German Finance Minister Wolfgang Schaeuble has said Standard & Poor’s (S&P) threat to downgrade eurozone countries is the “best possible incentive” ahead of Friday’s summit.
S&P put almost all eurozone countries on “credit watch” on Monday.
European leaders are meeting this week to save the common currency but in the Netherlands, some say enough is enough – it’s time, they say, to ditch the euro and go back to the guilder.
It’s a cold, wet day at the Albert Cuyp Street market in Amsterdam, one of the best places in town to grab anything from waffles, to sexy underwear, to an antique armoire.
When I ask a vendor who sells gloves, scarves and hats how’s business, he responds that it’s as gloomy as the weather.
“People spend a lot less,” said the vendor who didn’t want to give his name. “But food is more expensive, everything is more expensive.” He said people don’t have money left to buy anything.
To add to the misery, he said, the Dutch are now being asked to bail out the Greeks, the Portuguese and the Irish.
Like many here in The Netherlands, the vendor blames the euro. He said the Dutch guilder was one of Europe’s strongest currencies when the switch was made in the late 1990s.
“We sold our guilder too cheap,” the man said. “That’s what I think, and a lot of people think that. Give me back my guilder.”
Mathijs Bouman, an economist and author, said that looking back, the year before the euro was introduced, “Seventy to eighty percent of the Dutch people were in favor of the euro introduction.”
He said the Dutch loved the guilder, but let it go in the name of being good European partners.
Bouman said he understands why , in this time of crisis, some are nostalgic for the old currency. But for Holland, there’s no turning back.
“Abandoning the euro would destroy our economy,” Bouman said. “Especially in the Netherlands, if you look at multinational firms for instance, our banks — they’re really embedded in the Euro system. All their debts and assets are in euros, and we don’t know what will happen if we break it up. How does the old saying go? You can’t unscramble a scrambled egg.”
To prove his point, Bouman recently appeared on Dutch television. He grabbed a bowl, some eggs and a whisk and made, you guessed it, scrambled eggs.
But that isn’t stopping some from proposing ways to unscramble the Euro.
One idea floated by Dutch politicians is for a “northern Euro,” or “Neuro.” It would only include northern European countries on sound economic footing. The Dutch would get in because, in the words of one politician, “We Dutch are able to control ourselves.”
But this week, the ratings agency Standard and Poor’s put the Netherlands and other members of the Eurozone on alert, by warning of a possible downgrade of the credit ratings of the bloc’s strongest economies.
“It was a very clear sign telling us — you, northern part of Europe — don’t overestimate yourself,” said economist Jaap Koelewijn. “Your budgets are also going out of control, if you don’t take care. Your banking system is at risk.”
Koelewijn added that European leaders probably need to pony up more than $5 trillion for the European bailout fund in order to calm the markets and keep economic contagion in check.
But Dutch economist Arjo Klamer said that the price tag for keeping the Euro together is too high. To be clear, Klamer’s been against the euro from the beginning. Without a true political and fiscal union, he argued at the time, there was no hope for a single currency.
Now, Klamer said, just throwing money at the problem doesn’t address the real underlying issues – namely, that the economies of the various Eurozone countries vary so widely.
“Economies are dynamic,” Klamer said. “Things change and you need to have an institutional framework in place that can account for those dynamics, and has the space and flexibility to adjust to what’s happening.”
Klamer contends that future growth will center around cities and regions in Europe, and not around any kind of supra-national political or economic entity.
“With one Euro you become like a fortress in the world, and you stand firm with a huge market and you can position yourself vis-a-vis China and the United States. I think that’s an old-fashioned idea that comes from the 19th century. In the future, we shouldn’t think in terms of these huge powers.”
Like everyone else in Europe, the Dutch will be paying close attention to meetings of European leaders scheduled for Thursday and Friday in Brussels.
I asked economist Mathijs Bouman what he thinks will happen.
He urged me to watch the “chicken” scene in “Rebel Without a Cause,” the one where James Dean’s counterpart gets his sleeve caught and can’t bail out in time.
The Euro is just like that, he told me; one small mistake at this point and the car will go right over the cliff, and the Dutch along with it.
“And,” he added with a grin, “I’m an optimist.”