Monday, November 7, 2011

Rigueur by any other name ...

The Élysée doesn't like to use the word rigueur, but François Fillon, a dour man in the best of times, did not shrink from calling the new plan "le plus rigoureux" since 1945. He spoke repeatedly of the "effort" and "sacrifice" that would be demanded of the French. But actually it didn't sound all that rigorous: the salade niçoise you eat for lunch will be taxed at 7% rather than 5.5; the renovated bathroom will cost 3,042 euros instead of 3,000 (according to France2); the RSA will be reduced (an unkind cut, that) apologies, my mistake; dividends will be taxed a bit more; etc. It wasn't clear that France was actually sacrificing so much as making a show of sacrifice, to impress the ratings agencies.

This matters, of course, but does it matter quite as much as Fillon thinks? I think not. What really counts is the spread on Italian bonds, which rose today, increasing the pressure on French banks. Jiggering the budget has its uses, but what the market really wants is some sign of European coordination sufficient to enlist foreign investment. A few extra centimes on the jambon-beurre isn't going to cut the mustard (hold that culinary metaphor!).

Meanwhile, Hollande, interviewed on France2's JT 20h, clearly rejected Eva Joly's ultimatum and said he would support the EPR at Flamanville. First hurdle cleared on the way to becoming presidential.


Mitch Guthman said...


I agree with this analysis, although I think that what's really missing is what Fillon proposes to do about the structural problems of the eurozone and about controlling the recklessness of the banks.

Truthfully, I think everybody understands perfectly well that a large part of the current economic crisis was caused by (1) the failure to implement reform to the banking sector to stop them from continually trying to drive the world economy off a cliff and (2) the euro itself. All of which has been horribly compounded by the ludicrous doctrine of expansionary austerity.

The problem is that nobody wants to be the first to say that the only realistic solutions all involve the managed breakup of the euro and curtailing the power of Davos Man. And, above all, to immediately adopt some expansionary policies to get Europe working again. Unfortunately, reining in out of control bankers and blasphemy towards the confidence fairy are unthinkable since they are apparently punishable by excommunication from the world of the Davos Men.

FrédéricLN said...

And even: "Ces mesures ne touchent pas les minima sociaux (RSA, minimum vieillesse, allocation adulte handicapé..)".

Kirk said...

Everything I've read and heard said that the RSA will not be affected. See this article in Le Monde:

As for the rest, it's true that the measures aren't very harsh. The small rise in the VAT certainly won't be be the "travail au noir" apocalypse that some lobbies are decrying.

FrédéricLN said...

Re Flamanville : how to evaluate the probability of a major nuclear failure (meltdown)? Re seldom events, the most common way to evaluate it is to count occurrences in the long term. Here we have 3 major failures (TMI, Chernobyl, Fukushima) in 14000 years of nuclear reactor function, so p=2.1 o/ooo per year.

For 58 reactors (French situation), the probability to have one major failure in the forthcoming year should be evaluated at (58 times more) : 1.2%.

It's fair to consider that present French plants are safer than many others, due to their common design and, therefore, a better feed-back from experience (as opposed to the US individual call for tenders for each new plant in the 80's).

How safer ? Should the probability be estimated at 1.0% ? 0.8% ? even 0.6% (twice safer as the competitors, that would be great!) ?

Anyway, the same optimistic estimate cannot be applied to Flamanville, a prototype that raises many new issues, as already shown by the building delays.

Granted, much has already been spent on this project, and it's a sunk cost. Isn't it now more relevant to go on and assume the remaining costs?

On the other hand, the global commercial perspectives for "EPR" are very low. The global demand is for smaller reactors, on the same scale as the French previous generations. Perseverare diabolicum?

So, I would hardly consider the right option as self-obvious, and I'm at least happy that Les Verts' obsession for the topic re-opens the debate!