“Hungary knows what it wants”

This is the title Fidesz spin doctors gave to the speech of Viktor Orbán delivered on October 13 in which the Hungarian prime minister outlined his ideas about levying pretty heavy taxes, which he called "crisis taxes," on mostly foreign businesses. In this speech Orbán explained to his audience that "so-called analysts" always expect something new after each important date. A change in the government's policy. For example, analysts, especially foreign ones, were certain that after the local elections were over the government would do something, announce something, that would calm the nerves of foreign investors. But, said Orbán, his government is steady. It never wavers. He always says what he thinks and he sticks with his ideas which he translates into action.

This is a rather charitable description of what Fidesz was saying before and after the elections. Before the elections he said mighty little about its future policies. It was clear that Orbán's plans definitely included some kind of tax cut to be paid for by raising the deficit. However, he couldn't convince the European Union about the efficacy of his plan. After all, it was a miracle that Hungary managed to decrease the deficit from around 10-11% to 3.8% in three years. Now, going back to a higher deficit, especially after the Greek crisis, was not to the liking of the EU.

At this point Orbán had two choices. He could either continue on the course already set out by the Bajnai government, which by the way also included a very substantial tax cut, or he could get money from somewhere else to cover the cost of his tax cuts, which heavily favor the well-to-do. That's when he turned to levying extra taxes on banks and foreign-owned businesses. The foreign reaction was swift and negative. The Hungarian currency, the forint, that in earlier weeks had become a great deal stronger suddenly started to weaken, and analysts suggested that the government's decision to tax businesses showed that they were "shirking the opportunity to do proper and further reaching reforms." According to Capital Economics of London, the Hungarian government "could have turned their back on populist measures and taken the painful steps that will improve the sustainability of public finances."

The new taxes will raise 70 billion forints from the energy industry, 61 billion forints from telecommunications, and 30 billion forints from retailers each year. The government will also withhold transfers of social security payments to private pension funds for 14 months, saving 30 billion forints a month from November 1 on. The real plan, not quite openly revealed, is to nationalize about 3 million people's savings in these private funds and submerge them in the general budget.

These measures may not be enough to convince credit evaluators that Hungary's economy is on a new track. Morgan Stanley's analysts in London, for example, think that "neither the rating agencies nor the central bank will be impressed with measures which are anti-growth and temporary."

Stefan Wagstyl of the Financial Times wrote an article two days after Viktor Orbán announced his economic plans, the title of which was "Hungary: chilling times for business." Moreover, he questioned "how Orbán can build a credible long-term programme on the basis of such arbitrary actions." Of course, the question is rhetorical. He knows that one can't. He also noted that "the new taxes on the telecom, energy and retail sectors … are conveniently, mostly foreign owned." Another analyst, Preston Keat (Eurasia Group) thinks that this move "will hurt perceptions about Hungary's investment climate in general, and could have knock-on effects on growth and employment." Goldman Sachs's analysis is very similar. In addition, they formed the opinion that "because all of the proposed measures are temporary, fundamental fiscal problems are likely to re-emerge eventually, with negative consequences for fiscal sustainability and risk premia required on Hungarian debt." Capital Economics, another think tank, wrote that "the country is still walking a fiscal tightrope."

Yesterday the Wall Street Journal came out with an article by Margit Feher entitled "Hungary Still Lacks a Coherent Economic Policy." According to Feher, Orbán's parliamentary speech outlining the new government's second economic action plan "was a disappointment. It failed to prove that Hungary has a coherent economic policy for the coming years, with well thought-out plans for the most pressing fiscal issues." However, the country is in dire need of such a policy. Because Hungary refused a precautionary loan from the IMF, the country "is left to its own devices to ensure its financing from markets." A credible economic policy would be necessary to convince investors to put their money into Hungarian assets.

The new taxes will wipe out half of the energy, telecom, and retail sectors' profits. Even Orbán admitted that this is a "bad message" to investors. But he added that he is aiming at an economic growth of 4% to 6% in three years–above most economists' projections.

The Wall Street Journal allows comments. Most of the comments were reasoned and reasonable. But then came "justice," who claimed in very poor English that "Margit Feher is nothing but an anti-Hungarian evil unfortunately there are lots of them living abroad and painting false untrue picture about Mr. Orban and his cabinet. Viktor Orban is a top man & a top stateman. He’s the only person who can get Hungary out of this unpleasant situation where the previous lefty-liberal monsters put us! The vast majority of the Hungarian nation are behind Orbán. That’s why all these liberal-lefty-ex-communists hating him tying to undermine him discrediting him in foreign papers. GOD MAY GRANT US A BETTER TOMORROW & HUNGARY WILL FIND ITS OLD GLORY."

I wish that those who support Viktor Orbán would be just a little bit more objective and knowledgable. As for finding Hungary's old glory, all in capital letters, this is somewhat frightening. Which old glory does "justice" have in mind? Fifteenth century? The military glory of Matthias Corvinus perhaps? Instead of glory, I think that a well-oiled public administration and a functioning economy would be much more useful in the twenty-first century.

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Paul
Guest

So that’s where Szilárd went!
Excellent post, Éva, welcome back.

Matt L
Guest

Oh. I think the old glory that “justice” was referring to might be that quiet patch of history between the Treaty of Szatmar and the War of the Austrian Succession. Taxes were low, the Austrians didn’t ask for much, the gentry could recline on their collective grouch couch and do what they pleased to their peasants.

Paul
Guest

Incidently, did anyone listen to/watch the budget speech here in the UK today?
Staggering stuff.
I now have a lunatic right-wing government in both my homes!

Kormos
Guest
A quote for those, who still read Hungarian: “2010. október 24-én, vasárnap 15 órától tartják az 1950 és 1953 között kitelepítettek és kényszermunkások emlékére készített emlékmű avatási ünnepségét Budapesten, a Szarvas téren (I. kerület, Attila út és Krisztina krt. közötti füves park). A rendezvényen a Kormány nevében ünnepi beszédet mond dr. Rétvári Bence a Közigazgatási és Igazságügyi Minisztérium parlamenti államtitkára, felszólal Eötvös Péter, a Hortobágyi Kényszermunkatáborokba Elhurcoltak Egyesületének elnöke; a budapesti kitelepítettek nevében Széchenyi Kinga. Az üvegbeton emlékművet Széri-Varga Géza és Széri-Varga Zoltán készítette. A szobor felállításának kezdeményezője a Hortobágyi Kényszermunkatáborokba Elhurcoltak Egyesülete volt. Az emlékmű felállítására a Fővárosi Közgyűlés öt-párti egyetértéssel szavazott meg 30 millió forintot. A deportálások hatvan éve, 1950 júniusában kezdődtek meg. A kommunista terror szisztematikus tisztogatásai ekkor érték el tetőpontjukat. A vezetés által közrendre vélhetőleg káros elemeknek tituláltakat bírói eljárás nélkül, álmukban rájuk törve, az éjszaka közepén hurcolták el. A célzott támadás a középréteget érintette igazán, de az sem menekült, akinek volt egy rosszakarója, vagy akinek házára a felsőbb vezetés szemet vetett. Az elhurcolások családok ezreinek életét törték keresztbe több évtizedre, hiszen aki 1953-ban amnesztiával szabadult, az megbélyegzetté vált. Szabadulás után a rendszer tiltotta, hogy múltjukról beszéljenek. Hortobágyi deportálások (1950-1953) 1950. június 23-án éjjelétől kezdődően az… Read more »
Kormos
Guest

Oh, I am sorry!
“Socialist”…what am I saying!?

Alias3T
Guest

“where would you get the money to counteract eight years of socialist corruption and mismanagement?”
I’m not sure; maybe I’d give a public contract to transport some paintings to an exhibition in Istanbul to a company set up just a few months ago by a deputy state secretary in charge of authorising the loans of items of national patrimony?
http://index.hu/kultur/klassz/2010/10/20/feleves_ceg_szallitotta_isztambulba_a_csontvary-kepeket/
Or maybe I’d issue a Ft5n forint tender to compile aerial photography charts of Hungary for the second time in two years (though last time it cost just Ft160m), designing the tender document so that the only company that can win it is the one at which two state secretaries in the relevant ministry previously worked?
http://index.hu/belfold/2010/10/20/otmilliardert_fenykepezteti_a_kormanyzat_az_orszagot/
Or I could paste some documents about the 1950s on a blog, in the belief that this will distract from the adolescent nastiness of the government in power?
A tip: don’t transfer your pension back into the social security system. He’s lying.

frank
Guest

Paul, thank you for your informative intellectual analysis. No wonder Hungarians don’t want to listen to someone like you.
The writer of this blog wants the Hungarian government to reduce spending. You seem to be agreeing with her.In addition, you argue that Hungarians are “overemployed”.
Now, the British government does exactly what you argued for; reduce the size of civil service and reduce spending. Well, this isn’t good either.
Instead of making sarcastic remarks please confine yourself to presenting some intellectual arguments no matter how hard it might be for you.

Eva S. Balogh
Guest

Kormos: “A quote for those, who still read Hungarian”
Most people who read this blog never could read Hungarian. Therefore, if you quote Hungarian texts, please take the trouble and translate them.

Eva S. Balogh
Guest

Paul asked whether anyone of us saw what’s going on in Britain. Here is what one could see in the United States on PBS last night:
http://www.pbs.org/newshour/video/module.html?s=news01s4491qfaa

Odin's Lost eye
Guest
Frank – You say that ** “Now, the British government does exactly what you argued for; reduce the size of civil service and reduce spending.” **. They have had to. The past administration broke one of the Golden Rules. ‘Scunner Broone’ (I use the Doric) was borrowing money to pay the interest on previous loans. If our good hostess will point you towards a model which will predict the growth in the debt this will create. I am sure one will exist. I hope this answers you. The present Government is a coalition of ‘Whigs’ and ‘Tories’. It is now obvious why Fidesz now kindly provide us with ‘Trolls, Orcs, etc’. In the European press the doings of Fidesz in Hungary are well below the radar of popular papers like the ‘Daily Gabble’, the ‘Current Bun’, the ‘Daily Wail’. The so called ‘Qualities’ may well have the odd ‘stringer’ who speak Hungarian, but that is about it. With the number of hits per day this blog receives shows that it is a source of information about Hungary and the type of information that Fidesz does not wish the rest of the world to know. Professor you report the words as… Read more »
Kevin Moore
Guest

Odin’s Lost eye said:
” These words are almost the same as those that came from the mouths of Kaiser Willem II and Adolf Hitler. We all know what the results were.”
Odin’s Lost eye, do you like cacao?
Adolf Hitler liked it very much. We all know what the results were.
Don’t you think you are a Nazi too?

Odin's Lost eye
Guest

Mr Moore as a matter of fact I do not like ‘Kye’ very much, but your logic is as faulty and as futile as those who seek to make a perpetual motion machine that works!

Mark
Guest

Kormos: “Ítélet nélkül Budapestről kitelepítettek számáról nincs pontos adat, a kutatók 14-15 ezerre becsülik számukat.”
The piece you quote is inaccurate. Those of us who have researched the 1950s know that 12,704 people were deported from Budapest between May and July 1951 – there are actually very precise archival records that show the numbers deported, the property confiscated and how it was distributed.
I’m not sure how what you quote is relevant to this discussion, or what point you are trying to make. As far as I’m concerned I do think all such abuses of peoples’ rights should be recognized. One of the conditions of this is precise historical research. However, I note the piece quoted is inaccurate and vague and not only on this point.

Mark
Guest

Paul: “Incidently, did anyone listen to/watch the budget speech here in the UK today?”
Indeed, Cameron and Osborne appear to copying the mistakes made by Bajnai in Hungary last year. The circumstances in the two countries are rather different – large because public sector debt is rather small proportion of a gross debt burden in the UK that is far larger relative to GDP than in Hungary, that is most made up of corporate and private household debt. The likely consequences are spelt out here:
http://neweconomics.org/blog/2010/10/21/george-in-need-of-a-history-lesson
At least FIDESZ isn’t doing this. It is making an entirely different set of mistakes.

Gábor
Guest

Unfortunately Johnny Boy doesn’t frequent the blog nowadays, although I suppose he would gladly read what the Ministry of National Economy expects from the flat-tax:
http://portfolio.hu/cikkek.tdp?k=3&i=140298&is=1 (only in Hungarian)
It is not quite an anti-neoliberal reasoning. 🙂

Paul
Guest

Well, I don’t understand quite which nerve of Frank’s I hit there, but I fear he misunderstood me.
I was complaining that I had a lunatic right-wing government in both my homes, I wasn’t implying that it was the same government, or even had similar policies.
There are, unfortunately, many types of lunatic right-wing goverments, and, as Mark correctly points out, Hungary and the UK are very different countries.
Just my luck to get hit by two of them at the same time.

Paul
Guest

And I’m rather puzzled by Kormos’s line “…for those, (sic) who still read Hungarian:”
Are there people who once could read Hugarian, but now cannot? And is he implying that some of us starting on this blog with the ability to read Hungarian, but have since (accidentally, or perhaps even deliberately?) lost that ability?
Will us anti-Orbán, Hungary hating, Commie liars stop at nothing?

Kormos
Guest

Thank you Mark for correcting the author of the article which I pasted, and I truly respect your cool views on recent politics in Hungary.
To Paul: I agree, the semantics of my sentence could be more correct. Of-course, I did not write it with the intention you insinuate.
To Mr. Odin:
None of us can “turn back the pages of History”
Going back a few days of comments, what would be the attributes of a proper and modern state?
What way could an individual help Hungary into the XXI Century, apart from constantly attacking the present Government.
A quote,(poorly translated to English):
“The Communists will be more difficult to get rid of because no one so dangerous as a beneficiary of a failed idea, who can not protect the idea, but the spoils!” Sandor Marai

Eva S. Balogh
Guest

Kormos: “The Communists will be more difficult to get rid of because no one so dangerous as a beneficiary of a failed idea, who can not protect the idea, but the spoils!” Sandor Marai
Well, he most likely wrote that decades ago when the Soviet Union still existed. And one more thing. Just because someone says something it doesnt mean that it is gospel truth.

Paul
Guest

Judging by the one book of his I’ve read, Marai isn’t exactly a friend of the left, anyway.
I think it’s time, even for the Orbánistas, to stop going on about the Communists. They have gone. There are no Communist politicians in Hungary (despite what deluded Fidesz supporters might think), and no one seriously putting forward Communism as a solution to Hungary’s problems.
Time to move on and tackle the realities of today, not the ghosts of the past.

Kevin Moore
Guest

Paul wrote:
“Time to move on and tackle the realities of today, not the ghosts of the past.”
I’m sure you think exactly the same about the Holocaust and the Nazis too.

Alias3T
Guest

Kevin: “I’m sure you think exactly the same about the Holocaust and the Nazis too.”
Paul said there are no Communist politicians in Hungary.
Does this mean that you’re accepting that there is an equivalent to the Nazis and the Holocaust in today’s Hungary?
Say hi to Szilard and the other one.

Alias3T
Guest

“Does this mean that you’re accepting that there is an equivalent to the Nazis and the Holocaust in today’s Hungary?”
Unfortunate phrasing. To be clear: there isn’t. Paul seems happy to move beyond Communism, on the reasonable grounds that there are no Communists, and if he doesn’t even mentioned Nazis, then what are you saying?
That there are still Nazis around and they should be acknowleged?
That Communist crimes are so unforgiveable that they must stand for the ages, discrediting anybody who fails to reject them angrily enough?
He’s right: there are no Communists, and I’m happy to accuse a kommunistazo of bad faith. So what are you saying?

Paul
Guest

‘Kevin’ – The Communists have gone and the Nazis haven’t. Not too difficult to grasp, is it?
Is this the best Fidesz can do after the failure of Szilárd and JB?

Kevin Moore
Guest

Paul says:
“The Communists have gone and the Nazis haven’t. Not too difficult to grasp, is it?”
Take it easy, pal!
I was just hoping that you may as well think there are no more Nazis than Communists, so finally, on your own terms, you can let the Nazis, the ghosts of the past, finally go.
But I see you still see your ghosts, and I’m not willing to take away your little toys.

Eva S. Balogh
Guest

Kevin Moore: “you can let the Nazis, the ghosts of the past, finally go.”
There are neo-nazis all over in Europe and in North America. What are you talking about. Communism, on the other hand, is pretty much dead.

Paul
Guest

“I was just hoping that you may as well think there are no more Nazis than Communists, so finally, on your own terms, you can let the Nazis, the ghosts of the past, finally go.
But I see you still see your ghosts, and I’m not willing to take away your little toys.”
I’ll be generous and assume English isn’t your first language.

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