I've never taken much notice of a French election before, but this time I am. Nikolas Sarkozy is pretty uninspiring, but I think his opponent Francois Hollande is even less so, so it's not the drama that's drawing me.

Rather it is the fact that Hollande basically wants to keep on doing what the French have been doing - spending and borrowing more - whilst increasing the top tax rate.

It's pretty much what the Greens would suggest we do in Australia, so it has some interest in terms of where those policies might lead electorally as well as economically.

But more to the point, if the second largest economy in Europe runs away from austerity, where does that leave the PIGS (Portugal, Italy, Greece and Spain)? And if the French influence the Eurozone to cling onto dysfunctional policies what are the implications for Chinese and Indian growth and Australia.

I had a stab at some of these things on AmbitGambit here http://www.ambitgambit.com/2012/04/24/a-natural-experiment-or-catastrophe-for-the-world/.

It's an interesting question, Graham. The thing is, Sarkozy and
Berkel have been the ones holding the Euro together. Hollande is
unlikely to do the same, wanting a better deal for France.

That would only leave one option, a collapse of the Euro and back
to the French Franc, DM etc. What a mess!

Why do you want to spoil my day Graham? Surely it is bad enough watching the fool yanks make stupid decisions at an election, without having to watch the idiot French make another. It really is hard to see how such a bunch of ratbags as the French, ever managed to make such a sensible choice in their power generation technology.

The French have always cornered the market on bad decisions, particularly where getting their hands on unearned wealth is concerned, so the result is probably a foregone conclusion.

Still I can't see how we, in our glass house, can start throwing stones at either of them about electoral stupidity.

Funnily enough, a mere monetary union was never going to suffice in uniting member countries into an entity of continuing strength. The union wasn't comprehensive enough. Member countries still had the autonomy to go their own way as far as borrowing and spending were concerned. Only a tightening of the union with an overarching central control could have (and maybe still can) save the model. It would, however, mean a loss of some sovereignty for member countries - without it, a common currency is probably doomed in the long run.

*Poirot* thanks for the correction recently re *Pink Panther* & *SnagglePuss*

..

Regarding Chinese growth, whilst I do not know, I am wondering about the effect that austerity in Europe will have on their exports of manufactured goods.

Is it possible, that even though austerity will likely produce a situation where the majority in Europe will have less money to spend, that as the Chinese generally supply the bottom end of the market, that in fact they may not suffer all that much in reduced sales?

..

I note that whilst their growth has been revised down, it still is relatively strong.

Dear GrahamY,

It will be an interesting grand experiment for the French.

So will ours. While Obama had austerity forced upon him by recalcitrant Republicans and out of control Tea Partiers, our then prime minister Rudd spent big.

Do the current relative positions of each economy tell us anything, or is it to be dismissed as luck?

Now Gillard is intent on imposing the very type of austerity that crippled the US, all in the name of balancing the budget. Surely a slow turning off of the tap has to be more responsible than slashing and burning.

The current Liberal government in Victoria is also marching down the austerity path and we are quickly becoming a basket case. Steeply rising unemployment, people leaving in droves etc.

Is it all they know?