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EYE-BALL’s Herman on: An update on the French Presidential elections and other

April 23, 2012
Herman O'Hermitage
Title:
An update on the French Presidential elections and other
By: Herman O’Hermitage
Herman O'HermitageA

As the result of the French Presidential elections is absorbed and considered there are a couple of things. Marine le Pen is finished. She went well. She represents ultra nationalism and protectionism. I set some of this out before. Leave Euro, cut ties to Brussels and obligations to EFSF, greater self determination for France towards their obligations towards 3rd world aid refugees and so on.

Francois Hollande is now likely to win the ultimate poll but it is no sure thing. He describes his economics as reverting to classic Keynesian logics, for not only France but Spain Italy and Greece. He has campaigned on marginal tax rate of 75% for any income over Euro1,000,000 and targeting tax schemes for the rich. The counter Sarkozy argument is that a brain drain will occur where high incomes will simply move outside France. The ultra left candidate (Jean-Luc Mellechon) is now eliminated. In reality, the ultimate poll comes down to Hollande v Sarkozy. (Their preferential system is nothing like ours).

This will all only add extra confusion to Euro Zone. Only a narrow win by Sarkozy can put the Euro politics at ease. I believe a narrow win by Hollande will have a short wait see, before some massive financial markets turbulence, particularly in France. That will effect all of Europe

In proposing massive taxes on the rich, and stimulatory economics for the marginalised, he is doing what some Americans are saying they need, but no Republican could win the Oval Office by employing. About 6 to 7 months before Presidential Day in the USA, this will set a background for the White House debates. President Obama will naturally align himself with France and Francois Hollande.

What Premier O’Farrell is employing in NSW is also worth noting. The real debate about Sydney’s second airport is whether the Premier can sell non-productive government assets. The government has sold some parcels of land owned by the old Roads and Traffic Authority but now a massive sale like Badgery’s Creek would stimulate private sector, and reduce government debt. No one is really talking about starting to build a second airport, the problem has been in the too hard basket forever, and there it will remain. The real issue is the Premier is not working buy side or sell side, but Return On Assets employed.

I will post a bigger update in the next 4 weeks.

Soon we will see the effect of reduced prices on metal ore sales by BHP and RIO. We will also be further down the track with the Greek crisis. The only saviour for Greece is departing Euro and letting it’s own currency level to stabilise. Each bailout makes this more twisted. In default, there is logical consequence. There will not be money for Social programmes. There will be loss of ownership of Greek assets. Everything that applies to Greece could have consequence for Spain, Portugal and Italy, and the whole of Euro. Belt tightening in Italy will continue, but it is not really possible in Portugal and equally as rough in Spain.

Until then,

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Herman …

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