In this Stratfor article George Friedman begins by discussing the Greek vote. He points out that it was very closely split between the EU friendly parties and those against austerity. For that reason it may not even be possible for the Greeks to form a new government of any durability.
The French vote for the Socialist Hollande, who is in direct opposition to the German government bailout plans, reinforces the deep split between the backers of stimulus and the backers of deficit control through austerity programs.
There likely is not a clean way of resolving that difference, and that does not bode well for Europe in the short and medium time frame.
The beginning of the article is excerpted below, with a link to the entire article at the end of the excerpt.
For the article's Hot Stratfor Babe I turned to women battling on the silver screen and came up with the movie Single White Female. Of the two female leads in that movie I selected Bridget Fonda for the honor.
In the movie Fonda plays Allison, a successful woman who advertising for a room mate and ends up selecting the mousey Hedra, who turns out to be a complete nutbag. Hedra gradually co-opts Allison's life, dressing like her and cutting her hair the same and so forth. I've never seen the film, so I don't know exactly what happens, but I assume that there is a murderous rampage towards the end, but maybe not.
Ms Fonda always struck me as being a rather pedestrian actress. Her grandfather is Henry Fonda, her father is Peter Fonda and her aunt is Jane Fonda so I assume -- although I'm sure she would rebel at the notion -- that more than one door swung open for her because of her family. She had a busy career until she retired from acting in 2002.
The Futility of European Elections
By George Friedman, June 19, 2012
Europe and the financial markets watched intently June 17 as Greece held general elections. German Chancellor Angela Merkel, French President Francois Hollande and Italian Prime Minister Mario Monti all delayed their flights to the June 18 G-20 summit in Mexico to await the results.
The two leading contenders in the elections were the center-right New Democracy Party (ND), which pledged to uphold Greece's commitments to austerity and honor the country's financial agreements with the European Union and the International Monetary Fund, and the Coalition of the Radical Left (SYRIZA), a group of far-left politicians who pledged to reject Greece's existing agreements, end austerity and maintain the country's position in the eurozone. A third major party, the center-left Panhellenic Socialist Movement (PASOK), shares the ND's position of maintaining Greece's bailout agreement. PASOK had been Greece's ruling party until it formed a unity government with the ND late in 2011.
For a while it seemed these elections would be definitive. Either Greece would reject the country's agreement with its international lenders, potentially being forced out of the eurozone, or it wouldn't. If Greece rejected austerity and forcibly or voluntarily left the eurozone, the country might set a precedent for other troubled states and precipitate a financial crisis -- a eurozone exit and default would likely go hand in hand. Europe would be tested as never before, and it would find out how resilient it is to a wider financial crisis.
But in Europe, the least likely outcome is a definitive one. ND won the election with about 29.5 percent of the vote, earning 78 seats in parliament plus another 50 seats awarded to the winning party by the Greek Constitution. SYRIZA received roughly 27.1 percent of the vote, equivalent to 72 seats, and PASOK received roughly 12.2 percent of the vote, or about 33 seats. The rest of the vote was scattered among a host of other parties. A party needs 151 seats to gain an absolute majority in parliament, but since no single party passed that threshold, a governing coalition must be formed. So the ND needs PASOK if it is going to cobble together a governing coalition, but PASOK has said it will not join a coalition without SYRIZA. It is unclear what a coalition would look like between a party that wants to respect the bailout agreement and a party that wants to reject it, but such a coalition is unlikely to happen anyway. SYRIZA wants to form a powerful opposition. Something resembling a government eventually will be assembled regardless of current rhetoric.
The Greek vote has settled nothing. In fact, it may not even lead to the formation of a government; the last election failed to produce a government and forced this election. That the European crisis most severely affected a country so politically fractious could be seen as pitiable. On the other hand, one could argue that the crisis inevitably would be most severe in the most divided country -- not because the divisions caused the crisis, but because the crisis caused the divisions.
The pressure brought on by the circumstances in Greece undermined whatever political order was in place; the choices for policymakers were so limited and so frightening that coherent responses were difficult. Greece has options, but it is unable to choose one. More than anything, Europe wants a decision on its future, whatever that decision might be. On June 17, Greece disappointed Europe not because of the choice it made but because it was crippled with indecision.
Greece's indecisions are at the ground level of Europe. Another and more significant framework for indecision is emerging in Franco-German relations. The French Socialist Party won an absolute majority the same day that the Greeks entered another gridlock. This makes it possible for France's Socialists to form a government without the Greens, giving Hollande a strong and coherent platform from which to operate.
France's position on managing the sovereign debt crisis differs fundamentally from Germany's. Germany has said it will not agree to proposed solutions that would essentially turn the eurozone into a transfer union until the rest of Europe can balance their budgets through austerity measures. Germany believes this must be the first step to further EU and eurozone integration. Hollande takes a different position. He, too, wants greater European and eurozone integration. However, Hollande advocates economic stimulus alongside austerity measures as a means to rebalance the finances of European governments.
Hollande wants to grow Europe out of its financial problems. This means stimulating economies, a process that requires deficit spending. Hollande upholds a traditional Keynesian tenet that increasing demand for goods among consumers will increase economic activity and increase investment. As a Socialist with a strong leftist contingent in his party, Hollande cannot support the German position, which constrains the economy, particularly by decreasing government expenditures, thereby depressing consumption.
The difference between the French and German approaches is substantial. It reveals a dispute at the heart of the European strategy for managing the crisis. The Germans have been aggressive in demanding balanced budgets. The French are becoming equally aggressive in demanding expansionary policies. Both want to avoid defaults, but the Germans want to guarantee payments of debt by a combination of bailout and austerity. The French want to add stimulus to this, which changes the situation entirely because the stimulus would be funded in large part by German coffers.
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