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EUROPE'S MORNING AFTER
by Thomas Lifson and Rick Moran
American Thinker
http://www.americanthinker.com/blog/2012/05/europes_morning_after.html
May 7 2012
The smoke has nearly cleared after elections in 6 European countries
on Sunday and Monday revealed an angry, fearful electorate who have
tired of the pain brought by austerity measures. In France, Greece,
Germany, Serbia, Italy, and Armenia, voters sent a clear message to
their leaders; let's try something different.
The consensus seems to be in favor of heading straight for the fiscal
cliff, pedal to the metal. Today, financial markets are taking the
measure of the implications, and it is not pretty. Tokyo, the first
major market to open closed down almost 3%. The US stock market opened
lower and oil dropped below $100 bbl - the result of fears that Europe
is not serious about reducing its crushing debt. The democracies
apparently lack the will to honestly face the realities of spending
at levels that cannot be sustained by the taxpaying capacities of
the populace.
France, the most prominent example of the rejection of austerity,
elected a socialist who has promised drastic change, and he has the
intent and the ability carry out such a program. Richard Waghorne of
the Daily Mail
Francois Hollande is a man who means what he says and his rise to
the French presidency comes at a moment when there are exceptionally
few restraints on how far the French Socialist Party may now push
its agenda.
The party already controls many of the branches of French government.
There are few institutional checks not already in the hands of his
allies. In the hands of a resolute politician, the powers of the
French presidency are almost breathtaking in their latitude. Most
fundamentally, he has earned a mandate to do much of what France's
unreconstructed left he longed to do for years.
In view of his promise to tax millionaires at 75%, the wealthy
of France are already making plans to relocate, as French income
taxes stop at the border (unlike American income taxes -- we are the
exception among major nations). Thanks to the EU, French plutocrats
can live anywhere in the union, with no visa.
Hollande also plans on reducing unemployment the old fashioned way --
drastically increasing the number of government workers, thus expanding
the welfare state even beyond the generous cradle to grave cocoon in
which the French state lovingly wraps its citizens. He has made vague
promises that he won't add to the debt to realize his economic goals,
but it is very difficult to see how he can avoid it.
Perhaps the most dangerous change in France will be its relations
with Germany. "Merkozy" - the name given to the close partnership of
German Chancellor Angela Merkel and former French President Nicholas
Sarkozy - is no more. The duo worked closely together to bring the euro
zone through several ticklish crises, and guide the EU to establish
a stronger central bank and agree to a fiscal compact. Hollande is
not likely to see eye to eye with the German Chancellor who believes
that austerity is the only way to re-establish confidence by investors
that european nations will pay back what they owe.
And after closely watched local elections in Germany where Merkel's
center right party was ousted from power, the Chancellor herself has
very little room to maneuver. As the Wall Street Journal points out,
"Ms. Merkel's options for ruling beyond 2013 are narrowing." Merkel
has pledged to continue to push austerity measures on over-indebted
nations like Spain and Italy, but if she is seen as something of a
lame duck, her influence will be lessened.
That influence will be needed in Greece. The Greeks not only
marched over the fiscal cliff by rejecting the bail out coalition
that negotiated the EU/IMF deal to reduce its sovereign debt, they
decided to set the country on fire before they jumped.
Fox News:
Official results showed conservative New Democracy came first
with 18.85 percent and 108 of Parliament's 300 seats. Party leader
Antonis Samaras, who backs Greece's bailout commitments for austerity
but has called for some changes to the bailout plan, will launch
coalition-forming talks later in the day.
"I understand the rage of the people, but our party will not leave
Greece ungoverned," Samaras said after Sunday's vote.
After receiving the mandate to start negotiations from President
Karolos Papoulias, Samaras will have three days to strike a coalition
deal. But that could prove impossible because even with the support
of the only other clearly pro-bailout party elected, Socialist PASOK,
New Democracy would fall two seats short of a governing majority.
If the deadlock does not ease, Greece faces new elections under a
caretaker government in mid-June, about the time it has to detail
new drastic austerity measures worth [email protected] billion ($19 billion)
for 2013-14.
In June, Athens is also due to receive a ~@30 billion ($39.4 billion)
installment of its rescue loans from the other countries in the
17-strong eurozone and the International Monetary Fund.
Analyst Vangelis Agapitos said protracted instability would threaten
the country's eurozone membership. Greece's debt inspectors - the
eurozone, IMF and European Central Bank, collectively known as the
troika - could turn the screws by halting release of the bailout
funds until Athens moves forward with its pledged reforms.
If Greece fails to receive the next segment of bail out money, they
will be in default and will almost certainly have to leave the euro
zone. Some politicians on the far left and right bet that the EU was
bluffing and would give them the cash even if they reneged on the
bail out deal's strict austerity measures. That's the kind of wishful
thinking Greek voters heeded when they went to the polls yesterday.
The local voting in Italy on Monday is showing a public tired of
austerity. Allies of Prime Minister Monti, who has been sidling away
from the austerity camp in recent weeks and begun to sound more
pro-growth in his public statements, are expected to lose ground
in elections affecting about 900 towns in Italy. Pre-election polls
showed a large number of undecideds but lowered support for two of
his major coalition partners.
Monti, a centrist technocrat, was chosen to run the country last year
and save Italy from a Greek-like default. With no popular mandate,
he has gleaned the straw in the wind and is gradually edging away
from making the kind of structural changes that will save Italy
from disaster. He will survive, but the local elections will hardly
strengthen his hand going forward.
In Serbia, the socialists find themselves in the cat bird seat. They
hold the key to any coalition government that is formed and they are
likely to side with those who want to do away with austerity.
Reuters:
The Socialist Party of late strongman Slobodan Milosevic held the
key to power in Serbia on Monday after tied elections in which voters
angry about the country's economic woes roundly punished the ruling
Democratic Party.
The Democrats, part of a reformist bloc that turned Serbia westwards
with Milosevic's ouster in 2000, saw their support crumble to 23
percent from 38 percent in 2008, hurt by an economic downturn that
has left a quarter of the Serbian workforce jobless.
After years of teetering between pro-Western reformers and pro-Russian
nationalists, Sunday's elections for president and parliament were
marked by an unprecedented consensus between the major political
blocs on Serbia's bid to join the European Union.
The right-wing Serbian Progressive Party, led by former
ultranationalists who say they now share the goal of EU accession,
claimed the narrowest of victories in the more-important parliamentary
vote with around 24.7 percent, but was seen struggling for coalition
allies.
The Democrats and the Progressives will fight it out for control of
the presidency, too, when Democrat incumbent Boris Tadic and opposition
leader Tomislav Nikolic go head-to-head in a run-off on May 20.
The Socialists, led by Milosevic's former spokesman Ivica Dacic,
doubled their vote to some 16 percent and emerged as kingmakers.
In tiny Armenia, President Serzh Sarksyan's Republican Party
won a parliamentary election that turned on which side was more
pro-development. Armenia, as an emerging democracy, hasn't suffered
as much from the financial crisis as other nations who have been
brought low by their crushing debt. Sarksyan will seek a coalition
government with his main rival - the Prosperous Armenia Party.
With the exception of Armenia, the elections booted or greatly damaged
incumbent parties who had been pushing austerity as the way out of
Europe's financial mess. Because markets are looking at the future,
many of the consequences of this widespread rejection of reality will
play out before the American election. It is a wild card for Obama. If
Europe goes into crisis because its voters embraced programs like
Obama's, what will American voters conclude? How does Obama spin that?
Read more:
http://www.americanthinker.com/blog/2012/05/europes_morning_after.html#ixzz1uD3rXyEi
From: Baghdasarian
by Thomas Lifson and Rick Moran
American Thinker
http://www.americanthinker.com/blog/2012/05/europes_morning_after.html
May 7 2012
The smoke has nearly cleared after elections in 6 European countries
on Sunday and Monday revealed an angry, fearful electorate who have
tired of the pain brought by austerity measures. In France, Greece,
Germany, Serbia, Italy, and Armenia, voters sent a clear message to
their leaders; let's try something different.
The consensus seems to be in favor of heading straight for the fiscal
cliff, pedal to the metal. Today, financial markets are taking the
measure of the implications, and it is not pretty. Tokyo, the first
major market to open closed down almost 3%. The US stock market opened
lower and oil dropped below $100 bbl - the result of fears that Europe
is not serious about reducing its crushing debt. The democracies
apparently lack the will to honestly face the realities of spending
at levels that cannot be sustained by the taxpaying capacities of
the populace.
France, the most prominent example of the rejection of austerity,
elected a socialist who has promised drastic change, and he has the
intent and the ability carry out such a program. Richard Waghorne of
the Daily Mail
Francois Hollande is a man who means what he says and his rise to
the French presidency comes at a moment when there are exceptionally
few restraints on how far the French Socialist Party may now push
its agenda.
The party already controls many of the branches of French government.
There are few institutional checks not already in the hands of his
allies. In the hands of a resolute politician, the powers of the
French presidency are almost breathtaking in their latitude. Most
fundamentally, he has earned a mandate to do much of what France's
unreconstructed left he longed to do for years.
In view of his promise to tax millionaires at 75%, the wealthy
of France are already making plans to relocate, as French income
taxes stop at the border (unlike American income taxes -- we are the
exception among major nations). Thanks to the EU, French plutocrats
can live anywhere in the union, with no visa.
Hollande also plans on reducing unemployment the old fashioned way --
drastically increasing the number of government workers, thus expanding
the welfare state even beyond the generous cradle to grave cocoon in
which the French state lovingly wraps its citizens. He has made vague
promises that he won't add to the debt to realize his economic goals,
but it is very difficult to see how he can avoid it.
Perhaps the most dangerous change in France will be its relations
with Germany. "Merkozy" - the name given to the close partnership of
German Chancellor Angela Merkel and former French President Nicholas
Sarkozy - is no more. The duo worked closely together to bring the euro
zone through several ticklish crises, and guide the EU to establish
a stronger central bank and agree to a fiscal compact. Hollande is
not likely to see eye to eye with the German Chancellor who believes
that austerity is the only way to re-establish confidence by investors
that european nations will pay back what they owe.
And after closely watched local elections in Germany where Merkel's
center right party was ousted from power, the Chancellor herself has
very little room to maneuver. As the Wall Street Journal points out,
"Ms. Merkel's options for ruling beyond 2013 are narrowing." Merkel
has pledged to continue to push austerity measures on over-indebted
nations like Spain and Italy, but if she is seen as something of a
lame duck, her influence will be lessened.
That influence will be needed in Greece. The Greeks not only
marched over the fiscal cliff by rejecting the bail out coalition
that negotiated the EU/IMF deal to reduce its sovereign debt, they
decided to set the country on fire before they jumped.
Fox News:
Official results showed conservative New Democracy came first
with 18.85 percent and 108 of Parliament's 300 seats. Party leader
Antonis Samaras, who backs Greece's bailout commitments for austerity
but has called for some changes to the bailout plan, will launch
coalition-forming talks later in the day.
"I understand the rage of the people, but our party will not leave
Greece ungoverned," Samaras said after Sunday's vote.
After receiving the mandate to start negotiations from President
Karolos Papoulias, Samaras will have three days to strike a coalition
deal. But that could prove impossible because even with the support
of the only other clearly pro-bailout party elected, Socialist PASOK,
New Democracy would fall two seats short of a governing majority.
If the deadlock does not ease, Greece faces new elections under a
caretaker government in mid-June, about the time it has to detail
new drastic austerity measures worth [email protected] billion ($19 billion)
for 2013-14.
In June, Athens is also due to receive a ~@30 billion ($39.4 billion)
installment of its rescue loans from the other countries in the
17-strong eurozone and the International Monetary Fund.
Analyst Vangelis Agapitos said protracted instability would threaten
the country's eurozone membership. Greece's debt inspectors - the
eurozone, IMF and European Central Bank, collectively known as the
troika - could turn the screws by halting release of the bailout
funds until Athens moves forward with its pledged reforms.
If Greece fails to receive the next segment of bail out money, they
will be in default and will almost certainly have to leave the euro
zone. Some politicians on the far left and right bet that the EU was
bluffing and would give them the cash even if they reneged on the
bail out deal's strict austerity measures. That's the kind of wishful
thinking Greek voters heeded when they went to the polls yesterday.
The local voting in Italy on Monday is showing a public tired of
austerity. Allies of Prime Minister Monti, who has been sidling away
from the austerity camp in recent weeks and begun to sound more
pro-growth in his public statements, are expected to lose ground
in elections affecting about 900 towns in Italy. Pre-election polls
showed a large number of undecideds but lowered support for two of
his major coalition partners.
Monti, a centrist technocrat, was chosen to run the country last year
and save Italy from a Greek-like default. With no popular mandate,
he has gleaned the straw in the wind and is gradually edging away
from making the kind of structural changes that will save Italy
from disaster. He will survive, but the local elections will hardly
strengthen his hand going forward.
In Serbia, the socialists find themselves in the cat bird seat. They
hold the key to any coalition government that is formed and they are
likely to side with those who want to do away with austerity.
Reuters:
The Socialist Party of late strongman Slobodan Milosevic held the
key to power in Serbia on Monday after tied elections in which voters
angry about the country's economic woes roundly punished the ruling
Democratic Party.
The Democrats, part of a reformist bloc that turned Serbia westwards
with Milosevic's ouster in 2000, saw their support crumble to 23
percent from 38 percent in 2008, hurt by an economic downturn that
has left a quarter of the Serbian workforce jobless.
After years of teetering between pro-Western reformers and pro-Russian
nationalists, Sunday's elections for president and parliament were
marked by an unprecedented consensus between the major political
blocs on Serbia's bid to join the European Union.
The right-wing Serbian Progressive Party, led by former
ultranationalists who say they now share the goal of EU accession,
claimed the narrowest of victories in the more-important parliamentary
vote with around 24.7 percent, but was seen struggling for coalition
allies.
The Democrats and the Progressives will fight it out for control of
the presidency, too, when Democrat incumbent Boris Tadic and opposition
leader Tomislav Nikolic go head-to-head in a run-off on May 20.
The Socialists, led by Milosevic's former spokesman Ivica Dacic,
doubled their vote to some 16 percent and emerged as kingmakers.
In tiny Armenia, President Serzh Sarksyan's Republican Party
won a parliamentary election that turned on which side was more
pro-development. Armenia, as an emerging democracy, hasn't suffered
as much from the financial crisis as other nations who have been
brought low by their crushing debt. Sarksyan will seek a coalition
government with his main rival - the Prosperous Armenia Party.
With the exception of Armenia, the elections booted or greatly damaged
incumbent parties who had been pushing austerity as the way out of
Europe's financial mess. Because markets are looking at the future,
many of the consequences of this widespread rejection of reality will
play out before the American election. It is a wild card for Obama. If
Europe goes into crisis because its voters embraced programs like
Obama's, what will American voters conclude? How does Obama spin that?
Read more:
http://www.americanthinker.com/blog/2012/05/europes_morning_after.html#ixzz1uD3rXyEi
From: Baghdasarian