2012年1月12日 星期四

2012/1/12 Hungary won’t be last to make bondholders pay

看起來匈牙利選擇違約的機率很高,畢竟緊縮帶來的痛苦很深,違約是較為輕鬆的選項。 


如果匈牙利在近期違約,很有可能再度衝擊希臘,並帶動歐洲銀行再度陷入危機。


LONDON (MarketWatch) — Much like Greece, Hungary was one of those small, slightly peripheral countries that most people in the financial markets probably thought they could get through a career without ever worrying about very much.
With a population of slightly less than 10 million, and with a total gross domestic product of less than $200 billion — only half the market value of Apple Inc. — it hardly had much of a claim on the attention of investors.
But right now, Hungary is could be the epicenter of the latest next financial storm.
The country is teetering on the edge of bankruptcy. Its authoritarian populist Prime Minister Viktor Orban is refusing to play ball with the International Monetary Fund. Bond yields are soaring and credit is drying up. The country may, in the next few weeks, become the first major nation of this ongoing sovereign crisis to default — and that could trigger a wave of massive, perhaps even crippling losses across the European and indeed global banking system.

Reuters
Hungary's Prime Minister Viktor Orban
Hungary by itself doesn’t matter very much to the markets. It is neither big enough nor rich enough. But it is a foretaste of things to come. The markets keep demanding more and more austerity. Eventually political leaders are going to kick back against that. It might be the first major country to default on its debts, but it won’t be the last, and that means there is a lot more pain ahead for the markets.
The Hungarian economy is a mess. Pumped up by lots of cheap lending during the credit bubble — and in particular by lots of cheap mortgages denominated either in euros or Swiss francs — it hit a brick wall after the credit crunch. It suffered one of the deepest recessions anywhere in 2008 and has struggled to recover since. A mountain of foreign debt has started to catch up with it. The ratings agencies have steadily cuts its status down to junk, and bond yields have soared. Ten-year yields are now up around 10% and the stock market has been hammered.
It is quite clear what the markets want. After a decade-long debt-fueled bubble, they are looking to the IMF to come in and clear up the mess, and make sure foreign investors don’t suffer any losses. If that means a harsh austerity regime for the ordinary people, so it goes.

Is Italy the biggest risk to the euro?

Italy poses the greatest risk to the euro amid the sovereign-debt crisis, Fitch Ratings said. Vincent Cignarella joins Markets Hub to discuss.
The Hungarians, however, have other ideas. The PM Viktor Orban is refusing to play ball with the IMF. Talks over a fresh bailout have repeatedly broken down. The main issue is the independence of the central bank — the government wants to put it under much tighter political control. But this is also about austerity. The country now looks set for a lurch to the authoritarian right and may well default in the process.
Orban is a fairly unpleasant politician, and potentially another Vladimir Putin in the making. That said, it is hard not to have some sympathy with the Hungarian position.
After all, the standard IMF medicine has hardly worked out very well in other countries. The Greek economy is still contracting at more than 5% annually and shows no sign of recovering any time soon. Ireland is slipping back into recession. If that is the price you have to pay for continued support from the IMF and for appeasing the bond markets, it shouldn’t be any great surprise if many Hungarians decide they are better off without it.
That revolt is going to grow and grow as 2012 progresses. Political leaders are going to fight back against the austerity the financial markets demand.
In Greece, it is hard to imagine that permanent 1930s-recession will be acceptable forever, even if the European Union does put technocrats in charge of the country. The same is true of Spain and Italy. Spain will be back into recession this year: The government now expects that GDP will contract by 0.2% this quarter and by 0.3% in the next. Italy looks just as bad. The economy contracted by 0.2% in the latest quarter, according to government figures, and with deep cuts looming in public spending, and little sign of structural reform, the downturn may well be a deep one as 2012 unfolds.
Everyone knows the reason. The confidence of the bond markets has to be restored. The debtors have to be paid in full. The banks can’t be allowed to go bust, otherwise the entire economy will collapse.
In fact, it isn’t really true. Iceland went bust, and seems to be growing again now — indeed, it is doing better than many of the countries that are still struggling to pay back every cent they owe. Eventually new leaders are going to emerge who demand that some of the debts get written off. Europe will be the epicenter of that. But it won’t be restricted to Europe alone. The U.S. has massive, and quite possibly unaffordable debts. So does Japan. So do many other countries.
In reality, sorting out of the debt bubble is going to take a long time and is going to involve a lot of pain for everyone. The view of the markets is that it is always ordinary people who should take the punishment — and never the banks or bondholders who should suffer any losses.
But Hungary shows that isn’t always going to be possible.
Prime Minister Orban has realized that bankruptcy isn’t such a bad option. It simply means the investors suffer some losses.
He is unlikely to be the last leader to reach that conclusion and that means there is a lot of pain ahead for the financial markets. Much of the debt that was built up in the last decade is, in reality, never going to be re-paid. The investors will have to take some losses, and the economy will have to suffer some austerity. A one-sided deal is not, in the medium term, going to be acceptable.
Hungary may be the first country to make that point, but it certainly won’t be the last. 
Matthew Lynn is chief executive of Strategy Economics, a London-based consultancy. His latest book ‘The Long Depression: The Slump of 2008-2031’ is published by Endeavour Press.

沒有留言:

張貼留言