It's Global

In case you had thought that the current credit problem was only affecting the US and Europe, think again. It is affecting almost every major country on Earth. Reality struck like a lightning bolt. The easy money is gone. The financial alchemists have been run out of town on a rail.

I found a good summary of recent events from RGE Monitor as follow:

• Iceland – it has been at the foremost of the global credit crisis as its banks heavily relied on wholesale funding to finance the aggressive expansion abroad. With the rapid depreciation of local currency and the seize-up of credit markets, refinancing of debt is almost impossible and some analysts predict Iceland GDP could shrink by 5-10% after almost 5% growth in 2007.

• Hungary – While it's not suffering a banking crisis a la Iceland, the global credit crisis has exposed long-simmering vulnerabilities – high level of foreign currency lending, slow growth, twin deficits and heavy reliance on non-deposit foreign funding. Given its woes, eyes are focusing on rest of Eastern Europe for signs of trouble.

• Turkey - a number of analysts have cited Turkey in particular is vulnerable due to its large current account deficit.

• Ukraine – its high reliance on external finance leads it to seek financial assistance from the IMF. With persistent inflation and a widening trade deficit and domestic and regional political uncertainty have contributed to deposit outflows, tighter money market rates and exchange rate volatility. The Ukrainian currency, hryvnia, sank by 20% so far in October and the equity market fell over 70% this year.

• South Africa – worries that a global recession would depress export demand especially metals, and investment inflows needed to finance its current account deficit. So far, the Rand has fell to its lowest level since 2003 while President Thabo Mbeki's resignation ushered in a period of political and economic uncertainty.

• UAE – It starts to feel the pinch of reversal of speculative capital that flowed in early this year to bet on currency revaluation. Long term project finance costs already tightened throughout the GCC and the freezing of global credit markets exposed UAE banks, which financed rapid credit growth with foreign not local borrowing. Worries about Dubai's property market are looming. Kuwait 's Central Bank stepped in Sunday to prop up one of the country's biggest banks.

• Venezuala – the main problem is that its sovereign wealth fund, known as Funden, holds about US$300mn in debt instruments that Lehman had agreed to cash. With Lehman's bankruptcy, Venezuela will have a hard time selling the debt. Moreover, the fund has a significant amount US$2bn allocation allocated in structured notes.

• China – Q3 marked the fifth consecutive slowing of Chinese real GDP growth, implies fewer commodity imports but government sponsored infrastructure projects may pick up some slack – clouding the outlook for countries like Brazil, Chile and Australia among others.

Now, we see the problem is global. As the US continues to sneeze, it's probably safer to say that the rest of the world gets walking pneumonia.