The IMF pulled the plug on Hungary's 20 bn € loan over the weekend. I cannot recollect this ever happening before. The Hungarians must have been very bad boys and not taken their austerity medicine. Hungary today Greece tomorrow?
In Euroland the authorities are currently inflicting a three medicine concoction of fiscal, monetary and currency tightening. Not the right medicine mix at all opines Tim Congdon. The accepted mix is fiscal tightening and monetary loosening. It looks like bad times are coming in Euroland or as AEP puts it, a 'deflationary vortex'. Fiddled bank stress tests are increasingly a side issue.
Worries are the Club Med disease could spread like the Black Death over north west Europe. So far only one country, Slovakia, has agreed to cough up for EU/IMF support package now entitled EFSF with the SF standing for the politically correct Stability Facility. Given Spain looks like it will be tapping this fund big time we have to ask who will be subscribing the money to the EFSF? Italy is down for a fair chunk. I don't think the markets will buy any more Italian paper, in fact I would say sell your BTPs now and buy Bunds and Oats.