GREECE IS DEAD: Time to start thinking about Eastern Europe.


The problems of Greece are still being debated far and wide, but The Slog is moving on. The ‘PIGS’ problem (Portugal,Ireland, Greece and Spain) will be next to be picked up by the mainstream media, but even if these don’t blow the Euro out of the water, meltdown in northern and eastern Europe will collapse the EU before its finished…if the EU authorities miss the boat as they so spectacularly have over the problems in Athens.

The summary issue in these former Soviet bloc countries is not one of overspending, but of never having had a strong enough private sector in the first place. Hungary, Rumania and Latvia all now have Euro debts owed to foreign banks which they cannot repay without massive devaluation and wholesale debt rescheduling. This is the classic vicious circle, but observers like me said from the start that only EU hubris allowed such States into the Union in the first place. The decision to steam in first the USSR and then Yeltsin Russia fell to pieces was always going to come back and bite the gonks in Brussels.

If you haven’t been there already, there’s a terrific piece by Michael Hudson in the FT this morning, arguing the case put by The Slog for over six months now: that Eastern and Northern Europe’s former satellite States are in deep trouble. He notes that:

‘No one wants to accept the fact that debts that cannot be paid, will not be. Someone must bear the cost as debts go into default or are written down, to be paid in sharply depreciated currencies.’

And yet, once again today the FT carries a prominent front-page piece headed ‘Revival hopes beat sovereign debt fears’. It does make you wonder at times.

If you really want to depress yourself, then think on this: the Greeks have overspent, and the former USSR satellites have not built up a big enough private production economy. The UK has both these problems.

6 thoughts on “GREECE IS DEAD: Time to start thinking about Eastern Europe.

  1. I've worked in a number of the former Easter Block countried over the last twelve years and though I am dismayed at times at the absence of basic commercial know-how in the so-called Western markets the total absence of grasp of business fundamentals in some of these countries makes you wonder how they get by on a day-to-day basis.We should also not forget that the relative success of countries like the Czech Republic have been largely at the expense of Western taxpayers, whose money has been 'donated' to infrastructure development projects that have been abused and miss-managed.Roads, railways and other transport links have all received large sums from the EU, much of which is known to have found its way into the pockets of corrupt officials. The Prague transport equivalent of the Oyster card project is the latest example. This black hole that has swallowed up millions of Euros with absolutely nothing to show for it has now been abandoned with no more than a shrug by those involved. Nobody knows where the money went.


  2. Hello I follow the great debt crisis with morbid interest. Having spent a lot of time in Africa it is quite clear to me that God helps those that help themselves, Botswana being a clear example. As long as money is handed out their will be people happy to take it. As the givers are civil servents or politicos there is a total lack of commercial sense involved.


  3. John,Am just catching up after having to calm down when I found out that Transport for London will charge me a penalty for the congestion charge because I am by one day in trying to pay for it. I had no intention of trying to avoid this. B******s. Serves me right for going up to the big smoke for a Spectator debate. But anyway,The Economist seems to be sanguine about the Greek debt, at least this week's copy does, as they think Greece will get over the next tranche of debt bids by a narrow margin, and that by going to the US in two weeks the Greek President and his supporters may get dollars to back them. In economic terms that might work, but the political fall out of the dollar supporting a Euro country might be what fractures the Euro.Comments?


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