Tag Archives: Manuel Valls

Banking France

The last few days have seen a serious change in multiple directions in Countries all over the place (in that rugged area known as Europe). One part is not a surprise, the news that the ‘Pound jumps against euro‘, it is the second part ‘as Germany’s inflation data shocks markets‘ that is cause for concern. We should not be that surprised, because it had been known that Germany was facing a slowdown, which in light of so many events in Europe makes perfect sense. It is the by-line “as German inflation fell short of expectations to give a big setback for the European Central Bank (ECB) programme to support the Eurozone economy” which is the actual story. You see, last week I mentioned Mario Draghi and the dangers he represents, we now see the first chunk of worry that came from ‘Decoupling Draghi is hard to do‘ (at https://lawlordtobe.com/2017/03/28/decoupling-draghi-is-hard-to-do/). The mention of Reuters and how big funds are having concerns is now more than a fact. The quote “This assessment had raised hopes the ECB could perhaps cut short the money-printing programme, which injects billions of euros into the economy each month. But the fall in German inflation will be seen as a sign that money-printing will not be reined in any time soon“, implying more and longer printing of money to do something that never worked the first time around and will in equal measure fail the second time too. It is a side that the papers are not touching, not by a mile, yet it is also the reality that we face in the upcoming reality of Frexit. This is seen in two parts.

The first are the big 4 powers in the EEC Economy. France, Germany, Italy and UK. With UK triggering article 50, the stability of the Euro is now gone. Whether we have Frexit or not, the reality is that the Euro has relied on the German economy for a decade and now that there is an issue, that whilst The French economy has been stagnating since at least 2015 (actually longer than that), now with the German economy taking a dive towards no-growth, the issue changes dramatically, because the Italian lack of growth had been an issue for some time. With the German setback, the dangers of printing money becomes a lot more visible and the acts of the ECB needs to be questioned by several governments, who are actually not doing that. In equal measure the media at large seems to steer clear from the entire ECB debacle, which is a worry on another level. All this is now part of another shadow that is covering the ECB. Reuters has given view to the following quote “The documents show repeated violations of the ECB’s own rules by its executive board, chaired by Mario Draghi, and come amid staff complaints of favouritism at one of Europe’s most powerful institutions” as well as “Staff representatives complained last year to the European Parliament, which oversees the ECB, that dissent was discouraged at the bank, potentially hobbling its ability to spot the next financial crisis” an issue that should be very much on the minds of every European government, as the ECB is costing them a fair amount of money. Another Jewel from Reuters is seen in the quote “Recent comments from the ECB were misinterpreted, according to a Reuters report citing ECB officials, after President Mario Draghi dropped some of the more dovish central bank language and did not replace its bank lending facility at its latest policy meeting on March 9” as well as “adding to the slightly hawkish feeling, ECB policymaker Ewald Nowotny said a week later that the central bank would decide in the future if it would raise interest rates before ending its quantitative easing program, a comment that took market participants by surprise“. Whilst we can argue on the value of “The core inflation rate is currently running at 0.9%, not close enough to the ECB’s stated aim of ‘near to 2%’ to cause President Draghi to change anything, even rhetoric, at the next ECB meeting on April 27“, the reality is that we are facing a quarter of feigned misinformation due to what I would see a as an unacceptable level of ‘miscommunication‘ (read: misinterpretation). Especially when we consider that quote ‘comments from the ECB were misinterpreted‘, misinterpreted by whom? By the economic governmental powers, the banks, the traders? Is a major factor of the ECB not ‘clarity‘? Should clear communication not be seen as a way to thwart ‘misinterpretation‘?

The fact that the ECB is not just showing favour in the wrong places, but a level of non-clarity gives a second failing by the ECB, that whilst they are still printing billions of euro’s on a daily level. Not the place where you want to be anything less than crystal clear. It is that factor that is enabling Marine Le Pen and giving more and more concern towards Emmanuel Macron. There is a second sight to all this. You see, part of the entire election is set on what some agree ‘what is good for France’, yet who decides that? When we consider “The major candidates for the French presidential election Emmanuel Macron, Marine Le Pen and Francois Fillon all present their economic programmes to the Medef employer’s federation today. All will be hoping the influential group will give them the “business-friendly” imprimatur” (source: Reuters), It is in that light that I refer to the Saxo Group, who has an interesting article (at https://www.tradingfloor.com/posts/europe-divided-the-front-nationals-absurd-economics-saxostrats-8577141), there are too many quotes to just pick from and in the end, my version might come across warped. What does matter is the question that follows:

If we agree that the New Franc is not immune to speculation, how come that a national currency is (as claimed) so susceptible to speculative attack?

There is no clear answer, yet it is an important one, one that Marine Le Pen needs to answer. In addition, the article implies that Medef needs the ECB and that there is a link, as such we get two parts, the first is that Marine Le Pen is getting discriminated out of two economic groups, making the French elections no longer fair. The second is that the ECB has been setting up links and connections giving them unelected national powers in nearly every European nation, how is that in any way acceptable, especially when it gives them the influence over elections?

So why is it an issue?

For me, not that much, yet when we consider the actions since Brexit intent, and now that Brexit has started, we suddenly see the same panic driven media mob with headlines like ‘Study: Frexit chaos would be ‘worse than collapse of Lehman Brothers’‘, where we see the label ‘doom-mongering‘ with the quote “the population at large is in favour of the single currency and that there is little to suggest any economic benefit to doing so“, this whilst we know that leaving the Euro is almost the singular reason that Front Nationale with Marine Le Pen is this popular. Then we get ‘Why ‘Frexit’ not Brexit should top bond investors’ fears‘, with the mild claim “‘A more pressing concern [than Brexit] is ‘Frexit’,’ he said. ‘Le Pen is polling well in the run-up to April’s presidential election and looks likely to win the first round. She has pledged to lead France out of the single currency“, which is given AFTER Article 50 was delivered to the processing parties. What remains unstated is that with 2 of the 4 large players remaining, the Euro cannot survive. They are mellowing it down with ‘the Front National is unlikely to win sufficient National Assembly seats to enact her policies and such a decision would probably be subject to a referendum’, yet as I see it, when the French realise that Macron in conjunction with Manuel Valls is gaining momentum, the French are angry (according to several sources), in addition Fillon is losing ground too fast. There is no doubt that it will be between Emmanuel Macron and Marine Le Pen, even as at least three elements have decided to discriminate against Front National, her numbers are still stable. This should be a worrying factor to many as this implies that her vote will be carried by just the French voters, no tainting by Medef or pressure through foreign European leaders.

No matter who wins, there will be a powerful backlash. Even if Macron wins, France needs to realise that changes are essential to survive what comes after. Italy is up next and there the mood is also heavy. The Financial times was ‘timid’ with ‘Italy is falling out of love with Europe‘, it is however not that easy and it is getting harder in Italy on several fronts. Here is largely a blame game in session and the truth is that Europe, the ECB and others are not that guilty in the hardships that Italy faces. Its debt is far worse than Greece and the Italian banks have no way to deal with this problem. So there is a chance (not a very realistic one) that the next in power will start the Italeave signal. Even if that happens, the chance that France and Germany can keep the Euro afloat is much more realistic, but it comes with a two decade burden that any hardship or any recession (read: some kind of economic crash) would be disastrous to both the two nations and the Euro, a risk that the ECB, IMF and Wall Street are very willing to take as it gives them time to find other solutions to not get killed in the process.

So in the end, we are now 36 days away from learning whether the Euro will be dead or only near death, yet still dying.

 

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Pen Cil le balancement Élysée Palace

The lashes from Marine Le Pen are now swaying the presidential Palace (massively lose translation). This is not a joke, not a quaint reference. It is the direct consequence of European inaction for well over 2 years.  The people have had enough and now, fear is becoming key with the politicians who are relying on Status Quo. The issue goes a lot deeper than most realise and with the acts as shown in the last few days, the boomerang effect that those politicians are achieving could give Front Nationale from Marine Le Pen an even bigger rise.

Consider the following information from the BBC (at http://www.bbc.com/news/world-europe-35025846) “The nationalist FN got about 28%, ahead of the centre-right Republicans party led by former President Nicolas Sarkozy, which polled just under 27%, and the governing Socialist Party (PS), trailing with 23.5%“, in addition, consider the Guardian (at http://www.theguardian.com/commentisfree/2015/dec/07/marine-le-pen-front-national-france-cowardly-elite ) with “The fact is that France has failed to adapt to the challenges of globalisation. Its education system, for example, is stuck. Studies show that the lycée system increases social inequalities instead of reducing them, which means it is utterly failing in its republican mission to act as a social ladder“, this are just two of several issues that are in the main field of consideration by the French. I am not even getting close to the attacks in France or the Refugee issues in France. Instead, see the actions in opposition, again from the BBC, now at http://www.bbc.com/news/world-europe-35035230. Here we see “His Socialist Party (PS) has withdrawn from the second round in two regions to unify the anti-FN vote“, there he is moving away so that HIS opposition can yield more points against Marine Le Pen!

Are you freaking kidding me?

So even before the elections, party B gives their optional seat to party C, because it is afraid that Party A gets too many votes. How is that not treason against your own voters, how is this anything else but a group of people demanding to stay in the main seats and as such they are aggregating votes. In the past I spoke about one of the most powerful non-American economic wielders. The name Natixis, last year they stated (at http://philippewaechter.en.nam.natixis.com/2014/04/07/issues-of-economic-policy-in-france/) “The chart clearly shows that the GDP profile is conditioned by the private demand. Government demand has a positive but monotonic increase of its contribution. Contrary to private demand there are no fluctuations. Net external demand has a negative contribution which is consistent with larger external deficit on the period. There are no surprises in the decomposition“, well spoken by Philippe Waechter, chief economist of Natixis Asset Management. In addition he stated “The stronger private demand could go through incentives for consumers or for companies. Currently, it would not be efficient to go through households. Last year, there was an interesting situation. There exists an instrument of profit-sharing in France (l’épargne salariale). The rule is that employees have to keep this amount of money on a specific account for five years. But from time to time a government wants to use these important amounts to support consumption expenditures. That’s what was done in 2013. It was not a success. Households have kept their saving on their account and have not spent more. A stimulus policy that, at this moment of the cycle, goes to consumers would probably be counterproductive and would fail to boost economic activity“, this now gives us part of the statement from the Guardian in the title ‘France’s cowardly elite is to blame for the rise of Marine Le Pen‘, which comes from Natalie Nougayrède. It is her last paragraph that is the issue “Marine Le Pen has no solution for France’s problems, her economic programme is all about retreating from the outside world and Europe. Her social vision is of a mythical, homogeneous France that never existed. What she has to sell is an illusion. It’s only because so little else is on offer that people are buying

You see, as I see it: “Marine Le Pen is realising that an unaccountable wave of government is no solution for France’s problems, her economic program is all about cutting of these irresponsible spenders and gamblers who speculate and end up personally rich no matter how the end result falls. Her social vision is of a mythical, homogeneous France that cannot exist as European governments are not held accountable for massive overspending, including previous French presidents. What she has to sell is a nightmare for the exploiters as their gravy train ends. It’s because the damage has been too extreme that the French are considering an extreme change, in their view it is very unlikely to get any worse“.

It is all about the point of view and the fact that current politicians are too afraid (or made to fear) the change that coalitions for partial France are considered out of fear of the upcoming victory of Marine Le Pen.

Now reconsider the words by Philippe Waechter “from time to time a government wants to use these important amounts to support consumption expenditures“, which in itself is not an issue, France is not the only country doing this, many nations have done this in the past (and are still doing it at present). Yet France has been overspending by 5 trillion, which leaves the French people with no options whatsoever, this also means that new venues need to be sought and that has been delayed by too much through too many, which is exactly why the people are desperate for change. The step that follows will impact Europe in many ways, because the first one who leaves the Eurozone might get a deal, yet there will be no price for second place, which is why the Brexit vs Frexit issue is so strong all over the field. You see, when France moves out, the UK and Germany will have no options left, they will have to decide sooner rather than later. Because from the three in the field (UK, France, Italy), leave any one out and that millstone named Eurozone will kill the other two who are left, which will be a massive crises that follows. It also scares the US to no end, so we will hear many ‘phrased’ articles and stories all over the field.

In my view, PM Manuel Valls made a massive mistake, by trying to split France between himself and Sarkozy will only strengthen the fear of them and the willingness towards Marine Le Pen and Front National. Will I be correct? That truth is only a matter of time, but I feel that the early hours of the second round of regional elections will quickly show me to be either correct or wrong, my ego makes me choose option 1. The two regions here PS (Parti Socialiste) is pulling out is clearly in hands of the Le Pen family, with over 40% of the votes, By pulling out the party of Hollande hopes that their 23 percent will add themselves towards Sarkozy who has 27%. Such cowardice should not be rewarded! Whether the French voters will realise this remains to be seen, but I reckon that the Le Pen family will be adamant to inform the voters of this. The fact that both Hollande and Sarkozy are scared of the beautiful niece of Marine Le Pen who rules south Eastern France at present has less to do with looks and more to do with the fact that the parliamentary candidacy of Marion Maréchal-Le Pen for Vaucluse’s 3rd constituency was publicly confirmed on 25th April 2012 is pretty much a given. She will have 4  years of experience (at the youthful age of 26) when the elections are up. The fact that she grew from 2008 where she got no seat and 6.29% of the votes whilst now in the first round she took 41% of the votes should not be overlooked either. I cannot state that I know a lot about her, but I don’t believe for one minute that it is about her looks, as the French are used to good looks. France is about business and the fact that the Le Pen family now lead 6 out of 13 regions is a clear indication that the French population is voting a ‘no confidence vote’ to the failed economies of both Sarkozy and Hollande; they are desperate for an improvement and kicking Europe out of their decision line seems to be comfortable to the voters at present. I am not certain whether I can disagree with that view.

The game for the French is about to change in a massive way, I wonder how France will impact the EEC, because they will have a massive impact, just envisioning this is part of the problem, the situation is currently very unique, even (read: especially) for France. In the end, I still believe that this would not have happened to the degree it has, if the EEC had taken a much firmer stance on Greece, that is the side of the EEC that escalated many issues for too many players. Should you doubt that, than consider Italy’s  Lega Nord with Matteo Salvini at the helm, who is labeling the euro as a “crime against humanity”. A party that had zero chance in 2012 is now an actual contender for the Italian presidency.

All this because of a warped need for an economic Status Quo.

 

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