In coverage of the global economic downturn Hungary is cited as an example by numerous international news outlets of a once-prosperous country that has turned into a crisis-stricken mess in just a decade. Having returned to Hungary during Kádár’s “soft dictatorship”, Alex Bandy, the Hungary correspondent for the Associated Press, has first-hand experience of what has transpired.

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The Reform Alliance, a loose association of employers and academics, for weeks has been trying to convince Hungary’s gridlocked political elite of the need for fundamental reforms. Former finance minister (1989-90 and 1994-95) and leader of the alliance’s working group on economic policy, László Békesi, spoke to The Budapest Times about why he is confident that the alliance’s set of proposals will be put into practice sooner or later.

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A complex cocktail of absurd monetary policies and dangerous investment practices has staggered the world’s economies, but the root cause of plunging stock indexes, a paralysing global credit crunch, and terrifying economic indicators can ultimately be traced, according to Lászlo György, University Lecturer on Economics at Budapest University of Technology and Economic Sciences, to a pervasive psychology of debt and a misunderstanding of what money is and who controls it.

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By the beginning of 2009 it has become obvious that the Roma policy pursued in the past decades, and especially that of the left-liberal government of the last seven years, cannot be continued. The need for a change in direction is clearly reflected by the degree, and intensity, of popular protests in relation to crimes committed by Roma people in two important county seats, Miskolc and Veszprém.

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As has been the custom for nearly eight decades, the new President of the United States was inaugurated on 20 January. The significance of this momentous event was revealed when the US Ambassador to Hungary April H. Foley almost broke down in tears during her speech.

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The financial crisis, which is now hitting the new member states severely, highlights the shortcomings of the existing institutional architecture in Europe. Current strains reflect a revaluation of risks but they also result from policy mistakes. For many years, growth in the new member states has relied on massive inflows of foreign capital that are now being called into question. Some of the non euro-area new member states suffer from serious vulnerabilities, to which policy has been slow to respond.

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The Budapest Mayor's Office issued a full-scale smog warning on 11 January as air pollution levels, exacerbated by power stations that had switched from gas to oil amid the ongoing gas supply crisis, rocketed to several times the EU's safety limit.

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Russian gas supplies running into Hungary were completely cut off last Tuesday after Ukraine reduced the scheduled supply of 38 million cubic metres per day by a quarter last Monday. The same day, the amount of Russian gas delivered via Slovakia and Austria to western Hungary was halved, leaving Hungary with just a trickle of gas imports. With Central Europe in the grip of a winter freeze, gas consumption in Hungary was about 70 billion cubic metres a day when the effects of the Ukraine-Russia gas row hit home.

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Against analysts’ expectations, the rate-setting Monetary Council of the National Bank of Hungary (MNB) decided to lower the base interest rate by 50 basis points to 11% last Monday. The last time the council changed the base rate was on 22 October, before a four-day weekend, when consensus was reached in an extraordinary session to raise it by 300 points to 11.5%, in order to fight off speculation on the national currency. Despite the recent decrease, the Hungarian base rate remains one of the highest in the European Union.

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The employees of the Komárom and Debrecen-based electronic parts manufacturer Foxconn will be part of the biggest layoff the country has seen since the global financial crisis began to take its toll on Hungary. CEO Péter Tálos announced last Friday that some 1,500 employees of one of the biggest global suppliers of Nokia will be fired before the end of the year.

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As a direct result of the economic crisis jobs are being lost, therefore enterprises will receive HUF 1.4 trillion (EUR 5.25 billion) over the course of the next two years, Economy Minister Gordon Bajnai announced at last Thursday’s Economic Summit. Before any company manager had the chance to spontaneously hug everyone around them, the minister added that there will not be any new spending associated with the stimulus package, but instead a rearrangement of EU funds and government-guaranteed bank loans can be expected.

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The worst chapter began with the 1919 Trianon treaty and the latest, but definitely not the last, in the book of Slovak-Hungarian relations was written on 1 November in Dunajska Streda, at a football game between DAC, the team of ethnic Hungarian city Dunaszerdahely and Slovan Bratislava. Local policemen stormed Hungarian nationals, who were at the game to support the home team and to protest the burning of a Hungarian flag at an earlier game.

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Hungary's vulnerability is not exceptional, either within the region or in comparison with other emerging markets. We can easily find an example of a country at greater risk, despite having a developed market, in Denmark.

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 “Hungary is in the middle of the storm”, and “the Anglo-Saxon financial model will disappear” were just two of the opinions voiced at a conference in Budapest last Wednesday, where the global economic upheaval was on the agenda. Across town, as if any further proof were needed that Hungary is well and truly reaping the whirlwind, the National Bank of Hungary was announcing a base rate hike from 8.5% to 11.5% in a bid to protect the vulnerable forint from speculative attacks.

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In less than 48 hours after the National Bank of Hungary (MNB) left the base interest rate unchanged at 8.5%, the Monetary Council found itself back around the table last Wednesday at an extraordinary session, hiking the rate by 300 base points to 11.5% in a bid to defend the floundering forint and attract investors T-bill auctions, after several cancellations due to lack of interest.

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A high level crisis summit was held in Budapest last Saturday to discuss the threat to Hungary from international financial chaos.

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Four people were killed and another three, one of them a young German girl, were in critical condition after a train crash 30km southeast of Budapest last Monday. Signal failure was initially blamed for the disaster, which prompted the resignation of the chairman of the board of state railway company MÁV and the transport minister.

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The most recent wave of the ongoing global financial crisis has hit Hungary along with the whole of Europe. Gábor Békés, research fellow at the Institute of Economics of the Hungarian Academy of Sciences (MTA) and former analyst at Lehman Brothers (2001-03), says in his summary of the impacts while looking down the uncertain road ahead.

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Many people regard Hungary’s past as closed and are unwilling to talk about it. Historian Krisztián Ungváry, by contrast, stands accused of slander in two court cases because he openly criticised the political past of two public figures. “As a historian it is not my duty just to bury myself in books. Instead I have to take a public stance and use my knowledge in the fight for democratic values,” Ungváry said. The determination with which he answers reflects the fact that he has already withstood many public battles.

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I grew up surrounded by animals. In the ’50s in the village we kept rabbits, chickens, pigs, sheep, geese and ducks, which were allowed to move around relatively freely in our yard and garden. I was only at war with the geese: barely a day went by without bruises and cuts, and on many occasions my father had to rescue me from the attackers with purposeful steps. Some of the miscreants were sentenced to a premature death in the oven.

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István Kocsis, who became CEO of Budapest Transport Company (BKV) at the start of September, is optimistic about its future. He contends that BKV is not loss-making because it operates badly, and believes that predictable conditions, rather than greater state support, represent the solution to the problems of the company which treats Budapesters to 1.3 billion journeys each year.

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Keith C. Smith of Center for Strategic & International Studies believes corruption, and not dependence, is the threat to Western Europe from Russian energy trade. He criticised the EU for what he sees as its pusillanimous reluctance to stand up to Russia.

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It has almost become a cliché that the current political gridlock in Hungary may be resolved in three different ways: the dissolution of parliament and early elections; setting up a new “caretaker” or expert government; or securing a majority for the Socialists’ programme. In reality, there are more possible scenarios than that – especially from an economic point of view – because what happens and when is of vital importance.

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Russia was isolated but defiant at the end of last week as the diplomatic storm raged over its military intervention in Georgia and its recognition last Tuesday of the independence of the breakaway regions of Abkhazia and South Ossetia.

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The government has finally ended months of speculation by revealing its ideas on tax reform. Prime Minister Ferenc Gyurcsány released last Wednesday a plan in which he envisaged cuts of HUF 1.2 trillion (EUR 5.05 billion) over four years. The streamlining would begin next year with cuts totalling HUF 300 billion (EUR 1.26 billion) – the best indication yet of what the 2009 budget could contain.

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A former equities broker at the Hungarian K & H bank was sentenced to eight years in prison by a Budapest court last Thursday after being found guilty of massive embezzlement and misuse of over HUF 20 billion (EUR 84.57 billion) of investors’ money.

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The city of New Orleans, Louisiana - part of a metropolitan area of some one million people - is preparing for the arrival on Monday of Hurricane Gustav, which could be as devastating as Hurricane Katrina that three years ago flooded much of the city and left at least 1400 people dead. VOA's Barry Wood has the latest on how New Orleans is preparing for the storm.

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I was in Somogy County in December 2007 when Hungary entered the Schengen agreement. The photo coverage in the news provided some food for thought. Seeing politicians dismantling border barriers reminded me of pictures of the German attack on Poland on 1st September 1939 – at that time, doing away with borders by armed force. Today, European borders are dismantled by common accord. The following is a personal interpretation by a foreigner of a sensitive Hungarian issue. 

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Hungary opposes several points of the Common Agricultural Policy (CAP) "health check" and some sharp disputes are expected this autumn between Hungary and the European Commission.

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