Gordon Bajnai : “Republic, reconciliation, and recovery” Part II

First, I should report on the reaction to Gordon Bajnai's reappearance on the political scene. Népszabadság and Népszava simply summarized the fairly lengthy study. Not so Magyar Nemzet, whose reporter András Kovács was perhaps too surprised yesterday and therefore neglected to attack the former prime minister with the usual right-wing force. He noted only that there was a suspicious resemblance between Bajnai's program and the alleged IMF demands. I guess Kovács thinks that Bajnai in his spare time makes weekly visits to Washington and sits down with the officials of the IMF to discuss the agenda of the future possible negotiations. Since this is the underlying assumption it's no wonder that the title of Kovács's article is "Did Bajnai announce himself at the IMF as the next prime minister?"

By today Kovács wasn't satisfied with a possible Bajnai-IMF connection. He came up with the usual story that Gordon Bajnai is no more than an agent of Ferenc Gyurcsány. How does Kovács know that? Because in the last twenty years or so the two men worked together closely and even last summer Bajnai gave a couple of lectures at the Gyurcsány-led Táncsics Academy of MSZP. The title of the piece is "Bajnai crawled out from Gyurcsány's academy." I suspect that this will not be the end of the attack on Gordon Bajnai coming from the right.

ATV immediately arranged an interview with Bajnai on "Egyenes beszéd," and yesterday's Újságíró Klub (János Avar, György Bolgár, and Tamás Mészáros) spent quite a bit of time on the contents of Bajnai's program. György Bolgár in particular viewed it as an important event given the very shaky state of the Orbán government and the Hungarian economy.

But let's return to the "program" itself.

* * *

Economy. Bajnai considers the Hungarian economy to be in much worse shape than it was in the fall of 2008. The exchange rate of the forint, the sovereign debt, and the yield on government bonds looked better at that time than now. Therefore the government has only one choice. Either a stand-by loan with serious conditions or bankruptcy. This crisis situation is the result of an incompetent economic policy that was ''subordinated to political considerations." 

Allamcsod

In 2010 Fidesz won in a landslide because its promises were supposed to satisfy two groups of people with opposing interests. Viktor Orbán promised immediate and radically lower taxes to the economically active members of the middle- and upper-middle classes. At the same time he assured the low income people or those who were economically inactive, for example the pensioners, that their social benefits would be assured in the future. Clearly, fulfilling both promises could have been accomplished only if the deficit were raised. But in the very first week of the Orbán government it became clear that Brussels would not agree to the 7% deficit Orbán proposed to José Manuel Barroso.

At this point the government, if it wanted to follow a prudent economic policy, would have changed its plans. But Orbán was not ready to abandon his original idea. Instead he levied very heavy taxes on banks and some multinational companies and when that amount of money turned out to be insufficient he emptied the coffers of private pension funds. This money was supposed to cover 25% of the private investors' future pensions. Instead, he used some of that money to pay off part of the sovereign debt. Because of the subsequent weakening of the forint, however, that reduction of the debt was only temporary. By now the sovereign debt is higher than it was a year and a half ago.

A very serious problem of long standing in Hungary is the low rate of employment. That could be remedied somewhat by lifting some of the tax burdens on employers. Hungarian payroll taxes are extraordinarily high. The government did not lower payroll taxes. Instead, in order to compensate for the losses that people with lower wages suffered as a result of the introduction of the flat tax, the government forced employers to raise wages, including the raising of the minimum wage. Employers that were hard pressed already will have to let some of their workers go. Thus the unemployment will only grow.

The levy of extraordinarily high extra taxes on banks resulted in a scarcity of credit. For a 1% GDP growth there must be a 4-5% growth in credit. The result not surprisingly is very low economic growth and the prediction is that next year there will be an economic recession.

For a whole year the Hungarian people were relatively patient and waited for a favorable outcome of Orbán's economic policies, but if possible the economic situation has worsened. Orbán promised great things, at least for 2012, but this year looks worse than 2011 was. By now, patience is running out and in the last few months those who oppose the government regularly march out to demonstrate. They demand Orbán's resignation. The prime minister seems to be totally unprepared for this kind of active hatred instead of adulation. The anti-terrorist group set up at a great expense is no more than a very large group of bodyguards whose sole job is Orbán's safety.

So, what does Gordon Bajnai suggest?

(1) For the sake of equilibrium the government must embark on permanent and real structural reforms. For example, it will have to radically change the present setup of public transformation, stop subsidies to state-owned companies, and rationalize education and health care.

(2) For the sake of economic growth the government must reverse some of its recent decisions. Specifically, it should get rid of the flat tax, decrease payroll taxes, and stop the practice of extra levies on banks and multinationals.

(3) It must offer institutional guarantees that it will not return to its former irrational economic policies. Bajnai specifically mentions the status of the Hungarian National Bank, the Fiscal Council that is supposed to be the watchdog over the budget, the prohibition against introducing retroactive laws, and decreasing the number of cardinal laws requiring a 2/3 majority.

Such steps could restore the credibility of Hungarian economic policy and they would ensure the financing of the country. But that means a political change that will be very difficult to sell to the population. That's why Bajnai thinks that an agreement with the IMF and the EU is unlikely. But if there is no agreement Hungary is facing bankruptcy within a few months.

To be continued tomorrow

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peter litvanyi
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or



Sincerely:
Peter Litvanyi

Petofi
Guest

Finally, a sane mind.
For you Fideszers….try comparing the Curriculum Vitae of Bajnai with that of Orban, or any other government member.
Notice a slight difference?

GW
Guest

For you Fideszers… try looking at the actual policies. Bajnai is the real conservative here. Not a populist, not a socialist, not a radical, not a nut. Just hard but competent policy-making.

peter litvanyi
Guest
Sorry, after reading “Petofi”‘s comment /man..I thought you were gone../ I felt I needed to spell it out. The second “youtube” reference: watch it please! It is a Tamas Gaspar Miklos interview in Hungarian /I am going to summarize it in English here/. The first ref. doesn’t work. OK it was intended to be Koncz Zsuzsa’s “Szabadsag” cimu dala. TMG summary: -There is no real difference between say Mr. Gyurcsany’s /or our latest hero Mr. Bajnai’s/ austerity package and that of Mr. Orban’s. In fact Mr. Orban’s is more comprehensive and ruthless.More to the point. -The whole idea of “austerity packages” and so forth is based on an extremely ridgid and stupid/ malicious if you wish/ school of thought of certain hired economists. -The bone of contention is about who keeps the money. The powers that be /say IMF or certain EU circles/ don’t like the idea that Mr. Orban wants to feed himself/ his goons rather than handing the loot over to international them. -The Hungarian Nation does not enter the picture, either way. Bajnai or Orban. -All this defiance would be very interesting if it were about more than who gets to keep the money taken from the… Read more »
Member

Off topic, but interesting. Several news sources reported today that the Fidesz mayor of Budapest’s twenty-first district (Csepel) posted a request to all to say a blessing prayer for Viktor Orban. (THe news was true, as I confirmed it on the official page of Csepel:
http://www.csepel.hu/index.php?option=com_content&view=article&id=2381:aldoima&catid=1:helyi-hirek )
Before the language police arrives…. You are welcome to translate the original document at your liking as I simply tried to stay true to the text w/o considering the fine subtleties.
“The opposition again started a brutal attack against Viktor Orban.
Everyone fights with their own assets. Let’s pick up the fight!
As often as we can we should say the following for Viktor Orban.
THis is the blessing:
THe Lord be ahead of you to guide you to the true path.
THe Lord be beside you to close you in his arms and protect you,
THe Lord be behind you to protect you from the deceptions of the evil.”
etc.
Well, at least Fidesz cannot say that they left out anything.

GDF
Guest

peter litvanyi” I agree with TMG.”
TMG, an otherwise very nice guy, is a Marxist. Obviously, so is peter litvanyi.
Well, Marxism was tested and failed. They should have tested it in some zoo (or animal farm).
You guys just keep occupying everything, if Marxism is all you have to offer, I feel sorry for you.

Member

@ Peter Litvanyi, There is a big difference between Iraq and Hungary and that is that Iraq was a rich nation. It is a different story that who kept the wealth. Iraq did not need to borrow any money, so I do not really understand the parallel. I am not really sure that at this moment (not twenty years ago, ten years but now), where do you see the solution? Obviously the country needs to borrow money to keep it afloat, and let’s hope that they will put some ideas in place that will work to give back the money and to create a surplus. What should Hungary do, if not getting money from the IMF? I do not see countries lining up to lend or to prepay for chicken paprikasch and thermal bath tickets.

peter litvanyi
Guest
Quick answers: -here is the Koncz Zsuzsa link, I hope it works this time: -Dear GDF, yes of course I am a marxist. It’s like asking someone if he/she is a darwinist or what? In fact 99% of the daily capitalist machine operates based on principles previously unearthed by Marx /whoever he was as a person./ Marx is responsible for the idea of opinion polls, targeted marketing and who says what in exactly which state at our current primary elections. Marx invented sociology to begin with. I don’t know who a “marxist” is per se, like you believe in washing your hands before surgery???? Perhaps you don’t. “Well, Marxism was tested and failed.” I don’t exactly know what the hell you are talking about. The left /if that’s what you mean/ is very much alive. What is the proportion of the social democrat/ green parties in the EU parliament? It’s pretty good actually. I’d say we are doing just fine. Now notice I never said “CAPITALISM IS DEAD”. That’s because capitalism is a good idea and so is socialism /communism if you wish/. They grew up hand in hand and they are the child of the same age. They fed… Read more »
peter litvanyi
Guest

Dear some 1,
another point I want you to consider till next..
Brazil just surpassed the UK on the list of industrialized nations as you probably know. It made some splash in news.
Brazil is not an IMF customer. Most of Southern America is IMF free.
TMG in the interview talks about regional financing and cooperation. You asked me about a way out? Here it is.
By the way: are you a member of a credit union?
Sincerely:
Peter Litvanyi

Ron
Guest

Breaking: EU puts Hungary on eBay.
comment image

Ron
Guest

Eva: A very serious problem … tax burdens on employers. Hungarian payroll taxes are extraordinarily high. The government did not … only grow.
Actually, the payroll taxes are not extraordinarily high. However, the problem is not payroll taxes in general.
But the total salary costs (net salary, payroll taxes, social security and pension charges) are extremely high, due to the fact that you pay the maximum percentages from the moment you earn one forint,
the fact that there is no social security cap (maximum limit),
the fact that some salary costs are not tax deductible for corporate and local taxes, that the taxes are due and must be paid immediately.
Resulting that most companies need to finance the payment of taxes. Failure to pay the taxes on time results in blocking the bank accounts and automatic plundering by the tax office of the companies bank accounts.
The fact that there are a lot of tax credits, resulting that a lots of people do not pay the full amount of taxes due to these rules. Notably, EVA companies, agricultural tax credits (http://esbalogh.typepad.com/hungarianspectrum/2007/06/farms-and-farme.html).

Leo
Guest

Conspiracies everywhere, sure. It would be more interesting if Litvanyi came up with some concrete proposals. Marxism has been a cadaver since 1914. RIP.
About other boring things: I once saw Bajnai on an early morning show and promptly fell asleep again. Still, that may be just what Hungary needs. The consequences will be painful though, I’m not even sure the country would survive.
But until someone has a better idea…

An
Guest

@Peter Litvanyi: “Marx is responsible for the idea of opinion polls, targeted marketing and who says what in exactly which state at our current primary elections”
Seriously, opinion polls, targeted marketing? He unleashed those on humanity, too? (I highly doubt that info is correct, though, without considerable stretch).

Member
An, the first known opinion poll was a local straw poll conducted by The Harrisburg Pennsylvanian in 1824, showing Andrew Jackson leading John Quincy Adams by 335 votes to 169 in the contest for the United States Presidency. About “targeted marketing” direct marketing… it is as old as the tax system, when you could trade some tax money for some service or pat more tax for some privileges. Door to door selling has been around for ever, so is targeted marketing, even in war. The later certainly was not invented by Marx. Peter Litvanyi: Marxism just like communism looks very good in paper but it does not deal with the concept of human greed or simple human ambition. In the first case scenario you get an Orban, on the second scenario you get a Boll Gates. Yes I am member of a Credit Union as well as a bank. Can you point me to the regional financing solution or to the local credit union that could lend the money to Hungary now? Are you seriously comparing Brazil to Hungary as a solution? How is Mexico doing from South America? How is the Brazilian blood diamonds, Indian rights, and the Brazilian… Read more »
Odin's Lost Eye
Guest
I agree whole heartedly with Mr Bajnai’s first point about “permanent and real structural reforms.” But I will go a step further there must be a separation in the machinery of government between the Political aspects of Government (the House, the Ministers etc) who make the decisions and the Executive/Judiciary who carry them out. This has been a structural weakness in Hungary since the Communist era. In those times all who operated in the Political, the Executive and the judicial functions of the state had to be Communists. This problem should have been sorted out in the very earliest days of the new republic. In the U.K. and many other countries(including the E.U. Commission), the members of the executive are professionals whose entry, career and promotion are NOT subjected to the whim of the executives’ political masters. There is a similar situation in the Judiciary. This does not mean that members of the executive/judiciary cannot have political/religious opinions but they must leave them at home when they go to work. The lack of this separation is one of the curses on Hungary, as political appointees in the executive/judiciary obey those who appointed them and do ‘things’ which breach the rules.
Member
Marxists are fine as long as they don’t have a machine gun. By the way Peter when you say marxism you mean the marxist economical theories not the whole red enchilada, the Marxist political and sociological theory, right? Because the systems that grew out from the latter just killed too many millions in 20th century so you need to wait a couple of more generations until it picks up again. As long as it is just the good old “we are poor, your are rich, let’s occupy something’ movement, we will be fine. About the Orban prayers. There is also an alternatiive Lord’s Prayer about Orban spreading fast on Facebook. It goes like “please don’t wast our daily bread, and excuse us but we can not forgive you” or “don’t lead us into default but deliver us from yourself” or “for thine is not the kingdom, but the power only with no glory”. Amen. Here is the Hungarian: ‎”Mi Orbánunk, ki vagy a Parlamentben, szüntettessék meg a Te neved, lázadjon már fel a te országod, és töröltessék el a te akaratod miképpen a T. Házban, azonképpen itt a földön is. Mindennapi kenyerünket ne herdáld tovább, és már megbocsáss, de mi… Read more »
Paul
Guest

peter – this odd ‘free-form poetry’/stream of consciousness style of yours is very difficult to read – and, at times, almost impossible to understand.
Most of the time I have no real idea of what you are on about.

Paul
Guest

OT (just for a change):
Before reading HS, I usually check out a few other English language Hungarian sites to get a feel for what’s going on. And occasionally I post links to one or two of the more interesting posts.
But today, I could easily have posted a dozen links from just politics.hu and portfolio.hu alone!
It feels distinctly like things are hotting up again for the next crisis. Stand by your forints!

Paul
Guest

One link I will post though is my weekly dose of far-right lunacy:
http://www.hungarianambiance.com/
Here’s a typically mad quote from one of their posts:
“The following case demonstrates how deeply the liberal-Bolshevik influence embedded in all segments of Hungarian society.”
(It’s about someone riding on the bumper of a tram!)
I’m actually starting to feel quite affectionate towards HA – it’s my little moment of amusement in our increasingly gloomy world.

Eva S. Balogh
Guest

Enjoy a funny clip on Youtube called “total defeat”


Member

I see from the Financial Times that the head of the Austrian Central Bank is trying to calm fears there of the collapse of Austrian institutions due to the problems in their Hungarian subsidiaries.
http://blogs.ft.com/beyond-brics/2012/01/11/austria-a-cold-wind-from-budapest/
A quote:
“When a central bank governor speaks on national state radio, you can expect he has something important to say. Important, but not necessarily surprising.
And so it was on Wednesday with Ewald Nowotny, the head of the Austrian central bank, who took to the airwaves to declare that while the situation in neighbouring Hungary was a “challenge” for Austrian banks they faced “no danger” from the financial situation in Budapest. A lot, of course, rests on the difference between a challenge and a danger.”

Member

Orban’s good friend, Zsolt Bayer called the opposition the “dogs of Satan,” Hungarians “lotus eater pigs”, everyone who opposes the Orban regime are either “liars” or “villains”, Times magazine is “sick”, the Le Monde is garbage, the West “no matter how many stupid politicians.
Bayer is the recipient of Hungary’s prestigious Madach Prize Bayer is able to retain his readership by using sensationalism in his writing, like National Enquirer or most reality shows. Bayer lacks every substance from his writings and maybe this is why Fidesz and him has this admirable relationship. THe similarities are striking.

GDF
Guest

From an article in Marketwatch:
“Prime Minister Orban has realized that bankruptcy isn’t such a bad option. It simply means the investors suffer some losses.
He is unlikely to be the last leader to reach that conclusion and that means there is a lot of pain ahead for the financial markets. Much of the debt that was built up in the last decade is, in reality, never going to be re-paid. The investors will have to take some losses, and the economy will have to suffer some austerity. A one-sided deal is not, in the medium term, going to be acceptable.
Hungary may be the first country to make that point, but it certainly won’t be the last.”
http://www.marketwatch.com/story/hungary-wont-be-last-to-make-bondholders-pay-2012-01-11?reflink=MW_news_stmp

Member

Question to those who have some better understanding of economy than most of us. WHat would be the short and the long term consequences if Hungary declares bankruptcy?

Eva S. Balogh
Guest

It was just discovered that Schmitt’s doctoral dissertation is practically copied out from a French-language dissertation of a Bulgarian sport diplomat.
Here is the news:
http://hvg.hu/itthon/20120111_Schmitt_doktori_disszertacio_plagium

Member

“Schmitt’s doctoral dissertation is practically copied”
The jokes are out within 15 minutes:
“Plagiarism? I can’t even spell that …”
Pal Schmitt

Mutt Damon
Guest

or
Word of the day: Palgium
It would be “Paulgiarism” in English. His name is Paul (Pal).

Gábor
Guest

Here are 11 pages of examples of plagiarism:
http://images.hvg.hu/static/pdf/Schmitt_Pal.pdf

Mutt Damon
Guest

I’ll bet you $100 he won’t resign. Any takers? Johnny Boy? Simon?

Ron
Guest

Mutt Damon: I’ll bet you $100 he won’t resign. Any takers? Johnny Boy? Simon?
I am not a betting man, but I believe someone from Fidesz leaked this information to HVG.
Once Schmitt Pal resigns VO will be the new President.

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