France

Paul Krugman asks whether anyone thinks that Hollande has the faintest idea about how austerity is going to fix the French economy, in a context where France is clearly facing a huge demand-side problem.

I guess this is the latest statement of what the French are thinking. They recognise that there is a demand side problem in Europe, and hope that someone else (the ECB, and European institutions who might promote European investment) will address this. And they hope that if they do things that the Europeans like, then this will lead not only to saner European macroeconomic policy, but to investment by French companies as well:

“Je souhaite… que chacun prenne ses responsabilités”, poursuit Michel Sapin. “Le gouvernement a pris les siennes, je souhaite que l’Europe le fasse aussi. Mais il faut que les entreprises prennent les leurs.”

I sort of understand what is going on politically. One thing that strikes you about France is how partisan the politics there are. There are some — typically on the left — who think that demand is all that ever matters, and others — by no means all on the right, since VSP’s are to be found right across the spectrum — who think that supply is all that matters. So the government is trying to say that both demand and supply matter, and is describing this in terms of a bargain: if we are tough on spending and all the rest, then the French private sector and “Europe” should do their part, and invest.

But what if, as appears to be the case, the big reason that French companies are not investing is a lack of demand? And what if the Germans simply refuse to budge on macroeconomic policy, as seems likely? Is French policy simply going to consist of saying “pretty please”, or do they have a credible threat to move things along?

Threatening to leave the euro if things keep going the way they are might just do it (what would be the political point of the euro without France?), but does anyone see Hollande credibly threatening that? Does anyone see him credibly threatening anything? And what is his Plan B if Eurozone macroeconomic policy remains essentially unchanged? Does he even have one?

In the mean time, austerity in France will continue to hurt the French economy. How high in the polls does the FN have to rise before Hollande realises that what he is doing is neither prudent nor responsible, but incredibly dangerous?

And how long before the French political system is willing to acknowledge, publicly, that Montebourg’s warnings do not reflect a particularly “left wing” view of economics, but would be regarded as plain common sense by most macroeconomists?

 

 

Comments

comments

42 thoughts on “France”

  1. Le Canard is very good on what’s going on in France.
    Montebourg made a big speech on the 10 July against the current strategy and Hollande even SMSed him to congratulate him. “Hollande the conformist perhaps governs but he no longer has the force to manage Montebourg”

    Ultimately this is highly political. France will still be there whether the Euro survives or not. Montebourg and Valls are fighting for the post Hollande divvies. The FN is a big threat.

    Meanwhile

    http://www.ft.com/cms/s/0/7620188a-2d22-11e4-911b-00144feabdc0.html

    “While the path of ECB policy remains unclear, the extreme levels of European government bond markets demonstrate growing doubt that the ECB will deliver the policy response needed to revive growth in the euro area.
    Market pricing of future inflation has also moved to levels suggesting scepticism that the ECB will meet its inflation target over a two- five- or 10-year horizon.
    As a result, yields on 10-year German Bunds have fallen below 1 per cent – nearly 150 basis points below equivalent US Treasuries. This is close to the widest negative spread since the euro was introduced. Spreads of less than 50 basis points above 10-year Japanese government bond yields are also the lowest positive spread in 30 years or more. This is a market pricing in convergence towards a deflation scenario, not economic revival.”

    It’s very like the Wizard of Oz with Jens behind the curtain

  2. If the French left are so worried about demand then why don’t they cut taxes and put some money back in people’s pockets? Because they would prefer to spend the money themselves?

  3. The real problem with the French is their almost total inability to have any structural reforms without riots and strikes which lead to governments chickening out.

    Policies which centre-left governments almost everywhere else regard as necessary seem anathema to the trade union and socialist neanderthals in France – jut look at changing the retirement age.

    If austerity means some real attempt to balance public expenditure and taxation so that the ratio of public debt to GDP does not increase to totally unsustainable levels, then there has to be austerity (I would rather call it living within one’s means). However while austerity may be necessary it is not sufficient – hence the need for reforms to the real economy, particularly the labour market.

    The French political establishment are unique in Western Europe in their lack of understanding of basic economics. Unfortunately the price is being paid by younger age-groups in terms of huge unemployment. For “insiders” in France there has been very little real austerity.

  4. @ Seafoid
    Interesting link attached to the comments to your FT linked article above:

    https://www.youtube.com/watch?v=a3tPljeiT-Y

    Le Penn has already delivered the threat to leave the Euro. If Hollande gets it wrong, then the outlook looks terrible for the continuance of the Euro. Say 2017-2020 type of timeframe….slow motion train wreck still coming down the tracks.

    In the meantime, higher interest rates are coming via the $…..2015 beginning. Already the signs of stress are beginning to be felt…your FT link alludes to some small part of that story. AEP deals with some of the rest (the part on gold is rubbish but the rest is good enough).

  5. Kevin

    It is certainly true that the fall in investment (more than) accounts for the current crisis. Yet I think it’s a mistaken idea that French companies are not investing because there is a lack of demand.

    Consumption has recovered to some degree since the crisis began, €75bn higher than in Q1 2008. The bulk of this is government consumption (+€44bn) but private consumption is also higher, up €31bn.

    The main brake on growth is the slump in investment, which has fallen ever since Hollande implemented austerity in mid-2012 (Sarkozy hope to save his skin by postponing implementation until after re-election, much good it did him). It is no €37.5bn below its early 2008 level, even though consumption is higher.

    This remains an investment crisis, one which the French state has exacerbated by cuts in its own level of investment. Yet it has the tools (direction of the banks, state-owned enterprises, etc) to reverse that trend.

  6. The bond market has clearly concluded that ECB official rates will stay very low for a long time. That is to say that inflation expectations are anchored to about zero, not to 2%. Moreover that QE, if it comes, will not make much difference.

    The market could be wrong of course but if the implication is a higher probability of a choice by France to quit the Euro, or a disaster in Italy, the bond people will get around to spread-widening fairly soon.

    But not to worry! There is a summit on Saturday to dish out Euro-jobs.

  7. @Colm
    Obviously, the central bankers can only control the very short end with any certainty. When the Fed raises initially, watch the markets drive up the longer ends pronto, in $. It has the potential to be chaotic….and no one can be sure that can be controlled in any meaningful way.

    Anything can upset the applecart re Euro sovereign rates (and other EZ rates too). As some analysts in London have recently been commenting, a market correction in equities is only a matter of time (one analyst yesterday predicted a possible 60% fall, required to rebase to “fundamentals’ basis”). That too is the view here in NYC among some senior money managers. That said, it’s amazing how yet market participants continue to plough ahead regardless…trade or don’t get paid (or get fired) phenomenon, all hoping they can get out before real trouble hits (relying on the Fed to facilitate that). It won’t be pretty if they all try to head for the exits together. Amazing too is the lack of protection buying, in equities, in FX, etc Something recently emphasized by the likes of El Erian….all very cheap in today’s markets but simply not being availed of because of mainly peer-to-peer performance comparison pressure among the money manager professionals, but simple complacency also among the greater “unwashed”. We’ve all read about it, but it is still “amazing” to behold.

    Ugly or not in financial markets? What’s clear though is that change is coming courtesy of the Fed in the first instance, one way or the other. Watch the debtors get crushed badly again…….

  8. @ Paul W

    Do you really think higher rates are coming? That would imply some sort of global recovery, wouldn’t it ?

    The EZ is looking at stagnation if the bond markets are to be believed. The US may not be far behind. I think the post QE landscape is very uncertain.
    What did QE do other than inflate asset bubbles ? Was there any spike in investment anywhere ? An awful lot of companies went for share buybacks. Purely cosmetic.

    Smithers is convinced based on CAPE that US equities are 70% overvalued. If stagnation is the next stage earnings are going to be way lower. And share prices are based on future earnings.

  9. Seafoid
    2Q US GDP was revised to 4.2% today…so, yes, higher $ interest rates to reflect improved US economy (the point though is what happens elsewhere to those less able to deal with the change in $ rates). For me, implicit in the US rates will also be inflation in the US which has been under reported…..as I’v said before, so many things are excluded from the official measure. The Fed’s main concern has been wage inflation pressure, which is growing, some indirectly via health insurance costs and other. Yesterday Bloomberg reported that bonuses will reach 1 record average 13% of all pay in the US…..some things don’t change!

    The US has been signaling for months now that all this is coming (in 2015), testing the waters, etc. Tough if one didn’t or doesn’t heed the ‘heads up’.

    Euro interest rates appear to be mainly a political (including geo political) driven item at present. However, any serious shock is likely to differentiate the men (crd) from the boys (drs) fairly quickly. That can turn negative for countries like Ireland very quickly…..despite recent good times!

    The US rescuing of its economy was never going to last forever…..’Normalization” will mean back to survival of the fittest capitalism, with the Fed to step out of its current market making role as soon and as fast as possible. Plenty will fall, for sure….those that remain over-indebted, etc. A very interesting aspect I have noticed over the last 12 months or so is the pulling back of the “better” (smarter) bottom-feeding vulture funds. Started going to cash many months back (by disposing of assets n places such as Ireland)….in face of others’ criticisms as the latter continued to pour in. These vulture people people know their business and could smell the change, and had started to withdraw way before now.

    Share prices have not been based on future earnings is the last point…..but yes, there is now a chorus saying that it could get very nasty.

  10. Hollande was awakened one Sunday morning in 2011 by his then girlfriend to reveal the shocking news that he had a chance to become president of France.

    His mentor Mitterrand had preferred to have him as a party bureaucrat rather than a minister in government.

    It’s easy to be wise after the event but I thought during his 2002 campaign that the expectation outside France that he could deliver a much ballyhooed growth pact was naive.

    He didn’t have a serious political programme and he rode an anti-Sarkozy wave.

    There should be flexibility on the budgets of France and Italy in return for serious commitments on reforms.

    Debt servicing costs as ratios of GDP have plunged.

    The problem is that in respect of both countries, this has been the same challenge over 40 years.

    France’s public spending at about 57% is at a similar level to Denmark’s but the latter’s current account surplus was at 7% of GDP in 2013 whereas France has had a current account deficit every year in the past decade.

    It has had a trade deficit every year since 2002 and budget deficit every year since 1974.

    Société Générale has said that “the deepening current account deficit in France was mainly due to higher private and public consumption, which was stronger than nominal GDP, and to a lesser extent to investment growth. In the case of Germany, the accumulation of surpluses is not fed by rising household savings: in fact household income and consumption increased broadly in line with GDP. Rather, it reflects weak investment, which is substantially lower than GDP. The consequence has been that the weight of investment/GDP in Germany dropped from 22% in 1999 to 17% in 2012, when it went from 18% to 20% in France.”

    The ECB can help as could a growth pact in the short-term. However, there are big changes underway in business with the internet accelerating the trend towards a small number of global giants dominating key business sectors.

    Coupled with that there is increasing competition from emerging market companies for OECD companies in emerging markets.

    Italy has few big firms and lots of family-run operations but the second largest manufacturing sector in Europe after Germany, and up to mid 2013. it had lost about 24% of its industrial production, going back to the 1980s level.

    The so-called Golden Age of European growth in the period 1950-1973 is not likely to return anytime soon and beyond temporary workers and young people struggling to find reasonably paid work, it’s difficult for government to confront some home truths.

    Sarkozy had prompted French workers aux barricades, when he pushed through a rise in the pension age to 62. Hollande partially rolled back that reform.

    When French students protested against a 2006 labour reform a poll at the time found that 65% wanted to work in the public service.

    France’s public sector generated 600,000 net new jobs in the 1980s, shed 40,000 jobs between 2000 and 2009.

    So it’s no longer able to rely on adding public sector jobs while growth in the private sector is mainly in health.

    China has 10% of its workforce in the public sector compared with France’s 27%.

  11. By the way, I for one don’t see the share markets collapsing quite yet…we haven’t got to actual Fed increases, etc yet….in fact fear and flight to $ safety has reduced or capped $ market rate increases as of late. But who knows. The only thing relatively certain right now though is that the Fed will tighten next year.

  12. Kevin I don’t think politicians of the ‘left’ generally believe that borrow and spend will boost their respective economies other that in the short term. I think that most of them know they have to repeat the lines to pursue office, but don’t really believe it, and electorates usually sense that. If they get into office they don’t then seem to know what to do except line up another gig while waiting to get kicked out again.

    For that reason I think that most politicians of the European ‘left’ are somewhat to the ‘right’ of what you would describe as ‘most economists’.

    Its an interesting question as to whether that is more a question of failure to communicate effectively by the economists or failure to listen by the politicians.

  13. @ MH

    It seems that the majority of macro economists, according to Kevin O’Rourke, would not agree with you, or John Sheehan.

    @ CMc

    According to press reports, they will only be able to agree on the two non-jobs actually in their gift i.e. their chairman and the head of the – non-existent – common foreign and defence policy of the EU.

    The real jobs are those of the major directorates of the Commission – of which there are no more than eight to ten – in choosing which the new Commission president has a major role; the only real improvement brought about by the Lisbon treaty. Juncker is clearly no push-over in this exercise.

  14. @ Michael

    “China has 10% of its workforce in the public sector compared with France’s 27%.”

    How many peasants are in China’s workforce compared to France ?

  15. @ Paul W

    I suppose a lot will hinge on the winter as well- was it an anomaly or is it something to expect going forward .

  16. DoCM,
    If the majority of macro economists agree on something, I will go the other way 100% of the time.
    A question for the uber Keynes crowd, how do you critique austerity when it has never been tried. France has probably never run a budget surplus in my 30 year working life. It has increased taxes and run deficits to keep filling the trough for insiders. Now it appears to be running out of road. It is beginning to look like a failed state. Yet our ‘clever people ‘ continue to extol the model.

  17. @ Tull
    I don’t think the French deficit over 30 years is particularly shocking per se Maybe the % of public sector spending is. Maybe the deficit spending generated growth …

    The Yanks ran a balanced budget for 4 years out of the last 34

    http://politicalticker.blogs.cnn.com/2010/02/03/cnn-fact-check-the-last-president-to-balance-the-budget/

    The Brits were marginally better but not enough to condemn the French

    http://www.telegraph.co.uk/finance/budget/9932748/Budget-2013-Britains-debt-and-deficit.html

  18. Seafoid,

    So no evidence of ‘austerity’ there. Govt have continued to run deficits to cushion the business cycle. In addiction the sensibly run polities have doled out QE to prevent Armageddon…successfully.
    Only in Europe have we seen Rangers FC supporters club try to stem the tide against QE only to give up …hopefully.

    How long has France been in cultural and economic decline…since the 16th century. Beats me why the Irish elite is so obsessed with a failing system.

  19. @ DOCM

    I would expect that if Arnaud Montebourg was in charge that he would have a somewhat different perspective on the realities and last June he supported GE’s takeover deal for Alstom’s electricity business – even though his preference was that the business would remain in French control.

    The AP reported Montebourg said in July that the ECB should do more to weaken the euro in order to boost growth and the government should go ahead with €50bn in spending cuts in coming years but he proposed that only one-third of the money saved should be used to reduce the deficit, with the rest going to cut taxes.

    This is far from radicalism.

    Manuel Valls, the prime minister, said the time was long past for half-measures and demonising capitalists.

    “What does it mean to be a leftist? Is it to raise public spending? Is it to raise taxes?” he said. “Who will create jobs if not companies?”

    On macroeconomics, much of the analyses strikes me as superficial.

    A Marshall Plan for Europe will not happen as no German government
    would win public support for it. This week John Palmer in the Guardian wrote that “a kind of New Deal, spearheaded by a massive increase in investment in economic, energy, transport, environment and social infrastructure, is also essential,” besides ECB action.

    Even if such a plan was to get to a discussion stage, if there were to be any strings attached, Germany would surely be reluctant to play the scapegoat for politicians in say France and Italy who would blame it for unpalatable policies that they implemented.

    Japan got the best infrastructure in the world from a series of massive investment programmes, some bridges to nowhere, high debt and long-term near zero rates.

    Funny thing too was that its once feared companies were shown to be paper tigers and they still looked strong when the president of the United States threw up at a dinner in Tokyo in 1992. He was on a trip with auto executives who were begging the Japanese to reduce restrictions on foreign car imports.

    Leaving the euro may be the least palatable of options.

    Prof Hans Werner-Sinn said this week in respect of the period 1995-2013: “Relative to Germany, Italy became a whopping 42% more expensive. That price differential – and nothing else – is Italy’s problem. There is no other solution for the country than to correct this imbalance by means of real depreciation.”

    However for a government, leaving the euro would be suicide, as there would be initial chaos while the savers who tend to be people who vote would see their savings partly evaporate. So the inclination would be to put a decision on the long-finger.

    Besides, it’s a delusion to see 1999, the year of the launch of the euro, as the starting point of French and Italian economic problems.

    The European Commission has said: “With an export product mix that is rather similar to that of emerging economies, Italy has been exposed more than other euro-area countries to increasing global competition.”

    In 2007, the top 10% of French exporting firms accounted for 94% of export revenues.

    French firms have little interest in exporting.

    Over 1999-2007, Italy’s real annual GDP growth averaged 1.5%, i.e. around ¾ pp. below the performance of the Eurozone as a whole. France’s average growth was 2.2%.

    @ seafóid

    In China the communists have overtime reduced the public sector workforce to 77m in 2009 or 10% from 100%.

    France has been running a continuous budget deficit before the birth in 1977 of Emmanuel Macron, the new economy minister.

    France’s last annual budget surplus was in 1974 while the government debt to GDP ratio rose from 22% in 1975 to an expected 96% in 2014.

    Persistent twin deficits – budget and current account, in particular a trade deficit in the latter – do impact economies and the earnings of workers in exporting firms are usually higher than in domestic firms.

  20. For a country in decline since 16th century, France is still within accounting differences distance to Germany with respect to GDP per capita.

    They are basically in the same situation as Germany 2003. We were also agonizing for years, that things were not going like before. We too tried marginal tax rates of 65% (Lafontaine as finance minister in 2009)

    And they will do their Agenda 2010, a little more drawn out, and things will be alright, in 2020. It took us also 4 years to get back under the 3% limit.

    German accumulated Current Account was 0.4% in 1998, before we sold this Mannesmann stock to UK for 200 billions, French accumulated Current Account was 1.1% in 2006, and is now -20%, sooo.

    Germans last budget surplus was also back in the early 70ties.

    @ MH “investment/GDP in Germany dropped from 22% in 1999 to 17% in 2012, when it went from 18% to 20% in France.”

    Back in 1999 there was plenty of good investment opportunities in EASTERN Germany, especially public. But this stuff is mainly built now. And when I look at all this building projects I see here in Dresden, these are already often stuff with no tangible payoff.

    Just as background on investment:

    French population growth rate is 0.45%, Germany minus 0.18%, delta = 0.63%

    Use multipliers of 3 for working capital, 3 for housing, 1 -2 for public infrastructure, together 8, times 0.63% from above, and you would get a need of additional 5% in invest

    This is an aspect, many overlook, how much invest is needed to get or to maintain the same level of investment per capita, with a higher population density, especially people living in rental in larger cities, I also need a little lower invest in streets, public buildings, etc., can have a little more cost efficient education, etc.)

  21. @ Michael

    “France has been running a continuous deficit”- so have the UK and the US, bar a couple of years . Those China comparisons are often dubious. China is a low income country . Comparisons with France may not always be appropriate.

    France is stuck in a game – not clear the other players will choose rationally . The markets assume they won’t so the Euro remains overvalued.

    @ Tull

    Good points but it is not yet clear that QE is sensible. Has never been run before on such a scale. Policy in the dark . Are you sure it can be ended without provoking a spike in volatility or worse ? I think things would look better if companies were investing instead of running share buybacks. Productivity is not rising as once would expect in this stage of the cycle. If it is a cycle.

    Maybe it will work out. Economic growth is still fragile in the US and the UK and it’s 6 years on from Lehman and interest rates are ultra low.

    http://www.prayers-for-special-help.com/prayer-to-st-jude-that-i-get-paid-the-money-owed.html

  22. @Paul W

    I’d suggest your analysis of the oncoming market collapse in 2015 or later is probably wide of the mark.

    The likelihood of a rate rise by the FED is 2015/2016 is well known – so well known in fact that you are already suggesting that a ‘chorus’ of analysts are predicting a market meltdown. I’d suggest that when a chorus of market participants are predicting doom then the markets will behave in exactly the opposite direction as expected.

    In 2007/2008 those suggesting a collapse were few and far between – don’t get me wrong some predicted the credit binge had gone on too long and too far but the overwhelming majority of market participants did not hold that view at the time. This is not the case this time around.

    Investors, at least the ones I speak to, have never really been sure of this market (equity and bonds) since the 9th March 2009 when the current rally commenced. Many have stayed away, many have barely believed it and many more are bemoaning the fact that the S&P is today more than 300% higher than at the date noted above. Bull markets do conform to pretty well established timeframes and the real bubble only really gets going when those investors who believe they were wrong to have not got involved earlier get involved just before the bell is rung to mark the top aka ‘the sucker’ fraternity.

    I don’t believe we are any way close to this particularly phase in the equity markets, unless I’ve missed something. Yes valuations look stretched but from past experience valuations can and do go beyond fundamentals for a considerable period of time – don’t be surprised if this equity rally continues for another 3 /4 years. The time to get worried is when the market strategists from the stockbroker houses start appearing on Morning Ireland ‘explaining’ why the market have continued to move onwards and upwards.

  23. @ Michael

    China is several waves of economic development behind France. Probably pre WW2 in terms of the split of activity by sector. Most of the French farmers left the land after the war I think. And France didn’t have such a big public sector 70 years ago either.

    China has very little in terms of social protection. It’s more of a robber baron model. You are basically on your own in China.
    Most people in China AFAIK don’t dabble in bonds or equities.
    China also has that population bulge issue coming up on the inside.

    France obviously has serious challenges but I don’t think China is the best comparison.

  24. Krugman in today’s NYT:

    How does France fit into this picture? News reports consistently portray the French economy as a dysfunctional mess, crippled by high taxes and government regulation. So it comes as something of a shock when you look at the actual numbers, which don’t match that story at all. France hasn’t done well since 2008 — in particular, it has lagged Germany — but its overall G.D.P. growth has been much better than the European average, beating not only the troubled economies of southern Europe but creditor nations like the Netherlands. French job performance isn’t too bad. In fact, prime-aged adults are a lot more likely to be employed in France than in the United States.

    Nor does France’s situation seem particularly fragile. It doesn’t have a large trade deficit, and it can borrow at historically low interest rates.

    Why, then, does France get such bad press? It’s hard to escape the suspicion that it’s political: France has a big government and a generous welfare state, which free-market ideology says should lead to economic disaster. So disaster is what gets reported, even if it’s not what the numbers say.

    On the other hand: reform, REFORM, REFORM!!!!

  25. @ seafóid

    On Denmark, did you expect another recession in the US too when GDP dipped at an annualised 2.1% rate in Q1?

    @ All

    I suppose Hollande’s record low poll ratings since 1958 is because of his love life rather than the economy?

    Two years after sweeping to victory in two elections, Hollande’s party got a 13.9% vote in the European Parliament elections.

    Maybe it was the failure to implement the growth pact but does anyone know what euro price was on this stimulus proposal? Could it have been none?

  26. @ MH, all

    I dont think that Hollandes love life had any impact.

    He just didnt deliver the miracles many had somehow hoped for and didn’t want to destroy the European Union with openly treaty violating acts.

    Many people were very grumpy in Germany until 2007 too.

    France does not have to make so many or so cruel changes, like Germany in 2003 was considered by many as also “not enough”.

    Now, maybe asking folks here around, especially

    Ernie, Tull, seafoid, Kevin, cmc, Paul W

    What were the most important steps Germany did in 2003 and how much impact did that have on Gov deficit, Current account, unemployment ?

    In most cases this will be just gut feeling, but everything beyond, numbers , links would be of course very nice.

    Because the second question would be then, if we implement just x % of this would that be already enough for France now?

  27. @ Michael

    The point about Denmark is that the EZ malaise is impacting even countries that would be seen to be well run.

    If France, Italy and Germany are slowing down or not growing it’s hardly going to be great for the neighbours. On the States I think the Q1 numbers were the most shocking. Q2 appears to be good but how much of it is catch up? If Q1 is climate change and it happens again this winter I think Janet will be busy for some time.

  28. @francis

    Some people who enthuse about the virtues of Latin American defaults and/or devaluations conveniently fail to acknowledge the coincidence of a boom in demand for exports for their natural resource heavy economies.

    There was a boom, many would say an unsustainable one which has resulted in industrial overcapacity in places like China, which provided a nice ride for the post 2003 German economy. That boom, unlike the finance and real estate boom many other countries were predominantly riding, was even extended post credit crunch via the policy actions of the Chinese state.

    That was convenient for Germany. It may not be sensible to assume something equally convenient will turn up for France.

  29. ‘plain common sense’ is in short supply in the EuroZone …..

    I hear that Angela is now referring to herself as the ‘Neu Shogun’ …

  30. @ unfeasiblycharming

    the French have that already homegrown

    http://www.boston.com/news/world/europe/articles/2009/10/24/sarkozys_son_wins_post_after_scandal/

    Lagarde / tapie is a 600 m thing

    Young Louis Sarkozy, the 15-year-old son from the French president’s second marriage, was pelting her [ police woman ] with tomatoes

    and now Joe Bidens little one is in queue for a lot more than 600 k

    http://www.zerohedge.com/news/2014-08-29/has-ukraine-shot-itself-foot-gas-pipeline-deal

  31. @YOB
    Apologies for the gap.

    Don’t disagree that the upcoming Fed change is well known and has somewhat been factored into the curves……minimal if not fear (downward) effect thus far. However, the real change hasn’t happened thus far. We are still in a benign environment and most are still chasing the “good times”. Disagree though that this scenario will continue once real change actually happens, and I do expect 2015 onward volatility, etc Must agree to disagree on that. In relation to managed equities business in Ireland, and while that it’s not my business, it has always been a rather limited and local market (compare average fees with eg US managed funds, including pensions, and one sees very quickly that Irish fee scales are way higher..little competition or value add). The Irish equities environment is pension fund dominated. However even where this is not the case, much of the Irish equites business appears to be “follow index” based. Little real expertise locally, certainly on international equities markets. That’s my view (and experience with management of personal equity and bond, and legacy pension fund, portfolios there).

  32. Hollande reminds me of Gilmore.

    this week`s canard enchaine

    “avec une croissance nulle, un chomage qui monte, des déficits qui ne baissent pas et une dette qui s`accroit , ce qui est clair c`est que pour Hollande et Valls tout cela n’a pas gagne d`avance.”

    Zero growth, rising unemployment, deficits that are not being reduced and an increasing debt it is clear that Hollande and Vals are not moving forward

    Euro senior hurling

  33. France is going through a hard time
    and has been for some time now we do not really see the effects of the financial crisis in france because each time their is a problem the government up the taxes,This method is the only one they have because they are crippled by their own politics their socail system,export and import markets,the housing industry and the strong euro is not helping their cause.The french people have made alot of efforts for france paying more and more taxes but the government cannot ask the french people for any more help because their is nothing left to give, i know alot of people that have nothing left after paying their bills at the end of the month,The middle classed have been hit hard the moral is low, no one knows what is coming next.The country that has free health for all is sick and needs to heal quick.
    More and more people are losing their jobs the see no light at the end of the tunnel, Companies are closing up and going elsewhere because the tax rates are too high in a country that is out of gas and no driver on the bus.
    They have launched a new deal with companies to lower the tax costs in return these companies need to hire more people you and i know that will not happen because these companies already know the system and for them it is just like a tax return more money in their pockets.
    Dangerous is not the word Kevin the socail party will not get through to the second round of the elections in 2017 it is already happening their is to much suffering.It will be (UMP VS FN ).Why do you think the founders of the socail party in france have slammed the door on holland and why do you think montebourg left they understand the socail party in france and some left wingers are fighting to stay alive in french politics.

  34. @ All

    FYI

    Will Hutton and Dan O’Brien on France; and the euro!

    http://www.theguardian.com/commentisfree/2014/aug/30/francois-hollande-economics-gamble-with-europe

    http://www.independent.ie/opinion/comment/future-of-the-euro-in-grave-doubt-as-francogerman-core-crumbles-30549580.html

    The euro did not create France’s economic problems. What it do, however, do was remove the safety valve of devaluation which had been used in the past to mask the failure of the ruling elites to deal with them.

    Hollande, like his only recent socialist predecessor, Mitterand, has done a volte-face and in about the same timescale. This was, however, before the introduction of the euro and its unexpected role as a drag anchor in the relationship with Germany.

  35. @Paul W

    No harm to you Paul but I’ve been listening to that old guff about the lack of expertise for the past 20 years and it hasn’t prevented many of the largest funds in the world tap into the so called lack of local or indeed international knowledge within the Irish borders so I’m not a believer. Sometimes it absolutely critical NOT to be part of the jet set and free from the locals – decision making is a lot less encumbered as a result.

    Ask Warren Buffett why he set up shop in Omaha rather than Park Avenue – precisely for this reason I’ll think you’ll find – and that was 60 years ago – long before the age of instant news.

    With the world coming to an end as one would believe listening to mainstream media as they report on Ukraine. With all the rest of the problems in almost every part of the world getting worse and against that background equities continue to rise suggests to me that the market and its participants couldn’t really give a continental what Mr Putin eventually decides. In my view this equity market goes significantly higher from here (never a straight line however)- as for Sov Bonds – not so sure.

  36. France is now in the same position as Germany was in 2003, the tax raises to fix things have hit the wall.

    And that was the same for the scandinavians in 1991, notably Sweden.

    And the required fixes are also the same as somewhere else before.

    Not really a revolution

    http://www.zerohedge.com/news/2014-08-31/does-france-need-21st-century-revolution

    And this Krugman will forever camouflage his anti-German racist hate mongering (see e.g. “Germany’s sins”) as “common sense”.

    But has ever anybody deciding on anything listened to the clown?

    Or do all relevant people, like Norbert Walter say “I cant stand the rubbish anymore”

    Btw, Simon Wren Louis gets retired in one month too : – )

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