Reports are coming in that the Latvian government has collapsed after the People's party plain quit.

The People's Party, the largest group in a five-party coalition, walked out amid disputes over how to cope with the country's severe problems.

Unemployment has now hit 20 per cent and the economy contracted by 18 per cent last year.

The People's Party quit after its action plan failed to get the backing of Valdis Dombrovskis, the Latvian prime minister, who labelled it "populist".

From Business Week:

The premier, who took office a year ago during the former Soviet state’s worst economic crisis in two decades and forced through the European Union’s toughest austerity program, was left heading a minority administration after the People’s Party quit yesterday in protest over economic policies.

The People’s Party recalled its five Cabinet members after Dombrovskis refused to sign an agreement between the party and his own New Era group yesterday. It called for delaying tax increases this year and next and fewer ministries. The premier now controls 44 seats in the 100-member legislature with four unaligned deputies. A general election is scheduled for October.

Midtowng noted this possibility in Greece has nothing on Latvia.

A few details of this austerity program are detailed here but look what the IMF as well as the EU has Latvia doing:

The international lending program calls for rolling back wage increases and using deflation to restore competiveness, while keeping the lats pegged to the euro.

So, this is the answer, to never wipe out the Banksters and always squeeze the workers? Deflating their currency and wiping out their wages is now competitiveness? Ah, the road to serfdom.

Then another question is, now assuming Latvia will continue and this is a Parliamentary type of government which is not the same system as the United States, but will we see literally a sovereign casualty from the evil doings of the Banksters?