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Guest Post: Merkollande Becomes Merde

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Submitted by Pater Tenebrarum of Acting-Man blog,

European Discord Mounts – The Fraying Franco-German Alliance

The most important alliance within the EU, the one that has ultimately defined the union's course over the past few decades, is the French-German axis. It appears that this is no longer the case. The once so strong friendship is in danger of fraying ever since the socialist Francois Hollande has become president of France. Not only was he elected on an 'anti austerity' platform (disguised as a 'pro growth' agenda, which is of course one of the most laughable misrepresentations ever),  it has turned out that his big-brother, anti-free market socialist agenda wasn't merely an electoral ploy to differentiate himself from Sarkozy. He actually means it.

This puts him at odds with the at least nominally conservative chancellor of Germany, Angela Merkel. Shortly after Hollande's election, the tone of  commentary emanating from Germany was still marked by cautious optimism. Sure, so the story went, Mrs. Merkel would have preferred it if she had been able to continue working with Mr. Sarkozy. But we don't always get what we want, and surely it would be possible to find enough common ground with Mr. Hollande on questions concerning Europe. However, in the euro area, it is no longer so easy to completely divorce domestic policy from euro-land policy. And Hollande's domestic policies are setting a terrible example.

How can Germany demand free market-oriented reforms and austerity from the periphery while the French president implements anything but with great fanfare in France?

The growing rift was not yet as glaringly evident during the first EU summit in which Hollande took part, although the summit was notable for creating the impression that 'Germany was backing down on key demands' according to the press – ostensibly due to Mario Monti digging in his heels. However, Monti, Rajoy, Hollande and Merkel had met ahead of the summit to clear up the most important questions, so it seemed likely that we merely witnessing an example of well staged political theater. Monti was under great deal of political pressure at the time and had to return home with a 'victory'.

In the run-up to last week's 'banking union' summit, the vast gulf between the diverging opinions of the French and German administrations garnered some attention however. Apparently this time, it was rather more difficult to find common ground. As 'Der Spiegel' noted at the time, it seemed as though the moniker 'Merkozy', which was at first replaced with 'Merkollande',  was on the verge of being shortened to 'Merde':

"A bit of brinksmanship on the eve of European Union summits is to be expected. Heads of state and government are fond of going public with what they hope to achieve, only to make concessions once negotiations begin in Brussels. What might look like a deep abyss prior to the meeting will often be bridged.

 

But this time around, the self-serving rhetoric has been so intense that it is difficult to imagine the 27 EU leaders coming to agreement at the two-day summit, which begins on Thursday afternoon. First, it was German Finance Minister Wolfgang Schäuble, from Chancellor Angela Merkel's conservative Christian Democrats, who went on the offensive on Tuesday with a far-reaching plan to outfit Brussels with a veto right over national budgets. The position, widely referred to as a "super-commissioner," would even be able to override national parliaments, a taboo in Paris and in many other European capitals.

 

Then, in an interview with five leading European dailies, French President François Hollande repeated a proposal that isn't any less controversial. He wants to see the introduction of euro bonds, in addition to the installation of a euro-zone wide banking oversight authority by the end of the year. In Berlin, euro bonds are categorically rejected. And Hollande's timeline for banking oversight, combined with serious differences between Paris and Berlin on what such a regime might look like, is seen in Germany as unrealistic to the point of being an affront.

It almost seems as though Paris and Berlin are intentionally getting in each other's way. Germany wants to further stiffen EU budgetary rules and would like to amend EU treaties as quickly as possible next year to make it possible. France, on the other hand, believes the priority should be the collectivization of debt and rapidly installing bank oversight. For the summit, the result is likely to be a stalemate. The new Franco-German partnership of Merkollande is on the verge of earning a less flattering moniker: Merde."

(emphasis added)

 

Not seeing eye to eye: Francois Hollande and Angela Merkel.

(Photo credit: Getty Images)

Although the German government has refrained from publicly commenting on Hollande's domestic policies, it doesn't require a big leap of the imagination that the bizarre and outmoded socialist program implemented by the French administration is regarded with some apprehension from Berlin. There is not only the already mentioned signal that France is sending to the rest of Europe one needs to consider. There is also the not unimportant question of how France is going to be able to adhere to the deficit and debt targets of the 'fiscal compact' if Hollande runs its economy into the ground. Should France miss its targets, what can Germany do about it? In reality, not much. And should the markets begin to get worried about the sustainability of France's government debt, then it will be all over but the shouting.

 

What Angela Merkel dreams about: the much happier times when Ersatz Napoleon was still around.

(Photo credit: Philippe Wojazer/AP/Press Association Images)

 

Parallel Universes

In its latest edition, Der Spiegel once again tackles the topic of the Franco-German alliance, this time asserting that a 'crisis of confidence' has developed. France and Germany, so the magazine, now inhabit 'parallel universes' and relations have turned 'frosty'.

“Since the days of former German Chancellor Konrad Adenauer and former French President Charles de Gaulle, Germany and France have generally been run by politicians who placed more value on unity than their differences. The axis between former German Chancellor Helmut Schmidt and former French President Valéry d'Estaing axis proved to be just as resilient as the partnership between their successors, Helmut Kohl and Francois Mitterand.

 

Frosty Relations

 

Under Merkel and Hollande, however, the German-French partnership threatens to deteriorate into nothing but a façade. The two politicians, who hold the fate of the continent in their hands, greet each other politely with kisses on the cheek, and their respective public relations staffs extol their "professional" and "trusting" cooperation.

In truth, however, the relationship began on a cool note and has since slipped below the freezing point. Hollande doesn't want to forgive Merkel for having campaigned for his conservative opponent, former President Nicolas Sarkozy. Now the Chancellery suspects that Hollande is secretly planning a campaign for Merkel's challenger from the center-left Social Democratic Party (SPD), former Finance Minister Peer Steinbrück.

 

Mistrust shapes the relationship between Paris and Berlin, on issues ranging from future European bank regulation to the joint aerospace and defense group EADS and the future architecture of Europe. Hollande suspects that Berlin is using budget consolidation as an excuse to gain European dominance. Merkel notes with unease that Hollande is joining forces with Rome and Madrid to form a joint axis against Germany.

 

Last Monday, a joint interview with the French president at the Elysée Palace given to six European newspapers offered a sense of how deep the divide is. In the one-hour meeting, Hollande not only criticized German policies more sharply than he ever has before since taking office, but he also rebuffed Merkel's austerity course. "It is France's task to tirelessly tell our partners that there are alternatives to a policy of austerity," Hollande said.

 

His predecessor Sarkozy also had differences of opinion with Merkel. Nevertheless, the two leaders always managed to agree on a joint position prior to a summit. This has changed, with the two sides now intensifying rather than smoothing over their conflicts prior to meetings.”

(emphasis added)

But what are Hollande's vaunted 'alternatives to the austerity policy'? The new socialist “Zwangswirtchaft” model that he is implementing in France and which marches on inexorably, from one absurdity to the next? If Spain were to attempt to do the same, its bond market would crash in an instant.

To be sure, Hollande is not entirely wrong when he accuses the German government of having 'double standards'. As we have often pointed out, Germany itself has little moral standing in demanding that others cut their debt loads while it is in flagrant violation of the Maastricht (now 'fiscal compact') limits itself. The unilateral scuttling of the EADS/BEA merger was an inexplicable oddity as well. However, the Germans are quite correct when they grumble about the unprofessional attitude revealed by the  'journalistic broadsides' Hollande lately fires at them and about Hollande's economic policies at home. As an unnamed German official noted privately: “You don't get France's problems under control by raising taxes and lowering the retirement age.”  In fact, this is not only not the way to get France's problems under control, it is sure to add to the growing list of problems of the euro-zone as a whole.

One thing is certain: the markets have not yet fully assimilated what is going on here. If relations between France and Germany continue to fray, it will become highly likely that the euro area will eventually fall apart with a bang. After last week's summit, which predictably did not result in anything tangible,  Hollande sotto voce declared that “Europe is very close to ending the debt crisis” and had “taken the right decisions” (actually, no decisions have been taken at all). Ironically, he also proposed that the “surplus countries should lower their taxes”. This must have been the first time ever that Hollande has put the terms 'lower' and 'taxes' into the same sentence. Of course he is on safe ground here, as France is definitely not a surplus country:

 

France's trade deficit – click for better resolution.

 

France's current account deficit – click for better resolution.

 

Still, we can finally commend him for uttering a good idea: lowering taxes is always a good plan, no matter who pursues it. Let's get on with it.

Unfortunately he proposed a very bad idea in the same sentence: the surplus countries should also “raise wages”. He did not mention that rising wages need to be accompanied by gains in labor productivity – no, he wants the countries with trade surpluses to make themselves deliberately less competitive, which is an utterly nonsensical demand. Not only is it absurd, period, it is especially so as no country is an island, and neither is the euro area as a whole. German producers not only need to consider the European market – they must stay competitive globally. Obviously, to deliberately make one set of countries less competitive is fundamentally very different from altering conditions in those that are currently not competitive in a positive direction. Hollande is essentially saying: 'I'm implementing terrible policies at home – those with better policies should drag themselves down to my level, so as to blunt the harm I'm inflicting on France in the service of unworkable socialism.'

 

Addendum: BuBa Still Unhappy with the ECB

The Bundesbank's latest monthly report has come out yesterday (at the moment, unfortunately only the German version is available), and it is evident that the German central bank continues to look askance at Super Mario's foray into manipulating interest rates in euro area crisis countries by buying their debt.  We mention this here because this rift between ECB and BuBa is in a way mirroring the rift between France and Germany. If it were up to France, Draghi would no doubt already be a clone of  Bernanke. Alphaville has a brief comment on the BuBa's report, summarizing several of the salient points. We intend to provide a more extensive overview in an upcoming post.

 

 

Another picture from happier times, when France and Germany were working closely together: Francois Mitterand and Helmut Kohl are commemorating the dead of World War 1 in Verdun in 1984. It was a 'symbolic moment of reconciliation between the two countries' as Der Spiegel remarks.

 


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Tue, 10/23/2012 - 15:10 | Link to Comment catacl1sm
catacl1sm's picture

MOAR!

Tue, 10/23/2012 - 15:22 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Tenebrarum is almost surely correct.  Conflicting positions between rational (but embattled) Merkel and stupid (or worse) Hollande are unlikely to help Europe arrive at a set of rational solutions to help bring them back.  I do not see that happening.  Now I have to go see Nigel's harangue...

Tue, 10/23/2012 - 15:26 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Swine-hella Merde-kell

Tue, 10/23/2012 - 15:56 | Link to Comment 7thCardinal
7thCardinal's picture

I'm long tear gas 

Tue, 10/23/2012 - 15:10 | Link to Comment Unprepared
Unprepared's picture

What the world is getting to if we start regretting Bush, Berlusconi and Sarkozy?

Tue, 10/23/2012 - 15:42 | Link to Comment knukles
knukles's picture

Or that classic billboard with Carter's pic and the line

"Miss me yet?"

Tue, 10/23/2012 - 15:14 | Link to Comment magpie
magpie's picture

Yup, only means France will try to hoist the social democrats and Greens into power in Berlin.

Montrez-vouz l'or, putains

Tue, 10/23/2012 - 16:07 | Link to Comment Motorhead
Motorhead's picture

LOL...putains! 

Tue, 10/23/2012 - 21:21 | Link to Comment CPL
CPL's picture

But you are using too formal of french.

 

T'montres l'or, Putain!

or

T'montres l'or, Osit!

(if in Canada)

 

Tue, 10/23/2012 - 15:14 | Link to Comment Hedgetard55
Hedgetard55's picture

What, another multi-millionaire "socialist"?

Tue, 10/23/2012 - 15:23 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Qui est Jean Galt?

Tue, 10/23/2012 - 16:38 | Link to Comment YuropeanImbecille
YuropeanImbecille's picture

Hollande is actually a Israeli.. so this was to be expected all along. He hates the french and the Europeans and his goal is to fuck things up so bad that war will be the only solution for the poor, stupid fuckers that voted this satanist into office.

Tue, 10/23/2012 - 15:16 | Link to Comment Winston Churchill
Winston Churchill's picture

What no Falak telling us its really all sweetness and light , and that unions

of disparite groups are good for them,no matter what they might  want.

Coutersey phone for Falak.

Come out wherever you are...

Tue, 10/23/2012 - 15:22 | Link to Comment orangegeek
orangegeek's picture

France = Greece

Tue, 10/23/2012 - 15:39 | Link to Comment Nothing To See Here
Nothing To See Here's picture

Even worst. Greece at least invented philosophy. France invented both communism (Rousseau) and fascism (Robespierre).

Tue, 10/23/2012 - 15:43 | Link to Comment knukles
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And deciet as in perfume for they refused to bathe.

Mask over the real problem....

Tue, 10/23/2012 - 16:06 | Link to Comment Motorhead
Motorhead's picture

Pastis vs Ouzo...ouzo wins.

Tue, 10/23/2012 - 17:19 | Link to Comment ThirdWorldDude
ThirdWorldDude's picture

I'll have a Courvoisier, merci...

Tue, 10/23/2012 - 15:23 | Link to Comment Bam_Man
Bam_Man's picture

They look like one of the very unhappily married couples I know.

Tue, 10/23/2012 - 15:23 | Link to Comment Jugdish
Jugdish's picture

An old East-German Commie with a mullet at odds with a French Commie who looks like a creepy boy lover. Dude whigs me out. Breathe normailly. Prepare for mist.

Tue, 10/23/2012 - 15:24 | Link to Comment AGuy
AGuy's picture

"Now the Chancellery suspects that Hollande is secretly planning a campaign for Merkel's challenger from the center-left Social Democratic Party (SPD), former Finance Minister Peer Steinbrück."

Wouldn't that help Merkel? I would think that Hollande's policies will be as welcome as a Communism in 1950's America to the average German Worker.

Tue, 10/23/2012 - 15:25 | Link to Comment optimator
optimator's picture

Schuman and Adanauer I believe forged it started it off.

Tue, 10/23/2012 - 15:26 | Link to Comment LongSoupLine
LongSoupLine's picture

what does any of this have to do with the iPad mini?

Tue, 10/23/2012 - 15:44 | Link to Comment knukles
knukles's picture

French broads have small cooches.

Hey sweetie, nice legs.
What time they open?

Tue, 10/23/2012 - 19:57 | Link to Comment schadenfreude
schadenfreude's picture

Or the soup line? Fuck off stupid troll

Tue, 10/23/2012 - 15:28 | Link to Comment loveyajimbo
loveyajimbo's picture

Socialists, like Hollande and Obama are, in fact merde themselves... hopefully the illegals will not sway the election to the Kenyan dog turd.  Let's make China an ally, then invade and take over Saudi Arabia and Iran... Wheeeeeee!! cheap oil forever!!  the citizens can be relocated to haiti and Somalia and Siberia.

Tue, 10/23/2012 - 15:33 | Link to Comment Goatboy
Goatboy's picture

One politician finally does what he promised and was elected for and its still bad because he is a socialist?

What a load of reactionary bullshit! Times are tough.. how about some actual solutions instead of constant reactionary critique based on anti-social, unrealistic, utopian bullshit?

Say it outloud and clear: Should we dump everyone down the drain and wait for fucking markets to reach eventual equilibrium during 25th century? How clearer could it be? There is higher chance for Jebus's second coming.

Tue, 10/23/2012 - 15:38 | Link to Comment rosethorn
rosethorn's picture

Goatboy is right.  The current Bernanke/Geithner kick the can down the road strategy is a failure.  At least the French are willing to try something different.

Tue, 10/23/2012 - 15:43 | Link to Comment Nothing To See Here
Nothing To See Here's picture

I see your rationale. Communism only killed 20 million people, let's give it another chance. Or something like that, right?

Now I must return banging my head against the walls, hoping that MORE socialism will fix the mess we're in.

Tue, 10/23/2012 - 15:45 | Link to Comment rosethorn
rosethorn's picture

What the Germans have been doing for the last ten years is no less a form of socialism than what Hollande seems to be intending.

Tue, 10/23/2012 - 16:06 | Link to Comment walküre
walküre's picture

If you're refering to Hartz IV and the employment offices, I beg to differ. They got people off unemployment because they had to take 1 out of 3 jobs or get cut off by the knees. Those jobs were minimum wage jobs, about 4 Euro per hour. Voila. The rate of unemployment magically sunk and Germany finally had the low wage slave labor it lost with unionization. Mind you the policy was proposed and enacted by the charlatan and Merkel's predecessor Gerhard Schröder (Socialist Democrat cough cough). The industry loved that shit. Today Gerhard works for Nordstream AG, part of the Russian Gazprom conglomerate. He's well looked after. Good "socialist" boy..

Tue, 10/23/2012 - 16:49 | Link to Comment Nothing To See Here
Nothing To See Here's picture

Fascism has its roots in socialism (both anti-capitalist doctrines). I don't know how going socialist with Hollande is supposed to be any cure.

Tue, 10/23/2012 - 15:49 | Link to Comment rosethorn
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"Hollande suspects that Berlin is using budget consolidation as an excuse to gain European dominance." 

This is not an unreasonable concern.

 

Tue, 10/23/2012 - 20:02 | Link to Comment schadenfreude
schadenfreude's picture

Hollande is a communist

Tue, 10/23/2012 - 15:59 | Link to Comment azzhatter
azzhatter's picture

 

Oh Nicky, I didn't bring the strap on today

Tue, 10/23/2012 - 16:13 | Link to Comment lemonobrien
lemonobrien's picture

the french pissing off the nazies; hmmm... nothing new under the sun.

Tue, 10/23/2012 - 16:24 | Link to Comment Joe A
Joe A's picture

Gawd, Europe is divided along the line Germanic people vs. Latin people. What is new?

Tue, 10/23/2012 - 16:35 | Link to Comment elwu
elwu's picture

"The unilateral scuttling of the EADS/BEA merger was an inexplicable oddity as well"

The UK had the HQ of the military part of the merged company. France the civil one, in Toulouse. For Germany, nothing would have been left except a few shares w/o any real influence. Logically, Germany requested to get the overall HQ. France and the UK said no. So Germany had no choice than to cancel this merger. But this was in fact the result of a trilateral thing, not unilateral. Besides, since the Aventis story, Germany knows very well where France axes jobs after a merger.

Aside from the political aspects: the planned 60/40 weight distribution between EADS and BAE was a bad joke, considering the huge uncovered pension liabilites and the rather empty order book of BAE. 90/10 would have been more appropriate.

Tue, 10/23/2012 - 17:24 | Link to Comment falak pema
falak pema's picture

Nobody can deny the differences of substance between Hollande and Merkel in the current conundrum. But the underlying crisis is so heavy that these differences have to be faced; as there is no half way measure. 

As indicated in a different thread, Farage is bawling about "the total subjugation of Europe". If the French-German axis folds, there will be no total subjugation to anything.

Its one or the other. EIther the French-German axis holds in the face of this historic challenge or it doesn't.

So its Tenebrarum or its Farage; no half way measures for Europe. This post is more impressed by histrionics of franco-german differences than on substance. Whatever France does in terms of austerity or protectionism, in comparison to the banking sink hole, is peanuts. Keep your eye on the main issues. Not on the crisis of nerves. Either the concerted effort of central banks means we have a leviathan statist world or we'll have financial Armageddon and more. 

 

Tue, 10/23/2012 - 17:35 | Link to Comment Zero Govt
Zero Govt's picture

the socialists in France love, love, love the EU project.. it was their idea afterall

if anyone pulls the plug it'll be Germany, not France. And it won't be anything to do with France, it'll be down to the 1st four on the chopping block, Greece, Ireland, Spain and Portugal

Merkal will balance staying in and supporting these bankrupt morons against her election chances if she's seen pissing more German money away on those losers. She'll probably pull the plug and save as much as she can to refinance her imploding banks over-exposed to the 4 PIGS

Tue, 10/23/2012 - 17:42 | Link to Comment falak pema
falak pema's picture

If she pulls the plug now she pulls the plug on the whole capitalist world; its major financial crisis bigtime.

Its NOT about franco-german baby stuff, its about the biggest crisis since the 1930s, but worse.

I don't feel flippant about that. 

Tue, 10/23/2012 - 17:56 | Link to Comment magpie
magpie's picture

If they can QE their way into debt mutualization, i would not underestimate their ability to QE out of it. With max pain for all.

Wed, 10/24/2012 - 04:22 | Link to Comment falak pema
falak pema's picture

+1

The Leviathan central planned state of first world in cahoots with the Corpocracy cartels of extractive, private, commodity empires; Neo-feudal age where the welfare state and middle class democracy as we understand it will just disappear.

Hollande, in his current role, like a true son of Machiavelli, is PLAYING the last Mohican of the old welfare state model, and he is fighting a rear guard action which will end where it will end, like for Chingachgook...Then he will say what his mentor Mitterrand said : We tried everything but its just impossible, we CAN'T bring work back to our economy...useful idiot that he be!

Play on fiancialista oligarchy globalisation, it replaces the olde way : having a true world war to level the field.

Now its the economy "stupid" that levels the playing field, and turns inside out the old welfare states; like GAbriel Pincep's gesture turned inside out the olde colonial empires, in Sarajevo 1914! 

Tipping times for world capitalism construct like then for European empire constructs 1914. This is the current momentum in dangerous Pax Americana Titanic like navigation masterminded by FED/DC/WS oligarchy and surrogate, toothless Euro technocracy. All it takes is for someone to pull the powder keg in the Oil patch-Balkanistan of ME, for the radical nuclear component in the hands of a new Serbo-Bosniac to go boom. Then we will be back to the olde road of true Armageddon! 

Tue, 10/23/2012 - 18:14 | Link to Comment Just Ice
Just Ice's picture

What capitalist world?

The major financial crisis is already here. It has just been hidden behind a wall of refinancing credits and printed paper. Economies are buried under debt with broke governments and institutions. Using Visa to pay Mastercard does not work for long...when one reaches their limit with the creditor or has inadequate funds to make the minimum payment.

Debt deflation will win. Only question is whether it drips out in decades of "cushioned" misery and repeated crises or is allowed to collapse hurriedly making way for renewal.

Tue, 10/23/2012 - 19:29 | Link to Comment Jugdish
Jugdish's picture

Hopefully it doesnt't collapse I want the cushion and incremental feeling of increasingly getting fucked. I Fucking love being a slave to this worthless paper shit. This shit is so cool. Thanks Uncle Ben, Thanks Timmey, u fuckin satyr. After all, I wouldn't want the boomers to lose their retirement. They worked and by GOD they have earned their free nursing home and opiates. By God they are the greatest generation of sacrificiers the Milky way has ever seen.

Tue, 10/23/2012 - 20:09 | Link to Comment schadenfreude
schadenfreude's picture

Hollande is pretty aware of this and tries to get most bang for the buck for France. He is playing a very dangerous game.

Tue, 10/23/2012 - 20:17 | Link to Comment schadenfreude
schadenfreude's picture

edit

Tue, 10/23/2012 - 23:31 | Link to Comment Zero Govt
Zero Govt's picture

Falak  -  i agree it's not about Franco-German baby stuff, in fact i don't believe Merkal has much to say to Hollande, it's all about how Germany deals with the problems on their plate, namely her Govt and banks over-exposure to the Euro-wide Govt and banking debt crisis

again I don't think the Germans give much thought to the impact on others or the "global economy" whatever abstract concept they have of it. It's all about looking after No.1 now, the EU Project is walking dead in all but name and mothballing Brussels

 

Tue, 10/23/2012 - 17:30 | Link to Comment Zero Govt
Zero Govt's picture

"Merkollande Becomes Merde"

Give that headline wrIter a Nobel ha :))

the reason being German car sales in France have fallen off a cliff since Hollande made all too public/threatening wanting to tax the rich (German makers target audience) in France to death

If Mercedes, BMW, Audi and Porsche all get on the blower that Hollande is "f'ing bad for business" well Angela jumps

Tue, 10/23/2012 - 20:17 | Link to Comment Tourist2008
Tourist2008's picture

Mitterand looks even shorter than Sarkozy? What is it about short Frenchmen?

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