Cycles of Economic Crisis in Hungary

Gábor Egry in Taxis:

1_x5hzAMYq1jUBtAnZQ8R9AAIn the early 2000s, many Hungarians took out mortgages in Swiss francs. The rates were low and it seemed like a good deal at the time. But when the 2008 financial crisis hit and the Hungarian currency tanked, mortgage holders discovered they owed much more than they had borrowed. Political upheaval ensued after the Hungarian press published a leaked recording of Socialist Prime Minister Ferenc Gyurcsány recounting how the party had lied repeatedly about the country’s fiscal status and potential. The right-wing conservative opposition swept the next election, and the new prime minister — Viktor Orbán — passed a law that relieved the pressure on Hungarians with mortgages in Swiss francs. But he didn’t stop there: he installed jurists loyal to his party throughout the judiciary and declared that Hungary would follow the example of countries like India, China, Russia, and Turkey in fashioning an “illiberal” state. Hungary’s economic crisis had become a political one.

When I first began to study economic history, it was 1993. I was a teenager, and everything looked simpler. That year I moved from my hometown, run-down, industrial Miskolc, to the more vibrant Budapest where I became a freshman student of history. Hungary was transitioning out of communism, and in that triumphal moment of human rights and economic liberalism, it seemed that East Central Europe was on its way to being firmly anchored in the West. The air of freedom was palpable; I felt that what I thought and did might truly matter. Granted, the government had lost popular support and the country was struggling with the economic and social effects of the transition from communism, but with Hungary headed westward, stability seemed inevitable.

Instead of stabilizing, however, for the next twenty years Hungary descended into a culture war over the legacy of the twentieth century.

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