Merkel sleepless over Hollande
Germany’s Angela Merkel will sleep less easy tonight because the French people have confirmed their opposition to her austerity programs for all Europeans except Germans by electing Francois Hollande as their new President.
Tom Janssen, The Netherlands
Socialist Hollande won the Presidency after a hard battle with Nicholas Sarkozy, who was so close to Merkel that journalists lampooned the duo as “Merkozy”. Holland can offer no such velvet hand to Merkel because he was elected on a platform of renegotiating a Europe-wide economic management plan that German officials say is not negotiable in any strand.
He was also elected on a platform of protectionism in foreign trade and early withdrawal of French troops from Afghanistan regardless of President Barack Obama’s intentions. His platform includes less deference to the NATO alliance, which, to US delight, Sarkozy supported whole-heartedly after decades of French coolness. These electoral commitments are sure to draw fire from the White House but Hollande has bound himself so tightly that he cannot water them down any time soon. That would be read as betrayal, especially as the French gave him a clear victory with an estimated 51.8 percent of the vote.
In recent years, Merkel has emerged as the new Iron Lady of Europe because she has succeeding in placing German interests above all others after the 2008 financial collapse in the US and the euro debt crisis in Europe. Both shocks occurred because of imprudent lending by banks, followed by their attempts to disguise greedy recklessness with financial instruments so murky that even experts could not decipher them. Some of the banks were vital to the national and international financial systems and could not be allowed to fail. So they received massive tax payer bailouts combined with ultra-cheap credits from the Federal Reserve and the European Central Bank.
Big German banks were particularly badly hit by their careless over-lending to European governments and to governments of provinces in Europe. The political risks to Merkel of bank collapses in Germany were so great that she fought fiercely to make indebted governments, including Greece, Ireland, Spain, Italy and Portugal, apply ruthless austerity plans. To be fair, she also tried to force most banks to take haircuts but German banks got off lightly.
Sarkozy fought Merkel at first but soon caved in exchange for less German pressure for an austerity plan in France. But he managed to make Merkel bend enough to recognize that the euro must be defended to avoid a collapse in credibility that could cause a run on some of the bigger banks.
Hollande understands the economic imperatives but has risen to power on a promise of more social justice and less austerity. He has pledged to add economic growth plans to the austerity plans to prevent shrinkage in French growth. Minutes after his victory he was being criticized for having mislead voters into believing that austerity plans and economic growth plans are not contradictory.
Even before he arrived at the Bastille in Paris to deliver his victory speech, all parties announced the start of their campaigns for the June Parliamentary elections. The far right National Front of Marine le Pen, which brought Sarkozy down by splitting the right, says it wants to convert future elections into a contest between the left, led by Hollande’s Socialists and the right, led by le Pen.
This is a traditional conservative’s nightmare because the electoral space held by Gaullism and its successors, including Sarkozy’s UMP, will be usurped by the far right. Much depends on what Hollande does in Berlin and the US later this month. Any sign of weakness under pressure from the Merkel and Obama will make Hollande look still more like Flanby, the soft jelly pudding used to describe him during the Presidential campaign. He cannot afford that before the Parliamentary elections.
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This article can only make one laugh. Obviously the real losers in all this are the Mitt Romney’s of the world. It is time to begin taxing the rich and putting working people first. Oh right that is the capitalist and Republican nightmare.
Say good bye to Merkel next year because her party suffered defeat in local German elections as Sarkozy was losing in France.
Obama will soon have more solid support in Europe.
Wesleypresley..In the long run, no one knows who the real losers will be. One can only hope that no one loses.
In the short run, investors in 401 and 403 retirement funds are going to be the losers. Future market for the dow is down 140 points, meaning the stock market could take significant loss, meaning all the government and private pension funds that are underwater in their actuarial reports will be even further underwater. And since the government insures pension funds through the PBGC, anther bailout could be required if they remain that underfunded.
Merkel has done more to shift her country and the economies of Europe to the right than any modern German leader. She is Bush II’s buddy in ideology and mind, including her lack of smarts. World wide there has been a dangerous shift Rightward and the recession is only one scary result of it. it seems that politicians around the globe are finally being called on it. Hollande’s victory is Merkel’s political death nell, and hopefully Romney and Cameron will follow
Not surprised Sarkozy went down. What did he accomplish? Nothing that inspired confidence.