When things are going well, people vote for the status quo.
When they aren’t going so well, they move farther out on the political spectrum. In France, a couple of years ago, both Melenchon on the far left and Le Pen on the far right were considered “politically dead.” Now, a few years of crisis have brought them both back to life.
From “France 24/7”:
Far-right National Front candidate Marine Le Pen obtained a surprising 18% of the vote in the first-round of France’s presidential election Sunday night…
“Tonight is historic,” Le Pen gushed to her supporters gathered in the 15th district of Paris on Sunday. “We are the only opposition to the ultra-liberal, libertarian left-wing.”
A seasoned National Front loyalist, 42-year-old Jean-Christophe, explained his reasons for supporting the candidate. “I’m against legalising immigrants without papers, no exceptions… We’re not able to welcome them properly, so we should offer them aid in their own countries,” he said.
Marine ran a campaign tightly focused on economic protectionism and an exit from the Eurozone.
It was a ‘backlash against austerity,’ says The Financial Times.
If you’re in power…you tell people that the status quo is great and getting better. If you’re out of power, you tell them that things are going to hell in a hand basket, unless they vote for a change.
In France, as in America, left and right have more in common than in dispute. Both want to use the power of the state — the force of government — to get what they want. Protect one industry. Punish another. Reward one group. Tax another.
But the most important thing they want is to get elected — to get into the driver’s seat and turn the wheel in the direction they want to go.
Generally, the lefties want more spending. The righties steer towards more austerity. The lefties go with Krugman and Keynes. The righties prefer Friedman (Milton) and Schauble.
Right now, the Germans have the money. They don’t want to give it to free-spending Greeks and Spaniards. So, the “olive countries” promise to straighten up…and the fix is in. Trouble is, except for the elite bankers, bureaucrats and politicians, the fix isn’t working for anybody. In Spain, the real unemployment rate is nearly 25% — close to Great Depression levels. Of the country’s 10 biggest companies, 8 are now priced below liquidation value.
It’s “suicide by austerity,” says Paul Krugman.
And while the elite want to stick with Europe…and the euro…more and more voters seem to want to make a break. Colleague Justice Litle:
Europe’s real problem is a long-brewing and dangerous one: Political backlash in the streets. At some point, angry Spaniards, Frenchmen, Portuguese et al may join their compatriot Greeks, stand up to their cowed leaders, and collectively shout in unison: “To hell with your austerity.”
And guess what country the anti-austerity crowd looks to for an example?
Yes, the Argentines were stuck in a somewhat similar situation. Their economy was tied to the US dollar. They owed the rest of the world — primarily large foreign banks — a fortune. And the more they tried to keep up with their bills the more the economy seemed to suffer.
That was at the end of the 1990s.
What did they do? They simply walked away from their solemn promises, reneged on their debt, and dumped the dollar…
It was the biggest default in history.
And oh yes, the Argentine government not only stiffed its foreign creditors, it stiffed millions of its own citizens too. It froze bank accounts and forcibly converted dollar deposits to peso deposits, giving savers a 2/3rds haircut.
Did it work? Depends on what you mean by ‘work.’ The government ripped off lenders and its own citizens. People lost their life savings. Businesses went broke. Unemployment hit new highs.
But it was fairly quick. The economy was able to get back on its feet after a few years. And the leaders of the Peronist party, still in control even after the debacle, were able to get back on the job of ruining it. They seemed to learn nothing from the experience…except that they are able to get away with practically anything. Peso inflation is running at about 25% per year. The Argentine government just expropriated the largest oil company in the nation. And most observers expect another crisis within 24 months.
Is that success? Depends on what you compare it to…
for The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.
Russia also defaulted and things worked great
Defaults have worked pretty good for lots of countries.
Countries who (in actuality) no one should have loaned any money to in the first place (like the greeks)
“Down With Everything” according to THOMAS L. FRIEDMAN: http://nyti.ms/In2v6V
I wonder when our own crisis will hit.
It hasn’t gotten to countries saving themselves yet. It’s still all about saving the necks of the oligarchs as far as I can tell.
Default is just like bankruptcy. Spain, Greece, Argentina and any other country that is insolvent should default and reboot. If voters in those countries want to vote for politicians who push austerity instead of default that is their choice.
If people are crazy enough to lend governments their savings they might be disappointed. Everyone know that Japan, USA, GB, Greece, Spain, Ireland etc cannot pay their debts and are insolvent. Put your savings somewhwere else.
The bigger fool is not who asks, but who gives. Then again, the key driver in this endless farce looks to be the perverts in the position to hand over other people’s savings for personal profit, and go with it.
We need to start getting all the insolvant countries (china included) into bankruptcy and start weening the shock to the system now
The latest victim of the crude rout is none other than the stalwart tech stocks. These are the go-to trades that have held up all year long. I'm talking about stocks like Google, Yahoo! and Microsoft. Like I said before, these aren't no-name stocks you're seeing drop more than 10% from their highs last month.
By the time you do… Kaboom! It’s too late. They’ve already blown up your retirement. There are three time bombs the mutual fund industry has planted within your 401(k). By the time you’re done with this article, you’ll know how to identify them. And, more importantly, how to disarm them. Dave Gonigam has the scoop...
On the eve of the FOMC’s meeting announcement, our CIA financial strategist suggests, “To beggar thy neighbor or not… that is the question.” Read on to find out why having a strong dollar is good for you, but not so good for the Fed...
There's an entire parade of metals and energy plays running off the side of Commodity Mountain like a herd of lemmings. Gold cracked $1,200 after a $30 drop. Silver cratered more than 5% on the day. Copper fell another 2% Natural gas is down. Heating oil is down. Oh, and our main culprit, oil, coughed up another 4%. And that's just yesterday's losses...
The current global currency war started in 2010. Our own Jim Rickards published his book, Currency Wars, soon after that. One of the points that he made in the book is that the world is not always in a currency war. But when we are, they can last for a very long time. They can last for 5, 10, or 15 years, sometimes longer. Read on to learn the latest battle phase of the current currency war...