Hungary facing default

In a report on the financial crisis in Hungary (remember an existing EU member) the Guardian reports Prime Minister Ferenc Gyurcsany as follows:

"The goal is to provide Hungary with a protective shield, so we have access to financial resources and even in the most extreme situation we are not facing the threat of a default... We expect a final deal in the coming day or two," he added.

The European Union (EU) is preparing a financial aid plan for Hungary, the European Commission said, but it did not make clear whether its scheme would be part of a package agreed in principle between Budapest and the IMF or come on the top of it.

IMF CONDITIONS

"The IMF had two reasonable conditions. One: plan a budget in which even in the most pessimistic case, you plan spending which you have funds for. Two: in a situation like this, don't commit to reducing revenue," The IMF conditions will be of interest for the UK. Although with Prime Minister Gordon Brown's proven incompetence and idiocy, he will probably defer seeking IMF aid until after the time that their limited funds are exhausted, he should nevertheless abandon his ludicrous plans to further increase borrowing which the UK can no longer afford and follow the IMF guidelines above. At present Brown is expecting the independent Bank of England to reduce UK interest rates while the government itself plans huge new borrowings which could only be achieved with massively raised interest rates to compensate for the daily more severe sterling currency devaluation risks. In the absence of any real political opposition party it is now increasingly difficult to see any way for the UK to escape from the equivalent of an economic Armageddon. I guess that is essentially what the Bank of England was trying to state, in somewhat less alarmist terms, in its survey released this morning. Meantime, Iceland has raised interest rates to 18 per cent, see AFP report here, and requested urgent help from the US Federal Reserve and the EU"s ECB.