August 26, 2005

02:25:55 pm Lithuania - Russia Diary  

Thursday, August 18, 2005 - Vilnius, Lithuania

Had a tour of a private museum, The Kavys Varnelis House Museum. As was often the case during our stay here, Kavys Varnelis is a friend of Darius's parents, and Stase arranged the visit for us. Kavys is a Lithuanian artist who like so many of his generation migrated to the US and has now returned to Lithuania. His house featured paintings, furniture, and books he has collected from around the world, plus his own abstract optical art. It is an impressive collection in an impressive building, and it is now a branch of the National Museum, only open by appointment. I could have spent several days in his library that was packed with historical books from the past several centuries. We spent about 15 minutes at the nearby Architectural Museum which had models and drawings from various Vilnius projects, some built, others not. After lunch, I spent the afternoon at the Internet cafe, updating the web site, answering e-mail, and looking up visa requirements for the remaining countries on our trip. We took out Bronius and Stase for early dinner at a French restaurant across the street from where they live to thank them for letting us stay with them. It is reputed to be the best in Vilnius. Their condo is in the heart of the old town, so we were able to walk to everything we did today--it was all within 10 minutes.

Prices in Vilnius and throughout the Baltics are cheaper than the rest of Europe and somewhat below the US, but catching up fast. Darius considers everything dirt cheap--we don't necessarily, having been to so many cheaper places throughout the year. For example, Argentina has roughly the same level of per capita GDP, yet a nice dinner there is only 1/3 to 1/2 of the price of Vilnius. I'm not sure how much of a bargain the Baltics will be in a decade or two. I could see it becoming more expensive than the US, although it may still be somewhat of a bargain relative to Western Europe. Through July, the official year-over-year rates of inflation were 6.1% Latvia, 3.8% Estonia, and 1.8% Lithuania. The increases in what you actually spend are higher, however, because more expensive and better quality goods are becoming available. For example, the best bottle of wine in a restaurant might be over $50 now, when it was only $10 three years ago. More expensive wine is now available, as rapid integration with the European and world economy is occurring.

Friday, August 19, 2005 - Vilnius, Lithuania and Moscow, Russia

6:35 AM flight on Lithuanian Airlines from Vilnius to Moscow. Staying four nights at Hotel Baltschug Kempinski, just off Red Square. Sheremetyevo-2 Airport (SVO) was small--closer to what you would expect from a US city of 100,000, not from a national capital of 9 million. Later learned that Moscow has five airports with a sixth being built--still SVO is the major international airport. The first 15 minutes or so of the 60-minute drive into Moscow was on what appeared to be 2-lane country roads. Overall, quite a contrast to arriving in a major Chinese city where the airport is huge and new and the highway from the airport is a four or six lane US-interstate equivalent.

Went to Museum of Contemporary Russian History, which covered last 150 years. It probably was quite good, but since it was all in Russian, I'm not sure. I half expected this as Russia is not that integrated with the west. I can excuse them for the lack of English (whereas I was critical of Sweden on this point), as even two decades ago they still hoped for Russian to become the world language--although they were probably beginning to doubt the likelihood of this by then. Throughout our travels, we have met people from around the globe--Cuba, Mongolia, Vietnam, Sweden, and the Baltics--who speak Russian fluently. Many of them studied in Moscow. Their children, though, will never know the language, given the fall of communism.

Took a taxi to the museum and then the subway back. First subway we've been on with no English. Russian alphabet consists primarily of Roman and Greek characters, so you can figure out the station names through character recognition, if you are patient. Moscow subways are known for being elaborate, with chandeliers and artwork, and every station designed differently. Still, having heard so much about them, I think I expected a bit more. 70 years with millions of people using them every day has made them a bit less grand, but they are still remarkable.

We met our Exeter Travel group at 5 PM. We toured Red Square and then had champagne and dinner at the hotel. There are three other couples--one from New York City, one from Cincinnati (northern Kentucky), and a mother/daughter from Miami/NYC. This may be the first all American group we've been with on this trip. When we have gone with a group, it has been primarily European. We paid up for our trip to Russia, instead of our usual DIY mid-range approach because we thought Russia would be challenging and would not have much English (and thus having pre-arranged guides would be useful). The other benefit is having people to talk to, and when you pay up, you tend to get interesting, accomplished people that can really make the trip more enjoyable. So far, this group seems similar in that regard to the Chicago Architecture Foundation group we went with to Cuba at the end of 2003.

Saturday, August 20, 2005 - Moscow, Russia

With our group, visited the State Tretyakov Gallery (Russian art) and had a tour of the city. Afterward, Deanna and I went to State Historical Museum, which guidebook misleadingly said had adequate English. It did not, so our visit was short. Had a nice dinner with everyone at Cafe Pushkin, in a refurbished old mansion.

Moscow is nicer than I expected. Of what we have seen, not much is run down, and the city is clean. The graffiti here is less than any city in Europe we have seen so far. From the negative press you read on the country, I expected there to be disorder, with public services falling apart in the post-communist system. A paradox of communism is that life is miserable, the stores are empty, but everything is safe, and--at least on the surface--orderly. So I expected the opposite now--a better life with stores full of goods, but with crime, dirtiness, and disorder. The former is there, but the latter is not evident. It may lurk beneath the surface, but it is not visible to a Western tourist. This makes Moscow a good place to visit, albeit expensive. You do need to be comfortable with the lack of English, though, or compensate for it by paying a lot and having all of your tours pre-arranged. Overall, the city looks much better than you would expect after experiencing 70 years of communist stagnation.

The group we are with is very interesting. When we were booking this trip, we had decided to go with Exeter but were undecided whether to go with a small group or by ourselves. By ourselves meant that we would have a guide everywhere and would get to see exactly the things we wanted to, while the group tour meant we would not see everything we wanted but would have the benefit of being with other people. In the end we decided to go with the group, to save some money (it was only very expensive instead of incredibly expensive), and hoping that having other people around for a change would enhance our experience. This latter point could go either way depending on the group, but so far it has been a great experience, and it is nice for us to have other people to talk with. Actually, we have had and will have this throughout much of Europe, knowing people or having friends and relatives join us in the UK, Sweden, Baltics, Ireland, Italy, France, and Spain.

Sunday, August 21, 2005 - Moscow, Russia

Group visited Pushkin Fine Arts Museum (western art through post-impressionism), Moscow subway, and a shopping area. Once the Russian part of our trip is over, I think I will have had enough shopping and visiting churches for a lifetime. We have seen so many during our trip. The number of churches in Moscow is a real surprise. The communists destroyed many churches, but they left a number of others closed but otherwise undisturbed. They are open now and very popular. Anytime people are denied something, there seems to be high demand for it once it becomes available.

The weather has been good--around 70 and sunny each of the last two days. This is a continuation of the great weather we had in Vilnius, where it was 70-75 and sunny the last three days we were there. It's cool here at night, though--in the mid 40s.

Monday, August 22, 2005 - Moscow, Russia

Spent about half a day at the Kremlin. Kremlin means fortress, and inside there are a series of government buildings, museums, and churches. Again, surprising that not all of the Kremlin churches were destroyed during communism.

Nearly everything I read on traveling to Russia was bad: expensive, overly bureaucratic, terrible service, and rude people. After being here my conclusion is that it is expensive, but having prepared mentally for the worst, it's actually not always as expensive as I expected. There are occasional service lapses and rudeness, and while this is probably lingering Sovietism, it also could be just randomness. Things are bureaucratic, especially the visa process before arrival, but once you are here it's no worse, and perhaps better than a place like India (although that may not be saying much!). If traveling straight from the middle of the US to Moscow, you will probably think worse of Russia than we do, as you will not have had the buffer of European costs and inattentive service. Overall, it is better than we expected, although we had set our expectations low. We wanted to see Russia, but we expected it would not be all that enjoyable, and we would be ready to leave. Actually, everything has been enjoyable, and we could spend more time here. However, I should quickly add that we are on a high-end very expensive tour that is over engineered to shield you from any possible unpleasantry. Thus, we are getting a less than authentic experience, but after seven months of primarily authentic experiences, this coddling is mainly welcome by us. I say mainly because at times the coddling is a bit absurd for us given all of our travel experience, but naturally the trip is priced and designed for individuals who expect a five-star experience with no hassles whatsoever.

Tuesday, August 23, 2005 - Moscow and St. Petersburg, Russia

11:15 AM flight on Pulkovo Airlines. Staying four nights at Hotel Astoria in St. Petersburg. On plane I read last two issues of Moscow Times, the daily English paper. There was a lot of talk in op-ed pages, as there also is in the West, about President Putin's autocratic nature (he is a former KGB agent), and how the country is moving away from democracy toward authoritarian rule (e.g., eliminating direct election of governors, renationalizing previously privatized companies--albeit through somewhat free market purchases). There is concern that Putin will engineer a constitutional change to run for a third term in 2008 (presently Russian presidents are limited to two terms). I think the concerns are well founded. I put the chance of him trying to overstay the term limits at 40%, which is a worrying high percentage since it is only 2005. Seeing Russia I'm less bearish on it than I was before arrival, but I'm well aware that there is no real long-term history of democracy or capitalism here and the last 15 years of progress could be erased quickly (some would say it already is). The country went straight from the czars to the Bolsheviks. People don't have much experience thinking or acting for themselves.

The economy, by the way, is booming because of high oil prices--the country's primary export. In 1998, Russia defaulted on its debt and things appeared to be in shambles. Now, thanks to a low, flat tax that increased tax revenue and limited government spending, the government is running a surplus and paying off its debt ahead of schedule. One might even say that Russia has managed its fiscal affairs better than the US in recent years. For this, Putin deserves credit. Awash in cash, however, the government spending spigots are now being turned on full blast. Putin has said he wants to raise government salaries (one-fourth of the workforce) by 50% after inflation over the next three years. Russia's inflation rate is something around 13%. If that rate held steady, government salaries would have to more than double over three years for Putin to keep this promise. Moreover, such a wage increase itself could lead to increased inflation, requiring even greater wage increases. Some additional government spending is necessary. How much and what it should be spent on--infrastructure, salaries, social programs--is the question. Critics are suggesting that too much is being allocated on the last two items and not enough on infrastructure. Cynics are wondering if the government salary pledge is an initial step of a politician looking to amend the constitution for another term.

Wednesday, August 24, 2005 - St. Petersburg, Russia

Went to the Summer Palace and the Chinese Pavilion of Oranienbaum, both about an hour outside of St. Petersburg. The Summer Palace is reminiscent of Versailles outside of Paris in terms of distance from the capital and the grandeur of the building and gardens. The buildings in Russia are as opulent as anything in Europe, or the world for that matter. It's hard to compare the palaces of different countries because so many of them are so far over the top that it really becomes a matter of personal taste. Personally, I think I've seen about enough of them for all of Europe, and we've only been on the continent for a month! The my kingdom versus your kingdom one-upsmanship of palace building can become somewhat pointless. You can see why communist revolution happened here. The vulgar display of wealth by the royals contrasted with the poverty of the citizens and minimal Russian government reform is a recipe for social revolution. The lavishness of these Russian palaces is so extreme it really is a surprise that the communists did not destroy them for what they represented.

Parking meters--a concept unknown in Russia. You can park anywhere and people do.

Thursday, August 25, 2005 - St. Petersburg, Russia

Went to Pavlovsk Palace, Catherine Palace, and the Church of the Spilled Blood. Turns out the Summer Palace we saw yesterday was not the main summer palace--Pavlovsk Palace was. Again, the grandeur and endless displays of wealth is just over-the-top extreme. Several people voluntarily offered my thought of yesterday, "No wonder they had a revolution!" We have not seen Vienna, which I have heard is the grandest city in Europe, but at this point I don't think anything can top what we've seen here. The Church of the Spilled Blood has marble floors and glass mosaic walls and ceilings, making it as opulent as the palaces. It's probably the finest church I have seen. I don't understand why the communist atheists restored it, albeit at a slow pace, after World War II. Many of their actions seem inconsistent with their stated beliefs in ways I would not have expected. At night, we went to a ballet, Giselle, at the Hermitage Theater. It's off-season, so the production was only so-so, or so I am told by people who have seen a ballet before. I thought it good, as it was only two hours long.

Excepting for the palaces and churches, St. Petersburg is a bit more run down than Moscow, with somewhat more graffiti, although still less than what we have seen so far in developed Northern Europe. I suppose the most money is pumped into the government center, Moscow. Putin is from St. Petersburg, though, so I think it probably gets more pork than the rest of Russia.

Russia's population has declined by 5 million over last dozen years. We have written about population decline that developed countries, especially Japan, face in the 21st Century, but it is already happening here. I have not seen a breakdown of how much is due to deaths exceeding births and how much is due to a net outflow of immigrants. Russia does have some inward immigration, from the poorer former USSR republics to it, but I can't quantify how much.

On a separate note, I read in the local newspaper that research has revealed that Russian and Eastern European women may possess an extra gene that enables them to worry excessively about minor details at all times. The gene is present from childbirth onward, but it is also contagious by airborne contact if one spends a year or so in the Russian environment. After 1991, the gene and its contagiousness appear to be on the decline, although the chance of an outbreak is still possible, as the underlying causes that lead to the worry mutation are not completely eradicated from the country.

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August 18, 2005

07:17:10 am Baltics Diary Continued  

Tuesday, August 16, 2005 - Vilnius, Lithuania

Took a day trip to nearby town of Trakai, visiting the castle there. Probably the best day of weather we have had in Europe: sunny, low to mid-70s, blue sky with white puffy clouds--the kind of sky that makes every picture look great. Most of our three weeks in Europe have seen high temperatures in the 60s and occasionally only in the 50s. Back in Vilnius, we visited the TV Tower, the tallest structure in the city, with an observation deck.

Lithuania was the first Baltic country to declare independence on March 11, 1990; however, for the next 18 months there was an uncertain period where the USSR did not recognize their declaration, and the rest of the world waited to see what would happen. The US and other countries wanted the Baltics to be free, as most countries never recognized the Soviet World War II takeover; however, the world also wanted the nuclear power Soviet Union to be stable, and any breakup to be orderly.

On the ground floor of the TV Tower is a memorial to the dozen people killed on January 13, 1991 when Soviet troops dispersed independence demonstrators and retook the tower after pro-independence forces seized the tower and began broadcasting from it. This action was timed to occur when the world's attention was distracted--it was three days before the Gulf War began. Seven months later, though, in August 1991 after the right-wing military coup failed in Moscow, Baltic independence was recognized throughout the world. The weakened Soviet government by that time did not have the will to stop them, even though Soviet troops remained in the Baltics for a couple more years.

Wednesday, August 17, 2005 - Vilnius, Lithuania

Went to KGB Museum and took city tour of Vilnius. KGB Museum is in the building where KGB carried out its interrogations and murders from 1940 through 1991--except for the 1941-1944 period when, fittingly, the Gestapo occupied the building. The names of all of the people murdered are chiseled like tombstones into the stone facade that wraps around the building. The three Baltic countries have a common history, but there are some differences, of course, between them. As the southernmost of the Baltics, Lithuania's history has more in common with Poland than does Latvia or Estonia. The Lithuanian-Polish Commonwealth lasted for hundreds of years in the 14th through the 18th century, at one time covering a vast area, south and east to the Black Sea. After this commonwealth fell, Lithuania became part of the Russian Empire. Treaties after World War I re-established Poland and Lithuania as independent countries, but each had to fight Russian Bolsheviks for several years to make this a reality. For good measure, though, Poland occupied part of Lithuania, including the present capital Vilnius, until World War II, when the three waves of invaders--Soviets, Germans, and Soviets controlled Lithuania. Another shared attribute of history with Poland, is that Lithuania had a substantial Jewish population--about 200,000 people when World War II began. Jews also lived in Latvia and Estonia, but in smaller numbers. Today only a few thousand Jews live in Lithuania, as the prewar population was largely slaughtered by the Germans.

The KGB Museum also had a small temporary exhibit on the Turkish genocide of Armenians during World War I. Approximately 1 million died.

At night we had dinner with Darius's cousin Aiste and her husband Claudius. As Claudius works for the government, we mainly talked politics. The current Lithuanian president is a Chicagoan, born in Lithuania. He is of Darius's father's generation, immigrating to the US, and now relocated back to Lithuania. Darius said he remembers having him over for dinner in the 1980s at his family's house in the Chicago suburbs. Chicago has a large Lithuanian community, with many of the older immigrants having personal stories similar to Darius's father.

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August 16, 2005

02:28:49 pm Sweden - Baltics Diary  

Thursday, August 11, 2005

Spent most of the day in Stockholm; flew to Tallinn, Estonia at night on Estonian Air. Darius Vaskelis flew in from Vilnius, Lithuania where he was visiting his parents, landing in Tallinn about an hour after we left. In Stockholm, we went to City Museum and War Museum. Former was okay, latter was probably good if you read Swedish, but pointless if you do not. The English guide handout provided only the most basic explanations. This was the first museum we had been to in months that was only in one language--the kind of thing that is common in South America but inexplicable in a developed country like Sweden, which has a small population and many foreign visitors. Afterward, filling the rental car with gas proved to be a chore. The first two gas stations took only debit cards--but not US debit cards--credit cards were not welcome. Instructions were only in Swedish. The third station did take credit cards, but only at certain pumps, and certainly not at the first pump we tried. Fortunately, unlike the first station that was completely automated and had no employees on site, this station had a helpful clerk who directed us to the correct pump. Earlier, parking in the tourist areas was a challenge as some parking lots only take local credit cards like a gas card, have no English instruction, and only take certain Swedish coins, not the bills that a traveler would be most likely to have. You might expect such native-language provincialism in a place like France, but not in Sweden where everyone happily speaks English and hardly any foreign visitors would know Swedish. Because everyone does speak English, and is friendly, all of these obstacles were surmountable by just asking someone for help, but the obstacles were surprising. We did not have similar issues in Iceland or Denmark, although we did not drive there.

It's worth mentioning that the reason I'm so gung-ho on English being available and down on places where it is not, is not because I am from an English-speaking country. Rather it's a simple point of function and efficiency that in an interconnected globalized world where people from different countries with different languages must interact, there must be one language that serves as the global language. It's impractical for every traveler to a foreign land to know the language of that land, or to have to hire a translator. Few people would ever go anywhere if this were the case. The global language could be any language--English, French, Spanish, Chinese, Swahili, Esperanto, or Martian--it does not matter what it is, there just must be one. That it happens to be the language I was born with, is a convenient coincidence for me, but if that were not the case, we would have had to learn the dominant world language before this trip, or more likely at an earlier point in our lives. Countries that don't require their students to learn the dominant world language in school are putting their kids at an economic disadvantage, unprepared to interact in the world economy. Countries that don't have the dominant world language available in places where businesspeople and tourists frequent are discouraging trade and commerce and holding back the development of their countries. So on our trip I have praised relatively poor countries like China on this point for being forward looking by being English friendly and criticized places like South America for being insular by not catering to an English-speaking crowd. Overall, Sweden is accessible to English speakers, but less so than I would have expected and less so than the two other Scandinavian countries we visited. We will see if Finland and Norway are similar to Sweden or more like Denmark and Iceland.

On the point of Spanish in the Americas, it has occurred to me that the homogeneity of language in Central and South America that ought to be an advantage for the region has actually been a disadvantage to date. The region has not reaped the benefits of a common language anywhere near as well as they should have--through trade agreements allowing free movement of goods, services, and people. These exist, but are much more limited than they should be. Actually, the common language has made the area insular, somewhat shutting themselves off from the outside world. In contrast, in Europe, with its dozens of languages, has overcome its language disadvantage, creating a union that is to its strong advantage. Its disparate countries have grouped together and realized tremendous trade benefits. Without this integration, many of its small countries would be isolated and insignificant. This is an example of how a disadvantage can lead to a better outcome because it requires ingenuity, and how an advantage can sap the willingness of a country to better itself.

Friday, August 12, 2005

Baltic Facts

Country Population
Estonia: 1.3 million
Latvia: 2.3 million
Lithuania: 3.6 million

Capital & Largest City, Population
Estonia: Tallinn 443,000
Latvia: Riga 856,000
Lithuania: Vilnius 576,000

Per capita GDP, Purchasing Power Parity
Estonia: $12,300
Latvia: $10,100
Lithuania: $11,200

Per capita GDP, Absolute Dollars
Estonia: $4,960
Latvia: $4,070
Lithuania: $4,490

Size
Estonia: about twice the size of New Hampshire
Latvia: slightly larger than West Virginia
Lithuania: also slightly larger than West Virginia

Currency
Estonia: Kroon, 12.5 per dollar
Latvia: Lat, 0.55 per dollar
Lithuania: Lita, 2.7 per dollar

All three countries joined the European Union in 2004 as part of the 10-country expansion from 15 to 25 members. These 10 new members will be allowed to use the Euro beginning in 2007.

Language

Each country speaks its own language: Estonian, Latvian, or Lithuanian. English is common in all three countries.

Independence

All three countries became independent for the first time in the years after World War I as part of the post-war treaties. The Soviet Union seized all three countries in 1940 when Germany and Russia agreed secretly to carve up Eastern Europe, incorporating the Baltics into the USSR against their will. Germany routed the Soviets from the Baltics when they attacked the USSR in 1941. In 1944, the Soviet Union returned, driving out Germany. All three countries declared independence from the USSR in 1991, four months before it collapsed.

Our hotel, Merchants House, is in the heart of the Old Town, just off the main town square. It's a new hotel in an old building in a great location. All of the Baltic capitals have an old town area dating back eight centuries or so with narrow cobblestone streets. We spent the day walking through the Old Town area visiting sites like the Museum of the Recent Occupations in Estonia, the Kiek in de Kok Tower, and the Tallinn City Museum.

The Tallinn City Museum covers the early history of the city, which is something like this: for this century the Germans ruled us, and then the Russians took over, and then the Swedes ran things for a couple centuries and we really went downhill. Then it was time for the Germans to come back, followed again by the Russians. I probably have the order wrong, but it was something like that, with maybe the Danes taking charge for a period somewhere in there. That takes us up to the end of World War I when Estonia finally gained its independence.

The Museum of the Recent Occupations in Estonia--the name clearly indicating that it does not cover the earlier occupations that are the purview of the city museum--covers 1940 to 1991, when the Soviets, Germans, and Soviets in turn violated the sovereignty of the country. Now a word about the Soviets. They were our Allies in World War II because we had the same enemy, Germany. That's not to say, however, that much was honorable and admirable about the Soviet government. They were thoroughly evil, and the Baltic countries--aside from their Jewish citizens--generally preferred the harsh rule of the Germans to the even harsher rule of the Soviets. Political arrests, torture, deportations, labor camps, and mass murder were all common instruments of Soviet policy toward the Baltics. Unsurprisingly, they rather hate Russia today, instead embracing all things Western, joining the EU, NATO, and supporting the war in Iraq.

Returning to World War II, a significant number of Baltic males joined the German army in 1941 to help eject the Soviets from their country. Finland is another country that--invaded by the Soviet Union--openly supported Germany as the better of two bad choices, from its perspective. The UK declared war on Finland because of this (the US did not), but I can understand the Finns reasoning. The Soviet Union was its enemy, having invaded it without provocation and forcing it to sign a treaty that surrendered part of its territory (which Russia holds to this day). The enemy of my enemy is my friend, making Finland and Germany allies. By that same logic, the US and UK were allied with the Soviet Union.

Thus a scorecard of Soviet aggression in 1939 and 1940 includes Poland (invaded from the east, while Germany invaded from the west), Estonia, Latvia, Lithuania (all absorbed involuntarily in the USSR), and Finland (the League of Nations expelled the USSR over this). Only the barbarism of Germany made the brutish USSR an ally of the west.

Saturday, August 13, 2005

A driving day, from Tallinn to Riga. The 20-minute walk from the hotel to the downtown Hertz office took over an hour as we walked in circles, due to the miniscule Hertz sign being 95% obstructed by scaffolding. The drive back to the hotel probably took another hour due to Darius's circuitous navigation instructions through the narrow cobblestone streets, many of which are closed to vehicles.

Riga is larger than Tallinn, and its old town area is even more filled with sidewalk cafes and beer halls. Again, we stayed in a small hotel in the old city--Viesturs Boutique Hotel. If nothing else, the Baltics have become a relatively cheap destination for young beer-drinking enthusiasts from elsewhere in Europe to come and spend a mindless weekend in pursuit of the opposite sex. Baltic people have more Scandinavian features (e.g., blond hair) than I expected. This quality in females, when combined with the stereotypical slutty Russian style of dressing present in the Baltics, provides a tempting attraction for a drunken European young man, which I believe is the point of such manner of attire. Combine this with the ubiquitous strip clubs prominent on every corner, and Riga is a bit of a dream stag weekend destination for a group of Irish lads. Many Riga establishments attempt to please all comers--a sidewalk cafe provides an intimate setting for couples, a bar inside draws the drinking crowd, a room in back provides strip club gratification for frustrated males, while the upstairs is a dance club. Strangely it all works, as couples see nothing odd in having dinner in a pole-dancing establishment.

Having said all of this, I don't want to give the wrong impression of Riga. It's a charming place and a good place to visit--100% Europe at 50% of the price.

Sunday, August 14, 2005

Full day in Riga, visiting the Occupation Museum of Latvia, the Museum of War, and walking around old town. The former is the same concept as the museum in Tallinn, detailing the trio of World War II invasions from USSR, Germany, and the USSR again. The Riga version had less detail on Latvian participation on the German side. I don't know if that's because it did not occur as frequently, or because they are ashamed it did occur. Tallinn museum rather matter-of-factly presented the view that of course we helped the Germans; they weren't as bad as the Soviets after all, unless you were Jewish which not many of our people were. Museum of War was mainly in Latvian--I'm willing to give them a pass on this point where I criticized Sweden since Latvia only joined the EU last year (Sweden only joined in 1995, but they were part of developed Western Europe for decades prior.)

Monday, August 15, 2005

Drove from Riga, Latvia to Darius's parents' house in Vilnius, Estonia. During the drive, we decided that the Baltic countries rank first in worst public bathrooms in the world, dislodging the prior champion China and moving the US down to number 3 from number 2. Darius thought this was a leftover attitude from the Soviet era where no one took care of public property since no one owned it. Along the way, we stopped at the Hill of Crosses, which is literally that--a hill with a million or more crosses on it (see image gallery once we add our Lithuanian pictures). Originally, it was a protest site over the Soviet's ban on religion (although there are some reports that the site existed prior to the Soviet takeover). The Soviets would take down the crosses, and by morning, the local citizens would have them back in place. With independence, there is no longer any restriction on religion, but the site has flourished, not so much as a protest area, but rather as a celebration of religion. Lithuania is primarily Roman Catholic whereas Estonia to the north is primarily Lutheran and Latvia in between is a mix of the two religions.

Darius's parents have a fascinating life story. When the USSR was advancing to retake the Baltics from the Germans in 1944, his father, Bronius, fled west on a bicycle to avoid the Soviets. As related in our earlier entries, the Soviet Union was feared more than Germany as the real enemy of the Baltic States. He ran into the retreating German army. They detained him, but he escaped the first night. Having no food, he joined the Lithuanian resistance, which opposed the Soviets. Once his hunger subsided, he traveled by ship from Poland to German-held Denmark. He was forced by the Germans to perform construction and security duties until the war ended. For a while, he was in a British refuge camp. Eventually, Bronius ended up in Germany, finishing high school there after the war. He then immigrated to Canada, working initially as lumberjack, and continuing his education, eventually becoming a college professor. Later he lived in Pennsylvania and Chicago. He was the only member of his family to escape Lithuania; some other family members were persecuted and banished to Soviet labor camps in Siberia. His parents spent 12 years in Siberia after a neighbor informed the authorities that Bronius had been a member of the Lithuanian resistance. After he arrived in the New World, some North Americans could not understand why Bronius did not share their appreciation toward the Soviets for their World War II contribution. To North Americans, he seemed ungrateful for the Soviet "liberation" of his homeland from the Germans. As the Cold War heated up, though, this question became less common.

Bronius first traveled back to Lithuania in the 1960s, where he met Stase, now his wife. After about a week, they decided to marry. They could not do so, however, until Moscow approved, a process that took several more weeks. Bronius returned to the US without his wife, who had to remain in Lithuania for a year until she received permission to leave the country. In 1989 with glasnost well underway, but with the Baltics still part of the USSR, Bronius returned to Lithuania with other Lithuanian expat professors to found a university, which he later became president of. Since 1992, Stase has joined him, making Vilnius their permanent home, although they do spend a few months each year in St. Pete Beach, Florida to escape the Baltic winter.

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March 21, 2005

05:47:06 pm Plane Reading  

March 21, 2005

On the flight from Christchurch, New Zealand to Sydney Australia, Nick caught up on recent newsmagazines. Of note:

- Who would have thought? The two-week old editions of Time (dated March 14), Newsweek (Newsweek content published inside of The Bulletin in Australia, dated March 15), and the Economist (week ending March 11) all had opinion pieces crediting the Bush Doctrine and the invasion of Iraq as the catalyst that has led to democratic openings in Palestine, Egypt, Lebanon, and Saudi Arabia. Best was Charles Krauthammer's piece "Three Cheers for the Bush Doctrine" in Time. To be sure, much is uncertain and much could go wrong, but it is possible that the January 30 elections in Iraq could be the Middle East equivalent of the Berlin Wall falling, as one of these articles put it.

Since we have been gone, a grudging acknowledgement also seems to have crept into the foreign press we've read that maybe some good after all has resulted from US involvement in Iraq. Whatever your view of the war (and we've certainly had mixed views at times), it's hard to dismiss the connection between elections first in Afghanistan and then in Iraq and the sudden willingness of Middle East leaders to lurch toward democracy as their constituents, emboldened by what they see elsewhere, have begun to demand it.

- High housing prices now means it is wiser to rent than to buy in many developed countries, according to a financial and tax analysis in the Economist. In response to this out-of-kilter situation, housing prices have begun falling in Australia and the UK (we read this in another source, not the Economist article). One Australian index showed prices down 7% in the fourth quarter 2004 versus a year prior, with Sydney down 16%. Japanese and German housing prices have dropped two years in a row, although this is due to their slack economies, not to high prices. Notably, Hong Kong, while up recently, is still down over 50% from 1997 when its property market peaked and before the 1997 Asian financial crises hit. Japan is down 25% since 1997.

How about the US? The Economist opines "there is a clear risk prices might fall" and estimates that prices here need to remain flat for 10 years to bring the ratio of house prices to rents back to its long-term norm. They estimate that based on current rents, US housing prices are 32% overvalued. That's better than the UK, Australia, and Spain, all 60% or more overvalued. We would add that we think excesses in the US are present in some markets (Southern California is one example) and not in others.

Think prices can't fall in the US? Think again. In the early 90s, both the Northeast and Southern California experienced drops of around 20%. The Chicago house we now live in sold twice during that period, each time for less than the prior sale. Overall, we think the US is in better shape than other countries, and we think most parts of the country have nothing to worry about (other than a possible future period of stagnant or low levels of appreciation). We do believe that some of the areas which have the highest prices or which have had the highest rate of increases over the past five years or so could see some degree of decline over the next year or two as US interest rates increase.

- Over the last 10 years, the following countries have adopted a flat rate personal income tax: Estonia (26% rate), Latvia, Lithuania (we think these two countries are also at 26% but Economist was not clear on this), Russia (13%), Serbia (14%), Ukraine (13%), Georgia (12%), Slovakia (19%), and Romania (16%). There's a move in Poland and the Czech Republic for a 15% flat tax rate. The ruling party in the Netherlands is considering a 30% flat tax, and other EU countries such as Spain and Germany are studying the idea.

So, totaling up, four of the 25 EU members plus future entrant Romania now have a flat tax. The expansion of the EU to the east, while opening up new markets for the west, is also putting tremendous pressure on the west to reform both business (see our Initial Impressions of New Zealand post which discussed the problems German automakers are having) and government practices. While US business practices have already reformed over the past two decades, government tax policy moved backward under Bush 41 and Clinton. We had moved close to a flat tax in 1986 under the second Reagan tax reform that left just two tax rates in place, at 15% and 28%. But Bush the elder, panicked, reversed course on his "Read My Lips" pledge and burdened us with a new 31% tax bracket in 1990, then Clinton piled on two more brackets at 36% and 39.6% in 1993. Both presidents, but primarily Clinton, added an explosion of new deductions, perverting the tax code away from the simplifications of the 1986 reform.

Bush the younger has partially rolled back the rate creep to 35% and promises now a "simpler, fairer" tax code. Looking to the east and the flat tax policies of the former Communist countries (that, having suffered under communism for so long, at times seem to have learned to appreciate capitalism better than west) would be a good place to start.

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