Sunday, August 24, 2014


I watched Montebourg and Hamon on TV tonight at Montebourg's Fête de la Rose. Both seemed slightly inebriated and full of swagger. They're not trying to conceal the fact that they've thrown a dagger directly at the president. And Valls' office says that they've crossed "une ligne jaune." So, de deux choses l'une: tomorrow they will be fired, and the government will be plunged into a deep crisis, or they will be let off with a reprimand, and Hollande will lose whatever semblance of authority he has left. Either way, Hollande loses, and Montebourg probably steps out ahead of Valls in the polls as the most likely to succeed.

What happens between now and the next election is anybody's guess. A full-blown fronde in the Socialist ranks could make it difficult for Hollande to enact the revised Responsibility Pact or do much of anything else. A modus vivendi between the frondeurs and the Hollande-Valls axis is difficult to envision. If Montebourg goes, who will replace him? Moscovici could be recalled from disgrace; Sapin or Rebsamen could be tapped (both have been mentioned for the job in the past); or Hollande might strike a bargain with Aubry, who may retain enough credibility with the party's left wing to calm things down. But at the moment things are looking quite bleak for Hollande.

Hollande Down Again in Polls, Valls Falling Rapidly As Well

Quoting poll results is not the most thrilling duty of the blogger, but every once in a while I feel it necessary to record for posterity just how bad things have gotten for François Hollande:

Deux records à noter dans le baromètre mensuel du JDD. Et non des moindres. L'enquête menée par l'Ifop pour le quotidien dominical place François Hollande à son plus bas historique. Quant à son Premier ministre, il enregistre la plus forte chute de popularité depuis sa nomination à Matignon.
Le président de la République bat ainsi son propre record d'impopularité. Il perd un point, à 17 %, tandis que le Premier ministre voit sa cote dégringoler de 9 points pour s'établir à 36 %,selon le baromètre Ifop pour le Journal du dimanch

Hamon Joins Montebourg in "Near-Fronde"

"Arnaud et moi ne sommes pas loin des frondeurs." So reads the headline in Le Monde. Hollande, as is his wont, is trying to minimize the difference between him and his ministers: everybody wants growth, he says in essence, and the entire government is trying to convince our European partners of its importance. Well, of course, if you put it that way ...

The disagreement, of course, is over how to get that desired growth, how much of existing policy dogma can be jettisoned to achieve it, and exactly what screws can be put to Germany to make it happen. Hollande may be right that there's not really much difference between him and the dynamic duo when it comes to actually taking risks rather than flapping their jaws. Montebourg and Hamon, the two most likely présidentiables of what remains of the Socialist Party's left wing, are doing what anyone would expect them to do to stake out their positions in advanced of 2017. The problem is that 2017 remains--if my clock is accurate--still some time in the future, and meanwhile the country has to be governed.

There is somewhere in Tocqueville a remark to the effect that every presidential election plunges a democratic polity into such a frenzy that one must take care to ensure that elections don't happen too often, lest the country fall into the grip of a permanent madness. It may be that the reduction of the presidential term from 7 to 5 years was too much for France, since the electoral frenzy seems to have become more or less permanent. Hollande's weakness exacerbates the phenomenon. It would be worse if he hadn't himself moved to the right since the 2011 primaries, when Valls was the candidate of the party's right wing and Hollande appeared to his left. But now you couldn't slip a cigarette paper between Hollande and Valls, to judge by their public statements.

Is there anything of substance beneath this public positioning, however? Hamon and Montebourg converge on the "left" rhetorical holding position, while Valls and Hollande converge on the symmetrical "right" message. In both instances, however, there is more verbiage than analysis. Does either camp offer a plausible strategy for building either domestic or foreign support for its position?

Krugman and Wren-Lewis on Draghi at Jackson Hole

The bottom line:

The point is that even if Draghi is, as I believe he is, a good man and a good economist who gets the situation, the combination of the euro’s structure and the intransigence of the austerians means that the situation remains very grim.
Wren-Lewis agrees, sort of, with a key caveat:

Should we celebrate the fact that Draghi is now changing the ECB’s tune, and calling for fiscal expansion? The answer is of course yes, because it may begin to break the hold of balanced-budget fundamentalism on the rest of the policy making elite in the Eurozone. However we also need to recognise its limitations and dangers. As the third sentence of the quote above indicates, Draghi is only talking about flexibility within the Stability and Growth Pact rules, and these rules are the big problem.
Emphasis added.

And throw another Nobel laureate into the mix:

With unemployment at near-record heights in many depressed European economies, it is “totally indefensible” to argue that stimulus policies are not needed to get the jobless back to work, according to Peter Diamond, the MIT professor who won his Nobel prize in economics in 2010 for his work on labour-market mismatch. Professor Diamond’s work has been extremely influential in shaping the approach of the European Commission and many EU governments to tackling unemployment, which focuses on “active labour-market policies”, such as job retraining and other help in matching workers to vacancies. But such is the shortfall of demand in Europe, and to a lesser extent the United States, that there is plenty of labour-market slack that better matching of workers to jobs cannot hope to reduce.