“According to several reports, a spokesman for the new prime minister of Hungary, a member of the European Union that does not use the euro currency, said that talk of a Hungarian default is not “an exaggeration.”
Hungary truly is a welfare state. It’s a nation of 10 million that has three million pensioners. Besides money for regular retirees, the government gives special benefits to accident victims, the disabled, military and police veterans, mayors, widows, farmers, miners and “excellent and recognized” artists. The average Hungarian retires at 58, and just 14% of Hungarians between 60 and 64 are working, compared with more than half of Americans. Hungary has run fiscal deficits for years to pay for social programs, and its annual tab for pensions now surpasses 10% of its gross domestic product.
NEW YORK (CNNMoney.com) — Just when we all got used to referring to Europe’s fiscal crisis with the tidy little acronym of the PIIGS, another European country is angling for admittance into the bad debt club.
Stocks tumbled Friday, and while a big reason for that was the disappointing jobs report, futures were already lower before the jobs numbers came out because of new concerns about Hungary.
According to several reports, a spokesman for the new prime minister of Hungary, a member of the European Union that does not use the euro currency, said that talk of a Hungarian default is not “an exaggeration”
Those comments caused Hungary’s currency, the forint, to plunge and also led to another sell-off in the euro. The euro dipped below $1.20 against the dollar, another 4-year low and an important technical milestone on what some experts think is a road to eventual dollar parity.
“The euro has been moving lower and it will continue doing so. The question now is the pace of the decline, not whether it will decline,” said Vassili Serebriakov, currency strategist with Wells Fargo in New York. Source CNN money
Greece, Spain, Hungary; who is next? I think the message the world is sending to “communist China” is don’t count on our not having an industrial base to sustain your status-quo. They better start developing their own domestic consumer market because the West’s dependence on “Cheap goods” is not a guarantee to keep the Chinese “export” economy going at the rate they envisioned.
Stop telling yourself pipe-dreams communist, China! Hungary is getting caught in the domino effect that started with Greece and surely will continue. It is time for the yuan to appreciate because communist China, you’re going to need to start counting on yourselves for growth and not the rest of the world.
How many more nations did global financiers dupe into not taxing their populations enough for the programs they offered because their ability to take on debt was judged by the financial debt experts, the rating agencies, to be “just fine”?
What about nations where governments-of-the-day have deliberately reduced taxes on the wealthiest supposedly to be globally competitive with others who are reducing taxes on the rich to be “globally competitive?” This puts the nation into a financial pinch by reducing the payment of existing debt. Indeed, when circumstances like financial disaster are created by the inconsiderate it leads to the need to take on more national debt than would have been required if the taxes had stayed where they were. This extra debt is easy to sell because the current generation gets the benefit that the future generations have to pay for.
Hungary has bad financial past
For those of you who know anything about Hungarian politics this is nothing less than paying out a cash bonus for the last 2 terms (as of 2008) of political and fiscal irresponsibility by the coalition in power, the MSZP and SZDSZ parties. Endless accounts of corrupt officials using public funds for personal gains are found in the Hungarian daily press, meanwhile the average Hungarian struggles to pay for the basics of daily life, paying the bills and putting food on the table. It is disgusting to see that these thieves are being supported and rewarded by the international community. A bailout, or a “structural adjustment” as the IMF likes to call it, may be required due to the circumstances but there must be a level of accountability attached to it, at a minimum the government should be dissolved and elections held to provide a better chance that a responsible government would not just create a new scheme to tuck this money away into their pockets like the billions they have already pocketed.
The inconsiderate have a game plan. They use deceptive messages to make it sound like you will be the beneficiary. Most people will likely see little real benefit, only that warm glow of thinking they benefited significantly. The inconsiderate have a competitive advantage. They can only be deterred by referees successfully significantly penalizing the inconsiderate. Restraining the referees to allow the maximum free flow of the game just gives the inconsiderate more advantage. That’s acceptable in sports, it’s just entertainment, but that lack of restriction on the action of the inconsiderate cannot be transferred in to the real world of socio-economic-environmental issues.
“Structural Reforms” are a crony capitalist euphemism for the merciless gutting of social programs, and the subsequent appropriating and diversion of the resulting wealth into liquidity [bail out loot] for the use of stock market gangsters. Compliant henchmen within the corporate political class are set to work dismantling the state and selling off public assets, rendering entire nations onto transnational conglomerate balance sheets, and citizens into slave labour within their own countries, all for the benefit of a few international crooks and a system that requires perpetual destructive growth at any cost.
The continuous series of economic woes that have battered one country after another into submission are purposefully designed to accelerate processes that have heretofore been entrusted to laggard back pocket politicians, those who have demonstrated as much ineptitude at accomplishing the tasks set before them by their corporatist masters as they have in representing the interests of the people. Profit waits for no one. Our turn is coming as well. We will see’ reform’ thrust upon us soon enough in order to maintain market competitiveness with other regions around the world that have undergone the procedure.
Countries and financial institutions scramble for cash when they realize that Nations will not repay loans, to shore up reserves and amass cash in order service there own debts.
We’re not talking about $100 Million forgiven to a 3rd world country in Africa, we’re talking potentially about more debt collectively in these countries like Spain, Portugal, Ireland, Hungary, and so on than exists in hard currency OR in the ability of the World Bank to prop up. The reason for the nervousness is because nobody can put a figure on the damage or extent of the potential damage to the worlds finances that globalists have done to Global markets and valuations. Indeed, Europe is shuttering under the weight of debt, next will be Russia and central Asia, China, Korea, Japan and Taiwan.
This thing has to run its’ coarse over the next 3-5 years and coming out of it we will have determined what the “New Normal” will be. You’re kidding yourself if you believe this will blow over and everyone will go back to lives as usual. Money in the form of debt financing will be very hard to come by which means it will effect everyone’s ability to qualify for mortgages, car loans and higher education.
Mass default is the inevitable endgame of a credit based monetary system that accumulates debt in an exponential manner. It is a ponzi scheme. Once it is recognized as a ponzi scheme, it collapses nearly immediately.
The Keynesians and Monetarists were wrong. Their experiments with fiat and credit based money have failed. And the Austrians have been telling us exactly how it would happen for nearly 100 years.