NETHERLANDS – JUST THE FIRST DOMINO?

"If you’re still trying to piece together the events of the last 48 hours this note from Nomura might help.  They describe how the collapse of the government in the Netherlands could put increasing pressure on Germany to abandon support for the periphery.  A negative trend here is not far fetched at all.  If Sarkozy loses his re-election campaign the core will likely see increasing support for those who don’t want to continue bailing out the periphery countries.  I still think Germany will hold the line no matter what the costs, but the risks can’t be ignored as they grow.  Anyhow, here’s the Nomura commentary:

“As we reflected in our 13 April report EU: Now is the second summer of our discontent – Act 2, the PvdA has also signalled that it does not support the eurozone’s fiscal compact, Dutch ratification of which is now, we believe, seriously in jeopardy. Although failure by the Netherlands alone to ratify would not in theory spell the compact’s demise – only 12 out of 17 eurozone members need to ratify for it to come into force – it would at best significantly damage the compact’s credibility and at worst encourage other members to follow suit.

at  http://pragcap.com/netherlands-just-the-first-domino