News from the Netherlands
UWV, the institution paying out unemployment and disability benefits came out with a report Monday stating that it's funds reserved for the unemployed had fallen to minus 1.9 billion euros. At the end of 2008 there was still more than 9 billion euros to pay out unemployment benefits. The employee contributions were scrapped in 2009 by the fourth Cabinet under PM JP Balkenende. The reason at the time was to compensate for drops in purchasing power due to other measures taken. The current Cabinet under PM M Rutte is discussing ways to cut spending this week. They had received warnings from Brussels last week to toe the line on the deficit. A likely outcome is that employee contributions will be reimplemented. A short gaze over the comments to news stories covering the developments on UI indicates widespread dissatisfaction and cynicism.
Update 15:53 CET:
Minister of Social Affairs Henk Kamp says a reintroduction of employee contributions would harm purchasing power and would not be practical. A new administrative system had been introduced recently to simplify the administration of employee's wages and an employee's contribution to UI does not fit in the simplified system.
Give me back my Guilder
The Freedom Party, the party never shirking controversy, in fact usually benefiting from it in the polls, released a cost benefit report they say shows a return to the guilder would be positive. The essence is that leaving the euro would cost 51 billion euros but lead to benefits of 75 billion euros. They had commissioned Lombard Street Research to do it and are being vehemently criticized for using a firm widely known to be eurosceptical.
Candidate for the leadership of the Labour Party, R Plasterk, is especially critical and reasoned that the researchers had started with that conclusion and worked their assumptions to prove it. Hmm, who has produced any 'objective' research on this issue that the rest of us can examine? I may look further into Labour Party leadership contest but it will be decided in a couple of days and another angle on politics generally may be of more interest to zerohedge readers.
Z24.nl writer Jeroen de Boer argues that LSR's conclusion that the Dutch going it alone would be positive is actually a 'wild' experiment since the guilder had been defacto tied to the D mark for decades except for a few incidents. So he seems to be insinuating any scenario for leaving the euro should involve using the same fiat as Germany. He picks through the research in his way and adds some from other sources and his own logic. This mostly involves comparing exports of countries such as Switzerland, Denmark, and Sweden to Germany. He then reasons it wouldn't work because the Netherlands has deeper trade links with Germany.
PM M Rutte said this afternoon that he thinks the guilder would have been 'destroyed' by speculation in 2008 and 2009. Like so many currencies that were 'destroyed' in those years I guess. I wonder what makes him so anxious.
As I've said, the point of my blog is just to give an impression of events in the Netherlands. We can discuss this attempt at insight on my part in the comments. That is if anyone deems any of my observations interesting or would like to help me out trying to make sense of it all. I'm trying to figure out an angle that will fly on zerohedge. This is something entirely different from my first post so we'll see what happens.
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