HUNGARY/ROMANIA: Many Struggle As Foreign Loan Costs Soar.

AP/ PABLO GORONDI /
      Foreign currency loans were extremely popular in Eastern Europe during the mid-2000s. But they are now proving to be a serious burden in several countries, especially Hungary, Romania and Ukraine.
The problem seems the worse in Hungary with its sharply devalued forint.(Pictured)
There foreign currency loans totaled 7.3 trillion forints ($35 billion usd) at the end of June with nearly 80% of that was in Swiss francs, with some loans in euros.
Of the 1.8 million people with such loans, 400,000 are behind on their payments, including 100,000 who are behind by three months or more.

POLAND: New Central Bank Chief Wants Regional Austerity.

WSJ/ Gordon Fairclough/      Marek Belka, the former IMF official now heading Poland's central bank believes that EU governments must start spending cuts and reduce debt loads or they may harm their neighbors. The zloty was dragged down with the Hungarian forint v the euro after the IMF and EU ended talks with PM Viktor Orban. They said Orban wasn't doing enough to cut spending. Belka believes only "moderate" austerity cuts are needed.  (Foto of M.Belka)

HUNGARY:2nd UPDATE/ Grim Prognosis Spooked Markets; Remarks Called "Unfortunate."

BUSINESSWEEK/ NEW LINK/ 5 June/  The government is trying to cool the  severe negative market reaction after a remark by ruling Fidesz Party leader Lajos Kosa that Hungary had a “slim chance to avoid the Greek situation” and the economy is in a “much worse” situation than the party had forecast spooked them. Kosa was quoted as saying the country was at risk of a Greece-like crisis and European Commission President Jose Manuel Barroso said it was in a “very delicate situation.”  “It’s clear that the economy is in a very grave situation,” Peter Szijjarto, spokesman for Prime Minister Viktor Orban, said. “I don’t think it’s an exaggeration at all” to talk about a default. “I’m staggered by these comments,” said Tim Ash of the Royal Bank of Scotland, referring to Szijjarto’s statements. “It’s ridiculous, remarkable and extremely dangerous. What message does this send to foreign bondholders? You will look to protect your investments.” State Secretary Mihaly Varga said: “The comments that have been made about this issue are exaggerated and if they come from colleagues that’s unfortunate.”