Buiter expects writedowns on Dutch mortgages, recommends debt jubilee

The Dutch press is reporting that Willem Buiter, the Dutch-born Chief Economist of Citigroup, believes that we are going to witness a slew of writedowns in the Netherlands unless the Dutch can right the economy and stop the fall in house prices.

Buiter expects that writedowns will be unavoidable if prices fall further, for example by 20%. "Or if the recession continues for another year - as expected. Then the political pressure (writedowns of outstanding debts, etc) will therefore be bigger," Buiter said in an interview published this morning in the Financieel Dagblad.
'As regards the economic arguments, it will be difficult to resist. Already, 800,000 households are underwater. If prices fall another 20%, that's a million," said the economist.
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