When the sum of parts is more than the whole

One of the major political events in Hungarian politics in January was the formation of the “Összefogás” coalition which is a joint list of the Hungarian Socialist Party (MSZP) and two newly formed “left liberal” parties…  founded by two ex-Socialist prime ministers (Gordon Bajnai and Ferenc Gyurcsány), plus some Alliance of Free Democrats (SZDSZ) leftovers like Gábor Fodor.

According to Tárki, a major Hungarian polling company, MSZP stood at 23 percents among the decided voters in January and both Bajnai’s Együtt-2014-PM party and Gyurcsány’s Demokratikus Koalíció were at 6 percents last month.  That’s 23+6+6=35 percents.

In contrast, the joint list of these three parties turned out to have 27 percent support in February.  Incidentally the 49 percent support for Fidesz has remained unchanged among decided voters, support for Jobbik increased to  19 percents from 14 and  LMP  (“Politics Can Be Different“) has also increased their voter support from 2 percent to 6.

They don't deserve another chance!

They don’t deserve another chance!

This news has made my day. Keep up the good work, please, and add some more splinter parties to the grand coalition!

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Underdeveloped Hungary?

Prime Minister Orbán and Deutsche Telekom CEO Höttges have signed a “partnership agreement” and Deutsche Telekom is rumoured to invest one billion Euros in Hungary which would allow Hungary to achieve its goal of  providing high-bandwidth Internet-connection for every Hungarian household by 2018,  implementing an EU directive  two years earlier than Hungary’s original undertaking for the year of 2020.

Orbán mentioned some surprising statistical data: the telecom and IT sector currently produces 12 to 14 percents of Hungary’s GDP and 25% of last year’s GDP growth came from these sectors.  When I had a look at the Eurostat site, I have found something even more surprising:

High-tech employment by countries

2.6 percents of Hungary’s work force is employed in high-tech manufacturing!  Only Ireland has a higher figure, at 3.0%, than this in the EU and the EU average is 1.1%.

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Historic low base rate again

Hungary’s central bank  (MNB) cut the base rate by 15 basis points to an all-time low of 2.70% yesterday.  This was quite unexpected since nearly every economic analyst  had thought the reduction would be 10 bp and nobody predicted a 15 bp cut. 

Base rate in Hungary

The Hungarian Forint  went to 310.5 HUF/EUR after the announcement and today it has depreciated further.


Economy Minister Mihály Varga said before the decision yesterday that  he “trusts the MNB will act responsibly in view of the current situation ” (that is the weak level Forint is at)   He added that “we’re in the 310 HUF band now despite Hungary’s good and stable economic fundamentals and an external market shock may send the forint in the 320 or 330 band, though this would mean business as usual at least domestically “.

A lower base rate is certainly good for Hungary’s economic recovery and for increasing exports, besides it also  reduces Hungary’s debt payment burden, but (mainly because of the very high FX loan exposure Hungarian households have) it carries a lot of risk, too.  I keep my fingers crossed since our central bank now is skating on thin ice.

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The Reding strategy

MSZP chairman Attila Mesterházy paid a visit to the USA last week. He held a non-public talk in the Center for Strategic and International Studies  (a think-tank of the Democrat Party) and, according to Magyar Nemzet, he stated that he didn’t think the presence of international observers on the upcoming elections would be useful and he personally would not want call for it. He said he thinks the international observers wouldn’t give a real guarantee (for Hungary’s holding free and fair elections) but they would legitimize the election results. He added  this is not an official viewpoint of their “Összefogás” coalition now and ex-Socialist Prime Minister Gordon Bajnai disagrees.

Mesterházy in Washington

Charles Gati, an American professor of Hungarian descent, who belongs to the circles of Hillary Clinton, an ex-councillor to the Department of Foreign Affairs,  also sat among the audience of Mesterházy’s talk.  Gati said earlier that  “there are methods for getting rid of the Orbán government  – in a democratic way if possible and in another way if that’s not possible ” . Later he elaborated that, besides the IMF-weapon,  civil war is also an option. (See, for example, the same article)    Does “Ukraine”, with its shale gas luring western companies, ring a bell?

According to an unnamed Italian EU official, EU Commissioner Viviane Reding said  in the secretive Bilderberg-meeting last June that she would do everything to question the legitimacy of the 2014 elections in Hungary and she had held meetings about this with representatives of Hungarian organizations which receive most of their financial resources from the USA.

Mesterházy’s talk in the Center for Strategic and International Studies is the umpteenth sign of  the Reding strategy  being realized.

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National Sovereignty or Global Governance?

This is an interesting lecture given by American political analyst John Fonte, director of the Center for American Common Culture at the Hudson Institute, in the Danube Institute and it is discussing the issue of national sovereignty in the 21st century.

The Danube Institute is an independent think-tank in Budapest, “established  for intellectual debate between conservatives and classical liberals and their democratic opponents in Central Europe”.

Here is a very interesting interview (unfortunately in Hungarian) with John O’Sullivan,  the executing manager of DI, once a special councillor to British prime minister Margaret Thatcher and editor of British and US conservative newspapers, and DI deputy manager Gerald Frost.   Please stay tuned because I’m going to review it in a later post.

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Jewish violence in Hungary?

According to the Jerusalem Post,  the Federation of Hungarian Jewish Communities (Mazsihisz) “may send people to physically prevent” members of the nationalist far-right Jobbik party from holding an (undoubtedly provocative) rally at a former synagogue next Friday.

While the local Jewish community has called upon Esztergom Mayor Éva Tétényi to prohibit the gathering, it is also preparing itself for a physical confrontation, Mazsihisz president András Heisler told the Post.
“In case this [gathering] will not be prohibited, the Mazsihisz and Jewish civil organizations will protest and physically hinder the Jobbik rally on the spot,” Heisler wrote in an email.
Mazsihisz has previously indicated a willingness to use physical force, if necessary, to combat rising anti-Semitism.
During an interview last June, Mazsihisz executive director Gusztáv Zoltai told the Post that “until this moment, we have [had] verbal attacks so we strike back with words, but we have more than words.
“We are strong, and if we have to, we will strike back,” he said at the time.

Did Gusztáv Zoltai hint at his AK-47 assault rifle perhaps which he used as a Communist militiaman assisting the Soviet troops to crush the Hungarian revolution in 1956?  Or did he mean Mossad, the Israeli secret service infamous for its clandestine operations in other countries?

So are the Mazsihisz men going to attack the Jobbik-rally? Has the Hungarian police allowed the rally to be held? Was there a court appeal by Mazsihisz? What was the court sentence? Unless there is a legally binding court decision to ban the Jobbik rally, the police’s job is to protect their rally and to remove all those who want to “physically hinder” the rally.  It really sounds like Mazsihisz thinks they are above the law…  But they are very wrong about this indeed.

The Mazsihisz executive director in the uniform he may long for

This is not the only sign now that certain  Jews may want to resort to violence in Hungary though. American Nepszava online, the Internet site where Jewish writer Ákos Kertész called Hungarians   “genetically inferior” and “pigs wallowing in the mud, happily grunting and guzzling swill”,  published an anonymous article which urges that  a planned memorial to WWII German occupation in Budapest should be blown up, Magyar Nemzet reported.   The Foreign Ministry of Hungary has sent a letter to the US embassy which said that the article conveyed extremist views and incited criminal behaviour. The ministry also has asked the US embassy to take steps, according to the US legal system, against the news portal which is registered in the United States, “similarly like we repeatedly asked to in the case of kuruc.info” (which is an extremist, racist far-right site also registered in the US)

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In full flight

The conservative daily Magyar Nemzet daily  reported  on Tuesday that Gabor Simon, the deputy chairman of the opposition Hungarian Socialist Party (MSZP)   had placed 575,000 euros and 162,954 US dollars in a securities account opened in Austria in 2009 and his deposit account held 770,000 euros (240 million Hungarian Forints) last October.   Simon’s earlier asset declarations as an MP did not contain these amounts, that is he forged the submitted documents, and the origin of the money is unknown. Simon  was suspended from the party on the same day and MSZP has been refusing to answer questions about the case  since then. (Though Simon promised on Wednesday in a short message that he would  “give a detailed briefing on Thursday”) Hungary’s chief prosecutor asked the Hungarian parliament to suspend Simon’s immunity rights on Wednesday so that he could face criminal charges of tax fraud and document forgery.  It was reported that a criminal investigation was initially launched out of official duty last November, without anyone named as a suspect,  when they received information  from the Austrian financial markets watchdog which sent data to the Hungarian tax authorities concerning suspicion about money-laundering.

Let’s see how the Socialist Party’s campaign chief, Zsolt Molnar responded when  he was asked by journalists on a conference  organized by a left wing think-tank whether the dirty money found in Simon’s Austrian bank account had anything to do with MSZP:

The Socialist Party campaign chief’s response to the journalists’ questions

Another Socialist politician (Zsolt Török, the ex-spokesman of MSZP, who had to resign because of a fake video MSZP tried to smear Fidesz with in a by-election held in the town of Baja a few months ago) said only this: “one has to investigate Fidesz politicians, too”

This says it all, doesn’t it? 😀

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Economic Sentiment Two

The central banks of Turkey, South Africa and India caved in and they increased their base rates after the Turkish Lira, the South African Rand and the Indian Rupee were smoked in the financial markets. Now the Hungarian Forint is under a strong attack, too.

The exchange rate of the Hungarian Forint against the Euro

The big difference to these countries is that Hungary has a massive trade balance surplus.  Besides the budget deficit is under 3 percents and the economic growth is accelerating, the inflation is low (under 1%). The debt-to-GDP ratio is still high (80%) but at least it’s not growing anymore.

In fact the trade balance surplus of Hungary, which in principle should matter most in determining the exchange rate,  in last November has turned out to be more than expected, it was 825 million Euros instead of 804 millions. The surplus was  almost 7 billion Euros in the first 11 months  which is half a billion Euros more than it was in the first 11 months of the previous year. That’s big for a country like Hungary. So what’s cooking?

Let me quote this comment on Business Insider because I think it sums the situation  up very well indeed:

If tapering of 10-20 billion has this kind of effect on these small countries currency then why didn’t we see the opposite when QE was announced?

This is economic warfare pure and simple. Why any of these countries  should have their currencies move this violently makes no sense. Their share of exports to the US can’t be that high. The US wants the world to say go ahead, keep print and living above your means. The Truth is that this will shorten the life of the dollar as a reserve currency. People around the world will band together against us.

We should be cutting gov’t spending and we should have reduced taxes over the last five years, but that would have only benefited the American people and let the gov’t feel the pain. We can’t have that now can we.

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The modern democracy dilemma

Hungary is going to expand its nuclear power station in Paks which was built by the Soviet Union in the 1970’s.  These nuclear power blocks will have to be decommissioned at around 2030 and the new ones are going to be built by the Russian company Rosatom.   Russia will provide a 10 billion Euro loan for 30 years to finance the construction and 40 percents of this amount will be awarded to Hungarian companies as suppliers.  (At a first sight that sounds really good to me.)  The postcommunist (“socialist/leftliberal”) opposition is using this opportunity to accuse the government and Prime Minister of “selling out the country to the Russians”, “betraying our Transatlantic interests” and they generally question the need for the new power blocks, etc.   At the same time they keep a low profile  about that the MSZPSZDSZ majority parliament voted for the expansion in 2009.  According to a Wikileaks document,   Attila Mesterházy, who is the chairman of MSZP now, told the Americans that “the tender offer (for the expansion) would be announced soon and  that, while a Russian firm would probably have an advantage based on the fact that the existing Paks reactors use Russian  technology, he hoped potential US suppliers would be given due consideration”)

There is a lot of noise about this decision and everybody (and his dog) speaks and writes about it.  Most of the “arguments” are purely and openly political.  However there are some which are disguised as professional counter-arguments. (Leftist) environmentalists say, for example, that the increased requirement for cooling water will force Hungary to build water dams on the Danube, etc. (What a nonsense!)

However in fact I don’t  mean this post to be about lambasting the deep  hypocrisy of the post-communist opposition again or to argue for the necessity of the power station expansion or why the Russians should do that indeed.  Incidentally most Hungarians support the Paks upgrade by Russia.

The point I want to make here is the apparently universal feature of modern democracies when a particular issue,  which maybe only one person in each ten thousands or so could have a competent opinion about, will become the object of heated political discourse.  And, following from this,  the political discourse has the least to do with the technical or economical details and things like anti-Semitism (in Hungary and Russia), LGBT rights (in Russia and Hungary), what-have-you will be brought up.  And the existence of vested interests  lurking behind the scenes will swept carefully under the carpet. (The US nuclear power station flagship company Westinghouse  won’t have a piece of the Hungarian nuclear power cake: read that Huffington Post article I linked to below keeping this in mind!)

As opposed to earlier times, people in our modern times get practically all their information from others, opinion makers and practically nothing from their own experience. Opinions are practically never  formed through the process of critical comparison of conflicting arguments, the masses simply get ready-made opinions, like their ready-made food from the supermarket,  and then they’ll decide in the general elections on the fate of themselves and others based on these ready-made opinions.   No doubt this mechanism seems to be the worst in the US among democracies,  the country which loves  so much to lecture other countries on democracy :

We understand the concerns about the state of democracy in Hungary that have been raised by people both inside and outside of this country. Some of these concerns are very serious. They need to be resolved democratically, by Hungarians, and this country’s democratic institutions, its checks and balances and rule of law, need to be strong enough to support that process.

The USA is the country among modern democracies  where there seems to be the sharpest divide by far between the (at most five percent) opinion -making elite and the undereducated, opinion-fed masses.  This opinion-feeding is not restricted to the media in our time though (BTW, the Latin word ‘media’ means “transmission, mediation”).  It’s a common thing, too, when it comes to history, social sciences, too.  Sadly I must say that it happens even in natural sciences to some extent.  No doubt natural sciences are the least infected with this opinion-feeding plague though.

Maybe a certain cultural-intelligence test to exclude the illiterate, the ones who are incapable of any independent thought,  from voting might help modern democracies.  In earlier times tying voting rights to having some minimal income or possessions (“cenzus”)  did act as a kind of cure for democracies then.  Of course this is almost like  comparing apples and oranges:  there was no TV, no radio, no Internet, there were only printed newspapers in those times.

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