Under the Clouds of the Subprime Crisis (July 2007–September 2008)

The story of the subprime crisis is well-known, with excellent shorter and longer papers, books, and memoirs analyzing its causes and consequences. However, much less attention was paid to the so-called decoupling process of emerging countries in the pre-Lehman period. This chapter describes the special contagion process of 2007–2008 in emerging EU member states and offers a detailed analysis of the positive features and the vulnerabilities of these economies. Day to day dilemmas of the Hungarian Central Bank illustrate the difficulties of policy makers.