Holland has already officially
confirmed it is in recession. And this at a point in time when its gigantic
housing bubble hasn't even started popping yet. With mortgage debt at anywhere
between €650 billion (official government number) and €1 trillion (Ernst &
Young, unconfirmed by me) for its 16.7 million citizens, and taking into
account that only an estimated 50% of Dutch are homeowners to begin with, it
should be obvious that a "mere" 10% or 20% drop in prices would be
devastating.
If 9 million (well
over that 50%) Dutch men, women and children bear that €650 billion debt, each
and everyone of them carries over €72,000. A typical family of 4 is then
€288,000 ($375,000) in debt. On average! The huge popularity of interest-only
mortgages has undoubtedly contributed strongly to this debt proliferation. And
most will still feel fine, because the inevitable fall in prices hasn't
materialized yet. And, admittedly, there are substantial savings.
Any drop in prices beyond 20% would mean unmitigated disaster. A huge part of private savings would be wiped out, and the banks that hold the mortgages would be pushed further into their already bankrupt status. Given the near inevitability of one or more countries leaving the Eurozone, even after trillions of euros were spent to prevent just this from happening, it's hard to see what the government could do to stave off widespread financial mayhem.
That same government did launch one idea last week: it seeks to force the country's "home-building corporations", a left-over from post-WWII state building projects aimed at offering affordable rental homes to everyone, to sell 75% of their rental homes to present occupants (at "reasonable" prices...). That’s a lot more potential debt slaves in one fell swoop. Whether or not a government, any government, should aim for just that is quite another matter.
This is one of Europe's richest countries. Or so everyone seems to think. Europe is rotten at the core too, not just the periphery.
Any drop in prices beyond 20% would mean unmitigated disaster. A huge part of private savings would be wiped out, and the banks that hold the mortgages would be pushed further into their already bankrupt status. Given the near inevitability of one or more countries leaving the Eurozone, even after trillions of euros were spent to prevent just this from happening, it's hard to see what the government could do to stave off widespread financial mayhem.
That same government did launch one idea last week: it seeks to force the country's "home-building corporations", a left-over from post-WWII state building projects aimed at offering affordable rental homes to everyone, to sell 75% of their rental homes to present occupants (at "reasonable" prices...). That’s a lot more potential debt slaves in one fell swoop. Whether or not a government, any government, should aim for just that is quite another matter.
This is one of Europe's richest countries. Or so everyone seems to think. Europe is rotten at the core too, not just the periphery.
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