At the very least, the new German government is leftward enough to cause great dismay at the Financial Times. Following is an excerpt from an editorial in today's FT:
Leftward lean in Europe
Before this week the left or centre-left was already in power in a majority of European Union countries. But now there has been a further leftward lurch in Germany and Italy. The composition of the new Schröder government, announced in Bonn yesterday, reinforces the key position of Oskar Lafontaine, leftwing head of the main SPD party, as finance minister, while Massimo D'Alema looks set to become the first ex-communist to head an Italian government.
The wider import of these changes is that they occur in Germany, which has been Europe's fiscal schoolmaster, and in Italy which, in terms of accumulated debt, has been the most wayward pupil in the class. What do these moves bode for economic and employment policy, and for the euro?
There is nothing in Mr Lafontaine's consolidation of power or in Mr D'Alema's rise to the top that directly undermines the two countries' fiscal policies. ... But if fiscal policy is not changing, or at least not yet, the economic mood-music is. Up to now, most of Europe had seemed to quietly aligning itself on the very market-minded socialism of Britain's Tony Blair. Even Lionel Jospin, France's socialist prime minister, has tended to defy his communist coalition partners by tacking to the right on most issues. Now continental Europe may well move away from Mr Blair, and towards the siren voices in Germany's red-green coalition, calling for job creation, increased welfare benefits and interest rate cuts.
[end of excerpt]
Let's hear it for those sirens!
Carl Remick