Tag Archives: Dijsselbloem

Dijsselbloem believes in the confidence fairy: “If we now are less tough on fiscal consolidation, we will kill the recovery”


In this Dutch interview (excerpt online only)with the Dutch Finance minister it is clear that Dutch and European economic policy is unlikely to change (he is the head of the Eurogroup). He really states what is said in the title. Yep, confidence fairy time again.

He also says:

Het probleem is dat werkloosheid hoog is, dus er gaat veel geld naar uitkeringen. De uitgaven voor de gezondheidszorg blijven stijgen, die voor de ouderenzorg ook. Zolang die structurele trends niet gekeerd zijn, zit er weinig anders op dan blijven besparen.’

Or in English: ‘the problem is that unemployment is high, so a lot of money goes to unemployment benefits. Costs for healthcare and elderly care are also rising. As long as those structural trends are not bent the other way, there is no other solution to cut budgets.’

Cost for healthcare and elderly care may be part structural,  given the retirement of the babyboomers. I don’t know about the healthcare  issue, but this may have a lot to do with how the Dutch system works.

But that Dijsselbloem suggests that Dutch unemployment is structural, is rather strange. Yes, the Netherlands had a housing bubble but it is not only construction workers and real estate brokers that are unemployes. A recent report I saw (by the Dutch statistics bureau I think) made explicit mention of loss of jobs in business services, including IT and consultancy.  This has to do with demand. Not structural issues.

The suggestion that cutting government budgets must help to buck trends is quite something. Probably social benefits might be meant, e.g. cutting unemployment benefits might speed up the transfer of workers to other sectors, if Dijsselbloem really thinks Dutch unemployment is structural.

The Dutch economy is going for a rough ride. Why do Europe’s strong countries have such misguided leader? Oh and he also think Olli Rehn will be lenient when (not if, in my mind) the Dutch government will not meet the budget criteria in time.

With politicians like Dijsselbloem,  Europe is doomed, and European Social Democratic policy as well.

Jeroen Dijsselbloem is ‘disappointed’ about the Cypriot no-vote

Via the Dutch Trouw-newspaper, a short reaction from Dutchfinance minister and Eurozone Chairman Jeroen Dijsselbloem (my translation):

‘The Eurozone has fairly quickly and in great unity submitted a proposal to Cyprus [i.e. the bail-out plan]. Now really the responsibility is theirs to accept the proposal in terms of its requirements. The large capital is in the banks of Cyprus. The banks are now in trouble, so it is clear and unavoidable that their capital is looked at [for the bail-out].

Dijsselbloem said he is ‘disappointed’ about the vote but ‘At the same time we did an offer on behalf of the Eurozone.  That offer is still valid and its requirements/conditions as well. The ball is really in Cyprus’ court now.

So in short, the message to Cyprus is to accept this proposal for bail-out or else….

Quite amazing how the Eurozone can’t admit it made a mistake.

Testorsterone pit: analysis of SNS Reaal bailout

This is an interesting story, insofar it relates to a possible coming bailout (Cyprus). Apparently I did not catch the whole significance of the expropriation of the subordinate bonds/participation certificates.

‘Nationalization of SNS – Costs 3,7 billion’

The bullet is through the church, or so it is (literally) said in the Netherlands: the nationalization of SNS Reaal, which was expected, is now a fact. The first interesting development is that the Dutch budget deficit increases to 3,3% or in other words: over the limit set by the EU. But Finance minister Jeroen Dijsselbloem says this nationalization was inevitable, because the bank would have gone bankrupt otherwise, and very soon too.

Regarding the junior/subordinate bonds:

Het ministerie van Financiën onteigent de investeerders die achtergestelde leningen hebben gegeven aan SNS Reaal. Dat scheelt de schatkist volgens Dijsselbloem een miljard euro. De Nederlandse banken moeten ook bijdragen aan de overname.

In other words – the Finance ministry disowns the investors that had subordinate loans to SNS Reaal, which apparently makes a difference of 1 billion (shareholders are also not protected). Also the other Dutch banks are supposed to contribute to the nationalization – they have to pay banking fee of 1 billion. But in exchange, they can take more time to fill a fund that is meant to protect the accounts of normal account holders.


I am not sure if this write-down of subordinate bonds is the issue referred to by Fitch, but the whole episode is quite dramatic, especially since the bank received support in 2008 already, and the Dutch financial system doesn’t yet seem any more stable.