Mike Shedlock shares an interesting letter about Slovenia (whose bonds went to 7% recently):
I am an economist from Slovenia (I have written you before about social unrest in Slovenia). I just want to point out few facts about Slovenia.
- Slovenian debt to GDP ratio has doubled since 2009 (one of highest growing on the planet)
- Our banking system is on the brink of collapse. Biggest bank (Nova Ljubljanska Banka – NLB) is owned by the government and almost all the money it has lent is sub-prime (much worse than in US up to 2007/08) or it was lent politically to chosen people who now can’t pay the debt back. NLB has 15% bad loans (payments being late more than 90-day) and the number is getting higher.
- Our housing market is frozen. Prices are not falling because no one is buying or selling. Most of the construction companies are bankrupt and they owe lots of money to banks. (percentage of loans that payments are late in construction sector is mind boggling 25%! – and is even growing!)
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This is quite interesting – because Slovenia is a Euro country. It’s dangerous to ignore the cracks at the fringes…
