Eastern Europe fact of the day

by on February 16, 2009 at 2:18 pm in Data Source | Permalink

It's a little scary:

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….

"This is the largest run on a currency in history," said Mr Jen.

1 Sergey Kurdakov February 16, 2009 at 3:06 pm

Ukraine might sell it’s gas network and other state owned property ( still most of Ukraine property is state owned ). Seems, however, they would prefer to go bankrupt. on another hand 400 billions is much less than us 5 trillion which were lost during financial crisis.

2 IWantCookieNow February 16, 2009 at 4:38 pm

eM: USA and Germany do get besser financing terms than Poland. But that doesn’t contradict you of course. 🙂

3 DanC February 16, 2009 at 5:46 pm

How did the world go so crazy so fast?

Some blame Bush, but how did he screw up Europe?

Ireland was an insane housing bubble – Dublin had become more expensive then New York. Ukraine has lower commodity prices to blame.

We had a spike in energy costs that started problems for the world. Then a slight recession revealed financial weakness around the world. And this is enough to destroy economies like dominos?

Or is the threat this severe? I don’t know.

4 Anonymous February 16, 2009 at 6:49 pm

DanC, I blame supply-side economics and the “greenspan put” all the bankers were…banking on. We’ve “pushed forward” all of the recessions of the last 25 years and now we’re in somewhat of a bind. A little too much leverage goes a long way. On a brighter note, everythign from school to food should be finally attainable if we let this whole thing play out. We may even be able to…I don’t know…afford to live. What a novel concept. Financing be damned! We used to be able to pay for large ticket items like cars and furniture without financing back in the ’60s. Now everything must be financed? I refuse to believe it.

That’s not even mentioning the enormous brain-drain we’re experiencing since many of our “best and brightest” were put to work engineering this whole thing instead of engineering bridges and cars and electronics.

5 sd February 17, 2009 at 2:18 am

Its the Baltic countries + Hungary, not the whole of Eastern Europe.

6 Georgi February 17, 2009 at 4:44 am

It’s mostly Russia, Ukraine and Hungary – the bad boys that were spending like crazy during good times (and will now suffer most in bad times).

Also, East Europe exports 60-70% of GDP per year. So, many countries will survive, despite what failed American investment banks say. (Many East European countries have better CDS than American investment banks.)

Also, in many countries most of the foreign debt is a loan from a bank/company to its subsidiary. It maybe short term, but it will be refinanced (companies and banks do not want to loose years and billions of investments or to fire sell).

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