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Is the eurocrisis about to engulf the Netherlands?


Iphonista

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Jun 6, 2012
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Right since the start of the eurozone crisis, the Netherlands has been held up as one of the Triple A rated countries who were a pillar of fiscal virtue. The country's debt levels were respectable, the deficit looked manageable, unemployment appeared to be low. The Dutch were standing shoulder to shoulder with the Germans one the fiscal conservatism side of things. The Dutch hadn't gone crazy when it came to either personal or sovereign debt. Savings rates were good. Why couldn't everyone be like them?

Well, all is not quite as it seems in the land of tulips and windmills. The Dutch actually have the highest consumer debt in Europe - 250% of available income. Unemployment is on the increase and the economy is on the slide. There was a property bubble after all and Dutch banks did go pretty crazy too. What makes it worse that many borrowers weren't paying off their loans. Instead, they put money into an investment fund hoping that the profit generated would pay off the loan. But what investment fund is generating a profit now?

Unemployment still seems low but could be underestimated by 800,000 - proportionally, that's over 200,000 in Irish terms. Consumption is down. More people are saving as the cold winds of recession blow ever more strongly. In February 2013, bankruptcies hit a new record - the highest monthly figures since records began in 1981. Because of all the mortgages, the assets held by banks are four and a half times annual economic output. It's not Cyprus but it's not pretty.

Economic Crisis Hits the Netherlands - SPIEGEL ONLINE
 

Baztard

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Feb 3, 2009
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314
"Finland, along with Germany and the Netherlands, issued a joint statement last September following the agreement in June by EU leaders to break the link between sovereign and banking debt. This outlined its opposition to the use of the ESM fund for legacy assets. The Government is pressing for the fund to be used to directly recapitalise AIB and Bank of Ireland."


Smug baztards, hope they get everything they deserve
 

Nemesiscorporation

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Joined
Oct 2, 2011
Messages
14,214
Right since the start of the eurozone crisis, the Netherlands has been held up as one of the Triple A rated countries who were a pillar of fiscal virtue. The country's debt levels were respectable, the deficit looked manageable, unemployment appeared to be low. The Dutch were standing shoulder to shoulder with the Germans one the fiscal conservatism side of things. The Dutch hadn't gone crazy when it came to either personal or sovereign debt. Savings rates were good. Why couldn't everyone be like them?

Well, all is not quite as it seems in the land of tulips and windmills. The Dutch actually have the highest consumer debt in Europe - 250% of available income. Unemployment is on the increase and the economy is on the slide. There was a property bubble after all and Dutch banks did go pretty crazy too. What makes it worse that many borrowers weren't paying off their loans. Instead, they put money into an investment fund hoping that the profit generated would pay off the loan. But what investment fund is generating a profit now?

Unemployment still seems low but could be underestimated by 800,000 - proportionally, that's over 200,000 in Irish terms. Consumption is down. More people are saving as the cold winds of recession blow ever more strongly. In February 2013, bankruptcies hit a new record - the highest monthly figures since records began in 1981. Because of all the mortgages, the assets held by banks are four and a half times annual economic output. It's not Cyprus but it's not pretty.

Economic Crisis Hits the Netherlands - SPIEGEL ONLINE
Yup, the Dutch disease has returned.

Actually it never went away.

Netherlands had a crap economy all through the 70's and 80's with slow grow from the mid 90's until about 5 years ago. Most of that so called growth from the mid 90's was in the financial services sector.

Since the mid 90's Netherlands, Sweden, Denmark, Luxemburg, USA, Iceland, Australia, Canada, Japan, United Kingdom, Ireland, Italy, Greece, Spain, France and Belgium have all had major growth in there financial sectors, but with slowly creeping up youth unemployment as jobs have been steadily shipped offshore to China, India, etc.

No one in those countries has the brains or determination to face down the banksters who are destroying our society and capitalism.
 

Iphonista

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I just think it's mad that rather than paying off their mortgages, they were gambling it all on investment vehicles. WTF......?!
 

GDPR

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I just think it's mad that rather than paying off their mortgages, they were gambling it all on investment vehicles. WTF......?!
I have a vague memory of some concept named something like endowment ''with profits'' mortgage or endowment loan being pushed here. I think the interest on the loan gets paid but the money for paying down the reducing balance goes into the investment vehicle.
 

DownTheyGo

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They still think it is a brilliant idea.
UK Insurance companies pushed something like that during the '90s... endownment policies. Despite all the assurances and guarantees, came nowhere close to paying off many mortgages due end of term. So interest went on being paid and contributions were necessary far beyond the original planned term e.g. 20 years of endowment policy and interest payments became 30 years or longer. In many cases, the actual cost per month was higher than if a normal interest and capital only repayment mortgage had been selected.
 

Dublin 4

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Huge prop bubble there - I've linked it various times & it's expected to turn nasty...
 

SideysGhost

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Nov 30, 2009
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UK Insurance companies pushed something like that during the '90s... endownment policies. Despite all the assurances and guarantees, came nowhere close to paying off many mortgages due end of term. So interest went on being paid and contributions were necessary far beyond the originally planned term e.g. 20 years of endowment policy and interest payments became 30 years or longer. In many cases, the actual cost per month was higher than if a normal interest and capital only repayment mortgage had been selected.
They were all the rage when I was working in financial services in the mid-90s. It was always an obvious scam, especially with the management and administrative fees on those funds, but loads of people bought into it. And yeah, lots of people then got terrible shocks when the term was up and the endownment policy was only worth half the mortgage.

They were still selling them up till fairly recently, a couple I know in Derry have one of them. After 12 years of paying into the endownment, 2008 happened....largely wasted money. Their only consolation is that they bought before the bubble so the mortgage isn't all that big, but still they've taken a big financial hit and now only have a few years to try and somehow come up with the bulk of the principal outstanding.
 

brughahaha

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They were all the rage when I was working in financial services in the mid-90s. It was always an obvious scam, especially with the management and administrative fees on those funds, but loads of people bought into it. And yeah, lots of people then got terrible shocks when the term was up and the endownment policy was only worth half the mortgage.

They were still selling them up till fairly recently, a couple I know in Derry have one of them. After 12 years of paying into the endownment, 2008 happened....largely wasted money. Their only consolation is that they bought before the bubble so the mortgage isn't all that big, but still they've taken a big financial hit and now only have a few years to try and somehow come up with the bulk of the principal outstanding.
Remember being offered a "pension mortgage" in the early 90's ... just pay the interest and put the rest into a pension fund which would not only pay my mortgage but also give me a nice lump sum as well :roll:....wonder how that worked for people ...actually I know , it would have paid for many a pension fund managers bonus and a few meetings over dinner in the 4 seasons before shafting the poor sod who took one out leaving them deeper in debt despite years of payments
 

DownTheyGo

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Dec 4, 2010
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They were all the rage when I was working in financial services in the mid-90s. It was always an obvious scam, especially with the management and administrative fees on those funds, but loads of people bought into it. And yeah, lots of people then got terrible shocks when the term was up and the endownment policy was only worth half the mortgage.

They were still selling them up till fairly recently, a couple I know in Derry have one of them. After 12 years of paying into the endownment, 2008 happened....largely wasted money. Their only consolation is that they bought before the bubble so the mortgage isn't all that big, but still they've taken a big financial hit and now only have a few years to try and somehow come up with the bulk of the principal outstanding.
I actually took out such a policy early 90s, in my late late teens working in London. Had a mate working in Legal & General; thankfully I never bought a property against it so it remained an investment until I just stopped paying the premium and locked it up until whenever. But it was the craze alright; everyone was going to pay off their mortgage and have 200K left over to live it up! Sorry about your friends though, at least not too upside down on the property deal.. that would be double jeoperdy!
 

GDPR

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Australia should be OK, though I haven't heard that the bankers really misbehaved there. Nor are its jobs being shifted to China.

Why is Australia on your list, Nemesis?
 

SPN

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Australia should be OK, though I haven't heard that the bankers really misbehaved there. Nor are its jobs being shifted to China.

Why is Australia on your list, Nemesis?
Australia is booming by supplying raw materials to China.

China's demand for raw materials is running into a brick wall.

No demand from China = No economic activity in Australia.
 

socmonster

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"Finland, along with Germany and the Netherlands, issued a joint statement last September following the agreement in June by EU leaders to break the link between sovereign and banking debt. This outlined its opposition to the use of the ESM fund for legacy assets. The Government is pressing for the fund to be used to directly recapitalise AIB and Bank of Ireland."


Smug baztards, hope they get everything they deserve
Not to mention the fact that Finland also decided austerity is okay for Ireland, but not for them. They eased their debt targets.

Finnish Government May Waive Deficit Target to Boost Growth - Bloomberg
 

SPN

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Iphonista

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The Dutch pay high tax rates but since residential mortgage interest is fully tax deductible, there's a big incentive to take on a mortgage, especially if you can find some clever way to kick the repayments down the road.
 

SideysGhost

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Australia should be OK, though I haven't heard that the bankers really misbehaved there. Nor are its jobs being shifted to China.

Why is Australia on your list, Nemesis?
Australia has an obvious housing bubble in the likes of Sydney and Perth and is somewhat over-reliant on resources/mining to feed China's industry. Job growth is unbalanced with most new jobs being part-time and low-paid. Oz economy is more fragile than it appears. NZ has an obvious housing bubble too but the banks here are mostly owned by Oz banks, so for as long as the party continues in Oz, those banks will keep supplying the crack cocaine for property junkies here.
 
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