Sarkozy, France Elections and Global Markets

Anti-Sarkosizm Will Decide France Presidential Elections, the election outcome could drastically affect European Union recovery and politics.

Nicolas Sarkozy has tarnished his name and popularity at home with the French people.  Internationally, he is praised for his efforts to make France (NYSEARCA:EWQ) more competitive economically and for his work with Angela Merkel of Germany (NYSEARCA:EWG) to save the Euro (NYSEARCA:FXE).  His policy proposals for France’s future are simple, thorough, and favored by most French voters;  if you ask those voters about those proposed policies without their attaché to Sarkozy.  The man in front of the curtain, however, is loathed in public.  How could a president – whose tireless work has kept France from imploding – be the subject of such animated hated?  Perhaps the answer has to do less with what he has done, and more to do with what he hasn’t done.

No French president in the history of the “Cinquieme Republique” has received harsh criticism akin to that pressed upon Sarkozy.  Even Jacques Chirac, arguably the most corrupt (and openly corrupt) president in French history, was better received than his straight-edged successor.  What, then, could cause the anger felt in France (NYSEARCA:EWQ) today over old “Sarko”?  It may be a result of Sarkozy’s inability to say “non” to anyone.  When the right said jump, Sarko jumped.  When the left said duck, Sarko ducked.  When the right said deport the Romas, Sarko deported the Romas.  When the Left told Sarko to keep his hands off of the national banks (NYSEARCA:XLF), he kept them off.  Thus, each attempt to cross the political isle helped one party, but angered the other.  Then, having tried verdantly to please each side, Sarkozy unshamefully announced that he is a hard-right candidate, a move suggested to him to appeal more to the far right. Sarkozy is by nature a people pleaser, and to that effect he is incapable of making the hardest choices: to cut out one side of the bench for the other.

Inside the world of ETF Investing>>>

Deemed “Bling Bling Sarko” by Francois Hollande in regards to his obtuse displays of wealth, Sarkozy has had no reservations in making his privileged lifestyle public.  Sarkozy showed off his “bling” to appeal to the younger generation whose affection for the excessively wealthy pop stars of the United States has soared in recent years.  What Sarkozy did not expect was the backlash from a still-apprehensive-about-wealth French population who see wealth less materialistically as their American counterparts.  And so, animosity has swept the country as the French took Sarkozy’s public life as a metaphorical slap to the face.

Add the fact that Sarkozy married a  French-Italian pop star, Carla Bruni, and Sarkozy’s public life suddenly became a charade of media attention.  While in American politics politicians are assessed on their personal lives, the French require their politicians to keep their personal lives separate from their politics.  Sarkozy has crossed an unspoken and unspeakable boundary by blending the two, attempting to make himself more popular by showing off his personal life he certainly appears to think is awesome.  No scandal has come of the display, but in French terms it is in and of itself a scandal.  When Strauss-Khan’s private life hit the front pages of every newspaper in the western world, his career was over.  No, Sarkozy did not have an affair with an African migrant, but his love affair with money is, in French eyes, even worse.

Unfortunately, Sarkozy’s goals for the French Republic are good for everyone, something even the French seem to know.  If re-elected, Europe (NYSEARCA:VGK) will have a fighting chance at solving the debt crisis with France (NYSEARCA:EWQ) as a cooperative partner.  Hatred for the current president is mostly unfounded.  As demonstrated by the blind polls taken before the first round of voting in which Sarkozy’s proposed policies were voted upon favorably by a surprisingly large margin, it appears that were any other person in Sarkozy’s place promoting the same future policies, they would win.  But Sarkozy is not winning, and in fact he appears to have even lost the support of the far right.  After passing to the second round, the loosing parties on the left openly lent their support to Hollande, whereas the loosing party on the right, which boasted upwards of nineteen percent of the vote, has yet to openly endorse any candidate.  Indeed the tides have turned on the president simply because he is hated; a true victim of public slandering.

A Hollande victory would see France turn back in on itself and carry out similar isolationist legislation as seen during the Mitterrand presidency.  Debt reduction efforts would take a turn to favor the social programs sought by the French Socialist Party.  While the reasons Sarkozy hatred stem from a complex subset of issues, a kind of “mob” effect has swept the voter base.  That is the danger of holding popular elections for the highest government position in a country: the people can be swept away by rumors and common notions (whether false or true) to the detriment of an individual’s career.  Although the final blow has not yet been dealt, Sarkozy is, figuratively, at the end of his rope.  Europe’s (NYSEARCA:FXE)  future is at stake, and the world will watch carefully; for even the small country of France can impact the world’s economy, as France has direct influence to the outcome of the European sovereign debt crisis.

Bottom Line:  The finance sector (NYSEARCA:XLF) in France should brace for a Hollande victory.  As the French elections approach, investors should be mindful that a change of party in France  (NYSEARCA:EWQ) could drastically change how France interacts with the international community.  Sarkozy’s chances of re-election are slim, although still possible which, in financial terms, could save the world from the uncertainty of a socialist takeover and possible drag on European Union (NYSEARCA:FXE) progress.

John Nyaradi is the author of The ETF Investing Premium Newsletter.