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f,,tJlvEditorialThey say a new year has started. The Chinese even say it's the year of the Rat.Not a very nice thing to say, is it? A filthy, disease-ridden rodent for a year?That's just wrong…Anyway… A lot of things happened all around the world since the ChristmasInsider issue, and one of them was of tremendous importance: the Insider got itsnew editors. Or, to put it somewhat more interesting, the Dynamic Duo wasreplaced by the Fantastic 4. Ok, ok. We might not be that fantastic yet, but atleast there's four of us. And we'll do our very best to be as fantastic as fourLithuanians studying economics in Latvia can be.Life has not been easy. Year 2 is still gone financing, Year 1 can't make up theirminds which report to write first. The weather can't make up its mind betweenwinter and spring. But there's an end for everything and this time it's Valentine'sDay plus a brand new Insider. News, sports, parties, gossip, travel, interviews,something old, something new, something borrowed and something blue – it'sall here.So, without further ado, we present to you our first creation. As all younglings itmight seem a bit clumsy, strange, and maybe even silly. But as all younglings itwill grow-up over time, go into puberty, develop some bad habits, maybe somegood ones too… It will be a great addition to the family!deRdnaeBullniL,ėngda,eht,nEgchlėeeB.,Mrleadarti,siHpeSrenK,carirjsstina,ItaAaesnial,eea,dnaeSoG:osilrIA,.sialHohnrsaateKSr,,o.VM:ė MVrelomgtEmsk,hansoaSna,Lašs,mports.coRollercoaster economicsMost people prefer a smooth and predictable development of the economy with, of course,positive growth and full employment. Well, not lecturers. For them such development israther boring and it is much more interesting when something new and exciting, be it verygood or very unpleasant, is happening.And 2008 seems, like 2007, to be another good year for lecturers. Whereas 2007 was veryinteresting due to severe overheating of the Baltic economies, 2008 is interesting as it ishard to predict what will happen to the world economies. The United States may be on thebrink of a recession. Slow development in the US means less imports into the US, whichmeans less exports from us, which means less demand in our economies, which means aslowdown in growth here, too.When you look at this development (for you should!!) please make a distinction betweenthe following: Slow-moving and fast-moving economic variables. GDP growth, exports,inflation etc are slow-moving – should the US go into recession it will pull down Europe toobut it’ll take a couple of years to show its full effect with slower growth, increasingunemployment and less inflation etc. But stock markets reflect this via a very fast-movingvariable, namely stock prices. In the last few weeks it has dawned on stock markets that thisquite predictable scenario in the US might actually happen. This will imply that firms willproduce and sell less in the US and in Europe in the future i.e. will earn less and have lowerprofits. As stock prices are supposed to reflect the value of a firm in terms of future expectedearnings, this expected future decline in profits hits stock prices right now and January2008 marked a period where billions and billions were lost in the stock market.But will the US slow down? If not, expect some tremendous increases in the stock markets.Whatever happens, a great year lies ahead for economics lecturers!2|INSIDER February 2008Published in Stockholm School of Economics in RigaStrelnieku 4a, Riga LV-1010