Europe's
Crisis:
Much
Bigger
Than
Subprime,
Worse
Than
U.S.
Posted
Feb
27,
2009
08:00am
EST
by
Henry
Blodget
John
Mauldin,
president
of
Millennium
Wave
Advisors,
was
among
the
few
analysts
whose
forecasts
for
2008
proved
accurate.
Mauldin,
author
of
the
popular
"Thoughts
from
the
Frontline"
e‐letter,
joined
us
to
discuss
the
economic
situation
in
Eastern
Europe.
Scroll
down
to
read
highlights
from
Mauldin's
analysis,
and
click
"more"
to
embed
the
video.
From
The
Business
Insider:
If
you
think
things
are
bad
here,
take
a
quick
peek
at
what's
going
on
across
the
pond:
The
Telegraph:
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.
In
Poland,
60pc
of
mortgages
are
in
Swiss
francs.
The
zloty
has
just
halved
against
the
franc.
Hungary,
the
Balkans,
the
Baltics,
and
Ukraine
are
all
suffering
variants
of
this
story.
As
an
act
of
collective
folly
–
by
lenders
and
borrowers
–
it
matches
America's
sub‐prime
debacle.
There
is
a
crucial
difference,
however.
European
banks
are
on
the
hook
for
both.
US
banks
are
not.
Almost
all
East
bloc
debts
are
owed
to
West
Europe,
especially
Austrian,
Swedish,
Greek,
Italian,
and
Belgian
banks.
En
plus,
Europeans
account
for
an
astonishing
74pc
of
the
entire
$4.9
trillion
portfolio
of
loans
to
emerging
markets.
They
are
five
times
more
exposed
to
this
latest
bust
than
American
or
Japanese
banks,
and
they
are
50pc
more
leveraged
(IMF
data).
Spain
is
up
to
its
neck
in
Latin
America,
which
has
belatedly
joined
the
slump
(Mexico's
car
output