Austria represents a financially-leveraged nation that could be one of the first to go if the global recovery hits a pothole and credit markets tighten up.
ETFdb: Austria recently announced the nationalization of Hypo Alpe-Adria Bank International, the country’s sixth-largest bank and the second major financial institution to be nationalized since the start of the financial crisis.
There are reports that other Austrian banks are on a “watch list,” indicating that the country’s financial industry may be on the verge of a disaster. Such a development could be devastating for the entire Austrian economy. As Austria has evolved from a primarily state-owned economy to a well-developed social market economy, the financial sector has played a major role. Vienna is one of the major financial centres of Europe, serving as a bridge to Eastern Europe and home to many of the leading corporations in business with new EU member states.
Thus Austria could be tomorrow’s Greece, and its exchange traded fund, iShares MSCI Austria (EWO) hasn’t collapsed yet. In fact it’s rallied year to date, thus has a decent amount of ground it could give back should positive expectations get slammed.