An American observer comments on French politics.
Art have you seen Dowds article in the NYT today? http://www.nytimes.com/2011/06/01/opinion/01dowd.html?emc=eta1I didnt see the cover of that edition of the Liberation, what was the outcry, if any?
Erin, I saw a few reactions on Facebook, mostly from men who felt wronged by over-generalization.
The graphs in Martin Wolf's column are unusually unclear today - not sure what these numbers are; billions of euro?In any case on complication in the narrative is that Ireland, which seems in the most difficulty, actually has "the highest trade surplus relative to GDP in the EU":http://www.tradingeconomics.com/ireland/current-accountDomestic demand is so weak it hasn't done much for growth or employment. Indeed this explains the current account:"Ireland's trade surplus rose 3 per cent in March as imports tumbled, according to new data from the Central Statistics Office showed today.Seasonally adjusted imports were down 14 per cent year-on-year to €3.65 billion while as exports fell 6 per cent to almost €7.6 billion during the same period."http://www.irishtimes.com/newspaper/breaking/2011/0520/breaking21.htmlStill this complicates Wolf's account (as well as factually correcting it since he refers to an Irish current account deficit).
Paul Krugman's post is very simple, very clear and very right. That's nothing new (many of us wrote that more than one year ago), but well, the figures highlight the facts quite accurately.Such things happen usually in war times : the State is strong enough then, within his borders, to order its money / currency to be taken by suppliers (domestic suppliers… and allies) even if everybody know the money will be of no worth in the long run.Moreover - if there is no economic reason to trust the State, democracy is in great danger. Usually, you need a military power to act as in war times, ordering factories, peasants, and so on, to work even if they do not agree with the way they are paid: that's what many Greeks are requiring, according to polls; that's what Spain has experimented many times since Great Britain broke its XVIth century wealth.Let's take another perspective. The US administration pays its spendings even a simplest way: by ordering the FED to declare this money exists. Shortcut: don't feed commercial banks, after all.The euro as well as the dollar should break down.But what would come then? They have a duopolistic position on the "market of currencies". China, India and the oil extracting states haven't decided, so far, to declare their national currencies as international (fully convertible) currencies. They still prefer to work with our rotten dollars and euros. That's a huge kind of poker game. As long as these currencies are accepted, they should use it to buy as much capital as they can (land, planes, formerly-State-owned buildings or companies, even the Paris Saint Germain soccer club!), because once currencies won't work any more, the one with the highest stack of tangible capital - and with armies to protect it - will have the safest position.Only one thing is sure: it cannot last for ever. Exactly like Madoff's Ponzi - but it lasted some decades. France (State, local authorities, social security, pensions systems and other public-owned services) spend since 31 years, as an average, 105 when they earn 100. It's not a big difference, but it cannot last for ever. Some day, you have to admit you'll spend only 100 (or 95, because reduction will have recessive effects) - and tell your lenders to mourn they money.
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