Lights flashing, sirens blaring, the IMF ambulance has arrived at the scene of the accident. Dressed in their natty Washington uniform of blue suits and button-down shirts, the IMF paramedics are hopping from one stretcher to another applying financial sticking plasters to small countries affected by the recent carnage in the lending markets.

Iceland got $2 billion on Friday and seeks another $4 billion; on Sunday, Hungary was promised a $16.5 billion loan. Hungary has reached agreement on a rescue package that is likely to exceed $10 billion. Ukraine has been promised support and others among the recent converts to capitalism — Romania, Bulgaria and the Baltic states — may yet call upon the IMF to repair their balance sheets.

The hryvnia, Ukraine's currency, is still tumbling; Sunday's pledge of support is dependent on the Ukrainian Parliament passing reforms including measures to balance the budget and protesters are disrupting the Bill's passage. Meanwhile, news of the IMF package has stabilised Hungary's forint; the currency lost a fifth of its value during the past month and yesterday Standard & Poor's reduced Romania's debt rating to “junk” status.

Common to all these capitalist converts is the enthusiastic embrace of the culture of debt. Hungary's gross external debt is roughly equal to its GDP and the current account deficit is more than 6 per cent of GDP. Like many of the emerging market countries, it has borrowed heavily from foreign banks to finance internal growth and, in Hungary's case, ordinary consumers joined in the party. Europe's finest banks are on the hook with portfolios gorged with debt from the so-called “transition economies” of central and eastern Europe.

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