In the wake of the sudden closure of Hungary’s biggest opposition newspaper let us remember one of the many scandals it broke. Well, it’s a person, rather than a single case but Népszabadság kept bringing up embarrassing news about him. And let’s face it, this guy just keeps on giving. Without further ado I give you 8 (yes, eight!) fun acts about Hungary’s central bank and its colourful governor, György Matolcsy – commonly known as the economist who is not bothered by the numbers.
Except the number “8” – he is scared of that one.
1. He is afraid of the number “8”
Yes, you heard it right. The Master of Money is as superstitious as Pelevin’s oligarch, picking up nuggets from numerology, Ayurveda, and Buddhism. There have been rumors about him being afraid of the number “8” for a long time but now it is confirmed. Indeed he avoids the days adding up to “8” (8th, 17th, 26th of the month), changed the legal address of the Bank to drop the evil “8” – which provoked an email campaign by the opposition sending him the evil number because they just don’t understand the dangers they bring on the forint with their reckless trolling and constant oppositioning. If anything happens to the forint, it will be on them and their emails – I hope we’re clear on that one.
Matolcsy is also known to time his announcements on the Buddhist ten million days – when positive (and negative) energies are multiplied by ten million times according to some bloke in India. But before you scorn the poor guy, remember that superstitions make perfect sense if you feel disempowered and rely on higher forces to have mercy and be generous to you. No wonder so many authoritarians (including oligarchs) become superstitious. When all you can do is beg and pray – you will.
2. He is a yoga-enthusiast
Or more precisely, the enthusiast of a thirty-something yogi who happens to be in his employment since 2010 – two days before her graduation. A ceremony which Matolcsy happened to attend in private capacity. (It was also a story dug up by a Népszabadság journalist… Any idea why the government wanted the pesky paper silent?)
It may be distasteful to dwell on their affair – I don’t find anything wrong with the fact – but the amount of public money going to her and her mother makes it a public issue. Turns out not only does Matolcsy’s lover belong among the top 4% highest paid central bankers (for teaching yoga to the bank staff and accompanying the governor on his foreign trips), but so do her mother and sister. Board memberships in the Bank’s infamous foundations are also falling from trees.
Since she came forward and proudly declared that they belong together these expenditures have come to the limelight. And so did the esoteric influence she appeared to have on him.
3. Central bank profits spent through its foundations is money that “lost its public nature”
Bloomberg, Reuters, and Financial Times have reported on the USD 1 billion central bank spending bonanza. In short, the Bank speculated on the depreciation of its own currency (surprisingly, with success) and put the gains into 6 foundations. Then they declared the money (approx. 1 billion USD) to be “no longer public” and spent it on frivolous purchases, government bonds, and on Matolcsy’s family.
When pesky journalists asked for information a new bill came to the rescue. In less than 48 hours parliament classified every activity of the central bank‘s foundations and their companies’, and their companies’ companies’. When public money is pumped in there it “loses its public quality”. There was a glitch in the smooth operation though. Unexpectedly, the constitutional court said ‘no’ to the the bill. Trust me, at that point we were most surprised that something of this magnitude couldn’t be made a secret for at least 200 years (standard government practice).
Even more unexpectedly the central bank actually followed the court’s order and published how the money was spent:
1) mostly buying government bonds, but also
2) giving eye-popping sums to cousins, nephews, brothers, secretaries and a confusing web of relatives of Matolcsy.
Some of the purchases really rubbed Hungarians the wrong way:
- The publication and buying of thousands of copies of the Matolcsy’s own, self-promoting book, written by his secretary – for 230 thousand euros, plus millions on translations. (Fun fact: In this book she brags that her genius boss – back then econ minister – gave away insider information to Goldman Sachs bankers at a business breakfast. And they were soooo shocked! Can you imagine? He has such secrets that he can even shock these important people? I am as impressed as you are…)
- Bank bought palaces and prime estates across the country
- Financed a new school of business peddling “unorthodox” economics (basically “Matolcsysm”) for 43 million euros
- Bought pretty much every good looking building in Budapest
- Bought a Tizian at three times its USD 1.6 billion valuation, and
- Financed wonky inventions such as a revolutionary new piano.
Governor Matolcsy is very close to PM Orbán. So much so that Matolcsy doesn’t even wish to be independent from the government as a central bank governor. In fact, he started his tenure declaring what he called a “strategic partnership” with the government. Even after the whole scandal went public, all Orbán could say was a quote from a 20th century poet: “heaven and earth would have to collide” before he dismissed Matolcsy. (Fun fact: that poem referred to a revolution doing away with corrupt elites. Wonder if Orbán knew…)
And why they will never be prosecuted? Hungary’s chief prosecutor happens to be the husband of the central bank’s HR chief, who is also a foundation trustee. The chief prosecutor found nothing suspicious.
4. Growing paranoia because “immigration and terrorism”
The Bank set up a personal army for the governor, hiring former secret service and state security officials as well as a drill sergeant from Orbán’s newly minted “counter terrorism center” and buying ammunition enough to eliminate a hundred thousand attackers on the forint.
5. Conflict of interest is missing from his vocabulary
Apart from Matolcsy’s family (son, cousin and a spider web of spouses and partners I won’t bore you with) friends also benefit from his powers. The president of Unicredit Hungary lets Matolcsy reside in his luxury home in the Buda Castle. In a completely unrelated news, his bank financed the overpriced purchase and refurbishment of a completely unnecessary palace for the central bank. Unicredit also received the juicy piece of business of selling government bonds to the public – pretty much the only thing that pays an interest these days.
But the economy is totally working, OK? In fact, it’s a fairy tale…
6. The “fairy tale” incident
In 2012 yours truly was visiting Prague and drinking good Czech beer in the hotel bar when suddenly Matolcsy appeared on CNN. In an interview with Richard Quest the then economic minister said things like the Hungarian economy is not in shambles at all. On the contrary, it is a “fairy tale”.
The waiter looked at us:
“Hey, aren’t you guys from Hungary too?”
“Nope,” I said. “Venezuela.” My friend nodded in confirmation.
7. The red dot incident
Before Matolcsy got banned from making noises near microphones he often shared his little views on the world. Fact free, counterintuitive, adorable little nuggets that seemed to share one thing in common: whatever western orthodoxy does is wrong. It didn’t help that he failed to gain acceptance among western economists, while murky, eastern mysticism embraces anyone who cares to do some damage in the west. And a wonky toy at the head of an EU central bank is definitely an asset.
At one point he was trying to make some point about the rightness of the government’s “Eastern Opening” policy and in order to do so he attempted to prove some genetic/tribal linkage with the far east. In his effort he said in front of cameras that Hungarian babies are born with a red dot on their asses – just like Japanese babies. According to him it’s a little known fact. We can agree on the little-known.
But his penchant for the mystical, genetic, and eastern doesn’t end there.
8. Economics are so last year
After taking over the Bank heads were rolling – just like everywhere else in the country after the Orbán regime came in. The Bank was looking for new employees in a frenzy. Weirdly enough they weren’t looking for econometrists or any other “orthodox” skills. They were recruiting geopolitical experts, the new hobby of the governor.
Some may be confused as to the nature of this discipline so let me enlighten you. For all intents and purposes geopolitics today is Russian for
“We’re coming and don’t respect any rules – only perhaps power.”
(“I only understand power” also happens to be an Orbán quote)
Matolcsy can babble about the decline of the west in unison with his girlfriend and his boss, Orbán, for any length of time and whenever a microphone is tossed under his nose. Which doesn’t happen a lot because he is known to be a bit of a loose canon.