February 3, 2014

A la Recherche du Temps Perdu.

Posted in Economic History · 80 comments ·
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Even though the Pantheon in Paris is covered up for refurbishment, it is impossible not to be amazed by the majesty of it. It is where France goes to bury its great men. The roll-call of the dead is impressive, from Napoleon to Victor Hugo. Interestingly, it was right in the middle of the French Revolution when the French were killing quite a few of their great men and wouldn’t have been that keen on such traditionalist, religious ceremonies such as burials.

Indeed, the legacy of the revolution and the subsequent role of Napoleon is everywhere in this part of the city. Just to the back of the Pantheon, opposite a lovely cafe called La Methode, is the Ecole Polytechnique. This is the finest university in France, the breeding ground for the next generation of French technocrats – and it encapsulates much that is good and bad about this wonderful country.

In La Methode, the students sitting around me are members of this gilded elite. Indeed, the very name of the cafe could well be applied to the Ecole Polytechnique. It too is driven by a method, a series of ways of ”doing things and ways of looking at the world.

I have studied and worked with graduates of this place and can reveal that the education, while top-notch academically, is not conducive to independent thinking, risk taking or flexibility.

This very inflexibility is arguably the biggest problem in France at the moment. With well over three million unemployed, a large current account deficit, a massive state sector and a population which is ageing, France is in a bit of a bind.

Added to the fact that the state simply has to prune itself back is the fear that France appears to be a country incapable of changing itself.

The trade unions are extremely powerful and have, until now at least, stymied any moves to reform the way the country works. I witnessed this first-hand myself while working as the French economist for UBS in the mid-1990s. The then prime minister, Edouard Balladur, tried with his finance minister Alain Juppe to bring in modest reforms to the way the train workers’ pensions were to be calculated. There was uproar. National strikes were called. Everyone, and I mean everyone, downed tools. Juppe backed down and later resigned.

Fast-forward to today and it is unlikely, with Francois Hollande’s attentions clearly elsewhere, that the lovestruck and least popular French president ever has the credibility to take on any vested interests. You get the impression that France is just happy to drift along, pretending to be a little Germany, terrified that anyone will cop on to what it actually is: a big Italy.

In the EU, only Italy has recorded slower economic growth in the past 25 years. France’s budget deficit is bigger than Italy’s, and its current account deficit is the largest in the eurozone.

The propaganda, which starts at the Ecole Polytecnique, is that France is Germany’s equal and an essential political counterweight to the Germans’ economic muscle. But to be a counterweight, you need to be, at the very least, economically credible.

This is not the case. Since the creation of the euro in 1999, France’s GDP per head has risen by just 0.8 per cent a year. In Germany, growth per head has been almost double that. This is a phenomenal disparity for countries with similar standards of living and aspirations.

Not only is France not producing so much, it is costing much more to produce much less. French unit labour costs were below Germany’s when I was working on the French economy. Now French unit labour costs are higher. And in 1999, French exports were worth almost 60 per cent of Germany’s. Today, total French exports are less than 40 per cent of total German exports.

As a result of this poor economic performance, the unemployment rate in France is near 11 per cent, a 16-year high; whereas in Germany it is just over 5 per cent, a 20-year low.

The latest economic data all suggest that while much of the EU economy will grow a small bit this year, France is heading for recession.

These are serious days for the Fifth Republic. Talking to French people, you get a sense that the country is in an ongoing crisis which is structural. Unlike Ireland, France didn’t have a boom/bust, credit-driven bubble which went wallop. Its predicament is more one of a lack of any real direction, demanding a re-thinking of its whole economic model. At the moment, the current account deficit is a reflection of the fact that France can’t afford its brilliant welfare state. The budget deficit is financed effortlessly because the world believes that France is at the centre of the European project and it simply could never have a current account financing crisis.

I am not sure about this. Italy and Spain, two huge economies in difficulty, both had near-death experiences in the financial markets last year. Could this happen in France? It has to be a possibility.

Over the years, many people – particularly English economists in the City of London – have been predicting the demise of France, which has not happened. English xenophobia towards France is a long-held prejudice which goes back centuries, and this mutual dislike colours the judgments of both the French and the English towards each other.

But when you are here in Paris, and you look at the performance of France in the past 20 years, it’s hard not to conclude that something has to give.

For the time being, France continues to punch above its weight, and its extraordinary history and culture reinforce that this was a very significant country. But you can’t help concluding with the words of that giant of French literature, Marcel Proust, that many in the French elite are simply longing for the past – A la Recherche du Temps Perdu.

David McWilliams’s daily analysis of the global economy can be read by visiting globalmacro360.com

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  1. dorn

    Are we to draw the conclusion then that the Euro single currency experiment has failed? And that the only country it has benefitted is Germany who have profitted massively from its introduction and continued control?

  2. Continuing this article’s theme of economic and social decay, here’s an interesting piece from The Guardian by Aditya Chakrabortty:

    “The Enfield Experiment: London’s fortunes distilled into a single borough”

    http://www.theguardian.com/cities/2014/feb/03/enfield-experiment-london-cities-economy

    • I used to live in Edmonton, it was run down then but not as bad as it is now according to that article.

      • I thought for a minute you had been freezing your rocks in the capital of Alberta.
        good article, Adam.

      • Colin

        Adam,

        I was in that neck of the woods last Wednesday when I went to see the ref help Citeh beat Spurs 5 – 1 at the Lane.

        I can confirm Edmonton is a very run down looking (even on a cold wet dreary January evening) part of North London. However, Spurs do have plans to redevelop White Hart Lane and that would involve retail therapy for the locals 365 days of the year. It will be interesting to see if it goes ahead as it involves demolishing the stands and moving the playing pitch over to where the stands are now.

        http://en.wikipedia.org/wiki/Northumberland_Development_Project

    • Joe R

      I was disappointed with the article, Adam.

      There a couple of good one liners in there but I thought that it is a piece centered on it’s own entertainment value with a bit of faux-rebellious social posturing thrown in, not fact or real analysis.

      For example near the start ot it there is a lot of rosy eyed anecdotal stuff about Edmonton’s industries. The bit about the arms factory is ridiculously inaccurate in particular. This isn’t even correct history Adam; it is a repetition of parochial myth making.

      Then there is that stuff about insulating local houses, backed with financing deals from British Gas. I have to ask who makes money there? could it be British Gas and their financial backers? and then British Gas some more if the refurbs don’t quite do what they are supposed to do? How does the temporary boom ( and possible fad )of ‘green’ renovation for old housing stock ( and this is not accurate nor endless work ) actually replace jobs that were lost when manufacturing industries died?

  3. ART6

    Perhaps the French cockerel should stop posturing on the EU stage and stop trying to live on German money. I have every respect for the people of France, but they really need a wake-up call like that experienced by Ireland.

  4. peterm

    So should the French start printing money like the failed captalism projects in the US and the UK?, the only thing holding the US and UK together are ultra low interest rates and lots of money that was printed, at least the French system has the people at heart and not just the top earning 10 percent like in the UK and US, its healthcare, transport and services are far better then the US and UK will ever be, I am not saying they are perfect but I would rather live in France then the vast majority of 1st world countries…..its not all about the dollar you know.

    • Deco

      Fair points. The Milton Friedman based model, with everybody mortgaged to the hilt, and psyched up and going nowhere, is rarely critiqued, in terms of what it does to the people.

      I doubt that Friedman intended it thus, but that is how it is implemented in the US and the UK. As a means for making the middle classes toil and spend, and leverage them in every sense to the limit for the sake of “asset portfolios”.

      It is “asset portfolio” economics. It is making many much poorer.

    • Of course the EU is printing money like crazy and/or the european banks including French ones are receiving money from the Federal reserve vis currency swaps and other derivatives.

      As usual the people get little and the insiders everything to make them obscenely rich at the expense of the rest. Inflation of currency robs the poor faster than the rest and so the gap widens.

      It is all over the world , the French are not unique. French fiscal policy may differ from some others.

  5. Eireannach

    +1

    Although France has all kinds of problems, you can forget about an honest appraisal of that country on this thread. Most of the posters on this thread love ‘the Anglosphere’ and are sceptical of the eurozone, with a special dislike for France, just as the English have successfully indoctrinated them to think. Never mind Italy or Spain, it’s France that needs the ‘wake up call’, blah, blah, blah.

  6. Eireannach

    Nice to hear from you. I don’t think it is fair to say Anglosphere. I do find the Europhilia of the Irish elite hard to take, but gong back to the Anglo world isn’t an option.

    Best

    D

    • Eireannach

      With the greatest respect David, the young Irish are queueing up to emigrate to ‘the Anglosphere’ with the same passionate intensity as the ticket-grabbing for Garth Brooks.

      They say the young are a country’s future. Assuming this to be true, the Irish are rejecting their right to freedom of movement within the EU and clinging to the Anglosphere without an impressive tenacity.

      Mindless Europhilia is hard to take, I’ll grant you that, but it’s not the only mindlessness doing the rounds.

      • Deco

        As far as I know Garth Brooks pays full income taxes, with not funny business to the US revenue authorities.

        I would not say that about U2.

        The Irish institutional state and “light touch regulation” in operation again.

      • Original-Ed

        Eireannach

        The main reason why the Irish don’t want to go to Europe is because of the language problem – let’s face it, the Irish are shit at languages. Even Ronan O’Gara admitted that his Irish school french is a very low standard and his mother is/was a french teacher.

        It’s so easy for the irish to jump on a plane and arrive in a better place without having to change language or culture.As far as i’m aware no other people on this planet can do this. It’s a legacy from the days of empire.

        As for the Irish Elite and Europhilia – they’re the ones with everything to gain. They already have security of employment at home and on top of that, the prospect of a cushy number in Europe is the main driving force – the Irish public are only a means to an end.

        Look at Máire Geoghegan-Quinn – a primary school teacher – all she has to do is bullshit about Science/Technology and she gets a king’s ransom in return. Forget about reality, that’s where it’s at.

        • Eireannach

          I don’t believe ‘the Irish are shit at languages’. I lived in France for 4 years and I speak fluent French, my younger brother lived in Germany and now in Sweden and speaks both languages fluently. It’s a question of attitude – are you willing to just put an hour or three aside every night to learn grammar, do online tutorials, etc. or are you just not willing.

          It has nothing to do with what school you went to – I went to a crap CBS, my father is from Dolphin’s Barn in Dublin and my mother is from Ballyhaunis in Mayo. My brother first, then me in his wake, took this on to see if we could do this. The passion was there to bite the bullet and do it.

          That’s what the Polish have to do – come here, clean up after us, save the ha’pence and the pence and gradually improve their English, step by painstaking step.

          The Irish just prefer to go on the sauce in Bondi Beach. It’s easier.

          • I agree, I learned Hungarian because I lived over there and it’s the only way to get to know somewhere properly and make friends and contacts.

            I knew people working in Budapest for Jameson and others, on 5 years stints – couldn’t be arsed learning Hungarian – down Becketts pub every night which was a shitehole with drinks 5 times the prices (seriously) of everywhere else, and they could barely order a beer in Hungarian. Just pure ignorance and disrespect to the local people, culture and language. That’s the type of parasites they were.

            We used to go to a pub called the Sixtus Kapolna (Cistine Chapel) where more than 50% of the crowd were ex-pats, but everyone had had a stab at learning the Magyar,with varying success, but were respected by the locals for it. It made a world of difference.

            I even learned both Dominican and Antiguan dialects of English when in the Caribbean for 10 years. There’s no other way to get along and enjoy life.

            My brother lives in Germany now and is doing well with his German language skills.

            Most people can’t be arsed.

            Sloth is a terrible thing.

          • Octavio

            I agree with Ed and Adam below to some extent. I’ve been living in France for coming up on 4 years and I work mostly in French in the world of IT Distribution. I also lived in a very Irish part of New York (Yonkers/Woodlawn) for over a year and mostly met people living as they would have back home in Navan, Limerick, Cork, Dublin, you name it, only their address happened to be NY, USA. It’s true that so many want to emigrate, but the sad truth is that so many just want to get away but don’t actually want to change. They just want to relocate the piss-up and the piss-taking – a very Irish answer indeed. I would say that most folk living in ‘foreign’ countries where speaking a new language is part of the deal are like-minded and pre-disposed to the concept of change by default, embrace it and therefore benefit significantly more as a result. The locals here really appreciate it the effort too.
            I will admit thogh that I’ll more than likely go to an Irish pub on St. Patrick’s Day. But I’ll share that with my French mates too.
            You get out what you put in. Learning to speak a new language and live in a different culture is tough but very rewarding in many ways.

            PS. I had a great time at Kilkenomics-Sur-Seine last Friday, thanks David, things were only strting to get going when ye wrapped it up!

          • Octavio

            I agree with Ed and Adam below to some extent. I’ve been living in France for coming up on 4 years and I work mostly in French in the world of IT Distribution. I also lived in a very Irish part of New York (Yonkers/Woodlawn) for over a year and mostly met people living as they would have back home in Navan, Limerick, Cork, Dublin, you name it, only their address happened to be NY, USA. It’s true that so many want to emigrate, but the sad truth is that so many just want to get away but don’t actually want to change. They just want to relocate the piss-up and the piss-taking – a very Irish answer indeed. I would say that most folk living in ‘foreign’ countries where speaking a new language is part of the deal are like-minded and pre-disposed to the concept of change by default, embrace it and therefore benefit significantly more as a result. The locals here really appreciate it the effort too.
            I will admit thogh that I’ll more than likely go to an Irish pub on St. Patrick’s Day. But I’ll share that with my French mates too.
            You get out what you put in. Learning to speak a new language and live in a different culture is tough but very rewarding in many ways.

            PS. I had a great time at Kilkenomics-Sur-Seine last Friday, thanks David, things were only starting to get going when ye wrapped it up!

          • Harper66

            “The Irish just prefer to go on the sauce in Bondi Beach. It’s easier”

            You are Irish, aren’t you?

      • Colin

        Eireannach,

        I can’t see Paddy the plasterer, Seamus the steelfixer, Colm the carpenter, Willie the welder or Mick the machine driver getting their foreign language skills needs met at their local FAS centre during their apprenticeships.

        I would imagine those who are more inclined to go to the continent already have language skills or at the very least an aptitude for learning languages. Arts degree holders who offer the wrong skillset to employers who are hiring in the Anglophone world fall into this category.

        Remember, in Paris, you need to wear earplugs at night to get a good night’s sleep.

        Bon nuit.

        Where’s bonbon by the way?

        • michaelcoughlan

          “where is bonbon

          Banned for abuse of privilege. McWilliams has set new explicit housekeeping rules. Posters must stay on Topic.

          Regards,

          Michael.

    • Deco

      Do the Irish elite ever apply rational analysis to the EU power centric decisions that they so enthusiastically endorse ?

      Or are they merely following it like lemmings following the leader ?

      Their involvement in Ireland’s process of joining the Euro (described in your book) was insightful. No rational analysis. The Minister for Finance makes a decision (with no rational analysis or any thinking taking place, except at a superficial level) and the lads (mostly they are lads) join in.

      Consensus is more prized than analysis.

    • Pat Flannery

      “going back to the Anglo world isn’t an option”. So glad to hear you say that David.

      On the role of unions in modern society listen to David Simon at the “Festival of Dangerous Ideas” in Australia.

      http://billmoyers.com/2014/01/30/david-simon-at-the-festival-of-dangerous-ideas/

  7. France is Different .

    Nothing can change the ‘quelle suprise’ it evokes and the awe it produces and the rich life it practices and their closeness to nature we consume at the table .

    Their philosophy is unmatched and they practice it with precision. Their Time is their own and our time is theirs too because many more ~Irish are employed by them even in Ireland under the tutelage of their French presence that we do not even detect .

    Cyril Roux ( Regulator of Central Bank ) has been a patron of La Method and has honed its craftsmanship with panache and now we are their servants because we cannot think a better way .

    They sell our culture and they call it Guinness and we drink its madness and think we made it .

    In WW11 France was in the middle and London and Berlin were bombed and Paris was spared .Who spared Paris , the Germans did and they will do it again .

  8. Deco

    It is interesting the emphasis that France places on the seeding and refinement of the “leadership”.

    Because the leaadership has been getting less able for the tasks encountered with every year since De Gaulle was in charge.

    Les Trentes Glorieuses (spelling ?) are over. France misses them. But has not yet grasped why they ended. There has been an intellectual malaise since De Gaulle. And it gets worse and worse. Chirac stumbled. Then Sarkozy promised everything, and instead went around Europe insulting his neighbours. Now Hollande is in power. Hollande has a lot of things on his mind. His decisions are hap-hazard and vague. Mostly he is just reacting to the current crisis and creating another.

    Is it the aspirations/worldview that is causing France to underperform ?

    or is the leadership tasked with the repsonsibility of making it all happen ?

    I reckon it is the latter.

    The French model of leadership only works if there are De Gaulle figures willing to tell the French that certain things are not feasible anymore (like De Gaulle told them that the colonial era was over), and ready to lead the entire state system to a more advanced level of performance in the service of the people. Recent French Presidents have been lacking the gumption to face down vested interests, and tell then that they need to adapt.

    Somebody who is a moderate in the ideological sense, but a radical in respect of getting people to push forward. Instead they have mediocre achievers, and committed ideologues.

    In the medium term, I expect France to continue to underperform. But the French are unlikely to anything radically idiotic like base the entire economic system on unsustainable debt accumulation in the private sector. For that you need a Reaganite/Thatcherite/Irish PD type politician with a vision of everybody playing with debt beyond their means.

    • Octavio

      France is in the grips of inertia and indeed the attitude to change here is one of apathy and fear. Therefore strong leadership is what’s required, but not what’s being delivered politically or economically. Living in France you can see that there are many subtle barriers to change which are reflect this psyche.
      France chopped off the heads of monarchy in the name of freedom, equality and fraternity only to remain as hierarchically impermeable today as it was before La Bastille. Sadly centuries later the ‘écoles supérieur d’Engineering or Commerce’ produce the same aristocratic classes that dominate the upper classes. And a rigourously defended old school tie policy renders any efforts by those from the lower steps of the ladder somewhat useless. In a country where fashion and style is as much part of life as religion in 50′s Ireland you don’t get many, if any, ‘rags to riches’ stories. No-one is prepared to show the leadership to change this dynamic.

      Leave aside the paperwork in general and lack of tax breaks required to set-up a busines and get it off the ground in any meaningful way without a blank cheque book (cheques still being part of everyday business, even in B2C). Most transaction costs are up front, meaning changing car, house, job etc require you to sweat the asset in order to get your ROI. In working environments there are plenty of unneccesary layers of middle management yet it’s the guy who tows the company line that gets on and anyone radical enough to offer ideas of change or improvement alternative is the outed as a black sheep. Getting anything signed off can be a nightmare, as no-one is willing to take responsibility. Most folk from 35/40 and older are simply not programmed for change – their level of English in general being a reflection of that. There is though a generation gap. The Pope’s Enfants and younger are a lot more open to change and at least giving things a go, and see English as an opportunity and really embrace it. Look at the French ex-pats in Shanghai.

      So France on the whole is endemically pre-disposed to maintain the status quo. The younger generations are finally prepared for something new but there’s a dearth of leadership and energy to transform the country to capitalise on this.

  9. barrym

    Heard/saw David in Paris on Friday, hopefully he got some insight into what allows France to tick. Many of the more +ve comments here apply.

    The basic tenet of French politics, despite the capitalistic sirens of the EU/EZ, is the understanding that the state has a role to play in the management of a country. This does not mean sub-contract everything but, broadly, to provide the infrastructure. Cf the TGV, the Nuclear Power, the Payage motorways (now subcontracted following Sarkozy, but subject to a monopoly investigation), etc.

    Remember also that France has a number of very successful international companies, many of whom are the owners of worldwide luxury brands, where the price doesn’t reflect the cost of production.

    As for the food and drink…..

  10. Adelaide

    Just wondering if anybody read ‘The Turnaround Challenge’ (published Christmas) and if so what do you reckon of the book’s proposal for a viable economic future?

  11. Ahem! France does not only bury its great ‘men’ at the Pantheon, Marie Curie was re-interred there in recent years along with Pierre.
    It got a lot of news because Madam Curie’s coffin was expected to be highly radioactive, but in fact wasn’t – it turns out that it was radiation from the X-ray work she did in WWI that killed her, not radioactivity. So scientists get it wrong too!
    CO’R

  12. Mike Lucey

    Does any county in the EU actually like its neighbour? Not many I feel. Even within a number of countries there is a lot of bad blood, Ireland, England, France, Spain etc.

    Bad enough that Brussels is a ‘Tower of Babel’ set up, there is really little commonality when it boils down to it.

    My understanding was that one of the main reasons for the setting up of the EU was so that we would not have future wars ….. wars with tanks and such! Even without ‘union’ I very much doubt we would have these kinds of conflicts in this nuclear age.

    What we have instead are Economic Wars! One way or the other, the globalists will get their way!

    • Eireannach

      The world is in total economic contest, whether the EU is integrated into a Federal state, and the cotest is between cities and regions within the Federalised EU, or if we revert to nation states, where the prospect of standing armies is added into the mix of economic contest between regions and states.

      It cannot be any other way with a global population of 7bn, all wanting a decent standard of living, even as the planet’s store of natural resources dwindles.

      There is no other outcome this century.

  13. matt

    Excellent article, thank you! One minor correction – Napoleon isn’t entombed in the Pantheon, but rather a couple of kilometres away at L’Hôtel national des Invalides.

  14. michaelcoughlan

    Hi,

    “In the EU, only Italy has recorded slower economic growth in the past 25 years. France’s budget deficit is bigger than Italy’s, and its current account deficit is the largest in the euro zone”

    When I read this the thought occurred to me that as Tony Brogan has pointed out the money supply and economy have to grow to keep to whole thing from going wallop. Maybe the solution will have to be heterodox in that it will have to provide an answer whilst the economy is contracting. It isn’t possible to have infinite expansion in a finite planet. Spending will have to come from savings and not credit.

    I keep referring back to the ratios between Management, capital and labour. That’s where the solutions lie. It maybe possible to do it whilst the economies are contracting. A recent article I read David said that Keynesian stimulus is only achieving 1:1 in terms of dollars pent to increase in GDP in otherwise is ineffective. It used to be around 1:4 apparently.

    Just a thought.

    • Hi Michael

      I have read that the ratio is now negative and that makes since as the stimulus increases hugely as a percent of GNP. The money supply has increased exponentially and the US national debt has gone to the official 17 trillion dollars. Up from One trillion in 2000.

      As all the stimulus is in fact also debt the ratio of debt in the economy to GDP is exponential as well. Taking the unaccounted liabilities such as pensions and healthcare means the dept can be calculated to be in excess of 200,000 trillions.

      You are correct I believe that when the debt is in low double digits as a percent of GDP then the stimulus works and the effect is in multiples. Now it is actually negative so the more the deficit financing the worse off everyone is.

      Unfortunately there is no way out of a big bust using the current money system. Only by stepping aside and implementing treasury money and then specie honest money issued as cash and not as debt can the social consequences of the bust be avoided.

      That knowledge must be available to the rothschild bankers and pals so I conclude the policy is deliberately chosen to create havoc world wide.

      Here is a forbes article with a semblance of commonsense explanation of the stimulus problem.

      http://www.forbes.com/sites/jeffreydorfman/2013/12/26/if-government-stimulus-worked-it-would-be-a-perpetual-wealth-machine-2/

    • http://www.forbes.com/sites/jeffreydorfman/2013/12/26/if-government-stimulus-worked-it-would-be-a-perpetual-wealth-machine-2/

      The current stimulus ration is in fact negative I have read.
      The debt level in the US has gone from 1 trillion in 2000 to 17 trillion today. That is the official level where if the unallocated debts such as pensions, welfare, and healthcare were added the debt is in excess of 200 trillion.

      As the percent of debt to GDP increases at a faster rate than the ration of stimulus to the economy the greater the stimulus the higher the ratio of debt to GDP goes.

      The above link goes someways to providing a commonsense account of how we are worse and worse off as the stimulus increases. Negative ratio = a dollar of stimulus costs more than a dollar in lost GDP.

      • The reason for the similar postings above is that I thought I had made a mistake and so rewrote the premise again. I had not realized that I had been locked out but later realized nothing was accepted, it was not me pressing the wrong button or a computer glitch. The posts evaporated, not even posted as under moderation.

        Later I enquired from the moderator why this was so but receive no reply. However the posts miraculously appeared. Hence the scramble above. Hopefully we return to normal :)

    • cooldude

      If they could achieve 1-1 they would be ecstatic. The figure now is about 1-.25 and dropping rapidly. We have reached what is called debt saturation level in the ponzi scheme we call the modern economy. The new debt isn’t producing any real growth in the real economy although it can still manage a bit of a bubble in the stock markets even though their value ratios are at all time highs.

      The real purpose for this money creation is to prop up both the insolvent banking system and the equally insolvent sovereigns. This is what QE and LTRO schemes do and they don’t bring any benefit to the real economy because they are not supposed to. If they wanted to do that why not give the newly created money directly to the people and let them choose what they want to do with it. This would give stimulus but it would also outline clearly how dangerous this debt/money ponzi scheme actually is.

    • Colin

      Tony Brogan is correct. Bonbon is wrong. However, our host ‘doesn’t want to go there’ so unfortunately we can’t chew the fat over it.

      Michael Coughlan’s observations about labourers wages in London not rising at all in 20 years are true. I wish I could say the same for rents (mine being increased by another £5 / week next week onwards). I dare not ask for a payrise at work as I’m perceived by many as someone who is ‘coining it’, when in fact I’m not as I still can’t afford to buy a half decent property near where I work.

      • We need a money system change or we get a second French revolution. It will not be pretty and Ireland may be one of the safer places to be in the world.

        We need a new Napoleon but one without designs for empire. Who’s up for the job?

        Effective buying power of wages is at 45% of 1970. the squeeze has been ongoing for 40 years. Blood is now coming from the stones.

  15. Colin

    ‘But you can’t help concluding with the words of that giant of French literature, Marcel Proust, that many in the French elite are simply longing for the past – A la Recherche du Temps Perdu.’

    AUSSI MOI.

    I want a lifestyle, where like my Dad’s generation, I get up out of bed (in a 4 bed semi with front and back gardens) at 8am, arrive at work at 9am, go home for lunch where a hot meal is landed on the table in front of me as I sit down, get back to work at 2pm, finish up work at 5pm, and had the whole evening to do as I please.

    If anyone can find that lifestyle for me, please let me know where I can get it.

  16. “Over the years, many people – particularly English economists in the City of London – have been predicting the demise of France, which has not happened. English xenophobia towards France is a long-held prejudice which goes back centuries, and this mutual dislike colours the judgments of both the French and the English towards each other.”

    Does this explain the huge concessions in agriculture given by Britain to France for the UK to gain access to the EU. THe commonwealth trade was devastated. French agriculture was behind the times and 35-40 % of the population involved. The industrial state of britain had only 2-3% of the population in agricultural production. (My figures are from memory of the 60′s so may not be totally accurate).

    France’s lifestyle and socialist policies were not to be disturbed.

    The attitude to real money was different. Charles de Gaulle precipitated the closure of the gold convertibility window by demanding paper dollars be converted to gold and Nixon said buzz off we don’t do that any more.

    Then the UK decided to advertise their selling of several hundred tonnes in 1999 for months in advance to make sure the price dropped in expectation and they got the lowest possible price they could. The infamous Brown’s bottom.

    Now years later Germany asks for a measly 15% of its gold to be returned from New York fort Knox and can’t get it. 1900 tonnes supposed to be in the US of the total German stash of 3400 tonnes of gold. % tonnes was all they got. Seems the US has sold, leased, lent, otherwise disposed of the gold to lower the price and gain funds to support the fiat paper dollar.

    Now china absorbs all the mined gold on an annual basis. The shanghai exchange (physical gold bullion only, no paper promise allowed) imports enough gold to absorb the world mining output. Most disappears to China.
    China is the largest supplier of gold from mining in the world and none leaves the country. Seems China wants all the gold while we in the west are told it is of no value.’A barbarous relic’.

    This is the economic story of our time. Italy has gold. France has gold, Germany hopes it has gold, china wants all the gold. US may have none left, UK has little left, Most other countries have little.

    What gives here. Could it be that gold is money afterall and it is one of the assets that France wants to retain. They do not seem to like change and in this regard I agree with them. The old saying is ‘follow the money’. Perhaps a discussion on this is timely.

    • Gold is irrelevant Tony.

      You are pining for an era that is never coming back.

      We need new solutions.

      • We agree to disagree there Adam

        But I pine not, I report what I observe.
        Why all the activity around gold. Why the suppression by western governments but the accretion by all other nations. Somebody is right and somebody wrong. I am betting on the oriental mode and money as practised by mankind for 6000 years.
        Not to say there will not be all kinds of money but free choice is the real issue rather than control.

        We need rid of the central banking system asap.

        Do you have suggestions for “new solutions”?

        • Yes, I fervently work on them all day, every day.

          Still working as we speak.

          • I am sure you are a solid hard worker, Adam. I admire your determination and wish you good luck with your PHd and business ventures.

            You have obviously just started on the money problem and realize we need a new solution. If there is anything I can do to help in your quest I will be delighted.:)

          • Colin

            Please keep us updated regarding your very important work Adam. The eureka moment, when we reach it, will be celebrated all around the world by everyone except the central bankers.

            Keep up the fervent work ethic, we are anxiously awaiting developments.

  17. Last week the French Government issued a decree to pay compensation to victims of flooding in France where an Act of God damage occurred .

    Irish government have only offered €6oo euros compo from a humanitarian fund .

    This same Irish Government compensated the bond holders more than 100% and paid them fat salaries too .

  18. barzaz

    Here in Brittany, we want one thing : move away from the Centralised Ultrajacobinist French. They killed our Breton language, mocked our Breton culture, destroy pour economy by over centralization,forced farming production and now they’re trying to tax all our products with their stupid eco taxes.
    If it wasn’t for our benedou ruz/red caps/bonnets rouges they would stampeed us to the ground.
    Don’t little cry on France, they’d eat you alive.

    • Devolution into smaller communities, especially local autonomous districts with local governance seems to be more effective and satisfactory to peoples all over. Couple that with freedom of movement of goods and labour so that surplus productivity can be traded to others.
      Allow people to use whatever they choose as a medium of exchange and there would be economic revival all over the world.
      Centralization of economic activity and especially the money system is a death knell for all.

      • barzaz

        I can only agree but devolution is a concept that will never be accepted by France, only one nation tolerated, one language and one way of thinking, the Parisian’s way.

        Our transportation has been hyper centralized and our mode of production dictated.

        It was great to see in Quimper and Carhaix up to 40,000 Bretons, caped in red hats, gwenn-ha-du in hands sending a strong message to Paris.

        • Unfortunately socialism rules.
          The rules of international socialism are dictated by the central bankers and behind that the ruling elite, the “den of vipers”.
          International finance imposes centralization as a means of population control.
          The next “French Revolution” needs to go after the monied elite in control.
          Andrew Jackson managed it in the US briefly but there needs to be an international tribunal and a new”" Nuremberg” to rout out the banksters and try them for crimes against humanity.

          Then will we have a new age of harmony and prosperity.

          “You may say I am a dreamer, but I’m not the only one”

          http://www.metrolyrics.com/imagine-lyrics-john-lennon.html

  19. Deco

    David – in “Follow the Money” (the VietNAMA chapter) you describe the European decision making and administrative elite.

    The same model of leadership is directing France towards underperformance. It is based on what might sometimes be called “bounded rationality”.

    The decisions are appear all perfectly rational (even if theya re defiend by irrational, and often flawed assumptions). This is exactly what we see in France. It is all based on assumptions of central authority always being right – and the people merely needing to be “instructed” on the need for them to obey for their own good.

    In the context of it’s centuries long progress, I do not think there has even been a time when there has been so much centralization of what constitutes “progress” as there is today. Even back when the Habsburgs controlled most of Europe, there was a certain “intellectual” spontaniety. Today this is prescribed as being dangerous for the entire confidence system in authority.

    It is a softer version of the same set of flaws that undermined the USSR, and caused it to be bankrupt.

    • Deco

      To put it another way, Europe went into a cul-de-sac under Jaques Delors, twenty years ago, with a series of assumptions that were seriously flawed.

      Unfortunately, there were no public figures in any of the member states (with the possible exception of Thatcher – but he reserve on the issue was purely ideological). They all “thought” it would be a great idea. Really, when we look back, we can say that they were not thinking at all.

      They have been tying Europe up in knots every since. Every decision assumes that the previous one is correct. This is what happens when authority becomes more important than reason. They do not want reasoned argument. Instead they want more authority – which they deem as necessary to fix the errors that they made from bad decisions.

      The best thing that Ireland might well be to quit both the EU and the Eurozone.

      Free-trade is good. Co-operation is even better. But intellectual obedience is nonsensical.

  20. US centic here and not French but no rennaisance evident but a renewal of declining US output and demand

    http://www.truthingold.blogspot.ca/2014/02/january-auto-sales-did-step-function.html

  21. Tull McAdoo

    This could be the first of many economic wars to be fought globally in tne 21st cenuary.

    The British with their sterling,
    Yanks with their dollar,
    Germans with their euro,
    Japs and their yen………
    Chinese renimbi…..

    And just like the world wars of the previous centuary, there are those who will profit from the turmoil……rating agencies and their crystal balls (or brass some might say), bond traders, hedge funds, vulture capital etc. etc.

    Super computers rigging the share prices with billions of trades per second, which can mean the nuclear option for some well meaning but vunerable companies! Derivitaves, credit default swaps and other economic weapons of mass destruction.

    As for the French, it is hard to see where they will draw their Maginot line for all this unregulated nonsense…… it will all end in tears I think as everybody tries to rule the world….. take it away boys and Goodnight Ireland . Sleep Well.

    http://www.youtube.com/watch?v=c8L_hLS21cw

  22. Tax authorities in France are looking to claim as much as €1bn from internet giant Google, according to Le Point magazine. The levy would amount to a record for a redressement fiscale, said Le Point claiming government and parliamentary sources. This refers to the tax office charging unpaid taxes plus, usually, additional penalty payments which may vary depending on whether the taxpayer is thought to have deliberately underdeclared or not.

  23. barzaz

    Tony, here what happened in November, a bigger meeting was held in Carhaix, some concession were gained, but I think the projected picture of France is as far as looking for a leprechaun. Pure imagination, the state is far from its auto proclaimed “human rights”. It didn’t even tolerated any other languages than French.
    Economically the same intellectuel carcan exists it won’t change.

    http://www.aljazeera.com/video/europe/2013/11/french-protest-against-proposed-transport-tax-2013113392514925.html

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