Friday, June 4, 2010

For a Few Forints More

Hungary Warns of Greek-Style Crisis

Fears that the sovereign debt crisis could migrate to central Europe were stirred Friday after a senior Hungarian government official said the previous government had manipulated budget figures and lied about the state of the economy, but most financial experts dismissed the remarks as a ham-handed negotiating ploy.

So a spokesman for the Hungarian PM is showing his hand by telling the world his country could be the next Greece. Given the steps other debt-sodden nations have taken to mask their insolvency, the Hungarian's candor seems counterintuitive.

Until you consider that what he is probably doing is pulling a Kim Jong-il; i.e., misbehaving to encourage foreign aid so he doesn't have to expressly beg for it. Like the generously foreheaded North Korean dictator, he knows that just acting naughty is reminder enough of the perceived potentially greater cost (further contagion) of not fronting him the cash.

And it pays to be near the front of the bailout line, because like I've said, at least one of these European sovereigns is going to be the Lehman of this bailout cycle, so Hungary is wise to force the Eurocrats' hands now. Look for others in Emerging Europe to soon start making public mea culpas about their inglorious balance sheets.

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