Wolfmans Brother (peamasii) wrote in talk_politics,
Wolfmans Brother

Hungary vs. the IMF (a battle of finances and politics)

Since Stratfor got hacked last week by Brazillian hackers who demanded that the site be totally open to non-subscribers, they've opened up the whole site to non-subscribers. I'm reading in today's article that Hungary is making quite the stand against the IMF austerity measures meant to reduce risk in over-leveraged countries. This is particularly painful to Hungary because even though they run a large debt-to-GDP ratio, their finance sector is 80% owned by foreign banks. The recently elected Fidesz party (who won over the socialists and their disastrous spending) has placed a new constitution which among other things extends the public functions for judicial and police personnel up to 12 years, while many other public functions and discretionary spending has been cut. Also they've altered the EU-imposed rules that guarantee the central bank autonomy from the state. Orban's party effectively will nationalize the Magyar National Bank to protect it from currency and leveraging risks which are seen as the reason for the current debt crisis. In response the Central EU powers have been screaming bloody murder and the IMF is promising to block further loans to Hungary until they reverse course.

What do you think about this method of state control over the central bank in order to prevent financial crises? Should the state become involved in limiting the power of foreign capital (which has become destructive in places like Greece, Portugal, etc.) or should they at least be able to place limits on how much ownership of a sector can be in foreign hands? Do you think a relatively small country like Hungary (or Greece for that matter) can stand up to the demands of the IMF?

Tags: east europe, finance
  • Post a new comment


    Comments allowed for members only

    Anonymous comments are disabled in this journal

    default userpic

    Your reply will be screened

    Your IP address will be recorded