Possibility of a Greek exit from the Euro increases daily

With the failure of Greek political parties to form a government, new elections will be held on June 17th.  According to current polls, the party likely to come out on top (although without a majority) is the leftist Syriza party, which is against fiscal austerity measures that would ensure the ongoing bailout.  Analysts have varying takes on what might happen if/when a Greek exit (aka "Grexit") occurs:

From the Economist: http://www.economist.com/node/21555567

The FT reports on the new caretaker government and the upcoming elections: http://www.ft.com/intl/cms/s/0/e18e27e6-a012-11e1-90f3-00144feabdc0.html#axzz1v8ps1Oj3

The UK Guardian's front page ran a headline stating that a Greek exit would cost over a trillion dollars: http://www.guardian.co.uk/global/2012/may/16/cost-greek-exit-euro-emerges

CNN contemplates the possibility of a Greek exit: http://edition.cnn.com/2012/05/17/business/greece-euro-exit/index.html?hpt=ieu_t2 and also reports on multinational companies making preparations, while politicians avoid the topic: http://edition.cnn.com/2012/05/16/world/europe/europe-grexit-planning/index.html?hpt=ieu_c2

Storm clouds on the horizon...

France's new president, Francois Hollande will be sworn in on Tuesday, and will be entering office during one of the most perilous times for the Eurozone.  http://www.eubusiness.com/news-eu/france-vote.ggu

A perspective on the upcoming meeting between Hollande and Merkel on Tuesday from the UK Guardian: http://www.guardian.co.uk/business/2012/may/13/eu-leaders-showdown-eurozone-crisis
Greece has been unable to form a government, and is likely heading for new elections, putting in doubt the government's ability to implement new austerity measures required for their bailout. http://news.yahoo.com/greek-efforts-coalition-flounder-131813794--finance.html

Economist Paul Krugman sees few options for the Eurozone - http://krugman.blogs.nytimes.com/2012/05/13/eurodammerung-2/?smid=tw-NytimesKrugman&seid=auto

But economist Barry Eichengreen sees difficulties for countries that want to leave the Euro, comparing the current situation in Europe to the historical situation with the gold standard he states, "Yet I am reluctant to believe that things will turn out the same way this time. Four differences lead me to believe that maybe – just maybe – the euro will survive.": http://www.project-syndicate.org/commentary/is-europe-on-a-cross-of-gold-

The bleak outlook in the media is punctuated by protests, like those this weekend in Spain:
http://edition.cnn.com/2012/05/12/world/europe/spain-protests/index.html?hpt=ieu_c1

...and the dominoes continue to fall in Germany: http://www.nytimes.com/2012/05/14/world/europe/in-rebuke-to-merkel-social-democrats-win-german-vote.html?hp

Why attention needs to be paid to French legislative elections in June

The outcome of the French presidential election this past weekend was not a surprise, although Sarkozy did indeed close in on Hollande at the end, but it was not enough to give him a second mandate.  There have been many analyses of the election and what it means, but little attention has been paid thus far to the upcoming French legislative elections in June.  Although the French Assembly has little power compared to the President, the June legislative election is critical for Hollande's ability to govern.  He will need a majority of leftists in the Assembly, otherwise, if the right can manage a majority, he will be faced with a divided government, and "cohabitation" as happened under Mitterrand and Chirac, who had to work with Prime ministers and majorities from the opposition.  As Jim Bitterman notes in a CNN report, Sarkozy set to work on Monday to strategize on getting a legislative majority for the right. (http://globalpublicsquare.blogs.cnn.com/2012/05/07/after-the-french-election-will-divisions-remain/)

Bitterman also notes that there were 2 million blank ballots cast, while Sarkozy lost by 1.2 million votes.  This fact will be critical to the right's calculations as they look forward to the legislative elections.  Marine Le Pen may hold the key -- as I have written in my book on the Radical Right (Voting Radical Right in Western Europe) parties in France tend to use the first round of the two-round legislative election as a sort of primary.  The top candidates from the left and right will move forward, and candidates who come in behind them will usually agree to drop out, in order to give the top candidates a better chance of winning.  In past elections, the mainstream right has said that they would not cooperate with candidates from the National Front, which cost them seats.  It is yet to be determined what will happen in the upcoming election, now that Marine Le Pen has shown that she controls a large number of votes, which is concentrated in particular departments (see electoral map http://media.rtl.fr/online/image/2012/0423/7747131778_2012-les-cartes-du-premier-tour-le-vote-le-pen.jpg).  If the mainstream right agrees to coordinate with the National Front, it could mean that they could win several seats, potentially impacting Hollande's ability to get a majority. As has oft been said during this economic (and now political) crisis in Europe - chaos could ensue.

More Analysis:
From Steven Erlanger of the NY Times - on the same track as my comments above: http://www.nytimes.com/2012/05/08/world/europe/sarkozys-party-assesses-2-paths-after-loss.html?_r=1&pagewanted=all

http://globalspin.blogs.time.com/2012/05/07/after-winning-the-french-presidency-what-will-francois-hollande-do-next/

http://www.businessweek.com/news/2012-05-06/hollande-defeats-sarkozy-in-shift-of-power-to-french-socialists

Elections and Austerity - voter push-back

Sunday's first round of the French presidential election was a clear rebuke to France's Nicolas Sarkozy, but it is also worrying for EU officials that the far right National Front (FN) candidate, Marine Le Pen received the highest percentage of the vote ever for an FN candidate (18%) - a protest vote against EU policies? Along with elections coming up in Greece, and today's resignation of the government of Mark Rutte in the Netherlands (which will precipitate new elections), the EU's fiscal pact could be put in jeopardy. This will also have an impact on the growing debate between growth and austerity.  I expect election campaigns in all three countries to focus on the growth vs. austerity issue, as well as immigration, assimilation, and Muslims in Europe.

Election night results in France

It was no surprise that Nicolas Sarkozy and Francois Hollande advanced to the second round of the French presidential election today, however, polls did not predict the nearly 20% of the vote received by the candidate for the French National Front, Marine Le Pen.  This is much higher than her father received even in the second round of the 2002 presidential election.  Without seeing detailed survey data, it is hard to know whether this was more of a protest vote against Sarkozy, or a vote for Marine Le Pen, but it is clear that this was a rebuke to Sarkozy, who had been trying to court far right voters with a tough stance on immigration policy during the last few weeks of the campaign. Voters chose the candidate with the tougher stance...this may eventually have an impact on policy, depending on the results of the French legislative elections in June. The latest word is that Le Pen will decide on May 1st if she will endorse a candidate.

These results may also give heart to far right politicians in places like the Netherlands, which is expected to call a snap election, and the UK.  The far right has been on the rise since at least the 1990s, so this is not a totally new trend, but the results for Le Pen may indicate increasing support, at least in France.

This vote will give a boost to the National Front as it heads into the legislative campaign, with the possibility that they may be able to get a few candidates into the French Assembly in June.  The election was a disappointment for Jean-Luc Melenchon, who was predicted to get as high as 15% of the vote, but only received approximately 10%.  Overall turnout was strong at 80%.

Early polls suggest that Francois Hollande will get 54% of the vote to Sarkozy's 46% in the second round on May 6th.  The next two weeks will be spent with the two candidates fighting for far left and far right votes. 

Websites with up-to-date information on the election:
New York Times: http://topics.nytimes.com/top/news/international/countriesandterritories/france/index.html
UK Guardian:
http://www.guardian.co.uk/world/french-elections-2012
France 24 - with video:
http://www.france24.com/en/category/tags-th%C3%A9matiques/french-presidential-election-2012

Election day in France

French news outlets were reporting turnout around 70% a few hours before polls were to close.  Here's a link to video from France 24 - http://www.france24.com/en/20120422-france-voters-presidential-election-polling-station-first-round-arrondisement

The main twitter hashtag for election news has been #France2012 but some tweeters are using the hashtag #radiolondres to get around the blackout on reporting election returns before polling stations close. However, Belgium's Le Soir was posting some early results: http://www.lesoir.be/dossiers_speciaux/special2/2012-04-21/decouvrez-les-premiers-resultats-910747.php

The night before the French election

It is unlikely that there will be many surprises in the French election on Sunday, the incumbent Nicolas Sarkozy and his main challenger, Francois Hollande will move on to the second round.  What is interesting, is what the vote will tell us about the French electorate's response to the candidacies on the extremes.  On the far right, Marine Le Pen hopes to at least match the percent of the vote received by her father in previous elections (~15%) and on the far left, Jean-Luc Melenchon's new left party hopes to come in third, giving the party a boost for future elections.  Steven Erlanger of the NY Times provides some context:

The success of Marine Le Pen's father, Jean Marie Le Pen, in 2002 was embarassing for French voters and has had an impact on subsequent elections.  Voters may be less likely to vote for extreme candidates to avoid an outcome where a mainstream candidate doesn't make it into the second round. I describe this as strategic voting in my book, Voting Radical Right in Western Europe. However, with the polls showing Hollande at around 30% of the vote, it is possible that far left voter's may feel that he is safe and vote for Melenchon.  I think it is more likely that voters will strategically abandon Marine Le Pen to give Sarkozy a boost into the second round.