"Many central and eastern European countries simply don't have either the financial strength or the technical expertise to bail out banks,'' said Lars Christensen, a senior emerging-markets analyst at Danske Bank A/S in Copenhagen. "It's like an Iceland look-a-like contest and there are a number of candidates looking very fragile at the moment.''
The ECB announced this morning that is to extend a helping to the suffering Hungarian markets, providing up to EUR 5bn of liquidity to the Hungarian central bank (MNB). This move will surely help boost the MNB's defence of the forint. Hungary's FX reserve is at present EUR 17½ bn. This equals less than 3 months of imports, which is normally considered to be the critical level for FX reserves. Among the EU8+2 countries, Slovenia (euro member), Lithuania, Slovakia, the Czech Republic and Estonia have similar small FX reserves.
Emerging-market banks plunged yesterday after Standard & Poor's warned that Korea's lenders will struggle to refinance debt, raising pressure on developing nations to bail out their own institutions. Standard & Poor's has announced that it placed its 'BBB+/A-2' sovereign credit rating on Hungary on CreditWatch with negative implications. S& P has also placed the following ratings on Ukraine on CreditWatch with negative implications: its 'B+/B' foreign currency and 'BB-/B' local currency sovereign credit ratings on its global scale; and its 'uaAA' ratings on its national scale. Hungary has a 'BBB+' rating at Fitch and 'A2' at Moody's.
In Budapest on Wednesday the forint fell 5.3 per cent to Ft266.09 to the euro and the BUX leading stocks index closed with a fall of 11.9 per cent, dragged down by a 15 per cent per cent fall of shares in OTP, Hungary's biggest bank. Currencies and stock markets have also been falling in Poland, the Czech Republic, Romania and Ukraine.
The European Central Bank also announced yesterday that it will support the Hungarian central bank's money market operations with as much as 5 billion euros ($6.7 billion) to help it ease the present financial tensions. The agreement will provide the central bank with a facility to borrow up to 5 billion euros in order to provide additional support to the central bank's operations, the ECB said in a statement this morning. The move will support the Hungarian central bank's "instruments of euro liquidity provision.'' This move is an important "first", since Hungary isn't a member of the 15-nation euro region, a may well set a precedent which will need to be followed as more and more of the walking wounded limp over and present themselves at the Kaiserstrasse front door, before being politely shown round the back to the overnight lending window.
According to Portfolio Hungary:
Chaos rules among institutional investors, as well, at least the majority of the investment fund managers polled by Portfolio.hu on Wednesday admitted, speaking on condition of anonymity, that they have absolutely no idea about the possible outcome of the current financial crisis. A number of them noted they are at a loss as to what to do with their portfolios in the current situation. Interestingly enough, the only parallel the respondents were able to draw between the present predicaments and the 1998 Russian economic crisis was the mass unwinding of leveraged positions.
As one fund manager interviewed said “From this perspective, the current situation is the same as in 1998 only to the second power. Margin calls are being received, you gotta put in the deposits but as there's no money you have to execute brutal sales irrespective of the price of assets.....Frankly, I haven't got a clue as to when and how this would end, I'm just staring into empty space."
One of the main problems Hungary is facing right now is that if foreign currency lending continues to be discontinued in Hungary on a "sudden stop" basis, then this will mean that domestic economic activity will slow sharply and capital inflows will be considerably reduced which is bound to cause one hell of a problem since at the present time these capital inflow amount to about €3-€4bn a year, and are close to providing the cover needed to fund the ongoing current account gap.
Key Points in the Crisis
1/ Hungary has a large debt -- the gross external debt of the Hungarian state and companies amounted to 89.9 billion euros or 93.8 percent of gross domestic product (GDP) in the second quarter of 2008, while net debt was external 46.3 percent of GDP.
2/ Hungary had an excessively loose fiscal policy between 2001 and 2006 and this boosted the budget deficit to above 9 percent of GDP. Following a mini financial crisis (and run on the forint) in the summer of 2006 the Hungarian government adopted an "adjustment programme", whereby tough measures were introduced by the government to cut the deficit, which has been falling and is now projected to reach 3.4 percent of GDP this year.
3/ Hungary has been running a current account deficit, and although this problem has been improving, it is still expected to reach 5.3 billion euros or 4.9 percent of GDP this year according to central bank estimates. Next year the deficit is expected to rise again since slowing export growth and will widen the trade gap while increased interest charges will also contribute negatively to the overall current account.
4/ In similar fashion to Spain, for example, Hungary now needs to refinance its existing household and corporate debt by issuing both forint-denominated and foreign currency bonds, and it is this rollover which has now become much more difficult due to the global credit crunch.
5/ As a result of the measures adopted to correct the twin deficits problem, internal demand in Hungary (construction activity, retail sales etc) has been more or less in contraction mode since the start of 2007. What little headline GDP growth the Hungarian economy has been able to achieve (note the sharp drop in growth after Q2 2007 which can be observed in the chart below) has come either fromagriculture (which is largely responsible for the rebound in y-o-y growth which can be noted in the first two quarters of 2008) or from exports. The export outlook is now worsening considerably, as most of Hungary's key client economies are entering recession, and it is this deep structural weakness as much as the credit crunch itself which has meant that the Hungarian financial economy has collapsed so quickly.
6/ The Socialist government rules in a minority at the present time. There is therefore a significant element of political risk, since the government needs opposition support to pass the 2009 budget in parliament in December. This can obviously condition the kind of measures the governing party feels able to agree to, and its ability to make them stick.
Seize-Up In Forex Loans
Oesterreichische Volksbanken AG's Hungarian unit suspended Swiss Franc and U.S. dollar loans in Hungary on Wednesday. The bank, which has declined to elaborate to the local press on its decision, will continue to lend euros it says. Swiss Francs are however the key currency in the Hungarian context, since around 80% of new mortgage lending has been in CHF. Bayerische Landesbank local subsidiary MKB was the first bank in Hungary this week to announce (on Tuesday) the suspension of new foreign-currency personal loans, saying the volatility of the forint made them too risky for clients. One by one the other banks in the market have all been following suit.
As local banks find their access to CHF reduced they will either stop or at least limit CHF-based lending to clients in the months to come, the Hungarian business daily Világgazdaság reported on Wednesday. OTP has announced that it will not accept loan applications submitted by those who are passive debtors in the Central Credit Information System (KHR, formerly BAR) and that it too is going to greatly reduce the ratio of FX-based lending, as has the K&H Bank the Hungarian unit of Belgium's KBC Group and Hungary's third biggest bank by total assets. K&H Bank has also indicated that it is terminating mortgage loans for personal consumption (equity withdrawal loans).
The recent move by the ECB to make emergency funding available to the NBH should ease the short term pressure on the availability of foreign currency in the Hungarian markets, but it will not stop the shut down in lending, which is now more driven by fear, and by concern that weakness in the forint will make the level of defaults rise in the future. The fear factor is partly related to what might happen to the bank credit ratings and share prices in their home markets (the majority of Hungarian banks are foreign owned) and Italy's Unicredit and Austria's Erste bank have both come under strong pressure already. Unicredit was recently downgraded by credit ratings agency Fitch precisely on it's East European exposure, while Standard & Poor's announced on Thursday that it had revised its outlook on Austria-based Erste Group Bank to negative from stable due to the impact of increased contagion risk from global macroeconomic pressures building in Central and Eastern Europe (CEE) and Austria.
Those who already have CHF-based loans are not going to be any-too-happy either as the effective interest charged on their loans is likely to rise considerably in the coming months as the HUF falls.
According to the latest data available from the NBH the total value of outstanding loans to households fell in July - by HUF 36.1 billion to HUF 6,320.8 billion. Forint denominated loans were up by HUF 2.7 billion, while foreign currency loans fell by HUF 38.8 billion and stood at HUF 3,703.7 billion. Exchange rate valuation effects need to be taken into account here, since they were calculated by the bank to have reduced the value of foreign currency loans by HUF 156.2 billion (debt to banks were reduced in HUF terms due to the strengthening of the forint) while new transactions increased it by HUF 117.5 billion.
Thus as of July of the total stock of household loans 58.6% forex were 41.4% forint denominated. But this is slightly misleading, since the majority of the older loans are in HUF, while the vast majority of the post January 2007 loans have been forex ones, principally swiss franc ones.
The share of housing loans in the total dropped very very slightly from 51.8% to 51.7%, while the total value of outstanding housing loans fell by HUF 23.9 billion. Foreign currency loans remained unchanged at 51.3% as a percentage of total outstanding housing loans. Again HUF revaluation effects make mortgage lending appear excessively stationary, but even allowing for the currency revaluation effect, it is clear that the rate of increase in private credit expansion has slowed considerably. If we look at the chart for forex mortgage loans for consumption purposes, the level of these has been virtually stationary since January, after a twelve month period when they virtually doubled.
If we look at forex mortgage lending generally we see a similar picture, even if the rate of increase in 2007 was nothing like as rapid as in the case of consumption directed loans.
Again, if we look at total mortgage lending, it is obvious that there is more than forint valuation effects at work here. It seems to me that we were already able to see clear signs of the impact of the credit crunch back in July, whether this be due to tighter liquidity conditions on the banking side, or due to the pressure of interest rates on the consumer demand side. In any event, this steady slowdown is now more than likely about to turn itself into a "complete stop".
The situation is of course reflected at the level of construction permits for new dwellings, which stood at 3,710 in Q1 2008 (down from 4,105 in Q1 2007) and 4,936 in Q2 (down from 5,318 in Q2 2007). And again more support is offered for the gradual credit crunch view from this statement in the last KSH report on building permits:
Holiday home new construction has shifted in the opposite direction from building permits. Building permits were up by 26% , while newly built holiday houses were down by 30% over the same period last year. In the first half of 2008, 650 holiday units got building permits and only 200 units were built, with the average size of 66sqm.
That is, there are more obtaining permission to build, but less of them - for some "strange" reason - are building.
But while our attention is currently focused on the crisis in the financial system we should never lose sight of the underlying problems in the real economy, and how they are likely to be adversly affected by what is happening now.
Industrial Output Slumps In August
Hungary's industrial output dropped for a third consecutive month in August as slowing growth in western Europe curbed demand for its exports, which are now the only real drive of Hungarian GDP growth. Production fell an annual 1.2 percent after declining 1.8 percent in July, and 0.3% in May according to data from the national statistics office. Output did however rise 0.8 percent over July.
Industrial output fell for the first time in three and a half years in June as the looming recession in the eurozone stifled demand for products assembled in Hungary such as Audi cars and Nokia phones. This slowdown already threatened to bring Hungarian GDP growth close to recession in Q3, and the recent financial turmoil now makes it almost certain that any (possible) Q3 contraction will be followed by a further one in Q4 with worse to come as we enter 2009.
The volume of industrial exports plunged by 7.2% yr/yr vs. an increase of 0.3% in July. If we look as the seasonally adjusted industrial output index, we will see that the level of output more or less peaked in December 2007 - February 2008, with the high point being in February, and with the level of output steadily slowing since.
If we look at the most recent purchasing managers index (PMI) reading we find that the rate of expansion in Hungary's manufacturing sector expansion slowed again in September (after August's mini boost) and remained close to stagnation as new orders growth dropped sharply while the rise in output also eased, according to the monthly report from the Hungarian association of logistics, purchasing and inventory management (MLBKT). The September PMI fell to a seasonally adjusted 50.3 from 51.9 in August. The figure is the lowest for any September in the past three years. In Sept 2007 the index stood at 55.1 (a reading of 50 marks the frontier between expansion and contraction, and 50.3 is this a very, very fractional expansion, if it be confirmed by the final data from the KSH).
One clear indication of problems to come can be found in the fact that European car sales fell 8.2 percent in September, extending a decline that began in May, as higher fuel prices and financial-market turmoil reduced demand. Registrations in September dropped to 1.3 million vehicles from 1.42 million a year earlier, the Brussels-based European Automobile Manufacturers' Association said in a statement earlier this week. Sales for the first nine months fell 4.4 percent to 11.7 million vehicles, compared with a 3.9 percent contraction through August.
Industrywide sales in western Europe, including the 15 countries that were members of the EU before May 2004 plus Iceland, Norway and Switzerland, slid 9.3 percent to 1.21 million vehicles. Deliveries in the 10 eastern European countries that have joined the EU since 2004 increased 7.8 percent to 93,275. The association's figures don't include deliveries in Russia.
New car sales inside Hungary are also well down, and dropped by 4.6% year on year in the January-September period, according to data published today by the Association of Hungarian Vehicle Importers (MGE) . The lions share of this drop must have come during the July to September period, since MGE only reported a 1.4% drop in the first six months of the year.
Inflation Eases Back In September, But Will We Now Head For Deflation?
Hungary's inflation saw stationary month on month in September with consumer prices remaining unchanged over August. On an annual basis prices rose by 5.7% over September 2007, greatly undershooting analysts expectations (the median forecast in the Portfolio.hu analysts poll had been 6.1% , for example)
Seasonally adjusted core inflation decelerated to an annual 5.0% from 5.8% in Aug, according to Central Statistics Office (KSH) data. In monthly terms, core CPI also remained unchanged as comparesd with the 0.3 % rise registered in August. This deceleration is pretty swift, and were in not for the sharp fall in the forint, we would now be expecting strong disinflatioary pressures to make themselves felt in the coming months.
The big surprise seemed to be in the processed food components, where a much slower disinflation (following the drop in fresh food prices resulting from this years excellent harvest)had been foreseen. Bread prices were for instance down, despite the fact that local bakers had been threatening further increases. Processed foods were flat month on month taking the year on year index down to 13.2% from 16.0% a month earlier.
In what could be interpreted as an early warning signal of what may be in store further down the road, however, durable and non-durable industrial goods prices continued to rise as the weaker forint fed rapidly through rather quickly to prices.
Producer prices were up in Hungary by only 3.2% year on year in August, down from July's 3.7% rise, and way down from April's 6.5% peak. The breakdown of these price increases is also interesting, since domestic sales prices were up 12.9% over August 2007, while export sales prices (measured in HUF) actually decreased by 3.9% year on year.
Employment Remains (more or less) Stagnant As Hungary's Population Falls
One thing the Hungarian economy is NOT doing to any great extent these days is creating employment. The number of employees in companies employing at least 5 people and in the public sector (combined) dropped by 0.5% year on year in July to hit 2.755 million. This decline follows a 0.9% annual drop in June. Actually this process is only natural (and more or less to be expected) as the Hungarian population declines, but of course it does mean that the only real way the Hungarian economy can grow is by increasing productivity, and that in June something like the first 1% of productivity any productivity improvement Hungary was getting was eaten up by diminished employment. Clearly the answer to this is to increase labour force participation rates, but while this sounds fine in theory (and is generally what is recommened by think tanks grom the World Bank to the OECD, see for eg the World Bank report from Red to Grey), but we are a long way from seeing it happen in practice in Hungary.
The distribution of the labour force is changing, however, since the number of employees in the private sector rose by 0.3% year on year in July while employment in the public sector decreased by 3.5%. On the other hand, and to put all of this in some perspective, there are now over 100,000 fewer employees in the private sector than there were in June 2003.
Hungary's present population is something like 10.03 million, and this is down from 10.22 million in 2000. The rate of decline is small, but the attrition is constant.
But as well as falling, Hungary's population is also ageing, and we know from basic life cycle theory (Modigliani) that saving and spending patterns change across the life cycle, with the propensity to borrow against future income to buy now declining significantly after 50, and since it is increasing consumer credit that drives retail sales growth in the dyamic internal consumption economies, then it is highly likely that ageing will now act as a drag on sales growth generally in Hungary. As we can see in the chart below, Hungary's median population age has been rising steadily, but the rate of ageing is now about to accelerate quite sharply, with the only real substantial unknown between now and 2020 being life expectancy, which may accelerate more than anticipated (in which case the population ageing will be even more rapid).
It's All About Exports Now
Apart from retail sales, another indicator of domestic demand which is worth thinking about is housing construction. Let's look at the chart.
As we can see the number of new buildings peaked in 2004. Since that point the sector has struggled. Obviously the absence of new households can be offset to some extent by holiday homes, but this has limits, and in the present credit crunch environment is unlikely to be as important as many anticipated. Despite the general economic slowdown there was a rebound in housing activity in 2007, but in the wake of the US financial turmoil of August 2007 this now seems to have faded. It will be many a long year (if ever) before we see construction on the 2004 scale in Hungary again, since housing is, above all, about demographics.
So what does all this mean for Hungary? Should people simply pack their bags and leave. No, not at all. What it means is that it is all about exports now, as far as the Hungarian economy goes, and the sooner Hungarian civil society (together with the civic institutions - parliament, central bank etc) faces up to this, the better.
Given the rapid ageing that Hungary is now faced with, and the need to maintain a health and pension system with some kind of minimum guarantees, then economic growth is essential, and the only way to get this economic growth is through the export sector, and this is now a hard fact of life. Indeed it is precisely because the structural commitments to current expenditure are so large in the Hungarian case, that the downturn in public sector construction has been so strong following the austerity package. The sooner everyone faces up to all of this the better.
And if we look at the short term outlook for Hungary's export sector, then it doesn't look too bright, since Hungary posted a trade deficit of EUR 103.7 million in August, according to first estimate figures released by the Central Statistics Office. This compares with a deficit of EUR 365.1 m in July and EUR -176.5 m in Aug 2007. Exports - at EUR 5,378.3 m - were down 0.7% year on year, which compares with a growth of 8.2% in July. The August drop is significant, since the last time the 12 month export index was in the negative territory was in June 2003 (-1.3%).
Imports - at EUR 5,482 m - were down 1.9% year on year, while in July they were up by12.4%.
Tightening credit standards and the cut-back in credit lines to producers and wholesalers suggest there will be a further dramatic fall in new orders, which is likely to weigh on export performance. The question is how long and how far credit standards will continue to tighten, but the chances of a prolonged deterioration in financial conditions have increased, pointing towards sustained weakness in the real economy for some time to come.
Construction Drops Back Again In July
Construction output is falling steadily in Hungary, and output fell more strongly in July - down by 11.8% year on year, than it did in June, when there was an 8.1% drop. Taking the number of working days into account, the decline was 12.8% in July, and 9.0% in June.
Adjusted seasonally and for working days, output contracted by 2.8% month-on-month from June, following a 5.5% month on month contraction in June. July was the third consecutive month when construction industry output dropped. Output in January-July was down 10.9% over the same period of 2007.
While the index will probably settle down a bit in the autumn, given the base effects due to the strong plunge in output last autumn, we are unlikely to see any short term improvement in construction output, and given the ongoing turmoil in the sector globally the position will more than likely continue to deteriorate for some time to come. Maybe someone will one day wake up to the fact that with an ever smaller and older population in the longer term you need fewer and fewer houses. As can be seen from the chart below, the level of construction activity peaked in Hungary in 2005 (along with domestic private consumption growth), and given the population situation, and that civil engineering will be continuously constrained by government budget commitments to health and pension programmes in an ageing society, it is very unlikely that we will ever again reach that level. Remember here, we are talking about the RATE of output, and not the STOCK of buildings, bridges, motorways etc. I simply can't see why none of this can enter the mindset of those who are sitting stoically, arms folded, waiting for the "inevitable" upturn in Hungarian domestic consumption. Less retail sales, less building, less people working, this is, I think, what you should expect with a declining and ageing population. And, of course, we are about to see this phenomenon repeated in one society after another as the process spreads. Hungary is simply unfortunate enough to be among the first.
Falling Retail Sales
Hungarian retail sales were down by 0.1% month on month in July, following a 0.3% drop in June, according to the most recent calendar and seasonally adjusted data from the Hungarian Central Statistics Office (KSH). Using calendar-effect adjusted data, there was a fall of 1.8% year on year in July, following a 1.9% decline in June.
Retail sales declined in 2007 by 2.9%, which compares with an increase of 4.4% in 2006 and 5.6% in 2005. As can be seen from the monthly seasonally adjusted sales index (below), Hungarian retail sales peaked in early summer 2006, from which time they have been steadily falling. As far as I can see, with an ageing and falling population, and domestic demand stagnating, is quite possible that Hungarian retail sales will never reach this historic peak again.
A Long And Deep Recession Looms Over The Horizon
Despite the slight acceleration in Hungary's annual economic growth seen in the second consecutive quarter in Q2 - which was largely as a result of a surge in agricultural output - underlying trend growth in the Hungarian economy is now extremely low - I would say between 0 and 1% per annum. So the charts are deceptive at this point, since agriculture was up 33.8% year on year, meaning that it contributed about 50% of the quarter on quarter growth despite being a very small segment of the economy. Such significant movements in GDP due to volatility in one small raw materials sector is a characteristic wich is much more typical of a developing than of a developed economy, and therefore what is so striking about Hungary's current situation is just how little it has been able to move away from this role model over the last seven or eight years, despite all the financial wizardy to which it has been subjected.
Gross domestic product was up by an annual 2 percent in Q2 2008, and this was the fastest rate since the first quarter of last year. The figure compares with the 1.7 percent growth achieved in the first three months of 2008. Over the previous quarter GDP was up by 0.6%, equalling the performance in Q1 over Q4 2007.
Agricultural production rose an "extraordinary'' 33.8 percent compared with Q2 2007, largely due to a bumper wheat harvest which was up 40 percent this year (to 5.6 million metric tons) following a very poor harvest in 2007 after frost and drought damaged the crop.
Industrial production was up only up 4.2 percent year on year, due to the slowing pace of export increase. IP had risen by 6.9 percent in the first quarter. Private Household consumption also showed some signs of life and rose 1.4 percent. This was the biggest leap in private household consumption since Q3 2006.
Indeed, quarter on quarter, household consumption was up 0.5%, which was the fastest quarterly rise since Q4 2005. Since this is really quite a surprising result it will be interesting now to see what happens as we move forward. On the other hand there is evidence that the stronger forint has been having an effect on exports. Indeed the annual growth in imports (at 11.2%) just exceeded the annual growth in exports (11.1%), hence the net impact of trade on GDP growth was marginally negative. The services and real estate sectors also slowed in Q2, with finance and real estate contracting by 0.3% quarter on quarter. Given that the rate of increase in new mortgage lending has now been slowing for some months, and new building permits are way down year on year, can we start to detect the first initial effects of the extending global credit crunch in Hungary at this point?
Investments as we have seen in a previous post were down year on year by 2.2%, while construction was down year on year by 6%. Given that the external environment in the Eurozone is now deteriorating, the industrial output (as we are also seeing for July today) is losing steam on the back of the high forint, I think we are more than likely going to see a steady reduction in the annual rate of growth as we move forward again, especially since one off factors like agriculture will not be so important, and can't be guaranteed to always show up just when you want them.
It is hard to put a precise number on future GDP growth at this point, given the dramatic events which are unfolding around us. We first need to see the actual GDP data for Q3 2008, but if we look at the industrial output, retail sales, construction and exports data presented above, it is hard not to come to the conclusion that the economy may well have contracted quarter on quarter in Q3 (even despite the good agricultural performance, which will, after all, enjoy a strong base effect from Q2), and if this is the case then with Q4 almost certain to see quite a strong contraction, it isn't unreasonable at this point to think that Hungary entered recession on 1 July 2008.
Central Bank Caught In A Double Bind
Hungary's Magyar Nemzeti Bank left its benchmark interest rate unchanged at the three-year high of 8.5 percent at its last meeting on 29 September as the global financial crisis and upside risks to inflation forced prevented the bank from initiating a rate cut cycle. Hungary's rate is currently the second-highest in the European Union after Romania, whose current base rate is 10.25 percent.Back in February Hungary's central bank and government took a joint decision to remove the trading band within which the currency had been moving and go for a free float. At the time this decision was applauded, since it was quite fashionable to think that allowing a currency to float upwards was one way of containing internal inflation. Whilst welcoming the move to a free floating currency, I have never been convinced that the reason for doing this was primarily to cap inflation, since in an economy with such weak underlying economic fundamentals as Hungary has (or Ukraine indeed, for that matter), I fail to see the justification for having an especially strong currency, especially given the need to sell exports to live. I was always worried what was going to happen when the banks upward interest rate project of hoisting itself on its own petard ran out of steam, and the florint started to weaken as high yield seeking risk appetite started to weaken, as it had to do at some point given that we were living in the middle of a global credit crunch. In my post at the time I said this:
Basically I think this is the point, when the HUF rally runs out of steam
the NBH is going to be in a very difficult situation indeed, and it will run out
of steam when Hungarian housholds let up on their frenzy to borrow money in
Swiss Franc denominated loans, a decision which may be made easier for them now
that the band has been removed and the currency risk is evident to all. A
difficult decision, but then maintaining the band was only encouraging people to
keep going on contracting the loans.
So now, as the economy itself continues to head downwards, and with more fiscal tightening on the agenda and an evidently more difficult external environment for exporters to confront as the eurozone economies themselves slow it is hard to see where growth can come from, and Hungarian economy now seems to be badly in need of some sort of stimulus shot or other. The ECB loan announced to day is really more of an "additional damage avoidance life support package" than it is any kind of monetary stimulus, while the NBH clearly can't start to enter a monetary losening mindset without undermining the forint, and with it the solvency of those who are paying the CHF denominated mortages. So we really now at a stage where things will inevitably move on over to the political front, and we need to ask ourselves just one more time, exactly how much more of this type of medicine with no tangible results is the Hungarian voter actually going to put up with before we see evidence of some sort of substantial protest? And when the protest does come - with all the technicians and economic specialist having failed them - just what kind of form might we expect this political protest to take?