Hungary’s Finance Ministry is examining whether changes may be needed to the tax treatment of retail government bonds after the European Commission launched an infringement procedure over their tax advantage compared with securities issued by other EU countries.
EU raises concerns over tax advantage
The dispute concerns one of the key attractions of Hungarian government bonds for private investors: the interest earned on most Hungarian retail government securities is currently exempt from tax. The European Commission objects to the fact that interest from Hungarian government securities issued specifically for retail investors is tax-free, while similar income from government bonds issued by another EU or European Economic Area country is generally subject to Hungarian tax rules.
Foreign government bond returns can normally be subject to 15 per cent personal income tax, with an additional 13 per cent social contribution tax applying in certain circumstances. Meanwhile, interest on Hungarian retail government securities issued after June 2019 is exempt from these taxes.
According to the argument behind the EU procedure, the difference in taxation can financially encourage Hungarian savers to invest in domestic government securities rather than bonds issued elsewhere in the EU, potentially restricting the free movement of capital within the bloc. The financial impact for individual investors could be significant. On a HUF 10 million (around EUR 27,350) investment, as much as HUF 154,000 (EUR 421) a year could depend on whether the interest remains tax-free.
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Ministry examining more than taxation
The Finance Ministry has now confirmed that it is reviewing possible responses to the European Commission’s action. In a statement to Hungarian financial news outlet Portfolio, the ministry said it was examining “all possible solutions” and that the review extended beyond taxation.
It is also looking at capital-market and government-financing considerations, although the ministry has not explained what specific measures these areas of review could involve. This has raised questions about whether the government could eventually change the pricing or other conditions attached to retail government securities, although no such decision has been announced.
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No decision has been made yet
The Finance Ministry said it would inform the public once a final government decision had been reached. For now, the tax exemption remains in place, and the government has not indicated precisely how it intends to respond to the infringement procedure.
The issue could nevertheless have important implications for Hungary’s retail government bond market. The securities have been an important way for the government to attract household savings and domestic financing, while the tax-free interest has been a significant incentive for individual investors. Any changes could therefore affect both the attractiveness of government securities for Hungarian savers and the government’s approach to financing through the domestic retail market.
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We’re paying more taxes than ever before and getting less than we ever did.
Indeed, in many “developed” countries the governments are failing to perform even the core functions of what a government is supposed to do at a minimum: national defense, law enforcement, and criminal justice. Hostile aliens are invading the West with total impunity while it’s the natives who protest who find themselves subjected to the full weight of the penal law.
Meanwhile, the social security system has become a Ponzi scheme while bloated and luxurious welfare programs mean that in quite a few places (Great Britain, for instance) more people are taking from welfare than there are those paying into it.
It is total madness.
If you can fiddle your taxes, it is almost your DUTY to do so.
If only the real world were that simple to explain, then even the biggest fool could solve every problem. But logic has never been the strong suit of the far-right. That is why they can only put their ideas into practice by suppressing the truth. It might help them and let them sleep soundly, but reality will come crashing down on them all the more fiercely.
If the following happens, you can forget about Hungarian government bonds as well.
Billionaire investor Ray Dalio warns the US faces a ‘perfect storm’ of problems – and predicts more pain for markets and the economy!
Ray Dalio has warned the US faces a rare combination of challenges, and has predicted the Federal Reserve’s inflation battle will cause further pain for markets and the economy.
The billionaire investor flagged the vast amounts of debt and cash in the US economy, raging political conflicts between Democrats and Republicans, and Russia’s ongoing invasion of Ukraine as key concerns.
“Those three things are the perfect storm,” he said at the Greenwich Economic Forum on Tuesday.
Dalio complained that “ridiculously stupid” interest rates and a flood of cheap money have inflated US asset prices and overstimulated the economy in recent years. He cautioned the comedown would be deeply unpleasant.
“The Fed and the government together gave an enormous amount of debt and credit, created a giant lurch forward, and created a bubble,” he said.
“They will raise interest rates to the point that there’s enough economic pain and financial market pain to deal with that,” he said. “They’re putting on the brakes, so we’re going to create a giant lurch backward.”
Dalio, the founder of Bridgewater Associates, recently stepped down as the hedge fund’s co-chief investor, and now serves as a mentor to its bosses. He explained that inflation only falls when people lose buying power and start spending less, which requires rates to increase enough to reduce demand for credit in the private sector.
The investor predicted yearly inflation between 4% and 5% in the medium term, and suggested rates would have to increase from about 3% today to over 4.5% in response.
The dollar has soared to a 20-year high against other major currencies this year, reflecting the US economy’s greater strength and higher rates compared to other countries. However, Dalio advised against valuing the greenback relative to its rivals.
“They’re all bad currencies,” he said. “They’re all depreciating in buying power,” he added, referring to the impacts of inflation and a growing money supply on the value of many countries’ notes and coins.
The veteran investor also offered some advice for navigating the current market. He recommended people invest in things they know they’ll need, such as education, food, healthcare, and a home.
He added that peaceful countries with budget surpluses and solid balance sheets are good places to deploy money, and emphasized the potential value of emerging technologies. He also underscored the importance of having a diversified portfolio.
“It only takes one time to knock you out of the game,” he said. “You have to survive first.”
Finally, Dalio flagged the numerous challenges facing China, including a “debt crisis that they’ve allowed to go too far into the bones of the economy.”
He pointed to the country’s overleveraged real estate industry, and questioned its commitment to free markets. He also warned of further disruptions from COVID-19, noted there are too few young people to care for the elderly, and highlighted climate and water problems too.
“China’s got a lot of those problems to deal with,” he said, adding that the nation’s long-term outlook is bright but it has “major issues” right now.
https://markets.businessinsider.com/news/stocks/ray-dalio-bridgewater-fed-rate-hikes-inflation-economy-dollar-china-2022-10?utm_medium=syndication&utm_source=AOL
And one more warning regarding the general topic:
Former Treasury Secretary Robert Rubin warned that the artificial-intelligence investment boom could bring major productivity gains but also create financial and social risks that markets may not be fully pricing.
Rubin, who served as Treasury chief during the internet boom in the late 1990s, said he’s particularly concerned about “circularity risk” in the AI ecosystem. The term refers to the overlapping of commitments among suppliers, customers and investors — such as between chipmakers and software firms.
“Some of these very big AI companies have enormous commitments, and then there are a lot of suppliers, and a lot of suppliers have borrowed against those commitments,” Rubin said in an interview at the Greenwich Economic Forum Tuesday. “What happens if they can’t fulfill those commitments or all those borrowed against them? It’s called circularity risk.”
The risk of some disruption — where one party breaks its commitments, causing cascading failures — is meaningful, according to Rubin. The former Goldman Sachs co-chairman described it as not “near zero.”
The scale of debt issuance this year by firms building data centers and developing AI software has been such that many market participants say it’s contributed to an increase in borrowing costs globally. Benchmark government bond yields have climbed further this week, with 10-year Treasury rates hitting their highest level since 2002.
That’s in turn propelling government debt servicing costs, stoking concerns about fiscal sustainability in the US, France and elsewhere. Rubin, who joined President Bill Clinton’s administration at a time when worries over budget deficits were widely shared, said angst over the scale of borrowing is beginning to be evident.
“I think what’s happening right now is some realization about our fiscal situation beginning to affect markets in a way it hasn’t for a long time,” he said.
He also pointed to inflation and a broader loss of confidence in the government’s ability to address fiscal problems. “When you have adverse or unstable fiscal conditions, it can affect confidence more broadly in the ability of your government to deal with this problem,” he said.
That dynamic could ultimately matter for equity markets as well, he said — because uncertainty tends to weigh on investment and productivity.
Rubin pushed back against the argument that AI-driven productivity growth could allow the US to effectively grow its way out of its fiscal problems. While it’s possible that a productivity acceleration boosts GDP gains, the benefits could be accompanied by substantial job losses, particularly among white-collar workers, according to the former Treasury chief.
“This is going to hit knowledge workers very hard,” he predicted. Lawyers, accountants and television workers could all face displacement, he said, raising difficult questions about how people transition into new roles. The US currently lacks effective programs to deal with such disruptions, he said.
“So could we have higher growth from AI? We could — we probably could well,” he said. “But I don’t think it’s going to do what we need to do to zero-off fiscal problem.”
He also questioned whether the massive investment in AI will ultimately generate sufficient returns. “Will it pay off, will it not? I don’t know, but neither does anybody else,” Rubin said. “Some of this will turn out to be terrific and some companies will do great, and a bunch of other companies are going to do badly.”
Rubin said his concerns extend beyond markets and the economy to the potential safety risks posed by increasingly powerful AI systems.
He said he sees AI safety and climate change as “two massive existential risks” unlike anything humanity has previously faced. Rubin also pointed to the dual challenge of attempting to put safeguards on AI but also keeping an eye on competition with China. If Beijing doesn’t impose comparable constraints, the US could be left behind, he noted.
“The US is still the best place to invest,” Rubin also said. But he argued that maintaining that advantage depends on the country’s political system becoming effective enough to address its fiscal, technological and other long-term challenges.
“Our political system has to become effective enough, again, — which it’s not now,” Rubin said. “It doesn’t have to be terrific. It wants to be effective enough to deal with our issues.”
©2026 Bloomberg L.P.
https://finance.yahoo.com/economy/policy/articles/robert-rubin-warns-ai-boom-190255724.html
Higher interest rates have an impact far beyond the bond market: they make new loans more expensive, depress valuations in stock and real estate markets, and limit borrowers’ financial flexibility. The pace at which borrowing costs rise is crucial here: while bond prices react immediately, the impact of more expensive refinancing often filters through to households, companies, and the real estate market only gradually.
Central banks set key interest rates, but the capital market also determines long-term rates (yields). Those lending money to governments via bonds take into account expected inflation, future monetary policy, and the risks associated with tying up capital for years. Four forces can drive yields upward, as is currently the case.
First: inflation and energy prices. If wars, production outages, or disrupted transport routes drive up the cost of oil and gas, expenses rise for both companies and consumers. If investors fear a sustained loss of purchasing power, they demand higher compensation.
Second, this can fuel expectations that central banks will raise interest rates further or keep them high for longer.
Third, the supply of new government bonds plays a role. Government budget deficits must be financed, and maturing debt refinanced. If financing needs grow faster than demand from bond buyers, higher yields may be required to attract sufficient capital. If central banks worldwide simultaneously reduce their bond holdings—for instance, in favor of gold—other investors must be enticed to step in (by offering higher interest rates).
Fourth, investors often demand a higher term premium when uncertainty is high. This compensates them for the risk of committing to a borrower over the long term. As the European Central Bank explains, uncertainty regarding inflation and future key interest rates can significantly increase this premium. Consequently, long-term yields can rise even without an imminent hike in key interest rates; mere expectations are sufficient.
This combination becomes critical given high debt levels: a one-percentage-point increase in interest rates translates to an additional €10 billion in annual interest costs for every trillion euros of newly financed or refinanced debt—using Germany as an example, a country currently in a much stronger position than Hungary. Pressure on public finances mounts with every instance of costlier refinancing and every increase in debt.
If market interest rates rise, existing bonds with low fixed rates come under pressure: their prices must fall to regain their attractiveness relative to new issues offering higher yields. Securities with long remaining maturities and low coupons are particularly sensitive to this. Even government bonds from top-rated issuers can therefore suffer significant losses in value. Consequently, a bond market crash does not necessarily require a default to occur.
Such price declines impact the securities portfolios held by funds, banks, and insurance companies. Further forced sales can exacerbate the downward trend. Past investment behavior by institutional funds has shown that they often sell riskier bonds precisely when prices are already falling, thereby further amplifying volatility in the bond market.
Rising interest rates have an impact that extends far beyond the bond market. Companies face higher costs for new loans and refinancing. This can squeeze profits, delay investments, and jeopardize jobs. Higher loan repayments leave households with less money for consumption. The European Central Bank explains this transmission to the broader economy: more expensive financing and tighter lending standards can reinforce one another. For equities, there is an additional valuation effect: higher interest rates mathematically reduce the present value of future earnings. Highly valued growth companies and heavily indebted firms (such as highly leveraged hyperscalers) are particularly vulnerable. If falling earnings expectations coincide with selling pressure, the risk of a stock market crash rises.
Real estate is also coming under pressure: higher construction interest rates limit the purchasing power of potential buyers and make financing new projects more difficult. When fixed-interest periods expire, significantly higher installments can place a burden on property owners. Location, rental income, and debt levels determine the resilience of individual properties.
While Dalio writes specifically about the US, these problems exist worldwide—to varying degrees, but without exception. Moreover, such crises spread rapidly across the globe; one need only recall the year 2000.
Ray Dalio warns of a dangerous dual risk stemming from the AI boom and US debt. Speaking at the Forbes Global CEO Conference in Singapore, the founder of Bridgewater Associates stated that artificial intelligence exhibits the characteristics of a “classic bubble.” Amid rising interest rates and increasing borrowing, the AI boom is already approaching a potential tipping point. “I think we’re close,” Dalio said, according to Bloomberg.
This is precisely where Dalio sees the problem: technology companies are investing hundreds of billions of US dollars in data centers, chips, and AI infrastructure—increasingly using borrowed money. At the same time, bond yields worldwide are climbing to levels that make financing these projects significantly more expensive. Dalio views this as the core danger. If companies and investors suddenly need cash, assets would have to be sold. “Everyone says, ‘I’m worth a billion US dollars,’ but okay, try spending that,” he argues. “To spend it, you have to sell assets to get cash—and that is exactly where the bubble usually bursts.”
Despite this warning, the S&P 500 and Nasdaq are trading at record highs. However, the rally is narrow: according to the *Wall Street Journal*, fewer than half of the stocks in the S&P 500 recently closed above their 200-day moving average. Meanwhile, US Treasury yields are at their highest levels in roughly two decades. In other words: while a handful of major tech stocks drive the indices upward, capital is becoming more expensive for companies and consumers. At the same time, Dalio warns of a potential US debt crisis within the next three years. Speaking to Bloomberg, he pointed to annual government spending of around $7 trillion against revenue of approximately $5 trillion. “When debt accumulates faster than it is repaid, debt-servicing costs rise,” he said. Japan and China have already reduced their holdings of US government bonds recently.
Author: Gina Moesing, wallstreetONLINE Editorial Team
Charles Nenner, a well-known investment advisor, recently stated that gold will reach a new high of approximately $6,500 over the coming year before experiencing another pullback. Nenner remains tight-lipped about what happens after this, out of consideration for his paying subscribers. Ultimately, however, only the future will reveal what actually occurs.