May 7th, 2012
08:05 AM GMT
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(CNN) – With the election of Francois Hollande as the president of France and a Greek poll dealing a major blow to the coalition government in Athens, voters in Europe are pushing back on austerity.

"I asked for a strong mandate, but people chose differently. I respect their message," Greece’s New Democracy party leader Antonis Samaras said late Sunday. "Today's result expresses people's disappointment towards the implemented dead-end economic policy that tested their limits and didn't include the necessary development policy."

Meanwhile, French voters gave victory to the nation’s first a left-wing president since Francois Mitterrand left office in 1995. "Austerity can no longer be something that is inevitable," President-elect Hollande said.

Both elections have shaken the markets, which yet again are faced with uncertainty about the fate of the eurozone. Will a new coalition government adhere to the agreements that kept the fragile Greek economy part of the eurozone, or will political forces place Greece’s membership among the euro nations once again in doubt? “This could be the start of another deeply uncertain period in Greece with consequences far beyond its borders,” observed CNN correspondent Matthew Chance in Athens.

Gone now too is the “Merkozy” Franco-German leadership that has helped steer the euro nations through the debt crisis, adding further to investor uncertainty. “To get anything done in Europe, Germany and France have to agree,” Holger Schmieding, chief economist at Berenberg Bank in London, told Bloomberg.

As nations like Spain and the UK drift back into recession, some economists are wondering if the austerity medicine is killing the patient.

“It is what you get when you begin with a diagnostic failure and you end up with the wrong cure,” economist Yanis Varoufakis recently told CNN.

Varoufakis argues the perception that debt in Europe is at the heart of what ails the eurozone is misguided. “The problem of Europe is not debt. The problem of Europe is a badly designed monetary system,” he said. “(Debt) is one of the symptoms.”

One result of the austerity measures is a rise in people taking their own lives, like 77-year-old Dimitris Christoulas, who shot himself last month in Syntagma Square in Athens,  site of recent clashes between anti-austerity protesters and the police. As Christiane Amanpour recently noted, this phenomenon is spiking in Greece, Ireland and Italy, coining a new phrase in European newspapers: suicide by economic crisis.

Since the start of the 2008 Financial Crisis, there has been a tug-of-war between economists who advocate stimulus to help economies grow, and proponents of austerity to create structural reforms without kicking the economic can down the line.

On Sunday, elections in Greece and France suggest that battle has yet to be won.



soundoff (43 Responses)
  1. TOADEARS

    Bottom line is that people see how well these so called austerity types live themselves. It is austerity for the masses and luxury for the elite. And that is the battle ground, like it or not. OFF WITH THEIR HEADS is more than just a phrase from an old cartoon. When it was shouted in the French Revolution, they meant it!

    May 7, 2012 at 8:27 am |
  2. defff

    cutting spending was europe's only hope. socialism is a joke, it never works. its just hopeless now. i give the eurozon less than 5 years to survive. the germans won't keep subsidizing their irresponsible spend-crazy neighbors. its like france just said "eff responsibility, i'm going shopping!" i feel nothing but sorry for the naive french people. they don't know what they're about to get.

    May 7, 2012 at 8:55 am |
  3. sung-jin lim

    the Asian financial crisis placed enormous suffering on the citizens that were affected.
    the deepest condolences to those people who are losing everything from this

    May 7, 2012 at 8:57 am |
  4. government cheese

    France just asked me for a loan.

    May 7, 2012 at 8:58 am |
  5. ImNotEconomist

    I take a view that the government is merely an insurance company that collects from its nationals.
    Except that they should be the least beneficial "company" to its employees – civil servants – when compared with the private sectors because they are so secure, and that is good austerity.
    On the other hand, never impose austerity on average Joe citizens, otherwise that's just parasitism with an excuse.

    May 7, 2012 at 9:00 am |
  6. inswinger7

    defff – neither did the promise of unmitigated capitalism worked. Unfortunately, the french are not that naive. It's those who believe in austerity who are naive, but they don't have to bear the brunt of it all...it's the ordinary fellow on the street who has to carry the weight. In a good economy, the ordinary person barely gets the share of the spoils. In a bad one, they get the short end of the stick. What is needed, is a good balance between austere measures and spending measures to create jobs and income. Anyone insisting on sheer austerity and its extreme opposite is bound to fail, as the case in Europe and in a degree, in the US, has clearly shown.

    May 7, 2012 at 9:06 am |
  7. John

    There has to be an alternative to austerity and the erosion of our working conditions to compete with the wage slaves in Asia.
    Support Made in USA and Made in the EU!

    May 7, 2012 at 9:41 am |
  8. Gabole

    +1 for John

    May 7, 2012 at 9:55 am |
  9. trambus

    bay, bay EU

    May 7, 2012 at 10:15 am |
  10. BobD

    The way out of national, regional and global recession HAS to be growth and a positive drive forward. Governments MUST lead by example. When the ONLY message is cut, cut, cut – then everything becomes negative. The first thing that must be changed is negative Government. Greece and France are leading the way – let's kick the rest of the failures out and get positive.

    May 7, 2012 at 10:22 am |
  11. Maria Bogren

    I say Germany will opt out of euro within 3 years. Germans agreed to the euro because it was suppliers to be the new, pan-European D-mark. They will never accept (and rightfully so) a new, pan-European Franc, Peseta or Drachma. With Hollande's win the euro has died.

    May 7, 2012 at 10:30 am |
  12. Maria Bogren

    I say Germany will opt out of euro within 3 years. Germans agreed to the euro because it was supposed to be the new, pan-European D-mark. They will never accept (and rightfully so) a new, pan-European Franc, Peseta or Drachma. With Hollande's win the euro has died.

    May 7, 2012 at 10:31 am |
  13. sumeet

    "In economics, austerity is a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to reduce their deficit spending while sometimes coupled with increases in taxes to pay back creditors to reduce debt."-- wiki.
    Now can someone let me know how can the new governments for Greece and France avoid these measures. If they intend to avoid, they cant at this stage. As long as every country forming part of EU doesn't works unitedly with others, and here we mean unity in strict terms and unanimous decisions on future government policies, one cannot expect sustenance of the eurozone without it. It's high time we forget the difference between us and work together with rational thinking over the present crisis.

    May 7, 2012 at 10:44 am |
  14. Costa

    Lets see how well the German exports will go if they will opt out of Euro and they have a stronger Mark making it too expensive for the Eurozone to buy their products.The Germans all these years export everything but doesnt want to import anything from EU making them a barrel where all the money from the Eurozone go.If Germans start import more the other countries will recover if not,it is the Germans that will be hit the hardest.

    May 7, 2012 at 11:10 am |
  15. Frederik Toft

    The elections in France shows that the majority of french-voters are stupid. Because they believe that Hollande will again lower the retirement age and create a lot public sector with barrowed cash...

    May 7, 2012 at 11:12 am |
  16. austerity finally

    One day, they will hopefully realize that their days of guaranteed employment without actually showing up and effectively doing your job are over. What they need is a work ethic and not benefits that protect workers so completely that you don't have to show up to get paid. Rwtirement at 60 when life expentancy has increased into the 80s? Three weeks off for getting married? A doctor telling you that you can't decide for yourself to go to work if you're sick? Time away from work mandated by the government to go to the bank? Seriously? Stop complaining there are not jobs and making it so that small businesses can't hire anyone without being stuck with them for life or paying them for not working. What is the difference between Nothern and Southern Europe. Two words... work ethic, not building your life around doing as little as possible and demanding the government pays for it.

    May 7, 2012 at 11:17 am |
  17. León

    Goodbye EURO.

    May 7, 2012 at 11:21 am |
  18. Roland

    I'm shocked that France and Greece have been spending like crazy in the last few years creating huge debts but now after only 1 year they decide they don't want to cut spending but continue spending money they don't have. How about trying austerity first before wanting to go back on the debt heroine? Of course it hurts that is normal withdrawal symptom.

    May 7, 2012 at 11:24 am |
  19. austerity finally

    I agree, Roland. It's like going on a diet. It stinks but necessary for health. Most of the fixes need to involve the ridiculous labor laws. The people who are demonstrating are basically screaming "I don't want to work and still get paid".
    Just to give an example, In Greece, they demonstrated over the loss of vacation pay. Vacation pay? You are bankrupt and worrying about vacation? I have several friends in Spain who walked away from their businesses because they could not restructure. They were not allowed to let one person go in order to update their business and then hire two or three more down the road, Where I work there are several staff members trying to get fired because the payout is so huge, even if you are fired with cause. You could attach someone or not show up to work for years and it will still cost your employer thousands of Euros to fire you. And they wonder why things are such a mess? The labor laws are stranguling the economy.

    May 7, 2012 at 11:34 am |
  20. Tom

    The French election won't change all that much. They will still reduce their deficit to below 3%. The only difference is how this will be done, probably by putting more emphasis on additional tax and less on cuts.

    The effects of this shift to the left is greatly exaggerated.

    May 7, 2012 at 11:43 am |
  21. emm

    I really, really wonder where do you get your information regarding work laws in Greece. All of us working within the private sector would very much like to find out who this employer is that pays you without working.

    May 7, 2012 at 11:51 am |
  22. JIMMY

    we have menny or mayby all special forces cops in athens greece thay ur idiots ,yes ,we take from one big packet ,of idiots and we make cops .from now and to the future when you see greek cop run run im greek 45 hold and i now look him oh god help his mother fuc..r to found the role in the society ,help this ping .help this animal with greens
    so this is the trooth the special forces of cops thay have kill there mom s to accept them in the cops-mat school , is funny r cops play in circus

    May 7, 2012 at 11:52 am |
  23. Roland

    BTW "Austerity' is a big misnomer , it's called "living within ones means" that is a better description because "austerity' suggests people going through garbage bins and not having any money.French and Greeks have lots and lots of money the problem is they want even more without earning it first.There is no such thing as free money.

    May 7, 2012 at 12:15 pm |
  24. oliver

    All governments and countries have created debts and they really know why they have done so. The reasons behind this "treatment" that is applied to Greece and south EU countries is a new era for Europe where Deutschland wants to dominate. They can print EUROS and start building and investing but they really need to see others dying and suffering. Close your ears and do not trust politicians who want to exhaust citizens. Just think, what money is??? What is the price of 1 euro, of 1 dollar? Is it something real? ??? No! Therefore, why do they delimit markets? Why they stop putting money on the real economy???

    May 7, 2012 at 12:29 pm |
  25. Eddie always ready

    I m wondering if this "austerity finally" guy knows anything at all about what is happening here in Greece when he is saying about Greeks who supposed they are demonstrating for their vacation's pay??...when this is happened really?are you for real man?

    May 7, 2012 at 12:46 pm |
  26. FenseSitter

    What they are actually saying is more debt will fix your debt problems. Works great if you have an infinite credit card limit. Wake up you stupid people, you are borrowing from your future and your future is arriving soon.

    May 7, 2012 at 12:46 pm |
  27. austerity finally

    I get my information having worked in Southern Europe for years. The labor laws throughout guarantee time off for the following ;
    going to the bank, medical appointments (even when you can make them after work), when the doctor says you can't go to work (you can't decide this for yourself, even if you are not contagious, I once had to argue for an hour with a doctor that I should go back to work ...he didn't understand why I didn't want 10 days off like eveyone else), three weeks for marriage (and this in professions like teaching where they have 4 months off!), moving (because you can't possibly use normal vacaton days or personal days or a weekend, etc). There is a very, very long list. we won't even get into the people who have doctors notes for years saying they can't work even though they are healthy. You could get a job, show up the first day or after a year and announce that you are taking three weeks off because you are getting married in some professions. Once you have been working for one year, in Spain for example, you become "permanent." The pay out is so high (even if you are useles and don't show up) that employers will delay trying to fire people or if they have worked there too long it is too costly to pay the legal fees to pay someone out 45 or 20 days of salary for every year worked, plus damages. For example, we had a custodian who went to get the mail every day, disappeared for three hours, and slept in his car. They finally got enough evidence to fire him legally with cause but had to still pay him out damages of 35,000 Euros. In addition, employees are alllowd to take semi-retirment which pays them a fulll salary for working part time as early as 60. Trust me, I have lived through it with the people i workd with. Small businesses can't afford all this stuff so their solution is not to hire. This then contributes to youth unemployment in particular. The think is that the demonstrators argue that the government should just arrange for them to have jobs without understanding the consequences of their "protections" Let me make it clear, workers should have protections from abuse, opportunities for retraining for new professions, and support short term if they lose their jobs. But the level of these protections in Europe is strangling the economy. These are the kinds of things that the governments are paying for.

    May 7, 2012 at 1:01 pm |
  28. Eddie always ready

    I get married 7 months ago...i was away from my work only for one day after my marriage..damn!...why i didnt ask you "austerity finally" guy to get these three weeks off.....is there such a law here in Greece?...you know so much "wise" guy...you think you do...Come here and work next to me and i will teach you more...come and face reality propaganda guy..are enough for you 58 hours of work per week or you want me to work more to get 900 euros per month?

    May 7, 2012 at 1:11 pm |
  29. Jules

    Dont the French realise that they cant spend money if they dont have it??? how long can a country rack up debt for before everything collapses?? Austerity mesaures will look a hole lot better from the perspective of a total collapse, I think they are acting like spoilt kids who want everything and dont care what it costs to not go without, they should think of saving their country before themselves.... I guess there is only 2 ways out... work hard like the Germans and pay down the debt or just keep printing money like the Americans and wait for it all to hit the fan.

    May 7, 2012 at 1:12 pm |
  30. GG

    Austerity measures and pumping money to spark growth have a limited duration otherwise the intended outcome will be missed. You cannot implement an austerity program for too long; in addition you cannot continue pumping money for too long in hopes of sparking the economy either. There is a very delicate balance between the two; a balance that varies from country to country. Greece cannot leave the Eurozone as there is no clause that would allow other countries to throw them out. Period. It is simply something the rich and influential use to become more rich and influential. Realize that there are individuals making millions every week based on currency fluctuations. How do you think the Canadian and Australian dollar has reached such record levels? In a 2-3 years Australia and Canada will be in a position that is worse than Greece, Ireland, Iceland, Portugal, Spain, Italy, France, Netherlands and Argentina. Please note that all these nations are relatively very rich nations. Let me remind you that average Canadians owe more money than average Americans. Its time for both Europe and the USA to get their acts together because without them our children will be working in inhumane environments, in factories just like in Brazil, India, China and South East Asia with little hope for the future. The middle class will vanish.

    May 7, 2012 at 1:22 pm |
  31. Paulo

    The german policies,except the wars,have always worked and made Germany what it is today – the motor of Europe.In the last 100 years lost 2 wars and passed through breaking up and reunify – all at huge costs i suppose.And they are still ahead though,they are bailing out the neighbours and sustain the european economy.For you guys who doubt that their policies are right – you think germans wouldn't like to go on shopping spree,fancy spendings?But they are a disciplined and educated nation and they decided is not the right way out.Is not about the choice between capitalism and socialism,is simply the fact that when you are bankrupt you can't keep spending like you aren't.A simple common sense fact which many opportunist politicians apply every day in their home but not at nation level!I too think the french were naive in these elections and they will pay heavily in few years for it.

    May 7, 2012 at 1:59 pm |
  32. sumeet

    For me this crisis is nothing but the survival of the fittest. There is no bravery neither strong economy, IF NOT compares with a one on the verge of collapse or even in cases like Greece to extinction. The fact that this crisis isn't getting over is just another proof that the fittest want to remain this strongest and in this act the poorer are dying out of riots, out of hunger, out of unemployment. The demonstrations form these common people are the only way they can bring their voice to the world. Debts, common man! they were a simple act of survival instincts, wont Germans do it? or be it France or Italy?? everybody tries to survive and in this act gets over debited. The whole point is, if EU wants to prosper and not divide at this stage, they should seriously think to put behind the debts and let the respective governments plan for a stable and better future for the youths, for the common people. BUT then will it happen so easily? NO because the rich and strong countries wont be able to take this occasion to show how influential they can be into this crisis.
    At this point, only way out is division an going out of euro-zone, but then again as someone wrote! these so called rich and strong countries depend a lot on being into EU (comprising of indebted countries), they benefit from this handicap and continue to rise..

    May 7, 2012 at 2:46 pm |
  33. Alex Povolotski

    Greeks have been in debt for thousands of years, remember? Nothing has changed. I think it's ingrained in their genes by now :-)

    May 7, 2012 at 4:45 pm |
  34. Intrepid

    This is the result of pushing people into a corner.

    May 7, 2012 at 5:43 pm |
  35. Barnum Bailey

    Unionization levels and labour laws in many European countries are absolutely ridiculous. Places like Italy and Greece need to completely overhaul their labour markets. Hopefully, if anything good comes out of this crisis, it will be the initiation of some sane European labour market policies.

    May 7, 2012 at 5:48 pm |
  36. Ricardo

    as someone who lives in Portugal, a country extremely hit by the crisis and also needed a bail-out, i need to say 1 thing that people who live outside these countries need at least to understand: Austerity measures are needed BUT too many will lead to destroying the economy, employment (35% unemployment in graduate (and the rate would be higher had it not 150.000 portuguese migrated JUST LAST YEAR and this in a country with a HUGE POPULATION DEFICIT) and 15% overall. People are starting to lose hope because no matter what we do (regardless if we follow the Troika memo to the word or even if we do more than what's demanded of us, just like last year) something will happen and the "markets" will use any excuse to higher rates for borrowing money to our countries: the 1 that truelly irritates is "expecting" (notice the "") growth with so many austerity measures. that's just mocking us...
    And, although some measures are needed, too much austerity will lead not only to killing the economy but also to making things worse. The tax revenue in Portugal this year diminuish even with the increase in various taxes. why? because a lot of companies simply closed, which lead to increase in unemployment which lead to the increase in social benefits costs.
    and btw you cant retire in Portugal nowadays even if you have enough years to do so IF you work in PRIVATE sector...

    May 7, 2012 at 6:23 pm |
  37. eric

    i have the solution: transparency.

    May 7, 2012 at 11:23 pm |
  38. Andy

    From gluttony to starvation. That is the inevitable nature of capitalism. Feast or famine. There can be no middle ground. Opportunity must be grasped. Uncertainty must be abandoned. Why play this game? We can change the rules, we can change the game. Reality is ours. It can be anything we want it to be. That is a simple fact. Ergo; The world is what you make it. RBE.

    May 8, 2012 at 1:50 am |
  39. Glenn

    How does one end austerity when the credit card is at its' limit ?

    May 8, 2012 at 5:31 am |
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    May 8, 2012 at 5:41 am |
  41. tommyxan

    Look to the Great Depression for the answer. The Hoover government's reactionary policies of austerity only exacerbated the crisis and required Roosevelt'sNew Deal of massive public works and large-scale social employment to finally bring the economy out of depression. Unfortunately, the financial regulations and authority of the SEC imposed in the aftermath of the Great Depression were largely gutted by the GWBush administration, which not only permitted but actively participated in the greedy feeding frenzy that precipitated the crisis and which undermined the ability of the SEC to effectively regulate these Wild-West markets.

    "Those who cannot remember the past are condemned to repeat it" G. Santayana
    see also http://en.wikipedia.org/wiki/Keynesian_economics

    May 8, 2012 at 11:41 am |
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  43. Bilgekadir

    Jen, I am so glad you visited Greece!! I miss you frenid, when do you get back to the US? I cannot wait to talk to you again and hear the thousands/tons of stories from this last year. I've been reading your blog, but I just would love to see you! Enjoy your world tour I'm SO PROUD of you!! Loooove ya! Mirela

    July 27, 2012 at 5:26 pm |

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