Be Careful What You Wish for, Monsieur Hollande

[Valin]

Via Meadia:

 

Walter Russell Mead

6/13/12

 

Via Meadia extends our heartiest symapthies to French President Francois Hollande on the occasion of his apparent victory in the first round of France’s legislative elections, where the left is well on its way to gaining a clear legislative majority. We also extend our condolences to world leaders ranging from Angela Merkel to Barack Obama; France is about to be come a much scrappier and more difficult partner.

 

The problem is that if the Socialists do win the expected majority of seats in Sunday’s runoff round of elections, the president will be under immense pressure to deliver on his many campaign promises. Without a majority, Hollande could simply shrug and blame the opposition for impeding his desired social agenda. With a majority, he has to govern, and given his platform and the views of his supporters, that isn’t going to be easy.

 

Hollande was elected on the time honored platform of “More!” but his Treasury officials will tell him that what he has to offer is “Less.” With the world’s bond markets in their current nervous state and France’s leading role in Europe almost entirely dependent on the strength of its credit rating, Hollande cannot spend money like a drunken socialist on shore leave; he will have to watch the pennies and cut his costs just like a conservative.

 

(Snip)

[Valin]

WSJ: Gerald O'Driscoll: How the Euro Will End

Greece will simply run out of cash. Then Spain's real-estate bubble will ruin an economy that really matters.

Gerald O'Driscoll JR.

 

The euro is the world's first currency invented out of whole cloth. It is a currency without a country. The European Union is not a federal state, like the United States, but an agglomeration of sovereign states. European countries are plagued by rigidities, including those in labor markets—where language differences and the protection of trades and professions in many countries impede labor mobility. That makes it difficult for their economies to adjust to cyclical and structural economic shifts.

 

For such reasons, when the euro was created in 1999, Milton Friedman famously predicted its demise within a decade. He was wrong about the timing, but he may yet be proven right about the fact.

 

Greece is the epicenter of a currency and fiscal crisis in the euro zone. Markets fear a "Grexit," or Greek exit from the euro. That exit is almost a foregone conclusion. The endgame for the euro will be played out in Spain.

 

(Snip)

 

Wave bye bye to the Blue Social Model.