Austerity meets voter backlash in Greece, France

Supporters of the Socialist Party candidate for president celebrate the victory of Francois Hollande, at Place de la Bastille in Paris on May 6, 2012. / FRANCK FIFE/AFP/Getty Images

(CBS/AP) The results of national elections in France and Greece on Sunday were seen as a rejection of government spending cuts and other austerity measures intended to carve down debt as an instrument against recession.

In Greece, where unemployment is rampant, the election was voters' moment to vent their fury over two years of austerity that Athens has been pushing through to qualify for Eurozone bailout loans. Incomes, benefits and pensions have been slashed repeatedly and taxes hiked.

Parties backing the international rescue package lost their majority in Parliament. "Citizens sent a very clear message that they don't want this (austerity) policy to continue," PASOK spokeswoman Fofi Gennimata said. "It was a very great defeat for us."

Greek voters punish old guard, turn to the right
Commentary on Greek elections: Distributing chaos across the EU

The results increased the chances of a possible Greek exit from the common euro currency.

That uncertainty weighed on markets across Europe and in the U.S. on Monday, with the Athens exchange tumbling 7.3 percent in midday trading.

The results were even more pointed in France, where the incumbent president Nicolas Sarkozy lost his job to Socialist challenger Francois Hollande.

Sarkozy had allied himself with Germany's Angela Merkel in pushing austerity measures. Some of his proposals, such as raising the retirement age, had been met with stiff resistance.

In the run-up to Sunday's election Sarkozy promised to slash the government's payroll further, increase the sales tax, and restrict legal immigration.

Hollande (the first Socialist to hold the presidency since Francois Mitterrand left office in 1995) got elected by promising a new French revolution - that instead of the austerity and budget cutbacks that France (and Europe) are now enduring, the way out of the financial mess lies in more government spending and more government jobs, said CBS News correspondent Mark Phillips.

Fed up with austerity, France turns to the left
Commentary: France's Hollande could struggle to change course

Following his victory, Hollande told cheering supporters, "In all the capitals, beyond all the heads of government and state, there are people who, thanks to us, have hope and who are watching us and want the end of austerity. That is my message. You are much more than a people who want change - you are already a movement that is rising up to carry our values and aspirations across Europe and perhaps even the world."

Appearing on "CBS This Morning," former Labor Secretary Robert Reich said, "Hollande basically is saying, 'We are not going to embrace austerity economics' - that is, cutting budget deficits, cutting safety nets as a means of restoring so-called confidence in the business sector. 'We are not going to sacrifice our economy for the sake of the bond traders.' ... But as a practical matter, they've got to do some of that."

Turnout in France was high, at about 80 percent. Conversely, in Greece - where voting is officially compulsory - Sunday's turnout was low for that country, at 65 percent.

Greece

Bailout-reliant Greece faces weeks of financial turmoil after voters angry at crippling income cuts punished mainstream politicians and let a far-right extremist group into Parliament, yet gave no party enough votes to govern alone.

Official results showed conservative New Democracy came first with 18.85 percent and 108 of Parliament's 300 seats. Party leader Antonis Samaras (who backs Greece's bailout commitments for austerity but has called for some changes to the bailout plan) will launch coalition-forming talks later in the day. Samaras has three days in which to build an alliance, after receiving the formal mandate from President Karolos Papoulias Monday.

"I understand the rage of the people, but our party will not leave Greece ungoverned," Samaras said after Sunday's vote.

Members of the Neo-Nazi party Golden Dawn celebrate at their offices in Thessaloniki, Greece, on May 6, 2012. Greece's two main parties suffered big losses in elections after a strong showing by protest groups, including the nationalist Golden Dawn, which is set to enter Parliament for the first time since the end of the military junta in 1974.

/ SAKIS MITROLIDIS/AFP/GettyImages

But striking a coalition deal could prove impossible because even with the support of the only other clearly pro-bailout party elected, Socialist PASOK, New Democracy would fall two seats short of a governing majority.

Sunday's big winner was the anti-bailout Radical Left Coalition (or Syriza), whose unprecedented second place finish, with 16.78 percent, gives it 52 seats.

Disaffected voters deserted PASOK and New Democracy, the two mainstays of Greek politics. Instead, strong gains were registered by smaller parties, including the extremist Golden Dawn.

That party has been blamed for violent attacks on immigrants and ran on an anti-immigrant platform, vowing to "clean up" Greece and calling for land mines to be planted along the borders. It got 6.97 percent of the vote -- a stunning improvement from 0.29 percent in 2009 -- and won 21 seats.

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[stormerF69]

When the people vote themselves a living instead of working for a living it will not be long before the country fails.

[TimeToEvolve]

The very rich have been taxing the job creators, we the 99%. Meanwhile the Top 1% has just been hoarding money because they could not care less about earth or the life on it. They look at us as mere tools to use for their profits. They have seized banks, governments, militaries and media outlets.

[stormerF69]

Your koolaid has something in it,you need to get a grip or back on your meds.49% pay no taxes,so what 99% are you part of?

[sandiegopete]

Stormer: The middle class, those earing between $35K and $150K per year pay the majority of the income taxes collected by the U.S. government. I deeply resent you folks in the top 1% insisting we in the middle class pay even more while you wealthy folks demand yet another tax cut.

[vsmit]

by lami987 May 7, 2012 3:56 PM EDT
Romney made $25 billion last year and he paid 15% tax or $3.75 billion. Buffett rule would make his tax rate at at least 30% or at least doubled the amount he paid last year. So Romney alone would pay at least $3.75 billion more. Go back and double or even triple check your numbers.
----------------------------------------------
Romney made $21.6 million in 2010 (not $25B). If he made $25B, he could have bought the presidency instead of having to work for it.

You may want to quadruple check your numbers. But I know, a billion, a million, what's the difference to a liberal.

[marychgo]

To get out of a hole, the first thing you have to do is stop digging. OUR hole (and Europe's) is NOT national debt; it's the Great Recession. Here and in Europe, thousands of businesses have gone bust and millions of talented, capable people can't find jobs. If HALF of those people were working and paying taxes -- rather than collecting unemployment compensation, if they're lucky -- our annual deficits would be greatly reduced. Obama's investments in energy, education, and infrastructure could put them back to work.

Let's talk about what "austerity" really means. There's a strike at a local Caterpillar plant. Caterpillar is doing fantastically well; its profits exceed analysts' projections. Caterpillar's "last, best, and final offer" to its workers' union called for a six-year wage freeze and higher employee contributions to benefit plans; aka a cut in take-home pay. But the plan didn't call for a wage freeze for Caterpillar's Chairman, CEO, COO, CFO, etc.: those folks now earn millions and will no doubt earn more in each coming year.

Isn't it strange that "austerity" ALWAYS means making workers (and retired workers) poorer but NEVER makes the slightest dent in the lifestyles of the rich and bullying?

[TimeToEvolve]

Exactly, very right on, thanks for clarifying this.

[RealiteBites]

Debt's all that's shoring up the economy.

That's why even under Romney, with Republicans holding a majority on both the House and Senate (if that happens), you'll STILL see Washington spending more than they're bringing in and using debt to cover the difference.

The politicians are deliberately confusing you by making it seem like it's JUST like a checkbook because it's politically beneficial for them to make a fake problem with a fake solution, rather than a real one.

To address debt and create jobs you can't just redistribute money, because income disparity, like debt, is but a symptom not a cause. You have to address the root issue, which would be the redistribution of JOBS (and hence consumer purchasing power) from the developed world to the 3rd world. The shift is relevant because it shrunk consumer purchasing power, and therefore demand.

[RealiteBites]

The debt grew because governments led by people like Barack tried to use fiscal policy on a system that's inherently broken. Fiscal policy needs for the system to be inherently sound to work, and if it's not then you need to fix that first, which he didn't do, and which is why the need for debt is never-ending.

Likewise, you can't just focus on debt because it's a symptom not a cause. The debt resulted from the borrowing which resulted from the broken system. If you focus just on debt, you not only tank the economy, you still haven't addressed the root issue.

But Paul Ryan's too dumb understand complex issues and how these problems interrelate. Same with Simpson and Bowles.

The root issue is faulty global trade ideology. Corporations tried to give workers the world over the shaft by essentially firing workers in the developed world, and hiring workers for pennies in the underdeveloped world. But workers are the people who buy their products, and with less global aggregate purchasing power the world over, there's less demand.

The only reason Corporations are banking record profits is because of the debt Barack and everybody else keeps borrowing to artifically prop up the economy. Ron Paul wants borrowing to be stopped so that the economy will crash, which is where it deserves to be on its merits, but that would cause starvation and riots. The only other solution would be for Barack to use tariffs to take jobs back from the 3rd world, so that jobs go to the people who purchase the products.

But that would take guts and self-sacrifice to completely re-engineer a failed ideology - and Obama and Romney are both sorely deficient in that department. They're both truly awful ... so selfish for only caring about their own personal political ambitions ...

[TimeToEvolve]

The jig is up on the fake and failed "free market" which was never free and has been an unqualified disaster for the 99%. The people of the world are waking up to who is the true enemy of the earth, corporations like AT&T, Chevron, Wells Fargo, etc. etc. etc.

We can no longer afford their welfare that we provide. We can no longer tolerate their propaganda that they are out to help us.

[vsmit]

Can you afford to GIVE UP the welfare they provide you?

[stormerF69]

Surely you can not believe the dribble you are spouting? first 49% pay no taxes at all,and Corporations are people do you understand that, or are you so stupidified by all the koolaid Obama pouring into your trough?

[Toryu88]

@BishopRomney Work much? I live and work in Texas and have been doing fine under Bush as govenor, Bush as president but had to take a pay freeze under Obama. Level paying field means taking from some to give to someone else who was too stupid to stay in school, just does not want to work, or isn't here legally. Which category do you fall into? People conviniently forget all the runaway spending the Democratic congress enacted after 9/11 when every little municipality got grants to buy hazmat equipment or tactical assault gear as every Democrat in the nation wet the panties over a terrorist attack. I live in complete confidence that if another comes the mushroom cloud will be over New York, LA, San Francisco or Seattle or some other bastion of Democratic idiocy. I really can't wait for it to happen, and it will. Democrats are whiners who think the Fed or local Agencies can take care of them. When were the Feds or local police, ever first on the scene anywhere. They just arrive to pick up the peices, after a week or so.

[peeoui]

I have easily survived all the past recessions I work in medical field. This one has been a challenge

[sandiegopete]

The European Union is a confederation of independent countries with a common currency and market. (Remember, the Common Market was the forerunner of the European Union). The United States is a confederation of states with a common currency and economy and a central government.

What the European Union is learning is that having a common currency and market without a central government does not work. Individual countries will do whatever they can to take advantage of the other countries within the confederation. And it is not just the weakest countries playing that game. Strong countries like Germany try to take advantage of weaker countries within the confederation. The result is what we are now seeing in the EU as the individual countries cannot agree on how best to deal with the current recession.

In the United States we have a similar problem. Although we have a strong central government we cannot agree on a unified approach to the stagnant economic conditions here in the U.S. Some even want to decentralize the national government and transfer most federal activities to the states, in effect remaking the United States into a model similar to the EU.

In the EU, as in the USA, the total net worth of households and businesses has not changed that much. What has happened is that the the net worth of the middle classes has gone down as their wealth has been transferred to the upper classes and business entities. Here in the USA the middle class took the major financial hit but the federal government, financed largely by the middle class, bailed out the bankers. The bank bailouts represent a transferance of wealth from the middle class to the upper classes.

Housing bubbles were not the cause of the current recessions. The cause of the recessions within the EU and USA was the outsourcing of jobs to Asia. The resulting job losses in the EU and USA resulted in the middle class losing income and being unable to maintain its mortgage obligations.

Instead of focusing on the problem of disappearing jobs politicians focus on debt as if elimination of debt will make jobs magically appear. Debt is not the problem. If absolutely necessary the EU and USA could pay down all debt simply by imposing high levees on those individuals and business entities that currently hold most of our nations' wealth. But, that is not a realistic solution nor is it necessary. What is necessary is a united plan to replace the millions of jobs that were intentionally relocated from the middle class to foreign countries. A healthy middle class ensures a healthy economy and a healthy economy will take care of any debt. So long as were have different factions focusing on preventing their own ox from being gored we cannot make progress toward a healthy middle class.

The only thing that is clear is that the politics of division results in stagnation.

[Fox_Rush_Zombie]

Down through the ages aristocracies around the globe have duped the working class into believing that they must labor simply for subsistance and have called the concept 'austerity'. In the United States, for example, 400 people hold more wealth than the bottom 150 MILLION citizens, but the powers that be insist that the poorest should bear the burden of their bad political decisions and that those 400 deserve even more.

What is happening now is an awakening.

[jnostromo]

Welcome to the America of the 20's and 30's...We have learned nothing from the past 8-9 decades...

[jnostromo]

Funny, France can get a high voter turnout and in the US we can't..