Refusing to spend pension funds to bail out Greece, MP Geert Wilders drops support for “austerity” budget, minority government collapses.
Euro stock market in chaos, US market DJI down 150 so far
The Netherlands was headed for early elections after coalition talks on a fiscal austerity package broke down on Saturday, Dutch Prime Minister Mark Rutte said.
Seven weeks of negotiations fell apart after the minority rightist coalition’s far-right parliamentary ally walked out, saying it “could not live up to” European Union demands.
“I have to inform you today that the three parties have failed to come to common answers,” a visibly upset Rutte told reporters in The Hague. Elections now seemed likely, he added.
Rutte said he had phoned Queen Beatrix to inform her of the latest developments and would consult with his cabinet on Monday on how to proceed.
The austerity package at the centre of the row included a slight raise in Value-Added Tax (VAT), a freeze on civil servants’ wages and a cut in spending in both the health and development sectors, ANP news agency reported. It cited Stef Blok, the leader of the parliamentary group of Rutte’s VVD party.
The idea was to cut 16 billion euros ($21 billion) off the budget. A number of economists contacted by ANP suggested that the collapse of the talks and early elections could cost the Netherlands its triple A credit rating.
Revised data from the country’s central planning bureau forecast last month that the 2013 public deficit would rise to 4.7 percent of domestic gross product under current conditions. But the EU deficit ceiling is 3.0 percent of GDP.
The figures were a blow to the government, which had insisted that countries in breach of European Union deficit rules had to be rigorous in correcting public finances.
In a separate press conference at the Dutch parliament, far-right leader Geert Wilders expressed regret that the talks had failed but insisted that the suggested cuts were unacceptable.
“It is a package that will damage economic growth in the coming years and that will allow unemployment to grow. “It will severely effect the spending power of many people, especially pensioners. “We cannot live up to the demands Brussels is putting on us. Money is being taken from the wallets of pensioners.
“That’s not right, just because Brussels wants to take away the economy built up by the elderly,” he said.
Wilders called for elections as soon as possible.
European markets crashed on Monday as Socialist candidate Francois Hollande beat President Nicolais Sarkozy in the first round of the French presidential election. A breakdown in Dutch government coalition also led the indices down.
“If Hollande becomes president it would be the biggest change so far,” Roland Nash from Verno Capital told RT . “So far French less and Germans in particular pushed for austerity measures for this part of the world. If Hollande becomes president it will be shift to less austerity more spending as a way out of the crisis.”
3.07pm: It’s official, Dutch prime minister Mark Rutte has offered his cabinet’s resignation following the collapse of talks over its austerity budget
The decision means that Rutte becomes the latest eurozone leader to fall victim to the eurozone crisis.
From Associated Press:
The Dutch government information service says that 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 information service said Monday that 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.
According to Reuters, Rutte has said that Queen Beatrix asked the cabinet to remain in place in the meantime—and to “do what is necessary for the country’s good”.
2.59pm: Important developments in Iceland in the last few minutes—Reuters is reporting that former prime minister Geir Haarde has been found guilty of one charge relating to the financial crisis.
Follow this link for a live blogging update of the situation.
U.S. and European markets sold off on Monday as traders worried about renewed eurozone political instability and a round of weak economic data.
As of 11:00 a.m. ET, the Dow Jones Industrial Average fell 142 points, or 1.1%, to 12888, the S&P 500 dipped 17 points, or 1.2%, to 1362 and the Nasdaq Composite dropped 51.7 points, or 1.7%, to 2949.
The selloff on Monday was broad. Every Dow component besides Microsoft (MSFT: 32.10, -0.32, -0.99%) was in the red, with Wal-Mart (WMT: 59.68, -2.77, -4.44%), Bank of America (BAC: 8.23, -0.13, -1.56%) and Caterpillar (CAT: 106.56, -1.17, -1.08%) taking the heaviest losses.
Looking at the broader markets, basic materials, industrial, energy and financial companies fell by the sharpest margin. The number of shares trading hands in advancing shares outpaced that of declining shares by a ratio of more than 18-to-one on the New York Stock Exchange, according to data compiled by FOX Business.
Markit’s eurozone PMI gauge suggested the 17-member currency bloc’s economic output contracted at the swiftest pace in five months in April. The measure came in at 47.4, down from 49.1 in March. Readings above 50 point to expansion, while those below indicate contraction.
Germany, Europe’s powerhouse economy, saw activity in its important manufacturing sector contract at a the swiftest pace in 33 months. Meanwhile, France’s key service-sector activity slumped to a six-month low.
“Germany’s economy continued to rest on a knife edge of recession in April, with modest service sector growth only just counterbalancing the escalating manufacturing downturn,” Tim Moore, a senior economist at Markit said in a note accompanying the data.
Also on the European front, talks aimed at bringing the Netherlands’ deficit in-line with a fiscal compact agreed to by all members of the eurozone broke down. As a result, Prime Minister Mark Rutte and his cabinet tendered their resignation, according to multiple media reports citing the country’s Government Information Service.
The developments in the Netherlands “not only threatens early elections in the Netherlands, but also poses a significant threat to the effective ratification of the fiscal compact, the central plank in (German) Chancellor Merkel’s strategy for addressing the eurozone crisis,” analysts at Nomura wrote in a note to clients.
So, do we blame elections in France (Hollande) and Wilders (Holland) for this whole mess? Not hardly. The entire EU has been tap dancing on the thinnest of ice for months and months now. The socialist model is collapsing, simply because there aren’t enough people working to put enough cash into it so that all the pigs may feed at all the troughs. And the whole thing then falls apart, because you can only borrow money for so long. It doesn’t matter if the people protest or riot for their daily bread and circuses. If there is no money, there is no money. And it looks like they’ve finally run out of other people’s money.
As you know, the Dutch government is a minority government. It can only survive in parliament with support of the opposition. That usually is the PVV (Geert Wilders’ party), but not always. On several occasions the government was able to get a majority with support of the left opposition.
For several weeks the coalition partners were negotiating what budget reductions were going to be implemented. As the budget has to be cut in a major way. That is no news. Each partner — VVD (liberals), CDA (Christian Democrats), and the PVV — have their own items they want to be careful about.
The VVD doesn’t want mortgage interest to be taxed. The CDA doesn’t want cuts in development aid. The PVV doesn’t want too many cuts in social security, and certainly does not want to make our pensioners pay for the comfy retirement of Greek pensioners.
This is what caused Wilders to withdraw his support for this cabinet. He did not agree with almost zero cuts to the development budget, nor with letting old age pensioners pay for the party.
As you can imagine, the media are having a ball right now. Their wet dream has come true: the conservative cabinet (first on since 1908!) has collapsed and — joy of joys — Wilders did it.
Is Europe finally figuring out that Socialism just doesn’t work? God, I hope so. It’s only taken them about a century to come to that conclusion.
"Is Europe finally figuring out that Socialism just doesn’t work? God, I hope so. It’s only taken them about a century to come to that conclusion.”
I can’t decide if Europe is serving as a cautionary tale to the US, or if they’re dragging us down with them.
Is the glass half-full or half-empty?
Here’s an odd bit to wonder about.
The price of gold has been dropping. Less than a month ago, it was at nearly $1700 per ounce. As I write this, it’s in the low $1630’s. Economies all over the world are teetering, so gold should go up. It’s not.
Anyone have a clue?
Here’s a link to a current gold chart.
The European Union going.......going.......GONE.
Ah, SCHADENFREUDE........I can’t wait.
Maybe the moosies (Saudi Arabia, Bahrain or the Arab Emerites) will bail them out.
The shieks LOVES them blonde, hairless, fair-skined German babes. And maybe a few red-headed Scots will be on the menu as well?
"Is Europe finally figuring out that Socialism just doesn’t work?
Wouldn’t hold my breath on that. Have no faith in these folks at all. Hope I am very wrong.
Based on their past voices and explanations, look for them to do a mea culpa and say they just weren’t working it to it’s full potential.