Quite suddenly this weekend saw an intense and unusually grown-up debate about the return of the Dutch guilder. The spark that lit this debate came from Geert Wilders when he announced a new project: PVV investigates return of guilder, may call for referendum
The anti-Islam PVV is paying a ‘renowned international bureau’ to investigate whether bringing back the guilder would benefit the Dutch economy.
If the report is positive, the party will press for a referendum on leaving the euro, party leader Geert Wilders says in Friday’s Telegraaf.
‘The cabinet is frightening us by telling us the lights will go out if we leave the euro. Of course it will cost money, but I want to know if going back to the guilder will deliver more in the long term,’ Wilders told the paper.
This announcement came in the wake of the news that the government is looking for extra budget cuts to the tune of up to 4 billion euros, in complete opposition to the promise made by the ‘Danish’ cabinet, made after budget week last September, that the current batch of budget cuts, totalling 18 billion euros, would be all. Another promise broken, indeed.
Wilders seemed to link the extra budget cuts to the extra deficit taken on by the Dutch in the various bail-out schemes (NL).
The euro is a failed project costing wagon loads of money. It started with a 2 billion loan and now we’re already giving guarantees for 100 billion.
According to a poll by De Telegraaf, 43% of the Dutch want out of the euro, with 22% even willing to accept a reduction in income to make it happen. In a poll on the Algemeen Dagblad (NL) as many as 54% of readers wants a return to real money.
Any expectations that an outcome not in favour of the euro will be seriously considered by this government were dashed immediately by Finance minister Jan Kees de Jager, when he stated (NL):
Back to the guilders we shouldn’t do. That is not an option.
One would think that a minister in times of crisis, deep crisis even, would want to keep all his options open. But of course that assumes a minister with the well-being of the people he serves at heart. Minister de Jager, clearly, is not that man.
And neither is our intrepid PM, Mark Rutte. In a speech to the German FDP (the party that is causing Frau Merkel grief over her ambitions to have Germany pay for the euro-zone periphery) Mark Rutte re-asserted his europhile credentials by saying that the extension of the EFSF (and that infernal ESM) are needed to ‘restore confidence in the euro’ (NL)
If we allow the whole thing to crash, the consequences for the euro and political cooperation in Europe are unfathomable.
However, not everyone agrees with our intrepid PM, not even within his own party, the VVD.
On Saturday conservative stalwart of the VVD Patrick van Schie, also director of the party’s policy think-tank stated in De Volkskrant (NL) he was growing increasingly tired of the ‘propaganda talk’ about the wealth that euro is supposed to have brought. From this report in EN:
The Netherlands should begin a serious discussion about introducing the ‘neuro’, a single currency for the northern European countries, Patrick van Schie, director of the VVD’s policy think-tank, says in Saturday’s AD.
Van Schie told the paper he has difficulty with the ‘propaganda’ about the euro, such as the statement that the euro has brought the Netherlands prosperity. This is a fact which has never been proved, Van Schie is quoted as saying.
Instead, the Netherlands could think about an alternative currency zone which would not include weaker euro countries such as Italy and Greece. France may also be ineligible to join a northern currency bloc, he said.
De Volkskrant cites van Schie as saying that any wealth brought by the euro has never been conclusively shown and is in fact impossible to prove. He further states his fear that the Netherlands will suffer ‘a heavy blow’ if the eurocrisis continues as it does.
Economist Arjo Klamer is even more outspoken: The euro has become a religion (NL)
“Everyone is always talking about the trade benefits the euro has brought within the European Union”, Klamer sighs: “But what has it benefited us that our exports to Greece have increased, when that country cannot pay its bills? The euro has become a religion. And the price we must pay gets steeper all the time.”
A return to the guilder is the best solution according to Klamer: “The sooner the better. Our incomes have decreased, our houses less valuable, stocks have dropped and of our pensions nothing will remain. Those problems are not exclusively, but nevertheless in part, caused by the euro.”
“A return to the euro will be painful, but we’ll survive. The Netherlands has a strong economy, the guilders is a strong currency. The euro will disappears, that’s a given, the only question is when. It is better to end it now, than it is to muddle on.”
What interesting times we live in. What was considered anathema as short as three months ago is now all of a sudden openly, and rather cogently, discussed. As the rather recent cliché goes: Under pressure everything becomes fluid.
I don’t expect the outcome of the investigation proposed by the PVV will be definitive. I am convinced that on the current trajectory a return to the guilder will prove to be the cheaper solution. But the long term involves some serious forecasting of events, which is fraught with all sorts of errors and biases. And especially in a highly volatile situation as we are experiencing now, the unforeseen, the ‘unknown unknowns’ are as many as they are unpredictable.
One opponent of a return to the guilder ridiculed it by predicting mass riots if the guilder was introduced with its historic exchange rate (fl 2,20 to the euro) because the population would then realize the extent to which they’ve been shafted by… just about everybody, leading to mass revolt and general mayhem. That, of course is a nonsensical argument. There is, to my knowledge, no reason why a ‘new Dutch guilder’ could not be introduced at parity with the euro, initially (1 euro = fl 1,-). This would greatly simplify the operation.
Nevertheless, squabbling over the initial exchange rate is squabbling over the colour of paint for the bicycle shed. First we have to decide a shed is necessary. And we have to drum up the will and pressure our ‘leaders’ the shed in is desperate necessity.
Equally nonsensical is the question, posed by D66-leader Alexander Pechtold, why we should not consider a return to the Dutch ducat, used between 1586 and 1808, before the French, under Napoleon, put a forcible stop to it. Call it a ducat, call it the guilder, call it the flimflam-dollar and have an exchange rate of 1,000.- flmflm$ to the euro.
Whatever form, name or exchange rate is not the point. These are side issue. The big point is a return to an own currency, one we Dutch manage ourselves. One that suits our economy, while not mortally wounding economies of countries where they’re used to do business in a different way from ours.
Respect diversity! Isn’t that a euro mantra? Yet the EUnion now seems bent to subjugating the economies of all 27 member states to the same Teutonic regime. Whether it fits (which it would in our case) or not (Greece and Italy, clearly. Spain and France as well).
The main issue about this crisis is that us being locked into the same currency as Greece and Italy does both sides a huge disservice. It renders ‘Club Med’ woefully uncompetitive, while demanding of us (and the Germans, and Fins, the British and whoever else has a SOLID AAA-rating) to hand over ever more of our hard-earned cash to relieve the banks that got into problems over the financial debauchery perpetrated by the less responsible elements in the euro-zone.
Taking the euro to the vet for its final shot and going our separate currencies will in one fell swoop repatriate the powers to set monetary policy according to the needs of each nations economy. European states will once again be able to really compete. This is not a drawback, this is a benefit. The great successes of Europe in history were because of, not despite, competition between nations.
Moreover, it will consign to irrelevancy the EUnion, the Groupe de Francfort and all those other scum-bags seeking to rule over us without a popular mandate. And it will moot the dreaded ESM. It will be a victory of freedom over tyranny. What is not to like about that?