The weak link just got weaker

„There is no denying that finance ministers in Greece and Portugal may be envious of the apparent liberty enjoyed by their colleague in Budapest, remarks Handelsblatt. As the daily points out, Hungary is a country that “clearly lives beyond its means with all the benefits of a currency which, unlike the euro, can come under pressure without threatening to undermine the global financial system. As a state, Hungary is sufficiently large to be on the map and sufficiently small to avoid triggering a domino effect.” But in spite of the foregoing, the German economic newspaper warns that Hungary represents an explosive danger for Europe — a lesson that one Austrian bank in Budapest recently learned to its cost when it was forced to merge with its parent company to guarantee the necessary funds to cover its risks in Eastern Europe.

"Hungary is not alone, and the crisis will weaken all of Central Europe with the exception of Poland and the Czech Republic," points out Handelsblatt. If in response to the crisis, the Greek banks decide to withdraw from the Balkans, “then the Austrian, Italian and French banks which are the main players in Eastern Europe will have to carry a much heavier burden.” It is on this basis that Handelsblatt insists that both the IMF and the EU on one side, and the Hungarian government on the other, should  stop playing with fire and return to the negotiating table.”