Photo via @aynolor.
This photo of a fleet of Ferraris purportedly fleeing to the Swiss border captures the feeling of many rich French people today. The socialist candidate François Hollande has defeated incumbent Nicolas Sarkozy — the first time a socialist has been elected President of France the Mitterand years.
This is a good night to keep tabs on financial markets in Asia and then Europe; as investors digest the news we will see whether a panic breaks out. Hopefully, they won’t. The markets have had a few weeks to accustom themselves to an election outcome that was widely predicted in advance.
Hollande now has a delicate few weeks. French legislative elections are scheduled in June, and Hollande must steer between twin dangers. On the one hand, if it turns out that all his talk about reform and growth was just so much election verbiage and once he’s in office he plans to continue French policy more or less as before, then disillusioned voters could turn on him next month. On the other hand, if he pushes against Germany and the financial markets too forcefully, a crisis of confidence in France and in Europe could develop in the markets. That, also, would not be good for his prospects in the legislature.
Those Ferrari owners may know something; pushing for much higher taxes on high income French people offers Hollande the best chance to throw red meat to his base without spooking international markets.