ELECTIONS OF THE EUROZONE
By: Hope Wilkos, Writer/Blogger Photographer: George Whylie Videographer: Maxine NolanThis weekend was a big election time in both France and Greece.
The French election has just taken place and by a small margin, the new leader is Socialist Francois Hollande who comes into power on May 15th. First on the agenda will be appointing his government and his cabinet. Some of the other items that will take top priority will be participating in commemoration on Tuesday for V-E Day which marks the end of the war in Europe. From there it is off to Germany to meet with Chancellor Angela Merkel. He will be making his way to the United States as well. His campaign vehemently opposes austerity.
Some of the refreshing promises include a reverse course on government budget cuts, creation of more jobs and bringing the retirement age for some from 62 to 60 years of age. He has agreed to reduce spending and raise taxes on the rich and larger businesses. He also has given the French people hope that the French combat troops will pull out of Afghanistan by year end with the close cooperation of NATO Allies.
In Greece where financial turmoil ensues, a whole new set of leaders will enter into office. It is the rise of the smaller Greek political parties to the left and right of incumbents. With the change of power it is feared that the country could slide deeper into debt. A new election may come as soon as next month. These smaller parties are intending to renegotiate conditions for the bailout package for Greece.
Germany is not very happy with this change in leadership in the two countries. Anastasios Papakostas, chief economist at K&P Invest, a Frankfort-based consultant firm, is quoted as saying, “We have just experienced a massive shift to the left in European politics, that means re-negotiating the deals and agreements which were meant to solve the eurozone debt crisis.”
The governing coalition has now appeared to lose its ruling majority in the state of Schleswig-Holstein.
Chancellor Merkel is expected to warn the new French President that weakening austerity pledges would threaten the Euro markets and certainly undermine investor confidence at a most critical time for the Euro zone’s economy. She is holding steadfastly in her decisions. Perhaps that is why she is called ‘Iron Chancellor’.
Unfortunately, the financial markets are reacting strongly to these changes. Stoxx Europe 600 Index fell by 0.5% and Standard and Poor’s 500 Index futures fell by 0.9%. The Euro dropped to a 3-month low of $1.3006. The French economy is in danger since most of its debt is due to foreign investors. Hollande will need to think out his next moves very carefully as will Greece which is teetering on financial uncertainty at the current time.
PHOTO CREDITS: A/P and Getty Images
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