Adding Central And Eastern Europe Back on the ‘Sinking Fast’ List

One of the old and ongoing offside carry trades that can no longer be swept under the rug is borrowing cheap in euros, and to some degree Swiss francs, in order to effect carry trade or real estate speculation in non-euro countries in central and eastern Europe (CEE).

The following chart shows that the great majority of loans made to the non-banking sector in a half dozen of those countries were euro carry trades. This makes paying off these loans very problematic when the euro appreciates against the local currency. Yes, gente, those rotting fish loans are still around, a lot like the old HELOCs loans in the U.S. that will be reset [see “Billions of HELOCs to Reset“].

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