The French and the Greeks
have followed voters in a series of other European countries in
rejecting a pro-austerity government. The Greeks just denied their
ruling parties a majority vote in the parliamentary elections, throwing
into question the country's commitment to structural and fiscal reform.
And the French elected Francois Hollande, who will be France's first
Socialist president in 17 years.
America has a large stake
in European prosperity. Twenty-two percent of U.S. exports are sent to
Europe and the two economies are stitched together with cross-border
investments, interdependent capital markets and a shared view of global
economic governance. Our mutual dependence has grown to the point that
when either economy catches cold the other one risks more than a mild
sniffle.
Kent H. Hughes
The European elections
add a degree of uncertainty for American companies thinking about
investing in slow growth economies. But the impact is likely to be
short-lived. As Europe goes through the process of finding a way to
combine some growth with long-term deficit reduction, U.S. exports are
likely to suffer.
As expected, the Hollande
victory and the political upheaval in Greece triggered strong reaction
from markets around the world. European banks that have been harboring
reserves are likely to be even more cautious going forward. And again,
there is talk of Greece having to leave the eurozone.
