As France Lowers Retirement Age, Germany Better Be Ready To Pay For Austerity's Unwind

Tyler Durden's picture




 

As noted earlier, Europe has been so obviously crippled by years of brutal austerity (which, as we pointed out before never actually happened), that it has had to experience the supreme indignity - a miserable two years of plunging flat GDP growth. Because under the old normal, it appears that unless one is issuing massive debt, pardon "growing", society grinds to a halt. Well, it appears that France has finally had enough, and as of today, "the French government approved a measure Wednesday that will lower the retirement age to 60 from 62 for a narrow group of workers, partly reversing unpopular pension reforms made by former President Nicolas Sarkozy as he sought to improve France's public finances." Obviously, this means that more welfare funding will have to be sourced as all else equal, this means less money will be produced by the country's workforce, and more money will be consumed by its retirees. Who will do it? Why German of course. Because after Merkel caved first on Greece, and then on Spain, it is now game over for German "prudence" and everyone will line up at the trough. Congrats Berlin: we can only hope you have discovered those magical money-growing trees. You will need them.

From Dow Jones:

The reform, which is less sweeping than promised by new President François Hollande during his election campaign, comes just days ahead of legislative elections in France and is likely to further fuel questions about Mr. Hollande's ability to make a serious dent in France's deficit against a backdrop of the deepening euro-zone crisis.

 

The government's decision will authorize people who contributed to the pension system for more than 41 years to retire at 60, Social Affairs Minister Marisol Touraine told reporters after the weekly cabinet meeting. The government will also take into account maternity leave and unemployment periods in the contribution period, she said.

 

Ms. Touraine said the reforms will cost €1.1 billion ($1.37 billion) in 2013 and €3 billion in 2017. The extra expenditure will be covered by increased contributions by employees and employers, she added.

 

The measures will allow people who started working early in life and who have paid the required amount of pension contributions over the course of their working life to retire at age 60, instead of the normal minimum retirement age of 62.

 

Ms. Touraine said 110,000 people will be affected by the reform.

We don't know about 110,000 people but we know about one: Angela Merkel. Have fun paying for French early retirement as austerity dies a miserable death.

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Wed, 06/06/2012 - 14:40 | 2500392 Ahmeexnal
Ahmeexnal's picture

Sacre Bleu, Deux Deux!

AVANT!!

Wed, 06/06/2012 - 15:45 | 2500650 Manthong
Manthong's picture

It is only fitting that 41 years of cheese tasting and Champagne sipping should earn an early retirement..

and those legislated five week vacations are brutal.

http://www.cbsnews.com/2100-500164_162-704571.html

Wed, 06/06/2012 - 16:47 | 2500887 DoChenRollingBearing
DoChenRollingBearing's picture

Greek Death Spiral, it's getting VERY real for Greece...

http://www.cnbc.com/id/47700847

Wed, 06/06/2012 - 14:40 | 2500397 eclectic syncretist
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Isn't that where all this is going?  Free money for everyone?  Maybe that's why the central banks are mad at politico's.  They forgot to remember that all the money is supposed to be taken from the taxpayers and given to the banks.

Wed, 06/06/2012 - 14:53 | 2500449 john39
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debt slaves are controllable slaves.  Breaking Germany is probably just part of the plan.

Wed, 06/06/2012 - 15:07 | 2500507 NotApplicable
NotApplicable's picture

For over a hundred years now.

Wed, 06/06/2012 - 15:08 | 2500516 Joe Sixpack
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"...this means less money will be produced by the country's workforce, and more money will be consumed by its retirees..."

The second part is true, but I am not sure about the first.

This means the out of work young people will take jobs (at half the wages) that the retiring 60 year olds have, and they will go off unemployment. French unemployment is 10% (http://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate). If people retire more will go to work (assuming a fit in skills). Youth unemployment is 23% (http://www.indexmundi.com/france/youth-unemployment-rate.html).

This may not be a dumb move.

Wed, 06/06/2012 - 15:16 | 2500538 withnmeans
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Top British MP calls for Greece to leave euro.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_06/06/2012_445582

Wed, 06/06/2012 - 15:17 | 2500543 Joe Davola
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The extra expenditure will be covered by increased contributions by employees and employers, she added.

 

So the youths earning less will end up paying more - c'est le fisted.

Wed, 06/06/2012 - 16:00 | 2500697 TheFourthStooge-ing
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.

So the youths earning less will end up paying more - c'est le fisted.

Französisch Faust ficken - nicht so ausgezeichnet.

 

Wed, 06/06/2012 - 16:16 | 2500748 darkpool2
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Of course thats a total lie ! Those who have contributed 41 years have seen their pension pool monies grow large and fat, and they should be ENTITLED to dip into the pot. No need whatsoever for remaining workers and employers to make additional contributions to cover these costs. Afterall, the money is all there..............isnt it ????????? What,you mean it isnt? Man the guillotine .

Wed, 06/06/2012 - 18:38 | 2501290 Matt
Matt's picture

What's the over-under on when France forms the Sixth Republic?

Wed, 06/06/2012 - 15:19 | 2500550 Bunga Bunga
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Workforce does not produce money, but the banks.

Wed, 06/06/2012 - 15:25 | 2500574 Thisson
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No way, Jose.  The retiring 60 year olds have cushy French government jobs with overpaid salaries and benefits, so no, the replacement workers wont be cheaper.  The new entry-level gov't workers will simply replace the echelon a year ahead of them as they step up replacing those above them, and so on, and so on up to the rank of the 60-year-olds that are retiring, now 2 years earlier, at an additional incremental cost for health care and other benefits.

You cannot make an economy more productive merely by making more promises to pay benefits and entitlements.   Someone, somewhere, has to produce the things that the government wants to give away, and until maximization of production is incentivized, an economy is not going to reach its full potential.

Wed, 06/06/2012 - 21:29 | 2501806 mjk0259
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I would rather retire at 60 then have the economy reach it's full potential? The top 1% get 80% of the wealth. Why do I want to increase that?

Wed, 06/06/2012 - 23:16 | 2502088 Joe Sixpack
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The 60 yr olds and the youth are already getting paid either way (work and unemployment). Then 60 year olds should be retired. The youth should be working. This move puts things in more correct order. And since both are paid anyway, it makes more sense to pay the young to work and the old to lounge rather than vice versa.

Wed, 06/06/2012 - 17:44 | 2501168 mkkby
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But societies trained on entitlement can default with absolutely no remorse.  Turns out the free shit really was free after all.  The only idiots in the game are the ones still working and supporting the system.  Myself included (but not for long).

Wed, 06/06/2012 - 14:40 | 2500398 Apeman
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I don't live very far from the German border. Where do I have to be to pick up my cash? Any Germans here who can help me out?

Wed, 06/06/2012 - 14:42 | 2500404 Ahmeexnal
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seems like germany's plan to dominate europe has just exploded in their face.

Wed, 06/06/2012 - 14:47 | 2500430 GeneMarchbanks
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One more time for you: the dominating force in Europe ain't in Europe.

 

Wed, 06/06/2012 - 14:52 | 2500444 pods
pods's picture

Yep, it beings with "City of" and ends with "London."

pods

Wed, 06/06/2012 - 15:00 | 2500479 AnAnonymous
AnAnonymous's picture

The center of the world is located in the US of A.

Wed, 06/06/2012 - 15:08 | 2500514 NotApplicable
NotApplicable's picture

That's just the barrel of the gun. Now, look for the hand holding it.

Wed, 06/06/2012 - 15:18 | 2500546 frenchie
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Tel aviv ?

Wed, 06/06/2012 - 16:02 | 2500703 mcguire
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the vatican

Wed, 06/06/2012 - 15:58 | 2500689 AnAnonymous
AnAnonymous's picture

That's just the barrel of the gun. Now, look for the hand holding it.
_________________________________

Most representative would be a US of A middle class, indo european hand.

You cant part a US citizen living in the US from her gun.

Has to be a US of A hand.

Wed, 06/06/2012 - 16:04 | 2500716 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous bleated:

Most representative would be a US of A middle class, indo european hand.

You cant part a US citizen living in the US from her gun.

Has to be a US of A hand.

Typical ridiculosity one would expect from French Indo-Chinese Antarctic citizenism.
You left your brain on Easter Island.

Wed, 06/06/2012 - 16:11 | 2500736 AnAnonymous
AnAnonymous's picture

Judgement from a master? It has to be with that french indo chinese antartic citizenism ridiculosity.

But it happens that master makers are sometimes poor judges.

Wed, 06/06/2012 - 16:02 | 2500707 mcguire
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thos are just the accountants...

the real power wears scarlet and rides the beast. 

Wed, 06/06/2012 - 14:46 | 2500421 5880
5880's picture

Please step into this shower for your money, they;ll get your filings later

Wed, 06/06/2012 - 15:13 | 2500533 timbo_em
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Sorry, no cash here, only gold and silver...and some calls on wheelbarrow makers.

Wed, 06/06/2012 - 16:00 | 2500696 Arnold Ziffel
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Corruption in Europe could slow recovery: study(Reuters)

 

http://smallbusiness.yahoo.com/advisor/corruption-europe-could-slow-reco...

 

Looks like 'Corruption and Fraud' are the new business models.

Wed, 06/06/2012 - 14:42 | 2500401 q99x2
q99x2's picture

Those Frenchies ain't never going to be allies against the NWO at this rate.

And the Germans are as bad as the Americans.

Wed, 06/06/2012 - 14:42 | 2500406 Aunty Christ
Aunty Christ's picture

Vive l'arrogance! This little piece de resistence ought to speed  up the rating agencies review of France"s AAA rating

Wed, 06/06/2012 - 14:49 | 2500434 GeneMarchbanks
GeneMarchbanks's picture

You're a tad behind the times.

Wed, 06/06/2012 - 14:42 | 2500410 bigdad06
bigdad06's picture

France is going to have to raise the retirement age before the end of the year! LOL! Take a listen http://www.youtube.com/watch?v=f3-ZZVFjFDM

Wed, 06/06/2012 - 14:47 | 2500419 ArrestBobRubin
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Huh, how do you figure? Here's what the Germans need to say:

F*cken Zee Offen, Ja?

Wed, 06/06/2012 - 14:47 | 2500423 midgetrannyporn
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funny.

Wed, 06/06/2012 - 14:47 | 2500424 Stoploss
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And everyone thought Hollande would lay down with his legs in the air.

Looks like it went the "you will print bitch, got it?" way.

Im guessing the retirement age drop was only for state employee's. :)

Wed, 06/06/2012 - 15:19 | 2500551 frenchie
frenchie's picture

nah dumkopf

for folks who started very early doing physical jobs, the ones fat ass ricans dont do anymore but chinese kids do...

see ?

Wed, 06/06/2012 - 14:50 | 2500431 Dick Darlington
Dick Darlington's picture

Hollande also promised to create "tens of thousands" of PUBLIC sector jobs. And the (communist) socialist FM Moscovici said France will NOT do austerity but will reduce deficit "by his own way". Which means Moscovici wants to BORROW more to create "growth" which is supposed to shrink the RATIO of deficit per GDP while the HUGE absolute pile of debt continues to grow. Translation: die-hard socialist continuing the same disastrous policies as before.

 

And 2014 will be the 40th anniversary of continuous budget deficit. Viva la France!

Wed, 06/06/2012 - 14:54 | 2500440 hedgeless_horseman
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Which means Moscovici wants to BORROW more to create "growth" which is supposed to shrink the RATIO of deficit per GDP while the HUGE absolute pile of debt continues to grow.

Exactly, for two key reasons: 

  1. The denominator, GDP, is much easier to fake than the numerator, which is debt. 
  2. Debt pays interest to the ruling class.
Wed, 06/06/2012 - 15:00 | 2500476 GeneMarchbanks
GeneMarchbanks's picture

Word is that an unknown amount of military(NATO) spending will be cut to continue the 'welfare state' spending that everyone loves to hate. Hollande apparently gave 'Bama the heads up in Chicago.

Damn this Ollande and his following through with promises.

 

Wed, 06/06/2012 - 15:07 | 2500511 boogerbently
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Who do they think they are?????

America?

Wed, 06/06/2012 - 14:58 | 2500471 midgetrannyporn
midgetrannyporn's picture

there is no such thing as capitalism. get over it already.

Wed, 06/06/2012 - 15:20 | 2500554 reTARD
reTARD's picture

Hollande just completed his very first "actual, not campaign-propagandized" objective upon election: lowering the retirement age for the "select few" (for himself and his closest buddies).

Wed, 06/06/2012 - 21:33 | 2501825 mjk0259
mjk0259's picture

Well, hasn't the USA also had pretty much 40 years of continuous budget deficit? And we did it without govt medical insurance, 35 hour work week, 5 weeks vacation, relative employment security, etc. Seems like the French have a better plan.

Wed, 06/06/2012 - 14:53 | 2500452 debtor of last ...
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As they say, there are people with hats, and people with caps.

Wed, 06/06/2012 - 14:54 | 2500454 Sanksion
Sanksion's picture

Austerity may save the State and its crony capitalism to a certain extent. As an extremist who whish the end of the state, I applaud these measures which will accelerate the rate of evolution. 

Wed, 06/06/2012 - 14:57 | 2500459 ebworthen
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Until the banker money trees are cut down, the people will demand their own.

Moral Hazard, Moral Hazard, Moral Hazard....

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