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Dutch Bankers Cashing in on American Debt Crisis

Robert Ottone
Nov 06, 2013

Back in 2009, during the bailout of ING, the Dutch decided to hold onto their investment in American securities. As reported by Bloomberg, that decision has seemingly paid off, resulting in $1.1 billion in interest accrued on their investment. The nation is now planning to unload all $12 billion of their assets, all connected to at-risk borrowers. The government is set to see a gain of almost 800 million euros, according to Financial Minister Jeroen Dijsselbloem. The sale of the stocks still require European Union approval, but the sale is targeted to go through within the next year. The Dutch government will be relying on BlackRock Inc., a company that provides diversified management services and investors. “Timing is everything,” said AllianceBernstein LP head of securitized assets Michael Canter to Bloomberg. “If they try to sell when there’s not a lot of liquidity out there, it could be a really bad thing. But if the markets are in a good place, it definitely could be absorbed without a hitch.” The Dutch were initially sold the securities at a discount while also providing the government a loan. Prices have since gained in 2013, making the decision by the Dutch bank a smart one. The Dutch government is looking to provide a return to taxpayers after providing more than 95 billion euros to rescue companies like ING, ABN AMRO Group NV and SNS Reaal NV. “If ING will now pay back the remaining capital it will be fully government-free,” said Cor Kluis, a Netherlands-based analyst. Foreign entities currently hold around $4.5 trillion of the United States’ debt. The primary holders of American securities include the central banks of China, Japan, Brazil, Taiwan, the United Kingdom, Switzerland and Russia. China holds 26 percent of all foreign-held U. S. Treasury securities, which amounts to a total of around eight percent of all U.S. debt. While this might be distressing to some, American economist Paul Krugman stated that “America is matched by 89 cents’ worth of U.S. claims on foreigners. And because foreigners tend to put their U. S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors.”
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