Hungarians’ fear of the economic crisis

I guess nobody who knows anything about Hungary and Hungarians will be terribly surprised to hear that according to an opinion poll conducted by TÁRKI and the Central European Opinion Research Group in the four so-called Visegrád countries (Poland, Czech Republic, Slovakia and Hungary), the fear of the consequences of the current economic crisis is greatest among Hungarians. In all four countries the majority of the population agrees that there are already palpable effects of the world economic crisis, but it is only in Hungary that a majority means 93 percent of the population! In Poland, it is 57%. It is also interesting that 70% of Hungarians claim that the crisis has touched them and their families personally. Twenty-five percent admitted that they haven't noticed any change in their economic situation, but they are certain they will feel negative effects of the crisis in the future. Only six percent cheerfully announced that they will not be affected. In contrast 25% of the Poles, 12.5% of the Slovaks, and about 20% of the Czechs are optimistic that the crisis will not touch them personally.

Well, one knows simply by looking at statistics that 70% of the country's population hasn't been economically affected by the crisis. Moreover, people who have visited the country lately claim that there is very little outward sign of economic distress. Yet Hungarians already feel deprived, and the austerity program is still nowhere. Why is this? I don't believe that the only explanation is that Hungarians just pessimistic by nature. I'm convinced that politicians, economists, and the media are largely responsible for this doomsday atmosphere. If one hears from morning to night that the end of the world is at hand, eventually one believes it. And Hungarian politicians, economists, and members of the media do everything in their power to spread the bad news. And if there is no bad news they create some. Everybody knows that predicting the future is a risky business especially in the present economic situation. Therefore, how can one of the vice presidents of the Hungarian National Bank say with incredible certainty that this crisis in Hungary will be deeper and last longer than anyone has predicted until now?  With such pronouncements she can do damage to the economic prospects of the country whose interests she is supposed to defend. Not to mention the damage to the mood of her countrymen. A lot of people watch Napkelte every morning.

(By the way, a team of Goldman Sachs strategists recommended on April 8 that investors in European stocks should increasingly favor manufacturing, technology, and other industries that rely on economic growth as the global recession eases. "Recent data make us more confident the worst in the economic cycle is past, and we further move towards cyclicals from defensives." Admittedly, prognostication in the stock market is no better than it is anywhere else. A famous line from Warren Buffett reads: "We have long felt that the only value of stock forecasters is to make the fortune tellers look good.")

But back to Hungary. The chorus of pessimistic economists has been relentless. They started their lament well before the actual crisis hit the United States and from there spread to Europe, including Hungary. The terrible predictions about the high deficit and the convergence program began more than two years ago. Economists warned the government that if this or that is not done, the whole country will go to the dogs. At least three different "packages" were prepared, one sounding worse than the next. In the meantime Fidesz politicians kept repeating that the country is already bankrupt though the population doesn't know it yet. Under these circumstances it's not surprising that Hungarians, pessimistic by nature, are convinced that life is bad and will only get worse.

Let's contrast the Hungarian scene with the American politicians' way of handling the crisis. At the time of Barack Obama's inauguration there was incredible euphoria and a false sense on the part of many that everything would be fine practically overnight. At that point both Obama and his team had to dampen expectations. They kept talking about the difficulties, the size and depth of the crisis. They warned that the crisis and its effects might last a long time. They kept repeating that they will try everything in their power to stimulate the economy but it might take years before the stimulus package has its full effect. After a few weeks (and a fair amount of criticism that they were too negative) they changed tactics. Now they are giving out optimistic signals–"green shoots" and all. Obama tells people to go out and buy stocks, the Fed chairman makes optimistic predictions, and economic players are following suit. And the result? Spectacular. In the middle of January only 15% of Americans felt that the country was moving in the right direction. Today it's 39%. Optimism is growing and without optimism there really is no bright future. Self-fulfilling prophecy. We know all about it.