The PIIGS family is growing  to include Hungary as a spokesman for the PM of Hungary said their economy is “in a grave economic situation” and the possibility of default is “not an exaggeration.”!!!

Markets rolled over after the comments and the euro fell to a new 4 year low vs the US$. Hungary 5 yr CDS is higher by 15 bps to 323 bps, the highest since July ‘09. Hungarian stocks are lower by almost 4% and European banks are all lower including rumours that SG ( Societée Generale ) has a huge exposure to Eastern Europe through derivatives exposure.

The possibility of Europe heading towards a double deep recession whenever Greece, Portugal, Spain, Ireland, Italy, and now Hungary apply restrictive medicine is becoming a REAL possibility. If that happens, US will follow as it happened in 1931…