France Has Second Thoughts About the Euro
The French have growing reservations about the euro: 36% want to withdraw from the eurozone and go back to the franc, the old national currency; 4% have no opinion, which means that they don’t warmly support the single European currency; 44% say it is a handicap in the present context of a world economic crisis; 45% say it doesn’t serve the national interests of France; and a staggering 62% say it is damaging the average French family’s standards of living and purchasing power.
Some “realist” analysts dismiss these figures as mere panic. Just two months ago, only 26% of the French mentioned withdrawing from the eurozone. The most articulate “withdrawist” was Marine Le Pen, the leader of the far Right turned populist National Front. She advocated a planified restoration of the franc as the sovereign currency of France, complete with a 30% devaluation. But most people were then of the opinion that the core of the eurozone (Germany, France, the Netherlands) was safe, and that the relevant question was how to deal with the less significant and less efficient partners (essentially the southern tier of the European Union, from Greece to Portugal).
In the meantime, however, the core itself started to melt. There was talk, in particular, of stripping France’s triple A credit rating. Even Germany got nervous. Both the Paris and the Berlin cabinets envisioned drastic reforms of both the European Central Bank status and the European Union statutes. This, to say the least, was an admission that the present ones were not perfect.
No wonder opinions regarding the euro plummeted shortly after. But once some reasonable steps are taken and core countries’ credit is restored, polls — according to the “realists” — will switch back in favor of the euro.
Or will they ? The measures that most European countries — with the notable exception of the UK — finally agreed upon last Friday in Brussels will be an acid test in this respect.
The problem of the euro is that it is a currency, but not money. Money is largely magic. It is the sum total of what allows production, trade, innovation, profit. It works as long as there is confidence in it. “Give me good politics, I’ll repay you in good finance,” said Baron Louis, the finance minister of King Louis XVIII under the French restoration. In other words, see to it that everybody thinks he has a future under your government, whether he is a Royalist or not. As long as that will be the case, it will be comparatively easy to manage business, raise taxes, and balance budgets.
Baron Louis’ modus operandi was the secret of the American era of prosperity from 1945 to 2008. In a globalized world, the United States — as a benevolent hegemonic power — was providing good politics, i.e., confidence, and it allowed for good business everywhere. Whatever the theoretical state of the dollar and other currencies, the United States had iron: the will and the practical means to make war if needed. It cost the American taxpayer 4% to 5% of its GDP annually — no other Western business-oriented nation (except Israel) invested as much. Europe as a whole never took off from a 1% to 1.5% level. France and the UK never raised above 2%. And the American iron transmuted into gold.
This article has far too many economic errors to take seriously.
agreed, money, magic, Harry Potter is Chancellor of the Exchequer…
Thanks to Myno and Michael JR Jose for brilliant, detailed facts that clearly show the author is a fool. (Why bother to post such comments?)
I know from Ireland that when the Euro came in, the kind of inflation the author mentions as happening in France happened in Ireland. Overnight. The Irish got the shock of their lives, and it contributed to their distrust of the EU.
So the author is at least right about that phenomenon.
As for the rest of it, it seems logical that a fiat currency must have a strong, well-established state behind it. Otherwise, it is too much like the old 19th century banks in America–printing up pretty money that may (or may not) be worth anything the next county over.
An Préachán
The common currency works in the US, because the individual states are required to have balanced budgets. The Euro failed, because member countries ran huge deficits. Don’t make things more complicated than they really are.
Who has balanced budgets in the US? Just wonder. However, the way the Euro will die makes me furious. A former “world power” and a “world power” in difficulties declare war against the Euro countries and their helpers act accordingly. Or, how you would interpret the recommendation of Goldman Sachs to speculate against the Dax? (falling shares of German companies).
Who has balanced budgets in the US ? — Texas, for one.
More to the point, the states cannot issues currency,
although California, for one, has tried to get around
that limitation with some very creative financing.
You mess every thing up then complain the markets are the problem. Make a case for buying German equities. You can’t that is why they are dropping. Not some bogyman at Goldman.
Well, several German economic and political magazines reported the recommendation of Goldman Sachs, among them the handelsblatt.com and the Spiegel. The Dax comprises 30 of our most important companies among them Siemens and VW. Why bet on falling shares? Economic reasons? Sometimes I believe in fairy tales… but never in regard to Goldman Sachs.
Do any of YOU want to run out and buy any French, Spanish, Italian, or, dare I say it, Greek bonds right now? I really don’t see people lining up to do that. Unless, of course, you’re Corzine of MF Global and lost your shirt and your company doing that. The Europeans are going to be in for a whole lot of financial hurt in the next year or so because this whole agreement yesterday was nothing but smoke and mirrors, designed to keep all of the banks happy for a few more months. None of these countries are going to give up all of their financial sovereignty to Brussels and Germany, especially the French. There have been too many wars fought, too many broken promises, and too many betrayals over the centuries for them to do any of that. Europe had a roaring economy that was doing fine for about 50 years after World War II and there was absolutely no reason to go into the Euro or the European Union. I give them about a year more before it all falls apart, taking American banks with them.
I should not be so much bothered with who takes down whom, since it takes two to tango. Why, BoA may fall well before the Euro; but these are trifling considerations. What is horribly obvious is that the house of cards cannot last:
http://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_December/MF_Global_and_the_great_Wall_St_re-hypothecation_scandal/
When it all comes down crashing, as it likely will, we will need to tackle the issues of basic survival. This is what we should be bracing ourselves for. Avoiding chaos will be nothing short of a miracle, unless universal conflict simply takes over and runs its natural course for the dominoes to settle. Stability may have a number of shapes, but the price will be very high in any case.
Would you buy British or US bonds and why? Name me the country who gave up just a little bit of her financial sovereignty to Germany? I do not know any. Merkel fights for Europe, not only for Germany. Unlimited European bonds would be an excuse for the Masters of Wall street and the City to downgrade whole Europe – except Europe’s only healthy economy and democracy – Britain. I simply cannot believe those arguments. Dear Brits, we did not alter the financial system that allowed Europe to prosper, your Mrs. Thatcher did. This woman privatised simply everything and that’s why Britain looks the way it does now. And whole Europe too. After all, the Brits introduced their economic system in Europe. Germany is not isolated in Europe. Even the Polish government backs us. Who backs Britain
(except the US).
Italy and Greece now have unelected governments imposed from Brussels.
Es tut mir leid, aber Sie plappern.
Tut mir leid, aber ich kann gar nicht plappern, ich bin Schwäbin.
Ja, doch!
Marianne, what is wrong with the Mark? Germany has earned its current greatness and now you fight to bleed yourself dry for those who won’t?
The lesson of Socialism is that it pays you not to work and to stay dependent. The evidence today cannot be any clearer. And for some unknown reason Merkel wishes you to pay countries around you for nothing.
What is the great goal of the Euro? Has it led to prosperity? Why is it worth all of this?
Nothing was wrong with the DM, but – as I mentioned some time ago – the DM, or better the loss of it, was the price we had to pay for German reunification. However, most Germans had been rather perplex when we heard that not only Italy but even Greece passed the entry conditions. I even wrote a letter to G. Schröder, the former chancellor and his office answered that everything was fine. O.K., the DM is gone for ever that is sure. And I am with Angela when she refuses to accept unlimited bond buying by the ECB. We allowed Greece and Co. to get money to the same conditions as we did but they wasted it and not even tried to build up a functioning tax system. German greatness? The average German got rather poor during the last twenty years. We had reforms(=reduction in salaries), reforms and nothing but reforms. Merkel is far better than the rest. The Social Democrats and the Grüne see it as our main job to be responsible for Europe. And even Schäuble, our finance minister, said some days ago that the Bundesrepublik Germany would not be a free country and never had be one. The great goal of the Euro and the EU is that we should share our relative wealth. Why is it worth all these? We have no choice and never had.
Merkel? The only public figure that makes sense and shows some brains as well as guts is Thilo Sarrazin.
As for DM, never say forever; it has been alleged the currency is already being prepared in case Euro evaporates. This is what any prudent administration would and should do to prevent chaos, and if it is so, not only Sarrazin makes the grade in Germany.
What does public opinion have to do with the EU project or the euro?
The whole thing was designed as an end-run around such filthy things as public opinion and democracy.
Exactly. Popular opinion about the Eurozone has been scrupulously avoided as much as is possible in the past, why start worrying about it now?
Full disclosure: I speak French, have lived there, and follow French politics in the original language and have for years.
Point: 36% of Americans think Obama is doing a good job. That ought to calibrate you on where 36% of French public opinion is. OK? The Franc is NOT going to happen any time soon. Not as long as the French can benefit from being in the Euro with the Germans.
Another thing to remember – most French HATE the English (aka les Rosbifs). If the Brits like something, then the Frogs hate it. Got that? It’s reflexive and they cannot do otherwise without great effort.
Singapore, Taiwan, Japan, South Korea, and Hong Kong all seemed to have done quite well without “iron”; without US iron protecting them, they might have done less well, but that is speculation. Canada’s doing well now thanks to a shift to more sensible financial policies nationally; Canadian troops might be good, but they don’t back up the loonie’s value: stability and fiscal sanity (or a close facsimile thereof) do.
I spent time in the US military and am proud to have served. However, a massive costly military is not inseparable from financial and economic well being. Peace Price Pres needs to lose the ability to force US taxpayers to go deeper into hock for more adventurism. Start closing foreign bases, bring troops home to closed bases here, and encourage vessels to sail armed to deal with pirates. It’s a safe assumption nobody will pay the US to be world policeman, so let’s exit the business.
Hong Kong used a British colony; It is now part of China.
Taiwan and Singapore will not remain independent if the
US withdraws its naval presence from the Pacific.
Korea and Japan owe their current independence and prosperity
to (admittedly self-interested) post-war protection from the
USSR and China provided by the US; It is a good question,
possibly to be answered by experiment, whether they can
survive on their own absent that protection.
You other readers out there; Please do not believe a word of this;
Read History on the Web, and find out for yourselves.
Roger,
Hong Kong is still relatively free because China needs the money it brings in. They knew they could never match the business model the HK has. As M.Report said, Taiwan and Singapore would disappear in a heartbeat if we were not there. Japan has almost no military other than a Self Defense Force. If we were not backing them they also would be gone in a heartbeat. They have no way to defend themselves.
I worked with the ROK Marines in Vietnam. They are tough, battle hardened fighters but I wouldn’t give South Korea a month if they had to stand alone against North Korea backed by Russia and China. He!!, we trained the South Vietnamese but everyone saw how fast they fell when we left.
As for Canada, not to belittle our neighbor, but they don’t need a strong military. Strength is relative to threat and with them riding on our shoulders there is little or no threat to them. However, if anyone did go crazy enough to attack Canada they would also have to contend with a very POed United States. We would never allow an attack on this Continent.
Sorry Roger but your post was wrong on just about every point though arming Merchant Vessels is a good idea. Of course, right now, about the heaviest weapons the pirates have are RPGs. If the Merchant Vessels are armed, then the pirates would just use some of the ransom money they have already to buy heavier weapons and we would wind up with an arms race on the high seas.
Our Military overseas, other than those in actual combat areas, are a force in readiness. They are there to quickly answer any threat to our interests or those of our friends. They are vital to our national interests.
Interesting polarity of opinion here, soon to be resolved by real world events.
Or perhaps not; Absent an actual shooting war, with invasion and occupation of
the losing country, there are some who will claim that all the political and economic changes are purely voluntary, carried out by democratic processes.
Let the banks fail. Pay off the depositors but not the Bankers. Then never let the banks get to big again. The US has many regional banks that would be fine, well we did before DoD-Frank.
i don’t understand the role of the french as a ‘decider’ in the affair…
they are the ones who are most exposed…
given their penchant to manage others, the ‘opportunity’ to manage the club med debt was how they managed to inflate their banking system.
they are simultaneously fannie/freddie and AIG, complete with direct ties to the govt. their banking system goes, and it takes their govt with them.
the french have the most to lose. if going it alone was ‘ever’ an option, they would have been the first to do so. they don’t care about the eu, they care about the eu debt they are holding, and the debt they are responsible for in the event of a ‘haircut’.
side note: i understand the uk’s outsider status, which has been well received by the anglo press. a very stark contrast to the tx of germany, which is now portrayed as a ‘withholding’ brat.
i can’t believe germany has gotten this far into the negotiations, without massive protests in the street. the ‘nationalist’ germans, portrayed anywhere else as patriots, are being told that they a driven by their ‘nazi roots’, and their motives are to be loathed.
have to think that they are bubbling, under the sub rosa. if that pot starts to boil over, things could quickly turn worse.
no, not a rise of the nazi party, so much as electing a new govt which will remove themselves from any eu deal that is excessive on their country…and all the eu deals will ‘have to be’ excessive on germany.
if merkel proceeds on her given course, anything manufactured will be suspect to the eventuality that a govt can/will leave a new eu, at the will of the voters.
Time to remember the “Iron Lady”. Who understood a pan-european empire as utopian fantasy. Dreamed up by intellectuals/academics and power-lusting “elites” from within their ivory towers of privilege and inherited wealth. In which of course we might surmise there is no competition, hostility or back-stabbing?
Given the history of the peoples of Europe before, during and after the Empires lost with the “Guns of August” this replacement empire could be established only with compulsion or massive bribery, together or alternately. The citizens of the disparate cultures to be encompassed in this benevolent bourne carrying their histories in their skins,knowing that no government can be trusted, did what any intelligent people do, took the money, ate the free lunch and ran.
The designers and their progeny of this fiasco now using the alternative implicit in their design: threats, menace and compulsion. The past may well forbode the future e.g. Germany as unity of independent principalities, Italy ditto, Yugoslavia culled by outsiders out of disparate cultural groups, and that prize replacement of the empires lost in the early twentieth century, the Evil empire, with its promise of the dictatorship – what an odd word to describe utopia – of the proletariate.
Moribund culturally,moribund politically, and moribund demographically,Europe is revealed for the exhausted fraud it has become . ADIEU SALOPE!