The downturn’s impact on political stability is only just beginning, as this story from Latvia reminds us:

Latvian Prime Minister Ivars Godmanis and his centre-right government have resigned, amid turmoil triggered by economic crisis in the Baltic state. President Valdis Zatlers has accepted the resignations and is beginning talks to try to form a new administration.
The country’s economy is in recession and is set to contract by up to 12% in 2009, with unemployment rising by 50%. Latvia’s is the second European government, after Iceland, to fall as a direct result of global economic woes.

Or if you prefer, there’s this:

Up to 100,000 people have gathered in Dublin city centre to protest at the Irish government’s handling of the country’s recession.

And as for what the financial implications of the tumbling Eastern European economies (the problems of Ireland, Greece, Portugal, Spain, and Italy are another topic altogether) could be, this Bloomberg News report is not a bad place to start:

Europe’s banking system faces growing risks because of losses in the region’s emerging markets, and the crisis may require a region-wide rescue effort, said New York University economist Nouriel Roubini.
“The banking problem in Europe is becoming more severe,” Roubini said in a Bloomberg Television interview. “You have a series of countries that are really in trouble,” Roubini said, citing Latvia, Estonia, Lithuania, Hungary, Belarus and Ukraine.
German and French officials this week expressed concern about a slide in investor confidence in smaller European economies. The cost of insuring Irish, Greek and Spanish debt against default has climbed to records, and mounting losses in eastern Europe among Austrian banks sent that nation’s bond-yield premiums to an unprecedented level.
European lenders are taking steps that could increase state control of banks as the recession deepens. German Chancellor Angela Merkel’s cabinet approved draft legislation this week that allows for the takeover of Hypo Real Estate Holding AG, which would be the first German bank nationalization since the 1930s.

Since the 1930s . . .