Hungary developments; rise of the right?

'Democracy Is Being Trampled On in Hungary'

It didn't take long for markets to react. Yields on 10-year Hungarian bonds spiked to 10.7 percent on Wednesday, continuing a sharp rise since the talks over a €20 billion ($26 billion) EU/IMF aid package for Hungary collapsed in December. The country's currency, the forint, plunged to an all-time low against the euro on Wednesday morning. Both Standard & Poor's and Moody's slashed Hungary's credit rating to junk status in the weeks before Christmas. Hungary needs to refinance debt worth €4.8 billion in the coming months.

Hungary is taking political control over the central bank. This is something we'd expect to see with the decline in social mood. Mish Shedlock discusses how this could move Hungary towards hyperinflation in Hungary Marches Down Hyperinflation Path; What About the US?. However, one point I continually discuss is how socionomics just tells us what is possible, not what will happen. In the United States, the main anti-central bank efforts are being led by people who want a strong currency and almost zero political control over the money supply. It is important to keep in mind that different cultures and societies react differently, even if the underlying impulse is similar.

I still think Hungary is receiving a bit of a bum rap though, simply for being on the right. More from Der Speigel article, quoting the FT Deutschland:

"Hungary is distancing itself from all that Europe stands for: democracy, the rule of law, the separation of powers and human rights. It is thus high time that the European Union increases pressure on Budapest -- not just legally, but also politically."
"That the European Commission is now examining whether Hungary's reforms are in violation of EU law is a good start. But it won't be enough, even if the Commission is likely to find problems immediately: The Constitutional Court has been robbed of its power because it no longer has jurisdiction over financial questions, the media now operates under government supervision, the central bank will have to bow to politics, and parliament, thanks to changes in quorum rules, will no longer have much of a say. It is a case of a governing party seeking to cement its power and to rob its successor -- and the entire country -- of the opportunity to pass future reforms."

This sentence describes what the Germans and French, with the European central bank, forced on Greece and Italy. They have tossed out the law for bailouts and imposed undemocratic governments. Here's more from Handelsblatt, capturing the social mood aspects clearly:

"Hungarian Prime Minister Viktor Orban is pursuing a dangerous course. Does he really believe that his comparatively small country, which has just 10 million inhabitants, can go it alone? He is putting talks with the IMF and with the EU about a new multibillion aid package at risk. Hungary could soon be paying dearly for the fact that Orban has led his country into economic and political isolation."

Hungary is in the lead in terms of social mood driven political changes, but the rest of Europe is close on its heels. The only difference is the elite in Europe want the society they are forcing on Europeans, while they do not like the society being forced on Hungary by Hungarians.

The trend here is to reject the authority of the EU, a move from internationalism to nationalism. The only question is what form nationalism takes: a restoration of liberty (democratically or not) or a move from Brussels to local authoritarianism. Some nations will throw off the EU's authoritarianism and enjoy greater freedom (perhaps the UK will be an example of this), while others such as Hungary may head towards a less free society.

However, I still believe the situation in Hungary is slightly more complex because the peak in social mood in 2000, if it was a Grand Supercycle peak, was probably also a peak in liberalism. The Enlightenment burned itself out and Hungary may be the first sign of the rise of right-wing politics. Just as the United States, fascist Italy, revolutionary France and the Soviet Union were all left-wing governments, so we can expect to see many forms of right-wing governments emerge. Judging by how things are unfolding in Hungary, it's unlikely to be a model government nor does it resemble what we will see in the future. The return of monarchs or a turning away from democracy (think U.S. voting laws circa 1800), the rise of the Church and military as social institutions. The rise of city-states and new forms of government, but with characteristics that may resemble governments from 1600 rather than the 20th Century. Consider Poland's government:

The nobility held absolute power of life and death over the serfs tied to their land. The clergy, merchants in the cities (the burghers), and the Jews were protected by royal charters, but were a minuscule portion of the population. After 1572, Poland's kings were elected viritim ; that is, they were voted upon directly by the mounted assembly of the entire nobility. The kings acted more like managers than rulers. In 1652, the Sejm , Poland's parliament, introduced the liberum veto , which mandated that all legislation had to pass unanimously. The country lost independence and unity when Austria, Prussia, and Russia divided the Polish-Lithuanian Commonwealth among themselves. The country was divided on three occasions, in 1772, 1793, and 1795.

Imagine a future where a monarch restores liberty by overthrowing a tyrannical democratic government and you have some idea of what is possible as social mood declines in the coming decades.