About a week ago I reported on an Austrian story that the EU was gearing up for a bailout of any eurozone members which found themselves in difficulty (see my post, “EU planning 200 billion euro package for Eastern Europe“. This report is now being confirmed by multiple sources including Joaquin Almunia, the economics commissioner of the European Union.

This comes from Austrian Daily Kurier:
A plan to stabilise the economies of Eastern Europe exists. What is missing is a united EU.
During and after the Eastern Europe tour by Austrian Vice-Chancellor and Finance Minister Josef Pröll, the Ministry always profusely denied that there was a plan to support the new [EU] countries. The talk was [...]

The following post is from John Mauldin, who is a Best-Selling author and recognized financial expert. He is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore

The Risk in Europe

This video does not mention Austria by name, focusing instead on Ireland, Spain and Greece, but Austria is more of the problem for the Germans as they are leveraged to Eastern Europe.
German Finance Minister Peer Steinbrueck became the first senior policy maker to broach the topic this week, saying some of the 16 euro nations [...]

You probably know that I am gearing up for some serious writedowns in Eastern Europe because I see these countries as having external imbalances which will have to be corrected as the economy softens. In previous posts, I had mentioned that there was considerable exposure to Eastern Europe in Austria, Sweden, Denmark ad Germany in particular. Austria is the worst of the lot. Today, I happened upon an article and a quote which puts the Austrian exposure into context.

Trolling the web today as is my wont, I happened across an interesting article about the Austrian finance company Immofinanz. It seems that Immofinanz got caught up in the Eastern European property market. Unfortunately, its investments have not worked out and it was forced to report a half-year loss of 1.85 billion euros. Is Immofinanz a canary in the coalmine for Eurozone financial services exposure to Eastern Europe? I certainly believe so as I indicated in my ten predictions for 2009.