French election? It's all about Europe in the end...

Where does one even begin to discuss the drama that just unfolded before our very eyes in Paris? Hollande's victory now cements a widely-expected change in the French political landscape.

But what changes can we expect? With Hollande returning socialism to French political life, we can expect the usual symptoms of spending, reaffirmed with promises that this will make all the difference. We can expect more "community" based measures, which ultimately, the wealthier part of French society will pay for, with their expected 75% tax rate. We can also expect other "bad" groups to be expected to pay, i.e. the financial sector, as Hollande will stubbornly introduce a Tobin tax on financial transactions in France, even if he can't first secure it at the European level.

However, hiding behind this wonderful illusion that spending solves all problems is the reality that you cannot spend what you don't have, so as well as increasing taxes you can expect the new French administration to borrow. Except that's not as easy as it once was, with the Euro debt crisis meaning that France is already up to its eyeballs...in debt.

As a consequence, we can expect France to be pushing at the European level for all measures to "save" the euro, which, when translated into French, means extracting money from the other 26 EU member states to save French banks....the more enlightened of us already know however that it's these banks, and not the German/Spanish/Irish/Portuguese/Italian/British ones that have the highest exposure to Greece.

With French banks saved, the French economy is prevented from collapse, and the French Government cannot become any more indebted to saving its own banks, (assuming that the money is eventually transferred from the EFSF/ESM directly to banks to avoid any bailout being recorded on a Government balance sheet) which have failed just as miserably as any "Anglo-Saxon" ones. But, the core problem will remain, and government debt will ensure that this socialist administration will not be able to fulfil its pledges. They will come to understand that if you don't have the money in your piggy bank, you simply cannot have what you want. It's a form of poverty, that some other political philosophies understand well.

Of course, the underlying aim of the French Government in joining the upcoming fiscal union/economic government/full monetary union/bank union or whatever they'll call it is not just to maintain the illusion of an economically strong France, but to continue to cement French political power within the European Union. The French have long benefited from being able to project French post-imperial power through the European project, and they will not let that go easily. Being able to influence the EU to do what France wants is the only real power France has.

If the French Government, in its likely disagreements with austerity-Germany is at risk of losing its influence in Europe and having other countries dictate to it through EU rules, you'll soon see just how much "solidarity" the French really believe in. They'll stamp their feet and make threats....

It's going to be an interesting few months, as the French desperately try to hang on to their influence as the Germans lead the way - but they won't like the German economic cure, so expect blackmail of some sort. France wants the political influence and the economic power - but you are in debt dear France, so you'll have to choose what is most important. You cannot have your cake and eat it.

In conclusion though, I sense that the idea of Europe is the most important thing. And the French will not sacrifice that for a few promises of government spending. So all Europe needs to do is to help Hollande save face by keeping his borrowing costs low so he can mortgage the next two generations of French children. With the EU extracting political power from France as its price of solving this crisis (Germany hiding behind the EU) and seizing the crisis as the moment it has been waiting for to build its federation, whatever Hollande promises, this French administration will be like the last one - all about Europe in the end....