April 6, 2009 8:55 pm

Hungarian Prime Minister Gyurcsány steps down - now what?

by Manuel Alvarez-Rivera, Puerto Rico

Last Saturday’s announcement by Hungarian Prime Minister Ferenc Gyurcsány that he was stepping down after almost five years as head of government may have come as a surprising turn of events, given that he had stubbornly clung to office despite his growing unpopularity over the course of the last three years. However, what turned out to be completely unexpected was the method he chose to end his mandate: a constructive vote of no-confidence in the National Assembly (Parliament) against his own government.

Under a constructive no-confidence motion, Parliament votes to replace a sitting prime minister with another person, rather than simply bring down the government. This mechanism was introduced in the former West Germany after World War II, in order to prevent a recurrence of the parliamentary deadlock that contributed to the demise of the 1919-33 Weimar Republic.

Constructive votes of no-confidence have been adopted by other European countries - Hungary being one of them - since they ensure cabinet stability by preventing Parliament from removing a government from office without having agreed upon a replacement; in Germany there has only been one successful constructive no-confidence motion, which took place in 1982 when the Bundestag voted to replace Chancellor Helmut Schmidt with Helmut Kohl, after the liberal Free Democratic Party - at the time the Social Democratic Party’s junior coalition partner - switched sides and formed an alliance with the Christian Democratic Union/Christian Social Union.

However, Gyurcsány plans to use the constructive vote of no-confidence to install another Socialist-led cabinet, and his government - which has become the third casualty of the global financial crisis, joining the ranks of Iceland and Latvia - appears to have resorted to this unusual maneuver for one simple reason: to avoid an early election.

Gyurcsány’s post-communist Hungarian Socialist Party (MSZP) won Hungary’s 2006 general election in coalition with the liberal Alliance of Free Democrats (SZDSZ), but in September of that year a leaked tape revealed that the prime minister had lied about the state of the Hungarian economy to secure re-election. Gyurcsány never recovered from this revelation, which triggered widespread protests that degenerated into rioting. Despite mounting calls for his resignation after the ruling parties suffered a heavy defeat in municipal elections held the following October, Gyurcsány refused to step down and subsequently won a vote of confidence in the National Assembly.

The Socialist-Liberal coalition government then went on to impose fees for visits to the doctor, hospital stays and university tuition, as part of an austerity package intended to reduce the country’s large budget deficit (the highest in the European Union as a percentage of GDP) and pave the way for Hungary’s adoption of the euro as its currency. However, Gyurcsány suffered yet another stinging defeat when the measures were soundly rejected by voters in a March 2008 referendum. Shortly thereafter, the Liberals left the government after Gyurcsány sacked the SZDSZ-appointed Health Minister; nonetheless, the Socialists remained in power as a minority government with external support from the Liberals. Meanwhile, Hungary’s already weak economy took a sharp turn to the worse, which left the country no choice but to take a billion international rescue package from the International Monetary Fund, the European Union and the World Bank.

Recent opinion polls have Hungary’s main opposition party, the right-of-center Fidesz-Hungarian Civic Union ahead of the Socialist Party by more than forty (40) points; not surprisingly, Fidesz continues to press for an early vote, while the Socialists are hoping that a new prime minister will turn the party’s fortunes around before a general election is held by the spring of 2010 at the latest. However, barring some completely unforeseen development it is highly unlikely the Socialists will be able to overcome Fidesz’s massive lead, although they could conceivably reduce it. At any rate, Fidesz’s large advantage would almost certainly be amplified by the complicated electoral system used to choose members of Hungary’s unicameral Parliament (reviewed in Elections to the Hungarian National Assembly), which combines French-style runoff voting in single-member constituencies with regional-level party-list proportional representation and a cumbersome top-up national list.

By resorting to a constructive vote of no-confidence, which will be submitted to the National Assembly next April 6 (with a vote scheduled for April 14), Gyurcsány has left President László Sólyom out of the process. Hungary’s head of state has made it clear he favors holding an early election, noting that the new prime minister would be in office for at most one year before the next general election would have to be held; nonetheless, he cannot intervene unless Gyurcsány actually resigns.

In the meantime, the Socialist Party - still chaired by Gyurcsány - has proposed three candidates for prime minister: former National Bank governor György Surányi, former president of the Hungarian Academy of Sciences Ferenc Glatz, and András Vértes, president of the GKI economic institute. The Liberals have already indicated their willingness to support Surányi; poll findings suggest SZDSZ could be wiped out in the next election, so the party has little appetite for an early vote. The Socialists have also been courting the moderately conservative Hungarian Democratic Forum (MDF), whose votes could prove to be crucial if they can’t secure support from SZDSZ.

While an early general election remains somewhat unlikely, it should be noted that voters will still go to the polls next June to choose Hungary’s representatives in the European Parliament, and the outcome of that poll could be indicative of what lies ahead.

Update

The Hungarian Socialist Party and the Alliance of Free Democrats reached an agreement on Monday, March 30 to support the nomination of Economy Minister Gordon Bajnai for prime minister in the upcoming constructive vote of no-confidence. In turn, Bajnai will name non-party experts to key cabinet ministries, as proposed by SZDSZ.

Although the Socialists and the Liberals had previously agreed to elect former Central Bank governor György Surányi as prime minister, he had indicated he would serve as head of government only if he was supported by all parliamentary parties; however, the opposition Fidesz-Hungarian Civic Union made it clear that it would not back Surányi, and as a result he declined the nomination.

In a related development, outgoing Prime Minister Ferenc Gyurcsány has also resigned as chairman of the Socialist Party.

April 6, 2009 8:55 pm

Moody's Cuts Slovakia's Outlook

by Edward Hugh: Barcelona

Now here’s an interesting story. Slovakia has just joined the eurozone, a status most of the rest of the EU’s East European members would badly like to attain. But just to remind us that joining the zone, while offering considerable support and protection in times of trouble, is no panacea, Moody’s Investors Service have last Friday cut their outlook on Slovakia's government bonds rating (to stable from positive, implying their is no likelihood of an upgrade in the near future, a possibility which was implicit in the earlier positive outlook).

Moody’s justify their decision on the grounds that future investment in Slovakia is at risk due to a combination of factors: the recession in the euro-region, the country's dependence on the car industry and its falling competitiveness compared with other eastern European nations, many of whose currencies have fallen sharply during the crisis. In fact the Slovak Finance Ministry forecast only last Friday that foreign direct investment into Slovakia will be much lower this year than originally expected - with the Minister stating he expected a decline in FDI to 0.6 percent of gross domestic product in 2009, compared with a 2.7 percent forecast before the economic and financial crisis hit the country.

The worrying thing for me about all this, is not the immediate short term pressure which Slovakia will undoubtedly be under due to the regional crisis, but rather the loss of competitiveness issue, becuase it is ringing bells in my head about what previously happened in the case of Portugal (see my lengthy post on this here). The danger is that eurozone membership gets to be seen as a target you strive to achieve, and then relax into once it has been attained. The Southern Europe experience generally is not encouraging in this regard, and as they are finding out now, the hardest work begins after adopting the euro, since there is no currency left to devalue should loss of competitiveness prove severe.

So I really do wish Jean Claude Trichet would exercise some of that famous “vigilance” on what to do about this issue too, since the long term future of the currency zone undoubtedly depends on getting this one right.

In fact investors are already positioning themselves for a future weakening in the country’s creditworthiness. Slovak five-year credit default swaps have been falling back recently, after hitting an all time high of 133.1 earlier in the month, according to CMA Datavision prices. (A basis point on a credit-default swap contract protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year).

But the spread on Slovak government bonds has also been rising (see chart below), and the spread with the 10 year government bond vis a vis the German equivalent was 136.7 on Friday. The chart presents a pretty preoccupying picture, since while bond spreads have all been under pressure since the onset of last October’s crisis, it is unusual to see investors perceiving credit risk rising in a country which has only just joined the “gold-digger” club. And Friday’s warning shot from Moody’s needs to be understood in this context.

The country has seen a huge increase in its car manufacturing capacity in recent years, fueling double-digit economic growth in the quarters before the financial crisis, but amid waning western European demand for Slovak-made cars - including brands Volkswagen, Audi and Peugeot - the country now faces a stalling economy and rising unemployment. Slovak unemployment data for February showed the jobless rate reaching its highest level in more than two years, rising to 9.7% from 9% in January.

Over 75% of the country’s EUR332 million stimulus has now been spent, largely giving tax breaks to low-wage earners to encourage them to reenter the work force, and with a fiscal deficit ceiling of 3% of GDP to defend, spending cuts rather than stimulus cannot be ruled out, since VAT returns are falling fast.

So while Slovakia’s total public debt only equals around 30% of GDP, pressure on the spread could increase if the country is forced to increase its borrowing. Slovakia only expects to need EUR 5 billion in borrowing this year, and EUR 2.5 billion has already been secured in the first few months of the year.

Strong Economic Slowdown Underway

The Slovak economy slowed further in the fourth quarter of last year with real GDP growing by 2.5 percent year on year. Whole year GDP for 2008 was 6.4 percent with total GDP reaching €67.33 billion. Economic growth had been 6.6 percent in the third quarter, and while there is no official data for seasonally adjusted quarter on quarter growth, I estimate the economy may well have contracted by around 1.5%.

Part of the problem is the drop in export demand for Slovakia’s car driven economy, and the country posted a trade deficit in January, as drop in demand was made worse by the suspension of gas deliveries from Russia. Exports slumped 29.9 percent on the year in January, the fourth consecutive monthly decline, and the biggest drop at least since 2006 when the statistics office began compiling data under the current methodology. Imports were down 22.4 percent.

The trade deficit totalled 279.5 million euros (1 million), following a revised deficit of 341.6 million euros in December. Slovakia posted a trade surplus of 42.3 million euros in January 2008.

The drop in the demand for exports has obviously hit industrial production which decreased by 27 % year-on-year in January reach the biggest drop since the statistics office began compiling data in 1999. Manufacturing output fell 32,7 %.

Construction output was also down sharply in January, falling by 25.6% year on year, although seasonal factors can obviously be playing a part here.

Slovak retail sales fell by 3.3% year on year and totalled €1.3bn in January 2009. The largest contributing factor to this overall decrease was from the category of 'other household goods in specialised shops' retail which dropped by 24%. In addition sales of fuels 'in specialised shops' retail (15.6%) and the category of 'retail sales realised not in stores' (4.8%) experienced significant drops. Retail sales of electronics fell sharply (42.5%), and drops were also witnessed in the categories of: 'food in specialised shops' (15.8%); recreation and entertainment (12.7%); other goods in specialised shops retail (5.9%); and retail in non-specialised shops (4.5%).

Worry Now, So As Not To Pay The Price Later

In the short term the Moody’s decsion really doesn’t mean that much, since Slovakia only had 28.6% (of GDP) in gross debt in 2008, but it is the mid and longer term dynamic we need to think about. Slovakia is about to issue a 2-year zero-coupon bond for an unspecified amount today, but the government debt agency is unlikely to have problems. However, as we have already seen in the cases of Ireland, Greece, Portugal and Spain, simply becoming a member of the eurozone is not a guarantee of anything in economic performance terms (although it does provide almost automatic protection from short term balance of payments crises). So it is important that Slovakia takes the appropriate measures to restore competitiveness now, otherwise we could see the horrifying spectacle of the eurozone’s newest member steadily moving over to stand alongside countries like Greece, hovering around near the exit door, struggling desperately to avoid being rocketed out.

April 6, 2009 8:55 pm

Two Graphs That Tell It All On Spain

by Edward Hugh : Barcelona

First, the one year Euribor reference rate, which has been falling since the ECB started lowering interest rates in the autumn of last year.

And secondly the chart showing the average rate of interest charged by Spanish banks on new mortgages, which as we can see, has been rising steadily since December 2007.

The average interest rate charged by Spanish banks for new mortgages in January 2009 was 5.64%, meaning that the average cost of a new mortgage had gone up by 10.2% over January 2008 (when the rate was 5.1%), and by 1.1% when compared with December 2008. Meanwhile the Euribor reference rate looks set to close this month at all time record lows of 1.91%. In January - the last month for which we have data on mortgage lending - the Euribor rate was 2.27%.

The reasons lying behind this upward movement in Spanish mortgages are twofold. On the one hand the Spanish banks are having increasing difficulty raising finance due to their perceived risk level, and on the other they themselves have have been forced to raise the risk premium they charge to clients due to the rising levels of non performing mortgages they have on their books.

Basically what this means is that the ECB policy isn’t working in Spain, and that despite the massive quantities of liquidity provided, the monetary conditions continue to tighten, and doubly so give that the real value of the rates charged (ie the inflation adjusted value) keeps rising automatically as inflation falls.

Mortgage lending in Spain more than halved in January while the number of homes started in the fourth quarter dropped an annualy 62 percent. The 51.7 percent year on year fall in mortgage lending for urban dwellings was the steepest in 12 straight months of decline.

House sales fell in January by 38.6 percent, figures published earlier this month showed, and Housing Ministry data showed the foundations of only 40,737 homes were laid in the fourth quarter - 62 percent fewer than in the fourth quarter of 2007, and 27 percent down on the preceding quarter. During 2008 as a whole, Spanish builders started 360,044 homes - a 41.5 percent fall on 2008. On the other hand 633,228 homes were completed last year, reflecting the optimist which prevailed in 2006/07 when the buildings were started at the height of the boom in 2006-07.

Spain has a supply overhang estimated at almost any number you like over 1 million unsold homes (the minimum estimate, and no one really knows), or more than three times the number of new households created each year in Spain.

The number of mortgages offered has crashed as banks restrict credit given forecasts non-performing loans will reach around 9 percent next year, while unemployment is now likely to rise above 4.5 million by years end, up from the current 3.5 million.

As I indicated in this post yesterday, we are moving from a situation where people the banks were afraid to lend, to one where people become increasingly afraid to borrow (since they don't know when they will lose their jobs, or even their homes), with Spain’s citizens becoming more and more reluctant to take on additional debt due to fears they could be caught in the next round of job losses.

As a result January mortgage lending falling to 6.47 billion euros, while the rate of new bank lending to households dropped to 3.9% year on year.

Spanish debt defaults leapt 197 percent in 2008, with construction and property firms accounting for 4 of every 10 failures. The number of firms and individuals that filed for administration rose to 2,902, the highest level on record, according to Spain’s National Statistics Institute. Also bad loans at Spanish banks rose by 15.3 percent in January, the sharpest monthly increase since property developer Martinsa Fadesa filed for administration in July. Bad loans rose more than 9 billion euros to 68.18 billion in January compared with an average monthly rise in the last six months of around 5 billion euros.

The non-performing loans (NPL) ratio for all institutions was at 3.8 percent in January, up from 3.3 percent in December, with rates among savings banks the highest at 4.45 percent compared with 3.79 percent a month earlier. Commercial banks had an NPL ratio of 3.17 percent, up from 2.81 percent. In fact Spain’s financial institutions have seen NPLs more than quadruple in the last 12 months from 16.23 billion euros in January 2008.

Spain’s savings banks, responsible for about half the country’s loans and the most exposed to the property market downturn, could see NPLs rise to 9 percent by 2010, according to the saving banks association.

What To Do With The Bad Banks?

As a result of all this a furious public row (unusual in Spain) has broken out over what to do with the broken banks.

The Spanish Economy Minister Pedro Solbes has said the government is prepared to recapitalise healthy banks but suggested that those with serious solvency problems should seek a merger rather than look for state aid.

“In cases where banks have acted correctly in relation to solvency and the health of their accounts…logically they could receive support,” Solbes said in a speech to an economic conference in Madrid. “Banks that are unable to remain solvent and clean up their accounts should cease to be players in the financial system so they don’t generate distortions in the public sector.”

What he has in mind is that the troubled banks should turn to Spain’s privately-funded Deposit Guarantee Fund (FGD) should they need capital injections to make tie-ups viable. However, the insurance fund holds only 7.2 billion euros in bank contributions, and since this is orders of magnitude less than the size of the problem it is obvious the government will end up having to putting money into the recapitalisation process, and especially into the Savings Bank sector, since the Spanish press has been reporting that 20 of Spain’s 45 savings banks are now considering mergers. And it is obviously only a matter of time before one of the mid-sized Spanish banks like Popular, Sabadell or Banesto joins the consolidation process.

Clearly many of those most directly involved in the banking industry are laothe to accept the Solbes formula, since wuite simply they cannot afford it. And this was made pretty clear by Francisco Gonzalez, chairman of Spain’s second largest bank BBVA, when he pointed out last week that nationalisation of the bad banks was the only realistic way forward.

“When a bank shows signs of extreme weakness the authorities should take control of it, which implies removing the directors and reducing or eliminating share capital in the institution,” Gonzalez said at a conference in Madrid.Governments should then appoint a new team to separate toxic assets from healthy ones and quarantine them in publicly controlled funds, the chairman said, advocating a level of state intervention not yet seen in Spain. “Then the bank would be privatised again through a transparent sale to private companies,” he said, without making specific reference to Spanish banks.

Two Spanish regional savings banks have already reached a preliminary merger deal - Unicaja, based in Spain’s southern Andalucia region, and the smaller Caja Castilla La Mancha (CCM), located in the central-southern province of the same name - following talks which were carefully brokered by the Bank of Spain. Clearly this merger willl need to be followed by a capital injection from Spain’s Deposit Guarantee Fund to help them clean up the “troubled assets” which will naturally be found in the combined accounts of the new bank which emerges. Many other such regional caja “weddings” are obviously soon to follow. But the big question is, where will all the financing come from? It is pretty clear that the problem which is building up is bigger than Spain can handle alone, and finance (not loans) from the European Union will be needed, with centrally backed EU Bonds being the most likely mechanism with which to fund the injection.

April 6, 2009 8:55 pm

Of Raising Rates and the Stakes

By Claus Vistesen: Copenhagen

WHO is Raising rates? The immediate answer to this question would seem to be; not many. On the contrary, most major central banks and now also their peers in the emerging world seem to have come to the conclusion that to counter the crisis, they need to apply both conventional as well as unconventional monetary policy measures. Especially, among the major central banks quantitative easing is the name of the game with only the ECB still clinging on to the fig leave. So, I ask you again who is raising rates?

Well, it is not yet a done deal but to show what it means to be stuck between a rock and a hard place it would serve us well to have look at Hungary which, even among its CEE comrades, look comparatively battered and bruised. To make matters worse, Hungary received another blow to the kidneys as Prime Minister Ferenc Gyurcsany announced on Saturday that he was resigning his position. On the face of it, it is difficult to blame the guy since with Hungary being the first economy in Eastern Europe to secure a loan from the IMF to the tune of 20 million euros the corresponding budgetary cuts demanded look almost cartoonishly unrealistic relative to the economic situation.

Even as he presided over a reduction of the budget deficit from 9.2 percent of GDP in 2006 to about 3.3 percent last year, Gyurcsany was criticized in February by some opposition parties and the central bank for his proposed 900 billion forint (.1 billion) tax shuffle to boost growth. Critics said more spending cuts were needed to stabilize the economy in the short run and boost growth in the long run.

"The government no longer had any room to maneuver," Gyorgy Barcza, chief economist at KBC NV's Hungarian unit, said yesterday. "Without new measures, the budget deficit would be more than the target."Failure to continue austerity measures could result in a downgrade of the country's credit rating, David Heslam, Director of Fitch Ratings' sovereign team, said in a statement today. The agency rates Hungary's debt BBB, the second-lowest investment grade, with a negative outlook.

The Socialist Party is less than half as popular as its biggest rival. Backing for the government started slipping when it introduced austerity measures to close a budget gap in 2006. The resulting economic decline was worsened by the global crisis, forcing the country to seek international aid. The party had 23 percent support last month, the lowest in 10 years, compared with 62 percent for the largest opposition party, Fidesz, pollster Median said on its Web site on March 18. Gyurcsany's popularity fell to 18 percent, making him the most unpopular premier since communism. The poll of 1,200 people has a margin of error of 2 to 6 percentage points.

As Edward put it recently, it is difficult not to note a irrevocable pattern in the (unfortunate) countries subject to IMF intervention whereby they collapse under the yoke of the measures demanded in trade for the loan. Of course, we should not only shoot at the IMF since in the context of e.g. the EU one wonders the extent to which western Europe can just idly watch a country such as Hungary spiral into the abyss without extending some kind of bilateral help. Note in passing here that Gyurcsany’s resignation marks the second case of government jitters in an IMF supported economy. The second would be Latvia where the government resigned recently.

As it could have been expected the market was none to happy about the PM’s resignation which brings us to question of raising those rates. Consider consequently that the Forint which have already been pounded relative to the Euro completed a 2.6 percent drop to 308.62 against the euro (click on image for better viewing).

Consequently and following the Prime Minister’s resignation the central bank was forced to move with comments that all tools would be deployed to avoid the Forint depreciation to spiral out of control. Now, I would not want to contradict myself here and let me very clear then; I think that a weak Forint is a fundamental part of whatever future Hungary may have but in the near term and with the rating agencies thoroughly marking the outlook for Hungary with the negative label it is a tightrope walk for policy makers not least because we still have the unresolved issue of translation risk whereby liabilities are denominated in foreign currency (mostly swiss francs though) and assets in Forints. Conclusively, it is difficult to see why, given the economic reality, the central bank would want to raise rates, but it is also difficult not to concur that they need to do something with respect to ensuring some kind of order vis-à-vis Hungary’s stakeholders not to mention investors. Perhaps this duality more than anything shows us the almost impossible situation Hungary now finds itself in.

Raising the Stakes?

Meanwhile and moving across the pond for a minute it appears that US authorities have just raised the stakes in the dramatic jeux d’horrible that is the unfolding economic crisis. Thus and following the Fed’s shock and awe treatment of the markets last week as Bernanke rolled out measures to buy treasuries (presumably) in the primary market we got the long awaited details in Timothy Geithner’s plan on how to deal with those toxic assets and consequently how to restore confidence in markets so that we just might go back to normal whatever that is these days.

Quite naturally, the plan (see also here and here) which includes most notably a public-private partnership scheme designed to take care of about 1 trillion USD worth of toxic asset has been parsed by many of the most astute economic pundits. From the horses own mouth this is how it is described;

The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.

The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments. These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.

Third, private-sector purchasers will establish the value of the loans and securities purchased under the program, which will protect the government from overpaying for these assets.

The new Public-Private Investment Program will initially provide financing for 0 billion with the potential to expand up to trillion over time, which is a substantial share of real-estate related assets originated before the recession that are now clogging our financial system. Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets. The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury.

This program to address legacy loans and securities is part of an overall strategy to resolve the crisis as quickly and effectively as possible at least cost to the taxpayer. The Public-Private Investment Program is better for the taxpayer than having the government alone directly purchase the assets from banks that are still operating and assume a larger share of the losses. Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets. Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience.

Macro Man offers nothing but a sigh, Paul Krugman is in despair, Calculated Risk also seems skeptical that this is the right approach and finally Yves Smith also chimes in with a “thumbs down”. I tend to agree with the skeptics and even though I have not really studied the proposal in detail the principal problem for me is that the government is putting up money for assets of which some are surely worthless and others may be work significantly less than current book value. In this way, it does nothing to solve the underlying issue and the risk for the taxpayer seems substantial.

Ah well, perhaps I and the rest of the gang above are just party poopers. What is certain is that the markets liked it and in fact Macro Man may have hit the proverbial nail on the head when he recently, and once again, evoked March Madness (click on image for better viewing).

Of course, if there ever was something resembling a sucker rally it is this but so far things look as they are working. Also we cannot rule out that this initiative may just be what it takes to allow these assets to be marked to (a credible) market which would mean that we had taken one important step in moving forward. One thing which I do like by the activism in the US is that it is just that; activist which flies in the face of ostrich attitude prevailing on this side of the pond.

Rates and Stakes

So, what do Hungary and the US have in common here? Except being in the midst of their worst economic crisis of, arguably, all time not a whole lot I guess. However, they are both being forced to move into uncharted waters when it comes to fighting off the current mess in the global economy and her financial system. It will be very interesting to see whether raising rates as well as the stakes will bring forth the intended effects.