Monday, June 18, 2012

Greece Avoids Certain Catastrophe Now by Voting for Catastrophe in the Future – and in France Francois Hollande Will Get Majority in Legislature Needed to Govern

The Drama in Europe Goes On – This Play is not Yet Even at Intermission

Greek voters had the choice of electing a hard left party that would disavow the austerity program imposed on Greece in return for aid, or electing a coalition of center left/center right parties that would accept the austerity program.  It appears the Greeks have voted for the coalition. 

Greece has a parliamentary form of government where the Prime Minister is elected by the legislature.  To provide stability the party with the most seats is awarded an extra 50 seats.  This will be New Democracy, a conservative party that has ruled before.  The center left party, Pasok has also been in power before, in fact they were in power during much of the time that things went south for Greece.  Pasok  has somehow won enough seats so that they can provide New Democracy with the majority it needs to name its party leader as Prime Minister.  Whoever devised the system whereby the party with the most votes gets an extra 50 seats deserves a huge thanks.  Without that provision Greece would have no government.

Europe is going to breathe a collective sigh of relief, but it shouldn’t.  The vote in Greece was a vote to stay in the Euro, not a vote to accept ruinous austerity.  In fact the two parties that will form a government are getting the message, and Europe will have to accept some face saving changes in the austerity in return for keeping the coalition New Democracy/Pasok government in place.

The big question, is Europe smart enough to recognize this?  Based on their actions to date in response to the economic crisis one is not very confident.

In France it appears that the new President who is a moderate Socialist will have a working majority coalition in the Assembly.  This may, and the stress here is on ‘may’ allow France to implement a somewhat expansionary policy, and to test if that policy can produce better results than austerity.  It should, but France will be swimming upstream and against the current, because the rest of Europe is in a downward spiral and France is not in all that great a condition iself.

As far as the United States is concerned Democrats should know that France has now joined almost every other western nation in voting out the incumbent rulers.  That should enlarge the group of Democrats who call themselves ‘concerned’.  In fact the ranks of 'non-concerned Democrats' should be thinned to the point of extinction.

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