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A Grimy Dipstick into France’s Gritty Economic Realty

testosteronepit's picture




 

The first quarter of 2012 was brutal for businesses in France: 16,206 filed for bankruptcy. A trajectory that may demolish the prior annual record set in 2009 during the worst of the financial crisis when 61,595 firms went bust. Since then, bankruptcy filings eased off:  58,673 in 2010 and 58,195 in 2011. But now the direction has changed—and worse, it is threatening a lot more jobs.

Bankruptcy filings aren’t clean, unlike GDP numbers which are adjusted and groomed and beautified in a million ways; they’re raw and ugly, but useful, like a grimy dipstick into the gritty reality at the bottom of the economic crankcase. Under French law, they fall into three categories: liquidation, restructuring, and “safeguarding,” an option since 2005 that allows debtors that are not yet insolvent, but can demonstrate financial distress, to benefit from the safeguarding proceedings—with the goal of keeping teetering companies from toppling.

While the increase in the number of the filings was only 0.3% over last year, the composition has changed and larger firms with more employees have filed. Tiny outfits with 0 to 2 employees, representing the vast majority of the filings (11,565), actually declined in number, many having been wiped out earlier during the crisis. But the larger companies with sufficient resources to survive the crisis were getting whacked: filings by those with 3 to 9 employees (3,490 firms) inched up 1.6%, those with 10 to 49 employees (1,028 firms) increased by 5.2%, those with 50 to 99 employees (69 firms) jumped 11.3%, those with 100 to 200 employees (40 firms) skyrocketed a sobering 73%, and those with over 200 employees (14 firms) jumped by 16.7%.

That larger firms are now crumbling at a faster rate is a sign of just how tough the economy has become. Unlike their German counterparts, they’re not focused on exporting to developing nations where business has been a heck of a lot better than in France or in much of Europe. The French auto industry is an example. It's in deep trouble, with nefarious consequences for smaller suppliers. But not just in France. The R-word—restructuring—is being bandied about with dire warnings of plant closings and mass layoffs. Exactly what you can't easily do in Europe. For that whole debacle, read.... Fiasco in the Auto Industry.

The companies that filed for bankruptcy in the first quarter represented 65,200 jobs that are now threatened or are already evaporating—up a breathtaking 16% from last year. Unemployment has grown for ten months in a row to 2.87 million in February, the highest since October 1999. Unemployment and underemployment rose to 4.28 million, the highest ever. Job offers sagged 9.5% from a year ago.

With companies and jobs at risk, the French are searching for a savior, a veritable deus ex machina. Well, not Nicolas Sarkozy and not François Hollande, though one of them will most likely occupy the Elysée for the next five years. But protectionism—according to a just released IFOP poll. And it would violate the most fundamental rules of the European Union:

- 82% believe that globalization is bad for jobs in France.

- 75% believe that competition with countries like China or India will have negative consequences for jobs in France over the next decade.

- 69% believe that globalization worsens France’s budget deficits.

- 70% believe that a solution to globalization would have to include an increase in duties on products imported from developing nations.

- 62% believe that France should erect customs barriers against imports from developing nations if the European Union refuses to do so.

- And only 22% believe that open markets are a "good thing" for France.

However, instead of drowning in a sea of protectionist unanimity, some intrepid dissenters spoke up:

Without globalization there would be no roadworthy car, there would be no cell phone in France, there would be no internet line.... This survey is really an expression of the pervading cowardice that has spread over the French people, incapable of taking up a vital challenge, that is to roll up their sleeves to take up the challenge of competition and revive our forces thwarted by massive assistance and social excess...! Get up, France, go to work, our children will thank you!

The majority of the businesses that have filed for bankruptcy have been in trouble for years and have used up their resources trying to stay alive. Now the moment of truth has come. Even large firms are struggling. But when they’re trying to lay off people, their executives may be rewarded with a very special, uniquely French treatment....  Taking Bosses Hostage with Impunity: a Labor Negotiating Tactic in France.

 

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Thu, 04/12/2012 - 19:11 | 2339834 THE DORK OF CORK
THE DORK OF CORK's picture

Hey, the 2 CV was a cheap 50MPG sportcar...........in the right hands

 

www.youtube.com/watch?v=CvJp1X3qiog

Thu, 04/12/2012 - 18:27 | 2339678 Joebloinvestor
Joebloinvestor's picture

French legal system is fucked up and corrupt.

Divorce laws are biased and "notars" are corrupt as hell.

The ones that can dodge the taxman as bad as the Greeks do.

The French ignore their immigration problem.

Thu, 04/12/2012 - 17:02 | 2339400 jeff314
jeff314's picture

allez vous faire foutre sale americain

Thu, 04/12/2012 - 17:55 | 2339588 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Je suis completement en accord avec tout ca. Mais vous avez des vrais cons dans le gouvernement chez vous aussi. Les gens en generale sont pas mals

Thu, 04/12/2012 - 17:01 | 2339394 SAT 800
SAT 800's picture

Never know where to post these trade notes; My short position in the US Treasury Bond, basis June, on the CME; at 141-15 is ahead $1,000 per contract now; and I'm putting the stop loss on at 142; and I'll just let it ripen for awhile. I love it, when people give me free money.

Thu, 04/12/2012 - 16:32 | 2339291 steve from virginia
steve from virginia's picture

 

Every country in Europe (and the rest of the developed-ing world is on the same chute to hell, this includes analysts' pets China, Russia, India and Brazil. Burning up yr resources for free is bad economics.

Our ancestors left much good behind with hand tools and hard work, artistry and restraint. Not us, what we leave behind is junk cars and pollution, war casualties and fat.

Fat fat fat!

Here we go, one more time: peeps have a choice to drive a car or have a decent job. What kind of job? Anything but cars and car-related, finance and thievery related. That leaves a lot. In the age of hand tools and hard work there was no shortage of the work.

Next choice after the current version is drive a car or have something to eat. That one is a real beyatch.

Have a nice fucking day!

Thu, 04/12/2012 - 21:28 | 2340181 smiler03
smiler03's picture

What the fucking hell are you on about? All I can work out is you don't like cars. It would be interesting to know just how much of your lifestyle is totally dependant on transport.

Thu, 04/12/2012 - 16:03 | 2339168 slowimplosion
slowimplosion's picture

Yes, we should all compete with people living in huts and shitting in a ditch!  I for one cannot WAIT until Wall Streeters are having to!

 

Globalization has worked out well for the elites and no one else.  Fuck that.

Fri, 04/13/2012 - 05:39 | 2340959 Zero Govt
Zero Govt's picture

globalisation started over 2,000 years ago with merchants plying routes from Europe to India, China and Timbuckto

what the elites do with globalisation is their game, what the majority of business does is good trade ..don't knock it all for a few rotten eggs

Thu, 04/12/2012 - 15:41 | 2339090 mholzman
mholzman's picture

France has been isolated for some time and has been trying to enter a world of games they do not understand. They have improved their tech/engineering nearly comparable to Germany, but they do not have the designer signature.

There is no out for any country today. However, I can understand and have much sympathy for the confusion of the people in France. I believe their best path is to stick with Sarkozy. The fork in the road is a dramatic change which will probably impact all of Europe.

 

Thu, 04/12/2012 - 16:38 | 2339304 Ghordius
Ghordius's picture

I'd say they know well the game - hence the trade-block push.

Thu, 04/12/2012 - 15:37 | 2339074 Zero Govt
Zero Govt's picture

Good article Wolfy

i very much enjoy (?) the gritty down to earth numbers of bankruptcies you're quoting from countries around Europe.. far, far more real than the massaged political footballs of GDP, unemployment etc etc 

it's gonna get rough out there

Thu, 04/12/2012 - 15:15 | 2338987 non_anon
non_anon's picture

what percentage of France are immigrants and on the states welfare?

Thu, 04/12/2012 - 13:57 | 2338692 Jack Sheet
Jack Sheet's picture

This is a lot better than the crap over at Graham Summers.

Thu, 04/12/2012 - 12:51 | 2338471 GeezerGeek
GeezerGeek's picture

Somehow I just can't seem to find any sympathy for the French. It's as if they're still suffering psychologically from the defeat Napoleon and his Grand Army suffered at the hands of the Russians.

Thu, 04/12/2012 - 14:39 | 2338847 ElvisDog
ElvisDog's picture

I think there is a more recent reason. They can't stand that people still make jokes about them collapsing and surrendering to the Germans after only 6 weeks in 1940.

Thu, 04/12/2012 - 12:31 | 2338396 AndrewCostello
AndrewCostello's picture

The French should grab the opportunity that stupid Americans have given them and ask Ron Paul to run their country.

Read:

http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref

Thu, 04/12/2012 - 21:23 | 2340165 smiler03
smiler03's picture

Still Pimping your book Mr Andrew Costello.

Buy his book!! Only $13.49

 

He thanks Tyler for the opportunity to advertise for free.

Thu, 04/12/2012 - 12:29 | 2338383 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Ah, ma cherie...but the French go bankrupt with more style.  

Funemployment means more time to sip coffee in cafes & smoke those thin cigarettes while mocking other less-refined Europeans.

 

Thu, 04/12/2012 - 12:23 | 2338355 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

"With companies and jobs at risk, the French are searching for a savior, a veritable deus ex machina. Well, not Nicolas Sarkozy and not François Hollande".

Hey U stuck up Frenchmen.  U can get Ron Paul to run France!  Americans are too stupid to vote him in!  Hurry up though...

Thu, 04/12/2012 - 12:21 | 2338340 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

LOL.

Sounds like a quote from a movie where Humphrey Bogart plays an economist that smokes cigarettes & solves murder mysteries, or a quote from a Tarantino movie about economists:

"Bankruptcy filings aren’t clean, unlike GDP numbers which are adjusted and groomed and beautified in a million ways; they’re raw and ugly, but useful, like a grimy dipstick into the gritty reality at the bottom of the economic crankcase".

Thu, 04/12/2012 - 12:16 | 2338317 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Vive Le Economique Collapsisez!!!!!!!!!!!!!!!!!

Thu, 04/12/2012 - 11:54 | 2338194 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

 

 

"there is no Hell,

there is no Hell,

there is only..... France ! "

(FZ)

Thu, 04/12/2012 - 11:52 | 2338160 Sanksion
Sanksion's picture

As a French, I can tell you, if the world was leaning toward free market, the last standing socialist survivalist would be France. There is no hope, there will be no change, there is no future in this country. Backwarded, pussyfied, arrogant, and they think they are the light to shine on humanity, really.... There is nothing good to expect from France. The scarriest topic is that we run a lot of old nuclear power plants. At least, we'll have some wine to forget.

Thu, 04/12/2012 - 15:38 | 2339080 mholzman
mholzman's picture

France is the only salvation on energy without utilizing Russia. Wait until your electric bill comes from Putin.

Thu, 04/12/2012 - 13:37 | 2338629 Hugh_Jorgan
Hugh_Jorgan's picture

Look on the bright side, French companies make some good tyres! (I run Dunlops exclusively on all my vehicles).

Alright, so maybe that doesn't mean squat...

Fri, 04/13/2012 - 13:11 | 2342120 Sanksion
Sanksion's picture

Hmm, did'nt notice, I run Yokohama. Cheaper. 

Thu, 04/12/2012 - 12:16 | 2338320 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Sounds like America!

Thu, 04/12/2012 - 12:09 | 2338275 Colombian Gringo
Colombian Gringo's picture

And lovely ladies to divert you, when you can afford it :-)

Thu, 04/12/2012 - 14:35 | 2338838 ElvisDog
ElvisDog's picture

What I love about French women is that they are mostly thin and like to wear blouses unbuttoned so as to reveal their middle cleavage. Awesome.

Thu, 04/12/2012 - 16:12 | 2339207 BeetleBailey
BeetleBailey's picture

True. But the glowing ones from living too close to the ancient nuke reactors are somewhat disconcerting.

I said somewhat - as in if you're going to go, what a way TO go!

Thu, 04/12/2012 - 18:14 | 2339647 CharlieSDT
CharlieSDT's picture

French chicks are no longer hot, that is a forgotten memory from years ago.  Today, no high heels, no good outfits, no makeup.  Instead, Converse sneakers, drab colors and feminism.  France is basically a hipster country now.

 

www.singledudetravel.com

Thu, 04/12/2012 - 11:45 | 2338142 apberusdisvet
apberusdisvet's picture

The French used to be masters of haute cuisine, but the PC obesity terrorists killed that.  They taught GIs the many pleasures of soixante-neuf, but the average American 5th grader can outlick/suck with the best of them.  The only thing that they are good at that has withstood the test of time is surrender to the Boche.  Viva the 4th Reich!

Thu, 04/12/2012 - 11:35 | 2338056 Clowns on Acid
Clowns on Acid's picture

Kidnapping Insurance in Europe should be a good buy right about now..... I know a reputable Mexican that makes a tight bid/ask quote in that market.

Welcome to the end of Keynesian economic policy and the dawn of the new Dark Ages, but we all knew that it would turn out that way.

Now.....what should be the penalty for all those left wing Keynesian kleptocrats?

 

Thu, 04/12/2012 - 15:32 | 2339051 Zero Govt
Zero Govt's picture

letting them try to find work in the private sector, after years of cushy over-paid worthless public sector careers, will be punishment enough

Thu, 04/12/2012 - 11:28 | 2338032 Dr. Crime
Dr. Crime's picture

Great essay.

These numbers paint a grim future for the consumers in Europe's second largest economy. The protectionism focus of the populace is particularly troubling, yet understandable in terms of the national attitude of most Frenchmen.

There is limited choice enough in terms of consumer goods in France as it is. I remember visiting a Home Depot in America recently and looking around and thinking, I have more choices in this one store than I would have in the entirety of France.

So if the government were to bow to populous sentiment then anyone living there will see their choice of goods decline further. Thankfully there is plenty of good and inexpensive wine available to ease the pain.

Thu, 04/12/2012 - 16:42 | 2339320 battle axe
battle axe's picture

That is it, lets dig up De Gaulle, he will Know what to do. Who is with me?

Thu, 04/12/2012 - 11:51 | 2338178 Thamesford
Thamesford's picture

The literal translation of the survey is: " I fart in your general direction. Your mother was a hamster and your father smelled of elderberries"

 - Fetchez la vache!

 

Thu, 04/12/2012 - 12:09 | 2338269 Colombian Gringo
Colombian Gringo's picture

With a bad economy, does this mean that I will get discounts when I visit my female 'friends' in the Pigatelle? 

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