BUDAPEST, HUNGARY – In Hungary, the post-Communist boom has turned to bust. And many Hungarians feel the rest of Europe is so preoccupied with its own problems that it simply can’t see how bad things are here.
The country’s prime minister Ferenc Gyurcsany warned this week about a new “Iron Curtain” descending across the continent, dividing rich from poor.
He’s also hinting darkly that Europe could see record levels of economic migration unless Brussels bails Hungary out; this sounds like economic blackmail to me. And so far it isn’t working. But Hungary’s plight is on a tragic scale.
Laszlo Vadasz is on the wrong side of that rich-poor divide. Like hundreds of thousands of Hungarians, he took out a mortgage in another European currency. Then the local currency, the Hungarian forint, collapsed and so the cost of his monthly repayments almost doubled.
Then he lost his job as a plumber. And because Laszlo can’t pay his mortgage, he and his wife Elizabeth face eviction from their home. Along with their severely handicapped son, Attila, who can’t speak or walk and lies in bed in their sitting room all day.
The irony is that Laszlo had never borrowed any money before in his life. The interest rate from an Austrian bank seemed too good to be true, and so it turned out. Things have got so bad that his wife tried to commit suicide.
That’s what Laszlo’s lawyer told me. She’s head of Hungary’s “Association of Bank Loan Victims” and her caseload of capitalism’s ingénues now struggling with unimaginable debt is full to bursting point.
Watch the video report from Latvia and Hungary
Laszlo explained to me why he took out his loan. “The foreign banks were advertising in newspapers and on TV,” he said. “They were egging us on to take out these loans. The property market boomed, so the whole country took out loans in foreign currency, 80 per cent of my friends did!”
Budapest’s elegant boulevards are littered with flashy European banks. Even the lampposts have signs directing you to the nearest branches. These banks are now themselves exposed to massive risks because people like Laszlo cannot pay them back.
I left his home feeling that western Europe had encouraged Hungary to copy the rest of us, to ape our mistakes. And Hungarians are now paying the price.
Channel 4 is not responsible for the content of external websites.
Commentsoldest first
I don’t need much grasp of “economics” to see that if I invest my energy, or money, unwisely, I will suffer. Sometimes “unwiseness” is difficult to spot. See the news of late. Somewhere are rich criminals. I have personally lost 10,000 Bulgarian Leva to one, who “needed a loan – against “his house”
He told me at first, that the money was the full price, and saying it was so little because he had to get into hospital. I said he would always be welcome, andmaybe buy it back.
Later he says it’s only the deposit, but no worries because if I don’t want to buy the place he will return my money when it sells elsewhere.
Subsequently we discover that at the time, it wasn’t his house. He had sold it 6 months previously.
Likewise goverments are “investing” in “Wind energy” schemes which – if you care to look into, you will see have no hope of lasting the hundreds of years that they need to in order to return the money – energy – which is required to replace them.
A large part of the reason for this “lack of rresult” is that Turbine-Alternator DEvices – TADs ? – have an unusual “economy of size”. The cost of a given ‘farm” is a necklace-shaped function of the SIZE of the TADs deployed. This is because 1 T to replace 4 of half the size weighs 8 times as much as each, whilst one A to replace the 4 costs only about twice as much as any one of. the 4.
The lowest cost region is for sizes where the T costs about the same as the A. This happens around 0.5 to 1.5 ? metres in diameter.
bert.windon@gmail.com
I sympathize with the Hungarian people. Have we got a situation where Capitalism displaced the idea of Communism 20 years but as Karl Marx said (it was Marx wasn’t it?), Capitalism is destroying itself ?
Saw the report on C4 news on Sunday. Quite enjoyed watching it, though the news was grim. I think I connected to the story more because I’d been reading about it beforehand on the blog…
It was the banks that encouraged people to behave recklessly. What the government is Hungary should do is to put legislation in place to prevent people from losing their homes. They could force the banks to freeze the loans and interest and defer them until after the crisis. The financial institutions have nothing to gain by acquiring homes.
It is the first thing governments in any country should do: protect the people rather than protecting the interests of irresponsible financial institutions.
The next thing the government should do is to ban all advertisements on interest-free loans or ‘release the equity of your home’ or ‘we will buy your house – guaranteed’.
I am worried that the UK economy was seen as the ideal system. It has been shown to not be the case.
Leave a comment
* Required field.