France: From The Sublime To The Ridiculous

Via Mark J. Grant, author of Out of the Box,

"Le Corbusier was the sort of relentlessly rational intellectual that only France loves wholeheartedly, the logician who flies higher and higher in ever-decreasing circles until, with one last, utterly inevitable induction, he disappears up his own fundamental aperture and emerges in the fourth dimension as a needle-thin umber bird."

                       -Thomas Wolfe

France is the odd duck on the Continent. It is neither a petulant member of the Southern European financial disasters nor a member of the Northern European banner of austerity nations. France, in my view, is the swing country in Europe. It waives about with the wind depending upon the subject.

There is some talk of bringing back the guillotine now in Paris. They tried a 75% tax on the people un-French enough that wanted to make money. Now they may resort to sterner measures. Who will pay for all of the social programs in France is currently in question. The French, of course, hope the answer is to be found in Berlin.

Industrial production for France was estimated to grow by 0.1%. The central bank of France had also chimed in that this was their projected number. Reality, released today, showed France's industrial production had actually shrunk by -1.4%. While France's Finance Minister has publically claimed that France has exited their recession the data does not support the claim. Of course data, in France, is only an indication. Numbers are run through the French political system and what spews out never seems to be exactly what went in.

Today CNBC reports that Richard Fisher of the Dallas Fed exclaimed, "I am concerned about France, more than any other country." There is something worrying in those words. This is not the statement of some talking head or a money manager with an axe to grind but very clear words from one of the few people on Earth that gets to see the real numbers and not the gibberish presented to all of us day after day. One may well wonder what he knows that we do not!

Recently France announced that they would miss their EU budget target. Europe responded as expected, "Pretend and extend for two years." Nothing new in this strategy but this is the second biggest economy in Europe and the falter, while ignored like everything else these days, may soon turn into a serious stumble, then a loss of footing and finally a fall upon one's French face. The lack of economic reality for the sake of socialistic politics may hasten the return of Madam Defarge and her infamous shrouds for Monsieur Hollande and his government.

In June, the number of unemployed in France rose to a record of 3.28 million, marking an 11.2-percent leap year-on-year and the 26th monthly increase in a row. The unemployment rate in France is now at a record high level. Of course, like so many other statistics, it is never the people who are counted but the people that make the count who are important so I fear that this statistic is woefully low and will remain so until after the German elections. No need to upset those is Berlin unnecessarily when soon they will be called upon to provide money for the bon vivant lifestyle to which every Frenchman is entitled. I wait for the newest wisdom from Monsieur Hollande, "Let them eat duck."

The bonds of France trade just behind those of Germany. I am sure the portfolio managers on the Continent require diversification. Where the market is pricing French bonds now may turn out to be a rather serious mistake in judgment.

"Du sublime au ridicule il n'y a qu'un pas."

("It's just one step from the sublime to the ridiculous.")