European Union and Euro Dead

With the election of Socialist Francois Hollande in France as President and electoral chaos in Greece, it is becoming clearer by the day that the European Union and the EURO, as we know them today are dead.   There just isn't the will in Europe to end cradle to grave welfare entitlements and deficit spending that are bankrupting these countries.   Hollande plans to restore the retirement age from 62, enacted by Nicolas Sarkozy, to 60.  Given longer life spans today, that is ridiculous. 

Hollande wants to continue deficit spending to hire more government workers and continue increasing entitlements, pushing a balanced budget further and further out to years from now, in the name of stimulating growth.   Of course, like in Obama's Socialist Schemes, a balanced budget will never come.  Hollande also wants to raise taxes on the "rich", the job creators, who he defines as those earning more than one million Euros a year, to confiscate 75% of their income.   Sound familiar.  Hollande, like Obama, is playing the Class Warfare game. 

Hollande's program is Socialist President Obama's program and we see the end result in the US.  High unemployment, home foreclosures, a lower standard of living and misery for millions of Americans.   The same thing will happen in France if Francois Hollande is allowed to prevail.   

There are already 400,000 French citizens living in Britain to avoid French taxation and stifling bureaucracy as it is.   Many of the remaining 3,000 French citizens, earning more than one million Euros a year are likely to vote with their feet to avoid this crazy level of taxation.   Socialists all over the world, including President Obama, just don't get it.  

The rich have options.   They will move to avoid confiscation of their assets producing a diminishing return for the taxing authority attempting to fleece them.  France will actually generate less in tax revenues if Hollande attempts to raise taxes because it will retard the growth of their economy and the rich will just leave the country. 

And, Hollande wants more crazy French laws governing employment in France.  Keep in mind, the French only work 35 hours a week and get 5 - 6 weeks off a year, when they do work, making France one of the least productive countries in the world.  Requiring more employee benefits, or time off will just push more jobs overseas.  Sadly, France will experience years of slow growth and high unemployment as a result of Hollande's Socialist Schemes. 

And, at some point both the Germans and the markets will say enough and no more.   France's credit rating has already been down graded once, with more to come, if Hollande moves forward with his plans.  This will make borrowing more expensive and only add to the problems facing France.

Greece is a basket case.   Voters there have voted for fringe parties, including the Nazi Party, that oppose any cuts in spending, or entitlements.   Greece will ultimately default on its debt, which will lead to the break up of the European Union and the end of the EURO as we know it today.  It is very possible that Greece, Portugal, Italy, France, perhaps even Ireland and other countries in the European Union will be thrown out of the EU.

While the Euro may remain as a common currency for remaining countries, there is no way the Euro will survive all of this because the Germans will not continue to foot the bill for this reckless deficit spending and continuation of unsustainable entitlements.  It is what it is. 

Europe's only path to economic growth and job creation is cutting government spending, taxes and regulations.   Instead, many of these countries plan to increase government spending, regulations and taxes.  This is a sure path to a Depression in Europe.  It is already happening in some countries.  Spain and Greece have 25% unemployment.   That is a Depression not a Recession.   Overall, unemployment in the Euro zone is above 10% and growing.  This is happening because they are combining austerity in some countries with higher taxes and more regulations.  This is a recipe for economic failure. 

That is a double whammy.  European countries need to get unsustainable entitlements under control so they do need more austerity; but unless they also cut taxes and regulations to stimulate economic growth and job creation in the private sector, there will negative, or very low GDP growth.  It is already happening is some countries.   This is Economics 101.  The European Union and the EURO are dead.   The only question now is what will come next.