"Austerity" now a dirty word in Europe

Forums: Europe, Politics, Elections, Economy, Austerity
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(AP) PARIS - The day after Francois Hollande rode to power in France on a slogan of "change now," the conversation in Europe was already different Monday: Austerity had become a dirty word.

What replaces it, though, was anything but clear.

The newly powerful in France and Greece want to roll back the spending cuts and tax increases that have defined Europe's response to its 3-year-old debt crisis. But campaign rhetoric is likely to prove more extreme than any real-world reversal of the budget tightening.

World financial markets took Europe's latest round of political upheaval in stride, convulsing early and then recovering. The continent's uncertain future - including the possibility of Greece leaving the euro - was causing anxiety but not panic about the threat to the global economy.

But there is hardly unity in Europe.

More here:
http://www.cbsnews.com/8301-202_162-57429642/austerity-is-now-a-dirty-word-in-europe/

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@Lustig Andrei,

Here's the French take on it:

Quote:

07/05 | 21:25
Standard & Poor's et Fitch Ratings se sont rappelées au bon souvenir de François Hollande lundi en affirmant que l'élection du député de Corrèze à la présidence de la République n'avait pas d'implication sur la note souveraine de la France, à court terme.
François Hollande est depuis dimanche le nouveau chef de l'Etat, élu avec 51,62% des voix face au président sortant Nicolas Sarkozy.
S&P, qui a abaissé d'un cran en janvier la note de crédit française de AAA, la meilleure possible, à AA+ assortie d'une perspective négative, estime qu'il y a au moins une chance sur trois pour que cette note face l'objet d'un nouvel abaissement cette année ou en 2013.
"Nous analyserons les décisions du président français et de son nouveau gouvernement, en tenant compte des résultats des élections législatives de juin", souligne l'agence de notation dans un communiqué.
"L'élection du candidat du Parti socialiste, François Hollande, à la présidence de la République française, n'a pas d'implications pour la note AAA de la France, actuellement sous perspective négative", a de son côté annoncé Fitch.
"Néanmoins, sa victoire électorale marque un changement important à la tête de la France et de l'Europe. Le nouveau président est confronté aux mêmes difficultés que son prédécesseur: le renforcement de la crédibilité budgétaire, l'amélioration du potentiel de croissance à moyen terme de la France et le traitement de la crise de la zone euro", ajoute le texte.
Fitch avait annoncé en début d'année ne pas envisager de modifier la note de la France en 2012 mais rien ne l'empêche de revenir sur cette position.
Personne n'était immédiatement joignable lundi soir chez Moody's pour un commentaire sur la France.
François Hollande a placé en tête de ses priorités européennes la renégociation du traité sur la discipline budgétaire signé en mars par 25 des 27 pays de l'Union européenne afin d'y insérer un volet sur la croissance.
Dans le même temps, le président prévoit un retour à l'équilibre budgétaire en 2017.
De son côté, la chancelière allemande Angela Merkel, soucieuse de poursuivre la réduction des déficits, a réitéré lundi son refus de renégocier le pacte budgétaire et affiché sa défiance vis-à-vis d'éventuelles mesures de soutien à la croissance.
Les agences de notation se sont préoccupées à plusieurs reprises du dérapage des finances publiques des pays de la zone euro, tout en soulignant que des mesures budgétaires trop restrictives étaient de nature à affaiblir la croissance, elle-même jugée indispensable à la diminution des déficits et de la dette.
François Hollande a annoncé qu'il se rendrait à Berlin très rapidement après sa prise de fonctions prévue le 15 mai.

http://www.lesechos.fr/investisseurs/actualites-boursieres/reuters-00442231-les-agences-de-notation-surveillent-francois-hollande-320473.php

1 Reply

@Lustig Andrei,

Ah, thanks.

2 Replies

@roger,

Early reaction:

Quote:

Asian stock markets rebound after jitters over European election results dissipate
Washington Post - ‎28 minutes ago‎
BANGKOK - Asian stock markets staged a modest recovery Tuesday as the initial shockwaves from election results in Europe faded. Trading is expected to remain volatile as Greece struggles to form a government after voters punished pro-austerity parties.

1 Reply

@Lustig Andrei,

All rhetoric, Andy. Merkel told them already that she's not willing to re-negotiate bills that were voted on already and she's not willing to change her course. Hollande is one day in office and his mouth is full of phrases that don't mean a thing, but the French obviously want to hear something.

Antonis Samaras on the other hand said, that Greece is not governable, the
Greece politics is in utter chaos and there is nothing his party can do.
I am not sure what the EU take will be on this latest revelation, but unless
Greece is willing to work out their fiscal crisis, austerity will be on their
dinner table every night.

2 Replies

@CalamityJane,

Yeah, I agree. But right now it's more about public perception of what's being done to offset the crisis than about the actual realities. I agree that Greece appears to be a basket case.

2 Replies

@Lustig Andrei,

The entire global economy is a basket case.....austerity was the one and only possible solution, and it did not work. The other possible solution....trying to juice growth, was tried for 30 years and also failed. Nothing to do now but to wait for the inevitable collapse.

0 Replies

@Lustig Andrei,

Here's the link for that earlier post:

http://www.washingtonpost.com/business/markets/asian-stock-markets-rebound-after-jitters-over-european-election-results-dissipate/2012/05/07/gIQAsv6Q9T_story.html

0 Replies

@Lustig Andrei,

Right! Hollande will be the second socialist voted into office. Mitterrand, the first socialist also learned rather quickly that his socialistic ideas could not
be implemented. He in fact became quite "right-wingish" in his rulings and
was right there with the United States marching into Lebanon. It was under Mitterrand's reign that the Greenpeace ship "Rainbow" was bombed by the
French secret service and he refused to give up atomic power at one of the Geneva disarmament meetings. I suspect that Hollande, who worked in the 90s with Mitterrand, will redefine his ideologic way of thinking too!

1 Reply

@CalamityJane,

here is an article from the german SPIEGEL magazine - it was written prior to the french election but i don't think would be much different now .

http://www.spiegel.de/international/europe/0,1518,830594,00.html

Quote:

German Chancellor Angela Merkel stood behind a podium at the DZ Bank at Berlin's Brandenburg Gate, gazing sullenly into the cameras. She had just received the wrong prop for a photo op, and she needed to get it out of sight as quickly as possible.

To thank her for her speech marking the International Year of Cooperatives, a gray-faced official had thrust a porcelain piggy bank into her hands -- an ugly thing with a milky sheen that appeared to reflect the very coldness said to characterize her policies.

Merkel reflected momentarily, then had the gift quickly tucked away in a box. Photos of the piggy-bank chancellor are not exactly what she most urgently needs right now. In fact, for the past few days, she has endeavored to put a more friendly face on her image as the strict belt-tightening politician who is forcing Europe to adhere to Germany's budgetary discipline dictates.

She is determined to stick by her strategy. But now when she talks about the euro crisis, instead of focusing solely on "structural reforms" and "stability," she has also started to refer to "growth" and "jobs."

just the kind of present she would surely appreciate ?

1 Reply

@hamburgboy,

Probably not! I like her though, she's a gutsy lady and she has stood up to
the boys more than once, I can appreciate that. When I think about Schroeder, the last chancellor, he was a wimp from the get-go.

1 Reply

@CalamityJane,

i agree ! merkel has been incredibly tough and steady in her approach to the european crisis . there seems to be a problem however : many germans are beginning to get weary of her straight-forward approach - perhaps she might diguise her disguise her bitter medicine with some sugar .

( btw i think ms merkel has really aged in her tough job - she certainly does not appear to be very cheerful )

2 Replies

@hamburgboy,

Gravitas. She doesn't have age, she has gravitas.

1 Reply

@roger,

roger wrote:

Gravitas. She doesn't have age, she has gravitas.

She is also wrong, and has done more destroy Germany's standing in Europe than has anyone since Hitler.....

Yet to be dealt with is her destroying the German Economic engine, which she did by rubbing out Nuclear energy. Germany faces dark days ahead, thanks to the hard headed idiot named Merkel

0 Replies

More on the Greek gaffe:

Quote:

ATHENS — Greece teetered on the verge of political chaos on Monday, with few signs that any party could form a governing coalition and the prospect of the nation leaving the euro zone looming increasingly large.

Just a day after coming in a weak first in its worst showing ever in national elections, the center-right New Democracy party quickly announced on Monday that it had failed to form a governing majority. While a left-wing, anti-austerity party that placed second will now have a chance to form a coalition, many analysts say Greece is unlikely to emerge from its current crisis with a government either capable or willing to carry out the strict budget-cutting mandates of its foreign lenders.

http://www.nytimes.com/2012/05/08/world/europe/greece-in-chaos-faces-possible-new-elections.html?_r=1&google_editors_picks=true

1 Reply

@Lustig Andrei,

Greeks has bearly had a function government for a long while...the final collapse of the Greek government has long been predicted. I am sorry that you seem to be the last to know....

0 Replies

@hamburgboy,

I have heard a certain amount of comment about whether or not the German electorate will long be willing to carry the burden of Europe's sovereign debt crisis. Several commentators have alluded to Merkel's personal strength, and others have pointed out what a good thing the Euro is for Germany. Those commentators point out that if European nations go back to national currencies, the Germans will get screwed because their currency would be so strong that it would ruin their export sector.

2 Replies

@Setanta,

Quote:

the Germans will get screwed because their currency would so strong that it would ruin their export sector.

False, the Germans more than any other European country produce stuff of value with efficiency...they should ditch the Euro (and the resulting being the lender of last resort for all of Europe) out of self interest.

1 Reply

@roger,

That article, Roger, largely refers to France's credit rating. It points out that Standard and Poors had already lower that rating from AAA to AA+ at the beginning of year and that observers were anxious to see if S&P would revisit the issue so soon after that event. It quotes S&P and Fitch ratings as saying the Hollande's election has no bearing on France's sovereign debt. Fitch still gives France a AAA rating, and said that they have no reason to revisit that rating this year--although it notes some speculation that they may change their minds, and the article points out that there is nothing to stop them from doing so. They were unable to contact anyone from Moody's on Monday who would comment on France's credit rating.

It quotes Hollande as saying his first priority will be the renegotiation of the treaty signed in March by 25 of the 27 Euro-zone countries, in order to insert a provision about means to support economic growth. It says that at the same time Hollande projects a return to budgetary stability by 2017. For her part, Angela Merkel, anxious to pursue deficit reduction, has signalled her refusal to revisit the treaty, and made point of showing her oppostion to measures to promote economic growth. (One assumes until the deficit crises are resolved.)

The article then returns to its theme about credit ratings, saying that credit rating agencies have pointed out that too strict austeity measures can kill the economic growth which is necessary to pay off the debts, and actually impede the process.

Finally, it says that Hollande will quickly head for Berlin to make kissy face with Angela.

0 Replies

@hawkeye10,

You're an idiot. There is no good reason to take your idiot word over that of seasoned financial analysts.

2 Replies

"Austerity" now a dirty word in Europe

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