Fiscal Conservatism took a beating in Europe over the weekend. The Presidential election in France saw the victory of the Socialist candidate--while voters in Greece swept out the Parliament that supported the country's bailout by the European Central Bank. If the European Debt Crisis was a Hollywood Western, the passengers would have just shot John Wayne while he tried to stop the out-of-control stagecoach from plunging over the cliff.
In Greece, voters have handed over 20% of the seats in their Parliament to Neo-Nazis and Communists--simply because they opposed the austerity measures placed on the country by Germany and the other countries that are funding the bailout just to keep the Greek Government afloat. The newly-elected representative's plans for solving the debt crisis? They don't have one--they just don't like the plan in place and they aren't going to abide by its rules. And since it appears no one else in that government has the guts to do the right thing, we can expect Greece to default on its debt--further deepening the EuroZone crisis--and likely getting kicked out of the Zone altogether. Then the Greeks can look forward to handing over a one-billion Drachma note to the waiter to purchase their shot-glassful of Ouzo.
France will be even more interesting to watch. Their new President campaigned on a platform of "Tax the Rich" and raising taxes on corporations. Does that sound familiar? Also, more government jobs and perservation of the social programs that bankrupted the economy there as well. Again, political positioning statements we here in the US seem to be hearing a lot this year as well. I'm trying to find some hope in the so-called "experts" quoted in the Sunday columns that economic realities will force the new French President to actually be more "moderate" in the way he governs--but that remains to be seen.
Now all of this would be good news for the US, as the dollar would gain value against the Euro-as countries beg for the printing presses in Brussels to be turned on again to pay for the decisions of the voters this weekend--but we are printing our currency even faster than them. To go back to the Hollywood Western analogy again--our stagecoach captain is chasing after the other wagon shouting "We need to go where they are going!!"