Forebodings Brought on by Upcoming Elections in Europe

Forebodings Brought on by Upcoming Elections in EuropeThe European governments should watch out now that the elections are back on their agenda. They will take place in 2015, and promise to be perilous. No, it is not a question of departmental or regional stir, disaster is announced for PS, which may constrain Valls to resign or put more water in his reformist brew. No, these are the elections in the countries of southern Europe that threatens to revive the crisis in Europe. In Spain, Portugal and especially in Greece.

The kick was given by the Greek Prime Minister, the Conservative Antonis Samaras. He decided to advance on December 17, the first ballot for the election of the President of the Republic. The position is honorary. But the decisive stakes if during the third ballot the Greek MPs do not choose their president, early elections will be called. And Greece will be in the dilemma of 2012, where it had to choose between keeping the euro on the conditions of Europe and the IMF, and the adventure with the far left Syriza. Back to the forgotten case thirty months later, with the Syriza party that has the wind in its sails, credited with a quarter of the votes, just ahead of the center-right party Samaras and far ahead of the collapsed socialist PASOK (7% of voting intentions). If it wins the election, the Greek recovery plan will be compromised: Syriza refuses to pay its debts, which are growing, and take the bitter European potion.

Financial markets are not mistaken: the Athens Stock Exchange has lost more than 20% while other European markets loosened during the past week, as Athens is not isolated. By dint of being obsessed deservedly, by the Right and the extreme right-wing populism (Le Pen in France, Golden Dawn in Greece, Ukip in the UK and xenophobic Germany demonstrate every Monday in Dresden) had ended up forgetting that leftism spectrum that continuously  haunted Europe.

Widespread eviction of traditional social democratic parties

In addition to Greece, Spain is taken in turn by the Podemos movement (“We Can” in Spanish), lefty version of “Yes we can” that could prevent the usual bipartisan game play in Spain, while the Conservative Mariano Rajoy in power is discredited by corruption and the Spanish Socialist Party (PSOE) scuttled by Jose Luis Rodriguez Zapatero, are as badly off as PASOK. The trend is the same in Portugal, while people are increasingly reluctant to austerity, evidenced by the general strikes in Italy and Belgium and the sling conservative PS against Manuel Valls.

Invariably, the same phenomenon occurs: eviction of traditional social democratic parties. Either they were brave, as the SPD in Germany and New Labour in the UK, or lax as PASOK or PSOE. In any event, this moderate left loses, judging by both too right and too far left biases.

The most tragic case is probably that of the SPD, which ended up by imposing at its entering the government in 2013 its social measures to Angela Merkel (the minimum wage, the decline of retirement from 67 to 63 years old) but is not credited by the voters. The SPD has stagnated at 25% of the vote, far behind the 40% of the Christian Democrats (CDU) of Angela Merkel. As a result, the SPD becomes schizophrenic: the chairman, Sigmar Gabriel, reputedly left, set sail for the center in hope to recover by 2017 and winning the Chancery. At the same time, his troops allied with the Left Party in Thuringia, wearing for the first time since the fall of the Berlin Wall a neo-communist head of a German region, that of Luther, Bach and Goethe. Angela Merkel was able to report a “declaration of bankruptcy of the SPD in Thuringia.” In fact, she is going to do this for the SPD in Germany and the entire European social democracy. Add to this failure of social democracy, the rising exasperation unions, which paralyzed Italy’s Matteo Renzi (center left) and Belgium Charles Michel (Liberal). That does not bode a repayment of debts of the states.

The problem is that markets are finding themselves to begin to loosen. At least the stock markets, while interest rates remain low. Europe is protected by Mario Draghi, the ECB president, who decided to protect the euro “at any price”. He is asked to do more, to walk in the footsteps of Japanese Prime Minister Shinzo Abe who led his country into recession and the country’s trade deficit by making it believe in miracles of Keynesian multipliers.

But as a consequence of being flooded with cash, the euro area is taking a risk, that of a bond market crash: who would dare claim that ten year government bond rate in France is 1%? That of Spain and Italy is less than 2%? They are free today in Europe, even more than they were before the great crisis of 2008. A sharp rise in interest rates could help, put the knife to the throat of the French so that they are no longer content with reforms. But it would be to sink the South that has made heavy efforts.

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