System Decay

Spending like there’s no tomorrow

Between March and November 2020, pandemic emergency funds (and then some) have been spent on pretty much anything but the pandemic. But then Orbán returned from his war against Brussels and spending got completely out of hand.

This might be what 2021 will look like. Spending and borrowing like there’s no tomorrow. It may help win 2022 – or make sure that any new government starts bankrupt. Orbán can only win – not to mention his hungry cronies.

It has become impossible to follow the money for the last decade. We never know if the billions going to an oligarch today are the same insane sum that went to him yesterday, or is it a new one. It is impossible to follow how much is spent on what – we can only sense that the numbers are insane, several zeroes have been added and they are this the new normal – so we have developed an insensitivity to them.

If it sounds like a counterintuitive way to entrench a kleptocracy – that is why you didn’t establish one and Orbán did. And other bullies of his ilk.

I think people have stopped understanding the degree of corruption during the last regime when it was a big building here and there, sold under market value. All the cases were thoroughly documented by the media, with their own name and crook attached, as we had enough time to get angry at each and every case.

Today, there is a case every day that is ten times bigger than the biggest revealed corruption case in the previous era. We don’t even have the time to digest one and learn the name of the crook – there is one, even bigger tomorrow. Running from scandals into even bigger scandals doesn’t just work for Trump. If the scale keeps increasing exponentially, eventually the scale breaks and we are left in an inverse world where we are looking at way of how it is normal after all.

The constant barrage of corruption makes it impossible to stay upset about yesterday’s theft when we have a new one today. And the numbers are also completely out of whack ever since the EU started pouring uncounted billions into the country. Not a cent of that reached the actual people – but we have a lot of shitty spas serving no one, guest houses inhabited by local strongmen, and big overpriced rocks in the middle of unnecessary roundabouts, arranged in the shape of the name of the village, surrounded by the most expensive landscaping job the world has ever known. One might argue that it is wealth – I am not one of those who do.

And lately, ever since the pandemic started, we have become dizzy with the never-before-seen billions flying in the general direction of – no, not healthcare, but churches and sport.

It is difficult to see how most pandemic-decrees were related to the virus. Not to mention funds earmarked for pandemic-related economic recovery. According to a painstaking summary of Covid-excused spending by decree, between the beginning of the pandemic and November 2020, almost half of the money was spent on sport. To be precise, EUR 400 million on sport, EUR 295 million on churches, and only EUR 145 million on healthcare.

The sum spent on sport was not only three times higher than the money sent in the general direction of healthcare – it was multiple times higher than what was spent on saving jobs and compensating for the economic impact of the lockdown.

And that doesn’t include December, when the last 20 year’s biggest ever monthly deficit was created simply by ramping up the spending on loyalists.

Indeed, when Biden won the US elections and Orbán concluded with his wars against Brussels, he came home, announced a curfew, and one minute before the curfew started he announced – no, not the details of the curfew – but two new amendments to the constitution. One doubles down on homophobia (“the mother is a woman, the father is a man”), to distract and to inform us that Orbán will not take back from homophobia just because his top MEP was caught at a gay orgy a few days earlier. And the other amendment made the process of disappearing public money and made it irreversible.

Under the new amendment, Orbán quickly started the fattening up of loyalists. One cadre-training institute, MCC, received one billion dollars’ worth of real estate and shares, for instance. One billion. And there were others.

Whatever Orbán concluded in Brussels, spending increased significantly in December, resulting in a 9% budget deficit for the year – even by the friendly standards of the EU – and planning another 6.5% for 2021. And it is not pandemic-related. 2021 will be a pre-election year, too, as 2022 is an actual election, but Fidesz’ campaign has already started.

budget deficit 2020 2019 2018

Budget deficit (monthly, billion HUF) 2018, 2019, 2020 Source: portfolio.hu

Unprecedented sums are flying out of the budget. The main vehicle of the maniacal spending is the so-called “economic rescue fund”, but the beneficiaries and the causes have not much to do with the pandemic, nor with helping businesses. Symbolic spending has always been bad under Fidesz but now it seems to know no boundaries.

monthly

Biggest ever monthly deficit in December 2020 (billion HUF, 2002-2020) Source: portfolio.hu

In the meantime, debts is taken on and the central bank found it the right moment to experiment with monetary financing again. The Hungarian National Bank has suddenly decided to buy assets worth of USD 2.5 billion from an entity it owns. It is also a huge red flag as the central bank has been warned for monetary financing by the ECB before.

Perhaps linked to Orbán’s Brussels grandstanding (that he would rather forego the funds from the European pandemic relief package if there is any kind of rule of law conditionality in the budget) and to prove that he could go through with his veto, a 2.5 billion euro bond release was announced proudly by Orbán himself, walking back on his almost religious mantra to reduce debt and exposure in foreign currencies and sell forint bonds instead. According to reports, the move was executed in just a few days from idea to execution.

Ever since he won the 2018 elections Orbán couldn’t stop talking about the upcoming economic crisis – perhaps because he understood that he can’t avoid one forever and he had been in power for too long. This  would be the first time he would have to face a recession while in office – not just benefiting from one by receiving protest votes and riding the rage against the austerity packages helpfully (and suicidally) enacted by his predecessors. Orbán appeared to be preparing the public that there would be economic problems – and blamed it on the West, preemptively.

But now that an actual crisis is here, and when he read about the shocking, 13% GPD decline in the third quarter of 2020, he cowered. Shelving the warnings that winter is coming, he started talking about the coming golden age. Secured by the EU funds he had personally brought home from his hunt in Brussels, we will all be well.

But in the meantime, he is fattening up his cronies like there’s no tomorrow. It is perhaps the most telling sing of what might be going on according to Orbán. The lush funds may serve to fatten up his loyalist, to strengthen their loyalty that has been shaken at the local election defeat – but also to bankrupt any successive government that might not be Orbán’s, leaving debt, bankrupt cities and empty budgets behind. Not to mention hostile and well-padded cronies who own entire economic sectors and would aggressively get in the way of any non-Orbán government in the future. Not to mention a constitutional clause that public money once spent is no longer the public’s business.

This spending will only increase in 2021, a campaign year before the 2022 elections.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.