François Hollande on Collision Course with ... France

Wolf Richter's picture

Wolf Richter

During the French presidential election, it became clear that François Hollande, if he were to win the presidency, would try to align other Eurozone countries, particularly Italy and Spain, into a southern front against German Chancellor Angela Merkel and her government—to fix the problems of the Eurozone à la française. Among his ideas: pushing the ECB to buy government bonds of troubled debt-sinner countries and instituting eurobonds—or euro-bills, as he now calls them—that would give any member access once again to cheap unlimited loans. Everyone would benefit, except the German taxpayer, who’d have to foot the bill. Both policies are despised in Germany where budgetary discipline is seen as the solution to the debt crisis—rather than even more debt and monetizing of that debt.

Now that he has won the election, he has set out on his pre-charted collision course with Germany. The war of words has already started. For the first time that I can remember, a French government is lobbing unvarnished and relentless verbal attacks across the Rhine. They had their differences before, but they always put makeup on them and dress them up nicely to come across as the harmonious if not always smiling Franco-German couple. But now, the center of Europe, the two architects of Europe and the Eurozone have chosen the path of confrontation—and if any single thing can break up the Eurozone, or cause Germany to bail out—that will be it.

But Hollande isn’t just on collision course with Germany.

“We have the feeling that we live a grave historical moment, a moment of truth,” said Laurence Parisot, President of the MEDEF, the largest employer union and lobbying group in France, representing 700,000 companies. During a press conference on Monday, “the boss of the bosses” delivered her solemn words without a trace of a smile.

The situation for French companies, she said, was already tough: collapsing margins, falling orders, extreme cash flow tensions, frozen hiring projects, and “uncertainties of such magnitude that all large investment projects are put on standby” (video). And she plowed into Hollande’s program item by item:

  • Imposing a dividend surtax of 3% that companies (over 250 employees or €50 million in revenues) have to pay. Shareholders already pay income taxes on dividends.
  • Raising company contributions for pensions, healthcare, work-injury and disability insurance, and other state programs.
  • Raising the minimum wage, already at €9.22 ($11.60) per hour. Arch-competitor Germany doesn’t even have a minimum wage.
  • Making layoffs even harder and more costly if they fall into the nebulous category of “abusive layoffs” whose sole purpose is to goose the stock price.
  • Lowering the retirement age to 60 for those who started working in their teens, and funding it by increasing corporate and individual contributions.

“These increases will not remain endurable for long,” she said, before “they hit small and medium-size enterprises very hard.” They were already in distress, and with these policies, France would “run the risk that private investors will invest less, or elsewhere.” And bringing taxation of capital in line with taxation of work would “dry up” the economy. The new programs are “disconnected from the reality companies have to face, from what a company can endure.” Based on these new costs, taxes, and limits, she said, “We fear a programmed strangling.”

Adding to the uncertainties about Europe is the feeling among foreign countries, she said, that the old continent is no longer a market of the future. She called for a unified European voice in foreign policy, defense, economic strategy, and finance that would allow it to “counterbalance the colossal powers in other parts of the world”—particularly China and the US. Thus, without saying it, she implored Hollande to make peace with Germany. And she warned him “not to transform our country into a hyper-rigid enclave that would be totally disconnected from the functions of a market economy.

And so the euro crisis moved on in its inexorable manner. The G-20 summit last November in Cannes, France, was all about bailing out Greece, and it turned into a fiasco. Now at the G-20 summit in Los Cabos, Mexico, tiny Greece is still front and center, but the summit has been escalated to bailing out the entire Eurozone. President Obama took it even further: he wanted everybody else to do “what’s necessary to stabilize the world financial system.” Read.... The G-20 Farce: Saving The Eurozone From Collapse.

And here is an excellent, hard-hitting article by Rex van Schalkwyk, former justice of the South African Supreme Court. In politics, he writes, it is the idea that counts. And between idea and reality, there lies that vast uncharted terrain of promises unfulfilled, of lies and deceit and of naked hypocrisy—a self-inflicted deception that accounts for the failure of society, particularly relevant, given the Eurozone fiasco. Read.... Compassion – Killer of Society?

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THE DORK OF CORK's picture

The French are better off with the Franc and their economy will preform better then Germany after breakup as previous German capital expenditure has been geared toward a flawed Mercantile policey.

The printed Franc will be free to flow toward it new Rail investments while its upper middle class will still be able to afford French built cars - this will dramatically reduce its money exports to oil surplus and high quality mercantile countries such as Germany.


Its elite will not give up their sick euro dreams easily however.

SAT 800's picture

I give you thumbs up for this statement because I hve spent hundreds of hours researching the Euro question; and I cannot see that it is not a crucial historical error and a complete failure.

duckarooni's picture

I thought the french guillotined all the rich a few years back.

Ropingdown's picture

Between Hollywood and the pop music and sports industries, all following the Gilded Age, "we" have changed America in very bad ways.  Honest labor is sneered at, rather than criticizing extravagant displays of wealth. Movies and TV have turned average people into voyeurs watching the few very rich being, well, very rich.  The average person has become accustomed to prefering stories which are easy to follow, soundbites and fairy tales, rather than facts, the bits of reality which do not fit into instant "understanding."  If I had my way, I'd have TV show the very rich actually earning the riches, how it was done, not the crap they bought with the money later.  Tell the stories of tech "competitive monopoly" and sports franchise owners taking a free ride on the communications infrastructure and the "star system" labor of the junior sports system grunts.  But no, the media will just keep the people's eyes on the stars and the luxury, and these people will have no idea whatever of how the riches really get concentrated and harvested.  Such, I must admit, is life both in the US and Europe and, soon, Asia.

Bastiat009's picture

The average worker cannot afford a 500sq/ft apartment in Paris unless he makes a good living and is willing to live with his wife and two kids in it. (French have to be skinny or they wouldn't fit in their cars, elevators or homes)

Unemployment is high and spending 3 hours a day to commute is common. So ok, you have many days off during the year but the rest of the time you leave home at 7a and get back at 8p. Well, your place is tiny and old and worn out anyway ... 

Hollande or Sarkozy are not much different. Socialism sucks, sucked and will always suck.

q99x2's picture

The NWO has been killing people out of the kindness of its heart every chance it gets.

The Age of Useful Idiots's picture

This guy is such a shill for the plutocrats it's not even funny anymore.

His heroes are As(s)mussen (another central banker screwing German workers so they have no benefits or minimum wage) and any corporate mouthpiece that will tell us what is good for the "market" (hint: it's not going to be good for those who work for a living). That Latvia "great success" story was one for the ages too. And obviously, the failure of society is "compassion". Because ideas don't count, only the plutocrat-enforced reality exists, which can never change.

Great stuff!

PulpCutter's picture

Savings rate for 'socialist, irresponsible, lazy' French: 17% GDP

Savings rate for 'I-stand-on-my-own-two-feet Americans': 11.5% GDP

"Even in the best of times France is among the most thrifty nations in the developed world, but the threat of Europe's debt crisis spreading to France has savers running for the perceived safety of bank accounts and becoming more wary of life insurance policies exposed to volatile markets."

PulpCutter's picture

ROFL.  The right-wing has been chanting "France's economy is going to die any minute now!" since the 1960s.

Yet, France has remained the world's 5th-largest economy, while having outstanding govt-run healthcare for everyone (including house calls!), free world-class university education, six-week vacations, and retirement at age sixty.  At the same time, America has gone from single working-parent families pulling ahead, to two working-parent families falling behind. 

Had enough 'trickle-down', yet?

GDP growth rate comparison, 1960 to today, for lazy, smelly socialist French, versus land of the free, home of the brave Americans:!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_mktp_kd_zg&scale_y=lin&ind_y=false&rdim=region&idim=country:FRA:USA&ifdim=region&hl=en_US&dl=en&ind=false

LMAO!  You can't fix stupid!

chiswickcat's picture

Thanks to their great healthcare system, France has highest percentage of people on antidepressants too.

g speed's picture

all that graph shows me is war is bad for the economy-- may be good for the MIC but sucks the life out of the country.

AlmostEven's picture

Don't try to convince me with a list of facts! What's wrong with you? Don't you know that the French welfare state caused the Lehman collapse and the shady Goldman/Greece dealings and the JPMorgan losses and the TARP bailouts. Wake up! Sheesh!

John Wilmot's picture

"You can't fix stupid!"

...apparently not.

Exhibit A: people still champion the glories of the welfare-state and central planning even as both are collapsing before their eyes.

PulpCutter's picture

Exhibit A right here folks:  The facts are staring you in the face, and you still can't get it.  You've been saying the same thing, and wrong, since (at least) the 1960s. 

John, did your Dad use a 2x4 on you, a lot?  I sympathize with him, but I don't think the long-term effects were good.

Here's another one:  Oil has gone from $3/barrel, before the Arab oil embargo, to $90/barrel today.  Do you 1) recognize that it's time to move on to other energy sources, or 2) drill more?

AlmostEven's picture

See? Didn't I tell the facts would get you nowhere? Have you learned your lesson yet?

Winston of Oceania's picture

Priced in gold and silver it has gone nowhere as has the price of everything priced in real money and not worthless script. Arrogance and ignorance go hand in hoof for you don't they Jack...

AlmostEven's picture

Enough of your trick questions! I have to go move my Hummer out of the handicap spot.

shovelhead's picture

The banksters won in Europe. Bailouts to infinity until the howling calls for a 'final solution'.

Line up for your RFID chip implant and the pain goes away.

Along with your silly little flags. Welcome to the Euro-Plantation. Coming soon to your global village.

Very efficient. No bills, no taxes, no worries. Join early before all the good jobs in the Ministry Of Truth are taken.


"Covering the world with a TARP of protection." ©

Join us in the GS-JPM-USA. You'll be glad you did.

rwe2late's picture

Germans will be told "their" prosperity depends on the euro. The deal will be framed as a minimal temporary sacrifice to get bigger future reward. The Germans will "blink" (as did the Greeks) and Merkel (or her replacement) will fall in line.

The French will be told some sacrifice is necessary to "save the euro" (for the banksters as Hollande has pledged to do), preserve European cooperation (especially NATO militarism as Hollande has also promised). The French will back Hollande as he mimics Obama and talks the talk for hope and "growth".

There is more financial control to be seized by, and more wealth to be squeezed out. The international power elite will not be deterred by rumblings of nationalism. In fact, they will use it to their advantage, both to deflect attention from themselves, and to channel fears of nationalistic excesses.

shovelhead's picture

"Who will help me bake some bread?" asked the Little Red Hen.

"Not I." said the sheep.

Funny thing about human nature...Been around a long time and yet some folks never learn.

darteaus's picture

The simple fact is that there are enough Makers to support all the Takers.  Sorry, but you need to support yourself.

falak pema's picture

buried in Gibraltar, and his legacy contested between Spain and Britannia. Now a subject of real estate meltdown as nobody is prepared to put flowers on his grave...Poor John, Atlas has dissolved into the ocean. 

falak pema's picture

Euro zone is now in crisis of civilization once again. This lady Parisot, sits at the head of the most inefficient corporate structure known as its totally crony capitalism, corrupt monopoly corporatism. Nothing new there, its the same situation on both sides of the pond, as in UK land.  Witness the scandal in the metallurgical industries in France, where the unions were paid by these corporate shills for decades, to hide their warts of inneficiency and market manipulation. It got as strategic outcome that ALL of french steel production belongs to ONE OLigarch : Mittal!

Well played french corporate lobby, your head up your ass was there for all to see, as in so many other sectors. 

The government investigation of that corruption scam was totally snuffed out, showing that Sarko, Chirac... and Socialists under Jospin... were in cahoots with the industry lords who had bribed to stifle union criticsim of their actions over twenty years, that resulted in the total takeover of that industry by outside Oligarchs. We now had culpable corporate cover up of bribing scandal to hide the warts after shoddy industry management for decades. THat's called regression of first magnitude and Parisot is iconistic representative of that mindest; the same that currently protects the french banking cabalista in the current shit storm. Government and industry barons, under the same Sarkozy umbrella, have created this impossible conundrum around the euro currency since 2008/2009. Where nothing was done to AVOID the upcoming financial bubble in sovereign bonds, with a banking structure already belly up! Omerta and unfettered the virtuous hand-wringing when the people have to pay the inevitable bill!

COver up and handwringing about government intervention when you are THAT lousy as industry scions is adding insult to injury to the people of France. That's what industry corpocracy is today; one big shoddy cover up for a ponzi that is going nowhere but down the shute.

Our friend Wolf has hit the nail on the head; but not for the reasons he touts : its time to wind down this bogus corpocracy, along with the banksta lobby. First world industrial forest is in a deep shit storm and its no use nit-picking, the dead trees have to be cut down. This includes but is not limited to fiscal reforms, which would obviously be more efficient if they were at continental level.

But that's another story, which the people of Europe have to decide on : do they or do they not want more discipline, cohesion and federation for their collective destiny. Is it a two tier system or one? A crisis is a good time to find out about these fundamental issues of society.

We are there; in crisis of civilization. And its going to be very painful for the coming generations of Europe as in USA. 

TD has brought up this same BIG issue here and here :

Guest Post: Public-Private Partnership - Another Phrase for Fascism | ZeroHedge

The Consequences Of The Rise Of European Nationalism | ZeroHedge

John Wilmot's picture

Indeed, "the most inefficient corporate structure known as its totally crony capitalism, corrupt monopoly corporatism."

It's not about laissez faire versus socialism, that fight is long over, it's about two factions within a socialist society fighting over the last scraps off an increasingly bare table (and their ruler using this conflict to advance other goals [supra-national State in Europe e.g.]).

This farce is like an onion.

AlmostEven's picture

I ask these questions of you respectfully: Was the table in France, Spain, and Italy bare prior to the formation of the banking cartel known as the EU? Did welfare programs sink Iceland, Ireland, Greece, and Spain or did the banking sector? And do you consider the EU bankers to be capitalists or socialists?

I see bankers, EU ministers, IMFers, etc. as capitalists who have become powerful enough to "socialize" losses related to their capitalist enterprises. I understand why you could view it the other way around, but the core philosophy of the banking cartel is not to act in a way that benefits society as a whole. A socialist might be misguided in believing that wealth should be distributed, but that is essentially what defines "socialism." I don't see the EU ministers (as puppets for the bankers) holding that view; therefore, I consider them capitalists.

Winston of Oceania's picture

Banking cartel has existed far longer than the EU or EMU, so you've started out on a false premise.

AlmostEven's picture

I realize the banking cartel has existed a lot longer, but their strength and influence over certain economies increases (or, rarely, decreases) now and then. I think we can agree that the EU has extended the cartel's influence from what it was previously. That was my point.

AnAnonymous's picture

What is good is the general aggreement displayed by US citizen Europeans.

They want to blob up. That is the US citizen solution.

NOw, all the bickerings and stuff is simple to explain: who the boss's alright.

Not everyone will be head of the massive blob called Europe.

TheFourthStooge-ing's picture

AnAnonymous said:

They want to blob up. That is the US citizen solution.

Good for a laugh, every single time.

Not everyone will be head of the massive blob called Europe.

That is why Europe will be blobbing down, your amusing trained monkeyism notwithstanding.

ebworthen's picture workers a decent wage and give them some retirement before they die or enrich the bankers and corporations?

Hard work is good, but so is the rule of law, not robbing pension funds, not making promises you don't keep, and not cannibalizing wages and pensions for the 1% stockholders who want to live on their pot of money and 10% returns.

If you can't keep your retirement and pension promises, and money invested is not safe or used for productive positive purposes - what is the point of corporations or stock markets; or governments and courts for that matter?

The Western World really needs to shit or get off the pot; do I own anything and do I have any rights or not?

John Wilmot's picture

"do I own anything"

Is everything you "own" subject to taxation (and/or emminent domain, and/or an enormous number of regulations)? Yes? Then no, you don't. In the case of real estate, the law openly says as much. No one in the US (the case I'm familiar with) has allodial title, which means true and complete ownership. Everyone who "owns" their home or other real estate hold that property in what's called "fee simple," the same as a serf in France 500 years ago: you owe your feudal dues (aka taxes) to your lord(s) down at city hall. Say, "thankee Massa!"

"and do I have any rights or not?"

Rights? Surely you jest (don't call me Shirley jokes anticipated!). You have revokable privileges. "Step outta line, the man come, and take you [to a foreign prison for 'interrogation'].

SAT 800's picture

Very good. Not popular because it's not fun to consider.

BotMightFly's picture

Reply to "do I own anything"

    After the US Constitution, States take responsibility for control of real estate law.  Rights are conferred in title, not merely privileges.  But a right without a fight doesn't sit right.  Take these Agenda 21 NGO's - out to get you and use municode chimp ordinances where a Board of Commissioners chooses revenue over your rights.  So, you may have to take control by objecting to the passage of an ordinance by standing up and speaking out about it. 

    Otherwise, the Board of Commissioners operating under some "Home Rule" provision of state law will upsurp your rights with impunity and send so called Code Enforcement types, many as ignorant and manipulative as callous in their disregard of your property rights or in a word "fascist" about it. So, they will lie, cheat and steal from you your rights - given the opportunity.  Video documentating this is freely available per the web. 

   These days in silent dead winter "hearings", when nothing else is scheduled, it may take only 3 people to approve one of these cookie cutter ordinances. Much to the ignorance of over a half million people, these ordinances go into effect to take a cut from rents and do what they can to destroy your constitutional rights, including your right to privacy.  Knowing your rights is so important these days and the public schools insure that most people do not know their rights out of high school.  Law practice, the free speech of standing up for your rights, is being legislated only to protect licensed lawyers and for hire representation.   The Bar is to bar you from having a say in court. 




AurorusBorealus's picture

"She called for a unified European voice in foreign policy, defense, economic strategy, and finance that would allow it to 'counterbalance the colossal powers in other parts of the world'"

This statement is why I am not quick to line up behind those who believe that the EU is destined to break apart.  There is much more at stake than a currency union.  The Germans, the French, even the Greeks understand this.  One can be a nationalist, but still acknowledge that it may be in the interest of Germans to support Spain, even at great expense to the German standard of living.

A Europe without some political and military unity is at the mercy of Russia, China, the United States, and the growing substratum of Muslim immigrants in Europe itself.  Spain cannot even prevent Argentina from taking Spanish assets by decree. A Europe divided has no standing in the world.  Many Europeans do understand this.

Winston of Oceania's picture

Germany may also be enticed into an economic alliance with Russia if forced out of the Eurozone by unfullfillable bailout demands. The German mindset has always been one of being caught in the middle and they will chose what is best for Germany over what is best for the so called Union/Banksters. Franco threats could well be the catalyst that drives them there.

AnAnonymous's picture

The socalled nationalists in Europe are actually what should be called pannationalists.

They want one people in Europe. And they are playing the US of A playbook: uniting around the collectivistic notion of race.

Check the targets of the so called nationalists. And the reason for their killing.

SAT 800's picture

"We fear a programmed strangling"  Not to worry, it's all good.

JOYFUL's picture

After a brief flirting with lucidity. our man has returned to his singular celebrity as the blogosphere's greatest ED GRIMLEY phrase be too hackneyed, no stereotype too tired to foist upon the the tuneless tonation of his triangl[ular] reasoning,

this Wolf with the Worm's eye view of the World spins more TEUTONIC TALL TALES editing out the major part of modern European history the better to achieve the desired storyline.

in truth, there is nothing at tall out of the ordinary about the current spat between Germany and it's reluctant southern hinterlands...all is nothing more than a replay of the same dynamics as when the so called Latin Union of the south, headed up by France, was forced to devalue it's silver coinage by pressures from the same Anglo-American sphere as is currently in control of currency distortions...and the delicate balance of bitmetallism [which had seen a long period of time free of the serial bloodletting which occurred both before and after] was terminated so that the moneychangers could return to their monopoly Kapitalism Kartel.

Germany, with the help of  it's heist of Frankish gold through the so called Franco-Prussian War Reparations set itself up with the gold standard that would abet the efforts of other bought n paid for politicos in the Anglosphere to help out their puppetmasters to eliminate currency competition and return the peeples of the West to their desired position of neo-serfs...and cannon fodder for their endless wars for profit.

the centuries change, the many moons wax n wane, but always, the game remains the report otherwise, as the top banner Bafflers do here on ZH every day, is to choose collaboration with the moneypower over honest reportage....which is "completely mental...I must say!"

slewie the pi-rat's picture

poor wolf!  he's just trying to get a taste of the imperial eagle in here?  L0L!!!

zola's great work of this war and his fabulous characters surrounding napoleonIII who is racing hither and yon with his kitchen and his gold in the royal carraige and entourage, getting in the way of everything:  theDebacle  

that whole empire collapsed  when zola was about 30 (1871) and collapsed may be an understatement;  the prussians arrived in paris and nobody knew how the hell to behave on either side

zola never saw a clusterfuk he didn't want to write about, and this soars like the two young eagles who entertained me late this morning

they were riding the hot air currents and compressions out of the valley below;  i followed one up, visually, from above the trees below me in the creekbed where s/he may have started

hundreds and hundreds of feet of near-effotless elevation and fiery trailing edges later, i see the other one already way aloft and they are circling and stalling/ folding and getting ready to dive, but just playing and not diving

wide- and deep-winged, foreshortened into the delta tail so far and yet so near

sangell's picture

France was a big dog in the EEC but those days are over. Pushing West Germany around was one thing. Pushing united Germany with its Austrian and Dutch auxialliaries around is quite another. Sarkozy made a big mistake in snubbing David Cameron as Cameron was only playing the traditional British role of maintaining the balance of power on the continent but now... Hollande isn't going to even have the option of appealing for British support as he seeks to confront Germany.

Akrunner907's picture

Just a chapter out of "The Coming Insurrection."  

mjk0259's picture

Thanks Wolf. Your articles are always interesting.

mjk0259's picture

Are Germany and France really arch-competitors? France makes a few cars but they are barely in machine tools or advanced engineering apart from Nuclear which Germany is abandoning. France has a lead in international retail, fashion, perfume. Germans not trying to compete there. France is pretty much focused on their own country. Seems to be working OK for them compared to US.

Yen Cross's picture

The collision course with Europe is "top/down"!

  If you want to post! BE FACTUAL!