“You’re Banned!” – Hungary To Ban Rothschild Banks

A long-running dispute between Hungary and the International Monetary Fund escalated on Monday when the head of the country’s central bank called on the IMF to close its office in Budapest, saying it was no longer needed.

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By Nerti U. Qatja@VOP_Today


According to Spiegel Online – Relations between the government of Hungarian Prime Minister Viktor Orbán and the International Monetary Fund have never been especially good. Now they have hit rock bottom.

Orbán’s former economy minister and current central bank governor, Gyorgy Matolcsy, wrote a letter to IMF Managing Director Christine Lagarde on Monday calling on the fund to close its representative office in Budapest as it was “not necessary to maintain” it any longer.

Hungary owes its economic survival to the IMF. When the country was caught up in the global financial crisis in 2008, the fund and the EU came to the rescue with a €20 billion ($26 billion) loan. At the time, Orbán’s predecessor was in office.

Ever since Orbán became prime minister in 2010, Hungary has had trouble with international institutions. His government pushed through a new constitution and many laws that curtailed democracy, the powers of the constitutional court, the justice system and press freedoms. The EU responded by launching several proceedings against Hungary for breaching EU treaties.

In early July, the European Parliament passed a resolution calling on Hungary to repeal the “anti-democratic changes.” Orbán angrily dismissed the demands as “Soviet-style” meddling.

Hungary Says Will Repay IMF Loan This Year

Under Orbán, all negotiations with the IMF about fresh aid have failed. On Monday, central bank chief Matolcsy said the country didn’t need the IMF’s money and that Hungary would repay the 2008 loan in full by the end of this year.

He said the government had succeeded in pushing its budget deficit below the EU ceiling of 3 percent of GDP and had reduced government debt.

Matolcsy is the architect of Orbán’s unorthodox economic policy which is based on imposing heavy special taxes on large companies. He became central bank governor four months ago.

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The Hungarian economy shrank by 1.7 percent last year. The EU Commission expects it to return to weak growth in 2013. The budget deficit is expected to rise again, back up to 3 percent of GDP.

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Record: The World Is $152 TRILLION in Debt – IMF

Calculation of burden highlights challenge of boosting growth.

The world is $152tn in the red — a record-breaking level of debt, according to the International Monetary Fund.

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By Nerti U. Qatja@VOP_Today


Today FT reports: The figure, more than two times the size of the global economy, comes from the fund’s latest Fiscal Monitor and is, officials claim, the most accurate measure of the world’s debt burden ever calculated.

“Global debt is at record highs and rising,” said Vitor Gaspar, director of fiscal affairs at the fund.

The figures highlight the apparent paradox between ultra-low interest rates imposed by many central banks in an attempt to encourage borrowing and boost sluggish economies, and the dangers that arise from excessive debt levels.

While the IMF did not call for rapid prepayment of debt, it warned that in some countries the unprecedented level of borrowing by companies was too high.

“Excessive private debt is a major headwind against the global recovery and a risk to financial stability,” said Mr Gaspar. “The Fiscal Monitor shows that rapid increases in private debt often end up in financial crises. Financial recessions are longer and deeper than normal recessions.”

Levels of borrowing have substantially outpaced global growth in recent years, rising from 200 per cent of gross domestic product in 2002 to 225 per cent last year.

While two-thirds of the debt is held by the private sector, governments’ borrowing requirements have also ballooned since the global financial crisis.

Nevertheless, officials at the fund — which is holding its annual meetings with the World Bank in Washington this week — want governments to act to boost growth.

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Calls for what are often dubbed “growth-friendly fiscal policies” have grown from the IMF and other multilateral institutions as concern has mounted that the world’s central banks have been left with too much of the burden to lift the global economy.

Mr Gaspar emphasised that debt levels were not high everywhere. “The sharp diversity across countries is a reminder of the need to tailor policy diagnosis and prescription to the specific conditions prevailing in each country,” he said.

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Most of the debt is concentrated in the world’s richest economies, although China has markedly increased borrowing in recent years. While low income countries have relatively low levels of debt, many have sharply increased borrowing in recent years.

The fund also said that companies would help raise growth if they shrank their balance sheets by reducing their size, although it acknowledged the process would take time.

He added that countries entering a financial recession with a weak fiscal position were likely to lose more growth than countries that manage to counter shocks by spending more.

Central banks have cut interest rates to all-time lows and engaged in mass bond buying in response to the global financial crisis. Although most economists think their actions have helped, there is also a broad consensus that the economy will remain below par unless governments do more.

The debt burden figure is based on data collected by the IMF and the Bank for International Settlements from 113 countries, which together make up more than 94 per cent of global GDP. Fund officials have worked on the project over the past year.