I am not convinced about a contagion, but it did surprise me to see an Austrian bank failing. I agree the author looks clueless speaking about Detroit. TBH I have no idea what the books of EU banks look like, or what their exposure might be. I do know that Greece won't be paying back its debt, however. That is a mathematically reality. I also assume that their debts aren't the only ones that won't be paid.
My understanding of European finance laws is they tend to be a lot less transparent than American ones. I mean, the SEC is toothless but compared to EU laws it's a fuckin' pit bull. You follow this stuff pretty closely, I assume. I do as well. This is the first I've heard mention of Austria. Wiki lists them as #14 (with Greece at 17 and Spain at 6) so it's not like they don't matter... but with Greece, it's the banks while this article is about a bank.
Looking back into the article this one links, it looks like the bank in question was Hypo Group Alpe Adria which Austria nationalized in 2009. I guess the Austrian government is saying that it's Carinthian's problem, -their own little Greece.“We are at a very delicate phase when Europe’s banking system switches from a bail-out regime into a much tougher bail-in regime, and Austria has just thrown this into sharp relief,” said sovereign bond strategist Nicholas Spiro. The biggest bondholders are Deutsche Bank’s DWS Investment, Pimco, Kepler-Fonds and BlackRock. The World Bank also owns €150m of Hypo debt.
Well now I'm truly curious. Looking over the Wiki article it looks like they only do half their business within the EU. Not only that, but many of their creditors aren't in the EU. So if I understand correctly (big if) this move gives them the ability to shaft non-EU holders of debt. EU holders as well, but that's internal and all on the same currency so it'll shake out... but it seems like one of the least harmful ways to get the debt off the books. I mean, if you get to shaft Serbia, Pimco and BlackRock, you might as well!