European elections and the global recovery?

[Kevin]

This week has been we can safely say a disastrous one in terms of the news coming out of Europe. After what looked liked a slow recovery on the Continent early in the year, progress appears to be rapidly being rolled back again as we are entering the spring/summer. Due to concerns now of Spain in addition to longstanding ones about Italy and Greece. For instance, today Britain announced that it had just slipped back into recession.

One of the factors driving these new concerns are over elections coming early this May in France and Greece which as we know are two countries with the most at risk in this crisis.

In France unpopular center-right President Nicolas Sarkozy looks like he may very well lose to the moderately anti-austerity Francois Hollande of the Socialist Party. Both candidates are/have been under pressure from both far-right and far-left parties in this election cycle and Hollande in particular has made alot of rash statements about undoing all the cuts/austerity packages that Sarkozy has proposed as well as dramatically increasing French government spending.  This has alot of market observers worried, especially since there has been alot of concerns expressed last summer over the stability of French debt.

While in Greece, the technocratic Socialist government that has led the harsh austerity drive in that country as mandated by the EU. Is deeply unpopular in Greece as a whole and polls have shown it's support in a nosedive over the past year or so. However, the center-right opposition led by the New Democracy party isn't preforming any better and polling show them preforming just as bad. Instead the Greek far-left as well as the extreme right have seen the most gain's in terms of support and both are on track to do quite well in the election was held today. This also deeply concerns those in the markets due to the fact that such a strong red-tan performance could mean a rollback of many of the measures in Greece.

Not to mention the fact that the firmly German encamped Dutch government fell earlier this week also causing worry.

So I was wondering with such an anti-austerity backlash being seen at the polls, what is going to be the reaction in Europe and Globally in terms of the markets as well as economic news going forward?

I'd like to hear any speculation on it.

Personally I think we're heading into the same cycle we saw over the past two springs/summers, but this time around it's going to be worse due to existing and unrelated factors like the the PRC's economic growth slowdown.

But then again we'll have to wait and see.