Tuesday, 1 July 2014
Bulgaria's Bank seems peculiarly inexplicable
Interesting to see the coverage of this story. So last week the US is putting pressure on Bulgaria to stop investing in the South Stream pipeline which Russia wants to use to avoid Ukraine.
This weekend, there was a bank run on two Banks in Bulgaria. Whilst the Country is known for its endemic corruption, the economy has actually been pootling along OK with plenty of Euro subsidy for the locals to feast one - €2 billion a year is a lot of money to share around.
So why the bank run? Why two random arrests of men said to be starting it via text messages? With Bond's at 3.7% yields and a deficit lower than the UK's what was the problem?
One view is this is an oligarch spat which has got out of control, but this feels implausible on its own.
Nobody currently knows, but I would be very suspicious of their friends in Moscow having had a little say in this. It can;t be much fun being a broke pawn in the great power game!