Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Economic Goulash to Calm a Ghoulish Market By: Charles Payne

Call it Hungarian goulash, the national dish that is neither a soup nor a stew. It was created by herdsmen, and prepared in cast iron kettles above an open fire. This peasant dish did not catch on with upper levels of society until the 19th century. Yesterday, Hungary unveiled a rescue plan that can only be described as an economic goulash that is neither Freidman nor Keynes. While the edible version is prepared into a thick consistency, the economic version is inconsistent and hard to swallow. The edible version is a beef dish with onions, Hungarian paprika powder, tomatoes, and green pepper (some recipes call for potatoes and noodles). The economic version aims to cut pork and add beef, but is such a hodgepodge of ingredients that it leaves everyone hungry for more.

The goal to lower the deficit to 3.8% of GDP this year doesn't seem attainable, but considering less aggressive goals of other European nations it's not the kiss of death. I like the idea of lower taxes on earners and businesses, as well as freezing expenses in the budget. There probably is a need to cut expenditures in the budget, and that could come later.
I suspect this is the compromise, but not sure how it will impact commerce. The tax on banks is expected to raise 200.0 billion forints ($1.02 billion), up from the current taxes paid by banks of approximately 13.0 billion forints.

Then there is the extension of a ban to evict borrowers who have defaulted on mortgage loans until December 31, 2020. Say what! Does ACORN know about this? Talk about a slippery slope, doggon it, I would be tempted to not pay my mortgage. This is the pledge that swept Viktor Orban into power, but it could mean one million people will get a free ride. I suspect this is the first cut, and there will be more. I appreciate the candor of the current Hungarian government but halfhearted austerity measures back in the mid-1990s only kicked the can down the road.

Despite the nutty aspects of the plan, on balance it's more considerate than the witch's brew we've gotten in America.


The Labor Department posted its fabled JOLTS report, which is one of those data releases that never garnered as much as a yawn but these days is eagerly awaited. I can't say the market rallied on the news, but the report was upbeat. April job openings climbed to 3,078,000 from 2,785,000 in March, and from 2,475,000 a year earlier. As the chart below illustrates, at 5 to 1 there is still a tremendous amount of unemployed persons per job opening.
A late rally was a refreshing change of pace but it wasn't conclusive. This morning's action in equity futures feels a little better. Interestingly, it's being driven by news out of China. Apparently, word has been slipped to Reuters that tomorrow's export data will show an increase of 50% year over year; right now consensus is 32%. The implication is the world continues to rebound, particularly America, and that is welcomed news. On the other hand, applications for mortgages to purchase homes hit a 13-year low despite interest rates that can't get any more attractive.

Disclosure: None