Eastern Europe is About to Blow

[seemslikeadream]

http://www.dissidentvoice.org/2009/02/eastern-europe-is-about-to-blow/


Eastern Europe is About to Blow
by Mike Whitney / February 18th, 2009

East Europe is about to blow. If it does, it could take much of the EU with it. It’s an emergency situation but there are no easy solutions. The IMF doesn’t have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. It’s only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape. The rise of fascism is no longer out of the question.

The UK Telegraph’s economics editor Edmund Conway sums it up like this:

A “second wave” of countries will fall victim to the economic crisis and face being bailed out by the International Monetary Fund, its chief warned at the G7 summit in Rome. . . . But with some countries’ economies effectively dwarfed by the size of their banking sector and its financial liabilities, there are fears they could fall victim to balance of payments and currency crises, much as Iceland did before receiving emergency assistance from the IMF last year.

Foreign capital is fleeing at an alarming rate. Nearly two-thirds gone in matter of months. Deflation is pushing down asset prices, increasing unemployment, and compounding the debt-burden of financial institutions. It’s the same everywhere. The economies are being hollowed out and stripped of capital. Ukraine is teetering on the brink of bankruptcy. Poland, Latvia, Lithuania, Hungary have all slipped into a low-grade depression. The countries that followed Washington’s economic regimen have suffered the most. They bet that debt-fueled growth and exports would lead to prosperity. That dream has been shattered. They haven’t developed their consumer markets, so demand is weak. Capital is scarce and businesses are being forced to deleverage to avoid default. All of Eastern Europe has gotten a margin call. They need extra funds to cover the falling value of their equity. They need a lifeline from the IMF or their economies will continue to crumble.

The UK Telegraph’s economics correspondent Ambrose Evans-Pritchard has written a series of articles about Eastern Europe. In “Failure to Save East Europe Will Lead to Worldwide Meltdown” he says:

“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.

“A failure rate of 10pc would lead to the collapse of the Austrian financial sector,” reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc . . . .

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, equal to a third of the region’s GDP. Good luck. The credit window has slammed shut.

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. Plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets. They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).

[babylonsister]

1. Maybe not. How do we know, and who do we trust? Not

Mike Whitney.

[seemslikeadream]

5. maybe this then

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5070686&mesg_id=5070686

[Dammit Ann]

10. Why? Honestly, just curious.

Thank you, I just really respect your opinion and this seems odd for you or maybe I should engage more instead of lazy lurking.

[babylonsister]

11. I have problems with

Mike Whitney, Paul Craig Roberts, and that site that I can't remember. Thanks for asking, but I used to try to post them, and now I try not to. Tiresome, negative rants I can do without.

We are in a position to think the worst or the best. Pick who or what you favor. I'm all for the positive, because no one has a clue.

[Dammit Ann]

12. Dissident Voice? Yes, I understand the tiresome part, for sure...

and the negative, actually. Smirking Chimp is where I first read Whitney, although, I can't bare to go there anymore either, sadly. Thanks for the answer, I get it. I did start reading MW at least 3 years ago and although everything he says is very chicken little, I do credit him with foresight.

[salinen]

31. Dear Babs

I've decided not to love you. The competition is too fierce.

[babylonsister]

32. Ha! If you only knew!

:D

[seemslikeadream]

34. Dow Closes at Its Lowest Level in More Than Six Years

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3747266

[leftstreet]

2. How was this not planned?

:shrug:

It seems like a few rich predators turned most of the world into a giant Argentina.

Strange days...

[bobthedrummer]

3. After Paul Dundes Wolfowitz left the Donald Henry Rumsfeld Pentagon

he was at the World Bank. Elizabeth Cheney played matchmaker for him and Shaha Ali Riza.

1+1=2.

[depakid]

4. When people cite the Telegraph to support their positions

rational folks look the other way.

[TheWatcher]

17. THANK GOD IT PASSED!!!!!!

Very rational.

:eyes:

[depakid]

19. The Torygraph both in Britain and Down Under is less than a credible source

and is well know to inflame and incite.

It's essentially a tabloid.

You can read it and get all worked up if you want- and you can act like a jerk.

Your choice.

[TheWatcher]

20. And you can continue to be an apologist.

We can be DU's Odd Couple.

I'll bet they'll even give us a show.

Besides, SLAD linked to a different source that might be less threatening for you, but I'm sure you'll find a way to pooh-pooh it anyway. I know how wedded you are to your paradigms.

Don't worry, "The Stimlas" will save you.

And if it doesn't, maybe the next bailout, scheme, plan, innuendo, etc will.

:rofl:

Iceland didn't really collapse, there is no massive unrest in Greece, France, etc. The Russian Exchanges did not close down abrubtly yesterday, Eastern Europe is much ado about nothing, nothing exists, nothing is real, Thank God It Passed, Stimlas Saves the World, Ireland isn't really in danger of default, blah, blah, blah.

[depakid]

21. Hardly an apologist- just not a jerk

and not someone who relies on the Telegraph (or counterpunch) for accurate information.

[TheWatcher]

22. No you rely on your false paradigms and whatever feel-good propaganda that helps you rationalize

Them.

Besides, SLAD didn't link to Counterpunch.

It was Jim Sinclair, and Financial Times. And there are plenty other sources that reported on it too.

Try again.

Sorry that it wasn't on any of the Cable News Cathode Help Centers, or any of the Networks. They were too busy covering the menace that is Michael Phelps, or Jessica's weight problem, you know, the REAL problems.

And it wasn't on Yahoo's front page either. But hey, there's a FASCINATING piece on the Top five Sports Star Wives!


But hey, why are you wasting your time with a CRAAAZZY Conspiracy Kook jerk like me anyway? You've got all the answers you need.

Besides, Paulsen's first bailout that you fell on your knees and worshiped has already saved the world five Times over, and financial hardship will never plague the World again. SURE they didn't use any of the money for what they said they would. Sure, in the end it turned out to be 8.5 Trillion that went down a Black hole instead of 800 billion, BUT THAT'S NOT IMPORTANT.

All you have to do is BELIEVE, and nothing else matters.

Just feel good, ignore everything that you don't like, and your Truman Show Bubble-Like Fantasy World will keep you safe, secure, and unscathed.

Only that which makes you feel good, and hopeful, is real.

The Total Unfunded Liability of the USA being 66 Trillion Dollars? Doesn't Exist. Can't ever hurt us. (The Total GDP of THE PLANET is 65 Trillion. Don't worry, that doesn't exist either.)

Everything Is Fine In Pleasantville.

"The Stimlas" will do the trick. The Home Owner Lifeline will Save Us.

Praise Marty Moose.

[depakid]

23. The author writes for counterpunch as well

and like counterpunch- isn't a credible source.

Nor are you and your rantings- so you should probably just let it drop.

[TheWatcher]

24. That's right dear. I'm not credible because I won't tell you what you want to hear, or wed myself

to the delusions you need in order to function.

Every time one of our leaders, no matter the party affiliation, swoops in with Gun-To-The-Head Panicky Language telling us that "We've got to pass this scheme, plan, innuendo, bill, etc, or the Sky WILL FALL, and The SEAS WILL BOIL, and every home will split open at the foundation and fill with hot liquid magma", I don't fall on my knees in tears and plead "OK! OK! ANYTHING! PLEASE, JUST SAVE US!", and then relentlessly defend it even AFTER it is obvious we were had beyond a reasonable doubt.

And that makes me a kook.

And Yes, because YOU say I'm uncredible, it MUST be so.

because you've been SO right about everything so far. Paulsen sure saved us all, didn't he? :rofl:

And this "Sky Is Falling" legislation will too.

And the next. And the next. And the next.

Keep dreaming! We'll get there as long as you BELIEVE!

Now, quit sparring with me, and go search for something that makes you feel good, so you don't have to face anything real.

That's all that matters.

The Eastern Europe Situation is Real. The Global Meltdown that is slowly occurring is real. And no Pet Bailout scheme is going to stop it. There really is no way at this point to know what the full impact of everything will be, because we are in uncharted territory.

I would be willing to bet you still believe there will be a recovery in six months.

Now THAT'S Credible. :rofl:

[TheWatcher]

26. By the way here's ONE MORE source on the subject

http://blog.atimes.net/?p=601

Now, you'll PROBABLY be able to Google that guy and find SOMEPLACE, SOMEWHERE, SOMETHING that he wrote got published AT SOME POINT, at SOMEPLACE that will make you feel uncomfortable and scared, but so far, I haven't found one.

Whether you want to accept it or not, there are some very dire things happening in the world.

Wake Up.

Or just keep living in denial and smugly proclaiming "Uncredible. Conspiracy. Doesn't Exist. Kook Alert." at anything that makes you uncomfortable, or that you are determined to believe cannot exist, no matter what, while relentlessly defending this Drunken Husband that passes for government and leadership, explaining in a calm, condescending tone that the abuse he keeps battering us with is good, but doesn't really exist, and that we all need to drop it and fall in line.

I could care less.

[conscious evolution]

29. BRAVO! BRAVO!!

:thumbsup:

[seemslikeadream]

6. BNP Paribas Posts Quarterly Loss on Investment Bank (Update1)

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahDTOzUFGLgg&refer=home

Feb. 19 (Bloomberg) -- BNP Paribas SA, France’s largest bank, had a 1.37 billion-euro ($1.72 billion) fourth-quarter loss after market swings drove the investment banking division to its first quarterly deficit.

The bank’s loss compares with a 1.01 billion-euro profit in the year-earlier period, Paris-based BNP Paribas said in an e- mailed statement today. The bank lowered its dividend for 2008 to 1 euro a share from 3.35 euros.

“In this environment that remains challenging, I’m confident that BNP Paribas will be able again to have a good performance and certainly be profitable,” Chief Executive Officer Baudouin Prot said in an interview with Bloomberg Television. “I do believe that the French market will be the most resilient in Europe revenue-wise and risk-wise.”

BNP Paribas, which avoided the worst of the U.S. subprime crisis, suffered after the September bankruptcy of Lehman Brothers Holdings Inc. caused “exceptionally violent movements in capital markets,” the bank said last month. The French company also had 345 million euros of losses related to Bernard Madoff’s alleged Ponzi scheme.

[bobthedrummer]

7. They say the best things in life are free, but you can keep them for the birds and bees...

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$
#####

[New Dawn]

8. Ukraine, Poland, Latvia, Lithuania and Romania are all ruled by right-wing regimes

Keep that in mind when reading about the economic meltdown there.

[MattSh]

30. According to who ???

Or are you justing making this up?

I've been living in Ukraine the last three years. In many ways, it's a lot more liberal than the states are. IMHO.

At least here, government is afraid of the people and actually listen to them on occasion. Unlike the USA.

[bertman]

9. Could be this is the beginning of what will be known by future historians as

The Great Culling.

[Kalyke]

36. Or the Great Revolution.

It will be hard for the handful of 1 percenters to fend off the other 99 percent of us for very long - even with their gated communities and moats and personal guards and pit bulls.

[bertman]

37. I was referring to a combination of factors: starvation, disease, drought, wars over

territory, civil wars, repression, pollution.

I'm not as confident as you that those you call the "1 percenters" are only one percent. In addition to that, it's obvious that the elites/overlords have gone to great lengths to surround themselves with those who benefit from and live off of the goods and services that the 1 percenters control, and thus find themselves beholden to them--as well as in the same proverbial boat with them if and when a violent revolution were to take place.

A mass demonstration of thousands can be stopped quickly and effectively by fewer than a hundred well-armed, well-trained police or military personnel. That's been shown to be true hundreds of times. "A whiff of the grape" has persuaded many a revolutionary to reconsider his/her involvement in a potentially suicidal endeavor.

In today's world, the rulers have spent billions of dollars/marks/yen developing ways to deter violent revolutionary tactics. Especially here in Amerika, the sheeple cannot be roused to action even when OUR democracy is stolen from US and We are bludgeoned about the head and shoulders with its bloody, broken carcass.

There are many more ways to stop a revolution than using weaponry. Severing communications and travel routes, and cutting off access to food and water, are all time-tested methods of dissipating the energy of anti-government fervor. Eliminating the heads of the movement is another effective tactic that is used with great effect all over the world.

I am still very hopeful that peaceful protest will help to resolve many of the problems we currently have. Revolutions do not have to be violent.

[JDPriestly]

13. Salzburger Nachrichten -- The Salzburg News

Osteuropa. . . . .
Eastern Europe --

Wien (SN). Einen Tag nach ihrem tiefen Fall haben sich die Aktienkurse von Raiffeisen International und der Erste Group leicht erholt (siehe Grafik oben). Die Sorgen, dass sich das Engagement ausländischer Banken in Osteuropa negativ in den Bilanzen der Konzernmütter niederschlagen wird, bleiben hingegen bestehen. Laut Gunter Deuber, Analyst bei der Deutschen Bank, stehen die größten Anpassungen noch bevor.

Die finanzielle Lage der privaten Haushalte werde sich verschlechtern und zu höheren Kreditvorsorgen bei den Banken führen. In einigen osteuropäischen Ländern seien die Bürger zu hoch verschuldet, in Rumänien, Bulgarien und Kroatien mache der Schuldendienst bis zu 30 Prozent des verfügbaren Einkommens aus, in Polen und Tschechien seien es hingegen nur 10 bis 15 Prozent.

Das zeige auch, dass man die Länder Osteuropas nicht in einen Topf werfen dürfe, sagt Deuber. Das sieht Gabor Hunya, Ökonom am Wiener Institut für Internationale Wirtschaftsvergleiche (WIIW), ähnlich. Er unterteilt die Länder der Region in drei Gruppen. Stabilen Staaten mit guten Wachstumsaussichten seien Polen, Slowenien, Tschechien und die Slowakei. Gewisse Risiken gebe es in den südosteuropäischen Ländern. Die baltischen Länder, Ungarn und die Ukraine befänden sich hingegen in einer Krise.

http://www.salzburg.com/nwas/index.php?article=DText/tz3je_ev~n~1svuvf23atb2&img=&text=&mode=§ion=newsletter&channel=nachrichten&sort=#

Too tired to translate, but very roughly some high points (leaving a lot out), this says that some East Europeans are deeply in debt.

After falling yesterday, the stock of (Austrian Banks), Raiffeisen International and Erste Bank (First Bank) recovered somewhat. The concern that the involvement of these banks in Eastern Europe would have a negative effect on the bottom lines of the banks, remains. According to Gunter Deuber, an analyst for the Deutsche Bank, the big adjustments are yet to come.

. . . .

. . . In some countries, people have taken on too much debt. Romanians, Bulgarians and Croatians are carrying debts of up to 30% of their available income. But the debts of the Polish and Tzechs are about 10-15% of their available income.

Poland, Slovenia, The Czech Republican and Slovakia are stable. But the Baltic countries, Hungary and the Ukraine are in crisis.

My translation is incomplete and not real accurate, but you get the picture.

[seemslikeadream]

15. translation

The downside of the long boom
18. 18. Februar 2009 | 17:38 | | Richard Wiens (SN). February 2009 | 17:38 | | Richard Wiens (SN).
Osteuropa. Das Wachstum auf Pump kommt nun in Form höherer Kreditvorsorgen bei den Banken zurück. Eastern Europe. The growth of Pump comes in the form of higher provisioning for credit from the banks back. Ein Rückzug ist kein Thema. A retreat is not an issue.

Richard Wiens Richard Wiens
Wien (SN). ). One day after her deep case, the share price of Raiffeisen International and Erste Group slightly (see chart above). The concerns that the involvement of foreign banks in Eastern Europe is negative in the consolidated balance sheets of the mothers is reflected, however, remain there. According to Gunter Deuber, analyst at Deutsche Bank, the biggest adjustments are yet to come.
The financial situation of households will get worse and lead to higher provisioning for credit in the banks. In some Eastern European countries were heavily indebted to citizens, in Romania, Bulgaria and Croatia make debt up to 30 percent of disposable income in Poland and the Czech Republic there were only 10 to 15 percent.

The show also that the Eastern European countries not in a pot should throw, Deuber said. Das sieht Gabor Hunya, That looks Hunya Gabor, economist at the Vienna Institute for International Economic Studies (WIIW), similar. He divides the countries of the region into three groups. . Stable countries with good growth prospects were Poland, Slovenia, the Czech Republic and Slovakia. . There are some risks in the countries of Southeastern Europe. Die baltischen Länder, Ungarn und die Ukraine befänden sich hingegen in einer Krise. The Baltic countries, Hungary and Ukraine, however, though in a crisis.

However, the recent turmoil Hunya after warning from the rating agency Moody's does not understand much was known. Moreover, shrinking the current account deficit shrank in some countries, the increase in bad loans was not worrisome, the public debt is not very high. „Es gibt wenig Grund für Panik.“ "There is little reason for panic."

Deuber raises the foreign banks, for too long been too optimistic to be. . Warnings from the IMF or ECB about high current account deficits had been in the wind beaten. Instead, you have to trust that the growth of permanent consumption financed by credit could be nourished. "But if the currency by 30 percent and more smearing", which no longer functioned. Die Warnung von Moody’s hält Deuber daher für „mehr als begründet“. The warning from Moody's therefore believes Deuber for "more than justified."

Admittedly, he sees no alternative to the high level of investment from abroad and also to other debts. Aber künftig müsse in Osteuropa auf die Ersparnisbildung geachtet werden. But in Eastern Europe will be the savings are respected.

That in matters of financial support for the region at the European level have the last word is spoken, does not believe For the EU member countries were numerous instruments available. Aber die EU sei gut beraten, den Währungsfonds vorangehen zu lassen. But the EU is well advised, the Monetary Fund to move forward. . That forced the countries to recognize that there is a crisis there.

Hunya considers the appeals of Austria for coordinated assistance to the countries of the region is correct. It was an international crisis, says Hunya "which must be resolved internationally." . This will indirectly help the banks. Sie hätten gut verdient, wenn die Gewinne jetzt zurückgingen, sei dies normal. They had well-deserved, if the profits went back now, this was normal. . At a retreat of banks from Eastern Europe who believe Hunya not, "said one market can not." A spokesman from Raiffeisen International leaves no doubt. "We are convinced that our business model is sustainable."

[grantcart]

14. Bush's legacy goes world wide

He was right when he kept saying that the whole world would be touched by his administration.

[babylonsister]

16. I refuse to believe he ruined everything. No way. Time to move on,

and that POS should not have that power. EVER. :grr:

[TheWatcher]

25. Actually it would PROBABLY be better to hold the previous administration accountable for it's crimes

And administer the appropriate punishment for such, and repeal everything they did while in Office, including the Patriot Act, instead of basking in the victory of our "Football Team", and sweeping it all under the rug and "Moving On."

But it would appear there are no plans to do that. YET.

One can hope.

[bdamomma]

33. there is a saying which holds true

when the US sneezes the rest of the world catches cold!!!!!

[KillCapitalism]

18. It didn't have to be this way.

It's too bad they just went and gave up on communism so easily...morans. I hope they are enjoying the results of right-wing rule.

[specialed]

27. This really could lead to the collapse of the Euro and then..

the crap will really hit the fan.

[Ikonoklast]

28. Say hello to a new world-wide currency.

It will not be controlled by any government, either.

Better learn how to play ball with those that will control it, or say bye-bye to your economy.

[Raskolnik]

35. To be fair, most of Eastern Europe has blown for quite some time. n/t