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I found this a rather fascinating article which highlights a massive change about to hit the EU, in essence, the German hegemony is going to come to a shuddering end and the consequences are unknown. When I arrived in Holland this day last week, the Government fell.  (Coincidence? You decide) The reason it fell is because the Coalition Government would not support any further austerity cuts, demanded by Germany. Meanwhile, across in France, it looks like the Socialist Hollande will replace Sarkozy and this is what he is says;

“It’s not for Germany to decide for the rest of Europe,” said François Hollande, soon to be French leader, unless he trips horribly next week. Strong words even for the hustings. “If I am elected president, there will be a change in Europe’s construction. We’re not just any country: we can change the situation,” he said. European allies are flocking to his cause from left and right, he claims. Not even Austria supports Germany’s austerity drive any longer.

What is the significance of this? Well…

This then is the birth of a Euroland growth bloc with well over 200m people and a commanding majority vote in the European Council, a defining moment in this saga. Mario Draghi at the European Central Bank is quickly bending to the new political dispensation with calls for a “Growth Compact”. The Commission – liberated at last – is finding ways to “extend deadlines” on fiscal targets.

As I keep saying, when leftists like Hollande talk about “growth” what they mean is more spending. So the reason for the recession is now presented as the cure – a remarkable volte face. Yet the fact is that outside of Germany (and possibly Britain) citizenry wants to see the State spending it has gorged on for years kept on going. This is electorally very popular if economically suicidal. The issue is what happens to German support for the EU when the majority of States challenge the basis of the German economic model. Frau Merkel has tough times ahead if Monsieur Hollande and his pals triumph. The “Growth Compact” Draghi talks about means Spending, loosening the fiscal ties, turning on the spending that cannot be afforded. This will end badly…..

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2 thoughts on “GERMAN RETREAT?

  1. “Coincidence? You decide”

    LOL. I thought of this on the day.

    OT: Austerity cuts are of course necessary, with out without German urging and no matter what the likes of Geert Wilders or Hollande (right-wing/Left-wing consensus at last!) like to think.

  2. Austerity is opposed by right-wing parties as well as those on the left. The right wing opposition includes the National Front in France and the Freedom parties in Holland and Austria.

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