In France the Socialist candidate Francois Hollande has defeated incumbent Nicolas Sarkozy to become the first Socialist President of France since 1995. This will give him the power to name the new Prime Minister of France, though no clear front runner has yet emerged.

But the victory for the left may not be as much as they had hoped. For one thing there is a debate as to just how liberal Hollande is, or how liberally he will govern.

In addition, the French Parliament is still controlled by the conservatives and with elections set for June it is entirely possible that this condition will remain, meaning Hollande and his PM will have to work with the opposition. As I see it this could actually be a good thing, insuring that neither side of the debate has too much influence.

One major issue will be the degree to which France implements austerity measures to reduce spending. On paper Hollande has suggested that he would at least resist such measures and that he would prefer tax increases. But the fiscal realities could make that a pretty tough promise to keep.

This issue also will have an inpact on the overall European economic reform programs. Both Germany and Britain have express concern over the issue and there are questions of how well Hollande can work with Merkel and Cameron, though it seems likely that in time working relationships will evolve. Indeed it is often the case that left/right partnerships are easier that left/left or right/right.

In Greece the situation appears to be a victory for continued chaos as the two major parties, normally used to winning about 40% of the vote each, are unlikely to reach that amount combined. A number of harder left parties, running on a keep the spending platform, have done well but so has a hard right quasi Nazi party.

It does seem at this point that the current coaltion of mainstream conservative and socialist parties will be able to reform a temporary government but the odds are for another election this summer, with continued instability until then.

Later returns now suggest that the two leading parties may not be able to form a government on their own, and since the other parties are pretty much anti austerity the formation of a government could be difficult, though not impossible.

On the topic of austerity cuts I do understand that the people of Greece don’t want to have cuts, they want to continue to retire at 50, have generous vacation benefits, etc. Indeed who wouldn’t want such things for free. But the reality is those programs are no longer affordable.

In both cases, the elections are likely to cast doubts on the future of the European economies and thus have a probable negative impact on the US economy, which could have an impact on our own elections.

Whatever happens it’s gonna be a bumpy ride.