Dutch Cabinet Resigns
As reported first thing this morning when we discussed the perfect storm in Europe, the Dutch government was expected to resign en masse in the aftermath of this weekend's auterity fiasco. Sure enough, that resignation is now fact.
From the WSJ:
Dutch Prime Minister Mark Rutte and his cabinet have resigned after failing to reach agreement on reducing the country's budget to meet European guidelines, the Dutch government information service said Monday.
The information service said that Mr. Rutte had met with Queen Beatrix and she had accepted his resignation, asking him to tend to pressing matters of state with a caretaker government for the time being. Mr. Rutte is due to address parliament Tuesday afternoon to discuss interim budget cuts and schedule new elections.
Talks over measures to slash the government's budget deficit collapsed over the weekend after seven weeks of negotiations, raising questions about the future commitment of one of the euro zone's foremost proponents of fiscal stringency to a German-led austerity agenda.
The Netherlands has been a key ally of Germany and one of the most vociferous supporters of austerity since Greece's debt problems initiated the euro-zone's debt crisis more than two years ago. But its economy is performing poorly and is expected to shrink this year, widening its budget deficit and making it one of the worst-performing in the euro zone.
The talks collapsed after the right-wing Freedom Party pulled out of talks with Mr. Rutte's center-right liberal party. The negotiations had been aimed at cutting the budget deficit to 3% of gross domestic product next year, in line with European Union rules, from a forecast 4.6%.
And so the final Catch 22 for Europe unfolds: impair banks and suffer threats of the end of the world, or impair citizens and suffer falling governments. Check to you.