The French are living the age-old adage of “Do what I say, not what I do.” They’re all for making the Greeks live with smaller pensions, longer work weeks and relaxed employment agreements, but the minute ex-French president Sarkozy raised the retirement age from 60 to 62 and called for businesses to have the power to actually FIRE people… well those were steps too far.

“Throw the bum out!”

And that’s what they did when the French elected Francois Hollande, a noted socialist, to be the next President of the country. They sent Sarkozy home to be comforted by his ex-supermodel wife, Carla Bruni, because he was behaving too much like a businessman.

Sarkozy, along with Angela Merkel of Germany, was forcing the countries of southern Europe to live with austerity if they wanted any bailout money. And he was also enforcing rounds of austerity at home.

The thing is, as long as Sarkozy was President of France, everyone knew what to expect…

Merkel would create gut-wrenching austerity plans that the likes of Spain, Italy and Greece would have to implement if they wanted any bailout money from the ECB. Then Sarkozy would talk about shared sacrifice and how important each member of the euro zone is… then get everyone drunk on French wine and make them feel better about having austerity shoved down their throats.

Those days are gone. What will Hollande do?


Well, he might actually keep the tough stance with Merkel when it comes to Greece, Italy, Spain, etc., because those countries owe a lot of money to the ECB and the European Financial Stability Facility (EFSF), and if they don’t pay, then France is on the hook for a good chunk of it.

But, when it comes to his own country, don’t think for a minute that Hollande will keep hounding seniors to take less in pensions. He won’t fight unions for greater contributions – through higher taxes – to social programs. That’s no way for a socialist to act!

Instead, Hollande will look for some way to inflate his way out of the dismal growth rate that exists in France. The recession – and yes, they are careening toward a recession – will bring out the big guns of public spending for the “greater good.” This will cause France’s own fiscal health to be called into question… and leave Germany to carry the austerity banner alone.

What does this mean for us?

It means a stronger dollar. A LOT stronger dollar.

Expect the euro to crumble to pieces as the coalition that has held together for years suddenly falls apart and the second largest economy in Europe begins to look like one more southern European basket case.

As the French would say, “C’est la vie.”


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Rodney Johnson
Rodney works closely with Harry to study the purchasing power of people as they move through predictable stages of life, how that purchasing power drives our economy and how readers can use this information to invest successfully in the markets. Each month Rodney Johnson works with Harry Dent to uncover the next profitable investment based on demographic and cyclical trends in their flagship newsletter Boom & Bust. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. Along with Boom & Bust, Rodney is also the executive editor of our new service, Fortune Hunter and our Dent Cornerstone Portfolio.