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Another chance of systemic collapse? 16/02/2009

Posted by chrisdshaw in Economics.
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The Daily Telegraph reports on massive debt exposure Western banks have to Eastern Europe. Ambrose Evans-Pritchard warns that, if mishandled, the situation could be big enough to shatter the fragile banking systems of Western Europe and lead to at least one more country. Eastern Europen needs to repay or roll over USD400bn this year, equal to a third of the region’s GDP. In in total the region has borrowed EUR 1.7tn. Austria has lent EUR 280bn; 70% of the country’s GDP.

One particular cause for concern is the dismissive attitude of Germany’s Steinbruek towards to the problem. Given that he has been wrong on absolutely everything in the last 6 months, we should start buying those gold coins now.

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