cryptogon.com

In Holland, where I’ll be for a few more days, there’s a “rogue” right-wing party named PVV (Party for Freedom). It has no cabinet ministers, but the minority moderate right-wing government needs its support to stay in the saddle. The PVV, like other European right-wingers, is, among many other things, against much of what the European Union stands for. It’s certainly against the Euro, and the bailouts with Dutch taxpayer money of countries like Greece and Portugal.

A few months ago, the PVV announced they had commissioned a report from British financial consultancy firm Lombard Street Research on the economic consequences of staying in the Eurozone versus returning to the guilder.

That report is about to be published “within days”. It will prove to be highly explosive material. And the PVV will do all it possibly can to make sure it receives a lot of media attention. It may tear down the incumbent government, which is a heavy advocate of all things Europe, and which will have to quit once the PVV support dies, but for that party that’s not the no. 1 concern.

And if and when Holland has a large scale discussion on the report and the issues it raises, Germany won’t be able to ignore it and stay behind. And then, neither will France.

Max Julius of Citywire.uk did a piece on the report, without mentioning it directly, 10 days ago:

Why Germans and Dutch will exit ‘suicide pact’ eurozone

Germany and the Netherlands are likely to quit the eurozone rather than swallow an indefinite number of ‘unrequited transfers’ to the union’s crisis-stricken nations, according to Charles Dumas, chief economist at Lombard Street Research.

Speaking at an event in central London, he said that before joining the single currency, German incomes had stayed level but their purchasing power had increased as the Deutschmark appreciated. With the weaker euro, the economist said, they have seen ‘tremendous’ wage restraint, leading to huge growth in German firms’ market share but ‘no serious growth of the economy’ and a squeeze on disposable incomes. Meanwhile, consumption rose elsewhere in the eurozone, he said.

‘So what you’re actually dealing with here… is a German population which has had a rotten deal – and that’s why they’re all so angry’ noted Dumas, who is also chairman of the macroeconomic forecasting consultancy. Branding the monetary union a ‘suicide pact’, he continued: ‘So what this exercise in uniting Europe has achieved is to divide Europe.’

Dumas [noted that] the ‘Club Med’ nations needed about 5% of gross domestic product in annual debt refinancing ‘more or less indefinitely’.

This would amount to €150 billion a year, of which Germany would have to stump up just over €60 billion, France a little under €50 billion and €15 billion from the Netherlands, he said. And this would be on top of the shortfall in consumer spending, in addition to the fact that wages and consumption may have to be held down in the future, Dumas warned.

Ilargi: This morning, Dutch daily Algemeen Dagblad cited Dumas as saying these numbers are “cautious estimates”. They are valid only if Greece and Portugal would leave the Eurozone in 2012 – which Dumas expects will happen -. If they don’t, the payments will be even higher.

He predicts the costs of a return to the guilder will be much less than for instance the Dutch government’s Central Planning Bureau claims, which warns of huge losses if Holland were to leave the Euro.