I have noticed in almost all the commentary about the deficit/debt crisis in Greece, Spain, Ireland, Italy, Portugal, and now here, in Hungary, that the discussions entirely focus on the public sector, there is none on private debt, the role of western European banks in encouraging borrowing in other currencies, or the fact that the IMF is up to its old ways of imposing pro-cyclical policies or deficit reduction, public sector contraction and often further privatization – all at the time when the objective economic situation – a near depression, calls for deficit spending and public job creation.

We should throw the situation in Latavia and Iceland into this trend as well.

But let’s focus on Greece and Hungary; what is the vaunted private sector doing? In Greece, we have shipping, energy, tourism, agriculture – and tax avoidance as the major industries. Innovation? Investment? Job expansion? Where are the plans for solar power in sunny Greece? In all the articles I’ve read, including at the vaunted Financial Times, there is apparently no shorting coming in Greece’s private sector…even worthy of discussion: it’s all good, we are supposed to assume…

In Spain: good infrastructure, but exactly what would be Spain’s old reliable, the proverbial “comparative advantage,” vis-a-vis eastern Europe, including Hungary? The periphery countries are all implicitly to gut the pay and the size of the public sector, thereby driving down wages in the private arena, but since this is everyone else’s game plan, and it still will be undercut in Asia, where’ the logic? Labor market inflexibility is the neo-liberal whipping boy everywhere, but in all the public beatings of public sector, no one seems to mention that Ireland delivered all the neo-liberal check-list items, and then some…and how’s old Ireland doing?

Maybe, just, maybe, a new model is needed. Rather than obsessing over the deficits, we need to emphasize public investment, if the private sector won’t, in energy (and therefore income saving) efficiency and conversions….that would seem to be better in the long run than another round of Goldman Sachs and companies latest models in currency swaps, credit default swaps, and interest rate swaps…which, budget balancers though they theoretically are supposed to be, they none-the-less seemed to be more than happy to pedal to Greece…with the well-publicized results.

As for Hungary, please explain how the current private sector stregth industries, or promising new ones, will be able to market their products or services to Europe and beyond…to generate the missing jobs? Any promising trends? Or is it all top secret, because like in America’s Wall Street, they don’t know the next hot area until they wake up that morning…?

If the current game plan consists of pure public spending bashing, then I think there is a logical burden to show what the promise in the private sector will be…

The date of the FT letter is 22th December 2005, that of the Deutsch response 6th January 2006.

http://www.klubradio.hu/cikkonly.php?cid=25910

This is a verbose gobbledigook of a document, but it contains the single sentence that satisfied FT:

“….if the statements of the politicians of FIDESZ and the advertisements published by the party have made the impression in you that FIDESZ have offended the personality rights and the goodwill of The Financial Times, then it was against our intentions and I express my sincere apologies…..”
Once again: Please follow suit!

2. Prophets are always right if not…

4. ????

1. Mr. Orban was forced for nothing.
2. If I should apoligize for my comment, I should apoligize for the turth.
4. Finally the facts confuted that the mentioned article was not correct.

May I remind you, that Mr Orban was forced to apologize to FT editors for similar words. Would be nice of you to follow suit.

So finally I would have just one remark on your findings. It is true that Fidesz, the main opposition party, who is likely going to win the next elections, said that the budget deficit in 2010 could reach 7%, but they did not say that this would happen because of an fiscal expansion or reversing the passed austerity measures. They are just claiming that the deficit is going to be much higher because 1) there are some disbursements which are postponed to the next year by the government to present lower figures this year, 2) some state owned companies need for a reconsolidation (e.g. the debt of the public transport company of Budapest is around 3 billion (10^9) euro).