France: Double dip or the edge of the abyss?

Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.

Francois Hollande was elected a year ago. With a bloody-minded determination he is already the least popular President in French history. A double dip recession is hardly a surprise in the face of such concerted incompetence.

We’ll avoid the “c” word as one thing France isn’t doing
is celebrating. A year ago, the electorate ousted the discredited
Psycho-Sarko. The victor Hollande campaigned on a remarkably left
wing manifesto (even by French standards). His redeeming feature
for those of us not blessed with the looks of Brad Pitt, was that
despite being nicknamed after a custard tart, Monsieur Flanby seems
to have a remarkable way with beautiful women.

However, given the lack of empirical evidence that glamorous
women close to the Presidency have actually galvanised economic
growth (in the case of Hollande, even the simple act of buying
engagement rings seems to be a commercial act too far), let’s stick
to the essence of political economy…

To describe the French as in a depressive torpor rather
overstates things. Monsieur Hollande’s first year as President has
delivered a double dip recession. The crescendo of cynicism is
rising about France’s discredited “third way” economics.
Government spends with gusto, taxes with rapacious alacrity and
watches wealth creators flee to South Kensington or Belgium…

Rank Government hypocrisy has further decimated Presidential
credibility: it transpired the Budget Minister held significant
assets offshore to evade his own punitive tax regime.

True, the government recently held high profile meetings to
convince business leaders that the President believes in
enterprise. The tricky point was that this came after months of
increasingly shrill posturing against all forms of wealth creation.
The entrepreneurial actor/national icon Gerard Depardieu ditched
his passport, availing himself of Russia’s pragmatic flat tax
fiscal policies at a fifth of the retrograde 75% rate imposed by
Paris. Historians recall short Frenchmen used to march on Russia
with invasion forces. Had it not been for flawed early adoption of
global warming theory they might have succeeded. Now Frenchmen
arrive in Moscow to renounce their nationality and embrace a
prevailing capitalist culture… How times change, the east
looks progressive, the west is festering in a socialist mess of
centralised planning.

France's President Francois Hollande (AFP Photo)

Other tax rises include investment transactions which will help
impoverish future pensioners with the temerity to save. Now a plan
is afoot to tax “smart” devices such as mobile phones and
tablets. The insanity of taxing data – a key future engine of
economic growth – pinpoints the closeted bunker-like attitude of
the government. When faced with the infant Web, the French
bureaucracy actively protected their Minitel network against
‘upstart’ global web standards.

Foreign relations are messy too. The historical Franco-German
axis anchoring the EU looks creaky. Germany wants austerity.
France, having failed to balance their budget since 1974, want the
punchbowl kept at the table to restart the party. To describe
relations between the inept left wingers and their conservative
counterparts as cool is an understatement.

France is tumbling towards a denouement: decades of
irresponsible government promising the people cake have left the
economy on the brink of collapse. The nation is ‘bankrupt’
according to Employment Minister Sapin’s own words in January.
Maintaining the high spending, high tax, 57% government controlled
economy risks disaster and France runs the risk of being just an
auction or two away from becoming the next Mediterranean Bond
market disaster…

Talk of revolution is premature although it preoccupies French
media. Certainly the French political elite is staggeringly out of
touch. When Hollande “relaunched” his Presidency with a
walkabout ‘relaunch’ in Dijon during March, he was “visibly
overwhelmed”
by the vocal antipathy to his shambolic regime.
Hollande is a damning indictment of the “grandes ecoles”
system where remote “leaders” are de facto anointed by attending an
elite college.

However, all is not lost. Entrepreneurs may feel crushed by
France’s intransigent anti-capitalist culture but there is much to
celebrate. French multinationals are enormously successful at the
cutting edge of emerging markets: building, producing, supplying
and retailing with panache throughout the world.

Nevertheless, President Hollande is already less popular than
Charles De Gaulle when he sought protection in a German air base
from rioting students in 1968! Clearly Mr ‘Flanby’ has panache: to
be this unpopular after one year demonstrates a certain talent! Now
he needs to focus on actually running a government and not a
juvenile debate which is of lesser quality than on the barricades
of 1968…

The statements, views and opinions expressed in this column are solely
those of the author and do not necessarily represent those of RT.

This article originally appeared on : RT