French voters went to the polls today to winnow a ten-candidate presidential field down to the “right-of-center” incumbent (Nicolas Sarkozy) and his socialist challenger (Francois Hollande). The two will face each other in a runoff election on May 6. A Sarkozy loss would be the first of an incumbent French president in thirty years. It would threaten the German-French sponsored European Union rescue package. It is no surprise that Germany’s Angela Merkel openly supported Sarkozy’s candidacy.
The French election previews the U.S. November election contest between incumbent Barack Obama and challenger Mitt Romney in the following four ways:
1). Both Obama and Hollande offer almost identical leftist platforms (details on this below).
2) The bland challengers (Hollande and Romney) ignite electoral passions less than their more colorful opponents (playboy Sarkozy with his celebrity wife and Obama, the first black president).
3) The sorry state of the economy gives both challengers a hefty leg-up.
4) The French and American elections are foreshadowed by electoral disasters for the incumbent party in off-year races in 2010 and 2011. In both, the incumbent party lost long-held majorities in one house of Congress or parliament.
Whereas the outcome of the U.S. election is currently too close to call, opinion polls show the French socialist candidate poised to win decisively in the run off. As the odds tip increasingly in favor of a Hollande victory, the risk premium on French bonds will rise. It is no secret that the investment community views a Hollande victory a threat to France’s solvency.
A victory of France’s socialist candidate Hollande will not translate into electoral success for his American soul mate, Obama, for three reasons:
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