More turmoil awaits Europe as Sarkozy loses and Greeks vote against Europe

Sarkozy has lost in France according to Belgian and Swiss sources though the exit polls in France are not yet out. Hollande is expected to win by 5%.

The exit polls are also out in Greece.

In Greece, the only two parties supporting the Eurozone bailout and the austerity measures – PASOK and New Democracy – will probably not be able to form the next government. And that means that the chances of Europe leaving the Euro are greatly enhanced. In the short term this will cause massive turbulence in the Eurozone.

But in the long term – I think – that is the best thing that could happen to the Euro. To have an artificially unified single currency forced to absorb all the political and fiscal variation that is present in Europe is just not sustainable – at least for the foreseeable future. The sooner Europe bites the bullet and accepts that a unified currency is premature, the better for Europe and for Europe as a motor for the world’s economy. Right now it is Europe which is retarding the recovery of the world economy from the depths to which it sank after the gross financial mismanagement in the US. China and India and Brazil cannot yet sustain the world economy without the US and Europe.

And in France it looks like President Hollande – if he wins – will also reject austerity and try to spend his way out trouble. And that will not help Europe either.

Reuters reports:

Greek voters enraged by economic hardship deserted governing parties in droves in an election on Sunday, according to exit polls that threw doubt on the country’s future in the euro zone. The exit polls showed conservative New Democracy and Socialist PASOK, who have dominated Greece for decades, reaching a maximum of 37 percent of the vote combined. ….. 

If confirmed by official results, the election could plunge Greece into new political turmoil, reigniting a euro zone debt crisis first detonated by Athens in 2009 and starting it down a path that could take it out of the euro.

The exit polls showed Greeks fuming at record unemployment, collapsing businesses and steep wage cuts had ignored warnings that a vote against the harsh terms of the bailout would push Greece towards bankruptcy. ….

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