Monday, May 7, 2012
Things are even more uncertain than usual in Europe after Socialist Party candidate Francois Hollande defeated incumbent Nicolas Sarkozy in the French presidential election on Sunday. Hollande ran on an anti-austerity platform and is seen as a leader in the growing backlash toward German-led efforts to contain Europe's debt problems. Adding even more instability is the fact that Greece's Sunday election did not produce a sufficient majority to form a new government, so if a coalition isn't formed soon, Greece could be led by a caretaker technocrat government just as new bailout austerity measures are about to kick in. This could lead to Greece's default and exit from the Eurozone or perhaps a collapse of the Eurozone itself. With austerity becoming an increasingly dirty word, many believe that growth is the only way out of the crisis. Of course the fact that many of these countries are buried in mountains of debt and have had their credit downgraded makes lending difficult, thus making the idea of growth pretty tricky, too. It's hard to say how all this will play out and how it will impact the U.S. economy, however we can be certain of one thing: if there is a negative impact here, Republicans and Democrats will find ways to blame each other for it.