Socialist Hollande claims to defend the middle class while taxing high-earners who create jobs. He vows to significantly reduce the debt while bailing out other countries along with Germany, all while undoing Sarkozy's retirement reforms so people can again cash in on benefits earlier. It's the usual Socialist fiscal math of "1 + 1 = you're paying, so who cares?"
Whoever gets elected in France, the euro zone risks breaking apart -- if not from Le Pen's proclaimed will, then by default from the other two parties' blind ignorance. Europe's economic engines, France and Germany, representing 40 percent of its economic power, will eventually have rummaged around and spent all the loose change they unearthed from between couch cushions. Greece and other countries are going broke faster than French and Germans can produce.
The solution to this predicament is decreased spending and/or increased production. Because less spending seems unlikely, it would make sense to produce more. This would mean slapping import taxes on products from China to make them competitive with domestically produced goods, reducing union costs that drive up prices, and lowering taxes on French producers to keep them from outsourcing. Think that sounds easy? Think again: What's China's largest export market? Europe. Who's buying up Europe's debt bonds to ensure European consumers can keep getting their "Made in China" fix? That's right -- China.
Because wages are so low, China certainly doesn't have anywhere near the kind of domestic consumer economy that Europe has. So China is outsourcing its consumers to Europe, and Europe is outsourcing its production to China. It's a symbiotic survival relationship. Does Europe still exist as Europe, with China as a major stakeholder calling the shots? And where does this leave America? Relegated to mistress status, with China buying fewer debt bonds in favor of leveraging Europe. This means less money floating around in America to buy that Chinese-made swing set for your kid from Walmart. Checkmate.
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