When Communism fell, there was no private ownership. People ended up owning the place in which they lived for a small fee payable to the government. Suddenly, Eastern Europeans owned property with no debt for the most part. Banks rushed in offering credit cards and mortgages backed by wholly owned property. The banks buried the people in debt and then sold them mortgages in Swiss francs, telling them they would save money on interest. The bankers could care less about the people – after all, this was Transactional Banking. Just write the business and resell it to someone else. Who cares what happens later?
Then the Swiss franc jumped 30%. Eastern Europeans are drowning in debts and now their politicians simply tell them it is their fault for protecting the bankers. The politicians are for sale everywhere you look. They do not defend the people or even bother to regulate the banks either prohibiting loans in foreign currency or demanding that they explain such transactions with full disclosure that there is a huge currency risk and offer hedging insurance. No, the politicians are in league with the transactional bankers – burn ’em and churn ’em – next!
The defaults on loans throughout Eastern Europe are likely to be seen as we turn down from 2015.75. This is part of the whole looming debt crisis. This is by no means a joke. This is a serious crisis brewing that is still off the radar. While everyone worries about the derivatives, they are not even paying attention to the Eastern European Swiss Loan crisis.