What does Austria Have to do with Stalingrad?

In Failure to save East Europe will lead to worldwide meltdown;
The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point, Mr Ambrose Evans-Pritchard reports and opines about new things about which to worry:

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

In 1931, the failure of the Austrian bank, the Creditanstalt, is credited with setting off round 2 of the Great Crash and the Great Depression. The first year and a half (or so) of the Crash was, from stock market terms, similar to the last year and a half here, or "not so bad" and not unprecedented. In less than a year and a half following the chaos of the Creditanstalt's collapse, stocks were down another about 80%. This is where the historic nature of the Great Crash and Great Depression came.

When one sees reference in what I hope is reputable press worrying about a monetary Stalingrad, then I worry too. Stalingrad is infamous for the extensiveness and brutality of the German siege during World War II.

More generally, what has received too little publicity Stateside is that the large EU financial institutions are much more heavily leveraged than their equivalent companies here.

The financial speculation was not limited to the U.S. More and more areas are revealed to have been part of the wildness.

As l'affaire Madoff has now perhaps led to the uncovering of l'affaire Stanford, which could be a multi-billion dollar scam, so too has the awareness of the scale of overpriced subprime securities been supplemented by the awareness of more and more risky borrowing and lending and other forms of speculation.

Great Depression II, with cellphones, is possible.

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