Edward Hugh submits:
Hypo Alpe Adria bank, the Austrian arm of the Bavarian bank Bayern LB, was nationalized on Monday for the symbolic price of three euros. This symbolic action brought to the world’s attention something which has been obvious to some of us for a very long time: namely that all is not well with Austria’s banking system, and it is not well for one very simple reason – over exposure to Central and East European Markets. Of course, when some of us first started pointing the problem out, we were roundly rebuked from all quarters, what a ridiculous idea! Izabella Kaminska had a reasonable review of how the arguments were being marshaled back in January here, while Paul Krugman attracted the wrath of Austria back in April by, as this blogger puts it, stating the obvious.
When will the world of officialdom wake up to the fact that when economists warn of impending dangers, this is not done to cause harm, but in an attempt to try to stop more damage being done? The posture they should adopt is not a defensive one of rejecting criticism at all costs, but a more open one of listening to multiple opinions in an attempt to best serve the interests of the citizens they represent. So when I said back in September – There Is Another Shoe To Drop In The Global Economic and Financial Crisis, And The Focus Will Be On Europe’s Periphery – I wasn’t doing this just to cause trouble, but to warn and raise the alert. Now it is becoming increasingly obvious that I was right, but another precious three months have been lost in the meantime.