And this old post must be read, too. It was written on the 18th of January, 2012, five days before hundreds of thousands Hungarians took to the streets of Budapest in freezing cold in defense of the Orbán-government.
PM Orbán later said several times this huge rally prevented EU/IMF from doing to what Hungary what they did in Italy and Greece, that is replacing their democratically elected prime ministers with their stooges.


The pro-Orbán rally on the 23rd of January, 2012

The Slog.

Orban…bad guy who may do some good?

While the media in general are paying far more attention to Greece and its determination to play by the rules and thus win back market respect, Hungarian maverick Viktor Orban takes the opposite view. He may well represent a far bigger threat to the shibboleths of our current form of capitalism.

It’s hard to be anything other than equivocal about the rumbling Hungarian crisis. On the one hand, Magyar Prime Minister Victor Orban appears to be in the same Bonkers League as Recep Erdogan, displaying as he does the familiar mix of controlling political power-grabs, while pursuing economic policies best described as All over the Place. But on the other hand, Orban was elected with an overwhelming majority, he inherited most of the fiscal problems from the previous deficit-obsessed New Labour-style government (Peter Mandelson had quite a few ‘friends’ in it), and…

View original post 1,445 more words


HUNGARY EXCLUSIVE BREAKING……Is the EC/US axis about to try and destabilise the dissenting Government of Viktor Orban?

I must reblog this… It’s spot on.

The Slog.


The Slog first posted about Viktor Orban’s outspoken Hungarian government in January 2012. Since then, Mr Orban has won a further General Election here by a very clear majority.This is called democracy.

Hungary is an EU member that wisely decided to stay out of the eurozone.

Hungarian politics are complex, but the Sun headline is this: Orban and his right wing Party are actually nationalists opposed to three things – US neoliberalist colonisation, the euro, and Brussels throwing it’s weight about. Although the Opposition in Budapest positions itself as ‘socialist’, it actually consists largely of former Soviet apparatchiks who became reborn as neoliberal fanatics soon after the USSR collapsed. But they still like the idea of rule by faceless bureaucrats: and so naturally, the EU suits them perfectly. (Think Angela Merkel)

Now think of Hungary this way: Orban is rather…

View original post 733 more words

Hungary’s economic boom vs credit rating agencies and the Economist

Hungary’s central bank has published the latest trade balance figures today. The trade balance surplus was  984 million Euros in the first quarter of 2014 and that’s more than double what it was a year earlier (463 millions).  There is a very significant increase compared to the last quarter of 2013, too (710 million Euros).

Hungary’s GDP growth was a “big surprise on the upside” again in the first quarter of 2014:  3.5%.  Foreign investments increased, too.  The inflation is zero so the central bank could safely cut   Hungary’s base rate to a new low of 2.3% today.


The CDS is the price of insurance against a particular country’s defaulting and it measures the risk of investors.  The higher it is, the higher the default risk is.  Let’s have a look at the CDS pricing of Hungary’s mid-term (10 year) government bonds. The CDS has reached pre-crisis levels.


CDS of 10-year Hungarian government bonds


In principle the big credit rating agencies rate the government bonds using such criteria as above. In reality they all rate the Hungarian government bonds in the “junk” category now and they all rated Hungary’s government bonds as “investment grade” in 2009… when the postcommunist MSZPSZDSZ coalition was busy ruining our economy… in the “orthodox way”, that is following orders coupled to the huge, 25 billion Euro loan they took out from the EU and IMF .

Yup, Hungary’s bonds were of “investment grade” when the CDS pricing was record high in 2009 and they became “junk” in 2011-2012 when the “unorthodox policies”, which seem to deliver big results by now, were implemented.

The downgrade of Hungary’s ratings reflects further deterioration in the country’s fiscal and external financing environment and growth outlook, caused in part by further unorthodox economic policies, which are undermining investor confidence and complicating the agreement of a new IMF/EU deal

Fitch wrote then.  Two years later Hungary’s GDP growth is one of the highest in Europe.

And what does The Economist  write about Hungary?  Well, only the usual libnazi bullsh*t  about Hungary’s role in the Holocaust and some more politically motivated drivel.   Yes, just check it out yourself with a search for the past month.  That’s about all those Economists have to say.



Unorthodoxy explained

Prime Minister Orbán took  his prime ministerial oath on the 10th of May and this event could be regarded as the birth of the third Orbán government. He and his Fidesz party promised to “carry on” (“folytatjuk!”) .  So what is it they’d carry on with, say, regarding the economy? Let’s recap what the “unorthodox policies” of the second Orbán government, which seems to result in Hungary’s well-visible economic recovery, actually meant.

When, despite all the economic success the first Orbán government achieved,  they were voted down by the Hungarian voters in 2002,  the  Socialist-left-liberal governments resorted to  accumulating foreign debt in order to manage the huge budget deficit problems their inappropriate economic policies caused.  So even though the first Orbán government decreased the dept-to-GDP ratio to 54% from around 65%, when  the international economic crisis broke out in 2008, the  Hungarian economy was already in a very weak position: the dept-to-GDP ratio was nearing 80% … and the  biggest part of this debt was foreign debt in foreign currencies.  Bankruptcy was imminent and taking out an IMF-EU loan was the only way to avoid it. Despite all the postcommunist/left-liberal propaganda, the truth is the terms of the loan were far from attractive: it came with thick neo-liberal strings attached: sell out your assets and tax people, not multinationals and banks.  Eventually when the second Orbán government took power in 2010, there was hardly  any economic elbowroom for them.  The IMF loan was a carefully set-up political booby-trap in essence.  If  Orbán had followed the IMF path then his political credibility would have evaporated in no time and the postcommunists would have returned yet again in a few years, just like the Communists returned as Socialists in 1994. Charging forward was the only way.  The actual budget deficit was more like 7% in 2010 instead of 4% what the Socialist Bajnai government put on paper.  Paper doesn’t blush…

It quickly became evident in 2010 that the  IMF and the EU  had no intention of renegotiating the terms of the loan their sidekicks  left behind and they demanded the usual austerity measures from Orbán they always do: tax hikes for people, cuts in benefits and public services, selling state assets.  Cutting links with the IMF was practically inevitable if Orbán wanted to go in a different direction.  He did so, accompanied with a political rhetoric of “economic freedom fight”.   The phrase “freedom fight” goes  down well with the Hungarian soul even if we’ve had many freedom fights and none of them were successful (at least directly).  Orbán bravely refused to accept the terms for  Hungary’s having the IMF safety net despite the huge political, and also economic, pressure put on him.  This policy alone made the already bad foreign press of Hungary even worse. We  became a “dictatorship” very quickly.

When Europe’s economic storm drastically worsened in 2011,  Orbán  bravely “pulled a Turkey”:  he invited the IMF back to the negotiating table… and he started playing for time just like Turkey did once.  He kept negotiation hopes alive for more than a year, making the markets believe that sooner or later Hungary would have the IMF safety net back.   In the meantime it became evident  that the IMF, certainly also because of  their political motives, was not willing to make concessions.  In fact,  they wanted to punish Hungary hard for  Orbán’s  policies, probably as a way of  deterring  other European countries from following similar policies.  During this economic storm EU/IMF had the prime ministers of Italy and Greece replaced with their stooges and by the end of 2011, the beginning of 2012 they tried to do the same thing in Hungary. That was when half a million Hungarians took to the streets of Budapest on the freezing cold day of the 23rd of January, 2012 and they said a big no to this attempt. Polls also showed Fidesz and Orbán had a strong enough political support, so he took the leap:  Hungary sent IMF home … and eventually paid the IMF loan back one year earlier  in order to send the message to the markets that Hungary had enough self-confidence to follow its own course.  The other very important milestone of success was when EU eventually, very reluctantly indeed, had to let Hungary out of  the Excessive Deficit Procedure in 2013. This further increased market confidence in Hungary.


Hungary’s budget deficit as a percentage of GDP


In order to balance the budget and to stop the increase of  public debt,  without resorting to “classic” austerity measures,  two major things were needed: taxing banks and multinational companies like the supermarket chains and effectively nationalizing the compulsory private pension funds.

It was beyond any doubt Orbán had the support of the Hungarian public for the former. There was/is public anger towards the banks because of the role they played in the economic crisis, especially because of all the hardship  the widespread foreign currency based mortgages caused for hundreds of thousands of people when the exchange rate of the Hungarian Forint plummeted during the crisis. People were also well aware that the banks had been heavily subsidized from taxpayers’ money before.  Let me note that eventually Orbán’s example of taxing the banks in order to manage the crisis was copied by a number of Western governments, even though the financial sector in Hungary was  hit harder this way than in other countries.  The stable and strong (supermajority in the Parliament!) political support, together with some domestic media support, allowed Orbán to push this unprecedented move through.  However Hungary’s press image in Europe and in the US  got even worse and darker. Hungary became a totalitarian dictatorship, a Nazi one. No doubt at all that the heavily taxed influential foreign financial institutions  played  their own important role in this process.

A Le Monde cartoon


The Hungarian Central Bank (MNB) was another important battlefield.  The bank chairman, András Simor, who was nominated and elected by the Socialist-left-liberal regime in 2007,  was a left-liberal and in fact he proved to be a real IMF stooge.  It turned out he supplied IMF with info, in a way which was bordering on crime, and most importantly and he and his men in the Monetary Council kept the base rate unreasonably high. The high base rate, not really justified by the inflation figures, resulted in very high interest payments on Hungary’s mounting debt and it was killing any kind of  chance for economic growth.   The government crossed with Simor and “the threatened independence of MNB” became a major worry  in the global (Western) media. In contrast, there was deep silence in the very same newspapers  when the Dutch prime minister directly intervened who the central bank chairman should be…

The chart also shows when Simor left office: that’s when the base rate started decreasing in 2013.


What was the story with  the private pension system?  The left-liberal Horn government introduced a two-pillar pension system in 1997.  Later the voluntary private pension funds made this a three-pillar system.  They kept the old state pension system, inherited from the pre-1990 Communist regime, for the elderly generation and they introduced a new private ‘pillar’  . The younger generations were forced to join these private pension funds. Practically the state created a guaranteed clientele for private businesses and the Hungarian state administration also collected pension contributions for these .  These pension contributions, of course, were missing from the state pension fund and that made a bigger and bigger hole in the state finances in each year… This was “plugged in” by more debt, “of course”… You get the idea.   Besides these obligatory private pension funds were ripe with corruption.  Their boards were filled with left-lib cronies, e.g. trade union leaders.  These mandatory private pension funds charged ridiculously high handling fees (like 5% per year!) and they produced  poor returns for the members.  No wonder they were quite unpopular with the public and the Orbán government could easily get hold of their assets.  The government payed out the individual members but they took over the capital in these funds and then they used it mostly to balance the state budget.  Note that the voluntary private pension funds were left alone.

Introducing a flat tax regime in order to encourage economic growth was another important element of the “unorthodoxy”.   A flat income tax may sound very unjust but  consider the huge tax breaks families were given and you’ll see that the goal is to strengthen Hungary’s weak middle class.  Making the middle class stronger, besides the obvious social-political benefits, then helps internal market demand increase, that is it stimulates economic growth.

Another major policy was what the British government later  put as “no more something for nothing”.  The Orbán government has been providing hundreds of thousands of people, who used to be on benefits, with “public work”.  Though this drove unemployment down and increased economic activity, it even must have increased consumption to some extent, but the most important goals may not be economic ones.
I must also mention “rezsicsökkentés” (cutting the costs of household services) which proved to be a very popular, possibly election-winning, measure.  The government made the costs of household services, including electricity, water, gas and other public services decrease by 20 percents or so by law.  Utility bills were relatively high in Hungary by European standards and most of the utility providers are again foreign owned.  The measure also reduced the inflation rate very significantly and eventually we saw something unprecedented in Hungary: the yearly inflation was minus 0.1% in March.

Orbán made his confidante, his economy minister,  György Matolcsy the central banker after  the office term of  left-lib IMF stooge András Simor was up.  It’s difficult to say how much of the above things could be attributed to Matolcsy but possibly most of them.  He and his men in the Monetary Council slowly cut the base rate to historic lows, and that obviously growth-friendly, while Hungary managed to keep the financial balance.   The budget deficit has been below the Maastricht criteria of 3 percents since 2011.  The Hungarian Forint exchange rate  fluctuated a lot but eventually Forint didn’t weaken too much. The weaker Forint boosted exports and hindered imports.  Hungary has a very high balance of trade now and that is going to strengthen Forint sooner or later.   Despite the low base rate, the yield of Hungary’s 10-year T-bill has sunken to 5.1%.  (In comparison that was 12.2% in the March of 2009!)

Matolcsy, as a bank chairman, also initiated a “Lending for Growth” programme: the central bank lends money at zero percent to banks for specific purposes, like SME-financing or reducing exposure to foreign currency loans, and the banks are allowed to charge only  2.5% at most.  His latest move is that the 2-week T-bills are to be converted into bank deposits and foreign banks and funds will be barred from having their money parked in MNB.  This effectively pumps liquidity into the economy.  Another strategic direction to strengthen the economy is a strong push to convert foreign currency public debt into Forint debt.


It’s time I finished this post. Please feel free to comment if you  have questions or you want to know more.


Enhanced by Zemanta

The Speaker speaks out

László Kövér, a founding member of Fidesz, who has been the Speaker of Parliament  since 2010 and he’s also the chairman of the Board of Fidesz, and probably he’ll continue to be the Speaker, gave an interview to a left-lib newsportal in January, that is a few months before the recent elections. Mr. Kövér is a very outspoken and a very anti-Communist, anti-leftlib politician.  Because of this, he’s my favourite politician in Fidesz besides prime minister Orbán.

Kövér’s political stance, as showcased in the below excerpt, definitely strengthens my commitment to be a Fidesz-supporter.  Let me translate a part of the interview which, I believe, will help my English-speaking, non-Hungarian readers understand  a couple of things about Hungary’s politics.  Since the Hungarian voters have confirmed that they support this direction  by  giving Fidesz another (hard-to-believe) supermajority in the recent elections,  it’s a safe bet  these policies of Hungary won’t change fundamentally at least until 2018.


László Kövér, the Speaker of Parliament


The last four years has been all about Hungary’s “freedom fight”. Whose decision was that? 

One could safely say  this was a collective decision by the Fidesz presidency board.

When  Viktor Orbán came home ashamed from Brussels in 2010 after the Fidesz-government was formed  and when he announced  in the Fidesz board meeting that  EU Commission President Barrosso wouldn’t allow to increase the Hungarian budget deficit despite the requests of Fidesz then who shouted “hey, guys, let’s make war on the EU!” ? 

I’ve got no idea and that’s irrelevant anyway.  This followed evidently from the events that it was a question of life or death if we could re-gain independent political decision making or we’d dance to the tune of Brussels for four years.  Those ones who had been playing up with (ex-Socialist prime ministers) Gyurcsány and Bajnai, those who knew exactly that the 2010 budget was built on a huge lie, well, those people brought us to book for the lies of  their cronies.  On one hand that was blood-boiling, on the other hand it was evident if we continued with the endless austerity measures then the country wouldn’t recover from the awful economic situation we had, only  Fidesz would lose credibility for a long time and nothing would change for the better.  So there was really no other way than charging forward.

Why did Brussels cross with you in particular? 

Maybe their patience ran out with Hungary which they had since 2004.   (Leto’s remark: The Socialist-leftlib governments. which were in power between 2004 and 2010,  ran high budget deficits and that increased Hungary’s dept-to-GDP ratio from 54% to  80% in 2010).  Maybe Brussels wanted to set an example of Hungary and to increase fiscal prudence in the EU-member countries where budget deficits were slipping out of control.   One must also add that  it wasn’t in 2010 when the West learned who is who  in Hungarian politics. Washington couldn’t get over it already in 2002 how a little Eastern European country dared not to buy F-16 fighters instead of (Swedish) Gripens.

How did you dare?

That’s very simple:  The Americans made a worse offer than their competitors did.  Of course they kept telling us: if you buy a watch then you’ll buy a Swiss one, if you buy fighter planes then you’ll buy American.  Then they got surprised.  (Leto’s remark: this might be one of the reasons why PM Orbán hasn’t been invited to Washington since 2010 and why President Obama failed to congratulate Orbán for his landslide re-election.)

Are you saying Brussels took revenge and jeopardized Orbán’s plans because of a decade old Hungarian-American skirmish?

No, surely not. That was meant to be only an example that it was evident for the West already well before the 2010 elections it’s much easier to make deals with the ex-Communists, who turned into cosmopolitans from internationalists,  than with a patriotic government.  (Ex-Socialist prime ministers)  Gyurcsány, Bajnai, Medgyessy and their lot were considered  easy-to-deal-with in (Western) Europe and in the USA.  It never occurred to these people that they, as Hungarian leaders, are supposed to fight for Hungary’s national interests. They sold everything out on the cheap, including utility companies, Hungary’s airliner, our health care market, agricultural lands, what have you.  The only thing they had  in mind was that their  circles should benefit.    In addition, since we were not on good terms with neither liberal EU financial commissioner Olli Rehn or his Socialist predecessor ( Joaquín Almunia ) , Brussels deemed we wouldn’t deserve the leniency  Gyurcsány and Bajnai were treated with.

If the EU had given a green light about the budget deficit to Orbán then the “freedom fight” wouldn’t have started? 

There still would have been one but it would have been much quieter than what happened. But actually that’s not a big problem  because at least it was understandable  what we were forced to do and  what we had planned to do, more cautiously, anyway.  It would have been better to carry out the strategic change in Hungary’s economic and social policies with less noise because we didn’t mean to be adventurous. But we had to be.

What did you plan at the change of the government (in 2010) concerning IMF?  Did you mean to kick the global bankers out after a few months of “peacock’s dance” (Leto’s remark: that’s a reference to a bon mot of PM Orbán) in the first place or did you make the decision only later? 

It was evident from the very beginning that we didn’t want to tread the path IMF was demanding we should follow but that decision was made only later.

You said to the weekly Heti Válasz that you are “capable of being a soft, friendly teddy bear”. So why don’t you fight diplomatically, in a “teddy bear style”, and why do you need to rub the nose of the  world’s lords, or at least of the continent, that what you want is what is going to happen? 

Because that feels good.

That’s great.

That was certainly irony. Well, we’re humans, too.  Hypocritical, unworthy, selfish chappies manage the European Union, all respect should go to the exceptions.  The Brussels bureaucracy  lives off that they keep increasing their informal power over the member states while they are  trying to present their demands snuffling about never fully discussed European values.  So why should we talk to them in a different way than what it feels good?

Because the goal is not to relieve your mind, not to even  satisfy  Hungarians’ thirst for justness, but to improve things for us, citizens. 

I don’t think we should have sought the favours of Brussels with a humble face after their rough treatment. We must make evident for them, and for the Hungarian public, too, that we are no dummies, we fully understand what’s happening, we know the game and we are not going to skin our own people.  If they want to wage a war then they must  understand there’s firepower on the other side of the battlefield, too.

Can these be matched? 

Apparently yes. I think we have won the “freedom fight” but, to say the least, our positions have not been eliminated.  As a relatively small player in the international  (political) arena,  our weight has increased and at least we’re in play now.

It’s all quiet right now. Is this already peace?

We cannot know.  Maybe it’s only a truce.  They may have decided it’s not worth pressurizing us any more until the elections. You cannot ignore the fact that the majority of the active voters stayed behind us even during the most difficult times.  We couldn’t be simply swept away like some would have wanted,  even putting democratic means aside (Leto’s remark: that’s a reference to Charles Gati’s infamous interview, see also my post) .  Of course, they are not going to give it up and a new match is going to start in 2014.   On top of that,  the situation cannot be described like there’s peace in the world and some rebellious folks are stirring up trouble in the periphery…  On the contrary, the empire is crumbling, everything is changing, sometimes  the perspective is wider and sometimes it is narrower than before.   There is a real danger for them that the economic and social policies of the Hungarian government will gather followers.  More and more people see, and they speak up, too, that the fake liberal dogmas which ruled, and ruined, Europe in the last twenty years must be relegated to the garbage heap (of history).


Enhanced by Zemanta

More news about Hungary’s improving economy

There was a very strong demand for Hungary’s T-bonds on yesterday’s  auction and this prompted the State Debt Management Agency to increase the issuance.  At the same time the bond yields were three to twelve basis points lower than at the previous auction held a fortnight ago.

Hungary’s construction industry output showed  a whopping 28.3% year-on-year growth in February.

Construction industry output

The industrial output was 8.1%  higher in February than a year earlier.  The month-on-month growth was 1.6%.

The gross average monthly wages in Hungary were 1.7% higher in February than a year earlier. Excluding those employed in public work programmes , the figure shows an increase of 6.9 percents!  The monthly gross wages averaged HUF 240,000 per month, 5.2% up year-on-year, in the private sector alone.

Pre-tax wages

Hungary’s inflation was flat at 0.1% year-on-year in March and it’s yet another  “surprise to the downside”.  The “market’s call” was for a 0.3% CPI. Core inflation measures declined again which confirms the absence of underlying price pressures.


Inflation rate


The central bank continued with their cutting the base rate which is at a historic low of 2.6% now.  Let’s note that the base rate was 7% when Hungary could get rid of bank chairman András Simor, a neoliberal/postcommunist stooge of the IMF. BTW, Hungary’s international reserves jumped to a new 2.5-year high at 36196.70 EUR millions.


Base rate


Hungary’s  balance of trade surplus jumped to EUR 766 million in February from EUR 482 m in January.  The surplus was EUR 118 million higher in annual terms than a year before.   Exports and imports (in EUR) increased by 5.0% and 3.5%, respectively in February, 2014 compared to the February of 2013.


Balance of trade

By December 2013 – February 2014, the number of unemployed people decreased by 123 thousand to 379 thousand over one year, and the unemployment rate diminished by 3.0 percentage points to 8.6%.

Unemployment rate


Employment in Hungary is at an all time high. The number of employed people was 4,053 thousands in February which is 236 thousand more than a year ago. The employment rate of people aged 15-64 increased to 60.4%.

Employment time series


Those London economists are surprised on the upside at the GDP growth  yet again.  JP Morgan revised their forecast for this year to 2.5%. Capital Economics expects 3.5% GDP growth and they write:

What’s more, the recovery seems to be broad based. Not only are export-led industrial sectors improving on the back of stronger demand from the euro-zone, but consumer spending is also staging a (long-awaited) recovery

This is the latest (2013Q4) figure, compared with other countries:

GDP growth in Europe


In the meantime the three big credit rating agencies carefully keep Hungary’s bonds in the junk bond category and economic newspapers like Financial Times, The Wall Street Journal, The Economist, etc. are all whining about Hungary’s autocratic tendencies, anti-Semitism and what have you.    In the meantime  The Jerusalem Post asked in their usual “Nazi Hungary” editorial that

Why would Hungarians support a party and a prime minister that legislate policies that hurt their weak economy ?

I think the above economic figures themselves give a good answer . Though I doubt very much indeed that the author(s) of  the Jerusalem Post editorial  wouldn’t have known these facts otherwise.

Enhanced by Zemanta

IMF and Hungary’s GDP growth

The Hungarian economy is likely to grow by 2 percent this year thanks to an expansion in investments and domestic consumption, while exports are also expected to expand, the IMF said in its country report on Hungary this year.

The International Monetary Fund admitted in a report after a recent visit by the fund’s experts. (Economists at the global financial consultancy Capital Economics predict 2.5% GDP growth for Hungary this year.)   As you may know, Hungary paid back her IMF-loan last year, ahead of schedule, and asked the IMF  to close its office in Budapest.

But what did IMF say about the Hungarian economy a year ago, in  March, 2013?  Here is an excerpt from their last year report:

(the government) expected real GDP to grow by 0.9 percent in 2013 and 2 percent in 2014, as external conditions improve, the drag from the fiscal stance is lifted, targeted measures increase household disposable income, and the absorption of EU funds is accelerated. The MNB was less upbeat. It expressed serious concerns about the worsened growth outlook. It estimated that potential growth declined to around 0–½ percent in 2012 (in line with staff’s assessment), and expected it to rise to a modest 1 percent in 2013–14.

What did IMF say last October? They expected a 0.2% growth for 2013 (in fact that was well above 1%!) and they “ruled out a two percent growth for 2014″  what the Hungarian government’s  forecast was then.

Now we may establish the fact that the government was right  and the IMF, and its MSZP-affiliated stooge András Simor, the ex-chairman of the Hungarian Central Bank, were wrong.

What does IMF say about the next year this year ?  Oh, the very same as last year:

Hungary’s medium-term growth prospects remain subdued


Enhanced by Zemanta

Hungary: Standing Up to the West?

This rare video gives a fair picture of what was happening in Hungary in 2012 in fact and it explains it pretty well why Hungary got so bad publicity from the Western media, often even along the lines of “Democracy in Hungary is dead and Fascism rules”.
If you do want to have a glimpse of the truth about Hungary then this video is to be watched.

Enhanced by Zemanta

Reheated Cold War with Hungarian hostages

There’s a deep political crisis going on in Hungary’s neighbourhood.  This obviously affects Hungary in a number of ways  but there’s an aggravating factor.  There are ethnic Hungarians living in Kárpátalja (Transcarpathia), a region which belonged to the Kingdom of Hungary from its founding in AD 1000 until the Trianon Dictat in 1920.  Like Hungarian Defense Minister Csaba Hende put it, “The life of the Hungarian community in Transcarpathia is the most important measuring device for Hungarian-Ukraine relations.”   Or, using Prime Minister Orbán’s words, “the most important thing for Hungary in the Ukrainian crisis is the safety of Hungarians both in Hungary and in Kárpátalja. This is the standpoint from where we regard each and every event”.  This is  why I’m going to make a couple of posts on the Ukrainian situation.

Ukraine‘s new government,  “glued together” by spin doctors like US State Secretary Viktoria Nuland, is now headed by a Jew,  Arseniy Yatsenyuk , who pledges to  execute tough IMF austerity measures (it’s worth reading this article in Forbes!), and  six major cabinet ministers in Yatsenyuk’s government come from the party  Svoboda.  Svoboda is the successor to the  Social-National Party of Ukraine  which is a reference to National Socialism .

One of the Nuland-approved ministers is Oleh Tyahnybok, the leader of Svoboda.  I wonder when he, using his own words, will start “fighting against the Moskali, Germans, Kikes and other scum who want to take away our Ukrainian state”…

And this leaked phone conversation between Estonian Minister of Foreign Affairs Urmas Paet    and   High Representative of the European Union for Foreign Affairs and Security Policy Catherine Ashton confirms the rumours that the snipers, who killed both protesters and officers of the riot police in Kiev, were employed by the leaders of the Maidan “revolution”.  Catherine Ashton really doesn’t appear to be particularly taken aback and her office declined to comment “on alleged phone conversations”. On the other hand the Estonian Foreign Minister has admitted  the conversation is authentic.

Kárpátalja is in Western Ukraine where anti-Russian sentiments are manifested like shown in this Russian-made TV programme.  Well, the Western press hardly reports on this side of the unfolding story…

Last week  Russia  invaded Crimea.  The  peninsula in the Black Sea, which was given to Ukraine in 1954 “as a symbolic gesture”, is of strategic importance to Russia.  Russia has intervened under the pretext of  “protecting the Russian minority”. Incidentally the very first thing the new Ukrainian administration did was making the Ukrainian language exclusive and scrapping the language rights of Russians, together with Hungarians’.  No doubt the Russian invasion is a breach of international law.  However the Russians are doing only what the US has done quite a few times, for example with the occupation of Iraq.  Grenada’s invasion in 1983 was condemned by the United Nations General Assembly as “a flagrant violation of international law” by a vote of 108 in favour to 9, with 27 abstention.   Maybe the Russians  should search for WMDs in Crimea to pour oil on US troubled waters. 😉

Hungary is an EU and NATO member.    However the protection of the Hungarian community in Kárpátalja  depends very much  on Russia’s policies.  It’s a very delicate path Hungary must tread indeed.

To be continued…

Enhanced by Zemanta

Orthodox vs. unorthodox, Part Two

Earlier I compared EU/IMF  bad boy Hungary’s economic performance since 2010 to  EU/IMF good boy Portugal.   Now I’m doing the very same comparison between  EU/IMF bad boy Hungary and   EU/IMF good boy Rumania.  Like I tried to point it out then, the previous comparison had its limitations and it wasn’t absolutely conclusive (yet).  This one isn’t going to be “perfect” either.

The population of Rumania  is  about twice that of Hungary’s (20 millions vs. 10 millions) and its present day area is twice as big, too (238,000 square km vs. 93,000 square km).  They are neighbouring countries and both are peripheral to the core economies of Europe.  Neither country belongs to the  Euro zone. Hungary’s currency is called the Hungarian Forint and Rumania’s currency is called the Rumanian Lei.    Rumania belongs to Eastern Europe culturally (though Transylvania may be considered Central Europe due to its history), that is Rumania is the cultural realm of Orthodox (Byzantine) Christianity. Hungary belongs to Central Europe culturally, that is Hungary’s culture is based on Western Christianity (both Catholic and Protestant!)  Rumania’s GDP per capita was  6200 EUR (8500 USD) in 2012 and Hungary’s was  9800 EUR (13400 USD).    Here are a lot more data to compare.

Both countries had Communist dictatorships until 1990. Though Hungary’s was a lot more lax  one than the totalitarian dictatorship Rumania had.  Hungary’s transition to democracy was a negotiated, peaceful one, while Rumania’s dictatorship ended with bloodshed, a revolution which was sparked by the courage of an ethnic Transylvanian Hungarian Protestant priest, László Tőkés.  So there are a lot of similarities and differences between the two countries.

Another difference is that Rumania, just like Portugal did, as I wrote in the first part, chose to follow the EU/IMF economic recipes in 2010 and Hungary chose to rebel against them.

So let’s see the same data  again, let’s see  how those economic figures, and  with special regard to  the ones important for people’s everyday life, have changed in good boy Rumania and in bad boy Hungary since 2010.    First let’s review some basic major figures which are somewhat indicative of how these economies were doing in 2010 and how they are doing now:

Annual GDP growth

Kudos to Rumania, their GDP growth is more robust than Hungary’s

What about the public debt to GDP ratio?

Government debt

Hungary’s public debt seems to have become stagnant, Rumania’s seem to be on the rise. However Rumania’s debt is way much lower than Hungary’s!

A positive trade balance means you sell more than  you buy.  A negative one, like the US has with China, means you get indebted.

Balance of trade

Unlike Hungary which has been having record high trade balance surpluses, Rumania runs a big trade balance deficit.

Now let’s see those figure again which directly affect people’s lives.    As far the the inflation rate figures go, I think it’s all right to call it a draw.

 Inflation rate

Unemployment rate is something which really affects people. Unemployment at a young age and long term unemployment are especially devastating. The situation in both  countries seems to be similar to me.  Well, it’s not particularly good.

Youth unemployment rate

Long term unemployment seems to get somewhat worse in Rumania and it seems to have improved somewhat in Hungary.

Long term unemployment rateThe overall unemployment rate seems to be comparable, and stagnant, in both countries.

Unemployment rate

And what about the wages and the income tax which also directly affect people? The wages are rising in both countries.


The dynamics of the wage change looks pretty much the same to me.

Rumania introduced a flat rate 16% personal income tax much earlier than Hungary. So now this is the same in both countries.

Personal income tax rate

Let’s see the construction output as in the previous post:

Construction output

This looks to be the same, too.

Unfortunately doesn’t have data on the foreign direct investments in Rumania.

The corporate tax rates are identical in both countries:

Corporate tax rate

The comparison with Rumania seems to produce a lot less clear picture than the comparison with Portugal. Rumania is doing better in some respect and Hungary does in some other.  I think it’ll be well worth doing some more comparison, probably also along some other lines, in a year or so.

%d bloggers like this: