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Friday, October 17, 2008

Action In The Pipeline On CHF Mortgages

This morning (Friday) off the Bloomberg wires:

Hungary is drawing up proposals to help borrowers whose foreign
currency-denominated loan payments rose as the forint weakened, Prime Minister
Ferenc Gyurcsany said. The government is in talks with banks and will present
proposals next week that will “significantly ease” the burden of borrowers,
Gyurcsany said today in a public television interview. The forint has been
battered along with Hungarian stocks and bonds as investors sold off riskier
emerging market assets. Foreign currency borrowing by local businesses and
consumers, along with slower growth and a wider budget deficit than elsewhere in
eastern Europe, make the country a target, economists said.”

This is the bail-out Hungary will need, a battery of measures to help those with CHF mortgages pay-down their debt, or transfer them over to (subsidised) HUF ones. Hungary, given the fiscal straightjacket she is now in, and the very large costs of population ageing that are now about to hit simply is not able to generate the resources to make this transition alone, and that is why the IMF will have to help.

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