Casino Royal? Reminiscenses of my childhood

This blog tends to be quite boring, I must apologize again, but instead of the announced posts on Romania or Germany (later, later...) I felt an inspiration to share my views on another funny personality from Hungary. The pretext to focus on his deeds is an announcment from last week that his construction company will establish a huge complex near Pratislava/Pozsony with hotels, a casino, a spa etc. The plan is grandoman one, although not without precedents, Hungary was somehow a favorite location - at least tehoretically, as no plans were realized yet - for companies to build a European Las Vegas. One of these attempts is under investigation after the company was accused to manipulate with the swap of territory with the state, another one is allegedly on its way to realization, suprisingly quite close to the place where this new complex is planned. Anyway, casino and the turist flow awaited from such an enterprise seems to be an object of desire for many entrepreneurs. In this case 1,5 billion euro is the invested amount.
It is strange to see the extent of reverence this businessman is treated. As if he would be a genius. This time the announcment was covered with a badly hidden feeling of disappointment and loss, with sour remarks to the Hungaian burocracy and environmental movements because they are blocking the realization of similar plans in Hungary, without any doubts regading its use or viability. If Demján embarks on this project it should be a kind of Eldorado, imply these recations. Not to speak of an alleged 30000 new employee and a 5% rise in Sovak GDP. Obviously, it was also unavoidable to read some sentences on the superiority of the Slovak tax system and state policies, especially as the manager of the planned construction works emphasized this factor behind their decision.
This small and in itself not really significant story is a very good illustration of the lack of critical approach and a servient and self-submissive stance in the public. Demján is treated as an economc genius, Slovakia is the object of our desires and every statement of a construction company - clearly biased - is accepted at face value. The general mood resembled a disaster. (The ironical side of the story is that one of the newspapers, Népszabadság, a couple of days later published a report from Bratislava/Pozsony infroming the public of the doubts raised in Slovakia itself...)
However, Demján was never an economic genius, at least not in the sense being a good economist. Hew grew influential as a manager of a state run chain of deprment stores and later he represented a Canadian businessman from the field of construction, Peter Munk. (Maybe the company usually described as his is still owned by Munk...) It is hard to escape the impression that he never has risked his money and got rich using someone else's. But it is simple jelousy, I wont deny. The real paradox of the story that Demján for some years advocates a strange economic policy for Hungary. (As he is accepted without doubts as an economic oracle he had a lot of opportunity to explain it...) To get rid of every "non-productive" sector and focus - i.e. support it with every possible means, subsidies, tax cuts etc. - on industry! And no one ever asked Demján why is he building instead of producing? Why is he inclined to establish a casino when he could have establish a factory? No one ever became curious of this strange contradiction. Apart from the reality and the reasonability of such proposals it recalled a very old - and as I believed outdated - notion of (vulgar)marxist concept: the comprador bourgeoisie. A social group subordianting everything to the interests of foreign capitalists and making gains as the representatives of it...

Birth of a dangerous populist

One of the favorite way to conceptualize the present tensions between Slovakia and Hungary is to emphasize the populist politics and the according personality of Robert Fico, the Slovak prime minister. (Ironically, Mr. Fico almost never forget to portray the present Hungarian opposition and quite probable governing party after next spring, and its leader Viktor Orbán as dangerous populist and nationalist.) This line of reasoning has as its starting point the economic problems caused by the crisis and its consequences and as a consequence sees in the nationalist political measures and manoeuvers an attempt to preserve electoral support by way of diverting the public's attention.

Recovery everywhere - why to be scared?

Back from a long summer recess, although the lack of posts recently was not due to my activities (however overburdened I'm am with tasks and responsibilities) rather the lack of impulses and events. One could have seen a rising tide of good news (maybe even the favorite color has changed from green to a more ripened one), a series of countries posting positive growth figures for the second quarter (quarter-on-quarter, in yearly comparison it is rather pathetic) and economic sentiment soaring almost everywhere. As the latter is considered to be a so-called "leading indicator" (i.e. signaling in advance the trends of the respective economy) further economic expansion is expected in the coming month. The change was abrupt, and rather peculiar. While only a half a year ago (almost) everyone forecasted that the world is doomed, now (almost) everyone is prophesizing that our torture is already ended or it will soon end.

A new migration period? - Fears and future of the East

The fear from a mass immigration from the East to the West was always prevalent since the EU accession of the countries in the region became a certainty. Its intensity never really diminished and it surfaces again and again, even though the recent years didn't proved it. For a certain extent quite the contrary happened, the migration was beneficial for both the destination and the country of origin, at least in the short term. But as the intention for migrating is not lower than it was some years ago one can consider it a structural phenomenon in the architecture of the EU, at least for the time being, and with lasting impacts on both the integration and the respective countries.

The main source of and reason for migration from the East to the West is very simple: the possibility to work and earn money, more than it would be possible at home. For a while the system is beneficial not for the countries receiving the wave of migrant and benefiting from the relatively cheap labour, but for the countries in the East, where the bulk of those who try to make a new fortune in the West invest their earnings and savings. Mainly in real estate, but a part of them even start new enterprises as well. But there should be one underlying assupmtion in order to preserve this behaviour: the huge differences have to became more moderate with time and that way enable he migrants to return home and live on their earnings there. (Well, again I know that the whole phenomenon is more complex...)

As far as the accession countries are concerned this last, important precondition was not realized yet. Although for a moment it seemed that soaring wages in some countries (Poland, Romania, the Baltics) can somehow attract the emigrées to return, it proved to be artificial. The raise of wages without the corresponding increase in productivity hurted the competitivity (it was caused by shortages in labour), while the flow of migrants was turned back (at least partially) by the effects of the crisis in the West, that led to the loss of low paid jobs, in a large proportion filled by migrants from the East.

Up to this point it is a rather an ordinary story with ups and downs and I'm not really keen on putting forward the issue of migration and migrants in that context. My aim is to emphasize the structural importance of the phenomenon in the
EU and its significance for its future. As the main reason behind the movement of labour was the huge differences between parts of the EU in a sense it was nothing else than a way to handle the tensions arising from the fact,that the market in Europe is much more integrated than the economic policy and the social systems. While the respective countries in the East were compelled to race for investemnts with relatively cheap labour and it meant low taxes as well, the inflow of money from the West was the only way to raise the standard of living significantly, not only for those in the working age, but for those in the pension systems, as the income for elderly peaple was ridiculous and terrifying at the same time in many cases. On the other hand the migration was in effect a way to deprive those countries from a considerable part of their workeforce, and even if it was not necessarily deliberate, it was an inherent consequence of the accession and the architecture of the EU.

The real problem is, that the countries in the east, even now struggling with the process of ageing, having no good prospects for their future composition of the population in terms of the ratio of active and inactive population are not in a position to make investments in sectors with higher additional value of labour, and there is a fair probability that they will be trapped in this process. They can't provide their population with even the minimal social security (there are countries with an avarage pension at around 100-150 euros per month!) and they could only rely on the migration and the resources sent home by those working in the West. On the other hand migration diminishes the reserves in workforce and soon leads to labour shortages resulting in the raise of wages, unsustainable in terms of competivity, and/or immigration into these countries, very probably leading to social tensions. Moreover, in order to keep the remaining workeforce throgh investment they should provide further tax cuts for companies investing in those countries, eiher for lowering the cost of labour or in the form of a low corporate tax rate. It is almost certainly a vicious circle.

On the other hand migration is not necesserily means of making those countries even poorer subconsciously. The migration can be a way - in this case also not necessarily deliberately - to compell member states to set up a kind of common, or at least harmonized social security system. For the time being migration was only prevalent among those in the working age. But it can evidently lead to the complete failure of the new member states what is a pressure on the whole community and on the other hand there can be a second wave of migrants, this time elderly ones, who are discontent with their situation and perspectives in the respective eastern social security systems and who has a right to settly in the EU anywhere. (Anyway, cynically speaking, as long as the politicians from the West and the Commission urge the Eastern countries to rein in social expenses it also implies that living on 100 euros per month is possible and decent, in compliance with the values of Europe as being an ever growing area of prosperity and therefore the 100 euos pension should be regarded as enough to settle in any other country.) If such a pressure would arise it would simply turn the process, this time the east not exporting the benefits of migration, but the negative effects, and not only in terms of budget expenses, but in terms of social tensions.

It is not a predestined story, of course. But it is certainly among the possible outcomes of an integration where there is no will to resolve the largest divides between new and older members. And as the integration of the capital markets benefited - maybe disproportionately - the older members, the integration of the labour market (more precisely the principle of the free movement of people) could benefit the new member states' population, although in a very peculiar way, clearly distoring the initial intentions behind it.

Never say reform again? - Despised words and obvious bias

The release of the GDP data gave an opportunity to quickly assess the situation in ECE and Reuters did it with an article yesterday. Although the piece is not unbalanced, it has some peculiarties in it, showing incoherence in the picture and the argumentation. (Although it is rather a report then a text expressing opinion, the concluding remarks disguised as a citation from Katinka Barzych, clearly shows the preferences of the authors, more reform is needed in ECE.) Especially the part about the two types of ECE economies is lacking any real factual basis and can only be interpreted as a sign of an effort of those analysts who visibly failed as experts, to uphold their views and their personal legitimacy. After yesterday's data it is really questionable to make a significant difference between so called reform countries - Poland, Czech Republic and Slovakia - and "reform laggards" like Hungary or Bulgaria (!). Especially in the case of the latter, where not only a budget surplus was achieved - that means having had more restricted public finances as in any of the above mentioned reformers, but that was also praised as a booming and investment and business friendly country. Other telling fact is the lack of Romania from the classification, wich was again pointed out as a model for the reform laggard(s)... Maybe it would have been too much even for our experts to qualify Romania as having brighter outlook after the country registerd the largest contraction outside the Baltics?

Even more contradictory is the classification of the Baltics. For years those countries were considered to be among the most reform oriented, most business friendly ones with flat-tax systems and budget surpluses, low redistribution rates and social expenditures,* while Hungary as reform laggard - implicitly even in the above mentioned article - was criticized because of its "high" social spending. The fate of the Baltics, simply dosn't fit into the framework of reform countries having a good chance to emerge early from the crisis, and I'm convinced that it completely undermines the whole argumentation. Moreover the "experts" expressed their views that countries relying on strong export oriented industrial sectors will have an earlier recovery, due to growing demands in their export markets as the recession fades. But the reform laggard Hungary has one of the strongest export oriented industrial sector that in itself performed quite well even under the strains of the restrictive fiscal policy of the recent years, with huge growth rates in production and export as well. Why do these so-called economists think that Hungary's export oriented companies wouldn't be able to use the growing demand in order to expand their production, especially as the country's public finances are in a significantly better shape then two years ago? And why do they think that the Slovak industry relying heavily not on a differentiated range of products but on three car producing companies will experience a growth similar to the one seen in the last years? Can they ensure that the demand for cars will remain the same? Can they predict that consumers will have the same amount of money to spend and will look after the same goods at the same amount? I would call it voodoo economics rather than expertise... Or, even worth the complete incapability to pose the right questions.

The similar effects of the crisis in ECE and the contraction far worse then expected in countries earlier expected to fare better than "reform laggards" can be a sign - besides showing those experts in their completely miserable condition - that the very model of growth implemented in these countries after the change of regime reached its limits, especially as the integration of the financial markets deprived the fiscal policy from its means to controll and influence the outside flow of capital.

Despite the possible objections and the important questions looming over ECE even if "experts" do not dare to ask after them, they sole advice is to continue reforms. Although the crisis and the events in the Baltics even before, revealed that the economic model so wholeheartedly advocated was not capabale to fulfil any of its promises - sustained and fast growth, growing incomes at the individual level, fast real convergence to Europe - they are sticking to these ideas. Peculiar. And not only peculiar. Sometimes it is complete blindness. Nigel Sharing expressed his opinion that: "“The Baltics have proven that they are flexible enough to carry out these reforms and wage cuts. The only danger is that public pressure could grow due to the rounds of budget cuts.” But it s a contradictio in adjecto. If the Baltics already prooved its flexibility then no danger of the abovementioned kind should exist. If such danger exists then the Baltics has not proven anything of its flexibility. Moreover, the political developments - recently the Estonian coalition practically collapsed, the rightist parties look after new possible combinatitons, excluding social democrats - shows that the pressure is growing. Why not, one should ask? It is not only the course of events to be expected in an economic crisis, but at the same time reveals another important part of the problem. The much advocated model ensured fast growth - at least seemingly and certainly only temporarily - but at the cost of social cohesion, with growing inequalities. Why shouldn't societies opt for a moderate growth - especally as the sustainabilty of the 6-7-8-9% rates in the medium term are highly questionable, at least after the recent crisis' experiences - instead of a faster one menaing only real convergence to Europe only for the highest 10% or 20% of the respective societies. Sometimes there is a reason behind the development that the phrase reform is more and more despised in some ECE countries...

Oh, and the Slovak press was once again true to its traditions. The SME summarized the Reuters article with the following title
"Reuters: Slovaks made refomrs, Hungarians didn't. We can see the result" Yes, we can see. Slovakia is falling from a higher cliff into a deeper canyon?

*A recent rankings of competitivity of individual economies, based on the data from 2008 (!) provided by the IMD Business School ranked the Baltics still higher than the other ECE countries, despite a huge loss of position compared to the previous year....

Doomsday or the truth revealed? - Q1 GDP data released...

It is almost official - Slovakia is always keen on overtaking Hungary either towards heaven or hell. The official (although preliminary) data on the economic growth in the countries of Hungary, Slovakia, Czech Republic and Romania is out. Every one of them was much better then the landlside experienced in the Baltics ranging from a 12,/% to a 18% year-on-year, but neither was very rosy. The Hungarian one 5,8% seasonally adjusted is slightly better then it was expected especially as the range of predictions/forcasts (or rather guesses, sometimes even bets) was between 5,5% and 10%(!). The other three publications were equally surpirsing, Slovakia with 5,4%,* Czech Republic 3,8% and Romania 6,4%. In these cases the data was far worse than it was expected, the contraction being twice or three times faster than predictions/forecasts (or rather guesses, sometimes even bets).

The conclusions? The situation is not rosy (ok, it is dire) but ECE is more homogenous than the "analyts' and "economists" were ready to admit. The predicted differences are less pronounced in terms of GDP contraction and if one compares the decline of the GDP with the year on year datas from the 4th quarter of 2008, then it is quite clear that Hungary, the economy of which fared worse in 2008, performed relatively better, not that it has any real significance among the present circumstances. The important issue is that those countries that were presumed to be more resilient either because being in the Eurozone and/or having a supposedly better tax system making them more competitive in the eyes of so-called analysts and economists underperfomed their forecasts. Those factors that were considered to influence the economic processes were seemingly not really importante in determining the economic contraction's pace. One can even dare to assume that they played no role in it. The broader framework of the world economy determines the fate of ECE not individual country's responses.

Moreover it is another question mark regarding the expertise of the analysts, who have a great influence on the image on the individual countries - conferring and/or conveying the opinion and judgment of the "markets" about those economies, and that way sometimes even deciding whether those will be financed or not - sticked to ideas clearly not really having roots in the present reality, namely that every country is an individual case and the main reason behind the depth of the crisis is the respective economic policy.

Otherwise the competiton is not finished. Slovakia is on the heels of Hungary and Romania is already leading the pack. Beware Hungarians...!!!

*Update: according to figures at the website of the Slovak Statistical Office the seasonally adjusted data for Slovakia was in fact 6% decline, that means even higher than the respective Hungarian one.

Slovakia still the frontrunner - irony and self-critic

As the data on the economic production and trends in the first few months in ECE is gradually revealed it is quite clear that the whole region is facing an economic downturn, regardless of earlier preformance and forecasts on possible growth. Last week the Slovak Statistical Office published its results on the industrial production in February, 28,2% year on year decline. It is very serious, especially as the industry makes up at about a third of Slovakia's GDP, but not suprisingly, given the effects of the crisis on the car making industry, of wich Slovakia's current ecenomics is based on.

The real surprise is the reaction of some of the Slovak newpapers, especially that of the SME's. The newspaper suddenly portrayed the situation very realistically, moreover we should find traces of self irony in the article. It is enough to emphasize the title, almost jokingly plyaing with the phrase "look at someone's back" in case soemone is hopelessly trailing the other. For months Slvakia was a frontrunner with its enomrous growth and Hungary was prophecized to be doomed, but the situation suudenly cahnged and at the moment it is not clear who is leading the pack in terms of velocity of the contraction. In this case Slovakia's "superiority" - that very popular idea - regarding the speed of decline is stressed and portrayed as faster than either the Czech Republic's or Hungary's speed of industrial contraction - turning around the whole concept.

Here I'm obliged to make some self-critic, the SME, that I was criticizing because the articles in the newapaper were sometimes reflecting the strong belief in Slovakia's superiority, moreover lecturing on the right economic policy, reacted very soon and changed its stance and did it with an obious sense of humor as well. Otherwise it is still the same perception of ECE, the eternal competition. But at least it is more digestible, and far easier to tolerate this way.

A week later - today's world as seen from Bratislava

Things are changing with an aunexpected pace in Slovakia as weel. Only a week after the serious lecturing delivered at the adress of Hungary the SME begin to relize that the problems looming over Slovakia are in fact larger than expected. Today they published an article with the title "The budget in state of an heart attack". The tone of the piece is substantially different from earlier one and it prophesizes that without major modifications (that means cuts on expenses) the deficit can reach a level the dubble of the forecasted. The resons: the collapse of VAT incomes, the loss of revenue from corporate taxes, the relatively high sums paid out for "stimulus pacakges". The danger: with a higher deficit Slovakia won't be recieve financing and investment from abroad, as the example of Hungary shows. The conbclusion: Slovakia need to adjust its udget to the circumstances and cease with the practice to give for everybody who raies his hands.

But the SME was not deviating too far from its earlier opinion. Although one could think that it is a profound change, there are signs contrary. The perceptible intention is to attack Fico, who is fra from being beloved by the liberal newspaper and as we can see the usual "Hungary-complex" remained, only to be reversed, this time put forward as a threatening example of collapse. But as things are going forward we can expect further changes as well.

Under the surface: normality?

Well, as I was writing long and boring posts in the recent weeks, considering problems not in line with my capacity to resolve and dealing with serious problems of human society (once again far from offering any viable solution) this post will be "something completely different". Even not really related to the crisis, or if it would be the case, only showing the flip side of the coin, business as usual. But "in the context of the worst economic collapse after the Great Depression, amidst the meltdown of hard won achievments of two decades of unfinsihed transition" such stories certainly can reveal that my seriousness in approaching the events, readily embracing its dimensions as age defining is not the only possible way, and perhaps not the most rewarding.

The SME published yesterday an article, reporting the foremost problem of Slovak dairy industry: the inflow of cheep and supposedly poor quality Polish "bryndza"! (Bryndza is a product from ewe cheese, cheese from cow's milk and butter, the former ingredients grated and mixed with the latter to make a homogenous, very spicy, somewhat bitter and acidic material, to a certain extent similar to cottage cheese made from cow's milk. It is very popular in Slovakia, another variant in Romania and it has many consumers in Hungary as well.) The Slovak producers are complaining that the Poles use only 30% ewe milk instead of the 50% usual in case of Slovak "bryndza". The Polish product is sold under the name "Tatranska bryndza" (bryndza from the Tatry Mountain) and as the Tatry (a part of wich lies in southern Poland)is a symbolic landscape for Slovaks, it is a not too subtle but certainly effective way to mislead consumers, who should be proud of the millennial production of this product.

Otherwise the story is quite typical, someone is cutting under others prices on the market, the consumers can buy cheaper product (and in the crisis it can easily be an important factor in their decisions regarding the type of "bryndza" they buy) and producers try to counteract not only on the market, but with such stories in the minds of their consumers. Business as usual?

Today's world seen from Bratislava

The liberal daily from Bratislava, SME, published today an article on the political situation in Hungary.(Unfortunately it is not a longer piece, as its author, Peter Morvay is a colorful personality, for example he was for a while probably the last Czechoslovak citizen, more than a decade after the dissolutuon of that country.) Otherwise the article is a short one, outlining the possibilities and arguing that the decision of one of the candidates for being designated prime minister to reject the offer was reasonable, given the limitations of his role. Later Morvay poses the question whether the leader of the Hungarian opposition, almost certainly prime minister after the next elections, will be able to implement reforms, even if these will be contrary to his campaign promises, replicating the situation that destroyed Gyurcsány's credibility.

What is interesting in this piece is the perspective and the implcit lecturing Hungary on the lack of reforms, similar to the achievements of the Dzurinda governments. Hungary is portrayed as very sick country with an almost dead economy, while its neighbors are realtively safe from the effects of the crisis. Even though both statements are exaggerated (Romania's budget are in a worse shape, and its economyc funamntals are maybe even worse - the driving force of growth was a housing bubble, instead ofr exports as in Hungary or Slovakia, Slovakia's budget, although clearly unnoticed for Morvay, is in the process of collapse because of the tax system's faults, the exchange rate for the koruna by the introduction of the euro disadvantaged the Slovak industry very much and paradoxically this is perhaps only veiled by the crisis (!)*, not to speak of Ukraine, and recession is hardly evitable in every country in the region) my aim is not to make an argument. On the one hand, because the criticisim is not completely unfounded, on the other hand because the stance of the SME is more important for this blog. It shows how easy it is in ECE to accept the role of leader of the pack, that of the model country's and how easy it is to present one country as superior to the others, using achievements and the sufferings leading to them as proofs of this. Today's world seen from Bratislava is a very assimetrical one, instead of the crisis, and Slovakia is its rigid schoolmaster.

(Ok, let me provide some proofs: the economic sentiment index hit in March an all time low in Slovakia, construction, services, retail sales confidence in almost free fall and industry and consumer confidence showing deep depression and no increase even though the Slovak car making plants were positively affected by the German "Umweltpraemie".)

Shame, fear and pride - notes on exceptionalism

The Romanian president, Traian Băsescu was very active this week, adressing the parliament with a speech on the state of Romania. (Although it was an event similar to the usual State of the Nation Adress, as Băsescu's prerogatives are very limited it was rather an act of substituting the premier, Emil Boc. It is quite interesting, how the president is acting as a substitute of the prime minister, the resons behind it, but not the story I would like to deal with here.) After one or two months of contradicting scraps of news, statements on the necessity of an eventual crdit from the IMF the president announced that Romania will receive support from the international financial institutions and the EU. In hard times it is far from being surprising and perhaps as an action to contain the spreding consequences of the crisis a wise one, or at least an inevitable one. But the long story of the credit once again reveals the importance of national pride, the will of being differentiated from "others", from neighbors considered as traditional enemies.

As it is well known, two of Romania's neighbours, Hungary and Ukraine have a running agreement with the IMF, those countries are receiving financial support in the form of credit. Although Romania was considered for a while as a possible next to the line of countries applying for IMF credit it was a very delicate issue in the country. Politicians, the governor of the Romanian National Bank were either denying any overture towards the Monetary Fund or downplayed it as a condition of the EU for its own support program. There were many contradicting announcments, even Băsescu was oscillating between denial of the necessity and the acceptance of compulsion. He once even spoke of the necessity to consult the people on the IMF loan. (As if it would be time enough to make such consultations in case of necessity.) Others were spreading fairy tales that the EU has no such condition (a member of the European parliament even told the press that the EU Commission is prohibiting Romania from an agreement with IMF!) and used the opportunity for attacking the government. Quite peculiarly the chairman of the coalitional partner of Băsescu's PDL, the social democrats, is opposing the idea even at the moment, arguing that Romania needs an own "anti-crisis plan". (The government, in wich Mircea Geoana's social democrats are sitting announced its budget in February as a complete anti-crisi plan...)

Although I personally have no real emotions over IMF loans and similar agreements, even if I'm not quite convinced of the usefulness of their recipes for the respective economies, such feelings are not completely incomprehensible. But in this case the reluctance is rather a sign of the traditional enmities than the expression of real ideological convictions. (The social democrats were so eager to be a governing party that they abandoned almost every points of their election program, even those that would be advantageous for the state budget and in line with the traditional leftist perception of social justice, like the progressive tax-system.) The relationship between Ukraine and Romania is far from being relaxed, a territorial dispute was settled by the International Court in The Hague, Băsescu mentioned some territorial reorganizations in favor of Moldavia and at the expense of Ukraine and the Ukrainian nationalism, having a strong official support in the last months caused problems for the Romanian minority in Northern Bukovina. The other neighbor, Hungary is one of the traditional "others" in the Romanian identity, an arch-rival. The ever graver political chaos and the steep economic contraction in the Ukraine and the very slow economic growth in Hungary in the last few years - while Romania was treated as a new economic miracle - certainly accentuated the self-esteem of Romanian politicians. It became even more emphasized when at the end of last year the IMF and the EU considered Romania as one of the few countries predicted to have growth in 2009. Against this background the necessity to ask for an IMF loan - and to admit, that Romania has to face a grave economic situation, first of all contraction, certainly was a shock for many politicians. The IMF loan is not only the loss of sovereignty (one of the most important elements in the consciousness of the Romanian political elite in the 20th century) but the loss of the favourable position compared to the arch-rivals - the missing of the chance of overtaking them. (Although regarding Hungary it was rather illusory in the short term even one year ago.) In this sense the crisis relegates Romania to its earlier position, threatens to lose its newly acquired "Wunderkind" status and to eliminate the perceived and precious differences between the country and ECE. The fact, that it is treated as a catastrophic result clearly shows the stance of the Romanian elite towards the idea of ECE. (Băsescu promised in his speech not only a fast recovery, but the chance to get loose from the region in case of hard work.)

In Slovakia, before the gravity of the economic situation and the budget deficit was revealed, the leading newspaper, the liberal (in European sense) SME publsihd sarcastic commentaries on Hungary's premier and economic situation, while at the same time pointing out the hypocrisy of Robert Fico, the Slovak prime minister. Th surprising fact was not the negative opinion on Gyurcsány, but the scornful tone indicating a self-assured belief in the superiority in the Slovak economic reforms. Those were implied not as a possible and contradictory way of managing problems, but as the only, and self-evidently superior model, something to be followed obligatorily and at the same time conveying supriority to those who are pioneers of its case.

What about Hungary? Well, this country obviously does not belong to the region. The ridiculous story of the forint coming lose of the other ECE currencies continued to be spread, it was even mentioned as reality in the press at Wednesday. I'm not an ardent lover of the idea of national characteristic but there are obviously some people who are not happy without having the feeling that they are living in a doomed country. Moreover, the "analysts" of Raiffeisen Bank Hungary took it granted in their analysis published this week. I would say, that the usual distortion of time was somewhat reversed, and not complete history created based on ten or fifteen minutes, but ten minutes streched into a week or more, maybe into eternity. We are now living forever in that ten minutes last Wednesday....