Only one year in office and “new” French president, Francois Hollande, faces rapidly falling popularity.  As expected,  he is vigorously opposed by his opponents on the right,  but now he also faces a rebellion from his own “left” constituents.   Few French presidents have crashed and burned so fast. The right attacks him for raising taxes and increasing deficit spending. The left hits him for not delivering on his promises, mainly to raise taxes smartly on the rich and restoring cuts in government spending. 

In essence Hollande represents the economic drama seizing Europe between those who insist on continuing the austerity measures that have served Germany well, but not the other EU members.  Opposing this are those who argue that austerity is returning the EU to recession and that it is time to adopt the deficit spending pattern of the USA.

Neither side presents a convincing argument. As for austerity, while it may have worked well in Germany, it has not had similar success in other EU countries, for example right here in Spain. As for deficit spending, the US has rather meagre accomplishments for deficit spending and the trend is to cut government spending, i.e. the sequester.

The truth is no one has a formula to return us to the heady economy of 2007. We all face the “New Normal” which means for the USA continuing unemployment at higher than the historic average and growth at less than the histroic average.  And the same is true for Europe, except for Germany, the main proponent of austerity.

While the situation looks pretty somber, I have written several times about the only way out for the USA.  The oil and gas boom underway in the Great Plains, Pennsylvania and Texas is a real “game changer” (a too much overused phrase).  We are set to replace most of our energy imports with domestic production which literally means billions of dollars added to our economy.  Well oil and gas has been a major contributor to the US economy in the past and it can do so again.  

We may very well “frack” our way to happy days again.