France poised to 'tax & spend' as Socialist Party wins big

EU Parliament member Daniel Hannan reacts


This is a rush transcript from "Your World," June 18, 2012. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": All right, meanwhile, to Mexico, the G20 summit is kicking off and Greece is the word, but maybe it should be France is the word instead because the French taking a hard, and I mean hard left turn into socialism last night with the tax-and-spend party winning more than 300 seats in Parliament.

That creates an absolute majority.

To a member of the European Parliament, Daniel Hannan, who's very worried about this development.

And, Dan, out of nowhere, we are so focused on Greece and whether it's going to really pick up austerity measures, stay in the euro, that we lose sight of the fact that a much, much larger economy lurches even harder left.

What do you make of that?

DANIEL HANNAN, EUROPEAN PARLIAMENT CONSERVATIVE: You know what, Neil; I would say that the lesson is that when the right becomes corporatist, it opens the door to the populist left. If the conservatives are represented by people like Samaras in Greece, Sarkozy in France, it's not very surprising that the voters are looking for a more radical alternative.

CAVUTO: But does that also mean that voters are looking for an alternative to any sort of austerity, anything that even slightly reins them in?

HANNAN: Yes, I think that is a lot of the problem.

People have been treated as children. You know, if you say to a 4-year-old, do you want do have the cookie today or do you want to have it tomorrow, their first instinct is to say, both, please. And that's pretty what has just happened in the Greek election. We don't want the austerity, but we insist on keeping the euro, which is what's causing it.

And we don't want to be told that we have to choose and you guys can sort it all out for us. That is what happens. Just as a person can be infantilized by welfare, so an entire nation can be infantilized when it's encouraged to look beyond its borders for solutions.

You know what? We've now got this crazy solution in Europe now, which is -- you couldn't make it up. The Spanish government is having to pay 7 percent to borrow, OK? It's borrowing at 7 percent to give to Spanish banks which can borrow at 1 percent from the European Central Bank, so that the banks can lend back to the Spanish government at 7 percent, so that the Spanish government can bail the banks out.

I mean is it any wonder people are voting against the whole thing?

CAVUTO: But then you have to ask yourself if they are not going to rein in some of the abusive spending and public waste that has been pretty rampant across Europe -- and now we are talking about giving Greece more time to get through its hump, it is like the collective will, European will is just gone and I don't know what the repercussions are globally but I know there they couldn't be very favorable.

HANNAN: Yeah, you're right.

We are into this crazy spiral because the truth is that the leaders of the E.U. from the beginning decided that the priority was to keep the euro and to keep their political system and their ideology intact, at whatever price to the poor wretches who have to use the euro. And so we can now see how high that price is.

In the southern countries, in Greece, in Spain, in Italy, it's deflation, poverty, immigration. And in the northern countries, it looks like endless tax rises. You know, ever since this crisis began, we have been treating the debt crisis with more debt.

So you mentioned Greece and France in your opening clip. I think Spain is the place to watch now. Spain just had a $100 billion euro bailout, and its debt has spiked. It made no difference at all. In fact, the day after the bailout, Spanish banks -- I'm sorry -- the Spanish government was downgraded three notches by Moody's, perfectly rationally, because it's just added 100 million euro's to its external debt.

Every Spanish family now owes 15,000 euro's that it didn't owe 10 days ago, and to no end at all. Of course, this is -- this is -- this no way to run any kind of government.

CAVUTO: Daniel Hannan, thank you very much -- Daniel Hannan in Europe.

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