Could a French Socialist throw an economic wrench into Obama’s re-election?

Of all the external factors that might affect the presidential race, I doubt many people saw President Obama being hurt by an honest-to-goodness European Socialist. But the intention of Francois Hollande, the French Socialist challenger to President Nicolas Sarkozy, to renegotiate the painstakingly struck European bailout could send shivers through economies over there and here.

From an interview Hollande gave German news site Der Spiegel:

I want to renegotiate it. Not all of it — some things seem reasonable to me. I’ve already committed myself to a balanced budget and better economic governance. But what bothers me most is that there is nothing about growth in the fiscal pact. And then there is some uncertainty with regard to the automatic sanctions — that is, what is expected of countries to reduce their deficits.

Hollande is right in a very narrow sense, that growth is key to balancing budgets in Europe (and here as well). But his proposal to attain that growth by issuing euro bonds as “a tool against speculation” and to pay for “big industrial projects” is an ominous one. First, because it’s clearly a ploy to get Germany to pay out more money in parts of Europe that are tightening their own budgetary belts — a ploy that isn’t going to pass muster with exasperated German taxpayers.

Second — and this is where the relevance to our election comes in — any renegotiation is going to restart the roller coaster that bond and stock markets rode for the better part of a year while European pols worked out the current terms. The French elections will be held April 22 (with a potential run-off on May 6) and Hollande is currently leading the polls by double digits with a clear majority.

If he wins and begins agitating to re-open the pact, Katrina bar the door.

And if that happens just as gas prices are approaching their peak, it could put Obama in a real economic bind. Not one to be wished for after a few years of rocky markets, but certainly one that could complicate our economic and political pictures.

(h/t: ViaMeadia)

– By Kyle Wingfield

190 comments Add your comment

Ernest T. Bass

March 12th, 2012
11:05 am

Have you seen who he is running against ?

Its already over

JF McNamara

March 12th, 2012
11:25 am

Hollande is pandering to the electorate and he should be ignored. The only potential Euro problem is Portugal (right now). Greece won’t have trouble again until 2015.

Even if its renegotiated, the default has already occurred and the money has been written off the books. There won’t be a deleveraging like in 2008.

Newt-A-Maniac

March 12th, 2012
11:25 am

I can just sense the giddiness at the potential for the economy to slip. Keep hoping as I don’t suspect the campaign against making whoopie is a campaign winner for the GOP.

carlosgvv

March 12th, 2012
11:26 am

If this were to happen, things that “could complicate our economic and political pictures” might last for many years. So, while this would certainly be bad news for Obama, it wouldn’t be much better news for his Republican successor.

HDB

March 12th, 2012
11:31 am

….from Der Spiegel:

SPIEGEL: You want to tax annual incomes in excess of €1 million at a rate of 75 percent. Isn’t that populism from the left?

Hollande: The 75 percent isn’t shocking. What is shocking is a salary of more than €1 million. In 2010, in the middle of the crisis, the chairmen of France’s largest publicly traded companies raised their salaries by 34 percent. That’s the reason for my proposal. In the crisis, they can be expected to be patriotic, which also includes solidarity.

SPIEGEL: After Sarkozy, who is seen as the president of the rich, do you intend to be the president who hates the rich?

Hollande: I don’t like indecent, unearned wealth. But it is legitimate for an entrepreneur who has created something to make a good living.

…and conservatives here are railing against a 5% tax increase??? Methinks the US doesn’t come CLOSE to the French populist movement……

JF McNamara

March 12th, 2012
11:31 am

@Kyle,

I thought you would enjoy this if you haven’t seen it. Both you and Bookman have these issues in the comments sections.

http://www.cnn.com/2012/03/11/tech/web/online-comments-sxsw/index.html?hpt=hp_t2

Just saying..

March 12th, 2012
11:32 am

Geez, Kyle.
Already reached “no hope too faint”, huh?

Just saying..

March 12th, 2012
11:35 am

JF McNamara-
Yeah, saw that. This blog certainly makes the exhibits section.

md

March 12th, 2012
11:38 am

“Hollande is right in a very narrow sense, that growth is key to balancing budgets in Europe (and here as well).”

Hence the problem for both……we/they tend to spend on projections, vs actuals. What folks need to remember, is there are no guarantees……we need to spend what we have vs what we wish we had.

Greece is feeling the pain of waiting for the growth that never came. And to a lesser extent, check out the Japanese economy over the past couple of decades…….

ragnar danneskjold

March 12th, 2012
11:42 am

Compliments, well argued, and a perspective that had not remotely crossed my mind. Completely plausible. Impressive.

md

March 12th, 2012
11:46 am

As for the impact on our market……S&P already fired a shot across our bow and it has been ignored as if it never happened…….new budget same as the old budget. The current powers that be are just asking for trouble.

And it is only a matter of time before Germany gets tired of carrying the load for the freeloaders in the EU.

Hillbilly D

March 12th, 2012
12:19 pm

it’s clearly a ploy to get Germany to pay out more money in parts of Europe that are tightening their own budgetary belts

As soon as the Germans figure out they’re toting the mail for the rest of Europe, that’s the end of the European Union. May not happen in the next year but it’s coming.

Kyle Wingfield

March 12th, 2012
12:19 pm

No doubt, carlosgvv. That’s one reason it’s foolishly short-sighted to root for economic trouble to boost one’s electoral prospects.

I’d add that pointing out a possibility, as I’ve done here, is not the same as rooting for it.

Kyle Wingfield

March 12th, 2012
12:24 pm

JF: Portugal won’t be the only European country we’re talking about if the deal is re-opened. I’m not entirely clear they’re out of ICU, as the popular meme has it, even if the deal remains untouched. The math just doesn’t look good for a lot of these countries — because they don’t have much of a prospect of growth, as Hollande pointed out. The problem is that his preferred method of stimulating growth — more government spending — is part of what’s kept Europe in slow-growth mode for decades.

JF McNamara

March 12th, 2012
12:42 pm

Word on the Street is that Portugal is going to get bailed out later this year. That’s already baked into the markets. Reopening the deal may cause bond rates to rise and push other countries into default, but no one else is in immediate danger.

Economies only grow fast if your businesses are creating value. In a non-competitive country like Greece, that’s not going to happen because France and Germany have subs a huge competitive advantage. Heck, its difficult here. Aside from an outright default, this psuedo default was the best option, and no one at the IMF or in any other country will be willing to listen at Hollande. He’s just politicking.

Tiberius - Your lightning rod of hate!

March 12th, 2012
12:46 pm

“Could a French Socialist throw an economic wrench into Obama’s re-election?”

Hope like Hell he does. The only thing more dangerous to the economic health of this entire world is a second Obama term.

Of course, the only thing more dangerous to the social health of this nation would be a first Santorum term. ;)

Jefferson

March 12th, 2012
12:50 pm

Why not write of how someone else is going to solve the problem, oh they can’t either.

Do what??????

March 12th, 2012
1:01 pm

“Have you seen who he is running against ?”

Yes, and both leading candidates lead Obozo in the polls.

Next.

Do what??????

March 12th, 2012
1:02 pm

“….from Der Spiegel:”

Yes, the commie appeasing Der Spiegel. Try again

Do what??????

March 12th, 2012
1:03 pm

“I can just sense the giddiness at the potential for the economy to slip. ”

Yes, I love seeing Obozo’s policies fail. It shows that socialism is a failed experiment.

Do what??????

March 12th, 2012
1:04 pm

“Why not write of how someone else is going to solve the problem”

He, and many others on the blogs have. You just either choose to ignore solutions or make fun of people for throwing out solutions.

Do what??????

March 12th, 2012
1:08 pm

“This blog certainly makes the exhibits section.”

Check out Bookman’s blog sometime. I’ll point you in the direction of AmVet, Granny, Midori and KUTGF.

Nuff said.

Just saying..

March 12th, 2012
1:30 pm

“Check out Bookman’s blog sometime. I’ll point you in the direction of AmVet, Granny, Midori and KUTGF.
Nuff said.”

You’re right. Calling the US President Obozo doesn’t count.

Mr. Holmes

March 12th, 2012
1:41 pm

I’d add that pointing out a possibility, as I’ve done here, is not the same as rooting for it.

I suppose that’s true. The Righties have “pointed out” quite a few “possibilities” since January 2009. While never secretly hoping for any of them to come to pass, I’m sure.

getalife

March 12th, 2012
1:44 pm

cons hate France.

thurston howell III (willard) will lose.

Do what??????

March 12th, 2012
2:11 pm

“You’re right. Calling the US President Obozo doesn’t count.”

I can call him whatever I want to call.

Do what??????

March 12th, 2012
2:12 pm

“cons hate France.”

Proof please.

Do what??????

March 12th, 2012
2:12 pm

“The Righties have “pointed out” quite a few “possibilities” since January 2009. ”

Just as the lefties were rooting for Iraq to fail.

wallbanger

March 12th, 2012
2:24 pm

Gee, I am having “an in the long run moment”. Did Germany win the war? Did Mexico beat Sam Houston? We are told that, historically, they didn’t, but when you look at the strength of those countries, and their populations right now, one might have to re-assess. Mexico is slowing taking over the United States, and Germany pretty much controls the entire European economy. Wow.

Tiberius - Your lightning rod of hate!

March 12th, 2012
2:27 pm

“Mexico is slowing taking over the United States”

Only in the mind of Harry Turtledove :roll: (obscure literary reference – look it up yourself, wallbanger)

Tiberius - Your lightning rod of hate!

March 12th, 2012
2:29 pm

Mr. Holmes, I’m right out front in saying that I hope Obama’s policies fail, as it will for once and for all prove that a government-managed economy is not in the best interests of freedom-loving people.

Finn McCool (Class Warfare = Stopping Rich People from TAKING MORE of OUR MONEY)

March 12th, 2012
2:30 pm

“Hey Europe, how is that Austerity working out for ya?”
~Thomas Jefferson

Just saying..

March 12th, 2012
2:33 pm

Do what??????
March 12th, 2012
2:11 pm

“You’re right. Calling the US President Obozo doesn’t count.”

I can call him whatever I want to call.

Of course you can. Enlightens many.

Tiberius - Your lightning rod of hate!

March 12th, 2012
2:36 pm

Still waiting to see any logic in how Finn McCool thinks that someone else’s money is his . . . :roll:

Just saying..

March 12th, 2012
2:51 pm

Tib-”Mr. Holmes, I’m right out front in saying that I hope Obama’s policies fail, as it will for once and for all prove that a government-managed economy is not in the best interests of freedom-loving people.”

I’m very uncertain that countries/societies/cultures Ever learn anything “…once and for all…”.

md

March 12th, 2012
2:59 pm

“Hey Europe, how is that Austerity working out for ya?”

And why exactly have they had to resort to austerity???

Wakey, wakey……….

Tiberius - Your lightning rod of hate!

March 12th, 2012
3:05 pm

“I’m very uncertain that countries/societies/cultures Ever learn anything “…once and for all…”.

Usually because our government is doing the educating . . .

Dusty

March 12th, 2012
3:09 pm

OK, I’m sleepy this afternoon. Still trying to get this straight. Here goes…………..

Kyle writes that a fellow in France who is going to run again Sarkozy is a socialist who may upset the European economy because he does not like the austerily imposed by some of the union members. In other words, he might start having more stimuli ( no austerity), upset the European Union which would wreck their economy and get ours stirred to a fatal economic state as directed by Obama.who loves negative stimuli like a mother. Germany, being the strong one in Europe, will tire of carrying the whole shebang and say goodbye to “baggage”, leaving the little dominions as penniless orphans looking around for rescue.

I think I have missed something here. Let’s start over. There once was a socialist in France, who might set fire to EU’s pants………..

Mr. Holmes

March 12th, 2012
3:20 pm

a government-managed economy

I’m assuming you mean the U.S. federal government, since lord knows government at every level in every political state in the entire history of Homo sapiens has attempted to “manage” its economy in some way. I seriously doubt any of the four men running for the GOP nomination will change that unblemished record, even Ron Paul.

This freedom-loving person is looking forward to (a) four more years of freedom from a Republican national agenda and (b) some small respite from political campaigns. That will be a blessing indeed.

Tiberius - Your lightning rod of hate!

March 12th, 2012
3:23 pm

“This freedom-loving person is looking forward to (a) four more years of freedom from a Republican national agenda”

Yeah, ’cause we wouldn’t want prosperity, would we, Mr. Holmes . . . :roll:

Finn McCool (Class Warfare = Stopping Rich People from TAKING MORE of OUR MONEY)

March 12th, 2012
3:25 pm

Obama will cake walk this even with a bad economy. Voters know Conservatives/Austerity/Milton Friedman stuff is a REALLY bad idea right now.

Why are they able to comprehend this? For the same reason the majority of Americans don’t watch Fox News.

Mr. Holmes

March 12th, 2012
3:30 pm

Oh, you mean like the 1990s, the longest peacetime economic expansion in U.S. history, when for eight years we had a God-fearin’, gay-bashin’ Republican presi– err, umm …

I guess you mean like Dubya. Yeah, he really left us prosperous.

AmVet

March 12th, 2012
3:36 pm

“cons hate France.”

Proof please.

Meat, you really wrote that???

The depths of your denial are truly amazing…

Finn McCool (Class Warfare = Stopping Rich People from TAKING MORE of OUR MONEY)

March 12th, 2012
3:37 pm

It’ll probably take another 6 years to dig us out of the hole we dug ourselves into in the 00’s. I guess President Elizabeth Warren will have to help finish the job….

Pierre

March 12th, 2012
3:42 pm

US Congress opts for “freedom fries”

French fries are off the menu for US legislators French fries in the House of Representatives’ cafeterias will now be known as “freedom fries” as part of a Republican protest at France’s opposition to a war on Iraq.

Republican representative Bob Ney, whose committee is in charge of the eateries, said the action was “a small but symbolic effort to show the strong displeasure of many on Capitol Hill with the actions of our so-called ally, France”.

Tiberius - Your lightning rod of hate!

March 12th, 2012
3:45 pm

“Oh, you mean like the 1990s, the longest peacetime economic expansion in U.S. history, when we had a largely Republican CONGRESS … ”

Fixed your typo, Mr. Holmes.

Just saying..

March 12th, 2012
3:45 pm

“This freedom-loving person is looking forward to (a) four more years of freedom from a Republican national agenda and (b) some small respite from political campaigns. That will be a blessing indeed.”

Hear, hear, Mr. Holmes!

Tiberius - Your lightning rod of hate!

March 12th, 2012
3:48 pm

“I guess President Elizabeth Warren will have to help finish the job….”

Considering she’s between 8-12 points behind Scott Brown in a blue state like Massachusetts (depending on what poll you look at), I don’t think we’ll be seeing her name on a ballot for years to come, Finn.

Unless Kerry finally retires.

Do what??????

March 12th, 2012
3:48 pm

“Obama will cake walk this even with a bad economy.”

Keep telling yourself that.

Do what??????

March 12th, 2012
3:51 pm

AmVet

How nice of you show up and then run away like the cowardly clown that you really are. You know, I went back and found one of Bookman’s columns from 2007. I found some of your lame comments and realized something. You’ve been blogging on the AJC blogs for 5+ years.

Do you know what that means? That means that you are the BIGGEST loser to grace the blogs of the AJC. You’ve blogged 24/7 on Bookman’s blog for over 5 years.

You obviously don’t have a job, aren’t married and live a pathetic life.