La situazione in centro ed est Europa

Europe’s top banks are bracing for a tough year as concerns grow over the worsening economic situation, especially in eastern and central Europe.

It seems investors are adjusting their ideas about Eastern Europe from a hot growth story to toxic investment -- as countries from Latvia to Bulgaria face potential economic collapse.

And Western banks that went into this market hoping to make a killing – may instead become dead meat, themselves.

According to Reuters, UniCredit (CRDI.MI), Erste Group Bank (ERST.VI), Raiffeisen International (RIBH.VI) and Societe Generale (SOGN.PA) are the biggest Western banks in Eastern Europe. They bought most of emerging Europe's banking sector in past years to tap into the rampant credit growth that fueled the region's boom.

However, since that time the local currencies have fallen in value. (Remember many of the nations in Eastern Europe are not on the euro and many countries in Eastern Europe have racked up massive amounts of debt.)

The fear is rapidly falling currencies could weigh down these banks' profitability and potentially erode their capital base – as loans are repaid in currencies that are worth less and less.

Should you take a short position in any of these currencies? According to Traxis Partners managing partner Barton Biggs probably not.

He tells Fast Money, “I would be very nervous about being short the core Eastern European currencies particularly Poland’s currency."

"And I would be nervous about being short the euro. The euro has already fallen on concerns that its finished and I don’t think that’s the case.”

In fact if you have short positions Biggs says to cover them.

CNBC