http://www.pastan.nu/cm/2.145/ekonomi/seb-stramar-at-utlaningen-i-hart-pressat-baltikum-1.666390

According to Danske Bank, the loans could cost Sweden a total of 2% to 6% of its GDP over several years, depending on how many Baltic borrowers default during the recessions. (RGE Monitor)

Swedish unemployment will be upwards of 11% by year end according to a recent (April 2009) JP Morgan report on the Swedish economic outlook.

Swedbank and SEB jointly control btwn 50-75% of bank lending market in each Baltic country; Baltic operations account for about one-third of Swedbank’s operating profit and one-fifth of SEB’s (Bloomberg)

Sweden has the third-largest exposure of all European countries to emerging-market bank debt, as a proportion of GDP (behind Austria and Switzerland), with total bank lending amounting to 25% of Swedish output (EIU)

Anyone arguing for green shoots, especially in Europe, is spouting gobbledygook. I would liken the current economic situation to folks running out to gather fish and gawk at the receding ocean prior to a tsunami’s arrival.

Sweden is a mirror of what is happening in most European economies. Switzerland and Austria have barely even begun to feel the economic pain of Eastern Europe’s looming mortgage crisis. These defaults will especially stress the Swedish Krona and Swiss Franc driving them, I believe, to severe weaknes vis-a-vis the Euro and Dollar in the next 12-18 months.

This tsunami has not yet arrived but is now unavoidable in my opinion. The only question is when and how hard it hits.