While the recession has seemingly been accepted by US investors with Wall Street’s surprise late 4% bounce, the credit crunch is focusing on a growing number of countries in eastern Europe, and on South Korea.

In fact, Europe is now by far the most damaged part of the world. The Swiss central bank last night bailed out UBS with a $US60 billion transfusion and assumption of dodgy property assets and Credit Suisse raised $US10 billion from investors, including a Middle East wealth fund.

Hungary and Ukraine approached international institutions for support in an effort to avoid following Iceland into a downward financial spiral. Hungary received a 5 billion euro lifeline from the European Central Bank for credit and Kiev confirmed it was seeking an IMF loan to “stabilise Ukraine’s financial system”, with the Financial Times suggesting it could be after up to $US15 billion.

The Financial Times report that Ukraine may borrow between $US 10 billion and $US15 billion. The country’s deputy Central Bank governor Oleksandr Savchenko, said yesterday that “We may not need all of the sum. We’re now meeting with IMF representatives, examining the situation, and are deciding how much money we need.’’ An IMF team arrived in the country last night to start the talks. The FT said that heavy borrowing by Ukraine’s budding banking sector has swelled the country’s total foreign debt to some $US100 billion, according to July figures. Of, this, just $US15 billion is government debt. Foreign exchange reserves stand at $US37.5 billion.

Germany last night cut its 2009 economic forecast in a reflection of the new realities for the global economy in the wake of the credit crunch and freeze. The Government now expects 2009 growth of just 0.2%, down from the previous 1.2%. There are even forecasts from a German economic institute, released earlier in the week, that German growth could contract by 0.8% next year in a worst case estimate.

German, French and Italian growth contracted in the second quarter, dragging the rest of the eurozone down with them. Ireland and Denmark are officially in a recession, Iceland is a basket case, unfortunately, and the UK is contracting, but the numbers are not out yet.

Other media reports say that the prices of bonds issued by Argentina, Pakistan, Ecuador, the Baltic States, Romania, Bulgaria, and Turkey are at levels suggesting intensifying credit and solvency pressures for ether the economies as a whole or various corporates and financial institutions.

Switzerland took an indirect US$5.3 billion stake in UBS and Credit Suisse raised fresh capital. UBS is one of the largest casualties of the US credit crisis and its also transferring $US60 billion of its illiquid US, mostly real estate related, securities to a new entity owned and controlled by the Swiss National Bank.

In Asia, South Korea’s currency suffered its worst one-day plunge for a decade yesterday, ending 9.7% lower by the close of trading last night. Domestic banks are facing increasing difficulties borrowing overseas. The move by Standard and Poor’s, the international ratings agency, to put seven Korean banks on its negative watch list, triggered the latest outbreak of nervousness. The country’s main stockmarket index, the Kospi slid 9% yesterday, its biggest daily loss in seven years. The won has lost about 30% of its value so far this year, in spite of support from the central bank. The South Korean Government has injected about $US15 billion into local banks and companies since late September to ease credit problems and says that more will be made available, although the amount is not clear.

Meanwhile in the US, Citigroup lost $US2.8 billion in the third quarter after a sharp fall in revenue while Merrill Lynch (which is bound for the bosom of Bank of America) reported a bigger-than-expected net loss of $US5.2 billion. Merrill Lynch has now reported $US39 billion of mortgage-related write-downs since the crisis started in August, 2007.