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Is the European austerity consensus coming to a slow end?


2:49 pm - April 27th 2012

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contribution by James Mills

This morning news that the Cutty Sark, a ship strongly associated with bringing global products and trade to European markets, was bookended this evening by the news that global financial markets are setting sail away from European financial markets.

This has been brought on by the result in the first round of the French elections that suggests that François Hollande could be on his way the Élysées Palace; but could also his victory be the crest of a wave that shows the tide is turning in Austerity Europe?

Although, such a tide may not wash away the rightwing austerity drive in some parts it certainly would knock it off course. And it would herald that the current European Austerity consensus enshrined in the European Fiscal Compact, is starting the crumble with more political clouds forming o n the horizon.

The resignation this afternoon of the Dutch PM, Mark Rutte, is one such storm cloud. The subsequent malaise means that the budget enforcing the European fiscal pact will not go through. And the coming elections could lead the rise of an anti-austerity left who are chomping at the bit for an early election smelling blood; despite recent opinion polls putting the Labour Party and Socialist Party’s behind the current government coalition.

Then there is another in the Greek elections in May, that are going to the polls, who although may still return the governing coalition, they may be emboldened to open up the European Fiscal Compact if they see other European countries attempting to do so. Especially as there is a chance that pro-bailout parties could be in the minority as four smaller anti-bailout parties sit on a 10% share of the vote each.

In addition, there are local elections in Italy whose outcome could put the technocrat leader Mario Monti, who relies heavily on cross party support, in a rather inclement disposition. Furthermore, Ireland is going to the polls to in a referendum to ratify the European Fiscal Compact and the trade unions are leading the “No” campaign, although they trail the Yes campaign 42% – 27% there are 37% of voters undecided.

When one pours more misery on top of this in the shape of next month’s North Rhine-Westphalia state elections that are expected to land Angela Merkal’s party a bloody nose, with a Red-Green Alliance victory, European Austerity starts to appear to be a sinking ship.

Although, Angela Merkel and her governing coalition appear to be faring well in the opinion polls, the German Federal Elections in October 2013 could begin to look grim if the popular Fiscal Compact begins to look unworkable, and on her watch German taxpayers believe they are picking up the bill.

The situation could look even worse for the European centre- right, if Hollande and the French Socialists show a more agreeable and successful alternative than currently on offer by centre-right European political governments, sparking a boost for the European parties like the German SDP. The latter who also endorse the Francois Hollande’s European fiscal plans.

The potential for a domino or snowball effect to occur grows in all possibility. And let’s not forget what Mr. Hollande has said he sees himself in this role as insurgent:

“I am a European who is going to change the direction of the continent….” “….Germany should not decide the direction of Europe alone.”

“If Europe is not capable of taking decisions, I will not ratify the treaty because I consider it’s a very important point for growth,”

Not since Napoleon could a Frenchman stand on the precipice of holding such sway in Europe that would make Charlemagne blush; and it is also been a long time since European leaders have grown to be cautious of the sound of the name Hollande.

As Napoleon famously once said: “A leader is a dealer in hope”, and today as global financial markets rush to dump European shares overboard, and the day before the UK could slip into a double dip recession, François Hollande is selling a hopeful alternative that the rest of Europe could start to buy.

Regardless of if anyone agrees with his alternative, his election would certainly changes the current consensus in Europe. Something centre-right leaders will be fully aware of…

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Reader comments


I hate to be picky, but the French President occupies the Elysee Palace. The Champs-Elysees is an avenue in Paris. The two are not even slightly adjacent. One should know the difference, especially when the reference comes near the start of the post.

Sorry, but the abysmal grammar in this article totally wrecked it for me.

3. Just Visiting

Yup, it’s un-readable.

Sounds like it’s been auto-translated by Google from the French or something.

It’s not just poor grammar – it’s poor sentence planning

> Regardless of if anyone agrees

Ouch – ‘of’ followed by ‘if’

> The potential for a domino or snowball effect to occur grows in all possibility.

Why say ‘all possibility’ ?

4. So Much For Subtlety

Reality is not optional. Sure, the French voters can do something stupid. What good is it going to do them? They can refuse to accept reality and continue to spend. If they are running up a primary surplus that may be possible. But they will have to default of their debts. Those debts are held by many people, but some of them will be French banks. That means some French people’s pensions will be lost. That means more austerity.

If everyone defaults the French banks will collapse – as they are over exposed to European basket cases. That means everyone’s pension will be lost. In fact it is likely that the Spanish banks will collapse – Spanish banks have gone on a debt fueled buying spree, buying Latin America’s banking sector as well as the odd British bank. Do the Spanish have some special gift for banking? Better than the British? Do the French for that matter? When the Spanish go, the French will follow.

If they are not running a primary surplus then Hollande will find that no one will lend him money and he simply cannot spend like in the past. He can try to raise taxes but France is probably on the wrong side of the Laffer curve.

The voters can be as irrational as they like. The question is no longer whether they can avoid austerity. The question is whether they want a Great Depression type austerity or a Pol Pot Year Zero type of austerity. I would suggest the former is a lot less painful.

Austerity isn’t paying any debts. It is not working for it’s stated purpose. It is working for it’s non-stated purpose which is decimating the public sectors of countries enduring it.

“Is the European austerity consensus coming to a slow end?”

It never seemed to exist in the Brussels glass palaces.

7. Man on Clapham Omnibus

I dont think there ever was a consensus in austerity. What we have seen are the ruling elites attempting to rearrange their affairs at the expense of the largely disenfranchised majority. The notion that countries like France, Greece and the rest can sustain the social collapse attendent with this economic correction is IMO a little far fetched. It is hardly surprising that certain elements of the Political class are now emerging to challenge the current hegemony at a political level. The big issue is whilst the political level maybe mirroring desent from below that doesnt automatically equate to the emergence of economic solutions. It’s a mess and in all probability it will become messier.

SMFS,
there is no austerity for the ecenomic elite…
isn’t the disappearance of pensions to do with pension funds being bait & switch. They were brought in when people only lived a year or two as pensioners. Now that timescale is measured in decades, and the scam is showing it’s true nature.

9. So Much For Subtlety

7. Man on Clapham Omnibus

What we have seen are the ruling elites attempting to rearrange their affairs at the expense of the largely disenfranchised majority.

Anyone who thinks the voters of Europe are largely disenfranchised looses any right to be taken seriously on any topic at all.

It is hardly surprising that certain elements of the Political class are now emerging to challenge the current hegemony at a political level.

Especially when they also claim the voters are not disenfranchised.

Dissident

there is no austerity for the ecenomic elite…

Mittal has just lost something like 27% of his wealth. I think there is.

isn’t the disappearance of pensions to do with pension funds being bait & switch. They were brought in when people only lived a year or two as pensioners. Now that timescale is measured in decades, and the scam is showing it’s true nature.

Indeed. Public pensions were always a scam. Now it is time to recognize them for the Ponzi scheme they always were. We need more private pensions.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Is the European austerity consensus coming to a slow end? http://t.co/CPu2sowQ

  2. Stephe Meloy

    Is the European austerity consensus coming to a slow end? http://t.co/CPu2sowQ

  3. OCCUPYLOCALGOVT

    RT“@libcon: Is the European austerity consensus coming to a slow end? http://t.co/imBN5SM2” End #Austerity Stop #Osbourne #AllinItTogether

  4. James Mills

    Is the European austerity consensus coming to a slow end? http://t.co/CPu2sowQ

  5. mark flannery

    Is the European austerity consensus coming to a slow end? http://t.co/CPu2sowQ

  6. Robert CP

    Is the European austerity consensus coming to a slow end? http://t.co/CPu2sowQ

  7. BevR

    Is the European austerity consensus coming to a slow end? | Liberal Conspiracy http://t.co/fMeneeMR via @libcon

  8. Joseph Healy

    Is the European austerity consensus coming to a slow end? | Liberal Conspiracy http://t.co/vRE9eR0w via @libcon One can hope and fight.

  9. Alex Braithwaite

    Is the European austerity consensus coming to a slow end? | Liberal Conspiracy http://t.co/DXCr5Muu via @libcon

  10. parlet scimpernel

    Is the European #austerity "consensus" coming to a slow end? I F*cking hope so! http://t.co/08AWdMPy via @libcon

  11. Martin Coxall

    @bokkiedog I think @sunny_hundal band the naive boys and girls at Liberal Conspiracy believed Hollande: http://t.co/mk1PHc1y





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