Pay attention to France, Iowa
Just across the Atlantic, economic hell has been breaking loose in Europe. The economic hell that I'm referring to is the numerous European countries whose economies are hanging by a thread.
Although the tunnel is currently pitch black, Germany may be the country that can provide the light at the end that so many countries are desperately searching for. Yes, the Germans seem to be the only European country capable of saving the euro; however, it can't do it alone.
Along with Germany, Deutschland's neighbors to the West make up the core that holds the European economy together, and so the survival of Europe depends heavily on France.
France's economic survival will depend greatly on the new changes that newly elected socialist president promises to implement, and these changes are BIG.
As much as we would prefer to focus on getting the U.S. economy back on track, we must pay attention to everything that's happening in France, because its economy can greatly affect the United States.
Newly elected President François Hollande has promised to bring drastic changes to France, and when I say drastic, I'm talking changes that would be unheard of in this day and age in the United States.
If Hollande makes good on his promises, France's monetary policies will be flipped upside down. For better or worse, we shall see.
Hollande plans to increase France's minimum wage, which is already one of the highest of any European country. If all goes accordingly, the average retirement age in France, the lowest in the country, will decrease by about two years. According to Businessweek.com, he plans on lowering the budget deficit to 3 percent by 2013. The president also plans on taxing every millionaire that resides in France with a whopping 75 percent income tax. If that isn't socialism in full force, I don't know what is.
According to The Economist, if the economic problems from the other European countries spill over to France, the euro's value will be severely threatened. If the France and Germany fall, then all of Europe falls, potentially erasing the little progress the United States has made in getting its economy back on track.
That's one of the main reasons why the economies of Greece and Ireland have been so closely watched over the past few months. Those two countries alone have significant economic effects on Europe, and so if Portugal, Spain, and Italy continue to struggle, France can very well go under, leaving Germany unable to carry Europe on its own.
We've all heard about the economic woes that the United States has experienced the past few years, and so now may not sound like the best time to focus on Europe's economic status. However as unapparent as it may appear, Europe's economy has a huge effect on the U.S. economy, which obviously will affect Iowa's economy.
According to the Associated Press, Europe receives 22 percent of the U.S. exports. If Europe's economy trembles, so will America's revenue that is made from exporting goods. Europe's economic state also affects U.S. financial institutions, because failing European banks can spread hesitation of investing to not only European investors but American investors as well.
American stock prices have dropped significantly since early May, with the European economic crisis being one of the main reasons, according to the Associated Press. With Ireland, Spain, and Greece paving the way for economic debacles — just think of the aftermath if the European economic titan France was to falter.
For the sake of both of the American economy, which includes the economy of Iowa, let's hope the policies of France's new president will be able strengthen the French economy and lend Germany a much needed hand in carrying the torch of the euro.
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