So far the effects of the American mortgage crisis and subsequent credit crunch seemed to have barely hit the Netherlands, but with this part nationalisation it seems we too are no longer immune to it. The big question is whether Fortis is just the first to fail, or whether like the UK or America, we'll see the whole financial sector collapse like a house of cards. There are other banks who, like Fortis, had to write off investments in the American mortgage markets this year and last, but none of these losses, including those of Fortis are big enough on their own to bring down any of the big banks. What made Fortis vulnerable was much simpler: a decision to get involved in a long and expensive hostile takeover at the exact moment that it became clear just how much of a disaster the US mortgage situation really was. This meant that Fortis had to find billions of euros it didn't have itself to pay for its share of ABN AMro at a time when nobody was willing or able to lend it to them as cashw as tied up in the every increasing death spiral of the US mortgages.
While it's fun to gloat about how quickly dyed in the wool capitalists are converted to "socialism" when it's their ass on the line, this isn't the kind of socialism that actually benefits the workers themselves. What's more, with the current plan the government doesn't even get a controlling stake in Fortis, so has little to show for its generous investment. And generous it certainly is to pump four billion euros into a doddering company when plans to provide e.g. daycare for everybody founder on millions rather than billions. It puts the lie to the oft heard argument that "we just can't afford" higher social benefits, or improved healthcare, or anything else that would actually improve the lives of ordinary people. Especially when you see how much money Fortis has wasted chasing after ABN Amro...
Wednesday, October 1, 2008
MARTIN WISSE Credit crunch hits Holland