“If the only way is printing money to help CEE countries out then I shut up and continue despairing.”

Well look, I’m not saying it is as simply as that, or that printing money is the only thing to do. There are lots and lots of internal reforms that can (and should) also be carried out. My point is really that people in the East need to be a bit more prudent (not that they should shut up completely, and be gagged) when expressing their opinions, given the fact that they generally need help. It is a bit like biting the hand that feeds you.

Obvioulsy the CR is the economy with the “least” problems at the moment, but all this is relative, and the failure of the property company OCRO this week makes clear that no one is risk free.

The CR is directly tied in with Germany, and will be pulled down with Germany, so even in the CR they have an interest in QE at the ECB, if only to stop the German economy falling into deep deflation.

May I remind you that earlier this week we saw Japan house prices go back to the 1984 level. In Germany they are delicately poised at present round the 1995 level. It only needs one sudden push for them to go tumbling backwards, and with them the German economy flying back in time.

Hungary and Latvia have very urgent problems at the moment. Bokros seems to be the only person in either country with some sort of clue what is happening, and even he hasn’t thought too much about the demographic issues.

So it is very important that something is done at EU level to help (and not just lend more money that people can’t repay) the two countries. This is my main point.

And when you need money from people, you need to be sensitive to their feelings, that would be my other point.

If the only way is printing money to help CEE countries out then I shut up and continue despairing. I really thought someone, somewhere has more prudent solutions.

/I don’t live in Hungary. My point of view is more affected by the UK discourse and I looked at Topolanek’s remark from that perspective. Do you mean that he said one thing in the EU and does another at home?

*******************************************

Hungary’s President László Sólyom has said on Wednesday early elections would be the best solution to drive the country out of the crisis, while former finance minister Lajos Bokros warned the country faced “a choice between more crisis or bankruptcy”.

Sólyom said that with parliamentary elections scheduled for the spring of 2010, appointing an interim prime minister would be merely a temporary and short-term solution to the country’s economic and political woes.

Lajos Bokros, the architect of painful spending cuts as finance minister in the mid-1990s, said Hungary no longer had any fiscal tools in reserve to soften the impact of a deep recession.

“Hungary is in a unique trap,” Bokros told the Financial Times.

“It’s not comparable to Poland or the Czech Republic, which can implement counter-cyclical policies to counteract the crisis. Many, including the prime minister, don’t understand this, and still want fiscal expansion [...] But for us, it’s now a choice between more crisis or bankruptcy.”

*******************************************

I agree with Bokros, with this qualification: that the alternative facing Hungary is between more crisis and bankruptcy only so long as a direct fiscal intervention from the EU/ECB is not envisioned. Under this scenario, without the EU directly involved (a la Obama) either you get more crisis now and bankruptcy later, or bankruptcy now and more bankruptcy later.

I am not a Bokros groupie, but I do think he does have much more idea of where reality is than the Topolánek’s of this world do.

Respected politicians are speaking out against the course of action taken by the USA and Britian (ex. New Zealand, China, United States).

Continue to poo-poo the words of Czech Prime Minister Mírek Topolánek. Then ask to been seen and respected as the true voice of the EU. Let’s see how much weight/respect that diplomatic position carries.

In closing, what does the EU think of the “Austrian” school of economics? Who will be the next President of the EU?

It just provides grist to the mill of those who consider the east of Europe is, well, let’s say “theatrical”.

But you are in Hungary aren’t you, and the economy is contracting, making your government revenue contract, making your economy contract even faster.

So, do you have any other proposals than the ECB prining money to inject into your fiscal (ie the Obama/Bernanke recipe) to stop your country disappearing straight down the plughole?

What is biazarre, I suppose, is these kind of speeches coming out of the East, when it is the East is the European region most in danger of meltdown at this point. On the other hand, many in the East are arguing that such reports are exaggerated, and maybe this latter detail is the most bizarre part of all, since if my country was at risk (which it is) I would want help from wherever I could get it.

A case in point was yesterday’s UK bond auction flop.