Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Saturday, May 05, 2012

Democracy bad for capitalism? Why the French and U.S. elections are unnerving investors

An increasingly tight French presidential race combined with signs America’s economic recovery may be slowing sent investors heading for the exits at the end of the week.

Global markets tumbled Friday for the second day in a row after the U.S. monthly jobs report came in below expectations and investors fretted over the outcome of the French election on Sunday.

The Toronto Stock Exchange fell 1.20 per cent on Friday, giving up all of this year’s gains and more. The market closed down 143.67 points at 11,871.23. The S&P/TSX composite index is now down 0.70 per cent since the start of the year.

In the U.S., the Standard & Poors 500 Index and Nasdaq also closed out their worst week this year after the world’s largest economy said it had created 115,000 jobs in April, raising concerns that America’s recovery may be slowing. Economists had forecast 160,000 new jobs in April.

America’s unemployment rate fell 0.1 per cent to 8.1 per cent, though much of that was due to more people giving up the search for work. Markets shrugged off the positive news that revisions to the previous two months added an extra 53,000 jobs.

An increasingly hard-to-call French presidential election this week has also created the kind of uncertainty that markets detest.

“The markets generally don’t like a swing to the left,” said Avery Shenfeld, chief economist for CIBC World Markets.

He was referring to the increasing likelihood that French voters will turf hard-line incumbent President Nicolas Sarkozy in favour of Socialist party leader Francois Hollande.

Sarkozy has been German Chancellor Angela Merkel’s closest ally in the battle to get the weaker members of the European Union to cut their debt loads by slashing spending.

But a shift away from the kind of severe austerity Merkel has been advocating might not be a bad idea, Shenfeld added. “It may lead to a more realistic assessment of how fast various European countries should bring their debt down because the pace they’re going at now is essentially ruinous to economic growth.”

“It’s not going to be any surprise if (incumbent French president Nicolas) Sarkozy is defeated,” said Grant Amyot, a professor of political and economic studies at Queen’s University. “There’s been a lot of statistical work, especially in the U.S., that says the state of the economy at the time of the election, or perhaps over the previous year, is the most important determinant of whether incumbents are re-elected or not.”

While the U.S. presidential race in November is still too far off to call, incumbent president Barack Obama will benefit if job growth remains strong, Amyot said.

To some extent, global markets have already factored in a Hollande win this weekend, said Jean-Philippe Vergne, an assistant professor at the Richard Ivey School of Business at the University of Western Ontario.

As well, once in office, Hollande may find economic conditions limit how much of his program he can implement, Vergne added, referring to his most contentious proposal to hire 60,000 additional civil servants.

“I think in the longer term, what is really worrisome in the business world about Europe is people are unsure whether the euro will still be around five years from now,” he said, referring to the common currency now shared by the 17-member European Union.

If Greece and other smaller nations decide to opt out of the euro, it would create a lot of instability with some of the weaker countries opting to devalue their currencies in order to compete with their stronger rivals.

“I’m not sure who is the next president of France will make any difference to that,” Vergne said.

Original Article
Source: Star
Author: Dana Flavelle

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