Our Related Articles
French voters said au revoir to President Sarkozy. Pourquoi?
Who is Francois Hollande and what has he promised voters?
Après Sarkozy, le déluge?
How are French people responding to Hollande?
Where was the French passion in this election?
How are Europeans outside France responding to Hollande's election?
How are the markets responding to Hollande's election?
What will Hollande do over the next year?
Video
"French Presidency : Can François Hollande make good on his promises?" (France24, 5/31/12)
"... 61% of those polled think he's already doing a great job ..." The panel dodged economics, and mainly discussed France's foreign policy toward former French colonies in Africa and the Middle East! One panelist, (a senior writer from Bloomberg) said (starting at 12:46), "... Hollande right now is looking at some 46 French companies laying off more than 90,000 workers over the next few months, ..."
News Room
"France's strange-but-true parliamentary candidates" (France24, acc. 6/1/12)
Maybe these candidates for the French parliament can generate some passion!
"Eurozone unemployment reaches all-time high" (France24, 6/1/12)
"EU forecast contradicts Hollande's growth targets" (France24, 5/11/12)
"French growth to stagnate for second consecutive quarter" (France24, 5/10/12)
Summing up the last three articles: The EU forecast 1.3% growth for France, but Hollande thinks it will be 1.7%--even though growth in the first quarter was 0.2%, in the second quarter it will be "flat", and Eurozone unemployment remains at a record high of 11%.
Reference Room
"Institut national de statistique et des études économiques" (INSEE)
French National Institute of Statistics and Economic Studies
May 25, 2012
On May 6, 2012, some French Voters said, through tears,
au Revoir to President Sarkozy. Others drank champagne and chanted, "It's over, Sarko."
Pourquoi?
Executive Summary
Nicolas Sarkozy's father left his family, when Nicolas was young. At school his classmates teased him about his height and relative lack of wealth. His childhood's memorable humiliations spurred him toward his adult behaviors and achievements.
He achieved early success in politics as mayor of Neuilly-sur-Seine, and was an appointed cabinet minister in several UMP governments. He had a reputation for being rude and imperious.
Soon after he won the French presidency in 2007 the world financial crisis and recession began. France suffered, and many blamed the president, as is the custom in the U.S., also. He kept deficit spending from reaching contemporary American proportions, and his opponents called that austerity. He said that France might try some of the measures that had worked for the Germans, and his opponents, including much of the press, said that he wanted "the French to be more like Germans".
In 2012 he faced opposition from his own party, as Dominique de Villepin tried to oppose him in the 2012 French presidential election, but didn't qualify to run. Sarkozy proposed a ban on full veils, and spoke against the large number of immigrants in France. That did not stop nationalist politician, Marine Le Pen (Front National), from running against him in round one. She received nearly 18% of the vote--to his 27%--then said that she would submit a blank ballot (not voting for Sarkozy) in round two.
In round two, Francois Hollande (Socialist) opposed Sarkozy. Hollande's personality is bland. His nicknames include "M. Normal" and "Flanby" (the name of commercially successful custard pudding). Hollande's platform was tax-and-spend liberal, and he wanted to lower the effective work week back to 35 hours and allow many workers to retire at 60.
Our impression is that the election was close enough to go either way. Sarkozy's personality cost his some votes. Marine Le Pen's refusal to support him may have been enough to decide the election. The Socialists may have had a better "get out the vote" effort. In round two or possibile Hollande (51.64% of the votes) defeated Sarkozy (48.36%) in round two.
A list of the articles on this page that this summary summarizes appears in the column to the right, in blue or red "ink", under the heading, "Our Related Articles".
Who was Sarkozy, and what was he saying?
"Nicolas Sarkozy" (Wikip., acc. 5/31/12)
Sarkozy's father was a Hungarian aristocrat, who made a fortune in advertising, and also divorced Sarkozy's mother and abandoned Sarkozy. "'What made me who I am now is the sum of all the humiliations suffered during childhood', he said later."
"Nicolas Sarkozy: The 'emperor with no clothes'" (MSNBC, acc. 6/1/12)
Leaked U.S. diplomatic cables described Nicolas Sarkozy as "thin-skinned", "authoritarian", "rude to his colleagues", and the "emperor with no clothes".
Sarkozy won the French presidency in 2007. Soon, the global financial / economic crisis began. The French economy promptly entered a long, serious recession. In France in 2012, as in the U.S. in 1992, the President "owns" the economy. If the economy's not sufficiently robust, what's the main issue in the election? "It's the economy, stupid." Sarkozy's solutions to France's problems were often reasonable, but were never pleasant and many voters didn't see results. He wanted to manage the economy more as the Germans did, anticipating similar results. He was even planning to have Ms. Merkel campaign with him, which aggravated his PR problem, so he dropped that idea.
"France loses AAA rating as euro governments downgraded" (BBC, 1/13/12)
Besides getting the blame for high French unemployment and slow growth, Sarkozy was President when S&P downgraded France from AAA to AA+. The French cost per year of borrowing for ten years increased from 3.03% to 3.07%. The German cost declined from 1.83% to 1.76%. Italy's cost remained about 6.6%.
Sarkozy was not always diplomatic
Sarkozy was not always the most diplomatic candidate, and had had an antagonistic relationship with the press and right-wing politicians.
"Sarkozy Called Journalists 'Pedophiles'" (NYT, 11/23/10)
At a news conference he allegedly illustrated his disdain for a reporter, who accused him of corruption with no visible evidence, by allegedly turning the tables and allegedly calling the particular reporter a pedophile. Later, his office denied making such remarks. You may follow our link, listen to an audio file, and decide for yourself.
"Sarkozy Wants French to Be More Like Germans" (Atlantic Sentinel, 1/30/12)
On January 9, 2012, in a television interview he pointed out that "France lost half a million manufacturing jobs in the last decade when German employment grew. 'The German economy chose to prioritize jobs, jobs, jobs,' he said. 'If it worked for them,' he added, 'why wouldn’t it work for us?'"
After that, people and headlines were saying, "Sarkozy wants French to be more like Germans". One imagines that many French voters did not like that idea.
"Marine Le Pen to cast 'blank vote' in May 6 runoff" (France24, 5/1/12)
Sarkozy did not charm important right-wing leaders, who might have put him over the top. President Sarkozy's main conservative competitors during the election's first round did not support him in the second round, versus Socialist Hollande.
"Sarkozy Wants Ban of Full Veils" (NYT, 4/21/10)
In 2010 Sarkozy had proposed a ban on full veils--even before it was obvious that he needed votes from Marine Le Pen's FN for the second round of the election.
"'Too Many Foreigners' in France, Sarkozy Says" (NYT, 3/7/12)
"President Nicolas Sarkozy, facing a tough re-election fight this year, declared on Tuesday night that there were “too many foreigners” in France and that he would move to limit their numbers."
Based on my personal experience, that sentiment could have won him the French waiter vote--at least, the waiters in restaurants where I tried to dine. (Except for my visit in 1983. More pertinent facts about that timely visit, later.)
"Marine Le Pen's 17.9% is not a breakthrough for the far right"" (Guardian, 4/25/12)
In round one, Marine Le Pen, leader of the Front National, daughter of the former leader won 17.9% of the vote. The FN is "xenophobic and anti-immigrant", "anti-globalisation, anti-euro, anti-EU, anti-establishment, anti-elitism."
Although most consider the FN to be on the right wing, its leader, Marine Le Pen, daughter of a founder, said that she would submit a blank ballot in the second round--not supporting either Sarkozy or Hollande--and she encouraged her supporters to do as she did, too.
WHO IS FRANCOIS HOLLANDE, and what has he promised?
Hollande is the French President of "hope" and "change". Also, he got from President Obama the idea of a strong, grassroots organization.
"Socialist Hollande wins French presidency" (BBC, 5/6/12)
He is "... a consensus manager ...", a "... listener ...", and proud of "... giving people hope". (emphasis added) Hollande said he wanted to "... refocus EU fiscal efforts from austerity to 'growth', ... [renegotiate] a European treaty on budget discipline ...," raise the minimum wage, and hire 60,000 more teachers. He "... promised to raise taxes on big corporations and people earning more than 1m euros a year."
"France election: A vote for change" (BBC, 5/6/12) (emphasis added)
The BBC said that a vote for Hollande is a "vote for change." Hollande "promised to defend the French social model and save what is called 'French exceptionalism'." For example, the retirement age [for people who have worked already 41 years], "... only recently increased to 62 - will drop back to 60." Also, "The 35-hour week will stay." Hollande " ... promised to increase spending whilst balancing the budget, mainly through tax increases ..." that would "squeeze the rich."
Hollande hates rich financiers
Hollande dislikes rich and "my real enemy is the world of finance" (Independent, 5/7/12)
Hollande "does not like the rich" and his "real enemy is the world of finance". So, he plans to reduce the role of Paris as a financial center, and create many more civil service jobs. However, "Mr Hollande will not repeat is the disastrous tax-and-spend policies introduced by France's last Socialist President, François Mitterrand, in 1981." Hollande will try to solve "the euro crisis", stop the French economy's decline. That's "widely blamed on a failed capitalist system", especially "a rotten banking sector". Holland's economic plans are "one of the most vehemently left-wing programmes in recent history."
Hollande "motivates" people
"Kiss austerity goodbye" (Time, 5/21/12)
Bernard Poignant, Socialist mayor of Quimper (a city), says, "Francois ... avoids imposing his will on people and much prefers motivating people into doing what he wants them to do, which we've seen now once again."
Socialist Hollande owns three homes on the Riviera.
"Socialist Hollande owns three homes on the Riviera" (Evening Standard, 5/11/12)
The English expression, "champagne socialist", has a French equivalent, "gauche caviar" ("left-wing caviar"), and it may describe M. Hollande. "He has also threatened to block the eurozone’s new financial treaty unless Germany agrees to renegotiate its stringent austerity measures." Hollande says he wants the treaty, allegedly crucial for the euro to survive, "to focus more on encouraging growth."
Socialist Hollande is the first French President with a business degree.
"Hollande: From B-School to the Élysée Palace" (Business Week, 5/14/12)
Hollande earned a "pre-experience master’s degree" from HEC in 1975, the same year that President Bush earned his MBA from Harvard. The Dean of HEC said, "If someone wants to be a leader in politics, they must first master economic issues. Second, they must master international issues. ... Business education is important for that."
Hollande's nicknames include ....
Monsieur Normale and ...
"President pudding: Francois Hollande wins French election" (Mirror, 5/7/12)
... Monsieur Flanby. A Flanby is a custard pudding.
"The Great Flanby challenge 2012" (Youtube, acc. 6/1/12)
This is a Flanby. Three hundred calories--mainly from sugar.
Après Sarkozy,le déluge?
France's new president, Hollande, said he wants to save "French exceptionalism", of which key pillars seem to be the 35-hour work week and retirement at age 62 ... and he wants faster economic growth.
Is it too early to get in a lifeboat?
First, we'll discuss "Le Déluge" ("The Deluge"). Then, we'll discuss whether Hollande's election will produce "un Deluge" for France's economy.
"Le Déluge"
"Flood Myth" (Wikip., 5/29/12 (acc.))
In this context, "Le Déluge" refers to Noah's flood, as a metaphor for the means that a higher power uses to destroy a corrupt community. Such a myth was part of the oral tradition and written literature of many early (BCE) civilizations, and has long been part of the literature of later civilizations.
Some people attribute the expression, "Après moi, le déluge" to King Louis XV (1710-1774) of France, and consider it prophetic, since the insurgents of the French Revolution deposed and beheaded his grandson, King Louis XVI (1754-1793). Others attribute the expression to the King's famous, beloved mistress, Madame de Pompadour.
Will Hollande's election produce "un Déluge" for the French economy?
"Après Moi, le Déluge" (ForeignPolicy, 4/24/12)
James Poulos used "le Déluge" in the title of his recent article in Foreign Policy, after Sarkozy lost round one of the French presidential elections. He did not make a case that Sarkozy's departure would lead to economic disaster.
Nor will we, because we do not know if the Socialists will control parliament, nor what a Socialist government would do.
The two rounds of the French legislative election will occur on June 10 and 17. After that the legislators will try to form a government (and succeed, immediately or eventually, we assume).
Hollande, who has been involved with the Socialist party for decades must know that the previous (1981) attempt by a Socialist government to do what Hollande has promised was an economic disaster for France, leading to a political disaster for the Socialists (loss of control of parliament in 1986, at the next election). With his degree in business Hollande should know the origin of the economic disaster.
Here are two predictions:
1. Hollande and the rest of the Socialists will continue promising what won Hollande the presidency, through June 17, 2012.
"Yogi-isms" (yogiberra.com, acc. 5/2912)
2. After that, they arrive at a fork in the road, and they will take it.
The fork offers the Socialists two main choices for economic policy: (a) more socialistic, and (b) less socialistic. They could do a little of each, but we'll focus on (a) and (b).
(a) The more socialistic fork
"France had zero growth in first quarter" (RTE News, 5/15/12)
Hollande has promised more government jobs and more government spending.
"The Symptomatic Keynes" (von Mises Inst., acc. 5/31/12)
One could say that that is Keynesian fiscal policy, but that sort of spending was around long before Keynes, under the name of political patronage.
Hollande has promised to pay for this with a higher (75%) tax rate on taxable income in excess of one million euros.
He has promised to keep France's 35-hour work week and to roll back the retirement age from 62 (recently raised to that) to 60 for those who have already worked 41 years.
"France had zero growth in first quarter" (RTE News, 5/15/12)
Hollande has said that he thinks that the EC's forecast of 1.3% economic growth for France in the next year is too low, and he thinks it will be 1.7% with his economic program.
In summary:
Hollande says that he is going to buy more goods and services that people had the chance to buy, but weren't buying. He will get the money to do this by taxing the rich. He will take workers out of the work force, but the result will be about 33% more economic growth (1.7% for this year) than the 1.3% that professionals have forecast.
Likely result from following the more Socialist fork
"Not bloody likely." (Youtube, acc. 5/31/12))
You ask, "If Hollande does what he says he would do, will that stimulate growth in the French economy?" I say, "Not bloody likely." (Pardon my French. Follow the link and listen to Jerry Seinfeld say it, much better than I could.)
"Keynesian" pork barrel policies will compound the coming disappointment with the French economy.
(a) The less socialistic fork
The less socialistic fork involves moving toward greater property rights, freer-markets, and less government spending. That would stimulate the economy. Less government spending means less government "taxation", i.e., less government taking of private production. That would encourage more production, so more employment. Freer markets would make production easier. Greater property rights would means that producers could keep more of what they produce, so they would produce more. Greater production is the rising tide that lifts all boats.
We suppose that Hollande, who is smart, and who has a business degree knows this. The dean of Hollande's school asserted this point.
We taught about a decade (total, over several decades, full-time and part-time) in some of the better American MBA programs, such as NYU and Wharton (where we were on the admission committee). Micro- and macroeconomics are required, fundamental, and/or "core" courses.
"resource guide: Explore Options; Plan Your MBA Academic Program" (Wharton, acc. 6/3/12)
For example, at Wharton, "Macro-economics and the Global Economic Environment (FNCE 602)" is a core requirement.
In our opinion, a graduate of a business program with competitive admissions and highly competent faculty (such as HEC, where Hollande earned his degree) would believe that reducing the work force by early retirement, reducing the length of the standard work week by regulation, hiring more bureaucrats, and paying for this by taxing the highest earners in an economy would do the opposite stimulate the economy.
"Francois Obama" (CNNMoney, 1/21/10)
This is particularly true, because--again, our opinion--every French man and woman who was not drunk or stoned from 1981 through 1986 saw that (a) President Mitterand's and the Socialist parliament's implementated an approximation of Hollande's platform, and that led to (b) increased unemployment, increased inflation, and severe depreciation in the dollar value of the French franc.
In 1983 we delivered a paper at a conference at INSEAD, and our main recollection of Paris was that it was a great time to have dollars.
However, if Hollande would push this program, he would alienate his party.
Perhaps, the Socialists will not be able to form a government. Hollande will be able to fight for socialist principles, but France may not need to suffer the result.
How are French people Responding to Hollande?
French Socialists are delighted. Wealthy financiers are looking abroad for new homes.
"France election: A vote for change" (BBC, 5/6/12)
After Hollande's victory, many supporters in Paris gathered at Place de la Bastille, drank Champagne, and chanted, "Sarko, it's over!"
Current French expats in London favor Belgravia, South Kensington
"Wealthy French eye move across channel" (FT, 5/4/12)
Many French financial experts and their families live, already, in "Belgravia and South Kensington, close to the Lycée Français Charles de Gaulle, a popular secondary school." Hollande has spoken of taxing income over €1M euros at 75%. In nearby London, wealth managers, lawyers, and real estate agents who cater to wealthy French say that business has increased. After Hollande's round one speech, in which he said, “My true adversary in this battle has no name, no face, no party ... It is the world of finance,” inquiries from French clients rose about 40%, said David Blanc, a wealth manager in London.
Coming: "Le Grand Départ" et "Un Grand Question": "To the Riviera for the summer ... or to London until the [tax] climate changes?"
"High earners say au revoir to France" (Telegraph, 5/12/12)
"Mr Hollande plans to implement a 75pc tax rate on earnings over €1m (£800,000) [$1,292,000] ..."
Will Smith is not French. However, does he not express well the reaction that many highly productive French taxpayers had, when they learned about Hollande's proposed 75% tax on income over €1 million? (Except, their first thought may have been about London.)
"Kate Smith introduces God Bless America" (video, Youtube, 8/26/09 (uploaded))
Will Smith was "singing the song" that Kate Smith introduced "... on the 21st anniversary of the Armistice of World War I ..." The film clip reminds us of what John Maynard Keynes predicted would be "The Consequences of the Peace".
"Five ways the European debt crisis could affect the U.S." (USA Today, 10/28/11)
In the Kate Smith video, at 4:05 a man says, about the unpleasantness in Europe circa 11/11/39, "We're going to be in this yet, Mom." If you watch the clip to the end you'll see a cameo of a certain U.S. President from the post-WWII era.
"MF Global 'first major US victim' of euro debt crisis" (theweek.co.uk, 10/31/11)
However, that has already started in a big way with MF Global.
Where Was the French passion in this election?
Our first impression from reading the articles was that most French voters in this presidential election were dégagé (disengaged), compared to past changes in government.
On July 14, 1789, citizens stormed the Bastille and freed the seven prisoners inside. This was one of the early actions of the French Revolution, and made clearer that the King was in trouble. The later, ritual beheadings of 1119 persons, including revolutionaries, guillotinings at the Place Louis XV (later, renamed Place de la Concorde) are further indications of French political passion.
"France election: A vote for change" (BBC, 5/6/12)
On May 6, 2012 Socialist supporters of Francois Hollande gathered at the Place de la Bastille, drank Champagne, and chanted, "Sarko, it's over!"
The passion was not at the same level. We didn't expect to find modern beheadings by French political gangs, but we continued looking for signs of emotional political action--something comparable to emotion and violence associated with the "Occupy movement", football hooligans, other disappointed, emotional sports fans.
Occupy Wall Street, etc.
In the U.S., the "Occupy" movement seems to have a socialist and anarchist philosophical foundation, hates "the one percent", and wants to--at the very least--tax the rich.
"Obama: 'Occupy Wall Street "reflects broad-based frustration"'" (CBSNews, 10/6/11)
President Obama says about the "Occupy Wall Street" movement, "I think it expresses the frustrations that the American people feel,"-- particularly, "broad-based frustration about how our financial system works".
"Nancy Pelosi: "God bless the Occupy Wall Street protesters." (Youtube, 10/7/11, acc. 6/2/12)
Some mainstream politicians--for example, Nancy Pelosi--have embraced aspects of the Occupy movement.
The movement has been on the move in her home town.
That is only a small sample of "Occupy's" violence, as "it expresses the frustrations that the American people feel". Is that violence really necessary?
Yes. An "Occupy" spokesperson says that "violence will be necessary".
" Occupy Movement Says ‘Violence Will Be Necessary to Achieve Our Goals’" (PJ Media, acc. 6/1/12)
"Gandhi, Gandhi today is, with respect to all of you, Gandhi today is a tumor that the ruling class is using constantly to mislead us. French Revolution made fundamental transformation. But it was bloody."
The pointless passion of the hooligan
"Football hooliganism" (Wikip., acc. 5/31/12)
We found reports of French soccer hooliganism. Not to give French hooligans a pass--or to disparage their passion--but, they don't seem to be in the same league as hooligans of some other countries.
Canadian hockey hooligans have shown how they feel after a Canadian team has lost the Stanley Cup.
"'Attacked' journalist accuses Sarkozy of inciting hatred" (France24, 5/2/12)
France 24 reported, "'Attacked' journalist accuses Sarkozy of inciting hatred". The alleged attack was on May 2, four days before the election. "The day before, Marine Turchi, a reporter from the muckraking news site, Mediapart, told France 24 that she had been harassed by a “baying mob” at a Sarkozy event in Paris on Wednesday. “I was genuinely afraid of being violently attacked,” she said. “A man grabbed the press badge that was around my neck and held it up shouting that I was a Mediapart journalist,” she told the French broadcaster. “People all around started chanting ‘here they are’ and ‘dirty leftist.’"
That's what we found. As "gonzo journalism", is not quite up to the standard of Hunter S. Thompson. As a "Ripley's Believe it, or Not" item, it might appear on a slow day.
Right-wing passion
"Nicolas Sarkozy supporters watch results of elections - France" (Demotix, 5/6/12)
Early, on election day many of Sarkozy's supporters appeared upbeat and hopeful. "'Sarkozy to l'Elysee,' thousands chanted as they awaited the official results outside the Mutualite, where Sarkozy was holding his election event."
That didn't last, as Al Jazeera reports.
"Sarkozy supporters tearful after defeat" (Al Jazeera, 5/6/12)"
After Sarkozy's supporters heard that he had lost, tears flowed, Al Jazeera reports.
Al Jazeera caters to a mainly Muslim clientele. Isn't it odd that Al Jazeera would report this story?
"Sarkozy's niqab ban: a legal nightmare" (Guardian, 4/28/10)
On a completely unrelated topic, Sarkozy had tried to ban the niqab, a couple of years earlier.
And in conclusion, ...
As far as we could tell, in 2012, Baltimore had more passion and violence on St. Patrick's Day had more violence than France had on election day--which is positive for French tourism.
How are Europeans outside France Responding to Hollande's election?
The Socialists are delighted to have a strong voice asking for the Germans to pick up the tab. Those Germans who are working hard and saving are nervous.
"France's Hollande steps up Eurobonds push" (5/23/12)
Hollande said he wanted to see eurobonds "written into the [EU's] agenda". Now he supports his reason is not to stimulate economic growth, but to bolster the euro for long-term integration.
"Hollande takes French presidency" (Breitbart, 5/4/12)
Some people see Hollande's election as a signal of hope for Europe that "austerity does not have to be inevitable".
"Germany says renegotiating EU [fiscal] pact 'not possible'" (Yahoo, 5/7/12)
Hollande wants to "rework" the E.U.'s fiscal pact. Hollande said, "Growth is not a new issue but rather the second pillar of our fiscal policy, and not just since yesterday." A German government spokesman said, "It is not possible to renegotiate the fiscal pact." He noted that the EU states had already argued about "imposing strict budgetary discipline", and "25 of the 27 EU member states had already signed" the agreement.
"Merkel seeks swift talks with Paris victor" (FT, 5/3/12)
Merkel seeks swift talks with Paris victor. At the start of campaign, [Sarkozy] had argued for making France's approach to economics and business “more German”. "Senior officials" say that "the tenor of the debate has changed". For example, EU support for new infrastructure projects may now find more favor. Mr Hollande supported such projects during his campaign.
"H[olland]e Presses Case for Growth in Berlin" (WSJ, 5/15/12)
The French economy grew only 0.1% during 2011's 4th quarter, and unemployment is 10% (the highest in 13 years).
Germany's economy grew 0.5% during 2012's 1st quarter.
Hollande and Europe
"France's Hollande steps up Eurobonds push" (Breitbart, 5/23/12)
Ed Milibrand, leader of the Labor Party "He says: "This is the time for countries that enjoy historically low interest rates, such as Germany, to recognise they must collectively support demand."
"Labour Party (UK)" (Wikip., 5/24/12 (acc.))
"The Labour Party [U.K.] is a member of the Socialist International and Party of European Socialists. The Party's current leader is Ed Miliband MP." [The Labour Party is now (5/24/12) the major opposition party in the U.K. The Conservative Party, the major right-wing party in the U.K., controls the parliament.]
"Hollande holds line on tax and troops" (FT, 5/18/12)
Holland insisists that he wants to impose a tax on financial transactions. "London has threatened to veto" the tax.
If France imposes the tax, unilaterally, he will make transactions relatively expensive inside France, relatively inexpensive outside France. A larger portion of transactions will occur outside France--e.g., in London. London is already a more important financial center than Paris, and the U.K. financial sector is a large source of U.K. GDP. If the entire EU imposes the tax, that will make transactions relatively expensive everywhere in the E.U., so more will occur outside the E.U., most likely in New York or Tokyo.
How are markets responding to Hollande's election?
Greek, French, and German equity markets fell after French and Greek elections
5/7/12 "Markets Plunge after poll results" (Express)
After the French and Greek elections, both the Dax (Germany) and Cac-40 (France) fell more than one percent.
Greek shares in Athens fell eight percent, because the election did not produce a government, much less one that advocates cutting spending. This reduces the probability of resolving Greece's issues, and increases "speculation over the eventual break-up of the single currency."
Bad news for the euro was good news for the dollar and U.S. Treasuries
Hollande prefers his forecast of 1.7% growth, next year, to the European Commission's forecast of 1.3%
5/7/12 "Stocks Drop, Treasuries and Dollar Gain on Elections" Bloomberg)
The euro lost value--for a sixth day--"after French Socialist Francois Hollande was elected president and Greek voters picked anti-bailout parties."
The S&P 500 was up less than 0.1%.
What will Hollande do over the next year?
He need to repeat the Socialist talking points through parliamentary election day. Then he has two choices ...
Hollande looks ahead to June's parliamentary elections
5/7/12 "Euro-zone elections pose bond-market challenge" (WSJ)
Hollande can't keep his his expensive promises, without a parliament that passes the required laws. From now, until the June elections, he must now campaign for a Socialist majority in parliament.
Greek shares fell around 20% on the Monday after the election. So, the election was bad for shares. Why? The election indicates a lack of enthusiasm to do what is required to remain in the eurozone.
Socialists hope Hollande's win gives them momentum for parlimentary elections
5/6/12 "Socialist Hollande triumphs" (France24)
Sarkozy's major competitors in the first round did not support him in round two. Marine Le Pen, far-right candidate, won 18% of the votes. She said she would cast a blank ballot in the second round. Francois Bayrou, centrist, won 9%. He said that he would vote for Hollande.
Hollande promised that workers with at least 41 years of work would be eligible to retire at age 60, not 62.
Hollande promised to give foreigners the right to vote in local elections.
Socialists hope this Presidential win will help them win a parliamentary majority in the June elections.
