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Thursday, January 05, 2012

Hungary and Greece Race To Default

It looks as though Hungary is set to beat Greece to being the first to default on its debts, and claiming the dubious "honour" of being the first EU country to default (note Hungary is not in the Eurozone).

Yesterday Hungary was forced to withdraw from a bond auction, as it struggles to roll over Euro5BN of debt, because the costs were too high.

It is due in February to start repaying a loan to the International Monetary Fund (IMF) that saved the country from financial collapse in 2008. Officials from the IMF and the EU are scheduled to resume talks about a financing agreement with Hungary on January 11. However, no one seriously believes that these talks will achieve anything.

Meanwhile Greece, keen not to be written off in the race to default first, has warned that it may suffer an uncontrolled default in March if labour costs are not further reduced.

Maybe, instead of just pushing for reduced labour costs, the Greek government should more proactively push to recoup the taxes evaded by the wealthy corrupt "oligarchs" in Greece?

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