Infinite Unknown

Hungarian Forint notes of differing denominations sit on display in Budapest on Nov. 19, 2008. Photographer: Balint Porneczi/Bloomberg News

Dec. 8 (Bloomberg) — The slowing global economy is halting the spread of monetary union into eastern Europe and may lead to another year of losses for the Polish zloty, Hungarian forint and Czech koruna.

The zloty fell 21 percent against the euro from a record high in July as Poland headed for its biggest economic slowdown in almost a decade, while Hungary turned to the International Monetary Fund, World Bank and European Union for a bailout as the forint weakened 15 percent. Koruna volatility almost tripled as it depreciated 12 percent. The two-year mandatory trial period before adopting the euro allows swings of no more than 15 percent.

Poland, Hungary and the Czech Republic joined the European Union in 2004, committing to enter the 10 trillion-euro ($12.7 trillion) economy of countries sharing a single currency. The dream faded since July as the worst global financial crisis since the Great Depression drove investors from emerging markets. Now, New York-based Morgan Stanley and UBS AG in Zurich predict more foreign exchange losses in eastern Europe.

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Tags: Bailout, Czech Republic, Economy, EU, Hungary, IMF, Inflation, Poland, Politics, World Bank

Nov. 5 (Bloomberg) — Russian leader Dmitry Medvedev said he would deploy new missiles in Europe, confronting the U.S. on the day Barack Obama was declared the winner in America’s presidential election.

Medvedev said he would place a short-range missile system designed to carry conventional warheads in Russia’s exclave of Kaliningrad, wedged between Poland and Lithuania.

“An Iskander rocket system will be deployed in the Kaliningrad region to neutralize the missile-defense system if necessary,” Medvedev said, referring to U.S. plans to place elements of a missile shield in Poland and the Czech Republic.

Medvedev blamed the U.S. for failure to coordinate its economic policy with other countries so that a “local” crisis turned into a global one, leading to “a fall on the markets of the whole planet.” He also renewed his assertion that the U.S. provoked the war between Russia and Georgia in August.

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Tags: China, Dmitry Medvedev, Financial Crisis, Georgia, India, Lithuania, Mikhail Saakashvili, Military, missile shield, NATO, Poland, Politics, Russia, South Ossetia

The Hungarian National Bank stands in Budapest, Hungary, on Oct. 16, 2008. Photographer: Balint Porneczi/Bloomberg News

Oct. 31 (Bloomberg) — Imre Apostagi says the hospital upgrade he’s overseeing has stalled because his employer in Budapest can’t get a foreign-currency loan.

The company borrows in foreign currencies to avoid domestic interest rates as much as double those linked to dollars, euros and Swiss francs. Now banks are curtailing the loans as investors pull money out of eastern Europe’s developing markets and local currencies plunge.

“There’s no money out there,” said Apostagi, a project manager who asked that the medical-equipment seller he works for not be identified to avoid alarming international backers. “We won’t collapse, but everything’s slowing to a crawl. The whole world is scared and everyone’s going a bit mad.”

Foreign-denominated loans helped fuel eastern European economies including Poland, Romania and Ukraine, funding home purchases and entrepreneurship after the region emerged from communism. The elimination of such lending is magnifying the global credit crunch and threatening to stall the expansion of some of Europe’s fastest-growing economies.

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Tags: Banks, Credit Crisis, Credit Crunch, Economy, emerging markets, Hungary, IMF, Meltdown, Poland, Romania, Ukraine

The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.

“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.

Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria - the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down - and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom - a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.

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Tags: Argentina, Austria, Banks, Brazil, Credit Crisis, Credit Crunch, Dollar, Economy, Euro, GDP, Hedge Funds, Hungary, IMF, Meltdown, Poland, Romania, Russia, Spain, Sweden, Switzerland, U.K., U.S.

Stalin was ‘prepared to move more than a million Soviet troops to the German border to deter Hitler’s aggression just before the Second World War’

Papers which were kept secret for almost 70 years show that the Soviet Union proposed sending a powerful military force in an effort to entice Britain and France into an anti-Nazi alliance.

Such an agreement could have changed the course of 20th century history, preventing Hitler’s pact with Stalin which gave him free rein to go to war with Germany’s other neighbours.

The offer of a military force to help contain Hitler was made by a senior Soviet military delegation at a Kremlin meeting with senior British and French officers, two weeks before war broke out in 1939.

The new documents, copies of which have been seen by The Sunday Telegraph, show the vast numbers of infantry, artillery and airborne forces which Stalin’s generals said could be dispatched, if Polish objections to the Red Army crossing its territory could first be overcome.

But the British and French side - briefed by their governments to talk, but not authorised to commit to binding deals - did not respond to the Soviet offer, made on August 15, 1939. Instead, Stalin turned to Germany, signing the notorious non-aggression treaty with Hitler barely a week later.

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Tags: Adolf Hitler, France, Government, History, Joseph Stalin, Military, Nazi Germany, Nazis, Poland, Politics, Russia, U.K., War

A senior Russian lawmaker says Moscow will deploy high-precision weapons near Poland, in response to a U.S. - Poland missile defense agreement signed in Warsaw last month.

Viktor Zavarzin, head of the defense committee in the State Duma, said Thursday Russia has new weapons that will be installed near the sites where Washington plans to deploy interceptor missiles.

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Tags: Czech Republic, Government, Military, missile shield, Missiles, Nuclear weapons, Poland, Russia, U.S.

Moscow has issued an extraordinary warning to the West that military assistance to Georgia for use against South Ossetia or Abkhazia would be viewed as a “declaration of war” by Russia.

The extreme rhetoric from the Kremlin’s envoy to NATO came as President Dmitry Medvedev stressed he will make a military response to US missile defence installations in eastern Europe, sending new shudders across countries whose people were once blighted by the Iron Curtain.

And Moscow also emphasised it was closely monitoring what it claims is a build-up of NATO firepower in the Black Sea.

Russian President Dmitry Medvedev (right) meets with Prime Minister Vladimir Putin - the ‘real architect’ of the Georgia conflict - and the Security Council (unseen) in Sochi yesterday

The incendiary warning on Western military involvement in Georgia - where NATO nations have long played a role in training and equipping the small state - came in an interview with Dmitry Rogozin, a former nationalist politician who is now ambassador to the North Atlantic Alliance.

“If NATO suddenly takes military actions against Abkhazia and South Ossetia, acting solely in support of Tbilisi, this will mean a declaration of war on Russia,” he stated.

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Tags: Abkhazia, Czech Republic, Dmitry Medvedev, Georgia, Germany, Iran, Mikhail Saakashvili, Military, NATO, Poland, Politics, Russia, South Ossetia, Spain, U.S., Vladimir Putin, War

MOSCOW, August 27 (RIA Novosti) - Russian President Dmitry Medvedev has said Russia will have to respond militarily to the deployment of elements of a U.S. missile shield in Central Europe.

The deal to place 10 interceptor missiles in Poland was reached in mid-August, and followed the signing of an agreement on July 8 by the U.S. and Czech foreign ministries to place a U.S. radar in the Czech Republic.

“These missiles are close to our borders and constitute a threat to us,” Medvedev said in an interview with Al-Jazeera television on Tuesday. “This will create additional tension and we will have to respond to it in some way, naturally using military means.”

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Tags: Bush administration, Dmitry Medvedev, George Bush, Georgia, Military, missile shield, NATO, Poland, Russia, U.S.

New Russian threat comes in response to war in Caucasus, US-Poland deal for missile defense shield in Europe. According to Sunday Times, nuclear warheads could be supplied to submarines, cruisers and fighter bombers of Russia’s Baltic fleet based between Poland and Lithuania

Cold War warming up? Russia is considering arming its Baltic fleet with nuclear warheads for the first time since the cold war, the London-based Sunday Times has reported, quoting senior military sources.

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Tags: Cold War, Dmitry Medvedev, Europe, Georgia, Government, Military, NATO, nuclear submarine, Nuclear weapons, Poland, Politics, Russia, U.S.

Russia threatened to retaliate by military means after a deal with the Czech Republic brought the US missile defence system in Europe a step closer.

The threat followed quickly on from the announcement that Condoleezza Rice signed a formal agreement with the Czech Republic to host the radar for the controversial project.

Moscow argues that the missile shield would severely undermine the balance of European security and regards the proposed missile shield based in two former Communist countries as a hostile move.

“We will be forced to react not with diplomatic, but with military-technical methods,” the Russian Foreign Ministry said in a statement.

The ministry did not detail what its response might entail.

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Tags: Condoleezza Rice, Government, Military, missile shield, NATO, Poland, Russia, Star Wars, U.S.