Saturday, December 31, 2011

Happy New Year

Une très bonne année 2012 à tous les fidèles de French Politics. Apologies for the light blogging over the past week, but I've been distracted with visits, celebrations, and preparing my son for a semester abroad in South Africa. Back to work next week.

Thursday, December 29, 2011

Minority Representation

The PS wants to increase the number of minority deputies in its parliamentary group, but it faces recruitment problems and ideological blockages:

Au-delà de ces blocages au niveau des élus et des cadres, la composition de la "base" socialiste est un frein au recrutement de jeunes issus de familles immigrées. Depuis la première Marche des Beurs, en 1983, les socialistes se sont coupés de plusieurs générations militantes dans les milieux associatifs, lassées des promesses non tenues sur le droit de vote des étrangers ou rebutées par le caractère trop gestionnaire du parti.
"Le PS ne sait plus attirer des cadres qui viennent du mouvement social, des syndicats ou du mouvement culturel. Son seul vivier, c'est le MJS (Mouvement des jeunes socialistes) et l'UNEF, c'est-à-dire des jeunes dans le moule", estime Malek Boutih, membre du bureau national du PS.
...L'autre frein est plus politique. Le PS peine à débattre des mutations de la société française et, particulièrement, de celles qui concernant les minorités visibles. Attachés à une conception abstraite de la République, les socialistes ont du mal àdéfinir ce qu'est la diversité et la place qu'ils lui donnent dans leur stratégie. "Pour le PS, les minorités doivent rester invisibles. Et pourtant, la direction sent bien qu'il y a un problème", observe M. Boutih.

The Issues that Count

According to Thierry Desjardins:
Selon le dernier sondage du jour, 79% des Français estiment que, pour l’instant, les programmes et les discours de tous nos candidats à la présidentielle sont « éloignés » de leurs préoccupations. Autant dire que cette campagne électorale, pourtant plus essentielle que jamais, commence par un dialogue de sourds entre des prétendants qui se disent prêts à sauver le pays et des électeurs affolés par la situation et désespérés par la médiocrité de ceux qui cherchent à les séduire.
Une fois de plus, et peut-être plus que jamais, on a un monde politique totalement coupé des réalités et qui semble se refuser à entendre la rumeur populaire, pour ne pas dire les grondements de plus en plus forts qui viennent des quatre coins du pays.
Il n’est pourtant pas nécessaire d’avoir fait l’Ena ou d’être un sondeur professionnel pour comprendre qu’aujourd’hui, et depuis quelque temps déjà, les « préoccupations » (le mot est faible) des Français sont, dans l’ordre et comme le rappelle d’ailleurs ce même sondage : 1) le chômage, 2) la hausse des prix des produits de première nécessité, 3) le remboursement des soins, 4) la protection des retraites, 5) l’accès des jeunes au marché du travail.

Les Brigades Anti-Criminalité bis

I previously discussed the new book by Didier Fassin, who studied one Brigade Anti-Criminalité in the Paris region over an extended period of time. Here is a lengthy, thoughtful discussion of the book, the BAC, and the problems of insecurity and policing in France today.Worth reading, since "security" issues are likely to play a major role in the presidential campaign.

Sign of the Times

A sitcom has surpassed the audience for one of France's two prime-time evening news shows:
Mais, le 21 octobre, la série de M6 a rassemblé sur sa tranche horaire 4,35 millions de téléspectateurs, soit plus que les 4,3 millions du JT de France 2. Le 27 octobre et le 9 décembre, la série a récidivé avec 300.000 et 200.000 téléspectateurs de plus que le JT de France 2.
So, how are we to interpret this fact? Does it indicate declining interest in current affairs on the part of the viewing public? Or does it suggest, rather, that people now have so many sources of news other than the TV that the JT de 20h are no longer the national institution they once were? I lean toward the latter interpretation.

Tuesday, December 27, 2011

Danton to DSK

Who? Depardieu, of course. And Isabelle Adjani as Anne Sinclair. Oh, the humanity! (h/t RF)

The State as Puppeteer

Paul Betts has a scathing piece in the Financial Times about the French practice of choosing "national champions" in various industries and staffing them at the highest levels with products of the Grandes Écoles hand-picked by the Élysée. The immediate pretext for the piece is the 2.4 billion euro writedown at Areva following the ouster of Anne Lauvergeon, who built the company after being selected by Mitterrand. Her removal followed a long public struggle with Henri Proglio, now chairman of EDF but formerly head of Veolia, where he compiled a lackluster record, according to Mr. Betts, but was nevertheless dubbed by Nicolas Sarkozy as "France's best industrialist." Other sick champions include Air France, EADS, and Thales. Presidential string-pulling is the system's biggest flaw, according to Betts, who also writes that under Sarkozy "this system has reached its apotheosis."

Unemployment

The unemployment figures are terrible. For workers over 50, unemployment is up by more than 15%. For women and long-term unemployed, the number out of work has increased by 7% in each category. Meanwhile, the government, in response to the euro crisis, is promising more austerity, which can only make matters worse. Small businesses are calling for an extension of the temporary labor contract from 18 months to 36. In Germany, where the unemployment rate is only 6%, compared with 10+ in France, job-sharing through reduction of hours (Kurzarbeit) has helped to limit the damage from the crisis, or at least spread it around, but this has not been tried in France, where labor-market regulation is stricter. Perhaps it's time to think about some new remedies, and Kurzarbeit is one that can be tried without spending government money, which is off the table for now.

UPDATE: I spoke too soon. I see that Xavier Bertrand is proposing a French version of Kurzarbeit, called "activité partielle." He also wants more flexibility in work organization if necessary to maintain competitiveness.

Monday, December 26, 2011

La Fin du Passé Simple

Ce fut quand même utile.

The Screeners' Strike

The strike of airport baggage screeners is over, most of the striking unions having accepted an offer of an annual bonus from management as a reason to call off their walkout. Did the intervention of the government, which sent in police to handle the screeners' job and end the chaos at the airports, weaken the workers' bargaining position? No doubt. As much as the public may dislike the tactic used by the strikers--to disrupt holiday travel--it was probably effective in the short run. In the long run, one may question whether it's wise for unions to antagonize a substantial segment of the public in this way, because it weakens the legitimacy of the union movement.

On the other hand, the government's action was, to my mind, outrageous and a violation of the constitutionally guaranteed right to strike. Against this, Sarkozy and Fillon invented out of whole cloth a "right to vacation" and used this as a pretext to intervene. This only underscored the stark class divide between the strikers, most of whom were close to the bottom of the wage spectrum, and the people they inconvenienced, those with money enough to enjoy a winter getaway. The statistics relating vacation travel to income are quite dramatic in France, and many at the bottom of the ladder rarely travel far from their homes. So, like the Occupy movements, the baggage screeners' walkout was a warning to the wealthy, and it came from a segment of the population more representative of the have-nots than "the 99%." The use of police to break the streak was probably unconstitutional and surely high-handed, but it seems to have worked.

Friday, December 23, 2011

Turkish Bath

So, for the sake of a few hundred thousand potential Armenian votes, Nicolas Sarkozy has created--his detractors say--an international incident with Turkey that threatens to have long-lasting implications for French foreign policy. Of course the opposition is no better. Hollande distinguished himself with a characteristically fence straddling statement:

"Ce qui est regrettable, fâcheux, comme méthode, c'est de saisir une occasion pour faire une nouvelle discussion d'une proposition de loi, dont le gouvernement a déjà dit qu'il ne la transmettrait pas au Sénat. Donc c'est purement un effet d'affichage", s'est indigné le candidat.
"Les socialistes ont voté cette proposition, c'est normal, puisqu'ils avaient voté quasiment la même il y a cinq ans. Pourquoi a-t-on perdu cinq ans ? Pourquoi le président de la République se réveille-t-il – si je puis dire – à la fin de son mandat ? Poser la question, c'est y répondre : c'est une opération électorale, a-t-il poursuivi. Je pense que c'est dommage parce qu'elle ne satisfera pas les Arméniens qui attendaient cette loi depuis cinq ans et demandent que ce texte soit transmis au Sénat."
Translation: we, too, want Armenian votes, but not in the way Sarkozy wants them. And Robert Badinter purports to discover some sort of "anticonstitutional" principle in the new law:

"Ce n'est pas aux parlementaires de dire l'histoire. Moins encore aux parlementaires français quand il s'agit de faits qui ont été commis en Asie mineure […] il y a un siècle, où il n'y a eu ni victime ni complicité française. Ça ne concerne en rien la France", a ajouté l'ancien garde des sceaux sur RTL.
Translation: Mind your own Holocaust. Denial of a genocide that your people are mixed up in is constitutionally punishable, but denial of somebody else's alleged genocide is offensive to the constitution because "it's not up to the parliament to define historical truth." I think Badinter needs to read Milton's Areopagitica:

And now the time in special is, by privilege to write and speak what may help to the further discussing of matters in agitation. The temple of Janus with his two controversal faces might now unsignificantly be set open. And though all the winds of doctrine were let loose to play upon the earth, so Truth be in the field, we do injuriously by licensing and prohibiting to misdoubt her strength. Let her and Falsehood grapple; who ever knew Truth put to the worse in a free and open encounter? Her confuting is the best and surest suppressing. He who hears what praying there is for light and clearer knowledge to be sent down among us, would think of other matters to be constituted beyond the discipline of Geneva, framed and fabriced already to our hands. 

Instead of the grappling of truth and falsehood, then, we have yet another of these depressingly entangled Franco-French and Franco-foreign conflicts in which all participants, seeking temporary advantage and guided more by the heat of passion than the light of reason, disserve the causes they claim to champion.

Thursday, December 22, 2011

Precipitous Drop in UMP Membership

Médiapart reports that the UMP's members has dropped from 370,000 in Dec. 2007 to 171,000 in June 2011. A remarkable decline. But even more interesting is the reason given as paramount: Sarkozy's attempt to make his son the head of the development agency EPAD:
Aujourd'hui, Dominique Paillé confirme que «l'affaire de l'EPAD» a été «désastreuse», «une vraie rupture»: «Ce sont des adhésions que nous n'avons pas réussi à reprendre».

France-Turkey, Je t'aime moi non plus

Turks have never been particularly fond of Nicolas Sarkozy, who opposed admitting them to the EU and who proposed a Union of the Mediterranean that they saw as little more than a consolation prize or, worse, a device to dilute their growing influence in the region. But the new law against denial of genocides, plural, including the one that Turkey is supposed to have perpetrated on its Armenian subjects, has led to an open breach with recall of Turkey's ambassador to Paris.

The Turks see a crass electoral maneuver, and no doubt they're right. Historians see an infringement of their right to interpret the events of the past by the norms of scholarly investigation rather than in obeisance to the political whims of the moment.

It's a sad business all around. Anyone who thinks that Turkish or Armenian national memory is going to be turned by lessons delivered from Paris is at best naive. Perhaps the UMP should have heeded François Baroin's warning of the other day, directed, it is true, at England and not France: "La France ne veut pas recevoir de leçons. On en a beaucoup reçu, on n'en donne pas." Apparently Baroin was misinformed.

In any case, if lessons are to be given, they must be taught subtly and with due respect for the sensibilities of the pupil.

UPDATE: Arun Kapil points out the reasons why this is a bad law.

Wednesday, December 21, 2011

Four Lessons from Olivier Blanchard

Olivier Blanchard, IMF chief economist, draws four lessons from the crisis. You won't find any earth-shattering surprises here, but it's good to be reminded of what events have demonstrated. Three key points:
We saw how perceptions often got worse after high-level meetings promised a solution, but delivered only half of one. Or when plans announced with fanfare turned out to be insufficient or hit practical obstacles.
The reason, I believe, is that these meetings and plans revealed the limits of policy, typically because of disagreements across countries. Before the fact, investors could not be certain, but put some probability on the ability of players to deliver. The high-profile attempts made it clear that delivery simply could not be fully achieved, at least not then. Clearly, the proverb, “Better to have tried and failed, than not to have tried at all,” does not always apply.
And:
Third, financial investors are schizophrenic about fiscal consolidation and growth.

They react positively to news of fiscal consolidation, but then react negatively later, when consolidation leads to lower growth—which it often does.
And finally:
Right or wrong, conceptual frames change with events. And once they have changed, there is no going back. For example, nothing much happened in Italy over the summer. But, once Italy was perceived as at risk, this perception did not go away. And perceptions matter: once the “real money’’ investors have left a market, they do not come back overnight.

Nouvel Obs Buys Out Rue89

The Nouvel Obs group has taken over Rue89. Although continued editorial independence is assured, such promises have a way of dissolving. Pardon my skepticism about this maneuver.

Chevènement Opines

Jean-Pierre Chevènement speaks his mind on a number of subjects: he is skeptical of the recent European summit, regards the precaution principle as a "principle of immobility and an ideology of fear," and defends the nuclear industry.

The latter comes at an opportune moment, just as German electricity officials are warning of possible shortages this winter because several nuclear plants have been taken off line. May this serve as a salutary reminder to overzealous Greens, who want to impose a hasty exit from nuclear dependence.

Tuesday, December 20, 2011

Sarko Invites Schröder

Former German chancellor Gerhard Schröder, who introduced supply side reforms in the German economy that are often credited with spurring Germany's export-oriented development and insuring its relatively good performance in the Great Recession, visited the Élysée this past weekend. President Sarkozy was no doubt looking for a few useful ideas but above all for themes that can be used in his campaign against François Hollande. You see, even the socialists in Germany believe in the need for the kinds of reforms I have been urging on the French, he will say. He will try to paint Hollande as a reactionary defender of entrenched interests to the detriment of the nation as a whole.

Er wolle künftig „eine angebotsorientierte Wirtschaftspolitik und Schuldenabbau nach dem Modell von Gerhard Schröder“, so Sarkozy. Das ist vor allem eine Ohrfeige für den sozialistischen Präsidentschaftskandidaten François Hollande, der vergeblich nach Vorbildern sucht.

Ekphrasis and the Art of Politics

Ekphrasis is a rhetorical device which consists in using the resources of one art to describe the product of another. The word came to mind last night as I watched La Conquête, Xavier Durringer's film about Nicolas Sarkozy's rise to power. If politics is an art, as thinkers from Aristotle to Tocqueville have claimed, then Durringer's technique can only be described as ekphrasis writ large: the film is from end to end a paean to a certain "artful dodger" in the realm of politics, one Nicolas Sarkozy.

This was surely not Durringer's intention. What he wanted to show us, no doubt, was the crudeness, vulgarity, and hollowness of the man Sarkozy. So we see the candidate giving a mighty thrust of his pelvis into the backside of an imaginary France held by the shoulders from behind, as he says "France will give herself to the man who wants her most." We see him hunched over his plate at Villepin's elegant table, repeatedly wolfing down his food without comment on its qualities while filching chocolates in quantity. He is ruthless, single-minded, and cunning, yet we are asked to believe throughout that his mind is that of a hormonal adolescent intent on only one thing, impressing his "girl," Cécilia, whose heart is fickle for any number of reasons never clearly differentiated by the plot: the trappings of power bore her, her husband humiliates her repeatedly, she is in love with another man, or she's just restless in late middle age, perhaps all of the above, or none. It hardly matters. This unconvincing "love affair," though at the heart of the film's scenario, is wholly incidental to its ekphrastic construction.

The film is shot through with what Roland Barthes called effets du réel, gaudy baubles of imitated reality that are supposed to attest to the authenticity of the object they embellish but in fact emphasize its facticity. Given this parti pris of achieving reality by aping it, the acting is impeccable: Denis Podalydès is more than adequate  as Sarko, capturing his tics, pugnacity, irascibility, volatility, and rhythms of speech, while Bernard Le Coq is superb as Chirac and Samuel Labarthe is perfect as Villepin, even down to the famous swimsuit scene. The casting director and makeup artists deserve Oscars, because each actor looks remarkably like his principal. Michel Bompoil is a dead ringer for Henri Guaino, even if his silent lip-syncing of one of the candidate's big speeches is a somewhat preposterous rendering of the supposed intimacy of the Sarko-Guaino collaboration, in which one discerns an erotic spark slightly warmer than the chemistry between Nicolas and Cécilia. Rachida Dati, played by Sa:ïda Jawad, is also physically convincing but emotionally vacuous. The one major disappointment is Florence Pernel as Cécilia Sarkozy: she is a cipher, perhaps because Cécilia is a cipher.

But really I should say that Cécilia is a cipher to readers of the press, which is what we all are when it comes to this story, and of course as close readers of the press we all think we know the true story well enough to stamp its simulacrum with a seal of authenticity. The film brilliantly reproduces many of the publicly known highlights of the Sarkozy-Chirac-Villepin duel, but of course what it really does is simply reinforce a certain superficial journalistic reading. Agnès Porrier is right: "We don't learn anything new. No new insight, no daring hypothesis, no cunning analysis on the kind of political animal Nicolas Sarkozy is." And consequently the intended deflation of Sarkozy oddly aggrandizes him. "Salut l'artiste!" we want to say, because we come to feel that his nemeses Chirac and Villepin really are rather villainous characters, slimily reptilian, and therefore we're not at all displeased to see them bested by "the midget," as Villepin calls him, even if his manners aren't all they should be.

In the end, La Conquête therefore gives us Nicolas Sarkozy as Lucien de Rubempré, another not altogether frequentable Frenchman in whose triumphs we nevertheless rejoice, albeit with a heavily guilty conscience.

Tribute to Vaclav Havel

On France Culture, featuring my friend Jacques Rupnik.

An Industrial Success Story?

Le Monde tells the story of the Bosch plant in Vénissieux, which was slated for closure by the firm but won a new lease on life thanks, we are told, to German-style cooperation between employer and trade unions (CFDT and CGT). Instead of closing the plant, Bosch eventually agreed to invest 25 million euros to convert it to the manufacture of photovoltaic cells. 450 employees were laid off, but 400 others were retrained and retained. This sum is one-quarter of what it would have cost to close the plant.

The story is nevertheless a bit vague about the economics, since we know that China has been accused of dumping photovoltaic cells below cost in the US, undermining domestic competition there. Why is this not happening in Europe? What is the long-term economic viability of this new product line? What other concessions were made to Bosch to preserve these 400 jobs? The case bears further investigation.

Monday, December 19, 2011

The Raft of the Medusa

DSK, back in the news from Beijing, compared the euro to a raft in a storm. Meanwhile, back in Paris, J.-F. Kahn said that DSK told him that he voted for Bayrou in 2007. (DSK denies the story categorically.)

Saturday, December 17, 2011

"The Sarko Trade"

President Sarkozy's last name has lent itself to all sorts of interesting combinations. The most recent is what the Financial Times calls "the Sarko trade."


Via Reuters:
French President Nicolas Sarkozy said the ECB’s increased provision of funds meant governments in countries like Italy and Spain could look to their countries’ banks to buy their bonds.
“This means that each state can turn to its banks, which will have liquidity at their disposal,” Sarkozy told reporters at the summit in Brussels.
And it wasn’t just us who were taken aback by the suggestion, which is not too dissimilar to Jon Corzine’s repo-to-maturity brainwave which wrecked MF Global (especially once haircuts hit the underlying assets).
In other words, what President Sarkozy was suggesting after the Brussels summit was that the Eurozone would finance its way out of the crisis without violating any EU regulations by having the ECB lend to banks against collateral, which is permitted, rather than buy distressed sovereign debt outright on the primary market, which is of dubious legality under existing regulations.

The problem with this scheme, as the FT Alphaville article goes on to point out, is that the amount of debt outstanding is so large that it would increase bank leverage ratios many times over. Read the article at the link for a full explanation. But here's the short version:


Everyone’s a winner.
Well that’s the theory anyway. But according to fund manager John Hussman it’s a dumb idea.
From his latest weekly comment:
We’ve seen some theories that Europe intends to address the problem through ECB lending to banks, taking distressed debt as collateral, with the banks turning around and buying more distressed debt.
Apart from the fact that this would be the sort of “legal trick” that the ECB would be unwilling to facilitate, this would imply an increase in bank leverage ratios far beyond the 30-40 multiples that already exist (which would be a disaster when tighter Basel III capital requirements kick in). In practice, depositors would flee, and you would end up with a European banking system where bank bondholders, not the ECB, would be subject to the losses, since the ECB’s collateral claims would be senior.
So if this is actually what Sarkozy and Merkel had in mind as a solution to the crisis, it seems that key financial sector actors are not buying it.

Friday, December 16, 2011

Lagarde Warns of Depression

I was skeptical when Christine Lagarde was appointed to head the IMF in the wake of DSK's disgrace, but to date she has proven to be the only world leader to recognize the seriousness of the crisis. Yesterday she issued a stark warning:
On a day that saw an escalation in the tit-for-tat trade battle between China and the United States and a deepening of the diplomatic rift between Britain and France, Christine Lagarde issued her strongest warning yet about the health of the global economy and said if the international community failed to co-operate the risk was of "retraction, rising protectionism, isolation".
She added: "This is exactly the description of what happened in the 1930s, and what followed is not something we are looking forward to."
The IMF managing director's call came amid growing concern that 2012 will see Europe slide into a double-dip recession, with knock-on effects for the rest of the global economy. "The world economic outlook at the moment is not particularly rosy. It is quite gloomy," she said.

These words should have gotten everyone's attention, but Lagarde's successor as French minister of finance, François Baroin, preferred to whine about alleged France-bashing by the British: "One would rather be French than British," he said. "The British economic situation today is quite worrisome." Indeed, it is, but Christian Noyer's complaint that "the British don't deserve their AAA" seems to be a pre-emptive justification for the impending loss of France's AAA. It's true that Britain has a higher debt/GDP ratio than France, but it's also true, as Noyer well knows, that Britain issues its own currency. Whether Britain's inflation risk is greater than France's default risk is a theological question. Noyer should spend more time listening to Lagarde and less worrying about sovereign credit ratings, which have become more or less meaningless since the US downgrade. Nevertheless, Paris seems more obsessed with the rating than with the 100 bp premium over British gilts that it is currently paying:


[The Guardian's] Paris correspondent, Kim Wilshirewrites that:
French politics descended to the level of the school playground as two cabinet ministers and a senior bank official were reduced to shouting names at Britain from across the Channel.Having sidelined Britain over a new treaty designed to save the crisis-hit eurozone a week ago, the French launched an ours-is-bigger-than-yours row over the state of each country's economy.Kim flags up that French prime minister François Fillon also took a pop at the UK during a during a visit to Brazil, saying
Our British friends have a higher deficit and debt [than us] but it seems the ratings agencies have not yet noticed.

Thursday, December 15, 2011

Bayrou, Internaute

François Bayrou is Internet-hip and "tablet-ready." Who would have thought?

High Tech Heist at the Élysée

In computer geek parlance, a "honey trap" is a machine deliberately set up to ferret out nefarious behavior on the Internet. It seems that someone set up such a honey trap to look into illegal downloading of films and other copyrighted material via the software BitTorrent. And what do you know? Guess who got caught in the trap: The Élysée, home of the HADOPI law, were someone apparently illegally downloaded a copy of "Tower Heist." (h/t Frédéric Martel)

Another Deal Undone?

The euro is falling, Italian borrowing rates are rising, and Jens Weidmann is still resisting, but the latest euro-saving deal seems to be coming unstuck even faster than the previous ones.
Meanwhile, at least four more European Union members — none of them using the euro — have expressed reservations about the agreement, which only Britain definitively opposed at the summit meeting. Some leaders said in Brussels that they wanted to consult their parliaments. Hungary, Sweden, Denmark and the Czech Republic now say they want to see the text of the proposed treaty, which is meant to enforce strict limits both on members’ annual budget deficits and on their cumulative debts, before fully committing themselves. France and Germany hope to have a draft of the treaty approved by the end of March and ratified by the end of 2012.
The fiscal strictures are meant to prevent future crises, but the financial markets appear to be much more focused on whether the euro zone nations will put their money where their mouths are now, when they say they will defend the euro and its members. Beyond the bailout funds already in place, the Brussels agreement calls for member nations’ central banks to provide 200 billion euros ($259 billion) to the I.M.F. to create a bigger “firewall” of money that would help protect heavily indebted euro zone states from speculative pressure.

And here is Médiapart:
Or quelques jours ont suffi pour montrer que le texte bouclé à Bruxelles n'est qu'une dangereuse supercherie.

Cet accord de principe n'a d'abord que peu de chances d'être traduit dans les formes juridiques d'un « traité intergouvernemental » d'ici mars 2012, comme le veut Nicolas Sarkozy. Il a encore moins de chances d'être ratifié dans les 26 pays membres de l'UE concernés. Il n'en a aucune d'être appliqué « à l'été 2012 », comme le souhaite le chef de l'Etat.
Told you so.

Chirac Convicted

Jacques Chirac received a 2-year suspended sentence for misuse of public funds while mayor of Paris. He is the first French chief of state to be convicted of a crime since Marshal Pétain. The verdict is sadly anticlimactic, coming at a time when most people have forgotten Chirac the ruthless politician and remember only the grandfatherly duffer.

For those who wish to be reminded of the other Chirac, I recommend a TV documentary on the Front National entitled "Le Diable de la République." It features, among other fine moments, the famous speech in which Chirac, pioneering the tactic (now associated with Sarkozy) of poaching on FN territory, delivered a speech attacking immigrants for bringing polygamy, large families, odors, and noise to an otherwise tranquil France.

I knew of this speech, of course, but had never before seen it, since the Internet did not exist in those days, nor was French TV yet available in the US. Seeing it makes it possible to appreciate the tone as well as the words, and in expressing contempt for immigrants Chirac surpasses Sarkozy by a country mile. The irony, of course, is that he was later able to claim victory in 2002 as the anti-Le Pen candidate and defender of French democracy--a pose for which we see a younger Marine Le Pen mercilessly mocking him with a dead-on Chirac imitation worthy of Nicolas Canteloup.

So, when you are inclined to find fault with the judicial system for piling on to a semi-senile 80-yr-old for crimes committed 20 years ago, remember the other Jacques Chirac, and know that in a certain roundabout sense, justice was done.

Wednesday, December 14, 2011

La Finesse de François Hollande

As predicted here many months ago, François Hollande has now "clarified" his position on the so-called "âge légal de départ à la retraite":
En tout état de cause, pour François Hollande, le rétablissement, pour tous et dans tous les cas, de l'âge légal de départ à la retraite à 60 ans n'est désormais plus d'actualité.
 Actually, Hollande has been saying this all along, and behind the scenes his advisors have been saying it even more clearly. Indeed, the candidate said on TV in 2010 that "Il y a un principe qui doit être posé : chaque fois que l'espérance de vie s'allonge, il n'est pas anormal que la durée de cotisation suive."

The problem, of course, is that the Socialist platform doesn't say this, and PS leaders were content to let those who protested against the most recent UMP tinkering with the retirement regulations believe that if they came to power, all the Sarkozy and Fillon "reforms" would be rolled back to the status quo ante of the halcyon days of Mitterrand. It was a convenient fiction then but an inconvenient one now, and Hollande is trying to shed it. For his sins, however, François Fillon has called him a "liar," igniting a mini-kerfuffle and some huffing and puffing in the press and on the blogs.

So let us stipulate that voters assessing the candidates had better not hope to differentiate between right and left on the basis of their positions on retirement reform, because when it comes right down to it, there is no discernible difference, and even if there were, there is no guarantee that it wouldn't succumb to expediency after the election--expediency and the need to reduce the budget deficit, to which both sides are committed.

You may not like it, but this horse has left the barn: the French will be working longer to collect their retirement benefits.

Quiggin on the Euro Crisis as Kremlinology

In one respect, the EU agreement was anything but subtle. The fact that the Eurozone countries and those aspiring to join them were prepared to go ahead without the UK (and a few others) suggests that they have something serious in mind. But what – the announcement is pretty much a restatement of the Growth and Stability pact, and under present circumstances, the deficit targets can only be seen as aspirational.

Applying one of the approaches that used to be standard in Kremlinology (not necessarily a reliable one, then or now) I’m going to assume that the EU leaders are acting with some sort of coherent goal in mind and work from there. In particular, I’m going to assume that everyone who matters now recognizes the need for a big monetary expansion and the use of newly created money to resolve, or at least stabilize, the debt crisis.

There are a bunch of obstacles to this:
(i) The desire of the ECB to save face, to avoid admitting its large share of responsibility for the crisis and, if it can, to hold on to its central position and to the inflation targeting system
(ii) The belief of the German public (and some others) that they are being made to bail out a bunch of feckless Southerners, rather than (the reality) saving French and German banks from the consequences of their bad decisions, and preserving the European economy on which the Germans depend as much as anyone else from the disastrous regulatory failures of the Euro-elite, including the ECB, European Commission, financial regulators and so on
(iii) the problems with EU treaty amendments requiring unanimous consent

Can Sarkozy Win?

Gérard Grunberg thinks it will all depend on where FN votes go in the second round--assuming the president makes it to the second round (a possibility that Grunberg does not discuss).

Financing the French Social Model

The French welfare state is expensive, and how to pay for it in a time of austerity will be a central campaign issue. Le Monde reviews some of the proposals. Seven think tanks offer their suggestions as well.

Tuesday, December 13, 2011

"Superbonuses" at Sciences Po

According to Médiapart, ranging from 10,000 to 100,000 euros, paid to 9 members of the executive committee. "We're not Goldman Sachs," said one.scholar. Indeed not. What was the basis of these "performance bonuses?" Just a few days ago Sciences po announced measures to further increase diversity in the student body--France's future leaders. A good thing. But this "bonus culture" seems rather alien to the spirit of academia.

Sigmar Gabriel on Europe

While François Hollande has thus far responded rather disappointingly to last Friday's Brussels pact, the German opposition leader, Sigmar Gabriel of the SPD, has published a long article in the FAZ attacking the deal and calling for a broad rethinking of the basis of the European Union. Instead of a "fiscal union," which he (rightly) believes is necessary, he argues, in a nice phrase, that Sarkozy and Merkel have given us a "sanctions union."

Diese dringend notwendige Fiskalunion hat Angela Merkel am letzten Wochenende zu einer reinen Sanktionsunion degradiert.
Hollande was in Berlin last week for the SPD party meeting, but he doesn't seem to have returned with anything like Gabriel's analysis, since he's still promoting austerity with a human face rather than "fiscal union." A huge mistake.

Fais gaffe!

(h/t Catherine Moreau)

Decentralization and the Working-Class Vote

Bernard Girard offers a fascinating insight into the alarming statistic that the Front National now claims almost a majority among working-class voters. The key is this map, which Bernard takes from a business journal called L'Usine nouvelle (interactive version here--try it for an interesting glimpse of the state of French employment):


The map shows job losses in various places in France. Bernard's interpretation is that state policies of aménagement du territoire (a difficult-to-translate term for which regional planning is a fair approximation) have led firms to locate in small towns and semi-rural areas by offering them important incentives (free land, tax breaks, and reduced labor costs). The problem is that these firms are often the only industrial employers near where they locate, so when they close their doors or lay off workers, it is difficult for the unemployed to find new jobs near their homes. That is why Marine Le Pen's rhetoric of "deindustrialization" resonates so well with working-class voters. "France no longer exports anything. Our industries have all been outsourced," she claims, falsely: France, the world's 5th largest economy, is also its 5th largest exporter. But workers who suddenly find themselves without work and with no other employer nearby may be excused for concluding that they live in an industrial wasteland.

Would relocation incentives help? It's an idea that the Socialists might want to consider.

The Nuclear Debate

Review of a book by Dessus and Laponche, who argue that an end to French nuclear dependence is possible.

French Income Map

The bluer the area,  the higher the median household incomes; the redder, the lower. Details here.

Big Losses at Areva

Areva, the French nuclear flagship. 87% state-owned, announced losses of 1.4 to 1.6 billion euros. Although the poor performance has been blamed on the downturn in the nuclear industry caused by the Fukushima disaster, Areva's problems are deeper, with major losses incurred from design flaws and other problems with the EPR construction in Finland and Flamanville as well as from a uranium mine acquisition in Canada.

Monday, December 12, 2011

When Mélenchon Defended Maastricht



h/t Arun Kapil

The Delphic Oracle on the French Economy

François Baroin:

« Cette crise n’étant pas classique, le ralentissement et la défiance est plus important, nous accélère dans un ralentissement économique. La sortie, si nous arrivons à prendre de bonnes mesures, nous permettra de sortir plus vite. »
And people complain about the president's grammar.

Sarkozy the Divider?

Sarkozy's rude rebuff of David Cameron in Brussels (he refused to shake the British PM's hand), followed by his blunt assessment this morning that the UK has isolated itself from Europe (a sentiment already expressed by many in Britain hostile to Cameron's decision), does not coincide with the position of the German government:
Mit seiner deutlichen Distanzierung von Großbritannien stellt sich Sarkozy gegen den Kurs der Bundesregierung, die vor einer Isolation Großbritanniens warnt. So hatte Finanzminister Schäuble in der ARD-Sendung Bericht aus Berlin die Hoffnung geäußert, dass sich Großbritannien doch noch an der engeren Zusammenarbeit beteiligen wird. "Die Tür für Großbritannien bleibt offen", sagte er. "Ich hoffe, dass die Briten die offene Tür durchschreiten werden."
Sarkozy may be overplaying his hand here. Merkel wants and needs his continued support, but she is averse to grandstanding and to high-risk strategies. Germany wants to keep its differences with London low-key. Sarkozy prefers to cast himself, rhetorically at any rate, into the British lion's den. If he isn't slaying a dragon or facing down a lion every day, he can't go home to his princess in the evening. But he had better use caution.

Skepticism about Brussels deal

Wolfgang Münchau shares my skepticism about the political arrangement agreed to in Brussels.

Shortage of lendable funds

The OECD is warning that governments may have a hard time rolling over debt because of a shortage of lendable funds. Governments of industrialized countries will be seeking over $10 trillion in financing from private markets in the coming year.

Meanwhile, central banks have been buying government bonds in unprecedented quantitites.



France Hearts Google

Here.

Médiapart Goes to Moselle

Médiapart has an excellent piece on the rising popularity of the Front National among the working class in Moselle. A taboo has been broken:
«Avant c'était impensable de prendre un tract FN», raconte le maire PS de Metz, Dominique Gros. 
This is no longer the case, as several interviews reveal:
Michel, 49 ans, lui, a choisi. Il ne veut pas être filmé, mais le dit d'entrée: «Je suis ouvrier et je vote Marine Le Pen, je n'ai pas honte de vous le dire.» «Il y en a beaucoup (d'ouvriers), qui votent FN, faut vous réveiller!», sourit-il. Lui a voté Mitterrand en 1981 avant de se diriger vers le FN. «(Marine Le Pen) c'est la seule qui dit la vérité, les autres n'ont pas de solutions. Avec la crise internationale, on ne voit pas le bout du tunnel. On a tout essayé.» Il n'est «pas raciste du tout», dit-il et trouve la fille Le Pen «plus soft». A côté de lui, il y a Ludovic, 28 ans. Lui vote à gauche, mais cette fois il «hésite». «Au bout d'un moment, ça ne bouge pas, il n'y a pas d'idées neuves, les promesses ne sont pas tenues. Marine Le Pen, elle voit les soucis. Je ne sais pas si elle va améliorer les choses, mais j'ai tendance à l'écouter.»
...
Tout comme Aurélie Duval, jeune maman divorcée que Mediapartavait déjà croisée à Florange en septembre. Trois emplois (cantinière, quelques ménages et l'aide à une personne en fin de vie), 22 heures de boulot pour «800 euros net par mois». Après avoir voté pour les Verts puis pour Sarkozy en 2007, elle est «sûre de voter Le Pen» pour«sa franchise». «Son père était limite nazi, mais elle, elle est plus douce, elle n'a pas d'idées extrémistes», croit-elle. Son déclic, ça a été l'affaire DSK. «Elle a dit: "tout le monde le savait", ça j'ai adoré!» La jeune femme pense qu'il faut «fermer les portes (aux immigrés)», qu'on ne va pas «sortir la Grèce de la merde une seconde fois» et que«la sortie de l'euro c'est une très bonne idée» car il «nous a foutus dans une crise monumentale». «On est dans la misère, ça peut pas être pire», soupire-t-elle.
Le maire PS de Metz reconnaît «une désespérance» des Mosellans.«Les gens se défoulent. Les thèmes du FN comme l'immigration percolent. Le discours d'exclusion "on est entre nous, faut que ça reste comme ça" progresse, la personne d'origine maghrébine, même si elle est française, est assimilée à l'étranger.» Et puis le thème de la fraude sociale, mis en avant par l'UMP et le FN, fait un carton. «Ils ont l'impression qu'il y a des abus au niveau des allocs, des logements, des arrêts maladies. Si quelqu'un a vu quelqu'un dont le fils n'a pas eu un appartement qu'un Maghrébin a eu, ça fait un électeur FN.»

The Purposes of Financial Regulation

The Current Moment has a shrewd comment on the split at Brussels over financial regulation:

There is lots wrong with this view of last week’s acrimonious summit negotiations. For a start, Cameron’s motivations were as much about avoiding a national referendum – and thus keeping his own Conservative –Liberal Democrat coalition alive – as they were about the City of London. The City itself is deeply divided over the issue of financial regulation: some would prefer to keep clear of European harmonization efforts and to go it alone (for a list of all the financial market reforms in the EU pipeline, see here). Others in the City say very clearly that a common European regulatory regime of which the City of London is a part would be better than a split. We should also have no illusions about the motivations of European financial regulators: the political push behind this regulation, led by the European Commissioner for internal market and services, the Frenchman Michel Barnier, comes from the French and the Germans and is driven by competition between national capitals. The goal is to weaken the City of London as a financial center as much as it is to reform European finance. Why side with one over the other in this struggle if not out of German, French or Euro-chauvinism?

Sarkozy Responds to My Question

The other day I entitled a  post "A New Europe?" Question mark. Today, Nicolas Sarkozy told Le Monde that the upshot of the Brussels agreement is indeed "a new Europe." Or at any rate a "different" Europe. He is more optimistic than commentators elsewhere, who are wondering if the agreement means the end of Europe. Time will tell, but in the meanwhile Sarkozy has staked his all on this agreement and will organize his presidential campaign around it--presuming that there is not some imminent disaster in the financial markets. Moody's warned that it is maintaining its watch on a number of countries, including France, while others cast a wary eye on the markets:

With mounds of European debt due to be refinanced early next year, the crisis is far from over. “More tests will obviously come, and soon,” perhaps as early as the opening of financial markets on Monday, said Joschka Fischer, the former German foreign minister.

In France, François Hollande says that if he is elected,  he "will renegotiate" the treaty. You can expect Sarkozy to make a major issue of this statement, which betrays--how shall I put it?--a less than firm grasp of the dynamics of international relations. Barring a collapse between now and next May, Hollande will have zero leverage with Germany. What is more, Hollande embraces the very austerity thinking that is at the heart of the Brussels agreement:

Il s'agit tout de même de 11,5 millions d'euros d'économies avec une hausse des impôts et la diminution de prestations sociales...L'austérité voudrait dire qu'on augmente beaucoup plus les impôts et qu'on remette en cause des prestations – ce qu'on ne fait pas, puisque toutes les allocations ont été maintenues. Elles ont, pour partie, été mises sous condition de ressources. On essaie d'éviter que ce soit pénalisant pour les familles modestes et moyennes.
C'est votre «rigueur juste»?C'est du sérieux. Et c'est de la justice. On fait du sérieux dans la justice et de la justice dans le sérieux.
"Just austerity" is apparently the new mantra of "social liberalism." It is not a rejection of the thesis of "expansionary contraction" but a sugar-coating, and it is not likely to appeal to voters seeking an alternative to the Paris-Berlin consensus.

This comment is particularly worrisome:

«Hollande est bien avec tout le monde mais, en politique, on ne peut pas être bien avec tout le monde», sourit Pascal Bagnarol, le responsable du PCF dans le département. «La Corrèze est un cas d'espèce révélateur entre une ligne d'accompagnement et une ligne de résistance, estime Eric Coquerel, responsable national du parti de gauche, qui devrait être candidat aux législatives à Brive. La gauche ne gagnera pas avec une politique libérale-honteuse...»

Sunday, December 11, 2011

Villepin Announces

Dominique de Villepin is running for president. It's now a free-for-all in the center, with Hollande, Bayrou, Morin, Villepin, and Sarkozy all vying for potential swing voters. A tough job for pollsters to sort this out.

Another Twist in the DSK Affair

Did two French ministries contact the New York prosecutor on May 15 to inform him of DSK's alleged involvement in the Carlton prostitution case? Libération claims that they did and that this information had a direct bearing on the judge's initial decision to jail DSK rather than release him on bail. At the time, this information was not public and was covered by the secret d'instruction, so the action of the ministries may have been illegal:
C’est une affaire dans l’affaire. Le soupçon d’une intervention de l’Etat français dans le scandale du Sofitel. Les faits sont simples. CommeLibération l’a révélé vendredi, deux hauts fonctionnaires du Quai d’Orsay et du ministère de la Justice ont alerté, le 15 mai, les services du procureur de New York sur la possible implication de Dominique Strauss-Kahn dans l’affaire du Carlton de Lille. Une démarche qui aurait eu une incidence directe sur l’incarcération de DSK, le lendemain, à la prison de Rikers Island.
Si les autorités françaises ont apporté vendredi un démenti vigoureux, les services du procureur de New York, n’ont nullement nié l’intervention de Paris, se contentant d’expliquer que «le dossier était protégé par le tribunal» américain (lire aussi page 4). Mais si cette affaire est susceptible d’éclairer d’une lumière crue certaines pratiques au plus niveau de l’Etat, elle n’est pas de nature à remettre en cause le fond du dossier du Sofitel.

Lessons of the Crisis

Paul Krugman teaches.

Saturday, December 10, 2011

A New Europe?

Did the crisis summit change anything? The Eurozone countries agreed to cut their deficits--a pledge of course already made and often violated before the crisis--and consented to a fairly vague enforcement mechanism if they fail. Pledging to cut deficits is one thing, actually doing it is another, so the sighs of relief that were heard on Friday can be counted on to give way to howls of protest when new austerity measures are introduced.

As David Cameron, who was not party to this agreement, has already proved in the UK, austerity can be counted on to lead to economic contraction, which will compound the deficit and debt problems. The Eurozone has effectively imposed on itself an equivalent to the gold standard, budgetary fetters to replace the "golden fetters" that were a source of deflationary pressures in the past.

Why make this choice? To persuade the European Central Bank that it can safely purchase the debt of distressed sovereigns without perpetuating the moral hazard that got them into distress. So the ECB will do just enough--it is hoped--to prevent major defaults or bank failures but not enough to expand the money supply, induce the mild inflation that might help to alleviate the burden of debt, or stimulate new demand and hence new investment. It will be assisted by the IMF, which is to receive 200 billion euros from EU member states, though where they will come up with the money remains mysterious, as does the backing for the new emergency fund that the Eurozone is supposed to set on foot next year. The "leveraged EFSF" was laughed out of existence by the markets; it's not yet certain that the new emergency financing arrangements will meet with any better fate. Meanwhile, unemployment will rise, hard lessons will be learned, and a chastised generation will never again experience the irrational exuberance that inflated the various European bubbles until they all burst. So goes the theory, at any rate.

The reality is likely to be complicated by politics a good deal messier than the already convoluted negotiations at the intergovernmental level. Because the real problems will begin when the heads of state and government unveil to their legislatures their plans for slashing budgets to meet the new requirements. Anti-Union sentiment, already on the rise across Europe, will inevitably increase. Nationalist passions will be unleashed. And President Sarkozy has already set a bad example in this regard by snubbing David Cameron in Brussels: he ostentatiously refused to shake the British Prime Minister's outstretched hand. Cameron was of course Mr. Unpopularity at Brussels for doing what British Euroskeptics have always done: he tried to drive a hard bargain. According to Sarkozy, Cameron proposed a compromise in which the Eurozone powers would have agreed to drop their insistence on a financial transactions tax, which the City of London detests. Sarkozy says that he and Merkel refused Perfidious Albion's unconscionable demands on principle. The principle was perhaps worth defending, but not if the cost is Britain's departure from the EU, which Wolfgang Münchau raised as a likely outcome of Friday's dealing.

Germany and France appear to be aiming for a new kind of European Union, a continental power with a federal government endowed with sweeping powers in at least the economic arena, if not across the board. But that cannot be achieved overnight, if at all. In the meantime the two conservative continental leaders think they have finessed the immediate crisis of the euro, done what they could to preserve their chances of re-election, and begun the process that will transform the Eurozone into an EU-bis, without the UK. I doubt that anyone sees clearly where this process ends, if it has any future at all. I have no confidence in the economic underpinnings of this deal, and its political contours, at best vague, will no doubt be battered into unrecognizability as the consequences of the economics explode in various ways across the continent.

Nothing was settled in Brussels, except perhaps the end of the European Union as we have known it for the past 20 years.

Eichengreen Is Right ...

... or at any rate I agree with him:
The collapse of the eurozone would, of course, be an economic and financial calamity. But that is precisely why the European Central Bank will overcome its reluctance and intervene in the Italian and Spanish bond markets, and why the Italian and Spanish governments will, in the end, use that breathing space to complete the reforms that the ECB requires as a quid pro quo.
To be sure, Europe will not be spared the pain of a recession. A botched bank-recapitalization plan and the cloud of uncertainty hanging over the euro mean that recession is already baked in. Moreover, the pro-growth reforms needed in countries like Italy will almost certainly make things worse before they make them better. The initial effect of reducing hiring and firing costs, for example, will be layoffs of redundant workers. But investors look ahead, so reforms that promise an eventual return to growth should reassure them.

Of course, O'Rourke is also right:



As many feared and most expected, the just-concluded European summit left much to be desired. Once again, Europe’s national leaders showed themselves to be in denial about what underlies the eurozone’s economic, banking, and sovereign-debt crises, and thus hopelessly unable to resolve them.
Durchwursteln: it sounds better in German. Europe will muddle through.

Friday, December 9, 2011

A Victory for France?

The Economist thinks France scored a victory in Brussels:

But especially for France, on the brink of losing its AAA credit rating and now the junior partner to Germany, this is a famous political victory. President Nicolas Sarkozy had long favoured the creation of a smaller, "core" euro zone, without the awkward British, Scandinavians and eastern Europeans that generally pursue more liberal, market-oriented policies. And he has wanted the core run on an inter-governmental basis, ie by leaders rather than by supranational European institutions. This would allow France, and Mr Sarkozy in particular, to maximise its impact.
Mr Sarkozy made substantial progress on both fronts. The president tried not to gloat when he emerged at 5am to explain that an agreement endorsed by all 27 members of the EU had proved impossible because of British obstruction. “You cannot have an opt-out and then ask to participate in all the discussion about the euro that you did not want to have, and which you also criticised,” declared the French president.
To which I am tempted to reply, "Another such victory and we are undone." This is, frankly, preposterous: all that Sarkozy has accomplished is to bind the Eurozone to constitutionally inscribed austerity. So Europe will embark on a lost decade, while the markets may--emphasize the conditional--choose not to precipitate the bad equilibrium for fear that this would at last provoke the ECB to act and wipe out the first intrepid speculators. If death by slow strangulation rather than a bullet in the back of the head is victory, then, indeed, France has won, and Germany too. "The Constitution is not a suicide pact," Justice Holmes famously said, but Merkel and Sarkozy have done their best to ensure that the Eurozone treaty is just that. Forgive them, Keynes, they know not what they do.

Environmental Regulation

In the wake of the Durban conference, Éloi Laurent offers two notes on Europe's success in regulating carbon emissions.

Sarkozy, the Police, and DSK

What did Sarkozy know about DSK's sexual habits? More than I did, no doubt, but even I had heard rumors before the arrest about clubs échangistes, soirées libertines, compromising photos, etc. And it seems that quite a few Socialists--including some, like the mayor of Sarcelles François Pupponi, who protested that the "Dominique" they knew could never have been involved in anything as sordid as the Sofitel affair--knew that the police knew, because Julien Dray had met with Bernard Squarcini, the head of les Renseignements Intérieurs, who had explicitly told him, and Dray allegedly informed Pupponi. And the omnipresent publicity consultancy Euro RSCG, now advising Hollande, seems to have been a key player in the contacts between DSK and Sarkozy's "Mr. Security," Alain Bauer (who eventually relayed the news of DSK's arrest from the Sofitel security chief to Sarkozy):
En mars, Dominique Strauss-Kahn a donné rendez-vous au Pavillon de la Reine, place des Vosges à Paris, à Alain Bauer.
Il est un intime de trente ans de Stéphane Fouks, le patron d'Euro RSCG. Il a participé, en 2007, à la réunion organisée par l'agence autour de Dominique Strauss-Kahn, avant son départ au Fonds monétaire international (FMI). Puis aux réunions de crise, en 2008, après sa liaison avec l'économiste hongroise, Piroska Nagy.
Alain Bauer est aussi devenu le "Monsieur Sécurité" très écouté du président de la République. Qu'importe. C'est lui que DSK veut interroger sur la fiabilité de son téléphone. "On me dit que les Blackberry ne sont pas sûrs ?" "Pas fiables du tout !, lui confirme Alain Bauer. Si tu veux être en sécurité, tu dois mettre une puce cryptée ici", explique-t-il en retournant le téléphone du patron du FMI, qui écoute et remercie.
All of this makes one wonder how DSK could ever have thought of running for president (he knew what they had on him) and how he could have behaved so recklessly even knowing what was bound to come out in the campaign. It's all quite revealing about the mores of la classe politique. Sarkozy knew, the PS knew, journalists knew, policemen knew, everyone who was anyone apparently knew that DSK was, in Sarkozy's words, "un obsédé sexuel." And yet the president pushed him for the IMF job, the PS would have nominated him as its candidate, and ... well, the possibilities are too grotesque to contemplate: un Parc aux cerfs moderne à l'Elysée among them. Perhaps the French could use some of that puritanism they're always mistakenly seeing in Americans.

Angela and Nicolas's Excellent Adventure

So, the dynamic duo have saved the euro yet again. Or have they? David Cameron is out, but no surprise there. The Brits--Tories especially--were never in, and they're not about to sign on now when the costs are clear and the benefits elusive. So, since a treaty change requires unity, the fallback is agreement by the Eurozone 17, which seems to be in hand. Mario Draghi says he's pleased, but he is still holding the purse strings tight. And his words yesterday were not very reassuring, as I noted in a previous post

Many analysts were stunned by what appeared to be Mr. Draghi’s turnaround, which they said would make it even more crucial for the European heads of state to forge a market-calming master plan at their summit meeting — as unlikely as such an outcome is starting to look.
“While Draghi had opened the door for more E.C.B. support last week, he closed it again today,” Carsten Brzeski, an economist at the Dutch bank ING, wrote in a note to clients. “According to Draghi, it was up to politicians to solve the debt crisis.”

Thursday, December 8, 2011

Merkozy a Bust

I expected this: Mario Draghi made his move today, even before the Eurosummit in Brussels announced its results, or lack thereof. He lowered the ECB's main interest rate and somewhat relaxed collateral requirements to allow distressed banks to borrow more easily, but he most emphatically did not do what Sarkozy undoubtedly hoped he would, namely, announce massive purchases of Italian government debt. In effect, he reiterated his stance that "solving the crisis is up to the politicians," who should not expect the central bank to bail them out. So the Sarkozy-Merkel plan is dead in the water even before it has hoisted its sails: there will be no strong wind from Frankfurt:

At a news conference, Mr. Draghi said he was “surprised” that comments he made last week were interpreted as a signal that the E.C.B. would buy more bonds if political leaders, who are meeting Thursday and Friday in Brussels, delivered tougher rules on budgetary discipline.

Klar, ja? What lies ahead? Most likely, slow or no growth, possibly bank failures, rising unemployment, and heightened political tensions everywhere. Plus growing nationalist animosities and rising power of extreme right-wing parties in several European countries.

Valls as Bridges

It's not every day that a defeated rival quickly moves to the center of the victor's presidential campaign, but that's what Manuel Valls has done in François Hollande's. Some say that he has put the official campaign manager, Pierre Moscovici, in the shade.

Now, Moscovici was a Strauss-Kahn backer, and Strauss-Kahn's publicist was an agency known as Euro RSCG, run by one Stéphane Fouks, who is a friend of Valls. So what we may be seeing here is a case of Valls becoming bridges (forgive the bad pun!). Euro RSCG had been preparing for years to run a presidential campaign. Then DSK got himself arrested, and all that work might have gone for naught had the boîte been unable to find a conduit to the candidate. Valls may have been the ideal bridge.

In any case, it's time for Fouks and company to start doing their magic, because the campaign has not been off to a fast start. And if yesterday's appearance by Hollande at the Alsthom factory was their work, they need to step up their game. The staging was almost the same as for Sarkozy's industrial visits, but Hollande doesn't have the jaw-jutting presence of the little guy going toe-to-toe with the tough worker. Shown in a white lab coat and hard hat yesterday on TV, he looked a bit like Mike Dukakis in his tank: not in his element. This is not the way to win back the working class.

Wednesday, December 7, 2011

Bayrou Announces

Le Monde reviews his career.

Trapped?

Has the PS been trapped by the "golden rule?" In order to meet Germany's demands, France must inscribe a balanced-budget amendment in its Constitution, and that requires approval by the Senate, now controlled by the left. Baroin made this point prefectly clear today. For Sarkozy, it might seem like a win-win situatiion: either the PS shares responsibility for this widely-disliked step, or the deal fails, France loses its AAA (which it will anyway), and the president can blame the PS for ... everything.

This is a moment for Hollande to show his stuff. Set conditions for cooperation. Demand concessions in return. Map out an alternative path forward. Will he rise to the challenge? Nothing is less certain. Boldness has never been his forte. But this is a test, and neither surrender nor reserve are options. He must take a stand on how the future of Europe and of France's role in Europe are to be defined.

Tuesday, December 6, 2011

Sex and the Civitas

Journalists in bed with politicians: it's an old story in France, even older than you might think.

La Fracture Sociale de retour

It's back: la fracture sociale that Chirac, with the aid of Emmanuel Todd, so effectively exploited to win the presidency in 1995 is back, worse than ever. Fully forty percent of the population no longer identifies with either the left or right, according to Le Monde. Diagnoses vary. Are these the laissés-pour-compte of globalization? The precariously employed? The "rural and peri-urban populations" denied the profits of European integration, which have gone to better-educated urbanites working in the non-tradable service sector?

To some extent, of course, these diagnoses overlap and reinforce each other. The question is what, if anything, can be done to remedy the situation. But for the parties the more immediate question is how to exploit the dilemma politically?

Golden Rules

Curiously, the French have adopted the term règle d'or for the balanced budget amendment that Sarkozy wants to inscribe in the Constitution and, together with Germany, extend to all of Europe:
Paris et Berlin ont annoncé parmi leurs propositions l'adoption d'une "règle d'or renforcée et harmonisée au niveau européen", que les pays de la zone euro s'engageraient àmettre en place pour rassurer les marchés et améliorer la gouvernance économique européenne.
The original golden rule is of course "Do unto others as you would have them do unto you." The fiscal golden rule seems to be rather to do unto yourself what you have already inflicted on the least fortunate among you.

But Le Monde notes that the German golden rule, the presumed model for the French, is less than meets the eye. It imposes a limit of 0.35% of GDP on the structural deficit but allows for "conjunctural variations":
"en cas de catastrophe naturelle ou de situation d'urgence exceptionnelles qui échappent au contrôle de l'Etat et compromettent considérablement les finances publiques, ces limites supérieures de l'emprunt peuvent être dépassées"
Despite the agreement in principle between Sarkozy and Merkel, a great many details remain to be specified regarding any trans-European golden rule, and in these matters, as always, the devil is in the details. National budgets are of course subject to all the vagaries of the business cycle. "Prediction is hard," Yogi Berra said, "especially about the future," and that is particularly true of budgetary matters. Structural deficits depend on the measures in place to finance entitlements, and these vary widely from country to country. The nature of the oversight to be applied--who will judge? what baseline assumptions will be used? how will long-term investments be charged against annual budgets? etc.--has yet to be worked out. And what exceptions will be allowed to accommodate the inevitable "conjunctural variations?"

Of course, in one sense, none of this matters. The only immediate question is whether the ECB will be satisfied by the signal of good intentions from France and Germany if accompanied by murmurs of support, or at any rate non-hostility, from other EU leaders. But in the medium term investors will have to be convinced that the rhetoric of "golden rules" is not mere eyewash or, worse, a return to "the gold standard albeit with a German accent" (I owe this phrase to Henry Farrell). The gold standard, you will recall, ensured the propagation of economic contraction from one nation to another in the 1930s: see Barry Eichengreen, Golden Fetters. The international golden rule seems destined to accomplish the same feat: ratcheting up contraction by forcing countries to rein in spending whenever economic activity decreases, ensuring a procyclical downward spiral of diminishing consumption, trade, employment, and prices.

If you read the Mundell paper on optimal currency areas to which I linked yesterday, you will see that one of the requirements is for fiscal transfers from prosperous to less prosperous regions to counter negative asymmetrical demand shocks. This is precisely what an EU-wide golden rule will prevent. Hence a measure designed to save the euro in the short run may prove to be its undoing in the long run, unless some other form of adjustment is put in place. Ultimately, what Sarkozy, if not Merkel, seems to have in mind is a fiscal union at the federal level able to collect taxes from all member states and make transfers as appropriate. But there is no guarantee that the process Sarkozy and Merkel have launched will reach that goal, whereas it seems much more likely that a golden rule will be enforced as a short-term fix. By adopting this expedient, which may alleviate the pressure for deeper structural change, the long-term solution may become even more elusive than it already is.

Peter Hall on the Global Crisis

Another of The Current Moment's series of interviews on the global economic crisis, this one with Peter Hall. (Peter is responding to the same set of questions to which I gave my responses earlier.) And for Wolfgang Munchau's views on the Sarkozy-Merkel agreement discussed in my previous post, see here.

Monday, December 5, 2011

A Few Thoughts about the Eurocrisis

So what do Sarkozy and Merkel think they accomplished with the agreement reached at today's Élysée lunch to press for a new European treaty? Markets are looking for a "wall of cash" large enough to prevent speculation against banks holding the debt of distressed European sovereigns. Nothing in today's agreement about strict budgetary rules and stringent oversight provides such a source of cash, nor would such rules have prevented the debt problems of Spain and Italy, both of which were running primary surpluses (tax revenues exceeded government expenditures net of interest payments) in 2008.

What seems most likely is that the agreement by the leaders of the two largest economies in the Eurozone was intended as a signal to the ECB that they are serious about deficit reduction. Presumably, the ECB, perhaps in conjunction with the IMF, will take this assurance as reason enough to stifle its qualms about market intervention, inflationary expectations, and moral hazard in order to do whatever is required to put a ceiling on Italian borrowing costs, Italy being Europe's sickest sick man at the moment. Meanwhile, the Italian government under Mario Monti has put in place an austerity program sufficiently draconian to have reduced one Italian minister to tears, literally.

So, now we wait to see if the ECB will in fact respond to this signal. Many commentators have remarked on the "undemocratic" nature of the reforms imposed first on Greece and now on Italy. By this they presumably mean that Greek and Italian voters would never have punished themselves so severely in order to save their creditors. But if we look at the European demos writ large, it is by no means clear that a majority of voters would disapprove of the punishments being inflicted on those whom the German tabloid Bild refers to as Schulden-Sünder, or debt-sinners. Angela Merkel has dragged her feet as she has because she is afraid of being voted out of office by German taxpayers opposed to footing the bill for what they regard as southern European profligacy. Although opposition in France is more muted, I have no doubt that it is virulent: one has only to listen to the speeches of Marine Le Pen and Jean-Luc Mélenchon to divine the hostility to the EU in a substantial segment of the French electorate.

The proposed treaty change will respond to the charge that the Franco-German approach to the eurocrisis has been undemocratic, but the outcome of a treaty-reform process is by no means clear. The proposal to be put to the voters is apparently intended to appease those dismayed by free-spending governments, but as we know from past European treaty ratification episodes, the actual content of constitutional amendments matters far less than their symbolic import. Nationalists everywhere will seize this opportunity once again to rebuke Europe's would-be constitution-builders.

And this time the surrender of sovereignty is at the heart of the measure: automatic sanctions for SGP violations mean loss of budgetary autonomy. The technical requirements for what economists call an "optimal currency area" will likely carry little weight with many voters frightened by the way in which past commitments to "Europe" brought consequences no one was prepared to deal with. The "democratic" response to the Eurocrisis may prove to be more damaging than the "technocratic" response. In fact, it is not hard to envision a new round of ratification debates unleashing more anti-Europe vitriol than any previous consultation, absent a quicker end to the debt/banking/currency crisis than anyone would be rash enough to predict.

In short, I fear that Sarkozy and Merkel, with this latest temporizing measure, may well precipitate a constitutional crisis even more serious than the economic predicament from which they are trying to extricate themselves. It is very difficult to feel optimistic for Europe on this fifth of December.

Sarko-Merkel Summit--They Want a New EU Treaty

Sarkozy défend l'idée d'un "nouveau traité" européen

Nicolas Sarkozy, lors d'une conférence de presse commune avec Angela Merkel, s'est prononcé en faveur d'un "nouveau traité" de l'Union européenne. Ce texte s'appliquerait à l'ensemble des pays de l'Union, ou, faute d'accord, aux 17 membres de la zone euro. Paris et Berlin souhaitent des sanctions automatiques en cas de non-respect de la règle du déficit public inférieur à 3 % du PIB pour les pays de la zone euro et l'adoption par ces pays d'une règle d'or d'équilibre budgétaire.

As expected, Sarkozy and Merkel are calling tor a revision of the EU treaties. But what is the payoff? Sarkozy's concession on sovereignty is supposed to be met with an agreement by Merkel to ease her opposition to either ECB intervention or issuance of eurobonds* to resolve the euro crisis. The automatic sanctions for SGP violations are intended to provide Merkel with cover for this indispensable with the German electorate, which believes that it will bear the burden of the bailout. Further details are awaited.

*ADDENDUM: The two leaders have now ruled out the eurobond solution (unsurprisingly, since the CSU, Merkel's coalition partner, threatened to break the coalition if she gave in on this point).

"Les eurobonds ne sont en aucun cas une solution à la crise, a dit M. Sarkozy. Quelle drôle d'idée que celle qui consisterait à mutualsier la dette : la France et l'Allemagne contribuerait à payer la dette des autres sans pouvoir contrôler la dette des autees."

Greenpeace Claims to Have Penetrated French Nuclear Site

Story here.

Sunday, December 4, 2011

Sarkozy's Secret Weapon

Éric Besson, the minister of industry, used to be a national secretary of the Socialist Party and knows Hollande intimately. As Frédéric Martel details in this lengthy piece, he will provide the president with invaluable insight into the thinking and strategy of his former boss Hollande as well as the psychology of the people around him. Raphaelle Bacqué picks up on the same theme, noting that Hollande will rely on Julien Dray and Manuel Valls for similar insight into Sarkozy.

Saturday, December 3, 2011

Cross-Cultural Racial Attitudes

France's runaway hit movie of the season is Intouchables, which features a wealthy white quadriplegic (François Cluzet) who hires a black man from the projects (Omar Sy) as his helper. Arun Kapil notes that the film, which has attracted huge audiences in France, has also been roundly panned by American reviewers:

Maybe I’ve lived in France too long, or have just come to view black-white racial dynamics differently from the way they are outre-Atlantique. Variety’s critic simply hated the pic. Money quote

Though never known for their subtlety, French co-helmers/scripters Eric Toledano and Olivier Nakache have never delivered a film as offensive as “Untouchable,” which flings about the kind of Uncle Tom racism one hopes has permanently exited American screens. The Weinstein Co., which has bought remake rights, will need to commission a massive rewrite to make palatable this cringe-worthy comedy about a rich, white quadriplegic hiring a black man from the projects to be his caretaker, exposing him to “culture” while learning to loosen up. Sadly, this claptrap will do boffo Euro biz.
Ouch! The critic at Hollywood Reporter was less severe, though only somewhat, praising the performances of Sy and Cluzet but calling the film “a shamelessly manipulative French crowd pleaser.” Aïe! Looks like we have a transatlantic cultural clash here. The Variety review mentions the 1980s Eddie Murphy-Dan Ackroyd hit ‘Trading Places’. Now that was a funny movie!
It's never easy to grasp the subtleties of intrasocial ethnic relations across national boundaries. I haven't seen Intouchables myself, but I have been watching the French TV sitcom Fortunes, which follows the hijinks of a group of young people of various ethnic backgrounds: Muslims, Gypsies, Portuguese, Chinese. A young Maghrebi real-estate broker married to a Portuguese woman dreams of making the big score and getting fabulously rich, but his schemes are frequently undone by his clever Chinese competitor, etc. You get the picture. Everyone gets along easily (except for the Chinese character) in a world in which Français de souche figure mainly as backdrops or comic relief. It's interesting to see how writers turn live social tensions into comic fodder, comedy being one of the (important) byways of ethnic integration.