Slovenia is the Next Crisis for the Dysfunctional European Union


by John Galt
March 27, 2013 22:30 ET

 Bloomberg started the Slovenia hit parade not even within a day of the “resolution” to the Cyprus crisis with this article:

Slovenia’s New Cabinet Under Pressure to Avoid Cyprus Fate

How bad is it? Their banks need upwards of €3 billion plus with an immediate need for liquidity for their banking system of €1 billion. Of course the European Union doesn’t realize that the more matches they flick on the Balkan powder keg, the more likely it will eventually blow up in both a financial and military conflict sense of the word. How bad have things gotten in Slovenia? The yield on their 10 year Treasury note is getting Greeky:

SLOVENIA10YRjgfla_032713(chart from

Of course the stock market in Slovenia is not quite Greek or Cyprus like yet, but give them a few weeks and more news headlines and this 78% decline will be a memory:


(chart from

The Slovenia Times declared that this crisis in their bond market and the financial crisis being precipitated by this price instability was due to speculators:

Speculative Pressure on Slovenian Bonds

From the article linked above:

The implicit interest rate on Slovenia’s long-term debt climbed above 6% for the first time since last October on Tuesday. The yield Slovenia’s ten-year bonds closed at 6.17%, 90 basis points above Monday’s closing value, data from the electronic exchange MTS show.

The yield on Slovenia’s treasury bonds surged after several foreign media outlets reported that Slovenia might be the next potential candidate to need EU help after Cyprus.

Slovenian banks, including the biggest, NLB, are looking for solution for its bad loans, which already account for one fifth of the country’s GDP, financial wire Bloomberg wrote today.

Just wow, the hits keep on coming. Thankfully the ECB and EU have taken the Bernanke approach by declaring that everything is contained. Welcome to the PIIGS club Slovenia and Cyprus. We’re running out of acronyms so it shall now be called the PIIGS+CS. More letters to be added soon, I’m sure.

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