Any public pronouncement on irrational exuberance in the Baltic was blocked by the Europeans on the IMF board. They wanted to keep the Baltics on track for euro membership and did not want to risk an IMF warning unleashing a chain reaction of uncertainty across Eastern Europe. The Swedes in particular were deeply concerned. Their banks had lent so heavily to Latvia that a crisis could easily spill back across the Baltic. Over the winter of 2007–2008, the Scandinavian representative on the IMF board went so far as to block the dispatch of the IMF delegation to Riga to complete Latvia’s regular
...more
