[Marxism] "Is Eastern Europe Primed to Explode?"

[S. Artesian]

This is not at all the result of the US govt. bailouts.  The problem in 
Eastern Europe is the accumulation of foreign, "hard," currency loans which, 
since payment of the loans requires conversion of the local currency into 
euros becomes essentially an Adjustable Rate Mortgage as the local currency 
declines.  And why are the local currencies declining?  Because their 
manufacturing, and their exports to the rest of the EU are plummeting; 
because the big European banks-- Austria has a $278  billion dollar 
exposure; Germany $220 billion; Italy $220 billion;  France $155 billion; 
Belgium $137 billion; Netherlands $122 billion; Sweden $106 billion; the UK 
$47 billion,-- are pulling their capital back home faced with losses in 
their home markets-- and not because the US is "crowding out" the market.

The former Comecon, central and Eastern European economies were the 
"emerging markets" of the EU,  providing the sort of "developed" 
maquilladora that Jack Welch of GE used to dream about.     But as 
manufacturing plummeted, based on overproduction not underconsumption, 
capital flows have reversed.  A capital inflow of $254 billion in 2008 will 
be replaced by an net outflow of $27 billion.

In addition, the European Central Bank turned down a request from these 
countries for bank aid of the type it already proferred to the banks of the 
EU 12 or 15.

None of this is due to US debt issues, but rather to the underlying 
overproduction, and deterioration of profits and exports in manufacturing.

Germany has had no difficulty raising money in the sovereign markets.

----- Original Message ----- 
From: "Lüko Willms" <lueko.willms at t-online.de>
To: <sartesian at earthlink.net>
Sent: Thursday, February 19, 2009 5:58 PM
Subject: Re: [Marxism] "Is Eastern Europe Primed to Explode?"