Your fear of crisis is probably not without foundation. I think the best people in Hungary can do is to concentrate all efforts on seeing things just a little bit lighter, which is very hard nowadays indeed. We all know the economical importance of expectations…

I myself have smart, young friends how are seriously considering leaving Hungary. They are able to and because of their talent and hard working habits they could be successful anywhere. Young people such as them leaving Hungary in considerable numbers is my greates fear of all. We have seen similar events happening on the sience fields just too many times in the last century. (Only one Noble price winner with Hungarian origin produced their research and discovery in Hungary…) These people would need something to believe in to stay and I think the worst sin of all from political actors (governing or opposition does not matter) is that they put little to no effort on providing a brighter future goal for people to work for. There is no country vision and we would very much need one. People need to believe in the future goods for what they are sacrifising present opportunities for. Not a single political entity is giving them this, all are just too much sank in just-in-time political fights and problems. I wish they would be reading this… oh.. well I already told you I’m an idealist

I stumbled across your blog, and find what you have to say interesting. In particular I noticed this point:

“So what’s ahead? The quick economic actions are required. There is no doubt. There are no other quick-win opportunities that to turn to tax increases and benefit restrictions. I just hope that when they planned the program they also had growth in mind in mid-term.”

What’s ahead is precisely the question, and you hit the nail on the head when you ask how you cut spending, increase taxes and sustain growth all at the same time.

I am a macroeconomist, and I belong to the blogging collective a Fistful of Euros which you may know. I am pretty concerned about the situation in Hungary. Quite frankly I think I have never seen a situation quite as complicated as this one.

In part you also need to think about the interest rate, which needs to be high to control inflation, but also needs to be low to let the forint drop so you can export. Really you are going to be very dependent on export lead growth.

But if the forint drops then all those people with none forint loans will really have a hard time.

No easy solution I’m afraid.

In fact I am so concerned about all of this that I have set up a small weblog called Hungary Economy Watch to follow the situation as it evolves.I have a couple of peeople inside Hungary who help me, but any pointers you can offer would be most welcome.

Essentially I am preoccupied by your ongoing demographic dynamics. You have very low fertility, and quite low life expectancy which is set to rise and rise. The issue with the latter is the pensions and health bill that needs to be paid, and just who will do the paying? You can see the battle royal that is going on with the drug companies right now.

The thing is you need children (which means a pro-natalist policy from the government, but this, as we know, costs money) and you need to be able to attract and retain immigrants.

My big worry is that you could have a major crisis sometime around the middle of next year (I agree with your sentiments on the politicians entirely) and this sends a load of young people vomiting out in search of work and money to send home to their older relatives. The impact of such a hypothetical crisis could be quite devastating on your already weakened population pyramid.

Just some thoughts. I have linked to you in my sidebar. All the best.