Euro self-torture in Estonia?

Estonia is back on leader board. This time being the hack & slash master of the public sector expenditures. Obviously for staying inside Maastricht criteria in 2009 and 2010 (fulfilled in 2008- phew)... Is self-torture of a national scale thing to be proud of? In this context I guess it is – although for obvious reasons people have wildly different opinions on this.

It seems that while eurozone target has been there for a long time, the whole idea behind it has changed dramatically over last few years – as has the whole country. In 2007/2008 it was more like a cherry on the top. A nice thing to have after many years of rapid growth just as the inflation is settling down... a testament of success. Also everyone were pretty content with the idea since it really didn´t get in the way of anyone. Now, on the other hand, reality is that a lot has to be actually compromised to achieve this goal and not too many are happy with that. This does not mean that it should be given up on...

Estonia is pretty average in economic terms. If one goes through fresh numbers, comparisons - Its really quite below-average. Especially when I see how 2009 is going to look like...and then try find a year in history when things were on similar level. Think of what really happened during all these now „lost” years in between and I recall a lot of below-average real estate that was piled up and similar quantities of discretionary items that were bought. Would I like the state/government to extend their public hand to prolong the joy and restore the situation? No. Here is what I would like though:

Keeping it clean – The smaller we are, less options we have. For the currency risk to be dismissed, prudent public sector is the only thing we have to show as a guarantee. It’s not the decimal of deficit but the idea and effort that counts.

Fueling the sentiment – people become incredibly productive in bad times. Yes, it is statistically proven that best time for setting up business is during bad times and yes, markets are much more responsive to new ideas. It is perfect time to look outside, build on ideas, find new niches. Multiply this situation with decreased currency risk and we have again increasing odds of brewing something good here and attracting investments to support that.

Asking „What next?” – among other issues we have a high social tax, quite hostile conditions for starting new businesses that require bright (expensive) minds and decreasing competitiveness. Probably everyone reading this has an idea how to make the environment little bit more attractive for the business (idea) they have.

In the end, common sense will prevail– large countries with limited debt (like the one they call the BRIC) will outgrow the ones with lots of debt until the balance shifts again. Inherently most open to risks are small countries with large private and public debt burden. Lets not be that one.