Lithuanian Economy Shrank 22.4%, EU’s Worst Recession ... and Blonde Parade helps Latvia, page 1

22% seems HUGE .. but to be honest you have to look at this a few ways. Then decide if it is as catastrophic as it sounds.

1. Lithuania is about the size of a New England state here in the US .. so it's not a massive economy by anymeans.

2. Technically speaking as with most of Eastern Europe, it is an emerging economy, however it is the most developed of all post-soviet states.

3. Average economic growth for the past few years has been 6-8.5% annually.. this is pretty impressive, but again, when your a small developing country, you have higher swings both ways.

4. Surprisingly for any Eastern European country it's unemployment in 2008 was only 4.7% .. that's considerably less than most major economies like the US, Uk, France, Germany etc.

5. Unlike other economies who exported citizens across the EU to lower unemployment (Poland, Czech etc) they actually built up a huge financial center and infrastructure.

6. Lithuania had (see had) one of the highest personal income levels in the EU.

So taking into effect that, yes, it IS an emerging economy by all means, it had high economic growth, and hundreds of billions in international development.. while also acknowledge the fact that 22% decline after such massive growth is simply astounding. To go from the fastest growing to fastest declining in such a short amount of time..

But the story of Lithuania isn't much different than the rest of the Eastern European nations. We can safely assume that Lithuania, while it had an excellent economy and economic growth for the past few years, not much of it was actual "wealth" generating .. basically an economy built around numbers, but the numbers didn't tell the whole story. The largest portion of the Lithuanian economy was Construction. It's the same all over Europe. Ireland, Lithuania, Poland, Czech, the Baltics, Romania, the list goes on and on .. credit levels decline to the point where it's essentially "free money" .. The West comes into a region completely undeveloped and pumps hundreds of billions into these economies and construction booms occur.

But it wasn't real wealth.. it was over leveraged fake wealth .. and when it disappears.. so do the economies that depended on it.

So the Lithuanian economy didn't really "crash" .. it merely came to the realization that there wasn't much of an economy to begin with.

If you build a house.. you don't create wealth. You spend wealth. If your whole economy is based on building houses and malls.... but you are not producing what is being sold, or the people living in the houses are not working to manufacture a good .. then you have an economy built on numbers. That's incredibly dangerous, you cannot build infinity .. it must end, so so will the mirage of wealth that came with it. Hopefully for Lithuania it will be a wake up call. 22% decline will be bad for Lithuanians on a whole as far as unemployment, but given the state of the economy I don't see it as catastrophic as they are still developing. And judging by the fact that so much depended on construction, hopefully they will turn it into a good thing and re-adjust their economic policies.