There has been a lot of speculation in the last year or so about who really is in charge in Hungary when it comes to economic policy. Or, perhaps better put, who influences whom? Was it Economic Minister György Matolcsy's vision that captivated Prime Minister Viktor Orbán who, as he himself admits, knows mighty little about economics and finance or is Matolcsy merely a willing tool in the hands of the "visionary," Viktor Orbán? In either case, the situation is pretty bad.
I am inclined to believe that the prime actor in this sorry affair is Viktor Orbán himself and that he picked György Matolcsy as his "right-hand" because Matolcsy supplies him with the kinds of ideas that he himself likes to hear. It is a symbiotic relationship. It is therefore unlikely, for a while at least, that Orbán would relieve Matolcsy of his responsibilities due to pressure at home and from abroad. It is true that today we received the news that the Hungarian delegation that will negotiate with the International Monetary Fund and the European Union will be headed by Tamás Fellegi, minister in charge of economic development, but Matolcsy himself is still holding on to his job.
Although the country's financial situation reached a point that forced the Orbán government to turn to the IMF, government communication hasn't changed at all. The unorthodox methods that were supposed to save the country still seem to be valid. According to government propaganda, the fundamentals of the Hungarian economy remain sound. The credit rating agencies are out to get Hungary and so are the "speculators" who attacked the Hungarian forint. And naturally, the Hungarian government will wage war against the enemies of the country. Members of the government as well as the official spokesmen emphasize how tough the Hungarian delegation will be and how they will defend Hungary's sovereignty. A long laundry list follows such announcements that tells the faithful followers of Fidesz the points on which they will not budge. All this while everybody knows that Hungary has no choice. If they want financial help they will have to follow the IMF's conditions for a loan.
Most commentators claim that this rhetoric is for internal consumption only. Home politics demand such communication tactics. After all, in the last eighteen months there were many instances in which the government said one thing at home and its very opposite abroad. Or, that one set of figures was released in Hungarian-language documents and another set in the English-language versions. Most likely, this is also the case now.
But I'm coming to the conclusion that this belligerent communication in fact reflects the ideas and attitudes of Viktor Orbán himself. It is not just politics. According to the composite picture one is getting from different informants, Orbán truly believes that his economic ideas are superior to those orthodox textbook solutions others use. He seems to be the captive of his own propaganda in which he himself by now wholeheartedly believes. For example, he has repeated so often that a close cooperation of the East European countries with Hungary as its center will be "the engine of European recovery" that it is impossible that it is just empty talk. The same holds true, I believe, when it comes to "the Eastern winds." By now I think he truly believes that he is more clever and wiser than his fellow politicians west of Hungary. As one of the informants told HVG, "Viktor is convinced that the majority of European politicians are dim-witted [korlátolt] and are afraid to make decisions and resort to traditional political methods." According to the same source, Orbán made no secret of his opinions and told his colleagues at international meetings what he thinks of them. Now, Orbán is convinced that these people are turning against him and through his person against Hungary.
At his meeting with the eleven economists at least some of the participants tried to convince Orbán that the reason for Hungary's current financial troubles is not the result of some international conspiracy against Hungary; it is simply how financial markets work. They didn't succeed. "He still thinks that two weeks ago an attack of speculators was launched against Hungary. Moreover, he is convinced that international financial circles and international organizations he offended with his economic policies are taking revenge on the country."
It is possible that it is Viktor Orbán who is dim-witted unless the eleven overly friendly economists did not use strong enough language with the prime minister. Here is a picture taken at the meeting. It looks too lighthearted given the seriousness of the situation.
Károly Szász in the middle, Zsigmond Járai and György Szapáry to his right
Perhaps they were not as forceful as András Simor, governor of the Hungarian Central Bank, who referred to "some" people who talk about a speculative attack but "when it comes to credibility and economic fundamentals [Hungary is not Vitali Klitschko] but a punching bag." And as far as the word "speculation" is concerned Simor gave a lesson in linguistics: "I would call attention to the thesaurus which provides synonyms to the word 'speculate'--to think, contemplate, muse, ruminate, reflect on." He pointed out that anyone "who has savings must speculate--think about--what to invest in; for the short or long term, into foreign currency or into bonds." No wonder that Viktor Orbán doesn't want to hear what András Sinor has to say. In fact, if it depended on the prime minister, Sinor wouldn't be the governor of the central bank today. He prefers those smiling guys above.
The price? High. A government politician observed that he couldn't tell whether Matolcsy is sticking with the notion of a speculative attack against Hungary out of conviction or because of his loyalty to Viktor Orbán. On the other hand, Viktor Orbán is totally convinced! The delegation, according to this informant, will be instructed to negotiate very hard and to go the last yard. The question is whether the IMF and the EU will be in the mood to haggle with the Hungarian delegation that is getting its instructions from a man who sees the world through very peculiar glasses.
Surely it is no surprise to anyone by now that: a) OV is running the whole show and b) he DOES believe all this nonsense.
If both these things weren't true, he simply wouldn't be able to function as he does. There's no way he could do and say what he does without total self-belief and complete control.
The day doubt creeps into his mind (or his lieutenants') is the end for OV.
When will people wake up to the reality that we are not dealing with a normal politician here (or a normal man) – and the ‘normal' ways of dealing with him (and getting rid of him) simply won’t work?
Posted by: Paul | November 30, 2011 at 03:36 PM
And, talking of the psychology of the situation, it’s noticeable that JB isn’t around very much these days. And, when he is, he doesn’t have the energy and stamina he used to display.
No doubt he will claim that he is still decorating his flat! But I suspect his absence is a sign of something deeper.
Whilst the true believers mostly continue to believe, despite everything, those with access to outside news and opinions, and who are challenged about their beliefs, like JB, are beginning to worry that maybe the wheels really are coming off. And he knows that we know that too, so he is doubly reluctant to come on here and argue ‘his’ case.
The heart of Fidesz may still be sound, and the belief in their Messiah and his 20 Year Reich may still be strong, but at the edges doubt is beginning to creep in.
Posted by: Paul | November 30, 2011 at 03:49 PM
Look at Esztergom, it is not only in OV, or not in people not protesting, not even not protesting vigorously, it is 'too many people in important positions with an own agenda' (the Fidesz deputies) and 'too many people complying' (the police). Although it appears to be a particularly bad case, I am not sure whether it does not reveal the logic of the current misfortune and show that it is not OV only.
What OV might mean by "traditional political methods" would be interesting to know.
"he is convinced that international financial circles and international organizations he offended with his economic policies are taking revenge on the country."
That need not be a wrong assessment. But why should all steps of OV go unpunished? Of course he may expect revenge given that he managed to harm quite a number of people.
Posted by: Kirsten | November 30, 2011 at 04:00 PM
He sees other motives through the lens of his own motivation.
He felt terribly humiliated by GY in 2006 and set out to ruthlessly destroy him in revenge. He sees nothing odd about this reaction and, of course, expects everyone else to behave in the same way.
Any psychologists on here? I'm sure his behaviour/character must have a name.
Posted by: Paul | November 30, 2011 at 04:44 PM
@Paul: My take on this is that it's NPD (narcissistic personality disorder) with paranoia starting to kick in. These two very frequently go together. Not that the name really matters, the problem is that he is not reacting as a normal person would.
No, I'm not a certified therapist, though I have studied psychology and research in a related field. Professional therapists, by the way, would not diagnose people without a series of personal interviews. Mostly that's regarded to be very unprofessional.
@Kirsten: You are right, it's not only OV and that is really disturbing. The problem is that this personality attracts similarly dysfunctional personalities and models dysfunctional behaviors... in other words, others would follow "his style", either because of personal inclination, or just because of a natural tendency to emulate the leader. So, to put it simply, we have a bunch on mini-OVs at different levels of the government (beside the simple opportunists).
Posted by: An | November 30, 2011 at 05:36 PM
On July 29 Orban's mental state was already discussed on this blog (and a few more times). My issue is not with Orban at this point on time. OK the guy is sick. No question. But how about the others? They must know. It is like the servants of Stalin. there is not a single man in his circle who would call his bluff. Orban is sick, so he is not responsible for this madness, and any decent court would put him in an institutional setting, but the others cannot be all sick. I mean, Vona.. He is a clown. He likes to play dress-up. What about the others?
Posted by: Some1 | November 30, 2011 at 05:54 PM
@Some1: Maybe they are all sick? You know, sick people I understand. What I don't understand is that 66% who did not go to vote last Sunday in the 2nd district in Budapest... these people really like what's going on? Or just really don't care?
Posted by: An | November 30, 2011 at 06:00 PM
It looks like the EU is having talks today about the Hungarian situation. Owen Patterson (Secretary of State for Northern Ireland) in an interview on BBC Radio Ulster this morning:
"George Osborne has just gone to Brussels to discuss the problems of Hungary which has really severe problems..."
Posted by: David | November 30, 2011 at 06:58 PM
It's Simor, with M.
Posted by: dvhr | November 30, 2011 at 08:15 PM
Yeah, this FIDESZ bunch is a bonanza for psychotherapists ... or ethologist. Tools. Case closed. xD
What maybe a more interesting psychology question is how to approach the growing number of silent and frustrated FIDESZ voters. How would you feel when you put all your eggs in the same basket ... and well, your heroes turned out to be totally clueless (I'm struggling to find the right word - this is the whole point of my post actually). Not even clueless but really dangerous. When they convinced you that the "other guys" stole from you and then they steal even more. So the emperors are all naked. How do you talk to the people in this sort of fragile state of mind?
I have the feeling that my FIDESZ voter friends are in denial at this point. Also, I think they are ashamed somehow. We have to watch not to rub their noses into the reality too fast because - unfortunately very typical in the land of the goulash - they can stiffen up and do something just to show you that you can not win. Like voting for the Jobbik in 2014.
On the other hand we also should keep poking them on everything to constantly remind them of the naked truth.
Posted by: Mutt Damon | November 30, 2011 at 09:17 PM
This morning on ATV news. According to sources Matolcsy is replaced by Fellegi, because IMF did not want to deal with him.
Posted by: Ron | December 01, 2011 at 02:32 AM
VO is paying off the people who supported him. Unfortunately, the taxpayer bleeds.
http://www.bbj.hu/business/railway-workers-to-get-huf-9bn-from-mav-cargo-sale_61702
Posted by: Ron | December 01, 2011 at 02:55 AM
An article in Politics.hu from MTI
http://www.politics.hu/20111130/consolidation-to-follow-big-changes-in-2012-says-fidesz-official/
The government has set the end of the year as the deadline for completing legislation on structural reforms while 2012 will be the “trial run” for these new systems, Janos Lazar, the head of the parliamentary group for ruling Fidesz, said on Tuesday.
Commentor Viking put it nicely:
That was rather straight-forward to acknowledge that the clowns do not have a clue what they are implementing:
* the “trial run” for these new systems
Perfect timing
One can only pity the Hungarian people
Posted by: Ron | December 01, 2011 at 06:16 AM
You are all a self-righteous, moralizing bunch, in need of reality-therapy. Anyone in the US knows how to get out of this mess? Some fifty million people live on foodstamps, a high percentage of children in poverty. US debt is 350% of GDP, and the Chinese hold three trillion US debt. If they were a-coming, the US would be 'fizetésképtelen'. Yet compare the resources of US to that of Hungary. If I lived in the US, I would be a bit more humble before telling everybody how to do things. You just play your little violins, along with the Super Committee, while Washington is burning.
Posted by: Joseph Simon | December 01, 2011 at 07:21 AM
@JS: The US debt currently is at 100% of the GDP... not a pretty number, but at least get your facts right.
For some reason, so far, investors trust the US government and the US economy more than they trust the Hungarian government to be able to manage the situation. Figure why. (Hint: it's not an international conspiracy)
Posted by: An | December 01, 2011 at 07:46 AM
A funny piece by W. Tóta:
http://hvg.hu/w/20111201_spekulancs
Posted by: Eva S. Balogh | December 01, 2011 at 08:49 AM
It will be really interesting to see what the government's delegation will be able to achieve. (The justification coming from a government MP from the Economic Standing Committe that Fellegi is a seasoned businesman, who used to negotiate with partners shows how far these guys are detached from reality and how narrow minded their view of the world is.) Actually, as far as I know the IMF nowadays is not negotiating with a prepared set of measures, rather they used to adress problems they identified and ask their partners how they would deal with them. (Look at their Iceland program.) It offers a broad range of possibilities for governments, but they have to adhere to the rules of orthodox economics: they have to prove that the measures proposed will bring the imagined results.
It carries a lot of risks (especially given the composition of the Hungarian delegation) for the government in case the IMF will insisit on asking quetsions regarding the institutional capacity of the government and the fiscal policy framework they dismantled, but also can offer them an escape route if they can convince the IMF that their policiy will deliver without reinstating checks and balances. However, in any case the government will have to prepare a credible macro-economic forecast.
Posted by: Gábor | December 01, 2011 at 09:31 AM
Jospeh Simon: "You are all a self-righteous, moralizing bunch, in need of reality-therapy. Anyone in the US knows how to get out of this mess? "
You mean from the Hungarian mess? Why would they care? ..and on this blog why would we care how the USA will get out of their mess. I am not part of any blog regarding the political/economical issues in the USA. By the way I live in Canada, and we are just doing fine? Don't you live in Canada Joseph? Talking about self-righteousness, what connection do you have to the USA that you dare to criticize them? People who contribute to this blog are either Hungarian, live in Hungary or used to live in Hungary. You are a hypocrite, so I perfect;y understand your feeling of belongings with Fidesz, but it is you, who cannot see clear, and need some therapy Joseph. Couple of days ago you were unhappy about how Fidesz is destroying the memory of Imre Nagy. WHat happened since then? Are you keep reading the Fidesz propaganda?
Posted by: Some1 | December 01, 2011 at 09:57 AM
I think Joseph got dinged by his supers in the propaganda ministry for his pussy posts on Imre Nagy that accidentally showed some common sense. Now he's making up for it.
By the way Joe, last time when the US was downgraded, everybody started to buy US bonds. I send you a chocolate turul if you figure it out why.
Posted by: Mutt Damon | December 01, 2011 at 10:07 AM
"A funny piece by W. Tóta"
He never disappoints. This pun with the word "intelligence" is perfect fit for Orban The 5th when he's going after the "speculators" with spies because he needs "intelligence".
We have a local company here called "Counter Intelligence". They are in the marble kitchen counter business.
Posted by: Mutt Damon | December 01, 2011 at 10:57 AM
Off subject. I hope the paint did not dry on the "Red Sludge" painting ordered by the Orban Government to commemorate this catastrophe.
Apparently the government forced the affected citizens to sign a waiver that all their claims will be waved in favor of the Orban Government. It gets even more bizarre, as in the process, from the 2 milliard forints (6,576,927 euros) donated by private individuals and corporations, 350 million (1,150,000 euros) were spent and the rest disappeared. The money supposed to be given out as a quick help to those affected but it is nowhere to be found.
The affected who did sign the waiver (since they had no choice, otherwise they would of became homeless) were moved into new homes, but they had to return to the Orban Government all chattels that were donated to them by the Red Cross or by other donors (refrigerators, washing machines, etc.)
http://atv.hu/belfold/20111130_magyar_gyorgy
So, I think the new painting should also contain a section (maybe in a frame) that shows how the people are lining up to donate, while Orban is removing the refrigerator from someone's home with one hand and buys some MOL stocks with the other .
Posted by: Some1 | December 01, 2011 at 11:25 AM
US total debt is 350% of GDP.
You can verify it.
Posted by: Joseph Simon | December 01, 2011 at 11:30 AM
To be ignorant is a terrible sin!
http://en.wikipedia.org/wiki/Government_debt
Posted by: Eva S. Balogh | December 01, 2011 at 11:45 AM
@JS: http://useconomy.about.com/od/fiscalpolicy/p/US_Debt.htm
http://www.zerohedge.com/news/ironic-scariest-chart-ever-redux-america-will-surpass-100-debt-gdp-helloween
even fox news says 100%, if it was higher, believe me, they'd say it
http://www.foxnews.com/politics/2011/08/04/us-debt-reaches-100-percent-countrys-gdp/
This is the external US debt, same as what's 82% in Hungary right now. The total debt would be a lot higher for Hungary, as well.
Posted by: An | December 01, 2011 at 11:51 AM
Joseph is referring to the "total debt" not the government debt. I'm not sure if he realizes it - maybe he's just doing his job trolling us xD
Total debt includes the household debt and the financial institution debt. The is around 300% not 350% by the way. This is because asset back securities, mainly mortgage backed securities (financial instruments that package mortgages into securities), are counted twice: first in as a household debt (your mortgage) then as a financial institution debt.
I'm really just an amateur googler. I would love to hear from an economist what's the theory behind the disastrous 300%.
Posted by: Mutt Damon | December 01, 2011 at 12:21 PM