Things turned into an "entertainment" once again. A web page that gives instant notifications about the developments in the world markets (Bloomberg) is open as long as my computer is on. When I left my office for lunch on Friday things were looking fine in Europe. When I turned back to my office, I saw that the markets were heading down. Soon, US markets opened the day with severer negative developments. One of the fun parts is this:

In the morning when positive developments were observed in the markets, the news detailed the underlying causes of the positive outlook. For instance, the recovery of the US economy had become visible, they said. Similar interpretations were backed by opinions of experts, with their names announced. In the afternoon, when the entire picture was reversed, explanatory remarks and news were highlighted, too. This time they argued that the economic recovery will be slower than what was hoped. Again, opinions of some experts were featured.

In short, it appeared that news channels put on stand-by both the experts expecting positive developments and the experts foreseeing negative developments. As soon as the direction of the movement was observed, they put an appropriate heading, gave the change in the indicators and then the views of a couple of experts, than the fall (or rise) in the US bills (generally due to the rise (the exchange markets, and vice versa) accompanied with expert opinions and so on.

There is no doubt that those operating the web pages are trying to do their job. But the markets are so volatile that they have to find rational explanations for all developments during the day, some in completely opposite directions. Thank God there are experts to expect positive developments as well as those who expect negative development, with valid justifications.

One of the indicators of the negative movements in the European markets in the afternoon and in the US markets the entire day on Friday was the employment figures for the US: the size of paid employment increased significantly less than what was expected. What is more, the rise stemmed from temporary public employment. This was a huge signal that the recovery of the US economy will be much slower than expected.

This volatility was not unique for Friday. The markets went through sharp falls in the week before while this week witnessed positive developments until Friday. Volatility prevailed over the month with the developments emerged in Greece and started to be felt in Portugal and Spain. This signifies that we are faced with substantial uncertainties posing large risks.

We hear a new series of positive developments from another European Union country, making the overall situation severer. This time Hungary stepped in. The new government blamed the former government and stated that the state of affairs about the fiscal policy was worse than announced. In fact, the new prime minister and some ministers expressed the situation with "harsh" words. They highlighted the risk of bankruptcy.

When these declarations were first heard on Thursday, interesting comments also came to the fore. Some people argued: "It is the usual politician attitude; they are trying to justify that they cannot keep the promises they gave before the elections by criticizing the practices of former governments." However, a prudent politician must be aware that in the current economic milieu in the world, the usual politician attitude cannot be demonstrated. Were those prudent politicians? If they were not, how could they turn the economy around? On top of everything, on Friday the Hungarian authorities "explained" us the difficulties the Hungarian economy faced with an even harsher language. It was unbelievable.

By the way, let me remind you that Hungary has enacted the "fiscal responsibility" law in 2008 and introduced the "fiscal rule" practice in 2009. The country also has an independent fiscal advisory council. The web page summarizes the fundamental duty of the council as ensuring the "sustainability and the transparency of the public finance." It appears that the council has just recently become institutional functional. But it successfully tells us that the fiscal rule is not solely a formula or a regular law amendment in the context of the declarations of the Hungarian prime minister that the economy is in a more unfavorable condition than that is known by the public. Everyone must keep this in mind.

This commentary was published in Radikal daily on 06.06.2011