Selhani zachrany Vychodu povede k celosvetovemu padu.
Vychodni Evropa vaze Evrope Zapadni dalsi bremeno kolem krku.
During the boom years leading up to the financial crisis Western European banks were the primary lenders fueling Eastern Europe’s growth.
Now, the stagnation of Eastern European economies, coupled with decline in the value of many of their currencies, relative to the Euro and Swiss Franc, has turned banks’ exposure to this region into a massive liability.
Austrian banks alone have more than $293 billion of exposure to Eastern Europe, roughly 80% of the Austrian GDP.
Banks throughout Western Europe have both direct loan exposure and exposure through their Eastern European subsidiaries.
The IMF puts the amount of private debt denominated in foreign currencies within Eastern Europe at roughly 15% and the absolute figure has been put at close to $1.7 trillion.
For instance, over the past 6 months the Polish Zloty and the Ukraine Hryvnias have both declined over 30% against the Euro and the Swiss Franc. In Poland close to 60% of debt is denominated in foreign currencies.
Austria’s finance minister, Josef Proell, fears that Eastern European default rates above 10% will be sufficient to destroy his nation’s banking industry.
Unfortunately, that is about to happen.
A rescue is unlikely to be forthcoming. Western Europe has pressing economic problems, independent of their Eastern European exposure.
Feb 23,2009
http://247wallst.com/2009/02/23/eastern-europe-throws-another-anchor-around-the-eus-neck/
Failure to save East Europe will lead to worldwide meltdown
Selhani zachrany Vychodu povede k celosvetovemu padu
Feb 15, 2009
The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.
Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.
The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.
Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year 2009, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.
Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95.
Russia has bled 36pc of its foreign reserves since August 2008 defending the rouble.
In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story.
As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.
Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.
The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan – and Turkey next – and is fast exhausting its own $200bn (€155bn) reserve.
Its $16bn rescue of Ukraine has unravelled. The country – facing a 12pc contraction in GDP after the collapse of steel prices – is hurtling towards default, leaving Unicredit, Raffeisen and ING in the lurch. Pakistan wants another $7.6bn. Latvia's central bank governor has declared his economy "clinically dead" after it shrank 10.5pc in the fourth quarter. Protesters have smashed the treasury and stormed parliament.
Germany contracted at an annual rate of 8.4pc in the fourth quarter 2008.
The implications are obvious.
Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU "union bonds" should the debt markets take fright at the rocketing trajectory of Italy's public debt (hitting 112pc of GDP next year, just revised up from 101pc – big change), or rescue Austria from its Habsburg adventurism.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html
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