benzion888 Says:

May 9, 2012 - Nonetheless, their grip on power is becoming more tenuous, and the representation of previously marginalized parties in the parliament will make it much more difficult for ND and PASOK to steer Greece in the direction of their choosing. Stratfor has long forecast a loss of control for Europe's traditional political elite; the shake-up in Greece is a reflection of that continuing trend

benzion888 Says:

May 9, 2012 - Ovear the next few weeks democracy in Euroland is on trial. Most pundits and commentators agree that French electors voted in Mr Hollande to end austerity. Most agree that the massive swing against Pasok and New Democracy in Greece was a swing against austerity policies in the Euro and EU. The problem is, the voters may end up with little changed austerity policies come what may

benzion888 Says:

May 9, 2012 - Part of the reason is the voters' own mistake. Many French and Greek voters who want an end to austerity think they can have that without withdrawing from the Euro. I fear that is very difficult if not impossible. Voters in Euroland seem reluctant to accept that the whole architecture of the single currency is founded on austerity all the time the huge imbalances between Germany and the rest persist

benzion888 Says:

May 9, 2012 - . If the rich areas refuse to send much money to the poor areas -- as they do -- the poor areas have to deflate, cut wages and costs severely, until they can compete. This cruel economic logic is not popular, but voters are reluctant to conclude that the currency is at fault.

benzion888 Says:

May 9, 2012 - Part of the reason is the way the Euro area is governned. It has been governed in recent years by a Franco-German alliance. The European Central Bank was part of this agreement, with a German home and constitution, and a French Head. Now it has an Italian Head it has started to have more of a mind and a printing press of its own. That has kept the unstable system afloat, but it has not remedied the defects of the whole system

benzion888 Says:

May 9, 2012 - The Franco-German alliance put in place a Stability and Growth Pact. The Stability part came from Germany. It was a set of rules to make countries cut back if they have too large a deficit, or if their debt is excessive. The Growth part came from France, and amounted to some modest scale EU spending programmes. In recent years the Pact has delivered neither stability, nor growth to the poorer regions of the Eurozone

benzion888 Says:

May 9, 2012 - Mr Hollande would be right to demand a rethink. I suspect he will settle for a few extra public spending programmes from the EU as a "Growth package" and a pledge by Mrs Merkel to respect his position and to work with him in their joint interest for the stability of the currency. He will soon be brought into Euro line, by plenty of advice telling him that France being too argumentative, negative or spendthrift will destabilise the banking system and upset the currency system

benzion888 Says:

May 9, 2012 - In Greece it looks likely it will take time to form a Coalition government out of the fragmented results. The new Coalition may contain some angry MPs who do wish to speak out against the austerity policy forced on them by the loans. They will be told by the bureaucrats that they have to accept the terms of the loans if they wish to carry on paying the large public sector bills They will probably under protest go along with it fearing to rupture a precarious and unsatisfactory agreement

benzion888 Says:

May 9, 2012 - European voters in two Euro countries will discover that they have very little power left to change economic policy all the time their country is in the Euro. Taxes will stay high and public spending will prove difficult to cut in a downturn. The governemnts will pretend to squeeze the deficit down in order to qualify for EU support in the case of Greece, and EU approval in the case of France. Meanwhile, economies will suffer.

benzion888 Says:

May 9, 2012 - Expect the informal economies to flourish, as more people decide to take the illegal course of opting out of the world of accurate tax returns and audited performance. Expect more to leave countries that are floundering under the Euro austerity scheme. The governments themselves will carry on failing to hit Euro targets whilst talking tough and pretending to deliver.

benzion888 Says:

May 10, 2012 - We have been discussing how the financial crisis in Europe is turning into a political crisis. The austerity measures demanded of Greece by Germany and other countries would in our view not only trigger a crisis in Greece -- they would also raise profound questions about the rest of Europe. The questions would involve not only austerity measures, but the political and financial elites that have dominated Europe for the past generation.

benzion888 Says:

May 10, 2012 - The French and Greek elections do not yet represent a definitive break with the past, but they are harbingers of an intensifying political crisis focused on the old European order By old order we mean not only the Europe that was created by the Maastricht Treaty, but the ideology that surrounded it. That ideology had two parts. The economic portion was the belief that free trade and an integrated regulatory regime would create a framework for a prosperity shared equitably between

benzion888 Says:

May 10, 2012 - nations and between classes. The political portion of the ideology held that the fundamental issues dividing European states no longer existed, and that the divisive nationalisms of the past had become irrelevant

benzion888 Says:

May 10, 2012 - In the French election, we saw the far-right National Front resurge, ultimately forcing a tighter runoff in the second round. The party's ideology challenged two key European ideas: that borders are meaningless, and that all classes benefit equally from the European project. French President-elect Francois Hollande's victory held open the question of borders, but certainly accepted the idea that all classes have not benefitted from Europe.

benzion888 Says:

May 10, 2012 - His victory also challenged Germany's leadership of Europe. Hollande and German Chancellor Angela Merkel differ substantially in their approaches to Europe's problems and solutions

benzion888 Says:

May 10, 2012 - Greece's electoral outcome, which has left the two mainstream parties struggling to form a coalition government, represents a more advanced case of the crisis. The fragmentation of the Greek political system, evidenced in part by the inability of the mainstream parties to rule alone and enter into a coalition, gives some sense of how far Greece has moved politically over recent years. That of course is not surprising, given the Greek reality

benzion888 Says:

May 10, 2012 - The two elections together displayed two things. First, that the far right wing is increasingly influential. By far right wing we mean that faction which is both populist and xenophobic and opposes the loss of sovereignty, the inflow of immigrants, and a system that favors financial, political and intellectual elites over the middle and lower classes.

benzion888 Says:

May 10, 2012 - The National Front's share of votes in the first round of the French presidential elections and the inclusion of radical right-wing party Golden Dawn in the Greek parliament are instances of this growing influence

benzion888 Says:

May 10, 2012 - Second, we see that mainstream parties that firmly advocate Europeanist ideology will tend to lose. Outgoing French President Nicolas Sarkozy can be seen as the quintessential Europeanist. Even so, during the campaign he had to refrain from Europeanist talk in order to court the far right. Sarkozy went so far as to threaten a suspension of the Schengen Agreement, which allows for open borders between all EU states --

benzion888 Says:

May 10, 2012 - the very essence of European integration. Hollande is not prepared to step out of Europe, but neither is he prepared to live with the deals Germany crafted. Similarly, in Greece the mainstream pro-European parties together barely earned half the votes. The other half was spread over a wide array of parties bound together by a mistrust of the mainstream

benzion888 Says:

May 10, 2012 - The familiar faces of Europe -- Spanish Prime Minister Jose Luis Rodriguez Zapatero, Italian Prime Minister Silvio Berlusconi, Greek Prime Minister George Papandreou, and now Sarkozy -- are being replaced by leaders who are still in the European mainstream. But it is becoming increasingly difficult to survive as a Europeanist. More precisely, it is difficult to survive as a Europeanist and adopt Germany's views on austerity.

benzion888 Says:

May 10, 2012 - Hollande has broken with the idea of extreme austerity, but not with the idea of Europe In opposing Germany on austerity, Hollande embraces Europe as an abstraction. The real Europe is opposed to Germany and the German solution to the economic crisis. This is not a stable position for Hollande. Given the forces in French politics, he will inevitably move further into opposition to the real Europe. Looking forward to other elections,

benzion888 Says:

May 10, 2012 - it is our view that these will become less predictable and less favorable to Europeanists. They will also create increasing instability in European countries as new parties and coalitions start to emerge. Europe's final act will be political, not financial or economic, and we are watching its beginning play out. Its themes are sovereignty, class awareness and control of national destiny. It is not an unknown Europe, but it is not a

benzion888 Says:

May 10, 2012 - Europe Europeans expected to see again. But then, we are at the very beginning. France and Greece are not even the overture. But that doesn't mean they don't point to the climax of the final act

benzion888 Says:

May 18, 2012 - Stratfor 17-May-12Fitch Ratings Agency downgraded Greece's credit rating May 17 from B- to CCC, Reuters reported. Fitch cited the increased risk of Greece exiting the eurozone as reason for the downgrade and Greek politicians' failure to form a government as evidence of the lack of public support for austerity. If Greece leaves the eurozone, there would likely be widespread default in the private sector and on sovereign euro-denominated obligations, Fitch said.