Okay, now this is just ridiculous. Holland finds itself in a political crisis. Mark Rutte’s government finds itself having to resign. The edifice of this solid state’s government collapses. Why?

Well, because of The Frau and her mindless obsession. Which was taken up with a vengeance by the Dutch Minister of Finances. He was rude and overbearing and wagged his finger at horrible miscreants, Greece in particular who had to apply more and more austerity if it wanted to be bailed out by the rest! (“Bailed out”, of course, being a euphemism for having money to the banks cycled through Greece, oh and of course paid for by insolvent Greece through high interest rates.)

And now, Holland finds itself unwilling (and rightly so) to affect slashing cuts merely in order to achieve a deficit of 3% by the end of the year rather than 4.5%. We’ve heard of fiscal discipline, but this is ridiculous!

Now The Markets are threatening to slash one of Holland’s three As off if it doesn’t take austerity measures to achieve this deficit rate. Why? Has everybody gone totally mad in this world? Or is The Frau’s obsessive idea of fiscal discipline being the answer to everything contagious?

Small digression. Since The Frau grew up in East Germany, she was raised on the notion that there is only one answer to everything. Marx! Of course it wasn’t even Marx really, but The Party’s diktat of what that meant. So here was a system where there was one answer to every question, The Party’s undisputed decision of what Marx meant. So perhaps it should come as no surprise that that is how The Frau is continuing to think. (If she does do that at all.)

Digression over and back to The Markets and Holland. First of all the 3% deficit target is an entirely arbitrary figure laid down by The Frau (and agreed of course by the Dutch government who erroneously thought this was for the bad guys of the club and not themselves.) This figure means nothing and has no relation to anything. Why 3% and not 2%? Or even 5%? Can anyone tell us?

Secondly, the Dutch economy is strong, with low unemployment, exports and, yes LOW deficits. Should the Dutch government proceed with stringent austerity cuts now to achieve the totem 3% what will it achieve? Well, quite simply, it will start ruining its economy which at the moment is functioning very well. The economy will slow down, GDP will shrink, unemployment will rise and so on. In other words, The Markets are threatening to lower Holland’s ratings if it DOESN’T take measures to ruin its economy?

This is rather a disservice to investors I would think. Holland decides to jump on the stringent austerity band wagon and The Markets do not reduce Holland’s rating so buyers flock to Dutch bonds. But this policy inevitably leads to economic stagnation in Holland so bond holders feel, hey, this doesn’t look good! And start selling off to minimise their losses and the interest rate goes up and, before you know it the Dutch start screaming “We will not become another Greece!!!” But they will, of course if they stick to the stringent austerity. And for no reason!

Now if the Dutch say, Hang The Frau’s obsession and hang fiscal discipline the way she wants it and we will keep our economy going as its is and concentrate on growth rather than austerity, then The Markets will pull away one of its A’s. Initially interest rates will go up on Dutch debt as investors become wary of buying Dutch bonds.

However, a little down the line when the Dutch economy is doing well and growing, investors will start wanting to buy safe and solid Dutch bonds more and more! So what the hell are The Markets playing at?