French elections are done: socialist Francois Hollande wins with 52% This is the same guy who has promised to: - raise the minimum wage, - cancel scheduled spending cuts, - hire back thousands of government workers - roll back the retirement age from 62 to 60, - increase government spending and he’s going to pay for that by implement massive taxes on corporations and wealthy individuals (quote: 75% tax rate) - raise taxes to financial institutions 15% - implement a financial transaction tax Let’s see where this goes. This might make a good case study one day
It’s not necessarily true that he’d pursue that platform while in power. They can do a total about face once they reach office, eg Lula.
I agree iteracom. I hope that he does impliment all of these things and more. It would be a interesting case study. France could get away with more spending even 15 years ago when debt was only 60% of GDP it now around 80%.
I also follow California with the same interest.
I’m more worried about the effect he’s going to have on the direction of Europe. Sarkozy and Merkel were really united in their approach to solving Europe’s problems. From what I can see, Hollande is going to derail that unity.
You say that as if they were not screwed already.
Politicians usually move closer to the center after they are elected. Hopefully, that will be the case with this guy. If not… well…
Hitler moved much closer to the center after his election.
People always exaggerate the impact of elections. Alternating between the left and right is healthy for a democracy. The supporters of both keep thinking it’s the end of the world when the other side wins.
I kinda think this a positive. The sooner France gets a guy like this the sooner the inevitable collapse or devaluation of the euro is bound to happen.
There is no way Latin countries will accept austerity.
Start spending and start inflating. Let’s get this show on the road.
Well, US market about unchanged. I guess people stopped freaking out? Last night, SPX futures were down like 25 points. I was like Fuuuuuuuuu…
Takes a long time for the effects of a new politician to be felt usually. My portfolio will probably look a lot different by the time Hollande’s policies get enacted.
I wonder if the equity market shouldn’t like Hollande being elected. Spend, Spend, Spend.
The increased spending will probably be positive for the economy in the short term. I don’t see how you could ever hope to improve a GDP to Debt ratio in a recession by removing fiscal stimulus, when there is excess capacity in the economy the money multiplier from stimulus and alternatively contraction, is significantly higher then when the economy is not in a recession.
Though I guess I am a bit of a socialist, I don’t see why all these countries should suffer because banks and investors were stupid enough to invest in them. Greece should just hit the reset button default completely and restart all over again, were ony talking a couple hundred billion dollars thats all backstopped already so there isn’t systemic risk like there was in the United States in 2007-2008
Well, if banks or investors did not lend money to countries like Greece, those countries would not have been able to grow their economies in the first place. They would be “austere” to begin with. A default today would severely impact Greece’s ability to borrow in the future, thus prolonging their period of austerity.
It worked for Russia. That country suffered short term but long term did just fine. Putin owes his success to successfully timing this trend. And if you are a politician this is all you care about.
The problem is, the guy who finally throws in the towel will destroy his party.
I disliked Credit Ag and SocGen before this happened…now they really seem screwed.
It will be fantastically difficult for Greece to borrow if they default, and public order may break down because they can’t pay the police. Of course, that’s kind of the way it is right now too, so maybe it does make sense to default.
What’s clear is that there need to be penalties for Eurozone governments that don’t stay within certain levels of fiscal responsibility, just as there were conditions required to join the eurozone. The problem is that a country is either “in” or “out,” and what is really needed is some kind of “probationary” zone for those who perhaps were in compliance but have fallen out of it (admittedly, it is questionable whether Greece was ever in compliance). I don’t know what that would look like, exactly: I’m not smart enough to figure that out, but that is what’s needed.
It worked for Russia because they have pools of gas and oil to sell to Europe…Greece has hills and unfertile land.
Greece can sell the Parthenon
Thing is it should be more difficult for Greece to borrow money if they default. But, this is a country that’s been in default 50% of the time over the last 90 years! But, bond holders keep getting bailed out, so they don’t mind going back for more.
Didn’t Argentina default twice in the 1990s? Anyone know if they have been severely hurt since?