The Lehmann Letter (SM)
France and Greece voted out their governments because of disillusionment with austerity and their weak economies. This disillusionment is also apparent in Spain, Italy and other nations on Europe's fringe that are struggling with high debt and high unemployment. Mighty Germany, with relatively low unemployment and low debt, wanted them to abide by the rules of the game: Higher taxes, lower spending and contracting economies. They rebelled.
Now Europe must re-examine how it will deal with weaker nations' government debt. New French and Greek governments will turn away from austerity while Germany will continue to advocate for austerity. Thus far, however, the newly elected are not advocating the abandonment of the euro. The European project - an ever more integrated continent - remains intact.
We will see whether or not the continued drive toward European integration - Europe's goal since the end of World War II - will survive this latest upheaval. The European project has survived past challenges: Compromise has prevailed. This letter believes compromise will prevail once more and the euro will survive.
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© 2012 Michael B. Lehmann