Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
Is a Stock Market Crash Imminent or Does this Stock Market Bull Still Have Legs - 25th Apr 18
Gold Price Focusing on May Cycle Bottom - 25th Apr 18
Cash “Vanishes” From Bank Accounts In Ireland - 25th Apr 18
Is the Malaysian Economy a Potemkin Village - 25th Apr 18
Land Rover Discovery Sport Rattling / Knocking Sounds From Car Pillars - 25th Apr 18
China Takes the Long View on Gold-Silver... and So Should You - 25th Apr 18
Russia Buys 300,000 Ounces Of Gold In March – Nears 2,000 Tons In Gold Reserves - 24th Apr 18
Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - 24th Apr 18
CRYPTOCURRENCY MASTERCLASS #CRY90 - 24th Apr 18
UK Gambling Statistics - What the Numbers Say - 24th Apr 18
Chaos Capitalists Short Countries - How Chanos Got China Wrong - 24th Apr
Artificial Intelligence Defines the Political News Narrative - 24th Apr 18
Stock Market "Oops, They Did It Again" - 24th Apr 18
Fox in the Henhouse: Why Interest Rates Are Rising - 23rd Apr 18
Stocks and Bonds, This is Not a Market - 23rd Apr 18
Happy Anniversary Silver Investors! - 23rd Apr 18
The Hottest Commodity Play In 2018 - 23rd Apr 18
Stock Market Correction Turns Consolidation - 23rd Apr 18
Silver Squeeze, Gold Fails & GDX Breadth - 23rd Apr 18
US Economy Is Cooked, the Growth Cycle has Peaked - 23rd Apr 18
Inflation, With a Shelf Life - 23rd Apr 18 - Gary_Tanashian
Stock Market Predictive Modeling Is Calling For A Continued Rally - 22nd Apr 18
SWEATCOIN - Get PAID to WALK! Incentive to Burn Fat and Lose Weight - Review - 22nd Apr 18
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

Le Pen-ization of France, Europe’s Changing Political Landscape

Politics / France Mar 12, 2017 - 05:21 PM GMT

By: Dan_Steinbock

Politics In France, President Hollande’s utter failure to foster broad consensus for structural reforms has paved the way for the most contested election in decades. While public debate focuses on the 2nd round winner, the real story is that Marine Le Pen's agenda has already shifted the French political landscape.


In recent polls, the French presidential rivalry involves 3-4 viable candidates, which together account for 85-90 percent of the total vote. Until recently, the leader of the Front National, Marine Le Pen, and the centrist Emmanuel Macron, have each garnered about 25 percent in the polls. The two are followed by the center-right François Fillon, who has about 20 percent, and the socialist Benoît Hamon, with 15 percent.

While Le Pen may win the first round, she is not likely to win the second round, in which her popular triumph would be likely contained by a coalition of her adversaries. Yet, the future belongs to Le Pen's agenda which the next president must coopt to win - and coopt to sustain victory.

Who's afraid of Marine Le Pen

The French presidential election will take place in late April, but the real winner will be chosen in the second round in early May. Even if Le Pen won the first round, the consensus is that a centrist or a center-right candidate will win the second round.

Marine Le Pen (49) is the youngest daughter of the veteran FN leader Jean-Marie Le Pen, a French far-right politician who supported euro-skepticism, opposed immigration and pushed for law and order, traditional culture and values. As long as he led the FN, it was a marginal far-right, anti-Semitic party with politically incorrect neo-Nazi associations. In the past decade, Marine Le Pen has successfully “mainstreamed” FN away from the margins and extremism. Nevertheless, she has had difficulties funding her campaign because of the opposition of every French bank to her political platform.

In her campaign, Le Pen continues to support traditional values, law and order, while opposing immigration and the EU. As her campaign kicked off, Le Pen pledged a fight against “two totalitarianisms, globalization and Islamism” that seek to “subjugate France.” Running in the name of the French people, she reaffirmed the FN’s anti-immigration, protectionist and anti-EU stance. “The divide is not between the left and right anymore, but between patriots and globalists,” she said. “Financial globalization and Islamist globalization are supporting each other. Those two ideologies want to bring France to its knees.”

Le Pen wants to pull out of the Euro and a return to French franc, a referendum on EU membership within 6 months, and taxes on imports and the employment of foreigners in France. Building on Gaullist legacies, she is a critic of and wants to pull France out of the NATO. She would like to revise French relations with the U.S. and has denounced French bandwagoning toward Washington. Her France needs greater independence, believes in a multipolar world and neo-gaullist geopolitics.

The three anti-Pen musketeers

Emmanuel Macron (40) is a self-proclaimed proponent of a “third way” and the product of the elitist École nationale d'administration (ENA). After a stint as an investment banker at Rotschild & Cie Banque, he served in Hollande's socialist governments, where he advocated business-friendly reforms that were a poor fit with Hollande's socialist constituencies. Like Blair and the Clintons, Macron tends to support whatever is expedient at the time, whether it has been Rotschild’s neoliberal profits or Hollande’s bureaucratic socialism.

Married with his 24 year older high school teacher he first met at 15, Macron’s personal life and policy stances remain ambiguous. Last November, he declared that he would launch a social liberal bid under the banner of En Marche!. In public, this was legitimized as a new Clintonesque-Blairian ideology; in practice, it was necessary because Macron had alienated socialists while failing to gain enough support among conservatives; he lacked a party platform.

Of the key candidates, Macron is the ultimate Europhile and federalist, although he sees himself as EU-agnostic. He supports integration and structural reforms. In controversies about immigration, secularism, security and terrorism, Macron has favored a balancing act, which accounts for the perception that he avoids taking any stances. Ironically, that makes him valuable to neoliberal business, Brussels and Washington.

Born into privilege, François Fillon (63) became nationally known as President Sarkozy’s Prime Minister. Already years ago, he undertook controversial reforms of the labor code and the retirement system. He represents conservative Republicans (previously Sarkozy’s Union for a Popular Movement, UPM), France’s largest center-right party. Last fall, Fillon still seemed to appeal to the conservative “silent majority” in France, but that was before a widening embezzlement investigation following charges that he had paid his wife and children almost 1 million euros from the public payroll for little or no work. Rather than resign, Fillon attributed all blame to a “smear campaign” and has stayed in the game.

Just as Fillon thought he could get on with his presidential campaign, he was recently hit by more claims of financial irregularities as Canard Enchaine disclosed that he has also received an interest-free, undeclared loan of 50,000 euros from a French billionaire tycoon in 2013. If Fillon can remain afloat, he could prove a minority kingmaker in the second round - unless centrist forces can agree on a unifying candidate.

Known as an “Anglophile,” Fillon is a French Thatcherite. He would like to balance the budget and abolish the wealth tax. He would raise retirement age to 65 and reduce the public sector by cutting half a million civil-service jobs. He holds tough views about immigration, Islamic radicalism and terrorism. As a believer in realpolitik, he has called for dialogue with al-Assad's Syria and Putin. “In a Trump era,” he says, “Europe must spend more on military.” While he stands for the West, he sees the expansion of NATO to Russia’s borders in the 1990s as a provocation that was bound to alienate Moscow and foster redundant friction.

The last viable candidate is Benoît Hamon (49), a French socialist (PS) who defeated the centrist and business-friendly Manuel Valls in the party primaries. While he is portrayed as a new figure, he is a veteran party bureaucrat and has served in the European Parliament (2004-9), Hollande’s Junior Minister for the Social Economy (2012-4) and Minister of National Education (2014).

Hamon supports a basic income to all French citizens, a 35-hour workweek, legalization of cannabis and euthanasia, and huge investments in renewable energy. Unlike recent socialist leaders who have managed to widen the gap between business-friendly and pro-NATO social democratic leadership and the socialist and NATO-skeptical grassroots constituencies, Hamon represents the left wing of the PS and is an admirer of US Democrat Bernie Sanders. He is critical of neoliberal myths and the NATO.

In contrast, the more leftist Jean-Luc Mélenchon, who heads the new “Unsubmissive France,” would like France to leave both the euro and NATO. While Mélenchon has barely 10%+ support in France, the two might align to achieve a unified left position in May. Nevertheless, after years of Hollande's failed policies and plunging ratings, all socialist candidates face a steep uphill.

Coming shifts in French policy stance

Whether Le Pen wins the elections or not may not be the question. The real story is that the winning agenda that the next French president has been re-defined by the rise of Marine Le Pen. Domestically, the new president will push for (subdued) structural economic reforms with or without the consent of the unions, while taking a stricter view of immigration and a tougher stance against Islamic fundamentalism.

France will have a more critical stance toward further EU integration, and the euro. As even Hollande recently acknowledged, "for a long time, the idea of a differentiated Europe, with different speeds and distinct paces to progress, has provoked a lot of resistance. But today this idea is necessary. Otherwise, Europe will explode." If Le Pen wins, Paris will also start a process that could ultimately result in a 'Frexit.'

In foreign policy, the new president will be more cooperative with Russia and President Putin, from the Middle East to Ukraine and energy issues. While France may actually invest more in defense spending, the return of Gaullisme is predicated on greater skepticism toward the NATO and harder push for French national priorities. While Macron’s team has already suggested that Russia may be intervening in the French election, France is not as vulnerable to Russo phobia as the United States.

Furthermore, recent Wikileaks disclosures prove that it is not so much Moscow that Paris should be concerned about. In the 2012 French presidential election – as classified CIA “tasking orders” indicate – the agency engaged in a spying campaign ahead of the election. The documents reveal that all major French political parties were targeted for infiltration by the CIA's human and electronic spies in the seven months leading up to France's 2012 presidential election. According to the most recent WikiLeaks documents, televisions, smartphones and even anti-virus software are all vulnerable to CIA hacking, which makes any effort to shape the outcome of the impending elections and referendums in Europe relatively easy. Washington and Pentagon favor pro-NATO candidates and will walk the talk.

Even more important will be the net effect of the new economic policies. In Brussels, the greatest fear involves Le Pen’s quest to unilaterally take France out of the Euro in just 6 months, which would be followed by the effective redenomination of €1.7 trillion of French public debt into francs (80% of this debt is not under international law and thus FN would have the right to change the currency). Unsurprisingly, the ratings agencies have already warned that the net effect would be the largest sovereign default on record, nearly 10 times larger than the €200bn Greek debt restructuring in 2012. Like biblical prophets, Le Pen's adversaries have warned that her victory would mean a French Armageddon, the plunge of euro, and chaos to the world financial system.

In contrast, the FN argues that reintroducing a national currency that would fall in value against the euro would lower France’s total debt burden and thus allow Paris to begin competitive devaluation.

Domestic dead-end, international spillovers

The struggle for France is the direct result of half a decade of policy failures, which climaxed last summer in a failed effort to reform the French labor code. It was not the first time. Years ago, huge strikes forced President Chirac to back down from proposed changes in the pension system, just as they led to fierce union opposition when President Sarkozy raised the retirement age. However, under Hollande, a Socialist government has been pitted against unions and the ultra-left, which has fostered apprehension, disappointment and fragmentation on the left.

When the socialist Hollande replaced the conservative Sarkozy as the French president in May 2012, the latter’s ratings had plunged but Hollande’s popularity hovered at around 58 percent. By late 2016, his ratings had plunged to less than 5 percent. So his decision not to seek a second term was hardly a surprise. While France cannot avoid the overhaul of its labor legislation in the future, a socialist president cannot drive a neoliberal labor agenda; and that’s what Hollande tried to do.

After half a decade of near-stagnation, French economy has been benefiting from a cyclical rebound, thanks to a more accommodative external environment, especially lower oil prices, a depreciated euro, record low interest rates and the European Central Bank’s quantitative easing. Nevertheless, these shifts cannot compensate for France’s longstanding internal rigidities, which overshadow the economy’s medium-term potential. In the 1980s and 90s, French growth still exceeded 2.2 percent; in the 2000s, it hovered around 1.8 percent; now it is around 1.1 percent and likely to decelerate to less than 1% by early 2020s. In the past decade, French competitiveness, as reflected by the country’s share in world export markets, has declined significantly as well.

What’s worse, French real wage growth has been solid, despite declining productivity growth. The equation is unsustainable; it means that French economy is penalizing future generations for its current distortions. If the external environment grows still more adverse, while reform progress is hardly evident, French banks, given their size and interconnectedness, could generate adverse effects not just domestically but through spillovers, especially in Italy and emerging Europe.

France remains the world’s sixth largest economy. If it begins to shake, Italy cannot avoid a quake and ailing Eastern European economies could take multiple hits. That, in turn, would have adverse implications across the Eurozone and globally.

Dr Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/

The original, slightly shorter version was published by South China Morning Post on February 28, 2017

© 2017 Copyright Dan Steinbock - 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 advisors.


© 2005-2018 http://www.MarketOracle.co.uk - 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