What the hell is going on in Hungary?

[randomness]

I've been meaning to ask this question for a few weeks now, but I've been waiting for more information to provide clarity. That clarity not being forthcoming I'm now asking anyhow.

http://fistfulofeuros.net/afoe/from-here-to-eternity-hungarian-style/

http://creditbubblebath.blogspot.com/2012/01/hungarian-hot-pot.html

(the author of the second piece comments in the first:

I don’t see a constructive outcome without Orban willfully sacrificing himself in the national interest by stepping aside. If he wants to stay put he has the ability to so and could always tap the FX reserves for short term funds. I think there is a pretty meaningful chance that this gets bungled messily. Trusting in politicians to do the right thing has been a dangerous belief to hold for some time now…

Crazy.

Comments

[achinhibitor.livejournal.com]

I can see:

- a deterioration of the competitiveness of Hungarian workers
- the ending of a consumption-driven boom
- the government attempting to goose up consumption through various tricks to keep the economy going
- lots of people borrowing in CHF (esp. mortgages), providing a huge barrier to devaluing the currency as a way to restore competitiveness
- a semi-authoritarian government applying pressure on the independence of elections, the press, and the central bank
- something called the "final repayment of credits" law, which is tough on foreign investors
- long-term risk of insolvency of the state, starting to become short-term risk of illiquidity
- some sort of shouting match between the Prime Minister and the EU, IMF, etc., etc., probably revolving around the Prime Minister won't follow any outsider's orders regarding measures that would sustain his popularity with the voters
- the revenge of the markets on the government bonds
- the Prime Minister's "oh, shit" moment, when he discovers that when you need to borrow, "he who has the gold makes the rules"

[r-ness.livejournal.com]

the Prime Minister's "oh, shit" moment, when he discovers that when you need to borrow, "he who has the gold makes the rules"

Worse yet, apparently the Prime Minister started out by telling the IMF to buzz off. This turned out to be a bad idea, now that he needs their money and all.

From that article in A Fistful of Euros:

Leaving aside the long list of recent grievances, it was Hungary who decided to walk away from the IMF in the first place, suggesting it could manage quite well on its own, thank you very much, so the Washington based lender is now hardly likely to welcome the country back as some sort of long lost prodigal son.