More than a decade ago, the Dutch central bank recognized the dangers of this euphoria, but its warnings went unheeded. Only last year did the new government, under conservative-liberal Prime Minister Mark Rutte, amend the generous tax loopholes, which gradually began to expire in January. But now it's almost too late. No nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books.

Consumer debt amounts to about 250 percent of available income. By comparison, in 2011 even the Spaniards only reached a debt ratio of 125 percent.

The Netherlands is still one of the most competitive countries in the European Union, but now that the real estate bubble has burst, it threatens to take down the entire economy with it. Unemployment is on the rise, consumption is down and growth has come to a standstill. Despite tough austerity measures , this year the government in The Hague will violate the EU deficit criterion, which forbid new borrowing of more than 3 percent of gross domestic product (GDP).

It's a heavy burden, especially for Dutch Finance Minister Jeroen Dijsselbloem, who is also the new head of the Euro Group, and now finds himself in the unexpected role of being both a watchdog for the monetary union and a crisis candidate .

Eoin Treacy's view The Netherlands and the UK have long had close ties. The two largest constituents on the Amsterdam Exchange Index (AEX), Unilever & Royal Dutch Shell, are dual listed in the UK. Both markets play host to a number of Autonomies and are noted for the global orientation of their respective stock markets Another common characteristic is that high personal debt ratios are evident in both countries. However while the UK has relied on a weak Pound to improve competitiveness, the Dutch are reliant on the Euro and fiscal consolidation.

The removal of tax loopholes for the housing market and rising unemployment will represent a significant headwind for the consumer sector. From a liquidity standpoint, the fact that the Netherlands is experiencing difficulty increases the potential for the ECB to extend its monetary easing policies.

While the Netherlands' government bond yields are not signalling capital flight at present, the spread over German Bunds which had previously moved in lock step has widened over the last couple of weeks to approximately 50 basis points. A sustained move above 2% in nominal terms or 80 basis points on the spread would suggest supply dominance beyond the short term.

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