Discussion for article #244816
Well…OK.
France is in real trouble for sure. I can just see the republicans now using France as a model against Socialism
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Fixed investment growth in France has been negative in France since 2013 and the household savings rate in France has gone from about 14% of GDP in January 2013 to 15.5% in January 2016. These trends, more typical of the Russian economy in hard times, was recognized long ago by David Ricardo. When people expect the government is going to increase taxes to meet rising deficits and pay off accumulated debt and the currency seems be getting devalued, they respond by accumulating wealth rather than increasing spending. As increased budget deficits are just another name for reduced public savings, private people and firms have to balance that with a corresponding increase in private savings. Some of this unfortunate situation goes back to Nicolas Sarkozy’s administration and the Austerity Craze of 2011, which flat-lined GDP growth in subsequent years. If you are French, and you remember the “Glorious Thirty” years of steady economic growth, this is just not very competent government. Whatever you say about France, and whatever party is in power, people expect good macroeconomic policies that stays above political fads. But here we go. The Socialists just saw the center-right win regional elections and this seems a panicked reaction to appear to be doing something that really isn’t doing anything. At the moment, foreign investors won’t touch the place with a ten-foot pole.
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There goes the Euro!.. UK never jumped on the Euro system of currency.
Today the Pound is $1.43. Euro $1.09.
He probably has to declare an emergency in order to take certain steps. Even a President can’t just make wild changes without some strong reasoning behind them.
A state of emergency is pretty much the pinnacle of problems.
DNL, the Euro started out as US$1.00, quickly rose higher than US1.00, and it is still north of the dollar. The pound used to be worth much more than US$1.43. So I don’t think quoting their exchange rate today really says much of anything.
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reduce chronic unemployment, which has been around 10 percent for years.
Which would partly explain their problem with extremism. Just like our Oregon wildlife refuge occupiers they sit around on the dole and plot a better world.
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“a 2-billion-euro ($2.2 billion) plan to revive hiring and catch up with a fast-moving world economy.”
We have lotteries that are almost that big.
…what’s wrong with this picture?
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In this war between the Keynsians and the Austerians, we know who won, but of late, it is really beginning to look like it should have gone the other way.
A $10/hr international WPA program would help the whole globe, if those with the resources were willing to contribute to the ocean of the global commonwealth instead of just to their own little landlocked lakes.
The economic flow they dam may be their own.
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It’s a plan to leverage that 2 Billion Euro’s into incentives for private employers to hire more and to train workers, not to give lots of people permanent jobs paid for by the government. Also, France’s total population is about 1/5th of the USA’s.
LOL- that was my first impression as well. “Today I’m pledging ONE MILLION DOLLARS to jump-start the French economy”…
The minimum wage in France is already over 10 $/hour.
I really think this is much more complicated than Ricardian equivalency. After all, the French have had sky-high taxes for decades, so it’s hard to see why that would be the crucial factor right now. As for a possible devaluation, if only… If you could somehow wave a magic wand and give France their own currency plus a devaluation, you’d probably see an investment boom.
And, as you point out, they’ve been but through forced austerity in recent years, not so much because of Sarkozy but because of the mad Euro experiment. Even now, Hollande is trying to leverage this modest set of economic proposals by describing it in histrionic terms - there really isn’t much to it, and he will not do much to widen the not-very-large deficit. My hunch is that the French know that things can’t go on like this, but also have no idea how they’re going to work out of their economic mess. The future looks bleak-ish, and that makes firms and consumers more cautious - which makes the situation even more dire. Sometimes fear of higher taxes is behind this behavior, but probably not right now.
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Globalism and automation are increasing social unrest. Climate change and war are going to make it even worse. Income inequality can’t continue, much less increase, without there being a huge price to be paid by those standing in the way of reform.
Instead of doubling down on failed policies that haven’t worked, those who have the money to tackle these huge problems must step forward and not shirk their responsibilities to society. If they don’t, the underemployed without any prospects will come after them. No government will be able to stop the chaos once the floodgates open.
These problems can be done in a manageable way like with ObamaCare or it will become nasty like the present refugee crisis in Europe. No country will escape the inevitable by refusing to face reality. Conservatives find themselves at Appomattox once again.
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"I don’t think…"…Good to know.
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It’s hardly an “emergency” when the 35-hour work week is still left intact.
Hollande has been anything but a socialist, he turned to austerity the moment he took office.
Most of Europe’s economic stagnation over the past decade is proof that “expansionary contraction” (they actually called it that) was a complete failure. Throwing people out of work and reducing demand was supposed to create so much “confidence” that it would induce people to spend and hire and stimulate growth. No, it never made the slightest bit of sense. That’s because it assumes that the problem to begin with was a high deficit causing people to lose confidence, which is absurd. It was a recession, caused by spiraling lack of demand.
Of course, since the common wisdom is that “socialism” is what’s hurt their economy, as you correctly state that the Republicans will assert as well as seeming to buy it yourself, that’s what people will believe.
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Ammon Bundy borrowing half a mill from the Feds is sitting around on the dole? I’d have called it grifting.
Valet Fleet Service received a $530,000 loan from the Small Business Administration in 2010. The loan was awarded through a program geared for companies “unable to obtain financing in the private credit marketplace.”
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Agreed that it is not simply the threat of even higher taxes per se, but the pattern of rising precautionary savings is a concern. The corresponding rate in the UK is about 5%. At minimum, it reflects nervousness about where the country is headed. France used to have it easy attracting FDI, so the drop in inward FDI in France’s case to close to zero already in 2013 is important. You could blame the euro, of course, many people do. But please remember that in the old days, beggar-thy-neighbor devaluations were routine and that too was costly. Moreover, the Bundesbank carried the franc for decades, buying francs to keep it slightly overvalued so it would have peace with its trading partner.