Peter Szijjarto, spokesman for the Hungarian prime minister, recently announced, “It’s clear that the economy is in a very grave situation… I don’t think it’s an exaggeration at all to talk about a default.” Other government officials are trying to walk back the comments, but the damage appears to be done:
“I’m staggered by these comments,” said Tim Ash, global head of emerging-market research and strategy at Royal Bank of Scotland Group Plc, referring to Szijjarto’s statements. “It’s ridiculous, remarkable and extremely dangerous. What message does this send to foreign bondholders? You will look to protect your investments.”
Indeed. Hungary’s currency, its bonds, and its stock exchange are all headed for the basement and dragging Hungary’s neighbors down with them.