This page has been archived and commenting is disabled.
Fitch Downgrades Hungary To BBB-, Forint Plunges, SovX Surges
As America continues to keep its head firmly planted in the sand, if not somewhere much worse, Europe is falling apart. Hungary was just downgraded by Fitch to BBB-, and still kept its rating outlook negative, meaning the country is about to enter junk territory. And what is sure not helping is the record strength of the CHF, which is making life for borrowers in Hungary a living hell, whose debt is denominated primarily in Swiss Francs. And as US stocks hit 2010 highs, so does the SovX index of sovereign spreads. In other words, equities and sovereign bankruptcy risk are now positively correlated with an R2 that would make 1.000 almost blush.
Forint plunges on the news:
As SovX surges:
Some more from Bloomberg:
“We are now only a step away from the abyss,” Gyorgy Barta, a Budapest-based economist at Intesa Sanpaolo SpA, said in a phone interview today.
Prime Minister Viktor Orban is bringing private pension funds under state control and imposed special taxes on banking, energy, telecommunications and retailing to narrow the budget gap below the European Union limit of 3 percent of gross domestic product next year and balance income tax cuts. Hungary is the EU’s most-indebted eastern member, with public debt estimated at 79 percent of GDP this year.
The forint slid 0.5 percent to 277.68 per euro at 1:16 p.m. in Budapest. The benchmark BUX stock index fell 0.8 percent. The cost of insuring Hungarian debt rose, with credit-default swaps increasing to 376.8 basis points from 375.2 basis points.
The government will probably meet its target of reducing the 2011 deficit to 2.9 percent from an estimated 3.8 percent this year, Fitch said. The figure is "flattered by extra" revenue, which will leave a "substantial" deficit in later years as the special taxes ease, it said.
“The downgrade of Hungary’s ratings reflects a material worsening in the underlying medium-term budget position, while relatively high levels of public, external and domestic foreign- currency bank debt leave the country vulnerable to negative shocks,” Ed Parker, head of emerging Europe in Fitch’s Sovereigns team, said in the statement.
Elected in April on a pledge to end five years of austerity after the worst recession in 18 years, Orban plans to use the retirement fund assets to pay current government pensions and reduce debt as he seeks to cut the budget deficit.
And somehow people across Europe are still ok with giving up their retirement funds to keep the domestic banker branch well fed and in turn, subsidizing the local hooker population.
h/t Andy York
- 5735 reads
- Printer-friendly version
- Send to friend
- advertisements -




http://finviz.com/futures_charts.ashx?t=CURRENCIES&p=m5
Happy Holidays from all our friends around the World
Merry Christmas to Mr. Matuschek!
He kind of reminds me of Soros - the gentlemen of the AustriaHungarian Empire
< 1% change is a plunge ?
"You're an everlasting summer and you see it fading fast so you grab a piece of something that you think is gonna last (rhymes with ass does it not?) Well you wouldn't know a diamond if you held it in your hand, the things you think are worthless i can't understand." Of course "it's just an interest rate." The money? Gone. The equity? Destroyed. The currency? "Doin GREAT!" Of course "we need a trillion in that worthless forint or WE'RE ALL DEAD!" And "debt is piled upon debt upon debt upon debt" whose purpose is....
The downgrade is in fact overdue. Quite a number of Eastern European countries should be downgraded. By and by, Blythe has used this opportunity to hammer PMs...
what's new?
in final analysis, her efforts (and people above her) are plain stupid...in words of Forest Gump: stupid is - stupid does.
I think Blythe Masters should be more creative. She has been using the same tactics at the same time almost every day.
Manipulation is ok if it's committed by the big players.
with all due respect they are beating a dead horse...yes, if you have support from regulators you can manipulate PM, but what are the consequences? China is simply buying it.
Yes, you can beat the "gold bugs" and paint your charts but WHO REALLY CARES? China doesnt - they are simply buying; buying commodities, buying everything and building in the meantime.
in my humble view we have a leadership problem - people at the top are stuck at solutions that worked 20 years ago...in the meantime they are giving up the store.
The ratings makes no sense. Hungary is junk with 74% debt to GDP, but Japan isn't with 212% debt to GDP.
The trade deficit is the issue. Japan exports, Hungary imports. The anticipation being that Hungary will have a harder time resolving debt.
Also Japanese debt is held mostly internally by their citizens.
OTOH: The US, like Hungary, imports. Also, the US, unlike the Japanese, do not hold most of their debt internally.
So we're kinda back to the original point: 'Ratings don't make sense'. Well, they do follow a rationale, it's just not reasonable.
So they come for private pensions. This act will not be lost on other workers and investors as the financial conditions in other EU states deteriorate. And here?:
"Perchance he for whom this bell tolls may be so ill, as that he knows not it tolls for him; and perchance I may think myself so much better than I am, as that they who are about me, and see my state, may have caused it to toll for me, and I know not that."
If you surround the confiscation message in populistic socialistic rhetoric, the masses will support the measure wholeheartedly.
The rest of us are screwed.
how much of "private" were they, when they were financially supported by government for years ???
BTW: Orban lowered the taxes from salaries significantly next year from 60% to like 30%
whose pensions are they ? pensions of communists ?
Someone said recently that we are entering what is traditionally the quietest week of the year.
Bah Humbug, etc.
No slack for Christmas. This coming week will set the tone for the coming year and if the coming year is the doozer it portends to be, I say this is going to "staring into the tip of the edge of the abyss" kind of year-end.
Sovereign Debt. Such a joke when you think of how "sovereign" EU states are.
Tch! So damn unfortunate.
ORI
http://aadivaahan.wordpress.com
"Battle not with monsters lest ye become a monster; and if you gaze into the abyss the abyss gazes into you."
--Some guy named Fred, or something.
Been preparing to look some monsters in the eye and leap into an abyss if presented Rodent.
I say, bring them on, all they are, are fig-ments.
ORI
Good god does that suck for all those Magyars with Swiss euro-denominated morts.
As I understand it, much of the Hungarian mortgage market is with Austrian and Swiss banks. Auf Weidersehen Osterreich !
It's the Kreditanstalt all over again.
the biggest bank in Hungary is OTP (hungarian owned by a friend of Orban = he wont get screwed)
Austrian banks (Erste/Sparkasse and Raiffeisen) for them Orban has a nice little Christmas present
All mortgages in Hungary done in CHF back in 2000-2008 wil be bought by the government at the rate at which they were sold, mostly like 1CHF =160HUF, banks can go smoke a joint to relax
Orban wins and his support grows and thats that
The abyss may wink but certainly, there's poetry in the air.
I almost forgot we have "Rating Companies" within the banking cartel. Do we still listen to them??????
"Orban plans to use the retirement fund assets to pay current government pensions" - how this does not spark an Revolution is beyoned me ? Are humans really not any better than trained monkeys ?
what do u know about hungary?
orban had an option to sell hungary to IMF, impose super high VAT 40%, its already at 23% !!! and turn it into greece, OR he could squeeze ever corporate forint into governmental pockets to pay off the debt and lower the deficit under 3% as, he choose to kick the jew money changers into their asses and use what corporate profits he had at his disposal to balance whatever can be balanced.
people will never riot over something that wont effect them for decades to come
people in Hungary just like in USA know that social security is GONE GONE GONE
the jews from fitch should compare previous commies in Hu (gyurcsanyi etc.) who destroyed the country just as is obama doing to USA right now and wonder why they werent hanged
Truly? Just slightly better.
In fact, just enough to lead those who think they are no better than trained monkeys to believe so... That is, until the training suddenly and unexpectedly breaks down, leaving them with millions of ~165lb pissed off unmuzzled semi-hairless primates that proceed to beat them senseless while they tear everything up.
Oh, and they use tools. ...And fire. Bummer.
Hungary for yield?
A beka segge allat
So I may be nuts, but here goes. I am up for a bit at 5:00 am and see gold and silver start to take a beating. Been as flat as you please for days. I get back to sleep. I wake up, do some work, come over to Zero Hedge and look at the headlines. The second I see this one I go "Gold is gonna bounce off the low" and what do you know...
When I see PMs get beaten down, I should know there is bad news of this nature coming, and that they are giving gold a lower launching position.
Am I nuts here?
Yes you are nuts here...and anywhere else you go. That is okay though here you fit right in...
@ricksventures. Agreed. Arany Szuka!! and Boldog Karacsony.
Did I read that correctly? The took private investments to pay public pensions....what the hell - seriously?!
yeah i hope there is more to it than that, seizing private pensions to pay gov't pensions