February 18, 2009
A time bomb is waiting to explode in the Eurozone with Western European banks at risk of defaults on Eastern European loans. This leads me to wonder, how much isvthe US and the UK exposed to developing countries. So I compiled the following charts from the latest Bank of International Settlements data (as of September 2008).
Euro area loans to developing nations are heavily skewed towards Eastern Europe while UK lends predominately to Asia, Africa and the Middle East. The US on the other hand lends primarily to Asia and Latin America.
Default risk in Asian nations are lower than Eastern European nations, which makes the UK and US less vulnerable if a time bomb explodes in Eastern Europe.
Meanwhile USD/JPY hit a 6 week high this morning after President Obama announced a foreclosure program.
Follow the jump for Eurozone and Switzerland charts