French Election Results Signal Hard Times for Europe

The major French media outlets have just reported their projection of a Socialist win in the French presidential election. Exit polls show that Francois Hollande will defeat conservative sitting French President Nicolas Sarkozy, with an estimated 52% to 48%.
This result will certainly change everything in Europe. Hollande has vowed to demand a stop to the austerity budgets imposed by the German Chancellor Angela Merkel, with the help of Sarkozy.
Hollande will embark on a spending for growth agenda for France and try to re-open the European Union treaties that put severe constraints on national autonomy in budget making and deficit control.
Whether Hollande will succeed is an open question, but it is now sure that Europe will face increasing budget deficits, rising national debts and the great probability that the financial rating agencies will lower France’s AAA/AA rating, causing the cost of borrowing for the French Republic to rise, as it already has in Greece, Portugal, Spain and Italy.
While there is no question that growth must accompany fiscal tightening for the package in any country to be effective, the fear now is that the EU Eurozone countries long constrained by Germany and France will break out of their austerity programs and the red ink will flow even faster, and with even less chance of being corrected in the next five years.
For example, Greece also voted today, for parliament members, and it looks like the incumbent government coalition, socialist, will also be defeated. The newly elected conservative coalition has already said it will abandon much of the austerity program foisted on it by Merkel’s Germany.
The news from Europe is certainly not as good as it could be, and now we will have to wait for the political maneuveuring to begin. Will Merkel be able to hold the Eurozone together as a functioning financial power without the help of France’s conservative Sarkozy. Nothing is less sure.
And, our attention must now turn to America, where the same scenario will play out in the next five months.
Will American voters toss out President Obama because he was on watch when the financial crisis hit and grew, or will they, like Europe, elect the Republican Mitt Romney, in the hope that he can straighten out the mess.
If it seems that Obama should win because he is leftist like Hollande, one must think again. What has happened in Europe in the last year is that every sitting head of state has lost his latest election - whether left or right made no difference - simply being in power was the single common thread that made them lose. Ten of them out of twelve.
So, it is far from certain that President Obama will be re-elected.