This is an incredibly important story in the light of our present long-term malaise. Amazingly, the architects of the disaster are using it to enrich themselves and punish us. They must be stopped here. They have had their day and they have been discredited.This is the great fear among the defenders of European “pro-cyclical” policies – that is, policies that weaken the economy during a recession or when it is barely growing. Hungary’s defiance could conceivably spread to other governments currently being squeezed by the IMF and European authorities.
First the Hungarian government decided in early July to levy a new tax on banks and other financial companies that would raise some $855 million dollars this year and next. Foreign banks, who made a fortune during Hungary’s bubbly growth years prior to the crash in 2007, screamed and lobbied, but – despite having the IMF in their corner– did not prevail.
Then the government refused to give in to IMF demands for further budget deficit reduction. Hungary has already been through nearly four years of austerity in which the deficit was reduced from 9 percent to 3.8 percent of GDP. More importantly, the country’s current account deficit – its imbalance with the rest of the world -- which was more than 7 of GDP in 2008, is less than one percent for this year. With unemployment having risen from 7 percent in 2007 to nearly 12 percent today, and the economy still barely growing, Hungarians were understandably beginning to wonder when they would see light at the end of this long tunnel.
Solidarity with the fighting people of Hungary, Greece, Honduras, Venezuela, and Haiti!
1 comment:
And Argentina
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