Do Markets Now Love The Left?

LONDON: It is often said that the power of global financial markets far exceeds the mandate of any government. Left wing politicians everywhere fear the "Gnomes of Zurich" and Wall Street. Recent events, however, suggest that the left has less to fear from international finance than they once supposed.

Here the markets' reaction to the Left's April victory in Italy highlights a worldwide trend. Not only does Italy now have the first West European government led by a former communist party, but this development has been embraced by businessmen, investors, and financial speculators at home and abroad. In the month after the Left's win, the lira rose almost 10% against the D-mark, the Milan bourse jumped 12% and longterm interest rates fell.

Financial capital's flirtation with the Left is not unique to Italy. Wall Street has soared under Democrat Bill Clinton. In Britain, markets seem to relish the prospect that the Conservatives will lose power after 17 years. In France, by contrast, President Chirac's election last year was greeted immediately by a franc crisis. Only in Germany does a conservative government enjoy support from financial markets -- and that may be explained by the fact that Helmut Kohl's policies are far removed from traditional rightwing policies.

So have the Gnomes of Zurich developed a social conscience? Has the Left strayed so far from its socialist roots that there is nothing left of them?