George Soros must be fuming this morning.  Not only did Hungarian Prime Minister Viktor Orban’s “Stop Soros” campaign work to get him re-elected it did so with  full two-thirds majority of parliament.

Looking over the results of yesterday’s election they couldn’t be worse for western neo-liberal elites like Soros.  Their hope, which was littered all through pre-election coverage, was that high voter turnout would dilute ‘strong-man’ Orban and weaken his Fidesz party’s control over parliament.

The exact opposite happened.

Like in Italy, high voter turnout, in this case nearly 69% percent of potential Hungarian voters (versus just 61% in 2014’s election) turned out and just under half of them voted for Fidesz.

This left Orban with 133 out of 199 seats in parliament and the ability to amend the constitution without having to placate other parties.  Democracy spoke yesterday across Hungary and it loudly condemned the outside influence of people like Soros and the policies of Angela Merkel in Germany.

Because not only did Fidesz get 49.5% of the total vote, the far more nationalist party Jobbik held onto its 20% share of the electorate.  No coalition talks are needed.  No potential for behind-the-scenes bribery and negotiations.

Hungarians wanted clarity of purpose from their government and then delivered that to Orban.

The Hard Shoulder

Orban is not one to mince words and he will now push through an anti-NGO law similar to what Russia’s Vladimir Putin has in place.

A law like this, while fundamentally illiberal and un-libertarian, is an unfortunate bit of defense in a world where economic and political dominance is being deployed in the most illiberal manner.

And that is the crux of the shift towards nationalism across eastern Europe. Countries like Hungary are uninterested with becoming forcibly integrated with foreign populations.  Poland feels the same way and is much farther down the road towards a toxic version of this instinct than Hungary is.

Like Orban or hate him, he has not promoted this level of disgust from his people.  But, rather nipped it in the bud by first putting up a border wall and second arguing strenuously against Merkel’s forced immigration quotas.

He made it the focal point of his re-election campaign and it worked. Brilliantly.  Now Hungarians can go back to work safely knowing that there isn’t going to be a color revolution in its future.

These results piggy-back on Italy’s protest vote last month where Euroskeptic parties The League and Five Star Movement both over-achieved at the polls.  Unfortunately, Italian politics is what it is, more akin to performance art than actual governance, so  the picture there remains murky for the time being.

But, between the Czech Republic, Germany, Italy and now Hungary, these past eight months have been a nightmare for the European Union.

Hungary will harden the Visegrad Four’s opposition to Merkel.  It will resolutely stand behind Poland in its Article 7 fight with Merkel.

Think about this.  Austrians, Czechs, Poles, Hungarians, Slovaks and Italians are all now in opposition to Merkel’s anti-Russia, pro-Culture War rule over the EU.  It’s a real political trend that can’t be gaslighted in the kept legacy European press anymore, who are apoplectic at Orban’s success. 

Again, it looks good on them.

Brighter Future

As an investor I now look at Hungary as a very interesting prospect.  Investors can be sure that political stability is here.  Arguments about an unhealthy democracy are silly.

Hungarians knew exactly what they were doing going to the polls.  So did Italians, Czechs, Austrians and Russians.  The Germans are still confused.

These are countries that despite the negative press, the outright lies and ruthless political and economic pressure voted for for stronger opposition to the dominant trends in European politics.

That is exactly what we hope democracy is capable of in times of instability.

And that means a more stable economic environment.

Remember, both Hungary and Poland never joined the euro-zone.  They still use their own currencies.

And while the Germans continue to try and bankrupt the Mediterranean states (Italy, Spain, Portugal, Greece) through an overly-strong euro and intransigence on high-taxes and austerity, the Visegrads are free to pursue more independent economic policies via their local currency’s comparative advantage and proper pricing of local labor.

Now, while the Hungarian market has been in an unbridled bull market for the past few years along with the rest of the equity markets, it has corrected along with a stronger Forint so far in 2018.

That said, all macroeconomic indicators are tailwinds for the Hungarian economy.  Unemployment is low and falling, consumer confidence is high, public debt-to-GDP has fallen steadily under Orban’s leadership.  But, most importantly, Per Capita GDP on a Purchasing Power Parity (PPP) basis has soared this decade.


And if you want to know why Orban can get re-elected this easily by that kind of margin look no further than this chart.  Hungarians are getting wealthier at an astounding rate and that will only improve with continued strong government infusing the investment community with confidence it can stand up to the worst Merkel throws at them.

Lastly, Orban has emerged as quite the statesman on the world stage, effectively not only making his case but also making strategic deals for securing an energy infrastructure independent of the edicts from Brussels.

These come in the form of an expansion of the Paks II nuclear power plant and a dedicated spur off the Turkish Stream pipeline currently under construction.

Election results like yesterday’s tell me the fight for the soul of Europe is only just beginning.  In fact, it’s only just now getting interesting.

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