Friday, January 16, 2009

Eurozone Interest-Rate Spreads

Jean Quatremer calls attention to increasing interest-rate spreads on Eurozone sovereign debt (with the German 10-year bond as a benchmark). France is paying a small risk premium of 38 basis points relative to Germany but has improved its position relative to the Eurozone average (see graph). More surprisingly, so has Spain (which has suffered from a severe housing bubble). Greece and Italy are in the biggest trouble in the eyes of bond traders. Quatremer wonders whether the euro will survive the pressure. At this point I think the fears are exaggerated, but let's see what the fallout from the latest round of US bank troubles will be.


Michel Rocard has announced his retirement from politics at the age of 78. I have had some critical things to say about some of his rather bizarre recent statements, but his career as a whole deserves more serious consideration, which I don't have time to give it right now. In the meantime, there is this from Pierre Moscovici, one of the few Socialists to acknowledge Rocard's contribution to the evolution of the Left. It's worth a look, though I think it's time to get beyond the conventional dichotomy between virtuousness and realism: to set les sulfureux machiavélique--Defferre, Mitterrand--against les anges spirituels mais conspués--Mendès France, Rocard--is to indulge in a narrative strategy that reduces the art of high politics to bathetic melodrama.


Yesterday, à propos the wildcat strike at la Gare Saint-Lazare, I alluded to a difference of opinion between the CGT and SUD-Rail. At Telos today there's an interesting article by Guy Groux on the relative support for various unions in the recent élections prudhommales. Perhaps the most significant figure is the abstention rate: close to 75%. So it can't be said that any union is doing well. But Groux's main point is that there is no evidence that more "militant" labor tendencies such as SUD are gaining noticeable new support despite the crisis and discontent with the Sarkozy regime.

Growth Revised Downward

When Christine Lagarde boasted a while ago that France was doing better than its neighbors because its economy was estimated to have shrunk only 0.7% in the 4th quarter of 2008, I said that it was only a matter of time before the estimate would be revised downward. Now it has been, by 0.4 points, to -1.1%. Growth for 2008 overall now stands at just 0.7%. And there is worse to come, as the adjacent graph of industrial capacity utilization shows.