Our media is enamored with the upcoming election and rightfully so. The nightly news wouldn’t be complete without half of the airtime focusing on someone talking about Romney, Gingrich or Obama. Our election may have the media’s attention but you need to know there are other elections quickly approaching that could create huge waves in an already fragile global economy long before Americans head to their local polling station.
You may have noticed a recent rise in your investments lately. Thanks are owed in large part to the European Central Bank’s crafty 1 percent three-year loans in late 2011 made to the euro-zone banks. That injected dose of financial adrenaline arrived just after the U.S. Federal Reserve wound its own program down. Fiscally minded citizens might object to the infusions, but the markets love them — thus far.
The recent monetary easing in Europe is a byproduct of the partnership of French President Sarkozy and German Chancellor Merkel. The Germans and the French working together may surprise many readers, but this has been the driver keeping a major economic explosion from erupting in Europe. These two leaders have worked well together, attempting to navigate a financial disaster. Little hope remains for gargantuan bailouts of Spain and Portugal, or more bailouts for Greece if this dynamic duo breaks up.
Merkel and Sarkozy work well together but politics and opinions are touchy, making a political breakup very possible heading into France’s first round of elections in late April, followed by a second round in early May. According to a recent Reuters report, Chancellor Merkel has gone so far as to directly campaign for Sarkozy’s re-election. Although polls show he is still down, Sarkozy is far from out.
Sarkozy’s rival, Francois Hollande of the Socialist Party, has been running on a campaign to increase government spending and raise taxes while reversing the recent increase in the French retirement age. Germany has only been willing to support the bailouts and capital infusion when they include austerity and fiscal belt-tightening. It wouldn’t be surprising to see Germany tighten the purse strings should Sarkozy’s less like-minded opponent win the election.
This would curtail the current bailout strategy being implemented in Europe. The German people are not fans of bailing out other euro-member countries. Many believe it would be cheaper to bailout German banks than protect Greece from default. They question why throw good money after bad when the possibility of a Greek default is a very real possibility. As we have already witnessed, Germany, with gritted teeth, will help fund bailouts for other countries; it would not be a stretch to conclude the government would also support the bailout of German banks.
While the media focuses their attention on our presidential election, your investments will be watching the elections across the pond. Sadly, a financial shock in Europe would ripple across the Atlantic and strike our economy. Like it or not, we are in this together.
Joseph “Big Joe” Clark, whose column is published Sundays, is a certified financial planner. He can be reached at bigjoe@yourlifeafterwork.com or 640-1524.
Local Business
Related Photos
-
Big Joe Clark
Discussion
'Big Joe' Clark: Other elections should concern us
- Local Business
-
-
Boxes outside Aldi catch fire
A small fire outside the Aldi grocery store in Anderson caused an evacuation of shoppers and employees.
-
Remy to build Chinese manufacturing plant
Remy International Inc. plans to build a manufacturing plant and engineering center in Wuhan, China, company executives announced in Chicago earlier this week.
-
Susan Miller: Looking for a summer vacation vocation
Summer vacation is often a synonym for summer vocation, particularly for teenagers.
-
Frankton woman will be on online car ad
Tina Collins giggled as she sped around the track in a go-kart at Applewood Raceway. Her son, Owen Foit, 18, smiled broadly as he threatened to pass her while her daughter, Tarah Collins, 14, tried to catch up from behind.
-
Senate candidate visits Alexandria ethanol plant
In his first post-primary visit to Madison County on Wednesday, Democratic U.S. Senate candidate Joe Donnelly visited the Poet Biorefining plant here to underscore his support for energy independence and Indiana corn farmers.
-
Corporate sponsorships help Elwood YMCA expand
The YMCA has been a part of the Elwood community for 20 years, but a new series of partnerships coupled with a $60,000 renovation are strengthening those bonds.
-
TIF expansion proposal gains more support
Before being able to expand a large consolidated tax increment financing district, the city’s economic development department has to get approval from several government bodies.
-
Emmett Dulaney: Today’s actions hurt tomorrow
I have no recollection of why, but for some reason when we were kids my brother could not stand Catfish Hunter.
-
Hoosier Park revenue posts 4 percent increase so far this year
Gambling revenue from Indiana’s 13 casinos has dropped the past two years and faces a third year of decline in 2013. But revenue at Hoosier Park & Casino grew at rate of 4 percent so far this year, said CEO Jim Brown.
-
Families get help with weatherization, energy assistance
Glenn Skinner installed the “modern blower” furnace himself more than 53 years ago. As last winter began to approach, Skinner and his wife began to worry that it was finally going to “blow” and they’d be without heat.
- More Local Business Headlines
-
Boxes outside Aldi catch fire
