Hungary's new government plans to take steps to improve public finances and also wants deep reforms and tax cuts to boost competitiveness after it reveals the "true" state of the 2010 budget, the prime minister's spokesman said on Friday.
Hungary's forint plunged and government bond yields soared by around 30 basis points on Thursday as investors financing Budapest's high debt worried about finances under the new center-right administration.
Prime Minister Viktor Orban's spokesman said the government will produce an economic action plan within 72 hours after releasing its report on the budget, which is expected this weekend or early next week.
If you add Hungary to the list, we are now looking at Spain, Ireland, Iceland and even Great Britain as potential countries that may go bankrupt soon. The stock market first started to drop when worries of "debt contagion" surfaced following Greece's trouble. There have been rumblings about this sort of problem for Hungary for nearly two years and now they've surfaced again.
On a similar note, Warren Buffett is predicting a municipal bond meltdown.
Add investment legend Warren Buffett to the list of those who warn of a municipal debt meltdown.
Many municipalities have promised overly generous retirement and health benefits to public workers without any viable plans to bring in the money necessary to pay for those benefits.
Muni bonds are chic investment vehicles for the uber wealthy largely because you can avoid paying taxes on income from them, especially if you buy them from municipalities in your home state. They've also been thought of as generally safe vehicles. Then again, the finances of municipalities have never been in the shape they've been in now.