The Lehmann
Letter (SM)
This morning’s
New York Times covered a press conference by Francois Hollande, France’s Socialist
candidate for president:
One might
think that he would advocate a radical departure from the policies of Nicolas
Sarkozy, the incumbent, with respect to European solidarity.
But it’s hard
to find them in this story. Here’s an extensive excerpt:
“In the first news
conference of his campaign, Mr. Hollande said that he would propose four
modifications to the European Union treaty, favored by Germany and approved in
March but not yet ratified. Most significant, perhaps, he called for the
creation of collective euro bonds, but to be used to finance industrial
infrastructure projects, not to consolidate debt, which the Germans oppose.
“He
said he would also call for a financial transaction tax, as his rival,
President Nicolas
Sarkozy has done, and for loosening up regulations to allow unused
European Union structural funds to be spent on growth. Finally, he urged the
European Investment Bank to place a greater emphasis on job creation in its
allocation of financing.
“The
main risk to Europe now, Mr. Hollande said, “is that the European economy
remains in a recession because not enough credit is provided to companies.” He
said that increased growth would help shrink debt, and that other European
leaders were coming closer to his argument that increased growth is “ultimately
a more effective way of reaching the same goal of controlling the debt and
reducing deficits.””
There is no mention of
additional fiscal stimulus, i.e. permitting peripheral nations such as Spain an
increase in their budget deficits in order to stimulate aggregate demand. There
is no mention of struggling with Angela Merkel of Germany, Europe’s champion of
fiscal conservatism. And, most important, there is no suggestion of breaking up
the euro-zone and derailing Europe’s march toward greater cohesion.
Could it be that, if
elected, Mr. Hollande, the Socialist candidate, will stay the course just as Mr.
Sarkozy has: Putting European solidarity above all other long-run goals.
It would not be
surprising.
(To be fully
informed visit http://www.beyourowneconomist.com/)
© 2012
Michael B. Lehmann
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