Sorting The Wheat From the Chaff


The marketplace is sufficiently spooked that we are at the point where facts are routinely mistaken or misrepresented to demonstrate just how desperate problems are…


There are some good pointers in this article. Certainly some European banks are over-extended in Eastern Europe and Austria may face some issues in its banking sector as a result (to name but one nation).

The Austrian issue is of course chilling as the failure of CreditAnstalt in 1931 was a significant event prolonging the Great Depression.

Nevertheless, by cherry picking debt figures it is easy enough to come up with a horrific picture. However, leverage in Poland is not remotely so significant as in the likes of Hungary. Similarly, Polish property has increased but outside of Warsaw the valuations are pretty sensible – certainly a lot more so than the highly leveraged property hedge fund better known as the UK.

There are significant problems brewing throughout Eastern Europe but the region (like Asia in 1997) is in a much much better position to rebound than the rather tired over-leveraged Western European economies.


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