Eurozone elections will precipitate Greek exit
A FRESH Eurozone crisis was always inevitable – the question was over its timing. At least now we have some clarity. What angry voters in France and Greece have done is to precipitate the next stage of the slow unravelling of Europe’s flawed structures. Greece would have gone bust and quit the euro regardless of who won at the weekend; the fact that such a motley crew has been elected in Athens means that its departure could now happen much more quickly than anybody realises.
The election of Francois Hollande will shift France even further leftwards – but the key immediate change is that the Eurozone will become even more rudderless. It will be even harder for the euro-elites to pretend that they have a bailout plan, or for them credibly to convince markets that all will be well. The row over Europe’s fiscal pact is a distraction; eventually, Hollande and Angela Merkel will agree some grubby compromise. The reality is that the pact is largely meaningless, just like the original stability and growth pact contained in the Maastricht treaty. The real issue is what will happen next time a country hits the rocks – and the Hollande-Merkel relationship will be even less ideologically consistent than the Sarko-Merkel one. There will be intractable differences on how far to push the European Central Bank towards money-printing. Just as French voters want to retire earlier and hammer the rich, German voters don’t want to suffer high inflation or pay for bailouts to profligate countries. Both countries will remain deeply committed to European integration; but their ideological differences and that of their leaders will mean that smaller countries will be reluctantly allowed to quit the euro in a bid to save the centre.
The widespread claim that pro-austerity politicians have been replaced by pro-growth ones is of course laughable nonsense. Everybody wants growth; this is a battle over means, not ends, and a disagreement about constraints. It is hard to generate sustainable growth; it requires profitably producing and selling more goods and services. Getting the government to borrow and spend even more money to create fake demand at a time when national debts are already rocketing is hardy pro-growth – it is either stupid and unsustainable (and will bring national bankruptcy a step closer) or impossible, in the case of Greece, where the latest bailout cash will run out in two and a half months’ time. Dear reader, it’s time to fasten your seatbelts.
OVER TO YOU, BORIS
It’s not all bad news. Boris Johnson’s reelection was the right outcome for London. We wish the mayor the best of luck – and hope and expect that he will fulfill his promises and continue speaking up for the market economy, hard work, enterprise and against oppressive taxation. There is much that David Cameron could learn from Boris’ brand of conservatism, which is much closer to classical liberalism than the coalition’s lame attempts. But Boris’s second term must be more radical than his first, especially when it comes to policing and reforming Transport for London. The pathetic handling of the count on Friday was another proof of the deep incompetence at the heart of London’s bureaucracy. The public have given the mayor the second term he so desired; he must now deliver real improvements. Over to you, Boris.
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