Wednesday, July 10, 2013

Andrew Watt Blasts French Investment Plan

Second, the program is laughably small. Details are vague, but it appears the program is to be spread over “a decade”. Makes 1.2 bn euro a year. That is less than 0.06% of annual GDP. S’il vous plait. Soyons serieux!
Third, and perhaps most dammingly as far as the evaluation of EU economic governance is concerned, the program is not to start until 2016. This is because of the government’s commitment under EU rules to reduce the budget deficit below 3% by 2015. As Prime Minister Ayrault phrases it “Investment and budget responsibility go together”. This is Orwellian in its linguistic reversal of fact and logic and monumental in its economic stupidity. France’s economy is in recession. Unemployment at record levels. Interest-rates are at historic lows. Monetary policy is constrained. The situation is crying out for government to borrow to invest. Instead the French government’s commitment to European fiscal rules, which do not properly distinguish between current and capital spending, are forcing it to delay the program until 2016, when the deficit will be smaller.

Montebourg for Fracking

It's an interesting political sequence. First, Delphine Batho is ousted as environment minister for calling the government's budget "bad." Batho claims she has been done in by pro-fracking interests. Ayrault denies this and points to the anti-fracking law. But then Arnaud Montebourg goes before the Economic Affairs Committee and testifies that France needs to explore for shale gas and proposes a public entity to do it. For once, I'm with Arnaud. Note that it was announced yesterday that French electricity prices will rise, making the development of new energy sources even more urgent.

Oh, and in case you had any doubts about Montebourg's ambitions, see the egregious column by the unspeakable Maureen Dowd, who is milking her vacation in France for a couple of columns, each as uninformed as the next. Here she profiles Montebourg and predictably swoons for his good looks:
I am sitting across from Arnaud Montebourg, a free-market villain and romantic hero, the pol selected by Frenchwomen in a new French Elle magazine poll as a top candidate for having “a vacation love affair.”
Right. Count on MoDo to flirt with her profilees.

Europe is the Sick Man of the World

According to IMF growth forecasts: