Getting the hang of it – Hungary Bankrupt.

You know I may be getting the hang of this.

Yesteraday I wrote about the situation in Hungary and Romania following on from the day before worrying about the Balkans in general. And today, guess what? European stock markets all dive because of ‘fears about Hungary’. In Hungary a spokesperson for Hungary’s Prime Minster ,( the one who I mentioned was critical of the markets and their calls for more austerity measures) – well this spokesperson said it was possible Hungary might default on its loans. Result. Austrian banks dropped nearly 10% in a few seconds. London went vertically straight down as did Paris and Frankfurt. They’ll recover, worry not. But the fear and volatility is here to stay. Austria is exposed to Hungary. Greece to Bulgaria. Germany to Greece and Austria. And the thigh bone is connected to ..

Of course anyone can be right once in awhile. But I wonder if brute, ugly reality is leaking its way back in to the fantasy holo-deck where central banks, policy makers and big banks have been playing?

If so, then when the DOW opens, no matter what the Futures say, it will head down. Down because the US might be waking up to its own dangerous fictions. The just released job data is, in reality, a puff-ball fiction. The people hired to do the US census accounts for most of it and, worse, there is also a large artifact of births and deaths mixed in there as well.

I think down here in reality-ville (little visited by bankers and poiticians) US unemployment has NOT gone down. What has happened is some more people have fallen off the end of benefits and thus simply disappeared from the radar.

UPDATE Trading in Hungary’s largest bank suspended after 10% plunge. CDS on Hungary’s debt is without any bidders at all. Which means there is no price because no one at all will insure it for any price.