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‘Seismic Shift’ In Europe After French And Greek Elections

Filed by KOSU News in Business.
May 7, 2012

A victory Sunday by Socialist presidential candidate Francois Hollande in France and the rejection by voters in Greece of that country’s austerity policies have caused a “seismic shift” that threatens the future of the euro, The Guardian writes this morning.

The news has also sent financial markets down sharply.

As Reuters says:

“Greece’s vote, combined with the victory of Socialist Francois Hollande over incumbent Nicolas Sarkozy in a French presidential election, will raise pressure on Europe’s paymaster Germany to pursue a more growth-oriented approach to the crisis. But it is far from clear whether Chancellor Angela Merkel, whose insistence on tough deficit reduction in vulnerable southern euro members is popular in Germany, will take more than symbolic steps in that direction, even after Sunday’s elections.

” ‘This shows that politics is getting out of control in Europe, the gap between politicians and voters is widening, that’s what you see in Greece, that’s what you see in France,’ said Steen Jakobsen, chief economist at Saxo Bank in Copenhagen.”

In the Greek parliamentary elections, according to NPR’s Sylvia Poggioli, voters “sent a strong message to their country’s international creditors … rejecting their strict austerity policies.”

Meanwhile, French voters seemed to be as interested in “getting rid of Sarkozy” as in electing Hollande, reports Eleanor Beardsley. But she adds that Hollande’s first trip outside France will be to visit Germany’s Merkel, and that he “plans to renegotiate [the] European austerity pact put in place by Sarkozy” and the German chancellor.

In response to the news about Sunday’s elections in France and Greece, “the euro and equity markets fell and bond yields in the eurozone’s periphery nations climbed,” The Financial Times writes.

The Wall Street Journal says “Wall Street stocks are expected to open sharply lower Monday after weekend elections in France and Greece led to a flight of money out of assets perceived to be risky into those seen as havens.”

“The fear now is that all the hard work that had gone into getting the second bailout package may start to unravel and we can expect some real pressure on stock markets in the coming days,” analyst Justin Harper of IG Markets, tells the BBC. [Copyright 2012 National Public Radio]

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