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May 06, 2012

Sarkozy loss in election in France means a shift to less Austerity and more Stimulus in Debt Crisis

Bloomberg - Sarkozy lost to Socialist Francois Hollande, who got 52 percent of the vote against 48 percent, five polling estimates showed. Sarkozy becomes the second French president to lose a re-election bid since World War II after former President Valery Giscard d’Estaing was vanquished in 1981. France has a 12-year high in unemployment and public debt at a record.

Time - Germany has consistently been the strongest advocate of restructuring and austerity as the key to solving Europe’s financial problems. But one by one, Germany’s economic allies are running into political resistance to those policies. The collapse of the Dutch government has made it difficult for that country to meet its budget targets. And in France, Socialist Fran├žois Hollande has won the presidential election. He has been calling for more progrowth policies, which has provoked consternation in Germany. But the balance in Europe has shifted, and Germany may have no choice but to go along with more spending — and more borrowing — by national governments. In the short run, that would help Europe’s economies by reducing unemployment and limiting the severity of any recessions. But additional borrowing will also contribute to the debt load that governments have to carry.






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