The Socialist leader Francois Hollande won the first round of French presidential elections and is now the favorite to win the second and final round on May 6th. Polls show him leading Sarkozy by a wide 10% margin (55% vs. 45%).
And if Parisian taxi drivers can be a reliable prediction source, Hollande is definitely going to win (smile)... I was in Paris last weekend and one particular gentleman was a voluble Hollande supporter (oh monsieur, Sarkozy no good pour la peuple, les pauvres, you oonderstaand?).
A Paris...
And if France is not enough, parliamentary elections are being held in Greece on the same day. For the past 40 years the country's two main parties were used to getting a combined 80-85% of the total votes, counting on graft, corruption and paternalism. No more: the crisis has stripped them bare and made their horrible mismanagement apparent to everyone; they will be lucky to get even 40% together. The Greek Parliament may end up representing 8 or even 10 parties, a unique situation in its modern history (4-5 parties is usual).
Depending on the total number of parties that finally make the cut (a minimum 3% is needed for entry), anything from 5 to 7 of them will be either on the extreme left (there is still a Stalinist Communist Party in existence) or the extreme right (a fascist fringe that used to poll 0.2% is now showing up at 5%). Not a happy turn of events, because all of them want Greece to get out of the eurozone, one way or the other.
The point is this: If France and Germany don't see eye to eye on practical matters very soon (say, by June), then the EU will fall apart for want of a cohesive substance more than the hot air constantly emanating from Brussels.
What this may be? A firm commitment to a common fiscal policy. I can't emphasize it enough: a common monetary policy is nonsense without a common fiscal policy. One-legged creatures can't run.
You were in Paris? Too bad! I live in Paris and I was one of your first reader from about February 2007. Which made me very pessimistic and I really believed that the end of the world arrived during August 2007. In fact we are still waiting for it (the end of the world). I would have liked to meet you.
ReplyDeleteArnould
@Arnould
ReplyDeleteI believe when Hellasious mentioned the end of world (if he did) he probably meant it as "an opportunity for a considerable financial gain by taking short positions in pretty much everything." I don't think he literally meant that Earth will cease to exist. With CAC40 still 50% below its 2007 high and dropping, I'd say this worked out as predicted.
On another note, it's hard to imagine a common fiscal policy without a (potent) central government. For example, the federal government in the US was established in 1787, yet the common currency didn't exist until 1913, or 126 years later (not counting a couple of attempts in between). So, Europe very likely got it backwards.
ReplyDeleteI'm pretty darn sure I never ever used the words "end of the world".. :) If I did, it was certainly metaphorically, end/or in pure jest.
ReplyDeleteHaving said that, the "world" as we knew it in 2006 DID end, i.e. free-for-all lending, credit expansion, derivatives rapine, property bubble, etc. are, in fact, OVER.
... and sorry to have missed you Arnould. Next time I'll let you know in advance and we'll share mules et bieres Belges at Leon's ;)
A tout à l'heure,
H.
Why should the voters of Germany vote to fund the corrupt? They won't.
ReplyDeleteThe implication that a common tax rate solves things is bonkers. It doesn't.
The problem is debt, government debt, and its vast. Add in all the debts hidden off the books, and even the UK and German governments are bust.
Your opinion: why does the EUR/USD continue to hold above $1.30?
ReplyDeleteThe cynicism of fiat money defenders here Comments?
ReplyDeleteHells, if you have the time, I'd like to know your opinion of Ron Paul. Thanks.
ReplyDeletecamabron... Can I say something?
ReplyDeleteI'm not a Paul nut, but I do agree with waaaaaaay too much of where he stands.
If he were to win, which the media has practically made impossible, the system would implode.
...which is the only "cure" to our financial ills. The debt we've amassed just can't be paid, and as hell says, you can't fix a debt crisis with more debt... yet that's still the only current game. Extend/pretend... rinse, lather, repeat!
I think Paul is necessary!!!! He gets the implosion going sooner, which starts/resets the game anew.
All the best, Miss America - RH
@ Anonymous @4:59 PM
ReplyDeleteI know the meme, collapse-reset-move on to the new. I've heard all the gangrene, cancer analogies. But I've yet to hear a serious historical example of such, and the happy ending that follows, nor have I ever encountered a compelling philosophical defense. By chance, do you have either to offer.
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ReplyDeleteHello Anon.
ReplyDeleteNo, I nor anybody else has a sample of what the reset would do. This is new. We’ve never had an interconnected world like we do now. The systemic virus is so unique because the new world economy can’t work without a single part disruption.
There is no scenario, I REPEAT, no scenario that I can calculate where the US wouldn’t cascade into EU, then into Asia, then into the Middle East, etc… or EU into US, into Asia, etc… An Asian disruption may do the exact same, but I fear it less for many reasons that I’ve reamed against for years about Asian overstatement that already exists, regardless of their current funding of US/EU deficits.
That political/financial entanglement (politiconomics) garners so many analogies because they ring true. Our economy is a living breathing mechanism. To not see and understand its true life cycle, and to not treat it as such, is the public’s lack of understanding of that system. The butterfly effects of this lifecycle work efficiently to a point, but there were MASSIVE unforeseen variables that came into play that turned infectious. …and those viruses had their butterfly effects and so on.
You can’t create a union, and forget to establish rules! EU…. c’mon man!
How the hellasious do you NOT create a legal system that will honor cross border commitments???
How do you NOT create political mandates that force politicians, policy makers, central bankers, etc… to work within those cross border commitments???
How do you NOT regulate the individual countries, and their financial systems to be asymmetrical?
…and yet, you marry all these countries together through a currency without this?
I am no cheerleader for the US, as I believe our political entanglements have damned us as well, but state to state, the US is in this all together. (the states will not break up)
Where Paul’s will collapse things is quite simple. There is no part of our US economy that isn’t surviving in some way shape or form off of stimulus/QE. Without massive intervention that is 100% driven through the fed, there are no credit markets. Not just a credit market freeze, but there is NO MARKET! …and from a lifecycle standpoint, the credit market is the blood & circulatory system of this analogous life.
If the credit market goes to 0, the stock market goes to 0! The bond market goes to 0. the currency market goes to 0. The ATM literally no longer dispenses cash as banks would have to freeze everything.
As a banker, I’ve watched near/temporary freezes 2 times now, (and in a debt laden system, where technically everyone is so far negative based on a “right now” snapshot of their balance sheet) and when the credit markets freeze, the market freefalls and they do so quickly.
Our financial survival on payments we’ll eventually make in some far off future is the basis that all of the current policymaker’s have bought 100% into, because there is no other option other than collapse. …and once again, the analogies pile up because people don’t understand the symmetry of this economic lifecycle.
QE, stimulus, etc… they are fake boobs on a 90 year old lady. Lipstick on a pig. …but make no mistake… they are unnatural to the lifecycle. The known butterfly effect is that this stimulus will make it’s way to the financial sector, and that financial sector can keep things alive for 1 more day, keep the markets up for 1 more day, keep the cascade from cascading for 1 more day… until…
All the best, Miss America – RH
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ReplyDeleteCompletely agree re: Ron Paul Miss America - RH
ReplyDeleteHarder still it has proved to rule the dragon Money… A whole generation adopted false principles,
ReplyDeleteand went to their graves in the belief they were enriching the country they were impoverishing. ~ Ralph Waldo Emerson
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ReplyDelete