|Currency in Crisis|
The agenda in the euro zone is changing. The likely outcome of the weekend elections in Greece and France are just as much an effect as a cause of the shift in the agenda. For the first time since the crisis began, the German insistence on austerity is being complimented by the push for a growth pact. We recognized ECB President Draghi's support for it last week as being significant.
It is not simply that the euro zone economy as a whole is contracting, but it is also that the political backlash against more austerity is growing and producing greater political instability. Consider what is likely to happen in France. It is not simply that a Socialist is likely to be elected to the French presidency, something that has only happened twice (Mitterrand both times) since the end of World War II, but the anti-EU Le Pen Party is likely to secure parliamentary representation in the National Assembly in the June elections for the first time since 1986.