Saxo Bank (Saxo Bank)
Markets  |  March 18, 2013 08:35:09

Hungary: squandering political majority


Steen Jakobsen, chief economist at Saxo Bank .

On Wednesday I after a great day with clients and the media left Budapest. Everyone was friendly, hospitable and most experienced traders.

In addition, Hungary is the only European state, besides which looks and Italy as well organized country.
 Maďarsko: Promrhaná politická většina
The current government was elected, as opposed to years of government communism and socialism. While people believed that the majority could change the then cabinet company. Today, however, it seems that most of the Hungarians regrets this option.Because as it is common elsewhere, even here failed to bring real change. Government goes through the weakening of central bank independence and constitutional changes. At best, its actions can be called a violation of the rule of law. In the worst case, but a comparison with autocratic rulers of the past.

The local economy is slowly falling apart. Additionally this year, also fell last good statistics when the transformed state budget surplus into a deficit, and seemed to other problems such as recession, high unemployment and persistent inflation.

From Budapest is becoming quite an expensive cityEven in comparison with Prague. And it can hardly be described as a success, so the government is busy manipulating the economy before elections in 2014. While the main problem is the foreign debt in foreign currency, that old familiar story with coverage mortgages Swiss francs. Here, while estimated that Hungary owes 8-11 billion. There is speculation that in this case the government goes for reserves from the central bank (which total roughly $ 36 billion) and loans through state banks swap for cheap mortgages in Hungarian Forint. And here we come to the bad loans with minimal provision and management.

The newly constituted committee on monetary policy was left with only one independentand (in this case, its) mandate expires in July. The central bank, ultimately, under pressure from the government nod to a significantly lower rate of the forint.
Yet it is manipulating the currency is considered a free step and a universal panacea. And even at the risk of discouraging foreign investors.

Hungary returned to the introduction of changes in the constitution, and forcing the European Union (nejpasivnějšího law enforcer in the world) that spurred the country to court, refusing to pay European subsidies. The political agenda is therefore changed so dramatically that an investor can not put another sticker forint than short.
To me, Hungary joined the ever-increasing number of currency manipulators. And as a political catalyst to break the 300 forints for one euro and tightening to the old highs at 325 forints per common European currency will be used to buy votes of voters through the redemption of loans denominated in Swiss francs.

In other words, Hungary is the only other country that I have visited and which has no mandate for real change. And even though they have a political majority. I think the reforms to enforce when Hungary proper crisis hits.

And now, as I like to say I'm optimistic period in the last 28 years. But it's worth it especially the fact that it's worse perhaps it can not be icon smile Maďarsko: Promrhaná politická většina .

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