Another “peacock dance”?

Every time either a Hungarian government official or a spokesman is asked about the reasons for the government’s sluggishness in fulfilling the requests of the European Commission, the European Central Bank, or the recommendations of the Venice Commission of the Council of Europe the answer goes something like this: “We immediately responded and fulfilled 99% of the requests, but then these organizations came up with a new set of demands. They are the ones who don’t want to settle these issues.”

Of course, the truth is quite different. It is the Hungarian government that answers letters in the very last moment, refuses to address key issues, and occasionally even enacts new laws that have an impact on earlier ones already approved by the Commission and the ECB. This is happening now with the extension of the transaction taxes.

It was last November that Hungary was forced to turn to the IMF for a loan. If all goes well, perhaps an agreement will be signed in October. That is, if the ever optimistic Mihály Varga, the new minister without portfolio in charge of the negotiations, is correct in his latest prediction. But we should keep in mind that Varga mentioned many dates before: June, August, September. So why not October?

There are many economists and political commentators in Hungary who are still convinced that the Orbán government doesn’t really want to have an agreement and that what’s going on with the central bank law is only part of what Viktor Orbán himself described as a “peacock dance.” It is, as he explained, a choreographed dance carefully executed which is intended to fool his negotiating partners. In the opinion of these commentators Orbán wants to avoid any kind of outside interference with his economic policies and therefore he feigns an eagerness to negotiate and thus hopes to keep the markets happy. As Kester Eddy said in the Financial Times, “if the current Hungarian government of Viktor Orbán ever entered an international strudel-making competition, it would surely win gold, judging by the time it is taking to meet the conditions set by the EU and the International Monetary Fund for a new line of credit.” One must know that in Hungarian to “drag one’s feet” is “nyújtja mint a rétestésztát,” meaning to roll out the dough for strudel, making it very thin.

Peacock Dance / Flickr

In any case, today the word came. The European Central Bank gave the nod to the latest changes in the bill on the Hungarian National Bank. Admittedly not all demands were met, but it looks as if the European Commission and the European Central Bank are sick and tired of  dealing with Viktor Orbán. According to the statement of the European Central Bank,”the draft amendments, alongside a commitment not to increase the size of the Monetary Council during the term of the current MNB Governor, are an indication that the Hungarian Government is now ready to respect the MNB’s institutional independence.” Why anyone would believe Viktor Orbán’s promises is beyond me. After all, he himself confessed quite openly how he was planning to fool the bureaucrats of the European Union.

But whatever the reason, the EU officials threw in the towel and yesterday, when the word was already out that negotiations can begin, it looked as if all were in order. But the Hungarian government is still rolling out the dough, it seems.

The new leader of the Fidesz parliamentary caucus, Antal Rogán, announced a few days ago that the “members of the caucus are requesting that the government pay attention to job creation and make money available for that purpose.” I have my doubts that the members of the caucus had anything to do with this “request.” Fidesz doesn’t work that way. More likely the top brass looked at the opinion polls and decided that something must be done.

The request is all well and good, but one must keep in mind that in order to impress the European Commission with the excellent work they are doing at reducing the deficit Matolcsy and Orbán decided to submit the 2013 budget very early. The jobs bill is under discussion at the moment and it will be voted on in the next few days, before the summer recess. The budget prepared in the last couple of months naturally doesn’t not contain the stimulus package of 300 billion forints that Matolcsy announced yesterday. A bit of a problem, th0ugh not for a man like György Matolcsy, the author of “fairy tales.” Mind you, this latest brainchild of how to gather 300 billion forints from nowhere has been described by an LMP member of parliament as “shamanism.”

What did Matolcsy come up with? Naturally, new taxes but these taxes are truly unique. The economic minister plans to extend the financial transaction tax to the central bank and the treasury, with revenue from the levy expected at 380 billion forints ($1.66 billion). Absolutely brilliant, don’t you think? The government taxes itself. Money is being transferred from one pocket to another.

András Simor, chairman of the Hungarian National Bank, immediately fired off a letter to László Kövér, speaker of the Hungarian parliament, and to the chairman of the parliament’s audit and budget committee. Simor didn’t consider the content of the proposal a breach of the pertinent laws. He only reminded parliament that “bills pertaining to the role of the National Bank of Hungary require prior consultation with the NBH and the European Central Bank, respectively.” And such mandatory consultation did not take place.

Although Simor complained only about the lack of consultation with the Hungarian National Bank and the European Central Bank, I suspect that this latest move of the Orbán government will again slow down the already snail-pace preparations for the negotiations for the 15 billion euros Hungary allegedly needs so badly. Or doesn’t need at all, depending on whom one is listening to.

I truly feel sorry for the “bureaucrats” of the European Central Bank. They thought that at last they got rid of this pesky little fellow and now he is back. And what if the bureaucrats in Frankfurt find that a government taxing its own national bank’s financial transactions is illegal? I have the sneaking suspicion that this is a first in the world of finance and therefore might be problematic. Of course, it is possible that the bureaucrats will just shake their heads and let Orbán and Matolcsy run with it.

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petofi
Guest

It’s hard to understand for us raised-in-the-west schmucks: Orban is bankrupting the country for no understandable reason….add to that that no one in the political sphere, not one person, is apoplectic with rage at what Orban is doing.

Doesn’t any Hungarian politician have the interests of the country at heart?

Paul
Guest

petofi :
It’s hard to understand for us raised-in-the-west schmucks: Orban is bankrupting the country for no understandable reason….add to that that no one in the political sphere, not one person, is apoplectic with rage at what Orban is doing.
Doesn’t any Hungarian politician have the interests of the country at heart?

Not just politicians – no one at all seems to care that much. You get more angst about the situation on here than you ever hear in Hungary.

I’m not sure if that is because of Orbán or explains Orbán…

Guest

London Calling!

Well it’s very innovative – A sort of circular Ponzi scheme.

This could be another fairytale answer to raising money!

If you keep circulating the money through the MNB you could raise enough funny money to solve ALL Hungary’s finance problems. Brilliant! And creative!

We call printing funny money in London Quantitative Easing – but György has found an innovative way to get his hands on the reserves after all – Orban will be pleased!

Or smoke and mirrors as Richard called it in the CNN interview.

Yes I can see the CEE region replacing the Southern region – and Hungary occupying the very heart of it – the hub – the centre of Global commerce. Go György go! The rest of Europe is right behind you.

Cultural Learnings of Hungary for Make Benefit Glorious Thousand-year-old Victorious Nation of Hungarystan

Regards

Charlie

LwiiH
Guest

Tax the central bank, what a great way to get to the fx without touching it.

enufff
Guest

“What did Matolcsy come up with? Naturally, new taxes but these taxes are truly unique. The economic minister plans to extend the financial transaction tax to the central bank and the treasury, with revenue from the levy expected at 380 billion forints ($1.66 billion).”

I had to read this again to believe it!
Finally they found a way to tap into the CB’s money. CB’s is one of the enemies ; so, let’s punish them!

enufff
Guest

Paul :

petofi :

It’s hard to understand for us raised-in-the-west schmucks: Orban is bankrupting the country for no understandable reason….add to that that no one in the political sphere, not one person, is apoplectic with rage at what Orban is doing.
Doesn’t any Hungarian politician have the interests of the country at heart?

Not just politicians – no one at all seems to care that much. You get more angst about the situation on here than you ever hear in Hungary.
I’m not sure if that is because of Orbán or explains Orbán…

I ask myself this question nearly everyday and sometimes I ask my husband. He has no answer and he is getting annoyed with me for reading too much politics :).
I could understand why politicians wouldn’t want to jeopardise their “rice bowl” (chinese saying) . But what’s in it for the average Hungarians?

Ron
Guest

This transaction tax is a real legal issue. Of course Matolcsy can tax the transactions as it is the government’s money. But the bank (as a third party) has to pay the transaction tax.

My understanding is that all taxes, duties, etc. are transferred to a 100320000 bank account with National Bank of Hungary (MNB). This money is than transferred over to the various institutions of Hungary. This last part will be taxed. And of course they than do this. But the MNB will deduct the money and than transferred it o the 10032000 account, which again is taxed. Etc. Etc. Etc.

But I do not understand Matolcsy, why does he not charge VAT on top of this?

Odin's Lost eye
Guest

There is no anger amongst the voters of the Viktator’s and Fidesz’s shenanigans. The voters know that MUST keep their noses out. Politics are now NO concern of the people. They know that they must keep their noses out.

Big taxes have little taxes on their backs to tax them
Little taxes have smaller taxes and so ad infinitum.

One of the problems caused by running the printing presses to finance government spending is inflation.

Hungary is well versed in inflation especially ‘Hyper Inflation’ Hungary holds the world record by issuing the world’s largest bank note ever the ‘100 million ‘B’ Pengo’. (100,000,000,000,000,000,000 Pengo). They also printed but did not issue the ‘1 Millard ‘B’ Pengo (1,000,000,000,000,000,000,000 Pengo). ). This valued the Dollar at 460,000,000,000,000,000,000,000,000,000 (4.6×E29) Pengo.
There was an earlier inflation in 1923 but here the largest note issued seems to have been the 1 million Korona. The Korona was later replaced by the Pengo.
Hyper inflation the thief of mans’ efforts will be the end of this regime, but at what cost and suffering.

Odin's Lost eye
Guest

I have a feeling that this transaction tax is illegal in the E.U. My reasons are that within the E.U. there is free movement of Goods, Services, and Money. Taxing the movement of money within a nation is a restriction on the free movement of that money. This is unlawful.
It may well also be an impost on foreign sources of money which are beyond Hungary’s competence to tax.

LwiiH
Guest

Odin’s Lost eye :
Hungary holds the world record by issuing the world’s largest bank note ever the ‘100 million ‘B’ Pengo’. (100,000,000,000,000,000,000 Pengo).

They have one of these uber pengo bills in the money museum in Ottawa (Bank of Canada, Spark Street). It’s an awesome bill!!!

LwiiH
Guest

Eva S. Balogh :

LwiiH :
Tax the central bank, what a great way to get to the fx without touching it.

Exactly, I hope the ECB will also catch on.

So, if I’m company X transfer money to Hungarian company Y to pay for my shipment of palinka. I pay 10,000 Euros and then the government takes a transaction fee and so the question is, does Y get 10,000 Euros or something less? Is company X to pay the fee or Y or the bank… of course the bank will just pass it along in the form of bigger other fees but….

Odin's Lost eye
Guest

LwiiH :

Eva S. Balogh :

LwiiH :
Tax the central bank, what a great way to get to the fx without touching it.

Exactly, I hope the ECB will also catch on.

So, if I’m company X transfer money to Hungarian company Y to pay for my shipment of palinka. I pay 10,000 Euros and then the government takes a transaction fee and so the question is, does Y get 10,000 Euros or something less? Is company X to pay the fee or Y or the bank… of course the bank will just pass it along in the form of bigger other fees but….

No I think from what I have read so far it is the transmitting bank (and their client) who will pay. That is why this tax may establish dangerous percidents. It could be concidered as an export tax. Similarly when goods are imported and paid for from Hungary this could be concidered as ab Import duty. In the E.U. this is a big, big NO-No,

LwiiH
Guest

No I think from what I have read so far it is the transmitting bank (and their client) who will pay. That is why this tax may establish dangerous percidents. It could be concidered as an export tax. Similarly when goods are imported and paid for from Hungary this could be concidered as ab Import duty. In the E.U. this is a big, big NO-No,

So that means that when I’m in the UK I will have to pay a Hungarian tax to send money to Hungary? If I send my 10K to Hungary and the fee is taken off at the bank then my supplier will feel that I’ve not paid the bill? I’m not seeing the logistics when things cross borders.

Louis Kovach
Guest

So far, the Orban bunch is doing better than the Spectrum bunch. They got back the development money for next year, the ECB settled with them, all inspite of the opposing clamor here. It is almost worth following the Spectrum for its reverse Cassandra effect.
BTW What goes with the European Council meeting that was predicted here by Dr Balogh to be a disaster for the Orban bunch on June 15????
And yes, I know, that it was the Venice Commision that met on June 15 and the full EC met at the end of June contrary to the dates stated here.

Odin's Lost eye
Guest
WiiH you write ** “So that means that when I’m in the UK I will have to pay a Hungarian tax to send money to Hungary? If I send my 10K to Hungary and the fee is taken off at the bank then my supplier will feel that I’ve not paid the bill? I’m not seeing the logistics when things cross borders” ** Hmmmn there are other possibilities. Firstly your supplier adds the tax to the bill (and knowing the Hungarians the will add the AFA (VAT) to the whole bill). The second is that Hungary taxes your (U.K.) bank. I do not think that the Chancellor of the Exchequer or H.M.Gov would like that as Hungary would be stuffing its nose into U.K. tax affairs. ‘No taxation without representation’ (we lost a war over that one!) The point is that this tax could be construed as an Import/Export tax and in the E.U. this is NOT ALLOWED!!. Once the E.U. gets wind of this little trick, the ‘muck will hit the fan’. OR as an old Arab friend of mine (Sid) would say “They are in the Mutti, deep in the Mutti”. It also breaks the rules E.U. of… Read more »
LwiiH
Guest

Louis, skin deep it might look this way but the way I see it is why would a bureaucratic organization want all this fuss there are bigger problems to deal with and the IMF will do the dirty work anyways.

I’ll make a prediction, the IMF will come in and then proceed to lay out some conditions that OV will once again reject. The IMF will once again walk and when that happens it’s January all over again…. ‘cept this time the gang won’t be able to bluff the markets along and lay blame with the EU. Remember, the ECB and EC et el must deal with Hungary (treaties) whereas Hungary went to the IMF for help. The IMF is under no obligation to help nor are they bound to any deadline to complete negotiations. They will act in the best interest of those providing the funding IMF. On the other side of the coin, Hungary still needs the IMF and so it will be up to Hungary to come to the table to break the impasse. So far OV has been able to Turkey everyone along but like I said, once the IMF calls OV’s bluff, it’s game over.

Guest
London Calling! Firstly I did point out that György’s circular Ponzi scheme was a neat way to get his hands on the MNB’s reserves – Not just FX btw – the reserves are choc-a-block with Forints! There will be an option for the submitting bank whether the payer or payee will pay the costs. If the Payer pays the costs – the ‘supplier’ will get his full payment. If the payer indicates that the costs will be paid by the payee – then the ‘supplier’ will be short changed and he will be very unwilling to supply again. For intra-Hungary transactions the fees will be paid by the paying bank at source – and charged to the submitter’s account as a transfer ‘charge’ together with any other costs they can squeeze from the customer. The foreign owned banks in Hungary are determined to retrieve some of the damage done by the government – so they will be looking for new income streams, for example, a ‘handling charge’ for collecting the tax – disguised as fees. I wouldn’t be surprised. In England you may have heard – our big banks have been caught manipulating the ‘LIBOR’ rate – that is the… Read more »
spectator
Guest

Actually is nothing Earth shaking in it – Viktor aimed for it, worked for it and got it finally.
The whole scheme is/were premeditated, don’t make any mistakes regarding the intentions.
As I see it from day one they’ve worked on this tactic and it paid off – the whole EU got sick and tired of the whole charade and gave in at the end.

Another question is the “why”.
As we all know, Mr.Orban building his authoritarian little empire, one step at the time. He doesn’t want any kind of control around him while doing this, hence the “freedom fight” crap to the masses, to accept the much higher cost for the loans what normally would have been significantly cheaper if it went through the IMF. He keep the facade like having a negotiation on the way with the EU and the IMF, smoke-screening the financial market by giving the appearance of the obedient European statesman, just to buy time and at the main time changing just about everything, the Constitution, legislation, civil- and criminal law, every aspect of life, in order to secure the long (ever?) lasting Fidesz rule in Hungary.

That’s about it.

Erik the Reader
Guest
Louis Kovach : So far, the Orban bunch is doing better than the Spectrum bunch. They got back the development money for next year, the ECB settled with them, all inspite of the opposing clamor here. It is almost worth following the Spectrum for its reverse Cassandra effect. BTW What goes with the European Council meeting that was predicted here by Dr Balogh to be a disaster for the Orban bunch on June 15???? And yes, I know, that it was the Venice Commision that met on June 15 and the full EC met at the end of June contrary to the dates stated here. I agree with that in totality that this bunch is living in some kind of parallel reality where they don’t get informed of the actual hits ( like the case of Egymásért Alapítvány, the foundation which bribed the secret service) . They must have a very special filter which whitewashes and twists reality. Hungarian Spectrum is more like a cult where the main dogma is that Gyurcsány and his team are the non plus ultra. Interestingly usually the blog goes against even the general Hungarian viewpoints as if it was written not by a Hungarian.… Read more »
Petofi1
Guest

Louis Kovach :
So far, the Orban bunch is doing better than the Spectrum bunch. They got back the development money for next year, the ECB settled with them, all inspite of the opposing clamor here. It is almost worth following the Spectrum for its reverse Cassandra effect.
BTW What goes with the European Council meeting that was predicted here by Dr Balogh to be a disaster for the Orban bunch on June 15????
And yes, I know, that it was the Venice Commision that met on June 15 and the full EC met at the end of June contrary to the dates stated here.

Hey, Louis, don’t count the hens before they hatch: we’ll see about the developmental money when it actually arrives. And the IMF loan? October? Really? Just watch: I’d be surprised if Orban’s Hungary gets anything more than what comes out of an ostrich’s ass.

Petofi1
Guest
Erik the Reader : Louis Kovach : So far, the Orban bunch is doing better than the Spectrum bunch. They got back the development money for next year, the ECB settled with them, all inspite of the opposing clamor here. It is almost worth following the Spectrum for its reverse Cassandra effect. BTW What goes with the European Council meeting that was predicted here by Dr Balogh to be a disaster for the Orban bunch on June 15???? And yes, I know, that it was the Venice Commision that met on June 15 and the full EC met at the end of June contrary to the dates stated here. I agree with that in totality that this bunch is living in some kind of parallel reality where they don’t get informed of the actual hits ( like the case of Egymásért Alapítvány, the foundation which bribed the secret service) . They must have a very special filter which whitewashes and twists reality. Hungarian Spectrum is more like a cult where the main dogma is that Gyurcsány and his team are the non plus ultra. Interestingly usually the blog goes against even the general Hungarian viewpoints as if it was written… Read more »
Petofi1
Guest

Regarding IMF/Orban to-and-fro…

It is traditional, when dealing with an obstreperous moron, to do the opposite of what he wants. So we have the odd situation of Orban demurring when IMF and the EU appear
to be ready to deal. Orban backs up like a Georgia mule. The more he does so, the more
amenable the EU is to dealing. Funny kind of duet. But why on earth is no one questioning Orban’s foot-dragging when it’s costing the country billions?

Petofi1
Guest

Regarding dealing with Hungarians….well, the French and Canadians have learned their lessons. Fact is, the only ones who seem to get a good deal are Russians. Somehow, they managed in the past to buy Malev when it was worth something and, lo and behold, they even managed to sell it back loaded with debt!?!!

Those Russians, they really know how to deal with the Hungarian mind, don’t they?

gdfxx
Guest

LwiiH:”So that means that when I’m in the UK I will have to pay a Hungarian tax to send money to Hungary? If I send my 10K to Hungary and the fee is taken off at the bank then my supplier will feel that I’ve not paid the bill? I’m not seeing the logistics when things cross borders.”

Your supplier will know better to bill you not for 10k but for 10k + the tax.

LwiiH
Guest

Erik the Reader :
\Hungarian Spectrum is more like a cult where the main dogma is that Gyurcsány and his team are the non plus ultra.

Sorry, I’m no fan of Gyurcsány. It’s time he fade away….. but it’s also the case that the current government is just a corrupt and one step worse, they are intent on pummelling the opposition. It’s past time they leave Mr. Gyurcsány alone!

petofi
Guest

Eva S. Balogh :

LwiiH :

Sorry, I’m no fan of Gyurcsány. It’s time he fade away….. but it’s also the case that the current government is just a corrupt and one step worse, they are intent on pummelling the opposition. It’s past time they leave Mr. Gyurcsány alone!

My only comment is that you and many others fell for Fidesz’s very successful destruction of a man Viktor Orbán feared most. Too bad.

I’m afraid, Eva, you fail to appreciate the truly twisted nature of the Hungarian mind: in the first instance, it was Gyurcsany’s own party that did him in. Why? Well, when you’re thieves and sitting in the catbird’s seat, the last thing you want to find is a leader who’s stopping, or at least hampering, your thieving efforts.

Member

Erik, Eva seems to like Gyurcsany, but you can’t be serious saying that the “blog” is a Gyurcsany cult. Gyurcsany definitely not an optimal choice but considering the available line-up … Apropos Fleto. What was this fuckery with the Democracy Island when Gyurcsany’s party invited Peter Oszko and Gordon Bajnai without telling them they will promote the party? If things go like this Gyurcsany certanly doesn’t need help to remove himself from the ballots.

Kovach managed to surprised me again. Who are you rooting for? The Hungarian government managed to break every freaking EU law that came into his way but the EU is still throwing money at the country. Yessss! We still are getting the cohesion founds! 10 more miles of highway next year! We are winning!! Are you proud of this? Do you think this is a kind of good ol’ Hungarian street smarts, like we just fooled the rich fuckers? Your country is now the Charlie Sheen of Europe. How long do you think we can get away with this?

Erik the Reader
Guest
Petofi1 : Erik the Reader : Louis Kovach : So far, the Orban bunch is doing better than the Spectrum bunch. They got back the development money for next year, the ECB settled with them, all inspite of the opposing clamor here. It is almost worth following the Spectrum for its reverse Cassandra effect. BTW What goes with the European Council meeting that was predicted here by Dr Balogh to be a disaster for the Orban bunch on June 15???? And yes, I know, that it was the Venice Commision that met on June 15 and the full EC met at the end of June contrary to the dates stated here. I agree with that in totality that this bunch is living in some kind of parallel reality where they don’t get informed of the actual hits ( like the case of Egymásért Alapítvány, the foundation which bribed the secret service) . They must have a very special filter which whitewashes and twists reality. Hungarian Spectrum is more like a cult where the main dogma is that Gyurcsány and his team are the non plus ultra. Interestingly usually the blog goes against even the general Hungarian viewpoints as if it… Read more »
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