5 first insights to understand why populism is not on the way out in the Netherlands

Hello all foreign readers,

It seems as if our supertiny country has attracted quite some attention these days as all eyes were focused towards the main question: will a wave of populism change Europe? And although on the surface the answer seems a clear NO, there is more to the results than meets the eye.

In my humble opinion, the current results of the Dutch exit-poll show how populism and clientelism have become more prominent here, as in all other countries around the world. So mind you: in the Netherlands we're still moving to less democracy and more populism.

This will be clear after the reading the insights below. But do note that these are based on the exit-polls and not the final vote.

Insight # 1: Dutch voters have learnt their lesson, punished government and no longer voted strategic
What we can see is that both VVD (-10) and PvdA (-20) have been punished for their role in the preceding government. During the last elections, many citizens voted strategically and shifted their votes from their original parties to either VVD (right) or PvdA (left) to avoid the other party to become the biggest.

Yet through a strange turn of events and due to the anxious hunger for power, VVD and PvdA decided to work together. They compromised on fundamental party principles in order to be in power. As such they both disappointed the strategic voters and their party fanatics who assumed that it was unlikely that these two would work together with the enemy, even without additional parties.

PvdA and VVD formed an alliance that was based on very limited support and did not have a majority in the Senate. When started it was clear that they would focus on one thing only: surviving as a government out of fear that in-between elections would lead to a massive victory for PVV.

The first lesson in todays outcome in the Netherlands is that strategic voters have learnt that strategic voting does not pay. In addition, die hard party fans of both PvdA and VVD did not accept the fact that their party was sleeping with the enemy. So first and foremost, both parties are punished for quickly seeking power with the dark side. And the strategic voters have decided not to do this again but vote for their principles.

Insight #2: Dutch are more populist than before, but they come in different clothing
Whereas it looks as if the regular party VVD (31 seats) is the biggest with runners up CDA (19), D66 (19) and PVV (19), we should note that the only non-populist party in this row is D66. Both VVD and CDA made a sharp right turn by taking PVV-like positions on immigration and such.

With this in mind, I think it would be fair to say that effectively we had at least three rightish populist parties on the scene, who together assembled 69 out of 150 seats. This used to be 56 seats (for VVD and PVV) in the previous elections.

On top of that we can see that, even though parties all declared that right-wing PVV would not be invited for government roles (given their unreliable stance some years ago), the parties has won some 4 seats.

Right now, this election evening, most people and foreign media are misstaking the wood for the trees by concluding that the low amount of seats for PVV is a signal that the battle agains populism has been won in the Netherlands. It is with much regret that I need to conclude otherwise: the existing parties have adopted the populism and it is more widespread than before.

Insight #3: Fact free politics are also on the rise in the Netherlands
All over the world we are witnessing new 'leaders' or political activists who don't care about truth but focus on convincing the public by playing on their emotion. They don't provide solutions to real life problems, but are able to amass considerable support, either from within existing parties or as a new political party.

It's the same here. We have narcistic old and new players with a lot of noise, but no true consistent content coming into play from different angles. Among these are the party for elderly, forum for democracy, THINK and PVV. From a number of 15 seats in 2012, these are now expected to gain 28 seats.

Insight #4: Turkish incident helped both VVD and DENK with some extra seats
This weekend, just before the elections, the Dutch and Turkish government ended up in a diplomatic row over unwanted visitors to the Netherlands. This allowed prime minister Rutte (VVD) to pose as a leader, thus winning some seats, while DENK (representing Turkish interests in the Netherlands) avoided to enter the debate. Their existence did allow the irritated Turkish/Dutch citizens to voice their anger on the discrimination that they experience in the Netherlands.

One could compare this to the situation with Eurosongfestivals, where the immigrant population in the Netherlands and Germany have a big vote/say in influencing the Dutch end result.

Insight #5: Better economy allows for a more positive stance
With the economy starting to gear up slowly, there is more room for a positive outlook and progressive choices. Both GL (Greenleft) and D66 (liberals) spreaded a positive message and succeeded in regaining their strategic voters from the PvdA while adding some new ones. Therefore their results improved from 4 to 16 (GreenLeft) and from 12 to 19 (D66).

So did we stop populism and clientelism here in the Netherlands?
While many here in the Netherlands are strongly hoping that our election message to Europe and the world is that populism has been put on hold here, I am afraid that conclusion is not justified. Some of the mainstream parties have adopted the populist positions of PVV, including some measures that are in conflict with treaties and basic human rights. Meanwhile the PVV has still grown and some smaller parties popped up that are more in the personal interest of the party leaders themselves than for the public.

My conclusion is therefore that populism and clientelism is still with us, even stronger than before. Due to its absorption in main stream politics and the specific Dutch electoral landscape outsiders, may be less able to identify this. But I would not be surprised if in other jurisdictions, with other electoral constellations, the trend of populisms and clientelism (Fillon) remains the main trend, just as it is here.

So, the Netherlands may have appeared to have stopped populism, but mind you, we didn't!


Dutch insight for the US: how to understand Trump best

Hi there all you US Citizens,

It's been a remarkable couple of months, hasn't it?

Your democracy, known for its delicate set of checks and balances, has unbalanced itself into a situation where a Presidential candidate that wins the popular vote by 3 million is not becoming President. Instead an extreme narcissist has now entered the White House and everybody is wondering how to read and understand his 'politics'.

Let me try and help you, the US public, in understanding how to deal with this new President. Because over here in the Netherlands we already have (had) some similar politicans running around and that has provided us with sufficient learning material.

It's always and exclusively about inflated self-esteem
The major rule for understanding narcissist is not to listen to their talk. It's never about the things they say. Narcissist have an intrinsic lack of self-esteem which they want to compensate by getting attention and compliments. As deep as their lack of self-esteem, as high is their need for compliments and admiration.

Narcissist lie by definition. They adapt their stance to make sure one thing is constant: their own image in the mirror of a reputable, God-like human being who can and will get all they want. And in order to preserve this image, they will manipulate their environment with a psychopathic lack of conscience.

When caught in the act (of lying), narcissist will deny and manipulate for so long that in the end people stop calling them out. We've heard footage of denigrating talk about the treatment of women and even that has not stopped a large chunk of US citizens from denying this erratic person entry into their most important public office.

How to understand their inside thinking: reverse their statements and accusations
The best way to understand what's going on in the mind of narcissist is to fully reverse all statements that they make. So when a narcissist says his opponent is rigging the elections, this explains exactly what he is doing at that moment. Or when he says that the press is lying about the turnout for inaguration day, you can bet that he is lying himself about it.

The one thing not to do is to expect continuity in thinking. A narcissist will never be caught in being consistent. They refrase, ly and don't care about being inconsistent. Trying to construct this consistence from the outside is of no use: there is none. The only consistent thing happening is that the narcissist is playing the power stadium just as long as he gets what he wants: attention and compliments.

For the current US president it is quite obvious that he has had a youth with a cold, ambitious father who never really cared about his own kids. The closest thing to true fathers that Trump ever came in contact with are the generals and corporals in the army. This explains his high ratio of former military among his staff. He tries to assemble support from fatherly figures.

The eternal tragedy of all this is that as hard as one can try, you can never end up with the so much desired self-esteem this way. Self-esteem is something gained from within and no manipulation or even US Presidency will help you get it.

How to end this: neglect the attention seeker or overcompliment into oblivion
The essential way out of an unhealthy narcist relation is to not share anything personal and try and cut all ties. In doing so one either fully neglects the narcissists or overcompliments them into oblivion. Alas to say that both strategies may be hard to execute when the person in question holds such an important office.

Yet, it could well be the case that the other players in the world game of power recognize Trump for what he is and seek more stable alliances with each other rather than deal with the erratic treats of Trump. Which gets you exactly where you don't want to be.

How this will end for the US?
I am sorry to say, but the end of a narccisist is always somewhat destructive. If we summarize Trump his whole business consists of lying, constructing an image, selling the image and moving forward to a next adventure before anyone discovers that his previous adventure was a full fail and financial disaster. The tiny info that was provided on his tax deductions already shows this.

Given that he is now playing his game on a national level, you may expect the US to spend more than it can, to alienate all international stakeholders until some geopolitical or health incident happens. When all the dust settles, the US will discover that Trump has only worked towards a greater image of himself and funds for his children. But the country itself will be worse off, unless perhaps for some costly highways, built by former business friends of the president.

The so called angry Americans that have voted for him, will then discover that he was indeed a con artist that robbed them not only of their vote, but also of their self-esteem as well as their health care. All that the US will have left is nice pictures, selfies of Trump golfing at Balmoral castle, a golden plated and redecorated White House and - god forbid - most likely an extra Trump face carved out in Mount Rushmore.

This beautiful country of yours will thus experience the reversed American Dream. Trumps reign will send you from a millionaires position into an isolated newspaper delivery boy (with a big mouth).

I just hope for your sake that there won't be time enough during this 45th President's reign to ruin all the good things of the US. And I very much hope you will be able to see and live the next years as an intermediary phase, needed to learn a costly lesson about democracy.


Dutch lessons for all American friends that are struggling with the Trump-phenomen

Although this blog is intended to be about the amazing stuff happening in Dutch society and politics, it's now time to publish a feature for our friends in the United States of America.

The Trump turn of events is not unique
In the last year, you Americans have seen something happen that you wouldn't think possible. A strange guy, with strange hairdo and outspoken, politically incorrect behaviour, is appealing to the masses and making a run for Presidency. While at first you all thought this was extremely unlikely to ever lead to that guy being the Republican nominee, this did happen after all.

And while you think this is a unique turn of events, you may rest assured that it is not. What you are witnessing now is something we've seen happening here in the Netherlands already for quite some time now.

Even today we still have a blond loudmouth claiming to bring back the true Netherlands and true Freedom. And the guy ranks dangerously high in our polls. He even made it to become part of a condoning coalition but then ran away from this position of power, being afraid to be criticised by his followers.

Will you end up there as well in the US?

Well, it's up to you, and in order for you to get your bearings, let me provide some further background

The mechanics of narcist-populist leader
A Dutch scholar by the name of L D'Anjou has written a very solid piece of work about narcistic leaders and politicians. You can read it here and the summary is
In modern societies narcissists regularly enter the political arena to make their dreams of success and power come true. The dynamics of narcissism tend to propel these politicians into extreme behavior and radicalism - a process that is further intensified by the way the media operate. Moreover, a kind of ‘natural’ affinity exists between political narcissism and populism. 

Narcissistic politicians, therefore, try to organise electoral support with a populist platform and seek support in populist movements. As the latter are invariably radical, this strengthens those politicians’ radicalism even further. The article analyzes the dynamics of political narcissism, its relation to populism and the conditions that determine the success or failure of narcissistic politicians.

As the article is in Dutch I would recommend you to learn Dutch and read it. Or else, you''ll have to do with this brief summary and reflection by yours truly. 

Trump walks a clear narcist-populist walk 
In essence the article outlines that the modern society -with all media around- provides a great stage for narcistic personalities and politicians to florish. In general, the media will reinforce the performance of narcist leaders, but first they must gain political ground.

D'Anjou states that this may be easier in open societies as the Dutch (with low barriers for new parties to be founded). For that reason our two main political narcists, Fortuyn and Wilders, have understandably come from a background where they founded their own party, rather than affiliated with an existing one.

While D'Anjou thought it unlikely for a narcist to pass through the hurdles of political parties, the interesting thing is that in the US, our blond loudmouth property-developing and loss-making cowboy did do so. This can be the result of the fact that rather than achieve media-exposure via the political party, the candidate had drummed up his own media-exposure.

Next up on the list of conditions is that other players in the political market provide the opportunity for the narcist to gain grounds. In general this can be easier in times of fast change and turmoil, as the narcist can play an opportunistic game against current politicians. So the narcist will combine his outlier position with a populist approach and plays on emotions like ('things were better in the past'). The use of the 'make America great again' slogan is therefore in line with this theory.

Most important success factor for these politicians is formed by the functioning of media. The media, with their great need for news, deviations, rows, incidents will jump on the narcists behaviour to provide him with a forum for his views. And quite interestingly, we can now also see US media, recognising this dynamic and reversing course. This would be a nice lesson for the Dutch media (who tend to still amplify the vision of our local loudmouth with little fact-checking to debunk his untruths).

Whereto next?
The author D'Anjou states, at the end of the article, that our societies effectively have to learn to live with these narcist-populist players in the political game. So that means we best learn and adapt from the experiences all over the world.

Here in the Netherlands we now have some more than 10 years experience with that and all along Europe other countries are also experiencing this fact. We can see a populist bang a simplistic drum and attract a lot of followers. Putting their words to consistent political action will however not be as easy, as our local history showed.

But even so, for us in the Netherlands the jury is still out. Next years elections may even see - despite all our experience in dealing with narcist politicians) our local loudmouth become the biggest party (which of course has only one member, chief, secretary and treasurer: the loudmouth himself).

What appears to be happening in the US now, is that the essential traits of the narcist (inability to lose, to be left alone) lead to an increase of his erratic behaviour. In combination with the media that take their responsibility to not just amplify the voice, but also check it, this may finally lead to a choice for capabilities rather than pomposity.

Still, it will be very interesting to see how, in the US, as an example of a democracy with a lot of checks and balances, the elections play out. So in determining your vote, I wish you all the wisdom you need.


Dutch government deeply involved in illusionary budgets and politics (just like the bankers)

In my previous post, one year ago, I outlined that it would be possible that with the PvdA at the helm, the Dutch politics would enter a time of less populist talk and more stability. Boy, was I wrong about that. What happened here in the Netherlands is that the elections turned into a shoot-out between right wing VVD and left wing PvdA. All votes sucked into a battle where right wing voters chose VVD to prevent the PvdA from becoming too big and vice versa.

The end result was that PvdA and VVD both became very big and have a majority in the House of Representatives (Tweede Kamer) but not in the Senate (Eerste Kamer). Rather than seeking a bigger coalition, the two leaders: Rutte (VVD) and Samsom (PvdA) chose to develop a government policy plan within a brief period of time, with very few consultations. This didn't work well for a number of reasons.

It turned out that VVD and PvdA had compromised on important positions by using some simple cards. The result was that the VVD agreed to a very strong income adjustment whereby high income earners would significantly pay more tax than before. This was a PvdA desire that was one bridge too far. After a lot of hassle, the plan was revoked. But it showed the core of the problem: the agreed package of compromises between PvdA and VVD hadn't been thought through sufficiently. This was enough for me to coin their policies: Illusion policies.

Where are we now?
Right now, we are almost one year underway and it seems that the prime Minister has taken aboard some of the criticism that all the government plans were made without sufficient backing in society. As a result he is now setting up deals on healthcare, prison-policy and so on. The number of deals ('akkoorden') is immense and each changes a bit in the start policy of the government. One of the involved social partners at some point in time said: 'I'm getting a bit of tired from al these deals'.

But there is a bigger problem here in the Netherlands. In an effort to fullfil the EU criteria, our government is trying hard to cut expenses. It does so however, without making fundamental choices. It tries to avoid some of the hot issues, such as deductibility of mortgage interest. The reason for this is that ever since the death of Fortuyn, our politicians are scared to lose their votes to the populistic players that promise a lot but cannot deliver a consistent policy (see my previous post).

Meanwhile the public is smart enough to recognize that things aren't going well and they revert to an old Dutch quality and habit: save money, stop spending. Because in this political climate it is quite likely that even if you don't expect it, some sort of measure may affect your personal budget. Until revoked or replaced by an adapted plan or deal.

Much of the macro economic debate focuses on the housing and mortgage market as politicians believe that in this area the solution of the crisis can be found. The paradox here is that polls show that the Dutch public assumes the interest deductibility to disappear and understands that that is necessary. But this government doesn't want to do that and reverts to additional measures to fix the market (a government guaranteed mortgage fund being the latest plan). While in itself useful it keeps consumers in uncertainty as to when the deductibility will be abolished.

Illusionary cuts and budget
We should also note that significant part of the budget cuts of this government only exist on paper. The idea that it is possible to delegate central government task to municipalities while reducing the expenditure with many billions is unreal. It allows the government to book a reduction while municipalities will be blamed afterwards for not achieving their targets.

A similar illusionist trick is done with the government financial assistance (for childcare, raising kids, housing). By reorganising the existing range of reglementations and procedures into 1, it is expected to save us some other billions.  Quite unlikely given the bad track record of the government and tax department in automation and procedural change.

Essentially we have thus sent a paper tiger to Brussels stating that we achieve our budget goals, but we will undoubtedly be in for some surprises. Our government is living on borrowed time, hoping that the other countries pull us out of the mud (which might work as we are an open community, earning in the slipstream of Germany). And it would be a wrong idea to see a role for the ECB here. The ECB can't of course solve the deficiencies and absence of our political statesmanship with monetary instruments.

What do the Dutch think of all this?
In my view, those of us who suffer from the budget cuts do tend to align with the populist parties at the left and right side of the spectrum. Other than that we maybe more mature than the politicians assume. Mortgages are being repaid and there is an understanding that we all need to pay our fair share. But the problem is that the political debate is not about fair shares but about finding easy and quick wins in order not to lose votes. There is a longing for stability and trustworthiness which our politicians are unable to provide.

In analogy with the banking sector: the incentive structure for politicians is skewed towards the short term just as heavily as it was in the banking domain. While in the bank domain this is now being corrected, the politicians lack the self-reflection to apply similar lessons to themselves. The result is that the general trust in politicians is getting steadily lower.

Meanwhile the Dutch draw their own conclusions: stop spending, start saving until the outlook improves and becomes more predictable. Unlocking this spending stop will not just require certainty on the mortgage market. It requires more stability and fairness from politicians, but they are too busy going for votes, to notice that.

In sum: we had our opportunity for a Dutch spring here in the Netherlands, but as in other countries, we let the momentum slip away.


Dutch elections 2012: finally we have our Dutch spring

This fall, the Dutch elections will provide us with something we have all been waiting for: a true Dutch spring. While in the past years our country became a mock of a democracy with too much populist talk and too little true cooperation, we can see that there is change in the air. And I'll try to explain the sequence of events for you: the non-Dutch public.

From Fortuyn to Wilders: enter the populists...
As you know, ten years ago, we had a politician, Fortuyn, who sensed an enormous amount of dissatisfaction of the public with standard-politics and politicians. And he used this intelligently to mobilize the electorate to support his party. For many politicians, his strong emergence came out of nowhere and it was in fact the dawn of a different style of politics. More direct, more populistic and seeking the populist consensus rather than an optimal solution for all the public.

In a twist of history, Fortuyn was murdered. But PM Wilders had been looking closely and chose to emulate Fortuyn with clear and simple statements about Islam, mass-immigration. Essentially he played the classroom-bully for regular politicians, who found it hard to counteract his verbal agility. And in doing so he gained a lot of support. He also found it a good tactic to do some hate-speeching with respect to Islam/moslims but wasn't found guilty. Events in Norway later proved the effect of his hate-speech, but Wilder of course didn't want to take responsibility for infecting a young man's brain with nonsense.

As the 'Freedom Party' of Wilders grew quite big, he could enter into a construction where he helped a minority government rule the country for the past two years. But his party started to crumble from the inside, with some members leaving and explaining the inner workings of the party (Wilders rule is the one and only law). Given that there was no mass immigration of moslims he chose Europe as the new enemy to be used in campaigning. And he set up a notification-site to complain about Eastern European workers. But essentially the paint of his party started to fade and lose its effect.

At the same time, on the far left side, the Socialist Party adopted many of the stylistic elements of Wilders. In true populist style they banged similar drums on issues as Europe (no good), health care (don't touch it) and so on. Given that our Labour party was having too much internal debate due to a too decent leader (Cohen), this far left wing gained a lot of support in polls. The grand power party of the past, the Christian Democrats found themselves being punished once again and discovered that they alienated their constituency considerably by cooperating with Wilders in government.

Wilders breaks up the coalition
This spring, Wilders had to negotiate with the minority government on reforms to ensure that the Netherlands would remain within the 3% deficit criterium. After seven weeks, in which he dropped many of his previous populistic important demands, he suddenly stepped out. And thus, we were heading for new elections. And it is only through the responsible behaviour of five other parties (VVD, CDA, D66, GroenLinks and ChristenUnie) that we managed -in one week - to design and agree on a reform package that would keep us within the 3%

Since then it appeared we would see all the parties banging a populistic drum. Because that is what happened here in the Netherlands. In the last ten years our political debate became quite uncivilized, with name-calling and all kinds of unpoliteness. As such it may have been a reflection of a more general trend in society. Then again, when looking at the deepest desire of the Dutch (we have a government agency doing hefty research into this..: SCP), there was a loud and clear appeal for: less individualism, more respect, more collectivity, more honesty.

Meanwhile, our minority government had grown the habit of not listening to the representative organisations of the citizens. They didn't listen to their formally appointed Counsels of Advice. And they even ignored the negative advice of our Council of State (Raad van State) on legal proposals that were just unfit, undoable or unconstitutional. And thus, over on my Dutch blog, in february this year I wrote a longer blog-posting: Time for a Dutch spring.

The blog post outlines that the Dutch both need and desire a revolt in politics, just as badly as those in other countries of the world (even if we don't think we need it). I pleaded for more balance and more nuance in the political debate. And I hoped for a society where media don't go for the hype and the incident. In sum, the blog outlined that the true Dutch spring is within reach if we all, individually, act resposibly towards each other without letting the economic mantra's getting too much in the way.

Developments in the Dutch election campaign: we respond to decency and honesty !
The essence of what happened here in the Dutch election campaign is that the old populist talk didn't work any more. Citizend could see Wilders doing his usual kinds of populistic stuff, but in the back of our minds they all thought that his previous tough talk turned out to be nothing but a charade. And the same line of thinking was applied to the Socialist Party, at the other end of the politicial spectrum. So far right and far left were losing in the polls.

And while everyone had believed all the debat would be between Socialist Party leader Roemer and Liberal Party leader (and prime Minister) Rutte, a change was happening. Labour Party Leader Samsom chose to not sweet-talk the citizens. He outlined clearly the tough choices to be made (including possible help for a 3rd rescue package for Greece) rather than pretend that no more support would be given. And it is this, more true, nuanced approach that started to resonate. Within a time frame of weeks Samsom suddenly started making up to become just as big as the Labour Party (in the polls).

Rutte, the prime-Minister, made some errors in his campaign, resorting to verbalities rather than seriously answering legitimate questions. In an effort to steer his success he even tried to avoid sitting at the same table in a talk show, with a famous Dutch comedian: Freek de Jonge. The net result was negative however, because the one comedian filling in for Freek, was quite outspoken and well able to counter the verbalities of Rutte with spirited arguments.

Will we have a Dutch spring?
What I think (or perhaps hope) is that the Labour Party has rightly assessed that the public is fed up with the populist talk and scamming that all politicans were resorting to. They chose to position themselves differently than others and chose for honesty and nuance. And it looks as if that approach will get them the majority of votes and the chance to be in the lead for the formation of a new cabinet.

If indeed the PvdA turns out to become the biggest party, then we can rightly state that our election day: September 12, will have marked the beginning of a Dutch spring.


Eurozone troubles.... all originate in a wish to get back to normal?

In the recent days I've read a book by J. Beyen called: 'het spel en de knikkers'. It's a Dutch autobiography describing the life and career of a banker, central banker, former President of the BIS, Executive Director at the IMF, Minister of Foreign Affairs and so on. Beyen was for example one of the important Dutch delegates at the Bretton Woods conference. And his book - in particular the episode on the golden standard - is fascinating.

Golden Standard as the solution or the problem?

Until the First World War, the golden standard had become the de facto monetary norm for governments/countries. It consisted of a set of fixed exchange rates, which meant that local economies sometimes had to suffer, as devaluation was impossible. On the other hand, it allowed for a lot of international trade and stability and was thus praised and adopted. Until the First World War changed a lot and the golden standard was abandoned.

In his book, Beyen describes the major sentiment of policy makers after the First World War. And he calls it the desire to go 'back to normal'. A central theme in this desire was the re-establishment of the Golden Standard. Beyen also describes that monetary thinking at that time wasn't as advanced as in 1968 (when he wrote the book) He sketches that the system of fixed exchange rates in itself burdened the European economies, but policy makers weren't able to see this at the time: obsessed with getting back to normal.

Current flaws in Euroland thinking: still seeking a back to normal?
The musings and discussions all around Europe these days, in particular the new plans on a banking union, fascinate me enormously. The singlemindedness with which politicians now move forward into more Europe, more joint policy, more deposit guarantee may be variations on a similar desire: back to normal. Back to the Europe from before the crisis, using the same policy tools and concepts that we used before the financial and sovereign crisis broke out.

As a result, we are now witnessing policy makers, fully caught up in their goal to save Europe by designing futher institutions and policies.  But, essentially, our politicians and civil servants fail to recognize that the European car doesn't respond any more to twists of the steering wheel. The only thing that has helped (only temporarily) is throwing money at the problem.

Are we missing something here?
While our monetary thinking may evolved quite a bit since the 1930s, our knowledge of policy and strategy making is not as widely and heavily discussed and modeled. In theory we could all be aware of mechanisms such as groupthink, tunnel vision, decision complexity, resource complexity etcetera. But in practice we fail to properly recognize and address the fundamental errors in policy making.

Having read the autobiography of Beyen, I tend to believe that we are now learning new lessons in the Eurozone. And the lessons are not so much related to monetary theories but to international policy making under stress. I therefore hereby propose the concept of policy illusion to be better recognized in the future. It is the understandable tendency of policy makers to continue doing what you were doing all the time, even when the world fundamentally required a different way of looking.

And so we can now see our policy makers making policy by looking so intensely at the rear-view mirror that they will miss the fork in the road ahead.


Dutch magazine finds out that preview of Wilders' book is inaccurate...

Now that Geert Wilders has side-stepped in Dutch politics to become an opposition party, he has more time to promote his upcoming book, which will be published in the US. And it will of course be full of his ideology: how the islam is terrorising the West, how he is the victim and what we all should do about it. And a Dutch magazine has been allowed a read through of the book.

The interesting thing that occured is that the Magazine started fact-checking the book. Because somewhere near page 140 (in the Chapter Conquest) Wilders describes how he is being robbed by three Arab youth in his neighbourhood: Canal Island.

The true story however unfolds now in HP Magazine, which checked other books and sources (among which his own brother) to find out that:
- Wilders was attacked from behind and he has never ever seen the attackers,
- he was not in the Canal Island borough when being attacked but a well-to-do neighbourhood.

It's yet another example of how keen he is on living and portraying the world according to his truth.


Wilders stops his support for minority-government of the Netherlands...

The breaking news here in the Netherlands is that Geert Wilders has left the building. And 'the building' is the so-called Catshuis, the seat of our prime-Minister. It is here that, during the past 7 weeks, the VVD (liberals) and CDA (christian-democrats) have negotiated with the PVV (Freedom Party) to agree on further austerity measures. And our prime-Minister Mark Rutte has just explained to the public that the Freedom Party has stopped the negotiations and was no longer willing to take its responsibility for the measures. CDA-delegate Verhagen has mirrored this remark so we can see that the blame-game has now started.

It is interesting to note that this step of Wilders occured only 12 hours after the group was provided with the data of the Dutch Planning Agency that had calculated the impact of the jointly agreed draft austerity-measures. And our foreign readers should also note that Wilders is increasingly losing momentum. Hero Brinkman has left the PVV, a couple of weeks ago. And the quite unelegant bashing of the Queen as well as Turkish official Gül last week, didn't win him a lot of supporters either (he immediately lost 2 seats in the polls).

So now we find ourselves in a tricky situation in the Netherlands: we need austerity measures and we need our government to act. But the support-construction with the Freedom Party have turned the past 2 years into a standstill with no serious economic reforms and lots of symbolic regulatory measures to please the public (and the PVV-voter).  So while everyone in the Netherlands understands the need to reform, it is also clear that it is now time for new elections. The experiment with PVV has failed to work.

Our Prime Minister has of course phoned the Queen but has not resigned yet. He stated that the situation is so serious that he wants to discuss further steps with Parliament. And he leaves open the possibility that there will first be an agreement on government finances and afterwards elections. While some parties will want to follow this pragmatic route, it remains to be seen if the big opposition parties such as the left wing Socialistische Partij and the Partij van de Arbeid are willing to cooperate.

Geert Wilders has also given a press conference, just now, and he specifically blames Europe. He had outlined that he has stepped away, that he no longer supports the minority-government. And he stated that especially the cuts for elderly pensioners formed a serious issue for him.In the press-talk afterwards he repeatedly outlined that he did not wish to comply with the 3% rule of Brussel. So he started blaming Brussels and he started the election game.

It is clear to me that for Wilders, the duration of his cooperation with the minority-government was long enough to gain creditibility as a true states-man. And as he is losing support among the public, as his party starts to crumble, he must have decided that if ever, now is the time to capitalize on his popularity and to try his jump to become the biggest party in the Netherlands. In doing so he demonstrates once more that his major quality does not pertain to leading a party or a state, but is one of walking away from the debate and challenges that are really relevant to the nation.


Silly Geert Wilders seeks attention with anti-eastern European website

This blog is to update and inform the foreign readers about the current status of things here in the Netherlands. And in particular with respect to our narcistic party leader Wilders of the PVV. He has set up a website where complaints can be filed about neighbours from Eastern Europe, when they make too much noise. According to the Freedom Party PVV, the site is a great succes, with 14000 complaints filed on the first day and 40.000 after a week.

It is interesting to note the subsequent debate in the Netherlands (and rest of Europe). First of all, it appears that no one recalculates the data of the PVV. So the silly claim of 14000 in one day (meaning 10 complaints per minute, during 24 hours) goes unchallenged. And the same goes for the claim of 40.000 in one week (4 complaints a minute, during 7 days of non stop operation). Even if the PVV would themselves be filling in the forms on their website (which they did in a previous incident, about traffic incidents in The Hague), they would have a hard time typing it all.

Second, we had this bureau of discrimination, stating quickly that the site of Wilders would not constitute discrimination. Well, it seems to me clear that the site is discriminatory. But foreign readers should note that here in the Netherlands we lost our ability to value and protect human rights. We have had judges here that outlined that Wilders was not doing hatespeech (only to be corrected one month later when Breivik demonstrated that the effect even crossed our borders). And some maintain the fiction that this site is not discriminatory. In doing so, we completely forget our historic heritage (liberty of religion, as stated in the Union of Utrecht in the 16th century) as well as the relevant international guidances on human rights. So our Prime Minister turns a blind eye to the issue.

The reasons for doing so are not illogical by the way. Our Prime-Minister essentially chooses to ignore most of the stupid actions of the Freedom Party and its narcist leader. And in psychological terms that is indeed a correct approach which clearly works. The Freedom party is losing a lot of traction in voting polls with the Socialist Party (SP) gaining a lot. And the effect is so strong that Wilders himself starts showing up in interviews and tv programs. And that is new: he would normally just tweet and never give interviews. So he feels the heat and now seeks to regain influence.

But then again, when the subject involves discrimination, one may think twice when turning the blind eye. Fortunatety we have a lot of creative Dutch people that quickly set up all kinds of websites to hug the Polish, to report all scary PVV-MP's and so on. So foreigner shouldn't take this stuff to seriously; it's certainly isn't the common opinion. See also how our Dutch Commissioner Kroes aptly responded: why not create a website to complain about blonded hair?  So the thing that our Prime-Minister should do is to inform and advise all foreign nations to use a similar approach: just ignore Wilders on this one.

And while I'm tempted to do the same, I figured it might be good to explain this to the foreign readers. So do note that this whole charade is the proverbial 'cornered cat that jumps strangely' (as we say here in the Netherlands).


Bernankes blunder or Bernankes brilliance ?

About one year ago, the FED-President Bernanke started giving press conferences to explain the policy decisions of the Federal Open Markets Committee. I was pleasantly surprised then, but I was also a bit wary of the continued low interest rates. With the risk of being hilariously wrong I think his recent choice to state that the FED will keep the interest rate low for a number of years, is a horrible mistake that will cost us significantly.

One thing to remember of course, is that monetary policy at low interest rates is really Bernanke's cup of tea and expertise. In this research paper of 2003, he essentially describes all the possible policy measures of the FED:
- committing to low interest rates for a longer time frame (thus shaping expectations),
- changing the composition of the balance sheet (for example buying treasuries or swapping maturities),
- changing the size of the FED-balance sheet.
And in hindsight we can see that this is precisely the road map that the FED has been following the last years.

So why do I think this long period of low interest rates is wrong?

My main argument is quite simple. For markets to function properly, there must be uncertainty with respect to the real economy but also with respect to the behaviour of monetary authorities. This uncertainty by definition leads to a distribution of market expectations with some being more bearish and others more bullish. Thus, uncertainty is helpful as it creates the maximum liquidity in a market and maintains an overall balance with respect to divergence of expectations of the future.

Following this line of thought, the announcement of future low interest rate (for a long period) by the FED is the equivalent of giving a serious prolongued committment. And while this is done on purpose, with the aim to help out financial markets, I think it reduces uncertainty too much. Market participants will expect the FED to behave this way and the market will be robbed of an important uncertain factor. Thus, the market will become flawed and market expectations will not be balanced or evenly distributed any more. As a consequene the FED only stands to lose now, if for some sudden reason the market circumstances require a reversion of the outspoken low interest course.

I think that right now we are already seeing the effect of the FED behaviour. The effect of the low interest rate now leads some players in the US to desire negative interest rates on bonds. And in my view this is only the beginning. And therefore I am now officially going on record stating that Bernanke - brilliant as he may be - has blundered into a serious misstake here.


France and Germany wish to soften the Basel rules...

It's about a year ago that I outlined in this blog that the European politicians had a choice to either continue the introduction of planned bank regulations (leading to no growth in the future and Europa as an open air museum) or to postpone them. Today we can read in the Financial Times that France and Germany indeed wish to slow down the introduction of Basel 3 rules.

While I think that this is indeed the better way forward, things did change in the last year. We have become aware that our governments in Europe are quite unable to tackle the serious issues at hand. It took Merkel and Sarkozy a year to discover that their Deauville agreement with Private Sector Involvement was a shot in their own foot. And similarly they needed quite some time to discover that there was some merit in the banks' arguments on the timing and impact of Basel 3.

But why, why does it have to take a year before this sort of insights sink in?


Eurocrisis at its peak (december 2011)... some forward thinking here

Well, I think the world has all very much suffered its eurocrisis fatique in the last months. Yet it is time for some new forward thinking on the euro. And I'm going to ensure it's a plain vanilla explanation here. The situation is: this euro-thingy was and is a cunning French plan. And we shouldn't fall for the cunning French for a second time.

Let my try to explain this in three simple steps. That will help you understand the world without constantly following tweets and live blogs. It is - after all - not really that complicated, although the rethorics of the French President Sarkozy and the German Bundeskanzlerin Merkel do create a bit of fog.

Step 1: Monetary union means moving money between regions that constitute the union
Let's look at history. In particular the year 1977. A group of experts, headed by Mr MacDougall, wrote a report on the possibilities for a monetary union and the consequence on public finance. It's a beautifully written report in typewriter format, the standard of those days. And it describes the functioning of monetary unions in a numbere of countries, thus providing the European Commission (9 countries then) with a bit of inspiration for the future.

Conclusion four in this report clearly outlines that an economic and monetary union will always (and permanently) lead to a redistribution of money from richer regions to poor ones via a number of methods (taxes, subsidies and so on):
The redistribution through public finance between regions in the countries studied tends to be reflected to a large extent (though not, of course, precisely because other factors are involved) in corresponding deficits in the balances of payments on current account of the poorer regions, with corresponding surpluses in the richer regions. These deficits and surpluses are of a continuing nature. Net flows of public finance in the range of 3 - 10 % of regional product are common for both relatively rich and relatively poor regions, but a few of the latter enjoy considerably higher net inflows, up to around 30 % of regional product.

The report then continues to describe diplomatically that it's too early for a monetary union now. It also becomes clear that the redistribution of income between regions requires a central form of taxation/income for the centre of the Union (the EU itself) and a bigger budget. Because that creates the mechanisms through which redistribution can occur.

2. The euro: cunning French plan consisting of well packaged creeping committments
In an earlier Dutch blogpost I mentioned and honoured the foresight of Bernard Connolly. This former EU civil servant described in 1995 the French policy: use the euro to gain more influence in the relationshop with Germany. Because without some form of cooperation, the German economy would rapidly show its tail lights to the weaker French economy. By introducing the euro, the French got their influence as well as the desired endgoal; a political union in Europa.

The French understood that going into the discussion with their main goal revealed: political union, would not work. So they chose the Monnet-strategy of creeping committments. Just start with a joint currency and understand that economics will then in the end lead to some crisis-moments. Which are then used to further cement the union. They cleverly disguised their main goal (as no one was ready and willing to committ) and suckered the Germans into believing that this 'no-bail-out'-clause was really worth the paper it was written on.

Of course the French were clever enough to understand that in times of crisis, such clauses will be dropped. They also succeeded in making the sanctions of the Treaty subject to political assessment. And thus they put Germany and Europe on the road of small creeping committments were there is only one way: forward. Until in the end, after some crisis-moments, the full policial union would be arrived at.

Step 3: French magic and illusions: confuse the public with the actuality and hide the real rabbit
I think that it's useless to be excited about the events in the market and politics. What's happening now is exactly what was planned by the French. The diverging economies and bad public finances in the EU have become a strain on the functioning of the European Union. So now is the time to cement forward towards the political union. And we see Merkel and Sarkozy using this opportunity to convince their people and local politicians that this is the time to really step up to the plate and cement some solid new agreements in place. And once again, the German-French axis is the dealmaker with the rest of Europe standing by.

The real choice: political union or not?
By using short term rethorics Sarkozy still hides the real choice as the magician hides his rabbit for his audience. And that choice is wheter or not we want a political union in Europe (where rich countries yearly pay the poor ones and where a central EU-taxation exists and is used to redistribute wealth).

Let's be clear: we failed to properly assess the French gameplan in 1994. We got suckered into their game of creeping committments with only one endconclusion: political union. And our politicians didn't see it, were unaware or otherwise incapable of noticing this. But now that we have seen this happening, we can choose to engage in todays rethorics on new pacts and unions or to step back and repeat the main question: do we really want this political union? Is there sufficient solidarity among all countries in Europe to start sending money from rich to poor countries?

The answer and most likely outcome: Marseillaise rather than the ninth of Beethoven
Our true challenge now is not to be confused by the magic, the tricks, the thick air, the fog and the 34th rescue plan for the Euro. So when brushing all that aside, what remains is a lack of solidarity in Europe to go forward towards a political union. But we can also see that our current style politicans lack the courage, guts or vision to really deal with that question openly. Then again, that is also a valid choice. It's the choice to remain the puppet/marionet in the French theatre.

My guess is that Sarkozy is a very smart man who foresees that the European countries will continue to fall for his cheap magic and will remain puppets in the French masterplan. And could that perhaps also be the reason why, at the end of his pro-Europa-speech, one week ago, we didn't hear the European anthem (the Ninth of Beethoven) but the Marseillaise?

Click here to the read the Dutch version of this blogpost.


Wilders is changing his image..... suddenly has bright blue eyes !

Sometime ago, the website of Geert Wilders was hacked. And today I figured, let's see what his new site looks like. Of course it would have been fun to toy around with it and see if this site could be hacked, but I couldn't even start trying. Because something was staring me in the face. And it surprised me. But it also reminded me of something.

If you know Geert Wilders and his history, then you know that there is some Indonesian blood in his family. And you would also know that he's originally got black dark blond hair and brown eyes with big black pupils. While we are by now accustomed to his hair being dyed blond, we all recognize him when we see the picture here:

So you can imagine that I was quite a bit surprised to see his new website with the following, iconic picture:

At first I did'n believe it, so I magnified the picture to look again at his eyes:

Well, we all know what a little Photoshop can do to improve the looks. But this, I felt, was different.

So I tried to remember what is was that made this so familiar. I browsed around the web, my books at home, magazines, asked the neighbours, but still I couldn't figure it out. In the end I had to give up. I vaguely recall that there is something about a strong desire and ideal to have blond hair and blue eyes, but I just can't remember what it is.

PS Not having ever seen him in person (I am now checking a lot of google-images) it may be the case that his eyes may have a shade of grey/blue/green. Still this upgrade to hefty blue remains remarkable.

PS 2 (20.55): Indeed they appear to look a shade of blue. So he may (or may not) have used some digital highlighter that created the unnatural image.

PS 3 (23.24): I struck out the black hair, as I was wrong about his original hair colour as well. It used to be dark blond rather than black. So what remains is a bit of photoshopping and digital polishing that struck me. 


Eurocrisis: the frog may have been long boilt but we fail to notice...

Looking at todays market developments I am very much reminded by the complex discussions of 2007 and 2008. I think also these days, here in Europe we are failing to recognize that the political and decision process has gotten out of control. The bailout-frog is long boilt and dead, but we keep pretending it is alive and will be able to move. And heaven only knows wen reality will sink in.

Mind you, my personal opinion is that the Wednesday-package was not about bailing out Greece but about bailing out Europe. Given that clearly the EU governments don't have the support/cash to fund a bailout fund themselves, they had to provide the EFSF with sufficient flexibility to go shopping for funds in the market. Three cheers to Angela Merkel for finally understanding that...

And the European leaders of course also placed an emergency solution via the IMF in the background. In doing so the (emergency) plumbing is laid for a bailout of Europe. As a result, the financial markets could no longer determine whether the bazooka was sufficiently big. It's size is unknown, now that there is the possibility of some Chinese or Saudi Arabi or the IMF to step in. So, lot's of work to do, but the main problem was solved.

Thus, the essence of the EU-package was that it ensured that the EU itself would qualify for emergency packages, should push come to shove. And this appeared to work for a day or so. And while Draghi outlined to continue to take extra-ordinary measures, Italy got burnt in the market. So that did not bode too well.

And here we are now. Tuesday evening, first of november 2011. Berlusconi is meeting with his Cabinet to discuss measures. As is the Greek Prime Minister who presumably felt that the First November of 2011 was a good day to announce a referendum (1-11-11, it must mean something in Greek mythology). And of course, the Dutch Members of Parliament will also convene this evening. So there will be more discussions. And letters to parliament. And then our Prime Minister will say stuff. And then there will be the G20. And so on, and so on.

I understand that for those working in civil service, there is no giving up on Europe and procedure. They must continue to go the way that has been prescribed and try to make something out of this very desperate situation. But it is all quite similar to the myth/story of the boilt frog. If you put a frog in a glass of water it will jump out if it is heated quickly, but will not when the water is heated slowly. So in a situation of slow changes, the frog will boil to death.* 

The whole EU-situation now reminds me very much of the complex discussions we had here in the Netherlands with the takeover of ABN AMRO by Barclays, followed by the bid of RBS/Fortis/Santander. This whole deal messed up incredibly and had all kinds of side effects (no attention paid to smaller banks with two of them failing subsequently: DSB Icesave). And the one major lesson that we could learn in the Netherlands was that it is essential to identify the moment in which a process has become too complex to handle.

And what I'm saying here: we may have passed that moment quite some months ago already. We are already witnessing the Lehman 2 moment in the markets, but European politicians are too busy to notice (as they are holding summits and meeting to prevent Lehman 2 from happening).

By the way: later scientists proved that the story was untrue and an urban myth. Maybe someday people will say the same of the Euro...


Waiting for the trojka report and the finale... will the euro go out with a bang...?

The times they are changing amazing.

One year ago in Deauville, we saw Merkel and Sarkozy decide on how to save Europe: getting the banks involved was the answer. Then this week we saw them saving Europe once again: a huge fund and effort was necessary. Everyone was hopeful; it really appeared as if they were going to get it right this time. Stock exchanges felt happy but the stakes are up. Because if Merkozy fail to get it right, the finale will certainly become a blast.

What I find amazing is that we could see a sovereign crisis turn into a full blown bank crisis in Europe, due to the political desire to take revenge on banks. If banks need to pay up as well, this hurts their income, their revenue and future divivends. So down with share prices and trust. Then, add a couple of local bank tax plans on top and those are all the ingredients you need for a full blown contagion in the financial market. Yet only a number of people, among which former Director Hoogduin of the Dutch Central Bank, dare to outline to Merkozy that they themselves have been the major factor that contributed to the feared 'contagion' in the financial markets.

So now we need an ever bigger final bazooka solution. And what concerns me now, is the tone with which both leaders of state keep referring to the trojka report and the decision afterwards. It's a tone that defers the topic to a technicality with subsequent political decision. It's not the tone that you would expect of leaders. Two real political leaders might refer to the report, but not give the trojka this much attention.

Because imagine yourself to be a member of the trojka. If all the eyes of the world are upon you, what are you going to say? You need to keep an optimistic tone, but then again, you can see that the Greek are evidently failing the standards. What to report then? Outlining that Greece missed the norm will mean oil on the fire of populist hardliners in the EU. And stressing that Greece is well underway means that the flak might be directed at the trojka itself. There's no way of doing it right.

So what may happen is that there will be a highly diplomatic press conference and report, so ambigous that it will do the least public harm. Still, the politicans are responsible for putting the trojka in this awkward position. They deflected a primary political issue to a group of experts while they should effectively solve it themselves. Because as things stands now, the trojka has too much politicial expectations deflected upon itself, to do its work properly. And in my opinion, this doesn't bode well at all.

So we could be up for a grand finale. Either because of the trojka report or because of the fact that the French and German are not going to agree on the details that they need to agree upon to shoot the final bazooka.

More and more I feel that this political (and sovereign) crisis has some similarities with these animated Disney films. Cat is chasing mouse. Running hard. Running off the cliff and keeps running in a straight line. Until the cat discovers there's no more ground underneath. Which is when the fall begins. Cat falls down and should be dead of course, but in this miracle world of Disney just irons out the bumps and starts chasing the mouse again....

Updated 1540: If you wish the end result, the joint statement, read the text below: a nice example of diplomacy beyond diplomacy. Greece gets the money while it doesn't fullfill earlier criteria. Where did we hear this before..?

11 October 2011 - Statement by the European Commission, the ECB and IMF on the Fifth Review Mission to Greece

Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) have concluded their fifth review mission to Greece to discuss recent economic developments. The mission has reached staff-level agreement with the authorities on the economic and financial policies needed to bring the government’s economic program back on track.

Regarding the outlook, the recession will be deeper than was anticipated in June and a recovery is now expected only from 2013 onwards. There is no evidence yet of improvement in investor sentiment and the related increase in investments, in part because the reform momentum has not gained the critical mass necessary to begin transforming the investment climate. However, exports are rebounding—albeit from a low base—and a shift towards a more dynamic export sector, supported by a moderation of unit labor costs, should lead to more balanced and sustainable growth over the medium term. Inflation has come down over the last year and is expected to remain below the euro area average in the period ahead.

In the fiscal area, the government has achieved a major reduction in the deficit since the start of the program despite a deep recession. However, the achievement of the fiscal target for 2011 is no longer within reach, partly because of a further drop in GDP, but also because of slippages in the implementation of some of the agreed measures.

As for 2012, the mission believes that the additional measures announced by the government, in combination with a determined implementation of the adjusted Medium-Term Fiscal Strategy, should be sufficient to bring the fiscal program back on track and ensure that the deficit target of EUR 14.9 billion will be met.

Looking to 2013-14, additional measures are likely to be needed to meet program targets. Such measures should be adopted in the context of an update of the Medium-Term Fiscal Strategy by mid-2012. To ensure that the program is growth-friendly, and in view of the ambitious assumptions regarding improvement in revenue administration already embedded in the Medium-Term Fiscal Strategy, it is essential that such measures focus on the expenditure side.

In the area of privatisation, progress has been achieved with the creation of a professionally managed privatisation fund. However, delays in the preparation of the assets for privatisation, and to some extent worse market conditions, mean that revenues in 2011 will be significantly lower than expected. The government remains, however, committed to the revenue target of EUR 35 billion by the end of 2014. Ensuring that the privatisation fund remains independent from political pressures remains key for success in this area.
Banks have improved their capital base through market-based means. As evident from this weekend’s resolution of Proton Bank, the recent amendment of the banking law ensures that non-viable banks can be wound down while protecting depositors' interest and preserving the stability of the financial system.

As to structural reforms, areas of progress include the transport sector, licensing procedures, and regulated professions. As overall progress has been uneven, a reinvigoration of reforms remains the overarching challenge facing the authorities. In this regard, the decision to suspend the mandatory extension of sector-level collective agreements to the firm level is a major step forward, as it will help ensure the flexibility in the labour market needed to boost growth and prevent high unemployment from getting entrenched.

Overall, the authorities continue to make important progress, notably with regard to fiscal consolidation. To ensure a further reduction in the deficit in a socially acceptable manner and to set the stage for a recovery to take hold, it is essential that the authorities put more emphasis on structural reforms in the public sector and the economy more broadly.

The success of the program continues to depend on mobilizing adequate financing from private sector involvement (PSI) and the official sector. Ongoing discussions on PSI together with assurances provided by European leaders at their July 21 summit suggest that the program remains fully financed.

Once the Eurogroup and the IMF’s Executive Board have approved the conclusions of the fifth review, the next tranche of EUR 8 billion (EUR 5.8 billion by the euro area Member States, and EUR 2.2 billion by the IMF) will become available, most likely, in early November.


Exceptional, depressing and amazing interview by Peter van Ingen on Buitenhof (Dutch tv) this morning

This morning. Both the terms Peter van Ingen and Buitenhof became trending on Twitter Netherlands. And the reason is that we could all be amazed at the style of interview by Mr. van Ingen. I dedicated a Dutch blog on the implications of such an interview style, but the foreign readers may want a bit of background information.

So what happened here in the Netherlands in the media?
Our labour party, PvdA is strongly in decline. While they reached 30 seats in parliament during elections, they have considerable less seats in polls now (see here) which creates an uncomfortable position. The Socialist Party eats up a lot of votes and there is a lot of discussion in public on the style of Job Cohen, the chair of the 30 members of Parliament. He remains the gentlemen rather than choosing for the quote-style of politics that we can see a lot these days. In doing so he is the exception.

This week, the chair of the Labour Party, Ploumen, left the party. But she also gave an exit-interview in the Volkskrant (a bit left-oriented newspaper in the Netherlands). And as a result, the pressure on Job Cohen mounts. See also this article. Cohen has outlined that he will take the criticism to heart and therefore all eyes in the Netherlands were turning to Buitenhof, this Sunday morning. Buitenhof is the main political debate program, which often serves as a platform for political discussion.

The interview in Buitenhof
This mornings edition of Buitenhof had a particularly agressive interviewer, Peter van Ingen, who fist wanted to discuss in detail what exactly had happened this week, with the exit interview of Ploumen. Then Cohen explained this but also stated: I prefer not to further engage on this issue in public, but within the party. Van Ingen kept pushing, but Cohen outlined his stance.

In a lof of the rest of the interview van Ingen effectively sort of played the devils advocate and repeated some of the criticism of Ploumen on Cohen. Which was all about style and conduct. Cohen made it clear that he was choosing his own style, his own tone of voice and that insulting nicknames said more about the insultor than himself. Yet van Ingen pushed on, not willing to listen to the content of Cohen's message.

Essentially, the interviewer kept on moaning and complaining about how Cohen conducted himself in the political arena while Cohen tried to outline his partys vision for the future. And although the tv-interview was advertised on the web as: 'Cohen's reply', (suggesting that Cohen would get the floor for his vision on developments) the interviewer didn't allow for much space and often interrupted. So we ended up with very little content in the discussion and an awful lot of tit-for-tat talk on process.

The most striking element was that the last question was: 'Did you arrange already for your succession?'. Many comments on twitter described this as impertinent, given also the previous line of questioning by the interviewer. It's not nice to wrap up the interview and throw this prepared granate to the guest. But Cohen handled it competently. And this ended the interview.

The style of interview -and the last question as the cherry on the cake- got many people annoyed. This was more about the opinion of the interviewer than giving the floor to Cohen.It got me to immediately write an analysis and comment on my Dutch blog that:

1. the choice by a tv show to not focus on content but only short time actuality/gossip is in itself also a political choice; it's not a neutral choice but a choice that also shapes the political climate,

2. the choice by an interviewer to go for an offensive style can be made, but the talk should in the end be about the guest and the opinion of the guest, rather than the opinion of the interviewer. And this interview contained quite a lot of display of morality and opinion of the interviewer, blocking the message of the guest. And underneath, the interviewer did not appear to be interested at all in the opinion of the guest. Which showed.

3. the last question about succession planning, was an impertinent one; comparable to kicking a man when he is own on the ground. And I noted that this tough-style interviewing is becoming more and more popular in the Netherlands. And thus, the Dutch media themselves play a role in creating a more rude and inpolite political climate: a serious trend that they might want to reflect on.

To vent out my amazement I wrote this Dutch blog. And in it I placed two links so that readers who would agree, could easily send out e-mails to the journalist team at Buitenhof. So that the team may reflect on what happened today in the interview with Cohen.

I hope they will succeed in getting their interview standards to a higher level, because a good functioning political system also requires solid journalists keeping up their standards.


Dutch budget talks and generic policy discussions in parliament taken hostage by 'freedom of speech' of Wilders

This is a blog for the foreign readers, interested in finding out what's happening in the Netherlands political debate since Wilders was acquitted from hate speech.

Well the short update is the following:
1- many politicians were awkwardly silent when the Norwegian shooting occured; although it was quite clear that this shooting better proved the existence and cross-border impact of Wilders hate speech than the local Dutch court dared to conclude.
2- Wilders keeps on banging the drum that Greece should be kicked out of the euro; as a result the PvdA (Labour) challenges Wilders to stop supporting this minority cabinet or otherwise be silent,
3- Wilders now helps out a cabinet with a set of cutbacks that are contrary to his election promises, and seeks to divert attention,
4- the strategy of Wilders to divert attention was a full-out indecent and improper behaviour during yesterdays and todays Parliamentary discussions on budget and future strategy of the Dutch government (read the dutch report here).

My personal impression was that, as is often the case with narcist people, the words of Wilders said more of himself than of the subject or person at hand. And the fact that Wilders had to resort to so many unsubtleties shows two things:
- psychologically he has concluded - in his head - that with the acquittal of the penal court, he has firmly gained and established the right to freedom of speech and the right to express himself any way he likes; there is no stopping Geert now as he thinks the judge has now not only acquitted him, but also issued him a license to insult,
- politically, he is playing his old record/song (personal attacks, indecent inferrals and wording) louder and louder in order to gain attention from media and electorate; yet, now that he supports the government, the opposition is smart enough to point out to the people that Wilders is all talk, no action.

Effectively Wilders is eager to exercise his rights but never present when it comes to honouring obligations that come with the rights. So below I have listed some of his words, translated, to illustrate how Wilders uses his right to freedom of speech in Dutch parliament and ignores his obligation to show conduct an MP becoming. And do note that many other subtle hints in body language, tone and frasing, are untranslatable.

To Cohen, leader of the PvdA
-Well you can bleat all you want but at the end of the day you are the company poodle of this cabinet.
-I'll say it once again and it hurts, but you are the company poodle
-You are the toy dog, the poodle of the Cabinet.

To the chair of Parliament:
-Wilders (when meaning to talk to Cohen): ..you are the co-muddler of this government.
-Chair of Parliament: Mr Wilders you were going to try to talk via the chair of Parliament. I am not a co-muddler.
-Wilders: Not yet, so much is true.

About MP Peters (when characterizing Green Left as a 'beach-party' this summer:
.. and Mrs Peters was somewhere mixing up her interests (inuendo to an affair that became part of a public and political discussion).

To Mr Pechtold
I am not sure if there was a question, but let me try to answer this dhiarrea of Mr Pechtold..

About Secretary of state Albayrak
While Albayrak still recieved criminal strangers open armed, giving a general pardon away - I don't know if she did it in cooperation with her niece - we now really deal with criminal strangers.

To Green Left:
Objection noted. The Beach Party apparently does not agree.

About A director of a hospital
We have a concern with care-directors at the top (using the word bobo's which is a denigrating term for rich, ignorant directors).

About himself, when adressed about courtesey in parliament
We at the PVV enjoy a strong debate. One time it is courteous, the other time sharp and sometimes both. It's all part of the game and we will never change our ways.

Latest update: Wilders provoking the Minister President and parliament ignoring him
Yesterdays improper behaviour of Wilders resulted in 120 letters being sent to parliament. And some MPs, notable Roemer (Socialist Party) yesterday desired a written declaration of the Minister President Rutte on how he qualified the wording of Wilders. Prime Minister Rutte chose to do that at the end of todays session. And that was a solid choice, because a good discussion followed during todays session in parliament.

Until somewhere this afternoon Rutte denounced the wording of Wilders the day before and Wilders started rebutting, throwing in the remark (in sort of cockney style): 'Hey man, act normal.' So Wilders had chosen to increase the stakes by now provoking the Prime Minister. What then happened was quite interesting.

The chair of Parliament asked both Wilders and Rutte to behave and a discussion occured between members of parliament and Rutte on whether this verbal behaviour of Wilders was suitable. Rutte distanced himself completely from the wording of Wilders (yesterdays wording in particular) and explained: 'Well, we always knew this was a package deal. With Wilders we will get some support and because of the support we carry on as a government. But we also know his style to be provocative and at some times its best to not react and clearly state that this is unsuitable.'

Although Cohen outlined that this was too distanced a response by Rutte, the members of Parliament chose to discuss norms and behaviour at another time and to go on with the discussion. Also, the Minister President Rutte acknowlegded that as politicians we are struggling with how to deal with these provocations by Wilders. He literally said: "we know that the style of Wilders is to throw in some red meat in the arena sometimes". And having discussed the topic, VVD-leader Blok (who previously had outlined that he was not joining the debate because he had no intention to be provoked) simply suggested to move on. Which happened and was a new thing for this parliament.

Essentially Wilders provocation was ignored. With Wilders then stating that what he said was almost the same wording as used in previous years by other politicians. But that was a feeble attempt to communicate to his followers that once again Wilders was being discriminated against by the regular politicians.

The 'magic' of Wilders is fading quickly now
All in all, this is some interesting development here in the Netherlands. The content-less provocations of Wilders are no longer discussed as true suggestions but viewed and treated for what they are. Simple provocations that aim to make himself look as the reasonable guy that dares to say what the public thinks. And that dares to challenge everyone.

But it does have the looks of it as if the magic fades. Everyone in public gradually starts to realize that for Wilders there are no promises that he keeps, just the promise to himself that only he is allowed to do and say as he pleases and anyone critisizing him will become his object of hatespeech and indecent wording.


Interesting development... default Greece confirmed/rumoured (sort of) by Dutch Ministry of Finance..

This morning, Bert Bruggink, CFO Rabobank, was quoted in Financieele Dagblad, saying that -looking at the markets- it was not the question if but when Greece would default. And RTL Nieuws informed the public that the Ministry of Finance was now preparing for all possible (and unthinkable) options in the crisis. Which lead to clippings in the press: 'Dutch Ministry of Finance thinks that default of Greece is imminent.'

Tomorrow, Dutch parliament will discuss the EFSF in parliament. But PvdA (Labour) does not wish to support the extension of the fund if Finland still has its demand for collateral on the table. The 'Green-Left'-party states that with the extension, the EU should also decide on the Euro-commissioner for budget (the MarkRutte proposal). And the Socialist Party doesn't want the EFSF to take over bond-buying from the ECB as, the ECB has 'unlimited funds'.

Meanwhile, national radio bulletins send out the message that sources near to the Ministry of Finance outline that it is preparing for default (19.57). While formally the Ministry may not be calling for orderly default and denies it (20.20). Which means that the 'open' and transparant communication of Minister de Jager, once again creates more confusion than necessary. It's a bit like BNP formally denying the informal rumour about its financial health.

So, looking at this confusion, it does indeed look as if the default of Greece is imminent...


Eurocrisis: a clash of old (long term) and new (opportunistic) political thinking

These days I'm trying to get my head around the current developments in international and European markets and politics. There's a real flood of former politicians emphasizing that Europe is the solution, rather than the problem (see for example the statement by the Council for the Future of Europe). And here in the Netherlands we had former Prime Minister Wim Kok as well as former Minster of Finance Gerrit Zalm explaining to us on television that we need to remember the benefits of Europe and use it as a road to the solution. And I fully agree. As a whole, the eurozone is not doing so bad, but we do have a serious internal management and discipline problem.

Leadership today may be far more difficult than when the euro was formed..
Many commentators outline that now is the time to show leadership, based on a long term vision. And that is most certainly an important element of any solution. But I sense there may be more to it. There are some tectonic plates moving beneath todays politics. And the theory that I'm forming right now, is that most commentators are overlooking the movements of those plates as they are standing on those plates themselves (and incorrectly assume that they're not moving).

My theory is that, due to these slowly moving tectonic plates in the political environment, it might be much harder for todays leaders to exhibit the same leadership as their predecessors. So the solution to the eurocrisis is not just about leadership, but requires an appreciation of those fundamental trends as well.

What are the fundamental trends that now constrain our leaders?
The slowly moving 'tectonic plates' that constrain our leaders are:
1- a long period without war and a fading memory of bad economic circumstances,
2- a growing mastering of technology, leading to a shift in risk-sensitivity and a new control-perspective on the ability to control developments,
3- less religious attitudes, loss of self-discipline and focus on individual welfare,
4- electoral behaviour that is no longer focused on full political vision or ideology but can be seen as short-term shopping behaviour; the contract term of citizen and politicians decreased considerably,
5- the rise of the internet and social media, leading to increased scrutiny by the public, less margin for politicians to implement long term solutions and to oversimplification of complex problems in the public debate.

So what am I saying is: 
1- In Europe, we have forgotten how rich we really are and where we came from. So the financial and geopolitical benefits of Europe (income, peace and peace of mind) are taken for granted. And as we grow older, this individual and collective memory fades more and more.

2- The advancing technology incites a sense of control into the modern human being and people are less inclined to accept the limitations of life; we are used to demand more, get more, expect more, demand more and so on. The succes of technology also provides us with a sense that we can control more than we really can. And it shifts our risk-sensitivity. Risks that in former times were acceptable or considered an act of God, are now subject to preventive and containment measures, with the people seeking a culprit if insufficient measures were taken. Essentially technology makes us become spoilt brats that don't want to bite the sour apple for our health if there is a sweeter alternative around the corner.

3- The increased welfare and growing economy allow for the realization of many wishes. And the traditional religions slowly lose ground to an economic religion in which there is little place for self restraint or group thinking and solidarity.

4- In the political domain, the economization also occurs and voting becomes more an act like shopping than an act like determining which church/religion you wish to belong to. The lifelong committment to ideologies fades away and needs to make place for opportunistic electoral behaviour. In turn, the political parties need to focus more on short term issues and popularity to survive and represent the interest of their electorate.

5- Whereas in former times some leeway in government and politics could be created by controlling and restraining the flow of information, the rise of Internet and social media make it almost impossible to create time/intellectual room for debate/solutions. These media also allow for collective intelligence and feedback which is very much quicker than before. So politicians can no longer design political solutions which do not work in practice or contain design-errors. Similarly they cannot decide or choose open-ended solutions, hoping that some underlying fundamental problem will be solved by time rather than politics.

Thus, in order to solve the Eurocrisis, we don't just need leadership, but also:
- increased awareness about the benefits peace, peace of mind and economic growth that Europe has brought us and brings us,
- the ability to bite through a sour apple rather than postpone solutions,
- the awareness that we're in it together, even if it doesn't feel like that,
- politicians with the leadership to appeal to the publics desire for stability and growth and the fact that only with their prolonged loyalty can the public expect a better long term outcome,
- consistent solutions to the technical, financial and political issues at stake; any backdoor or design error will get back at us within a years time-frame.

See also the Dutch version of this post here.


How political opportunity helps dampen the economy

Today the Dutch Central Bank released its economic monitor. And that monitor warned that the good times are over. We are getting depressed again and growth will slow. See below the first signs of the downturn in dark blue:

It is quite clear to me that this time, it will be hard for politicians to blame the banks or anyone other than themselves. We know from research that bad news on financial markets and stock exchanges is affecting all the people in the public (although in the Netherlands only 1/16th is actually actively holding its own securities). And it is of course not more than fair to say that it is the clumsy and opportunistic behaviour of politicians with respect to budgets and eurocrisis that have significantly contributed to the turmoil in the market, this last half year. Add to this the fact that the politicians chose to also curtail all future economic growth by imposing taxes, buffers, liquidity traps and all that stuff onto banks.

So we are now back in the dried up markets, with depressed consumer outlooks with mainly the politicians to blame. Central banks are heavily overstepping their mandates to try and save the day but still we see no signs of true leadership in the Netherlands, Europe or the US. And somehow I have the impression that it may a take quite some time before our Dutch politicians will truly acknowledge that it was their own opportunistic behaviour that helped spark this crisis and slowdown/downturn.


Fed is moving the wrong way with announcement of longer period for low rates...

The full FOMC statement for August 9 says that “low rates of resource utilization and a subdued outlook for inflation over the medium run” warrant maintaining current rates until “at least” 2013. Although perhaps not surprising, it is not a smart thing to do. So many things can happen, among which feed-forward into an economic system that we do not really grasp. So why outline the policy goal now for such a long time?

My opinion is quite a bit based on the thoughts of Stephen Axelrod, a very senior policy expert of the FED. He explained (in this excellent book of his: Inside the Fed) that he thinks such a pre-announcement policy is not a wise thing to do (p 157).

In general I think it is best all around for officials to avoid commentary about the future of rates they cannot directly control or are unwilling to control - that is, rates other than the funds rate. I also think it is best to avoid commenting on the probable future of rates they do control. In either event, they taint the information being conveyed back to themselves and other market participants by the behavior of rates. Also, and more dangerously, because of misinterpretations and unintended consequences, they risk causing reactions in businesses' and individual's spending and borrowing decisions that make the underlying economic and also financial situation worse rather than better for the economy and its future.

In short, the future is unknowable both to the Fed and to the market. Little seems to be gained, and much can be lost in the terms of the chairman's and the Fed's credibility and policy effectiveness, by getting into the mug's game of exposing policy intentions and wishes that may be both misinterpreted and in the end, as market conditions change, misleading.

So in my opinion Bernanke is heading into very dangerous territory now.


Still amazed at the 'tough' stance of Netherlands Jan Cees de Jager in Greek Crisis

As the readers of this blog know already, here in the Netherlands we have a minority government that has to lean on support of the PVV to survive. With the end result that we have a divided caretaker government that steers on a day-to-day basis, and is unable to steer on long-term policy goals or to achieve fundamental changes.

As a result we see the current government and in particular our Minister of Finance, Jan Cees de Jager, surfing the waves of public sentiment rather than those of solid government. De Jager time and again has to account for the public sentiment and does so in particular with respect to todays political and macro-economic European crisis. He continues to stress that private entities will have to pay along to save Greece. And he says: there will be no more money going to Greece, unless this condition is fulfilled.

Well, this tough policy stance, copied from the Germans, is not bringing us in Europe or the Netherlands anywhere. All it does is prolong the crisis, as we have seen last week in all the market turbulence about Italy and the stress tresting of banks. So perhaps de Jager will slowly retreat. But still we can imagine some more populist talk to enter the European policy arena. Because the populist PVV is still banging the drum that no more money should go to Greece.

It is interesting to analyze the position of de Jager, using some of the insights of former President of the central bank: Nout Wellink. Just two weeks ago, on the day of his departure from the central bank, a book was published with the title 'Wellink talking'. And in it Wellink outlines that at some point in time, bad collateral of banks may result in losses for the ECB and thus also hit the Dutch tax payer. It is telling and striking that only very few people in the Netherlands realize that our 'tough talk' with respect to the Greek situation is just for show. The real costs of this crisis may well end up at the Dutch tax payer via the back door of the ECB.

Although by now I should have gotten used to the 'pragmatic', visionless way in which our government operates, I still remain amazed at the Ostrich policy that our Ministry of Finance uses in dealing with the EU-crisis. If indeed at some point in time the central banks or bankers were to blame for a crisis, now is the time that we can fully blame politicians for not deciding, for bowing towards populists and for a complete lack of leadership.