Archive for April 5th, 2011

Protecting Hungary’s Freedoms

The government of Prime Minister Viktor Orbán has voiced its belief that Hungarians need to return to a philosophy of self-reliance and personal responsibility. Yet this can only happen if the state does not take on responsibilities that belong to individuals.

So it’s troubling that Hungary’s proposed new constitution, in its current form, contains provisions that would empower the state beyond what is suitable for protecting economic liberties, and also provides weak institutional guarantees for the future protection of such liberties. In post-communist economies, where the proper distinction between private and public property was distorted by years of collectivist rule, it is especially crucial to provide robust guarantees for property rights and to draw a clear line between state responsibility and individual responsibility. As Hungarian leaders haggle over what will be the country’s first new constitution since it gained independence in 1989, they would do well to ensure that their charter does just that.

Lawmakers are currently debating and amending the draft submitted by Mr. Orbán’s governing Fidesz-Christian Democratic coalition, and are scheduled to vote on it on April 18. The drafters and Mr. Orbán have committed themselves to Hungary’s future economic sustainability, having already adopted a flat personal income tax of 16% and included a government-spending cap at 50% of GDP in the proposed constitution. At a time when national economies in Europe are collapsing left and right due to years of runaway public spending, Budapest is moving in the right direction.

But the proposed constitution also includes a series of second-generation rights and state objectives that will commit future governments to providing “adequate housing,” “access to work,” “sports,” public education and a state-run pension system to all Hungarians. Whereas natural rights (such as life, liberty and property) are rights that governments protect from infringement by others, positive rights (such as housing and leisure) are things that governments are expected to provide. This redefinition of the nature of rights necessarily and fundamentally alters the relationship between individual and the state and increases the scope of state power. The wealth redistribution necessary to provide these rights undermines the protection of private property.

read whole article Marion Smith: Protecting Hungary’s Freedoms – WSJ.com.

Western nations top CDS list on tightened spreads

THE BEST performing sovereign credit default swap (CDS) markets over the first-quarter of this year are made up of Western nations, despite the rise of Eastern economies.

Austria was the top sovereign credit over the first quarter, with a five-year spread of 60 according to data provider Markit.

The nation has improved its credit position as a result of recovery in eastern European markets, where its banks have exposure.

Hungary and Chile were the only two emerging economies in the top ten best performing sovereigns over the first-quarter.

The weakest countries in the Eurozone are the struggling economies of Greece, Ireland and Portugal.

However, the sovereigns have seen spreads tighten significantly.

Credit analyst at Markit Gavan Nolan said: “Although political instability and high debt levels made [Portugal Greece and Ireland] vulnerable in the eyes of many investors, there was the counter-view that its deficit was relatively small and it was unlikely to have any difficulty in raising funds. The latter perspective seems to have won out.”

via Western nations top CDS list on tightened spreads | City A.M..