Dutch is closer related to German than to Frisian. To make things more confusing, East Frisians are the Belgians of Germany (they have East Frisian jokes like the Dutch have jokes about Belgians).
True. Dutch descended from Lower Frankish which itself originated from Old German, alongside Swabian and Bavarian which formed the basis for Hochdeutsch, which together with Allemanic and other lower German languages (but not Lower Frankish, which became Dutch!) became Modern German. However, the existence of Frisian predated Old German and therefore Dutch.
In fact, Frisian is more closely related to English than to either Dutch or German. For example, the Frisian word "foks" means "fox" and pronounced in exactly the same way, while the Dutch equivalent, as you know, would be "vos".
How is the talk about the great european Euro crisis there now? Heard that the dutch were finally becoming aware that they had this little debt bubble also. So I'm wondering how stable are the banks there and how "pro-austerity" is the dutch government likely to remain in the future.
Well, the Netherlands has one of the highest total debt per capita in the world, in part because of the mortgage interest rate deduction, or "hypotheekrente aftrek". In fact, I believe it even excedes the level of debt of Japan and Greece. However, this has never been a problem because Dutch banks are perceived as highly stable, and Dutch government debt is relatively low.
However, there are worries about this arrangement, and the new Rutte II cabinet significantly curtailed the mortgage interest deductions, though doesn't plan to have it completely eliminated it (which is I think insane, as I believe it should be completely eliminated, though apparently only GreenLeft is the only party that agrees with me one this). It is quite popular because it allows legal residents of the Netherlands to cut income taxes in absolute amount by the amount of interest paid for home mortgages. Former Conservative Liberal Frits Bolkestein recently said that the European deficit rate of 3% could be ignored, and several Dutch government bodies such as the CBS (the statistics bureau) said that further cuts could be potentially harmful. So there might some possibility that the Netherlands, despite having Conservative Liberal party in its coalition, may become part of the pro-spending camp alongside France.