Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
This Invisible Tech Stock Threatens Amazon with 800,000+ Online Stores - 21st Nov 19
Crude Oil Price Begins To Move Lower - 21st Nov 19
Cracks Spread in the Precious Metals Bullion Banks’ Price Management System - 21st Nov 19
Why Record-High Stock Prices Mean You Should Buy More - 20th Nov 19
This Invisible Company Powers Almost the Entire Finance Industry - 20th Nov 19
Zig-Zagging Gold Is Not Necessarily Bearish Gold - 20th Nov 19
Legal Status of Cannabis Seeds in the UK - 20th Nov 19
The Next Gold Rush Could Be About To Happen Here - 20th Nov 19
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

France And The Long-Gone Thatcher Moment

Politics / France Sep 02, 2014 - 08:25 AM GMT

By: Andrew_McKillop


More Failed Remedies
Writing for Saxo Bank, 1 September, Steen Jakobson said “France needs a Thatcher moment, with a new leader brave enough to get elected on a mandate for change”. He also noted that Francois Hollande is the most unpopular president since the start of opinion polling on French presidents in the 1950s but did not say that former president Nicolas Sarkozy and his riotously unsuccessful “liberal reform program” of 2007-2012 also set out “do a Thatcher moment”.Sarkozy paid homage to Thatcher but also called it a Gerhard Schroeder and Tony Blair moment due to these supposed social democrats doing exactly the same thing.

With the same results, faster in the British case and slower in Germany. Deindustrialise, gouge up house prices, keep taxes high to feed big government, and reward the crony capitalists close to power.

Jakobson was celebrating the removal from office of Arnaud Montebourg and his quixotic attempts at “reindustrialising France” on the back of decades of de-industrialisation. Sarkozy's also-quixotic attempts to do exactly the same thing are well documented. The only difference was political style, and the non-results were the same.

Jakobson claimed that France needs a leader brave enough to tear down the political system that generates failed macro-solutions and policies, which we can call that the Montebourg model, rather than failed micro-scale policies, the Sarkozy model. Jakobson said France is “an elitist society with too many incentives for bad behaviour and disincentives for initiative, innovation and hard work”. Apart from Montebourg regularly cranking out exactly that theme, it was also the theme of possibly dozens of speeches by Sarkozy, so many it is impossible to count them all.

When it comes to defining “bad behavior” that is firstly political not economic. While Montebourg played to the left wing and slammed the wealthy classes, Sarkozy was also a pastmaster - at slamming everybody. On multiple occasions, in his speaking style called “tonitruant” or semi-hysterical, he would inveigle and lambast the entire French public for their bad behavior of not spending enough. Why didn't they get out there and spend? Despite not being able to offer themselves a presidential Airbus at 180 million euros like Sarkozy, they still had some leftover savings. Get moving!

When the talk shifted to “reindustrialising” France, Montebourg's examples did not exist but Sarkozy's examples of “good behavior” were usually farcical. His friend Bernard Tapie, for example, awarded 400 million euros by a dodgy arbitration panel headed by Sarkozy's Finance minister Christine Lagarde, had for decades shut down his industrial operations in France and outplaced them to China and elsewhere. Another of his friends, the billionaire Vincent Bollore, even outplaced the cigarette paper manufacturing activities of his OCB firm that had made his fortune – by manufacturing cigarette paper in postwar France! Under Sarkozy, Bollore pocketed impressive-sized government subsidies for ventures such as his strange oversized electric golf caddy that Bollore called the “Bluecar”. These micro-cars or buggies are almost invisible on French roads today, as you might expect. Where the money went is a mystery.

The Bottom Line is Crony Capitalism
Surprisingly perhaps, Jakobson said he thought Francois Hollande could or might be dumped before the end of his mandate in 2017 – and this is surprising because Hollande has cobbled together a surely and certainly “Thatcherite” economic team, headed by former Rothschild banker Emmanuel Macron. This will be French Crony Capitalism 2.0 but the big difference with Thatcher's era in the UK is simple – the pile of wealth to dissipate, fritter away and hand around to the crony capitalists clique close to power is thin on the ground today. In Thatcher's era, in the UK, there was residual wealth to throw around and waste – and North Sea oil was coming on fast. The bottom feeders loved it!

Starting from an early 1980s base it was also possible to gouge up UK real estate prices at a 15%-a-year clip and get away with it for a long time. Today that is no longer possible. The number of industries to destroy and outplace, today, is drastically smaller than in 1980. What else is there to do but crank up taxes and the national debt, watch unemployment rise and feed the crony capitalists?

Jakobson is right to say the national mood in France, today, is surly and anti-elite, anti-politician, and anti-reform when “reform” only means two things. Higher taxes and higher unemployment. French politicians, in a clumsy way, are getting a handle on that. They are no longer immune to public anger.

The so-called “Thatcher moment” in the UK was only spun out across a decade because of North Sea oil and the real estate boom. Neither of these wealth crutches are available to the France of today.
Another big difference is that “liberalisation” of the banking and finance sector, which Thatcher promoted through her reign also happened in France. It also has its bad banks, though their massive liabilities are outshone in a big way by those of Lloyds BG, Bradford & Bingley, RBS and HBOS.

Running that trick a second time around – of “liberalising” the finance sector and letting it run riot – is not possible today. We already have the crony banks. Are we supposed to “invent” them again?

Jakobson tempts fate by saying that “with or without Hollande, France just doesn’t seem ready to change yet” He then actually says in black and white that France “needs a deep recession and even a depression before we see real change”. This is the classic invitation to the Flash Mob, which in France unlike the UK is waiting in the wings and getting ready to strike. Revolution is in the air.

France Invented Liberal Economics
The facts are simple. Adam Smith was party to the “insights” of Francois Quesnay and his disciple Samuel Dupont in the dying years of Louis XVI's court. Quesnay cobbled the one-liner “laisser aller – laisser faire” because, very simply, the Revolution was coming. There was nothing to be done but go on rewarding the greedy crony capitalists huddled close to the royal court and let them sign their own death warrants, as well as those of Louis XVI and his comfort lady Marie Antoinette.

Quesnay was pessimist and misanthropic, like Mrs Thatcher. Unlike her however but like Adam Smith, Quesnay, as a “Physiocrat” said that all service sector activity and occupations are parasitic. Only the output of food, minerals and manufactured goods produces wealth. His famous “Economic table” purported to show this claimed fact.

Interestingly enough a large number of French historians say that Quesnay's special focus on the role of farmers, fishermen and food producers was because Quesnay believed they had the largest potential role in triggering a revolution and bringing down the “liberal” house of cards. Quesnay said that endlessly and massively enriching the crony elite would “kill the goose which lays the golden egg”, of food supply for the nation, as well as its industries..

Thatcher's crony capitalist elite, like that of France since the 1980s, killed the goose of industry – as the quixotic Arnaud Montebourg frequently claimed in his strange speechmaking style. Putting Humpty Dumpty back together again was a “Sisyphus project”, Montebourg rapidly found out – and new economy minister Macron doesn't even want to try. Under Francois Hollande's new and rather special team – including for example its Gender Theory minister of national education – laisser aller and laisser faire promises to be fin de regne flavor. And the Flash Mob is waiting.

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2014 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

Andrew McKillop Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules