The title is unfortunately not original. One of Hírszerző’s regular contributors who writes under the pseudonym “Nyüzsi” (an abbreviated form of nyüzsgő = swarmer) came up with it today. The Hungarian government tries to act as if nothing happened. And “Nyüzsi” gives examples. On the homepage of the Hungarian government there is a picture of politicians inside and outside of Hungary at a conference of representatives of Hungarians living in the neighboring countries. The headline reads “Above all the national interest.” When one visits the Ministry of National Economy one can read “In September retail sales again in positive territory.” The first thing one can see on the website of the prime minister is Orbán giving a speech at the conference cited above with the headline: “Dual citizenship is a historical success.” On the same page: “The government guarantees the value of the pensions” and “We must close the era of post-communism.” Fidesz’s website got stuck on the possible negotiations with the IMF and optimistically announces that “The Hungarian government moved in time and gave the correct answer.” If one is interested in other news on the subject, one can click on an article about Antal Rogán’s prediction that “2012 will be the year of careful planning” and that “our emotional relationship with the IMF hasn’t changed,” whatever that means.
I guess one can handle a huge crisis that way but I wouldn’t recommend it. If I were György Matolcsy, I wouldn’t stand there telling the people that I’m baffled because the Hungarian economy is robust and there was no reason to downgrade Hungary. The problem is that there is an attack by speculators against Hungary and this attack is under investigation by the national security forces. Good luck to them! I wouldn’t say such nonsense even if half of the population seems to believe it. You tell a Hungarian that some dark foreign circles are out to get them and they will lap it up. I saw a video today of pedestrians on Budapest streets as a reporter is asking their opinion about the Moody’s downgrade. At least half of them agree that this is a concerted effort on the part of either speculators or simply enemies of the country to ruin Hungary. Since these people don’t have the slightest idea how money markets work, I’m not surprised, but it would be a capital idea if the Hungarian government, instead of resorting to lies, would tell them the truth. One, the country is in trouble because of the high sovereign debt that by itself wouldn’t be so serious if the economy were roaring and not limping along. Two, even more important, if the country didn’t have such an incompetent government and such an aggressive prime minister Hungary would fare better. Viktor Orbán, György Matolcsy, and the whole crew are utterly discredited. And not only when it comes to finance. It is also becoming clear to more and more people that in Hungary the democracy so many people dreamed of for so long is in danger.
I know that Árpád W. Tóta is a favorite of many readers of this blog. Tóta occasionally uses pretty strong language but he is always on target. To give you a taste of Tóta’s style. His blog’s title is “This is Sparta!” and it begins like this: “It must be bad to be György Matolcsy. I am beginning to feel sorry for the poor man. Dreamless nights, anxiety, wetting the bed. And he is surely preparing himself for further adversities. For example, that in the end they will dump the whole thing on him. But this fuck-up is not only his doing. He wasn’t the only one who managed to achieve this junk bond status.”
After that Tóta reminds his readers that the famous Hungarian equivalent of the “f”-word “elkurás/elkurtuk” until now was reserved for Ferenc Gyurcsány’s political moves. This was the word the pro-Fidesz rabble kept repeating joyously. But, says Tóta, “at the time of the classic fuck-up by Gyurcsány Hungary wasn’t junk. There was the threat of a downgrade but it didn’t happen.”
And if through Tóta we got to Ferenc Gyurcsány, let’s see what he did in a similar situation as opposed to what Viktor Orbán has been doing in the last two weeks or so. Gyurcsány, who has a wall on Facebook, wrote a short article today entitled “End” (Vége). Orbán, says the former prime minister, doesn’t want to face the fact, but “after a while he will have no choice.”
Gyurcsány relates some details of the road he had to travel from October 2008 to March 2009 when he resigned. In October 2008 the forint was in trouble and OTP’s shares began to fall precipitously. The top brass got together and overnight they decided that they will ask for IMF and EU assistance. By the time the IMF delegation arrived in Budapest the government already had a plan for cutting 600 billion forints from the budget in 2009 and a further 1.8 trillion between 2009 and 2011. It seemed to everybody, including the members of the IMF-EU delegation, that the measures offered by the Hungarian government were sufficient. However, by the beginning of 2009 it became obvious that they weren’t and that further austerity measures would be necessary. In February the Hungarian government made another adjustment of 1.35 trillion for the next three years. But in the end even that wasn’t enough. The government was planning to cut another one trillion, but by that time the MSZP parliamentary delegation was not ready to support Ferenc Gyurcsány. He resigned. It fell to Gordon Bajnai to implement the final austerity measures amounting to 1 trillion forints and thus to solidify Hungary’s finances.
Negotiations with the IMF and EU were relatively easy in 2008 and 2009 because Hungary had a plan that could be presented to the members of the delegation. It seems that it didn’t dawn on Orbán and his team that without a plan there will be no agreement and thus no financial assistance. It would be a good idea if they realized that the game is over, says Gyurcsány.
Well, we will see whether they will or not. Although MSZP and DK are demanding Orbán’s resignation, I very much doubt that he is ready to make that move now. He might throw Matolcsy to the wolves after a few days as some Fidesz politicians apparently demand. However, I don’t think that the Fidesz bigwigs are ready to dump Orbán himself. When Mesterházy told Lázár to make preparations for the removal of Orbán as prime minister, Lázár’s reaction was that Mesterházy should visit a doctor.
However, my feeling is that the markets will not be satisfied with Matolcsy’s departure. Most analysts know that the policies hitherto pursued came straight from the prime minister. Matolcsy was only his right hand! And in this case, he will have no choice but to leave.