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  1. #1
    Join Date
    Apr 2008
    Location
    Christchurch, New Zealand
    Posts
    1,125

    Default Failure to save East Europe will lead to worldwide meltdown

    Failure to save East Europe will lead to worldwide meltdown
    http://www.telegraph.co.uk/finance/c...-meltdown.html

    The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.

    If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

    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. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

    Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany's Peer Steinbrück. Not our problem, he said. We'll see about that.

    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.

    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 defending the rouble.

    "This is the largest run on a currency in history," said Mr Jen.
    .
    .
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    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. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights.
    .
    .
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    So we watch and wait as the lethal brush fires move closer.

    If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?

  2. #2
    Join Date
    Feb 2008
    Location
    Melbourne, Australia
    Posts
    277

    Default

    Believable. However this post is unlikely to generate much interest on this forum. If it was a post about the value of painting over rust-spots on roofs there would be a flurry of activity.

  3. #3
    Join Date
    Jan 2004
    Location
    Whangarei
    Posts
    5,867

    Default

    Steve you old cynic. Everyone knows that you need to brush off the rust and apply primer first

  4. #4

    Default

    I like ollys, patch with a piece of old shirt then paint trick, but you must apply some rust kill first.

  5. #5
    Join Date
    Feb 2008
    Location
    Melbourne, Australia
    Posts
    277

    Default

    See . . . . . . .

  6. #6
    Join Date
    Apr 2008
    Location
    Christchurch, New Zealand
    Posts
    1,125

    Default

    Does anyone use Hammerite ?



    LKSteve, they'll get more interested when it directly affects them.

  7. #7
    Join Date
    Sep 2008
    Posts
    7,581

    Default

    We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights.


    that's a very thought provoking line....

    when will we see

    "25%pa interest is not hyper-inflation, yes, its high, but not unnecessarily so in light of our current situation"
    have you defeated them?
    your demons

  8. #8
    Join Date
    Sep 2007
    Location
    Auckland
    Posts
    8,332

    Default

    Well I read the article (I'm such a girly swot). I found the first comment telling:

    That was the most obvious and biggest myth of our time. For the record in the last year these pages have prophecised the [immediate] doom of the UK, ireland, spain, greece, italy and belgium. For the further record the only one that didn't feature AHEAD of the event was Iceland. Now which of the previous countries has gone pop?

    PS the UK has no gold reserves. Gordon sold it all at the lowest price in 2 generations... cute.

    I dunno, it's so hard to tell who is telling the truth. Is this just a journalist running a sensationalist story? Who knows?

    David

  9. #9
    Join Date
    Jan 2004
    Location
    Whangarei
    Posts
    5,867

    Default

    I read the article too and if you go have another look, there's some very good replies to it. The part about the Polish currency dropping 50% was from it's peak back to levels from 4-5 years ago... much the same as ours has done. There's no doubt about there being a huge problem with lending to eastern europe but some of the numbers were fudged to make the article more sensational.

  10. #10

    Default

    IMF can help for solve this problem.


 

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