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Markets braced for turmoil after IMF and EU withdraw 17bn Hungary financing deal
The Telegraph ^ | 7/18/2010 | James Hall

Posted on 07/18/2010 11:13:39 PM PDT by bruinbirdman

European equity and credit markets are braced for a volatile day of trading after the International Monetary Fund (IMF) and the European Union dramatically withdrew a €20bn (£17bn) financing deal for Hungary over the weekend.

The move, which was described by economists as “very rare”, means that Hungary will not have access to standby funds that were secured as part of a 2008 loan deal. The credit line was suspended on Saturday after the European Commission voiced concerns over the newly-elected Hungarian government’s budget plans.


Viktor Orban, Hungary's prime minister

The stark move by the IMF and EU will reignite fears in global stock and money markets about the state of Europe’s sovereign debt. It could also derail the fragile confidence that has been returning to markets after moves to resolve the economic crisis in Eastern Europe.

Hungary’s woes come amid fears of a broader bear market developing as investors adjust to signs of a global slowdown led by the US and China. The weekend’s events will only add to market jitters.

Economists have argued that the return of confidence to Europe is partly based on the assumption that the IMF and the EU will automatically step in as sugar daddies to save failing economies. The suspension of the review of Hungary’s credit line at the weekend will send out an international warning and shows such views to be naïve, observers said last night.

Peter Attard Montalto, economist at Nomura Securities, described the IMF and EU’s action as “a very rare event”.

“Countries usually go out of their way to satisfy these missions,” he said.

Hungary has Europe’s highest public debt at 80pc of GDP.

Viktor Orban, Hungary’s prime minister who was elected in the spring, last month unveiled a significant austerity package.

However, European

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; News/Current Events
KEYWORDS:

1 posted on 07/18/2010 11:13:44 PM PDT by bruinbirdman
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To: bruinbirdman

European politics and finances are both big houses of cards.


2 posted on 07/19/2010 12:11:54 AM PDT by lmr (God punishes Conservatives by making them argue with fools.)
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To: bruinbirdman
George Soros is Hungarian. Why doesn’t he show the world he is a patriot and give some of his money to his homeland? /sarc
3 posted on 07/19/2010 12:46:52 AM PDT by Cowboy Bob (Liberalism and Patriotism cannot coexist.)
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To: bruinbirdman

Obran’s Fidesz Party, along with conservative allies, won a supermajority in the spring elections. Given how little Brussels respects conservatives, I wonder if this is payback.


4 posted on 07/19/2010 12:56:39 AM PDT by Heatseeker (Elizabeth Cheney for President)
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To: Cowboy Bob
"George Soros is Hungarian. Why doesn’t he show the world he is a patriot "

Soros will make money on Hungary's economic woes.

While Soros' goal is the demise of capitalism by manipulating capitalism, he actually is facilitating the downfall of socialism in capitalist countries.

yitbos

5 posted on 07/19/2010 1:05:41 AM PDT by bruinbirdman ("Those who control language control minds.")
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To: Heatseeker
"Given how little Brussels respects conservatives, I wonder if this is payback."

Looks like it.

Hungary instituted fiscal prudence early. Its balance sheet (debt/GDP) looks to be in the top tier of EU states on a par with Germany.

yitbos

6 posted on 07/19/2010 1:16:36 AM PDT by bruinbirdman ("Those who control language control minds.")
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To: blam

Ping.


7 posted on 07/19/2010 3:03:56 AM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: Heatseeker
Obran’s Fidesz Party, along with conservative allies, won a supermajority in the spring elections. Given how little Brussels respects conservatives, I wonder if this is payback.

From the article:

Hungary has Europe’s highest public debt at 80pc of GDP.

Viktor Orban, Hungary’s prime minister who was elected in the spring, last month unveiled a significant austerity package.

However, the European Commission deemed this to be “largely of a temporary nature” and said that the measures “fall someone short” of what is required.

In a statement, the IMF said that Hungary must to reassure markets by achieving the budgetary targets.

There are also some interesting comments to the article.
8 posted on 07/19/2010 5:29:33 AM PDT by Zakeet (The Big Wee Wee -- rapidly moving America from WTF to SNAFU to FUBAR)
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