Jean Quatremer makes a good point: Nicolas Sarkozy's crisis discourse is internally contradictory. On the one hand he calls for a coordinated global response. On the other hand he excoriates the idea that a French car company might want to cut costs by outsourcing some of its manufacturing operations to the Czech Republic. It's OK for Renault to build an auto plant in India to sell to Indians, but to build in another EU country to sell to Europeans is not "economically patriotic."
Of course Sarko is not alone in being of two minds about liberalized trade, especially in these times of crisis. Just witness the flap in the US over "Buy American" provisions in the stimulus bill. But it's one of the frustrations of Sarko's style of "communication." He loves the didactic mode, in which hand-picked interviewers toss him softball questions that he can twist as he pleases, and he allows himself to say one thing and then another to put the questioner in his place without bothering overmuch about possible contradictions between this and that. No one is going to challenge him to reconcile X and not-X, not as long as he occupies the bully pulpit. His ability to maintain this pose through an hour and a half of questioning is impressive in its way, but wouldn't you really like to see him go for just 15 minutes with a couple of well-chosen economists rather than 90 with Pujadas, Ferrari, Lagache, and Duhamel?
Saturday, February 7, 2009
Axel Kahn, president of the U. de Paris-Descartes, who had supported the university reforms and whose name was invoked by Pres. Sarkozy as a left-wing backer of the plan, now says that the reform effort cannot succeed if the present course is followed. He has called on Sarko to go back to the negotiating table. This is a major defection, and I predict a tactical withdrawal by Sarko and Pécresse in the next few days. (h/t Laurent Bouvet)
Paul de Grauwe rightly points out that the market for European sovereign debt has gone nuts. So much for the efficient markets hypothesis. Interestingly, there seems to be a "racial" component to the bias (blond bonds carry lower risk premia):
It is difficult to understand, however, why the market (and the rating agencies) forecast a default of the Spanish government debt, while they do not forecast trouble for the UK, which has a debt build up similar to Spain’s and a more serious banking problem.