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In March, 32 people died in neighbouring Belgium when suicide blasts hit Brussels airport and a metro station. So-called Islamic State said it was behind both the Paris and Brussels attacks.

The attacks could hit tourist sites, restaurants, commercial centres and transportation, it warns, with large events such as Euro 2016 singled out. @media only screen and (min-width: 1px) { .ns_datapic_stat--euro-2016-data .ns_outer_wrapper { background-image: none; } .ns_datapic_stat--euro-2016-data .ns_outer_wrapper .ns_inner_wrapper { max-width: 100%; padding: 0; } } @media only screen and (min-width: 480px) { .ns_datapic_stat--euro-2016-data .ns_outer_wrapper .ns_inner_wrapper { max-width: 40%; padding: 0.5em; } .ns_datapic_stat--euro-2016-data .ns_outer_wrapper { background-image: url(http://news.files.bbci.co.uk/vj/live/idt-images/data_pic-Euro_2016_data/marseille_r13sr.jpg); } } .ie8 .ns_datapic_stat--euro-2016-data .ns_outer_wrapper .ns_inner_wrapper { max-width: 40%; padding: 0.5em; } .ie8 .ns_datapic_stat--euro-2016-data .ns_outer_wrapper { background-image: url(http://news.files.bbci.co.uk/vj/live/idt-images/data_pic-Euro_2016_data/marseille_r13sr.jpg); }

An unnamed US official told the Reuters news agency they had no particular threat information that gave rise to the latest alert.

More than 90,000 police, soldiers and private security agents are being deployed as well.

Greece will exit the euro not by choice but by necessity. It will do so not because the drachma (its old currency) is superior to the euro, but because the drachma is superior to barter

How the Spanish banking situation is handled will determine the future of the euro and possibly of the larger European Union. Will Germany's taxpayers and those of other solvent countries be willing to fund an even larger bailout of Spanish banks to save impecunious Spaniards? Will the citizens of EU countries outside the euro zone, such as Sweden and the U.K., be asked to chip in? Or will Spain be allowed to descend into a catastrophic 1930s-style banking crisis and Great Depression?

Third, the European banking system would have to be recapitalized and put under European, as distinct from national, supervision.

The fact that arrangements are made for the possible default or defection of three small countries does not mean that those countries would be abandoned. On the contrary, the possibility of an orderly default—paid for by the other eurozone countries and the IMF—would offer Greece and Portugal policy choices.

The German public still thinks that it has a choice about whether to support the euro or to abandon it. That is a mistake. The euro exists and the assets and liabilities of the financial system are so intermingled on the basis of a common currency that a breakdown of the euro would cause a meltdown beyond the capacity of the authorities to contain. The longer it takes for the German public to realize this, the heavier the price they and the rest of the world will have to pay.

Fourth, the government bonds of the other deficit countries would have to be protected from contagion.

he discussions ought to start right away because even under extreme pressure they will take a long time to conclude. Once the principle of setting up a European Treasury is agreed upon, the European Council could authorize the ECB to step into the breach, indemnifying the ECB in advance against risks to its solvency. That is the only way to forestall a possible financial meltdown and another Great Depression.

It was not simply that the eurozone was not structured to accommodate Europe’s economic diversity; it was that the structure of the eurozone, its rules and regulations, were not designed to promote growth, employment and stability.

The founders of the euro were guided by a set of ideas and notions about how economies function that were fashionable at the time, but that were simply wrong. They had faith in markets, but lacked an understanding of the limitations of markets and what was required to make them work.

Market fundamentalists believed, for instance, that if only the government would ensure that inflation was low and stable, markets would ensure growth and prosperity for all. While in most of the world market fundamentalism has been discredited, especially in the aftermath of the 2008 global financial crisis, those beliefs survive and flourish within the eurozone’s dominant power, Germany. These beliefs are held with such conviction and certainty, immune to new contrary evidence, that they are rightly described as an ideology.

Germany is talked about as a “success” only by comparison with the other countries of the eurozone.

It is perhaps natural that the eurozone’s leaders want to blame the victim – to blame the countries in recession or depression or reeling from a referendum result – for bringing about this state of affairs. They do not want to blame themselves and the great institutions that they have helped create, and which they now head.

According to Juncker, Europe is not to be held together because of the benefits that accrue – benefits that far exceed the costs, the economic prosperity, the sense of solidarity, the pride in being a European. No, Europe is to be held together by threats and fear – of what would happen if a country leaves.

One of the first lessons of economics is that bygones are bygones. One should always ask: given where we are, what should we do? On both sides of the Channel, politics should be directed at understanding the underlying sources of anger; how, in a democracy, the political establishment could have done so little to address the concerns of so many citizens, and figuring out how to do that now: to create within each country, and through cross-border arrangements, a new, more democratic Europe, which sees its goal as improving the wellbeing of ordinary citizens

There are alternatives to the current arrangements that can create a true shared prosperity: the challenge is to learn from the past to create this new economics and politics of the future. The Brexit referendum was a shock. My hope is that the shock will set off waves on both sides of the Channel that will lead to this new, reformed European Union.

the euro zone is about to repeat history. In the absence of sufficient resources for the new federal model, the new rules about budgets (and bank capital) are going to lead to pro-cyclical fiscal and monetary policies, deepening rather than alleviating the economic contraction we are witnessing.

if David Cameron can succeed in isolating Britain from the disaster that is unfolding on the continent, he deserves only our praise.

Last month I warned that the disintegration of the European Union was more likely than the death of the euro. You now see what I meant. The course on which the continent has now embarked means not just the creation of a federal Europe, but a chronically depressed federal Europe. The Eurocrats have exchanged a Stability and Growth Pact—which was honored only in the breach—for an Austerity and Contraction Pact they intend to stick to. The United Kingdom has no option but to dissociate itself from this collective suicide pact, even if it strongly increases the probability that we shall end up outside the EU altogether.

But that is not the entire story. The euro zone’s troubles have helped Germany’s export-oriented economy. The weak euro has made Germany’s exports more competitive against those of countries with which it competes, most notably the United States and Japan. Since the end of 2007, the euro is down about 10 percent against the dollar and about 20 percent against the yen.

The charts reflecting Germany’s unemployment rates, if they were the only evidence available on world economic trends, would seem to indicate there was a mild downturn in 2009 that soon ended, with the economy recovering the next year. The United States charts would indicate a more severe downturn, followed by a recovery that began in 2010 and may now be gathering strength. In Britain, there has been much less progress since unemployment peaked in 2011.

In the 16 other euro zone countries as a group, the chart indicates a deep recession that leveled off in 2010 and 2011 but has since gotten much worse — particularly for young workers.

The European Commission’s latest economic forecast, released last week, predicted declining unemployment in Germany this year and next, but said joblessness was likely to continue to climb in France, Italy and Spain.

Why can’t Europeans enjoy the conveniences of a common currency?Two reasons. First, unlike Europe, the United States has a fiscal union in which prosperous regions of the country subsidize less prosperous ones. Second, the United States has fewer barriers to labor mobility than Europe. In the United States, when an economic downturn affects one region, residents can pack up and find jobs elsewhere. In Europe, differences in language and culture make that response less likely.

As a result, Mr. Friedman and Mr. Feldstein contended that the nations of Europe needed a policy tool to deal with national recessions. That tool was a national monetary policy coupled with flexible exchange rates. Rather than heed their counsel, however, Europe adopted a common currency for much of the Continent and threw national monetary policy into the trash bin of history.

The motive was more political than economic. Europeans believed that their continent, once united with a common market and currency, would provide a better counterweight to American hegemony in world affairs. They also hoped that a united Europe in the 21st century would damp down the nationalist sentiments that led to two world wars in the 20th.

Flash-forward to today. Greece finds itself overwhelmed by its accumulated debts. To be sure, it bears primary responsibility. The Greek government borrowed too much, and for years it hid its fiscal problems from its creditors. Once the truth came to light, a large dose of austerity was the only course left. The result was an economic downturn with a quarter of the Greek labor force now unemployed. Continue reading the main story 136 Comments Making matters worse, however, was the common currency. In an earlier era, Greece could have devalued the drachma, making its exports more competitive on world markets. Easy monetary policy would have offset some of the pain from tight fiscal policy. Mr. Friedman and Mr. Feldstein were right: The euro has turned into an economic liability that has exacerbated political tensions. For this, the European elites who pushed for the currency union bear some responsibility

the eurozone, which is made up of 19 economies including France and Germany, is enduring big price hikes as a result of the economic recovery from the coronavirus pandemic and blockages in supply chains.

Across the eurozone, inflation is running at multiyear highs, including in Germany, Europe’s largest economy, where the annual rate has hit 6%.

Even that is below the 6.2% recorded at last count in the U.S., the biggest 12-month jump since 1990.

The eurozone’s core inflation rate, which strips out potentially volatile items such as alcohol, energy, food and tobacco, also spiked higher in November to an annual rate of 2.6% from 2%.

higher wages, for example.

However, the recently discovered omicron variant of the coronavirus has prompted some uncertainty over the global economic outlook, and as a result, central banks around the world are expected to hold back from announcing any big policy changes soon.

Many economists think the inflation spike over recent months will reverse next year as base effects linked with the sharp fall in prices during the pandemic last year, primarily of energy, are stripped out from annual comparisons.

Records started being compiled about the euro two years before its actual launch in 1999. For the first three years of its existence, it was an invisible currency that was traded on foreign exchange markets and used for accounting purposes and electronic payments. In 2002, euro notes and coins first came into circulation, replacing historic currencies such as the French franc, the German deutschmark and the Italian lira.

About two-thirds of the budget will go on subsidies for farmers and on development projects in the EU's poorer regions, as in previous years. But the spending on such projects - called the "cohesion" budget - is being cut by about 7bn euros.

He said that "alongside the historic 3.8% reduction which we have secured on the EU's long-term budget, this is further evidence of us bringing genuine discipline to EU spending".

"With the budget to be reduced 6% compared with 2013, the outcome is not only devoid of ambition, it will also lead to a situation again next year where the EU is facing budget shortfalls compared with programmed spending."

The deal, once signed off, should pave the way for the European Parliament to adopt the EU's long-term trillion-euro budget for 2014-2020.

An additional 400.5m euros will also be spent from the EU "solidarity" fund to help areas of Germany, the Czech Republic, Austria and Romania which were hit by flooding this year.

Piketty’s analysis articulates what many people on the Democratic left feel intuitively, that a domestic tax, spending and regulatory agenda is ineffective in the face of the power of globalized capital to grind down wages and benefits.

Rogoff views evidence of growing inequality presented by Piketty and others as “persuasive” and he proposes a number of alternative, smaller-scale remedies to control disproportionate wealth accumulation. He suggests a shift to a “relatively flat consumption tax, with a large deductible for progressivity.”

“absent aggressive policy intervention, the Western world appears to be headed toward a plutocratic dystopia characterized by wealth inequality approaching that of ancien régime France.”

Baker wrote that “a big part of the appeal is that it allows people to say capitalism is awful but there is nothing that we can do about it.”

Piketty’s proposed global tax would set rates of 0.1 to 0.5 percent on fortunes of less than 1 million euros ($1.37 million); 1 percent on assets of 1 to 5 million euros ($1.37 million to $6.87 million); 2 percent on holdings of 5 to 10 million euros ($6.87 million to $13.7 million); and a sliding scale ultimately reaching 10 percent on fortunes of “several hundred million or several billion euros.”

Why, Rogoff asks, should we “try to move to an improbable global wealth tax when alternatives are available that are growth friendly, raise significant revenue, and can be made progressive through a very high exemption”?

Rogoff cites a series of suggestions developed by Jeffrey Frankel, a professor at the Kennedy School at Harvard. These include “the elimination of payroll taxes for low-income workers, a cut in deductions for high-income workers, and higher inheritance taxes.”

In other words, centrists like Rogoff and Crook – in addition to liberals determined to assault bastions of privilege — are beginning to take proposals to restrain the growing concentration of wealth seriously.

Both the shift of attention to wealth and the seriousness with which a proposal to constrain the accumulation of wealth is being taken represent a major change in the contemporary debate over inequality. Few Americans appear to begrudge the multimillion dollar annual compensation of entrepreneurial executives like Steve Jobs or Bill Gates. But inherited and unearned wealth does not command the same legitimacy.

In fact, the emergence of what Piketty calls “patrimonial capitalism” — concentrated wealth and political power passed on from generation to generation in a class-based social order — runs directly counter to the longstanding American commitment to equality of opportunity. Piketty has laid the intellectual groundwork for a challenge to a social and political order based on socioeconomic ranking by wealth stratification.

The idea that the Wall Street crash caused the depression has also gone out of favour in recent years.

As with the rise of protectionism, it seems that the Wall Street crash was a symptom of problems in the global economy, rather than the underlying cause of them.

Economic historians now focus on a different candidate to take the blame for the sudden economic collapse of the 1930s: the structure of the world financial system before 1929. In particular, the work of the economic historians such as Mr Eichengreen and Peter Temin has recently stressed the importance of the malfunctioning of the gold standard currency system as the cause of the Depression, as well as its severity.

This system came to a head when the global economy started what, at first, seemed to be a very ordinary business cycle downturn in the late-1920s. When the drop in global demand caused balance-of-payments crises in countries around the world due to gold outflows, they were forced to use fiscal and monetary means to deflate their economies to protect the fixed value of their currencies (they also resorted to tariffs).This amplified the recession into a depression.

According to some monetarist historians, the four waves of banking crises in the 1930-33 period that bankrupted half of America’s banks were caused by the Federal Reserve tightening monetary policy in response to gold outflows.

According to research by Mr Eichengreen, countries that escaped the gold standard and changed to floating exchange rates first, such as Britain in 1931 and America in 1933, tended to recover earlier and far faster. The critique of monetary policy as a conduit of Depression dates back to Milton Friedman and Anna Schwartz's "Monetary History of the United States", first published in 1963

Policy-makers have drawn some lessons from the 1930s. Unlike in the Depression, central banks in Britain and America avoided unnecessary monetary tightening. Instead, they slashed interest rates and used unconventional monetary stimulus such as quantitative easing in an effort to fend off deflation (a scourge of the Depression). The role of banking crises in turning a normal recession into a deep depression has also been recognised. Governments pulled out the stops to prevent the Lehman failure from generating a global financial meltdown, keenly aware of the role of financial contagion in the 1930s. 

lessons from the Great Depression for Europe's current problems may be more difficult to discern than one might assume. The euro zone is a fixed-exchange-rate system, with elements similar to those of the gold standard. But the political and economic constraints holding back policy-makers are different from those that prevailed in the 1930s. Economists now say that the higher level of financial integration in Europe today makes leaving the euro-zone a much riskier prospect than was leaving the gold standard was back in the 1930s. And the euro zone has a central bank that can print euros—something the gold-standard system lacked.

Perhaps economic historians can make a better contribution by ensuring the past is not abused in debates about modern-day crises. For instance, putting all the blame on Wall Street for the Great Depression—or on bankers in the current crisis—does not stand up to historical scrutiny. The responsibility may more properly lie in a complex combination of factors, like how global financial systems are structured. But this still needs be interpreted from modern day evidence rather than in over-simplistic “lessons” from the past

“It’s a project for a generation; it’s going to take till 2040 or 2050, and it’s hard,” said Gerd Rosenkranz, a former journalist at Der Spiegel who’s now an analyst at Agora Energiewende, a Berlin think tank. “It’s making electricity more expensive for individual consumers. And still, if you ask people in a poll, Do you want the energiewende? then 90 percent say yes.”

The Germans have an origin myth: It says they came from the dark and impenetrable heart of the forest

. The forest became the place where Germans go to restore their souls—a habit that predisposed them to care about the environment.

So in the late 1970s, when fossil fuel emissions were blamed for killing German forests with acid rain, the outrage was nationwide. The oil embargo of 1973 had already made Germans, who have very little oil and gas of their own, think about energy. The threat ofwaldsterben, or forest death, made them think harder.

I came away thinking there would have been no energiewende at all without antinuclear sentiment—the fear of meltdown is a much more powerful and immediate motive than the fear of slowly rising temperatures and seas.

energy researcher Volker Quaschning put it this way: “Nuclear power affects me personally. Climate change affects my kids. That’s the difference.”

NG STAFF; EVAN APP

Demonstrators in the 1970s and ’80s were protesting not just nuclear reactors but plans to deploy American nuclear missiles in West Germany. The two didn’t seem separable. When the German Green Party was founded in 1980, pacifism and opposition to nuclear power were both central tenets.

Chernobyl was a watershed.

The environmental movement’s biggest mistake has been to say, ‘Do less. Tighten your belts. Consume less,’ ” Fell said. “People associate that with a lower quality of life. ‘Do things differently, with cheap, renewable electricity’—that’s the message.”

It was 1990, the year Germany was officially reunified—and while the country was preoccupied with that monumental task, a bill boosting the energiewende made its way through the Bundestag without much public notice. Just two pages long, it enshrined a crucial principle: Producers of renewable electricity had the right to feed into the grid, and utilities had to pay them a “feed-in tariff.” Wind turbines began to sprout in the windy north.

The biogas, the solar panels that cover many roofs, and especially the wind turbines allow Wildpoldsried to produce nearly five times as much electricity as it consumes.

In a recent essay William Nordhaus, a Yale economist who has spent decades studying the problem of addressing climate change, identified what he considers its essence: free riders. Because it’s a global problem, and doing something is costly, every country has an incentive to do nothing and hope that others will act. While most countries have been free riders, Germany has behaved differently: It has ridden out ahead. And in so doing, it has made the journey easier for the rest of us.

Fell’s law, then, helped drive down the cost of solar and wind, making them competitive in many regions with fossil fuels. One sign of that: Germany’s tariff for large new solar facilities has fallen from 50 euro cents a kilowatt-hour to less than 10. “We’ve created a completely new situation in 15 years

Germans paid for this success not through taxes but through a renewable-energy surcharge on their electricity bills. This year the surcharge is 6.17 euro cents per kilowatt-hour, which for the average customer amounts to about 18 euros a month—a hardship for some

The German economy as a whole devotes about as much of its gross national product to electricity as it did in 1991.

Ideally, to reduce emissions, Germany should replace lignite with gas. But as renewables have flooded the grid, something else has happened: On the wholesale market where contracts to deliver electricity are bought and sold, the price of electricity has plummeted, such that gas-fired power plants and sometimes even plants burning hard coal are priced out of the market.

Old lignite-fired power plants are rattling along at full steam, 24/7, while modern gas-fired plants with half the emissions are standing idle.

“Of course we have to find a track to get rid of our coal—it’s very obvious,” said Jochen Flasbarth, state secretary in the environment ministry. “But it’s quite difficult. We are not a very resource-rich country, and the one resource we have is lignite.”

Vattenfall formally inaugurated its first German North Sea wind park, an 80-turbine project called DanTysk that lies some 50 miles offshore. The ceremony in a Hamburg ballroom was a happy occasion for the city of Munich too. Its municipal utility, Stadtwerke München, owns 49 percent of the project. As a result Munich now produces enough renewable electricity to supply its households, subway, and tram lines. By 2025 it plans to meet all of its demand with renewables.

Last spring Gabriel proposed a special emissions levy on old, inefficient coal plants; he soon had 15,000 miners and power plant workers, encouraged by their employers, demonstrating outside his ministry. In July the government backed down. Instead of taxing the utilities, it said it would pay them to shut down a few coal plants—achieving only half the planned emissions savings. For the energiewende to succeed, Germany will have to do much more.

The government’s goal is to have a million electric cars on the road by 2020; so far there are about 40,000. The basic problem is that the cars are still too expensive for most Germans, and the government hasn’t offered serious incentives to buy them—it hasn’t done for transportation what Fell’s law did for electricity.

“The strategy has always been to modernize old buildings in such a way that they use almost no energy and cover what they do use with renewables,” said Matthias Sandrock, a researcher at the Hamburg Institute. “That’s the strategy, but it’s not working. A lot is being done, but not enough.”

All over Germany, old buildings are being wrapped in six inches of foam insulation and refitted with modern windows. Low-interest loans from the bank that helped rebuild the war-torn west with Marshall Plan funds pay for many projects. Just one percent of the stock is being renovated every year, though

For all buildings to be nearly climate neutral by 2050—the official goal—the rate would need to double at least.

here’s the thing about the Germans: They knew the energiewende was never going to be a walk in the forest, and yet they set out on it. What can we learn from them? We can’t transplant their desire to reject nuclear power. We can’t appropriate their experience of two great nation-changing projects—rebuilding their country when it seemed impossible, 70 years ago, and reunifying their country when it seemed forever divided, 25 years ago. But we can be inspired to think that the energiewende might be possible for other countries too.

At the peak of the boom, in 2012, 7.6 gigawatts of PV panels were installed in Germany in a single year—the equivalent, when the sun is shining, of seven nuclear plants. A German solar-panel industry blossomed, until it was undercut by lower-cost manufacturers in China—which took the boom worldwide

Curtailing its use is made harder by the fact that Germany’s big utilities have been losing money lately—because of the energiewende, they say; because of their failure to adapt to the energiewende, say their critics. E.ON, the largest utility, which owns Grafenrheinfeld and many other plants, declared a loss of more than three billion euros last year.

“The utilities in Germany had one strategy,” Flasbarth said, “and that was to defend their track—nuclear plus fossil. They didn’t have a strategy B.”

In a conference room, Olaf Adermann, asset manager for Vattenfall’s lignite operations, explained that Vattenfall and other utilities had never expected renewables to take off so fast. Even with the looming shutdown of more nuclear reactors, Germany has too much generating capacity.

Russians don’t run on their banks, because they believe that in a real crunch, the Russian central bank would provide the needed cash. After all, the Russian central bank holds enormous quantities of reserves: $630 billion at the last tally

To finance its war on Ukraine, Russia might have hoped to draw down its foreign-currency reserves with Western central banks.

Not so fast, argues Bernstam. What does it mean that Russia “has” X or Y in foreign reserves? Where do these reserves exist? The dollars, euros, and pounds owned by the Russian central bank—Russia may own them, but Russia does not control them. Almost all those hundreds of billions of Russian-owned assets are controlled by foreign central banks.

We, the people of the Western world collectively owe the Russian state hundreds of billions of dollars. That’s not our problem. That’s Russia’s problem, an enormous one. Because one thing any debtor can do is … not pay when asked.

With $630 billion in reserves, there is no way Russia would ever run out of foreign currency. You’ve probably read that assertion many times in the past few days

All of this requires the cooperation of the Fed or ECB in the first place. The Fed or ECB could say: “Nope. Sorry. The Russian central bank’s money is frozen. No transfers of dollars or euros from the Russian central bank to commercial banks. No transfers from commercial banks to businesses or individuals. For all practical purposes, you’re broke.”

if Russia’s foreign income slows at the same time as it is waging a hugely costly war against Ukraine, it will need its reserves badly. And suddenly, it will be as if the money disappeared. Every Russian person, individual, or state entity with any kind of obligation denominated in foreign currency would be shoved toward default.

Of course, long before any of that happened, everybody involved in the transactions would have panicked.

The ruble would cease to be a convertible currency. It would revert to being the pseudo-currency of Soviet times: something used for record-keeping purposes inside Russia, but without the ability to buy goods or services on international markets. The Russian economy would close upon itself, collapsing into as much self-sufficiency as possible for a country that produces only basic commodities.

Russia imports almost everything its citizens eat, wear, and use. And in the modern digitized world, that money cannot be used without the agreement of somebody’s central bank. You could call it Bernstam’s law: “Do not fight with countries whose currencies you use as a reserve currency to maintain your own.”

There is one exception to the rule about reserves as notations: About $132 billion of Russia’s reserves takes the form of physical gold in vaults inside Russia

Only one customer is rich enough to take significant gold from a sanctioned nation like Russia: China.

that does not solve the real problem, which is not to buy specific items from specific places, but to sustain the ruble as a currency that commands confidence from Russia’s own people. China cannot do that for Russians. Only the Western central banks can.

Putin launched his war against Ukraine in part to assert Russia’s great-power status—a war to make Russia great again. Putin seemingly did not understand that violence is only one form of power, and not ultimately the most decisive

The power Putin is about to feel is the power of producers against gangsters, of governments that inspire trust against governments that rule by fear.

Russia depends on the dollar, the euro, the pound, and other currencies in ways that few around Putin could comprehend. The liberal democracies that created those trusted currencies are about to make Putin’s cronies feel what they never troubled to learn. Squeeze them.

Economic gains have still left 30.9 percent of Latvia’s population “severely materially deprived,” according to 2011 data released in December by Eurostat, the European Union’s statistics agency, second only to Bulgaria. Unemployment has fallen from more than 20 percent in early 2010, but was still 14.2 percent in the third quarter of 2012

“I’m always asking people here, ‘How can you put up with this?’ ” said Juris Calitis, a Latvian-born Anglican chaplain whose family fled Soviet occupation in the 1940s and who returned when the Soviet empire crumbled. “It is really shocking,” added Mr. Calitis, who runs a soup kitchen at his church in Riga’s old town. Latvians, he said, “should be shouting in the streets,” but “there is an acceptance of hard knocks.”

In contrast to much of Europe, Latvia today has no tradition of labor activism. “What can you achieve in the street? It is cold and snowing,” said Peteris Krigers, president of the Free Trade Union Confederation of Latvia. Organizing strikes, he said, is nearly impossible. “It is seen as shameful for people who earn any salary, no matter how small, to go on strike.”

Also largely absent are the leftist political forces that have opposed austerity elsewhere in Europe, or the rigid labor laws that protect job security and wage levels. In the second half of 2010, after less than 18 months of painful austerity, Latvia’s economy began to grow again.

Since 2008, Latvia has lost more than 5 percent of its population, mostly young people, to emigration. The recent exodus peaked in 2010, when 42,263 people moved abroad, a huge number in a country of just two million now, according to Mihails Hazans, a professor at the University of Latvia.

Alf Vanags, director of the Baltic International Center for Economic Policy Studies here, is skeptical. “The idea of a Latvian ‘success story’ is ridiculous,” he said. “Latvia is not a model for anybody.”

A better and more equitable way out of Latvia’s troubles, he believes, would have been a devaluation of the currency, an option closed to Greece and 16 other countries that use the euro. Latvia kept its currency pegged to the euro, putting itself in much the same straitjacket as euro zone nations.

“You can only do this in a country that is willing to take serious pain for some time and has a dramatic flexibility in the labor market,” he said. “The lesson of what Latvia has done is that there is no lesson.”