The dutch have egg on their face as they follow spain breaking the weeks old fiscal compact .....So when does the Troika fly into the Netherlands , Greece and Spain must be wondering ?

http://www.telegraph.co.uk/finance/financialcrisis/9156277/Europes-fiscal-pact-in-disarray-as-even-Dutch-break-the-rules.html

The Netherlands Bureau for Economic Policy Analysis (CPB) said the country's budget deficit could increase to 4.6pc of GDP during this year and next year - a level that far exceeds the 3pc ratio that 25 European Union countries pledged to meet by next year.

In a report that will embarrass the Dutch government but delight Club Med countries, the CPB said: "The Netherlands is confronted with the same problems as Italy and Spain."

The Dutch government will have to introduce a raft of austerity cuts in order to meet the targets, the state think-thank said. Last year the Dutch prime minister, Mark Rutte, and finance minister, Jan Kees de Jager, called for countries that break fiscal rules to be expelled from the eurozone. In a joint article in September the pair said: "An agreement is an agreement. From now on we must prevent countries from violating the rules with impunity." They added: "In the future, the ultimate sanction can be to force countries to leave the euro."

The threat of the Netherlands breaking the "non-negotiable" fiscal pact will alarm European leaders. Angela Merkel, the German Chancellor said it would "last forever." But leaders have already had to agree to soften Spain's budget targets for 2012.

Tim Geithner, the US Treasury Secretary, warned against slavishly enforcing targets. "If every time economic growth disappoints governments are forced to cut spending or raise taxes immediately to make up for the impact of weaker growth on deficits, this would risk a self-reinforcing negative spiral of growth-killing austerity," he told a Washington committee today.

Jens Weidmann, head of the Bundesbank, said the crisis had "laid bare serious gaps in our understanding of financial markets." He added the grasp leaders now had was "still limited and lacking in a number of policy-relevant fields."

Meanwhile Greece received the first €7.5bn (£6.3bn) tranche of aid from its new bailout, just in time to repay the €14.5bn bond that threatened to trigger a Greek default. In Italy Mario Monti met with trade union bosses in a bid to push ahead with ambitious reforms. Christine Lagarde, head of the International Monetary Fund, said the global economy was "further away from the financial abyss than we were three months ago" but warned that financial institutions - the "high contagion agents for this crisis" - still needed reform.

and.......

It's not funny when even the Dutch can't meet the austerity targets

How southern Europe must be laughing. Of all the European “hardliners” who have demanded austerity from the “sinner states” few have been as rabid as the Dutch.

Jan Kees de Jager, the Dutch finance minister, was among those who rejected calls for leniency from eurozone countries saddled with harsh austerity measures. Photo: AP

By Louise Armitstead

6:34PM GMT 20 Mar 2012

25 Comments

Just a few weeks ago officials from Madrid begged in Brussels for their fiscal targets to be relaxed - they said the current ones were “suicidal” for Spain. Jan Kees de Jager, the Dutch finance minister, was among them who demanded the answer to be “neit”.

So now - fiesta, forever, all night long - today the Netherlands Bureau for Economic Policy Analysis (CPB) said the country’s budget deficit could increase to 4.6pc of GDP during 2013 and 2014. The level drives a coach and horses through the fiscal pact which is less than three weeks old.

Even better, there’s no need for a glacial set of summits to decide what to do: helpfully the Dutch prime minister and finance minister have already laid out their own punishment. In September they wrote detailed article for the FT entitled “Expulsion from the eurozone has to be the final penalty”. In the 700 word piece, which they must now be regretting almost more than the deficit, they argued that the “main cause of the current problems is that some countries played fast and loose with the very rules designed to guarantee budgetary discipline.”

The solution? The pair say the offending country must be forced follow strict steps, each one surrendering increasing power to a new European Commissioner for Budget Discipline. The steps get more onerous: pretty early on, "sanctions can also be imposed” like extra payments to the EU budget. The "final stage" is handing the Commissioner will have powers of “preventive supervision” including control over the budget “before it can be presented to parliament." And if this sounds too ghastly, there's step four: “Countries that do not want to submit to this regime can choose to leave the eurozone.”

So that’s pretty clear. But while the Dutch get on with handing over their sovereignty to a turbo-technocrat, what does it mean for everyone else?

The Germans would call it Schaudenfraude. Except the joke could easily be turned on them too. Three weeks ago, Der Spiegel revealed that Germany - the architect of the tough strategy - failed to reached its own austerity goals in 2011.

Even so, Germany and the Netherlands are applauding while countries,like Italy, that are already in dire economic straits, forge ahead with cuts and reforms that would be borderline dangerous in the middle of a boom.

Today in Washington Tim Geithner, the US Treasury Secretary, said: “If every time economic growth disappoints governments are forced to cut spending or raise taxes immediately to make up for the impact of weaker growth on deficits, this would risk a self-reinforcing negative spiral of growth-killing austerity."

Geithner has been roundly berated in Brussels so far, but he’s right this time. Europe’s leaders have become obsessed with setting targets and punishments rather than solving the crisis. Quite how far removed they are from both economic reality and possibility is now becoming clear: they can't even meet the hurdles themselves.

Surely it’s time for European countries to stop seeing each other as "hardliners" and "sinners" and admit that the fiscal pact and austerity programme is all wrong. Now that would be worth a chuckle.