Wednesday, May 16, 2012

Greece: The End in Sight?

So many people, Mario Draghi not least among them, have begun talking about a Greek exit from the euro that the prophecy is becoming self-fulfilling. There has been a slow run on Greek banks for some time now, as Greek savers transferred a part of their savings to other European countries, but the run has accelerated in recent days and has now reached the unsustainable level of 800 million euros per day. The euro fell to $1.27 against the dollar.

Meanwhile, as Bernard pointed out in comments, France conducted a successful bond issue, selling 8 billion euro at a lower interest rate than the last sale, thus giving the lie to Sarkozy's prediction that markets would tank if Hollande were elected. Unfortunately, Bernard's interpretation, that this successful bond sale means that I am exaggerating the severity of the euro crisis, is wrong. What it signifies is that investors are shifting funds to the stronger sovereigns, such as Germany and France. It is neither a vote of confidence in the Hollande government nor a vote of confidence in the eurozone. It's just a sign of flight to the deepest pockets as Greek destitution looms.

Merkel and Hollande made some comforting noises about rekindling growth in Greece and holding the eurozone together, but behind the scenes the talk grows darker by the day. I don't know about Hollande, but I'm fairly sure that the Germans have decided that Greece is hopeless and have chosen to make their stand in Spain. For Greece, whatever comes will come. It will be impossibly hard on the Greeks either way, stay or go, and the political system may not hold. Anything is possible, and the election and its aftermath showed that impending doom has not concentrated the mind, as Dr. Johnson believed it would, but has rather unleashed the wildest fantasies and the most uncontrollable passions.

History did not end in 1989. Far from it.

On Defense Policy

Continuity for Hollande, criticism from his left.

Reading Tea Leaves

So what does it all mean? A proponent of the "Non" in 2005 as foreign minister? A glib baratineur at Economy and Finance, arguably the most important post in this government? A woman of color from l'outre-mer at Justice? An advocate of "de-globalization" at Redressement productif, which ought to mean finding a way to ensure French competitiveness in the global arena but under Montebourg might well mean finding a way to keep failing businesses on life support. A Green, Duflot, at "Equality of Territories," whatever that is, and a specialist in public finance, Nicole Bricq, at ecology. Sapin, supposedly so close to Hollande, way down the list at labor, when he had been touted for Economy and Finance.

It's not necessarily a good idea to try to read policy choices from personnel choices, but it's not necessarily a bad idea either. The parity promise was kept. The Greens got a bone, the Front de Gauche did not. Moscovici's nomination provides a conduit from DSK, persona non grata but still probably the best economic head on the left, to the government. Hollande owed Fabius nothing but paid him handsomely anyway, a choice I don't understand. It will take some time to absorb all this. For the moment, I'm not thrilled. I would have preferred to see a frank recognition that the euro crisis is the paramount issue of the day. I don't see that priority reflected in the composition of the government.

Complete List

Affaires étrangères : Laurent Fabius
Education : Vincent Peillon
Justice : Christiane Taubira
Economie Finances: Pierre Moscovici
Affaires sociales et Santé : Marisol Touraine
Egalité des territoires : Cécile Duflot
Intérieur : Manuel Valls
Ecologie : Nicole Bricq
Redressement productif : Arnaud Montebourg
Travail : Michel Sapin
Défense : Jean-Yves Le Drian
Culture et communication : Aurélie Fillippetti
Enseignement supérieur : Geneviève Fioraso 
Droits des femmes et porte-parole du gouvernementr : Najat Vallaud Belkacem
Agriculture : Stéphane Le Foll
Réforme de l'Etat et décentralisation : Marylise Lebranchu
Outre-Mer : Victorin Lurel

Délégué Sports, jeunesse : Valérie Fourneyron
Délégué Budget : Jérôme Cahuzac
Délégué Réussite éducative : Georges Pau-Langevin
Délégué Relation avec le Parlement : Alain Vidalies
Délégué à la Justice : Delphine Batho
Délégué Affaires européennes: Cazeneuve
Délégué Personnes agées : Bernard Delaunay
Délégué Economie sociale : Benoît Hamon
Délégué Famille : Dominique Bertinotti
Délégué Personnes handicapées : Marie-Arlette Carlotti
Délégué Développement : Pascal Canfin
Délégué Français de l'étranger : Yamina Benguigui
Délégué Transports et économie maritime : Frédéric Cuviller
Délégué PME et innovation : Fleur Pellerin
Délégué Anciens combattants : Kader Arif

A Government!

Les ministres du premier gouvernement de Jean-Marc Ayrault ont été nommés : Laurent Fabius aux affaires étrangères, Pierre Moscovici à l'économie et aux finances, Vincent Peillon à l'éducation, Cécile Duflot à l'égalité des territoires et au logement, Arnaud Montebourg au redressement productif. 

Surprises galore!

Ayrault's First Major Problem

Via Arun Kapil on FB and Bloomberg News:

When spoken, his family name is colloquial Arabic in many countries for the third-person singular possessive form of the male sex organ.

The PS and Karachigate

Mediapart has another revelation: the Socialists knew about financial irregularities in the sale of submarines to Pakistan, and they knew that the kickbacks had been used to finance the Balladur campaign. But they chose to sit on that knowledge rather than blow up the political system by transmitting the information to an investigating magistrate. It will be interesting to hear their reasons. To be sure, they were cohabiting at the time with Jacques Chirac, Balladur had used the money to try to defeat Chirac, and Jospin no doubt thought it might ease his relations with the president to transmit this bombshell information to him and let him decide how to use it. Assuming he didn't already know. Fascinating story.

Aubry Out

Martine Aubry will not join the new government. She makes it pretty clear that she's miffed:
"Nous avons discuté de cela lundi avec François Hollande. Il m'a dit qu'il avait fait le choix de Jean-Marc Ayrault. Nous sommes convenus que, dans cette configuration, ma présence au gouvernement n'aurait pas de sens."
She describes the choice of Ayrault as both "a political choice" and one that is perfectly comprehensible given Ayrault's closeness to Hollande. So what are we supposed to infer from this? That the "political choice" of the party's candidate is such that the party's leader cannot envision herself as part of his government? Or that Martine is a prima donna who, having already served as no. 2 in Jospin's government, as she reminds the interviewer, will not settle for anything less than no. 1? Neither interpretation is very flattering to Aubry.

So Hollande will have to build his own base of support without any help from the leader of his party. He seems to have chosen his course for accomplishing that goal: he will demonstrate his modesty, eschew the monarchical trappings of the presidency, and reach out to ordinary people. The symbolism is good for now: the press is commenting abundantly on the modesty, sobriety, and seriousness of the new president and contrasting these qualities with the grandiosity, pugnacity, and erratic behavior of his predecessor. But a general needs to be able to keep his troops in line, and Aubry on day two already seems to have chosen her own drummer and headed off in her own direction.