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.
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© 2012 Michael B. Lehmann