Socialist Hollande triumphs over Sarkozy in French presidential electiion

The elections in Greece and France will probably rattle markets tomorrow (May 7). Francois Holland has been elected president in France. He is the first socialist president in two decades. The defeat is a humiliation for the incumbent Sarkozy.

Hollande won with between 52 and 53 per cent of the vote. Sarkozy received about 48 per cent. The last polls were close to that with a gap of about 5 per cent between Sarkozy and Hollande. Hollande had led throughout the campaign with Sarkozy being the first incumbent to ever lose a first round ballot!

Hollande vows to renegotiate the fiscal austerity pact a vow that worries EU leaders. Hollande also will increase taxes on the rich and hire some 60,000 teachers. For much more see this article.

Netherlands: Coalition government falls apart after failed austerity talks

The prime minister Mark Rutte along with his cabinet have tendered their resignations to the Queen. The Queen accepted of course!

The populist Freedom Party did not agree to austerity measures proposed by Rutte. The party is on the right and critical of Islam.

Elections were not due until 2015. Even now the earliest that elections can take place is in September. Until then Rutte will have to work with opposition parties as a caretaker government. Any austerity government will have to be negotiated with opposition parties to get majority support.

The Freedom Party leader Wilders walked out of austerity meetings saying:"We don't want our pensioners to suffer for the sake of the dictators in Brussels" The talks were designed to cut 21 billion dollars from the budget. The problems in the Netherlands plus the fact that a socialist led in the French presidential voting helped drive stock markets down yesterday. For more see this article.

Austerity Protests spread to Valencia Spain

Spaniards by the thousands are in the streets of Valencia as well as other Spanish cities. They are protesting both education cuts and labor reforms that are part of the Spanish government's austerity measures.

Valencia already has one of the highest rates of unemployment in Spain. Demonstrators have clashed with the police especially in Valencia on the coast. Protesters have complained that the police have used violent tactics charging the demonstrators and beating them with batons. They then dragged them off the streets. Several protesters have been wounded by rubber bullets.

More than 40 people have been arrested so far several minors. The demonstrators claim that reforms instituted by the government last month will destroy jobs by making it easier to fire staff and adjust schedules. The government claims the changes actually help labour. For more see this article.

Portugal debt status worsens

   Portugal's debt status worsened as underwriters raised the cost of insuring its bonds to new highs. Both business and consumer confidence hit new lows.
   Consumers in particular were hard hit by painful austerity measures. Banks offering insurance to holders of Portuguese debts have been demanding  very large payments when a contract is signed rather than spreading the cost over the period of the contract. Portugal is now second to Greece in the amount required to insure its debt.
   Standard and Poor's rates Portuguese bonds a "junk"status. The yield on Portuguese ten year bonds has risen to just under 16 per cent. This is over twice the rate that is considered sustainable. This is just another sign that Portugal will require another multi-billion dollar bailout from the EU and IMF. It already received 78 billion euros earlier. For more see this BNN article.

.