations was with a Latvian intellectual involved in public affairs. As we discussed the problem I asked what Latvia's government and leadership did about the crisis. Without hesitation he answered:

"What do you do when your economy goes into a crisis like this? It's obvious! You must sharply cut the government's budget of course and that's what we did."

Sounds pretty obvious, doesn't it?