Failure to save East Europe will lead to worldwide meltdown

[2952-0-0]

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html

Hold on to your seats again, folks.

[Sam Spade]

Amusing fact:

The meltdown of the Austro-German banking system in 1873 was the catalyst that started the global depression that Americans refer to as the panic of 1873.  The meltdown of the Austro-German banking system in 1931 was also the catalyst that led to the English currency devaluation and various bond market dislocations worldwide (including the US) that led to the worst parts of the "Great Depression" (1931-1933).  Not to mention that it really pushed Hitler to eventual power.

The catalyst for the same type of scenario I suspect will occur at some point in some place fairly soon.  And if I had to wager where it begins, Eastern Europe is a good place to wager.  Most of their debt is in Euro-denominated or Yen-denominated assets with a particularly strong exposure in Swiss and Austrian banks.

If that house of cards falls, we should get to our first key geopolitical moment of the mess:  Will Germany let other countries collapsing within the Eurozone drag it down or will they cut the binds that tie (either by departing from the Euro or kicking those countries out)?  France also has some power/interest here.  And will the US continue to get involved with more of its stupid currency swaps with Europe to protect dollar-denominated assets held by these banks?

Remember, the US is screwed, but the rest of the world has it worse.

[Tender Branson]

Interesting chart that shows how much credit a Western-European country holds in various Eastern-European countries (The numbers at the right and above are the total amounts and the amount relative to the share of the country-GDP, too bad it's only in German):

[Beet]

I just hope it doesn't all end in war. Every century the "Western" universe ends up having a spectacular conflagration
20th: WW1/2
19th: Napoleonic
18th: Spanish Succession
17th: 30 years
16th: The wars of Charles V

The only difference is that this time, the world would probably not survive in any shape to recover.