MoneyShow’s Jim Jubak wonders what would likely happen if the Eastern European countries lose their ability to borrow from Western European banks.

One of the scary things about the Euro debt crisis is that its effects aren’t limited to the 17 countries in the Eurozone, so that you get ripples all over the world.

Or if you prefer—and you spend a lot of time on boardwalks in the summer—you think of it as whac-a-mole. Somewhere or other, these effects pop up, and you can’t really figure out where.

One of the places that it’s showing up right now is in the Eastern European economies. This is kind of scary because these economies had to get a backstop in an agreement called the Vienna Agreement where, basically, the Western European banks said they guaranteed they’d continue to keep lending.

Well, this time, Western European banks aren’t going to guarantee that. The worry is that they are, in fact, going to pull money out. They dominate the banking sector in most of these countries, like Hungary and Romania and Slovakia and the Czech Republic, so if they don’t lend, growth is going to slow.

You’ve had some of the big international economic organizations come out and really downgrade those countries, so that Hungary, for example—which was just barely chugging along with a projected growth rate at 1.5% for 2012—well, it’s now projected to grow at 0.5%. The Hungarians say, "No, no, no, we’re going to do better than that," but you can see the danger—0.5% is really close to zero, which is really close to recession, etc.

The country that is in the best shape here is Poland, and that’s largely because it’s got the largest domestic market. Therefore, it doesn’t have to depend so much upon exports to Western European countries, and it’s got a little more in the way of a financial market.

But all of Eastern Europe looks like it’s going to be hit really hard by the slowdown in Western Europe, and that means that if you think about it…well, if it happens in Eastern Europe, where else could it happen? Who exports to Western Europe that’s going to get hit by this? Who in terms of the inner European trade is going to get hit by this?

You really can’t tell where this is going to play out around the world, but it clearly is going to play out, and that’s one of the things that makes people looking at the global market—not just the European market—very, very nervous right now.

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