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How Long Before France Has To Face The Music?

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Brilliant piece from the Slog. The eurozone will not face and fix its problems until France blows up. The sooner the better IMO.

http://nbyslog.blogspot.com/2010/09/french-without-tears-not-for-much.html

French without tears? Not for much longer...

EUROCRASH: HOW LONG BEFORE FRANCE HAS TO FACE THE MUSIC?

There’s only a week to go now before Mr & Mrs Slog pack up the car with bags, dogs and wine boxes before heading out of the fiscal frying pan that is France, and back to the raging fire that is Coalition Britannia.

We’ve been here for most of the Summer, and during that time discussed with many friends of several nationalities the extraordinary upweight in road works and municipal repair projects going on here. Everyone has noticed it. And most people know precisely what it’s all about.

“The good days are leaving,” said a French friend to me three weeks ago, “and so we must use the last of the sun while it still shines”.

“We noticed it the minute we got back,” English chums we met for lunch told us, “they’re obviously spending every last centime while the going’s good”.

France knows – or least, fonctionnaire France knows – that the game’s up. Germany has run out of patience, and the eurozone has run out of money. Local government – with its mysteriously direct route to EU funds – is putting in sewers, laying drains, resurfacing roads and replacing old signage on such a scale, the whole of our department looks like one gigantic episode of Challenge Anneka. It is the year of the cash cow, and the French are milking it furiously.

Many UK politicians insist that the French doing well out of the EU is a myth. But the statistics tell an entirely different story. When people ask me these days how come France’s infrastructure is superb, I answer simply “The EU”.

President Nicolas Sarkozy talks proudly of there being ‘no need for austerity’, telling the Trade Unions and farmers that they have nothing to fear. So far he’s been as good as his word: the notorious CAP abolition has been put off yet again until 2016, and not one bureaucrat has been fired in the public sector – bear in mind, however, that quite a lot of them can’t be fired: A staggering 26.5% of the working population, mainly in the public sector, has guaranteed employment for life;.

The country’s standard of living has risen 300% since the original 1955 agreement with Germany, and at five times the pace it rose from 1789 until that date. France employs 500,000 more civil servants than Germany on roughly 60% of the population. Its cost of public administration outgoings is 53.8% of the gdp.

Not everyone has done well, but those doing worst have done better than they would’ve done in any other EU member State. 4.5 million people -a sixth of the working population - are not in paid employment and are living on benefit.

But for most Frenchmen, it’s been milk and honey for 55 years….and they’re not about to give it up without a fight. There’ve been two national all-out strikes in September alone, and everywhere there are Parti Communiste posters announcing ‘Non!’ to the plan to raise retirement from 60 to 62. Even at that level, France would still have the equal lowest retirement age in Europe.

And it’s not as if the bourgeoisie hates the strikes: a poll in the left-leaning Liberation newspaper showed the other day that 63% of the country supports the strikers, and just 29% the government. Almost 60% oppose the plan to raise the retirement age, with only a third in favour.

Yet for once, this is a Sarko policy that not only makes sense, it is only scratching the surface of France’s deficit problem. The annual loss continues to grow at eight billion euro a month – the highest and fastest in the EU – while the French deficit has never – not once – been within the eurozone guidelines since the currency was born in 2000.

The debt has gone from 72% to 78% of the gdp since 2008. A recent OECD report states that

‘…in recent years, most jobs have been created in the service and public sector, where more women work: finance, education, health, welfare and administration are the sectors where the number of jobs is rising fastest….’

The fact is that France has carried on being what is always was: a half-command economy State with huge subsidies for its farmers, and incredible pay and pension conditions for its bureaucrats. And just like our Sir Humphreys, they’ve been amazingly adept at hiding their numbers. The OECD report laments:

‘….it is difficult to define the size of the public sector in France, due to the sheer number of types of public employers and personnel grades....'

And how. This is why The Slog has always laughed at Christine Lagarde’s ‘private’ sector recovery figures. When it suits the French for a pen-pusher to be helping the farming sector and thus privately employed, that’s what they’ll be. But everywhere in le gouvernment departmentale, the labynthine system of funding everything ensures that even a labourer working 85% of the time on a commune project can be recorded as working for the private sector because part of the project is down to private sponsorship. It’s a wonderful scam, and it has enabled the French to fill in a million fantasy forms for Brussels while keeping a straight face.

In the end, I emailed a senior source and old friend in Paris to ask if there might be anywhere a number for total public sector employment. This was his reply almost exactly translated:

‘It would be a highly politicized number and therefore it doesn’t exist. But if you take education, administration, health, local government and public sector employees, the general view among les Sarkoists is that the number can’t be less than 55% - and may even be over 60%. The President himself has asked numerous times for the figure, or at least something approximate. So far they have avoided telling him – although they may not even know themselves.’

On the surface, France is not in the firing line as far as a credit downgrade or suspected default is concerned: the overwhelming percentage of its securities are longish-term and at reasonable rates, because the country remains (inexplicably) AAA rated. But there remain widespread doubts about the country’s banking system, and its exposure to ClubMed sovereign debt.

“It’s all going to come out,” an English analyst based here told me earlier this week. “I understand that Credit Agricole is very dodgy, which is rather alarming because I’ve got several investment products of theirs”. Only yesterday, Societe Generale raised a few eyebrows by announcing that it would ‘fight the proposed extra capital requirement [of Basel III] tooth and nail’. During the laughable stress tests hailed by Trichet and Lagarde as ‘definitive’, the large French banks were extremely economical with the verite. As the Wall Street Journal noted earlier this month:

‘BIS data from March 31 indicates that French banks were holding about €20 billion of Greek sovereign debt and €35 billion of Spanish sovereign debt. In the stress tests, four French banks, which represent nearly 80% of the assets in France’s banking system, reported holding a total of €11.6 billion of Greek government debt and €6.6 billion of Spanish debt.’ Regular Sloggers will recall the level of lying involved in Barclays’ reportage of their Italian sovereign debt holdings.

As with the German banks, through all of this murk it is easy to see the extent to which the eurozone’s problems are as much to do with lending practices as debt management. But fiscally, it remains true that France is in poor health. It will be very interesting indeed to see how the French President deals with the mayhem that will break out once the serious cutting has to start.

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Such a shame we did not do the same as the French.

The EU has been no milking episode for us. We have been the country milked dry. We should not have done as the French do! We should not have joined the Common Market, because we were all lied to in the 1975 (referendum to stay or leave) about the master plan for immense bureaucratic central control and loss of sovereignty.

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Such a shame we did not do the same as the French.

I advise you to go and live there. Or North Korea, they are the only two Troskyist country left in the World. Although North Korea doesn't have neighbours like Germany or the UK to pay their own farmers and local infrastructure spending via EU subsidies.

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Brilliant piece from the Slog. The eurozone will not face and fix its problems until France blows up. The sooner the better IMO.

http://nbyslog.blogspot.com/2010/09/french-without-tears-not-for-much.html

Great read. If I understand what the article is really saying, it is that like Greece, France is understating its deficit and lying to the EU so that it can borrow more money fraudulently to pay for its largesse to itself.

And that means that at some point France is going to blow up. Just why do the UK and Germany put up with this nonsense? The two of us and Poland and any other sensible country should form a free trade zone. Let club Med, along with France and Ireland and Scotland, form their own funny farm of financial fiddles.

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I advise you to go and live there. Or North Korea, they are the only two Troskyist country left in the World. Although North Korea doesn't have neighbours like Germany or the UK to pay their own farmers and local infrastructure spending via EU subsidies.

Nah, Holland would be higher up the place of preference due to Dutch ladies.

Look, they've heard I am thinking of coming! :blink:

p8e.jpg

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Such a shame we did not do the same as the French.

+1

We give the banks, courtesy of the Bank of England, 200 Billion - end result, nothing.

France does similar but much of that money goes to the Departments and Communes via infra-structure spend. Money circulates in local communities and gets spent on nice roads, landscaping in villages, small towns etc. Its not EU money though - that goes to agriculture

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The problem we have is exposure to the debts of other government's through the French banks. The population is not as indebted as the basket cases (UK, Eire) so it will not IMO be as bad here. One would fool oneself if you thought France is not going to get the same rough ride and fall in living standards as the rest of the western world. French boomers are sponging just the same as elsewhere and equally as oblivious to the reality of the situation.

Sadly, as in other countries scapegoating and racism are the order of the day. These problems will get worse before they get better. Our immigrant President and his immigrant wife are keen to jump on that bandwagon :D

France, IMHO, will begin to feel the pinch when the tourism industry starts to downturn in earnest. Perhaps next summer, or 2012 at the latest. Already tourist related property is being hit hard.

The French people are at least trying to kick back against the cuts, whilst it seems to me the idiot English are voting for them. Still the cuts always affect someone else don't they?

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Local government – with its mysteriously direct route to EU funds – is putting in sewers, laying drains, resurfacing roads and replacing old signage on such a scale, the whole of our department looks like one gigantic episode of Challenge Anneka.

He says it's France but it's the UK to a T as well.

Traffic lights, roundabouts, resurfacing, white lines, yellow lines, straight lines, ziggy zaggy lines, lit up speed signs, new road cameras, zebra crossings, red patches here and there on the roads, new signs, new pavements, wider pavements, speed humps, bike lanes, pedestrian lanes, new lights and so on and on and on.

In the UK probably all funded on the council tax.

Edited by billybong

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He says it's France but it's the UK to a T as well.

Traffic lights, roundabouts, resurfacing, white lines, yellow lines, straight lines, ziggy zaggy lines, lit up speed signs, new road cameras, zebra crossings, red patches here and there on the roads, new signs, new pavements, wider pavements, speed humps, bike lanes, pedestrian lanes, new lights and so on and on and on.

In the UK probably all funded on the council tax.

Didn't this stop after the election?

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......

Traffic lights, roundabouts, resurfacing, white lines, yellow lines, straight lines, ziggy zaggy lines, lit up speed signs, new road cameras, zebra crossings, red patches here and there on the roads, new signs, new pavements, wider pavements, speed humps, bike lanes, pedestrian lanes, new lights and so on and on and on.

.....

Grass cutting. Everywhere you look is a 130Hp tractor ripping up a few tiny plants in an attempt to spend my tax. Awesome. Plus every tractor needs another bloke in a big Transit sized pick up to warn the traffic.

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I love france and have many friends who are French. Three things for me though signify the problems that lie deep within but it's been going on for so very long I wonder if it will ever explode.

1/ French employment taxes and business red tape are such an issue that France has the smallest number of new business start ups for any developed country pro-rata.

2/ Those that hear that and say rubbish, normally say while these things certainly discourage new businesses its not the real reason behind it.. The real reason is that with a state as generous as France is there's really no reason to work hard and risk capital when if you choose the right career the state will look after you very comfortably indeed.

3/ A few years ago in a market town in rural france I saw some strikers marching through the streets. I learned it was the unemployed "striking" for improved benefits which they duly got.

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Brilliant piece from the Slog. The eurozone will not face and fix its problems until France blows up. The sooner the better IMO.

http://nbyslog.blogspot.com/2010/09/french-without-tears-not-for-much.html

As the Euro rises the problems will increase. The US would be happier with a Euro above 1.50 again which will start Sarkozy off on another rant.

The sovereign debt crisis is still there--its just getting worse as the Euro rises and the imbalances grow.

£= 1.17373

I went to Portugal a couple of weeks ago and remember buying Euros for 1.19 based on the FOREX rate of around 1.22. Sarkozy must be loving it--especially now that the Euro is also headed up against the $ making that 2 trading partners with more competitive currencies. Forget the Chinese--they will not allow the Yuan to rise against the Euro either.

Edited by Realistbear

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France has got a lot of gold in reserve. In fact so do Germany. Even Italy. If Gold skyrockets they're sorted. In fact they're more than sorted.

A new gold-backed premier division Euro. Not impossible.

Edited by needsleep

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Brilliant piece from the Slog. The eurozone will not face and fix its problems until France blows up. The sooner the better IMO.

http://nbyslog.blogspot.com/2010/09/french-without-tears-not-for-much.html

France has many ills but their health service is superior that of the UK and I think it doesn't cost that much more. The GP just answer their own phone and

do their own paper work. Further, French productivity per hour work (though they don't work that many hours) is also higher than UK's.

Beyond that, I suppose France will have the same problem as other deficit running western advanced economy and the interesting time is probably just

a few years in the future.

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Didn't this stop after the election?

It's to be hoped so but stuff is still continuing under the current lot.

Maybe it's carry over jobsworth contracts from the last lot that can't be cancelled.

Amazing how the UK coped before NuLabour's ziggy zaggy road markings etc etc etc and so on everywhere.

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Nah, Holland would be higher up the place of preference due to Dutch ladies.

Look, they've heard I am thinking of coming! :blink:

p8e.jpg

Are they coming or going?

edit: leicester got there before me - but not sure if he was coming.

Edited by okaycuckoo

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That's one of the worst articles I've ever read - I liked the sources - an English 'analyst' and a friend... As for the %age figure for public sector employees - nonsense.

The public sector workforce was 5.2million in 2006 - around 25% of the workforce (Oliver Bargain, Blaise Melly)

Edited by gruffydd

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I advise you to go and live there. Or North Korea, they are the only two Troskyist country left in the World. Although North Korea doesn't have neighbours like Germany or the UK to pay their own farmers and local infrastructure spending via EU subsidies.

What complete and utter tripe!

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That's one of the worst articles I've ever read - I liked the sources - an English 'analyst' and a friend... As for the %age figure for public sector employees - nonsense.

The public sector workforce was 5.2million in 2006 - around 25% of the workforce (Oliver Bargain, Blaise Melly)

Bit of a sweeping surface skim of a critique there gruffydd... I know you are a UK basher extraordinaire but chill out old chap... it is Ok for other states to be in the cr@p too and I am sure there is plenty more UK labelled bad news in the pipeline ...

I take the article for what it is meant to be, a blog... ie someone's opinion and add it in with all of the other titbits to get the big picture. Anyway the size of the public sector and the employment market in general in France is a bit of a joke with my French friends (ever wondered why so many young French are living in London??) although I doubt they would know the actual figures... For instance in the blog post he does demonstrate the difficulty in getting reliable statistics thus:

A recent OECD report states that

'…in recent years, most jobs have been created in the service and public sector, where more women work: finance, education, health, welfare and administration are the sectors where the number of jobs is rising fastest….'

The fact is that France has carried on being what is always was: a half-command economy State with huge subsidies for its farmers, and incredible pay and pension conditions for its bureaucrats. And just like our Sir Humphreys, they've been amazingly adept at hiding their numbers. The OECD report laments:

'….it is difficult to define the size of the public sector in France, due to the sheer number of types of public employers and personnel grades....'

......

'The President himself has asked numerous times for the figure, or at least something approximate. So far they have avoided telling him – although they may not even know themselves.'

Would be interesting to see any links to your source of 25%... TBH I would be surprised if it isn't > twice that but do not have the figures .... but then I doubt anyone does....

Edited by Bubble&Squeak

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What complete and utter tripe!

I am sure you are qualified to make this statement :).

Thank you for your valued contribution.

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French boomers are sponging just the same as elsewhere and equally as oblivious to the reality of the situation.

Sadly, as in other countries scapegoating and racism are the order of the day.

It's amazing how many people can't see the irony (not to say the hypocrisy) in their own postings.

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  • 146 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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