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ETF Pick of the Week: Double Short Euro (DRR)

This is from Agora Financial's 5 Minute Forecast dated 2/23/09:
And in Europe, there’s a storm brewing that “could easily be as big as the U.S. subprime problem,” John Mauldin suggests.
“In Poland, as an example, 60% of mortgages are in Swiss francs. When times are good and currencies are stable, it is nice to have a low-interest Swiss mortgage. And as a requirement for joining the euro currency union, Poland has been required to keep its currency stable against the euro. This gave borrowers comfort that they could borrow at low interest in francs or euros, rather than at much higher local rates.
“But in an echo of teaser-rate subprime here in the U.S., there is a problem. Along came the synchronized global recession and large Polish current account trade deficits, which were three times those of the U.S. in terms of GDP, just to give us some perspective. Of course, if you are not a reserve currency, this is going to bring some pressure to bear. And it did. The Polish zloty has basically dropped in half compared with the Swiss franc. That means if you are a mortgage holder, your house payment just doubled. That same story is repeated all over the Baltics and Eastern Europe.
“Austrian banks have lent $289 billion (230 billion euros) to Eastern Europe. That is 70% of Austrian GDP. Much of it is in Swiss francs they borrowed from Swiss banks. Even a 10% impairment (highly optimistic) would bankrupt the Austrian financial system, says the Austrian finance minister, Joseph Proll. In the U.S., we speak of banks that are too big to be allowed to fail. But the reality is that we could nationalize them if we needed to do so.
“The problem is that in Europe, there are many banks that are simply too big to save. The size of the banks in terms of the GDP of the country in which they are domiciled is all out of proportion. For American readers, it would be as if the bank bailout package were in excess of $14 trillion (give or take a few trillion).”