Monday, May 07, 2012

Hollande wins in Paris, loses in Athens

Less votes than Hollande but, more clout?
The important electoral result yesterday is not the one in France (although a lot can be said of Hollande winning by less than all polls were saying).  No, the result that is sending Europe into convulsion (even if no one is ready to quite admit it publicly) is the one in Greece where not only a bona fide truly Nazi party made it to Parliament (next to Golden Dawn Marine Le Pen is your garden variety democratic right wing), but the parties that refuse to abide by European conditions to the rescue of Greece got at the very least 60% of the vote and enough in Parliament to block a grand coalition between Pasok and NeoDemocracia.  Not that the expected grand coalition, forced upon the Greeks, had much hope of success in the best of cases.

In Greece the runner up is a certain radical leftist party, Syriza, which sounds awfully a lot like the left of Melenchon in France, except that its leader Alexis Tsipras is better looking and that there is also an historical communist party that also run and got seats whereas in France the communist party hid in the skirts of Melenchon.  Syriza seems to hold the keys to any deal in Greece which is a problem since it does not seem to want to make any deal. (1)

There is the real possibility that Europe will have to decide if it wants to bail out once again Greece, and this time for nearly free, or accept the sad fact that the Euro is not for all and that Greece should go bankrupt and back to the Drachma. 

For Hollande this is very bad.  For the legislative elections of next month the temptation is going to be terribly strong for the Melenchon group to pull out a Syriza on him.  And even if Hollande were to survive such a blackmail, he may have to chose between fulfilling his electoral promises or use the hoped for cash for his promises to save the Euro and pay yet more money for Greece.

At least last night conciliatory tone of Hollande, in rather stark contrast to the euphoria of his followers who have no idea what may be going their way, shows that the guy is aware that his victory of last night is no prize.

1) Syriza seems to have penty of ex-commies in its fold anyway, starting with dear Alexis himself.


  1. I actually did found something about this

    Hollande's supporters are acting as if they were already saved. Things in Europe are turning more interesting by the minute. And not in a good way.

  2. Charly11:06 AM

    And today, Merkel told Hollande what the game in town is all about. That leaves him very little room to manouver. I read yesterday in the French press that he inherited the worst job in France. Indeed!

  3. Here you have one guy talking about the mainstream media, those who are not patriots and so on.

    I have been saying this for over a year: Greece should be taken out of the eurozone.
    Domino effect? I do not think so...if we do it now.

  4. Dr. Faustus12:09 PM

    France has sunk to the lowest form of democracy: People voting for politicians who promise to give them something in return. So, another socialist, Hollande, was elected President of France. What's he gonna do? There's no more money left to spend. The French economy is anemic, French taxation rates are the highest they've ever been, the unemployment rate is staggering,...thus requiring enormous additional fees from the state, and the really wealthy of France are quietly, and quickly, transferring their liquid assets to other countries. That's all plain to see. So, like, what's Hollande gonna do? Nothing! Being a socialist he will quickly discover that there's no more money to distribute. How silly of the French to elect this clown.

  5. Charly1:08 PM

    Dr Faustus, here is some heavy weight who disagrees with you, not that I support him mind you, I much prefer the Austrian School.

  6. DAX and DOW ticking tepidly into positive territory, the digestive issues over the Fr. presidency nearly over, and the Greek basket case having been factored in, long before today. Or so I think.

    1. The advantage to lead in polls for so long: they had plenty of time to factor it in. Besides, by getting less than 52% Hollande looks less scary and maybe even out of a parliamentary majority.

  7. Anonymous2:30 PM

    Low interest rates and high taxes. The only thing left for the French to do is money printing and distribution. I think a German invented the printing press, but they are unlikely to agree to quantitative easing at this time, just for the benefit of some French socialists. Unless the socialists win in Germany again, in which case I'll consider moving back to Venezuela. You coming, Kepler?


  8. They could try "Misiones" Mision Foie Gras, Mision Chablis, Mision Baguette.

    1. I am sure that high ranking chavistas are already members of said "misiones".

  9. Dr. Faustus5:01 PM

    Paul Krugman? Isn't he the guy Hugo goes to for advice on how to run the Venezuelan economy, or it would seem that way. It would explain a lot,....a lot. Krugman? A thoroughly discredited economist, and that's putting it mildly.

    1. I am afraid that Krugman's discredit is rather wishful thinking.

    2. Manuel5:52 PM

      Krugman is very discredited in the economic profession right now, at least in the academia. The guy definitely has some hidden agenda and is often intellectually dishonest. Unfortunately, his Nobel prize bought him some credit to push his very dubious agenda.

  10. Germany applied modest austerity some years ago because they saw what was coming if they kept on spending and now they have the strongest economy in Europe.Now they are requiring the problem economies to apply austerity as part of a deal to get more German bail out loans.Obviously the Germans believe that it worked for them and it can work for the problem economies that they are bailing out.If this were not so , Germany would be throwing good money after bad.


  11. Austerity makes no sense when there is insufficient economic activity to produce taxes which will pay off debt. Once the economy is back at full strength, and growing, the debt can be paid off relatively easily, as thhere is a much larger taxable base. This is basic Keynesianism.

    Austerity has failed in Britain, while Krugman's predictions have come true in the US. He is not alone among economists, and, given his results, is less "discredited" than the austerity group in the OECD, whose policy has failed.

  12. Juan Cristóbal10:16 PM

    Angela Merkel has apparently said Nein! to any change in the austerity policies. Someone in her government was quoted in the Huffington Post as saying "Germans cannot be expected to pay for French electoral promises." Ouch!

    1. Anonymous3:41 AM

      In particular the promise to lower the retirement age for public employees from 62 to 60, while Germans retire at 65. Think about it: would you like to work for an additional 5 years to help the poor French teachers and government office workers retire at 60? It is not what Merkel said: it is what the German workers/voters are prepared to tolerate. In terms of growth, the debate is between implementing structural changes (the antidote to a Chavez employment law), and a socialist-type spending plan using someone else's money.

    2. Retirement age in Norway, as far as I know, is 67...and Norway is definitely more to the left of France. I think this is not purely about socialism versus capitalism.

      It is about populism. We had this under this term already with the Gracchus brothers...but then we probably had it from much earlier on. Of course, there can be an ethnic cultural aspect on this..."quiero fer una prosa en roman non so tan letrado por fer otro latino,
      bien valdrá,commo creo, un vaso de bon vino."

  13. Jeffry house,

    I find it interesting that it is often the ones who are asking for loans or who are sitting on the side lines who consider it counterproductive to apply austerity.

    The ones who are actually doing the lending like Germany are requiring austerity .Don't you think they want to be sure they get their money back?

  14. Dr. Faustus10:43 AM

    Sir JeffryHouse wrote:

    "Austerity has failed in Britain, while Krugman's predictions have come true in the US."

    Krugman's predictions? He was the guy chiefly responsible for the economic justification of the so-called 'stimulus' plan of 2009 in the US Congress! Krugman! His only argument against it was that it should have been much, much more. Trillions of dollars of new debt and absolutely nothing to show for it. Unbelievable. By the way, there was an excellent book on the fallacy of Keynsian economics by a writer from the Wall Street Journal which came out around the time when the 2009 stimulus plan was being first proposed. It dealt with the misconception of the then stimulus programs instituted by FDR during the Great Depression. The book goes into great detail as to why Roosevelt's 'stimulus' plans failed,....utterly.

    This is a great topic because the French socialists are going to try their own version of a 'stimulus plan' in the coming months. It will be fascinating to watch. Any bets on their success?

    1. Faustus

      First, the "sir" to jeffry was unecessary. I reads as if you meant it derogatorily.

      Second, Keynes wrote almost a century ago and the economy has changed. His recipes are certainly not valid anymore today , but his ideas cannot be discarded outright and simply need revision and adaptation to the new type of world economics before they can be rejected outright.

      What I am trying to say in case it is not clear, is that things change and no one who wrote half a century ago can be qualified as "discredited". You can only be discredited if you are alive (chavismo is already amply discredited, to give you an example). If you are dead then your ideas are "outdated", "passé", etc ..., or some more suitable adjective.

  15. Dr. Faustus12:47 PM

    First, In no way did I mean to be 'derogatory' when using the term 'sir' to Jeffrey House. It is simply used as a quaint term of showing respect.

    Second, it would seem to me that the upheaval in France would be an excellent opportunity to discuss 'discredited' economic theories. After all, Hugo Chavez is the perfect example of a man plunging his country into one of the most discredited theories of the 20th century, socialism/communism. Price controls? Confiscation of private property? Supposed redistribution of wealth? All of these have been applied, and failed, to numerous countries in the early 20th century. Lenin's/Stalin's Russia. Mao's China. To some extent, Hitler's Germany. All discredited.

    Amity Shlaes in her book 'The Forgotten Man,' discredits the theories of John Maynard Keynes. Keynes was at the time one of the most powerful economists of the 20th century. Roosevelt, using Keynes as his model, instituted a vast array of US government spending programs to get the economy out of its deep recession. The idea here being simple, "If we spend a little money on government programs, thus getting a lot of people new jobs and some dignity, we can worry about the debt created sometime in the future, at which time we all be dead anyway." According to Shlaes however, what really brought the US out of the recession was World War II, not FDR's spending program. The spending, according to her, actually made the recession deeper and longer. It's an important point. Many world economies, including ours, face the same dilemma today. Can we spend our way to prosperity? Hugo Chavez believes it, and his ideas on the matter are an offshoot of the discredited economic theories of Keynes. The solution to these problems are no different today than they were in the 1930's. Things haven't 'changed' that much.

    Krugman is a disciple of Keynes. His belief in the core principles of Keynsian economics are unquestioned. There can be no greater proof of his discredited economic theory than the staggering amount of debt created over the past 3 years. It was his idea to begin with. It's that simple.

    Sorry for being verbose. I love your blog!


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