The world is about to get tongue-tied.
The Dutch finance minister, Jeroen Dijsselbloem, is likely to become the new Euro-zone finance chief, succeeding Luxemburg Prime Minister Jean-Claude Junker. Dijsselbloem has been leading a tough austerity program in the Netherlands, agreed upon shortly after their elections last September. The $20 billion plan will raise the retirement age to 67 over the next 8 years and will cut their budget deficit down to 1.5% of GDP within five years; it’s currently 4.5%.
Because they’re willing to take their medicine, Holland’s $840 billion economy is one of the few AAA countries left in the world. Dijsselbloem is a Labor MP; Prior to his brief posting as his county’s finance chief, he kept a relatively low profile, speaking out on video-game violence and educational issues.
He had better get up to speed quickly on the issues facing Europe and the common currency, though. Spanish banks, Greek riots, Portuguese stagnation, and a looming crisis in Cyprus all threaten the Euro’s very existence. Dijsselbloem is apparently acceptable to the Germans because he comes from a AAA-rated country, and the Socialist Government of France, while not endorsing him, hasn’t raised any serious objections.
But he’s the same age—46—that Tim Geithner was when he took the reins as US Treasury Secretary, and Mr. Geithner’s lack of gravitas has been a problem for him in dealing with the financial and economic challenges the US has faced over the past 6 years. Dijsselbloem’s background in agricultural economics may not help him deal with rogue banks any more than Geithner’s Asian Studies degree helped him.
The Euro-crisis demands strong leadership. Let’s hope Dijsselbloem is up to the challenge.
Douglas R. Tengdin, CFA
Chief Investment Officer