Global Crisis? Not for the Netherlands
Posted by butalidnl on 10 October 2008
The stock markets are crashing today, mainly as a result of the international credit crisis. This would make many people think – but from what I see in the Netherlands, people don’t seem too worried. Except, of course, those Dutch who had put their savings with Icelandic company IceSave (the Dutch government assured depositors that they are working to ensure that peoples deposits up to Euro 100 thousand will be refunded). True, a drop in the stock market will eventually affect pensions and pension contributions – but this will only kick in after the stock market is down for a year or two – so there is plenty of time for the stock prices to recover and leave pensions alone.
The Fortis Bank affair ended well for the Netherlands. The Dutch government ended up buying Fortis-Netherlands and the ABN AMRO bank (Fortis bought the Netherlands operations of ABN AMRO in 2007 for Euro 24 billion) for a total of Euro 16 billion. The Dutch are happy about this, because it returns ABN AMRO to Dutch ownership, and at a relative bargain at that.
The subprime mortgage crisis has left Dutch banks relatively untouched. ING bank had bought none of the “toxic”stuff, and other banks had written off all of what they had (which was not much) in one go (unlike the US banks which did this slowly).
The Dutch have a lot of confidence in the stability of their banks, and that their money in these banks are safe. (Just in case, the Dutch government has declared that it insures deposits up to Euro 100 thousand.)
The Dutch housing market is not affected by the crisis. While some developers are complaining that they are affected by high borrowing costs; this has not affected the prices of houses. One should also note that mortgage costs etc affect the Dutch much less than Americans, since a smaller percentage of the people own houses. Also, it is next to impossible to get mortgages here that are beyond one’s capacity to pay – the banks will only cover a maximum of 70% of the cost of the house (requiring the home buyer to make a 30% down payment), and the price of the house should not exceed 4 1/2 times one’s annual income. Thus, a subprime mortgage problem is quite impossible here.
The other crisis – that of the “real economy” is also not too much of a problem. The US recession will affect this country a bit; but despite this the IMF projects that the Dutch GDP in 2009 will grow by 1% (compared to 2.3% growth in 2008). Imports by the US will fall somewhat, but the bulk of the country’s trade is with other EU countries. And the expected reduction in jobs is also not too alarming; the country is expecting many people to retire in the next few years, and the “crisis” will help avert a labor shortage.
Petroleum prices have risen, as elsewhere, but by only a little. The gasoline price rose from about Euro 1.40/liter 2 years ago, to about Euro 1.70/liter when oil was almost US$ 150/barrel. People with cars felt the price rise, but there was no real pain. Now, the price of gasoline is going down.
All in all, the Netherlands is going to only feel the crisis a little.