Many are unaware of this but there is an housing bubble and bust cycle ongoing right now in the euro zone core. I'm talking about the Netherlands, of course. Prices are now back to levels last seen in 2004 and still dropping. The problem in the Netherlands is similar to what we have seen in the US, UK, the Baltics, Ireland and Spain, namely that Dutch house price gains far outpaced economic growth in the lead up to the financial crisis. And now that we have crisis, the bubble has burst, leaving enormous household debts as much as two-and-a-half times GDP. The net effect of this private sector debt overhang has been worsening economic demand and unexpectedly large budget deficits, necessitating austerity under the Maastricht Treaty guidelines.
This is just an update on that situation. The ...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.