Archives for category: France’s lack of political will to structurally reform

I have not been writing any posts since 9th February, 2016 because it became too monotonous to write all the time the same comments with nothing happening because of the Governments’ obsolescence in general and the  total inability of the Eurozone Governance (sic) to reform macro social-economics in this supposed “common interest” area.

This may seem an arrogant statement but I have written 2000 posts from April 2011 until October 2015 and (only) three posts since October 2015 and made a great number of concrete alternative proposals not limiting myself to criticism.

I have also written – 2014 / 2015 – in self-edition – Amazon – two books whose titles are self-explanatory: “Why Obsolete Macro Governance Is Killing the World Economy” and “Growth through Structural Reforms” (With Leadership and Competence Great Opportunities Exist).

I am now quoting entirely the UK’s 06/11/2016 article: “Eurozone heads towards its next monetary crisis” and showing it under MORE at the end of this post – you can also read it by clicking on above link.

This article, in a nutshell, relates to the incompetence of the EU and to the current domineering subject: Brexit or no Brexit, leaning heavily on the Brexit side.

My Comments

The only reason I am writing this short post is because of my continuous (5 years) largely repeated total disagreement with Central Banking dominant positions and “policies” (sic) in  the US, the Eurozone, to “limit” myself to these two huge areas.

The below cited article touches on the disgraceful “policies” of the ECB, which is trying to be  even worse than the FED (a real challenge!…) .

Last year I tried to be published by a traditional large and well known publisher in the UK / US and since they could not use the material in my two self-edited books with Amazon I wrote 100 pages of an eventual third book which I had entitled: “Structural Reforms Impeded by Central Banking”.

This was refused and the main reason was that it was not “classroom material” and that it was “iconoclastic”. I refuted the second point by arguing that there were no idols to be destroyed but that long awaited strong (not “reformettes”) social-economic structural reforms were not being achieved because of , in general, Governments ‘ ineffectiveness and Central Banking flooding markets with printed money at even negative interest rates by ECB, which made it easier for most ineffective Governments in the Eurozone to avoid implementing social-economic structural reforms, and by the same token to increase already huge indebtedness.

Now, Dragui, one of the big culprits that the Eurozone is not really getting out of recession, wants to initiate “helicopter” money flooding (see below article) to push demand (hopefully a joke?).

It suffices to observe the situations in Greece (the total absurdity, it should have been exited long ago), Spain (contaminated by the Greek situation and the popular new “Greek type” political parties’ expansion, with no Government since months), France (continuing going down the hill because of no capacity to reform itself), etc, etc…!

Conclusion: Nothing basically changes and if so it is for the worse – relatively.

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The terrible Migration situation which is Exploding Recently is Not New!

This shows the incapacity of the European / Eurozone “Governance” (sic) to anticipate these terrible human and economic situations with adequate and feasible planning.

The European Union (EC) and European Committee (EC) are incapable of establishing any rational planning and subsequent implementation, which has been proven since 2000 when the euro and Eurozone were launched under very erroneous social-economic premises.

This conduced the Eurozone to still be in a very pitiful situation, mainly on employment, where in many places unemployment (including under employment) have remained stagnant at very high levels; with published official unemployment equaling 11% of working population, which if  including under employment – where the real problems reside, exceeds 20% of non farm civilian working population!

Germany’s good situation, which is so because of past and large social-economic reforms, mainly those undertaken in the beginning of the 2000s decade, hides even larger Eurozone ratios, France being one of the leaders of this  extrememy high unemployment level because since 5 decades no social-economic real and complete reforms (other than “reformettes”) have been planned and therefore implemented, total unemployment still growing in the second biggest Eurozone economy…

The EU, and EC mainly, “Governance” (…) are now undertaking to repeat their fundamental errors of incapacity of rational planning and implementation in terms of the “policy” (“politicking” being a more adequate word) expressed this week to start “solving” the Migration situation by EC ‘s President, Juncker, an obsolete “leader”(sic) as ad nauseum repeated in this blog for “his” EC (starting Nov. 1, 2014) and that of Barroso, his predecessor.

The solving of the terrible human tragic Migration situation which is only starting now, is directly related to, finally, implementing social-economic structural reforms, starting with labor flexibility, in most Eurozone countries, which due to great “inactivity”, will (if starting to be executed – ???) be a gradual process which is in direct contradiction with leaving masses of immigrants enter undiscriminately Europe and the Eurozone, as Juncker is now requesting without any realism, because all EU / EC ” leaders” are big talkers, good at “politicking” and very little else.

More over Juncker is “kidding” the Eurozone population with the Quotas’ system he has published by country, which, as usual, are going to show, very rapidly, to be totally understated, an example being that Germany has been “allocated” 31 000 when the German Government is preparing to receive, in principle (?), 800 000 (26 x more!), this costing over 10 billions euros, which Germany can “afford” budgetwise.

Numbers of people leaving Syria go up to 4 million people semingly (?), a “pot pourri” of “persecuted” and “economic” refugees, which will be very hard to “divide”.

Why, suddenly this very much publicized number of people leaving Syria?

Because  the EU and EC have opened the valves and people have started to precipitate leaving Syria to enter “Nirvana”.

Any comparisons with the massive exode of Jews  in World War II is distorting, the type of population (I was one of them as a child) which left Germany had totally different characteristics than those now leaving Syria.

Germany now “wants” to receive 800 000 because it is a Eurozone over average ageing nation and needs to rebuild a workforce, this leaves the big question on how many of the 800 000 “fit” jobs openings and working population development in Germany? It also helps Germant to start reverting the image it has construed since the Eurozone was created, and from which it has greatly profitted, and mainly since the last quinquennium, of being a parochial and self-serving nation, not “helping” most of  its far less efficient Eurozone partner countries.

The real solutions are “At The Origin”, in Syria and in the Middle East itself. Until “Occidental” strong countries (including Russia who should not be primarily “fought” on the Ukraine situation and be “recovered” as an ally in terms of the Syria situation), starting with world leader US, do not establish policy where military action (air force, ground, whatever) come second to increasing all “Local” efforts to mobilize the civilians and the badly trained local armies against both the local dictatorship and mainly ISIS / DAECH, while “keeping” up with members of destroyed dictator’s “governement”, who know the ropes – this was one of the major errors committed in Iraq.

Many of the Syrians who are now leaving the country would have to stay to participate in this rebuilding effort, if its is rationally construed and with full participation of all “Occidental” forces and expertise.

The future of Syria cannot be foreseen with Assad, but that does not mean that everyone who has worked within the Baath party should be excluded from the future of their country. This was a big mistake in Iraq with Hussein and not choosing members of his entourage to”work with”, meaning that to organize , call it “national reconciliation”, to reintegrate members of the “old system” is necessary, practically speaking.

The worst “enemies” to start solving this huge problem are the “idealistic” (not that much…) and non realistic top politicians, supranational (EU / EC) and some per country, which propose universal entry, without credo / religion and work capacity discrimination, not taking into account (as with the creation of the Eurozone) the huge differences, in many aspects, between Eurozone countries.

I will next refer to a NYT’s 09/10/2015 article: E.U. Nations Urged to Accept 160,000 Migrants”which will appear under “More”, which I will quote and precede quotes with my own comments.

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A longstanding confusion has been maintained on purpose by governements of weak Eurozone nations: the fall of the euro benefits “everybody” in the Eurozone, the “Governance” – EU/EC, and even ECB, have done nothing to dispel this “credo” which is totally unfounded as following comments will show

I am referring to a very interesting Le Figaro Premium‘s 09/08/2015 article by Jean-Pierre Robin: La baisse de l’euro rend-elle la France plus compétitive?” (“Does Euro’s fall render France more competitive?”), which I have translated  and will quote (colored lettering is mine) and first precede with my own short comments.

My Comments

It is hard “work” which makes countries competitive, external factors like currency depreciations, oil and raw materials value falls, etc…, are temporary bonanzas (not always, depends who) and can vary tremendously.

A series of Eurozone countries led by France, Italy (second and third biggest Eurozone nations) have lost competitiveness and growth because they have not changed their social-economic policies, not implementing badly needed social-economic structural reforms, relying on solely monetary effects and increasing indebtedness exponentially.


The euro depreciated course for a year and a half, but much less than is commonly said. And French companies have done nothing to improve their vis-à-vis main competitors, which are European and have the same currency. Germany has maintained all its competitive advantage. Do not be fooled by monetary illusions.

Hallelujah, the euro fell. The “made in France” becomes cheaper and, from New York to Shanghai, the world pulls our “marinières” (sort of blue white striped French “T-shirt”) symbol of our expertise. This song is now being heard for months and months. It spins our ears like a rattle. More than any other European head Francois Hollande sings  it with gusto: “There will be a positive effect for the activity with a euro which is now in its good parity,” he said on March 12 (2015) while visiting the Poma company, world leader in transport cables (cable cars, ski lifts).

The euro had recently been dropping below $ 1.05, the lowest since twelve years. But is this really the panacea? Is the Head of State not a victim of the old French devaluation tropism prevailing time of the franc? At the time, governments spent without counting money to restore the competitiveness of enterprises undermined by the inconsistencies of their economic policy. But this world is over.

The depreciation of the euro cannot be assimilated to a devaluation of the franc of yester year who was erga omnes, vis-à-vis all other States. It is not the case anymore. We share our money with eighteen other countries who themselves constitute the vast majority of our export markets.

Moreover it is not only the European currency which weakens; it is the lot of most currencies, including the Japanese yen and the Chinese yuan. Besides that competitiveness is about much more questions price, the decline of the euro could have only homeopathic effects!

The euro has declined in that multi currency environment by 10%.
Francois Hollande maintains a widespread confusion by being obsessed by the singular relationship euro-dollar. The US dollar is the center of the international monetary system. It is used for the listing of commodities, including oil, and the majority of international credits are denominated in dollars. It is normal to constantly refer to it, and when the euro was born on 1 January 1999, a “number” for parity was taken for the euro: $ 1.17. Since then, the pair is moving in a particularly wide range: the euro fell to $ 0.83 in the fall of 2000 and it is propelled at nearly $ 1.60 in July 2008.

But the global monetary landscape is not just this head-to-head of dollar-euro. To stick to the two years 2014-2015, the euro was worth $ 1.40 in May 2014, and today it fell to around $ 1.10, a drop of 20%. But it’s not just our currency that has declined: Most emerging currencies have also depreciated. “The 20% difference observed between the dollar and the euro reflects a general half rising dollar and half a specific decrease of the euro,” says Sébastien Jean, director of CEPII (Centre for Future Studies and international information). The real depreciation of the euro is actually only 10%, and that’s the number that the European Central Bank  takes in its analyses.
The effective exchange rate of the euro has fallen by 10% between May 2014 and today is the true temperature of the European currency.

The ECB monitors indeed like milk on the fire the evolution of the euro vis-à-vis the other nineteen most important currencies of the world: this basket covers almost all international trade in the euro area. Technicians call this “the exchange rate” (TEC) of the euro. The expression is of great ugliness, justifying its ignorance by the general public, although the notion that it designates is simple. Note that TCE is expressed in terms of evolution and as an index (base 100 in 1999, when the creation of the European currency). The TCE of the euro has fallen by 10% between May 2014 and today is the true temperature of the European currency.

Or competitiveness gains for France and its companies are actually themselves still well below that figure, about half, or 5%. And here’s why.

Beware of optical effects.

Louis Gallois, who presided over the destiny of EADS (Airbus Industries) between 2006 and 2012, has done much to “promote” the euro-dollar parity. “When the euro appreciates by 10 cents vis-à-vis the dollar, Airbus loses 1 billion,” he proclaimed regularly before the television cameras, as Uncle Scrooge shouting thief. This is perfectly true in a group whose market is global, the prices of aeronautical products are fixed in dollars, of which almost the only competitor is the American Boeing. But such a scenario does not represent the totality of European companies, let alone French.

Similarly, we must not confuse the whole euro zone with individual countries. When the ECB notes that the “exchange rate” (TEC) of the euro has fallen by 10% since May 2014, it considers exports from the euro zone taken as a whole vis-à-vis the rest of the world. It is different for the respective countries, including France. “Much of our foreign trade (55% of our exports) is inside the euro zone, and should be taken into account when considering the effective exchange rate of France,” says Olivier Garnier, the chief economist at Societe Generale.

In reality, the TCE of the “house France” has not depreciated by 10%, but a little less than 5%, as the increased competitiveness due to the decline of the euro does not apply to that exports outside Euroland, or 45% of their total.

Another optical effect tends to greatly exaggerate the benefits of the depreciation of the European currency. Thus the recent publication of corporate results for the first half of 2015 led to a chorus of praise. “The CAC 40 can say thank you to the weak euro,” Did we read, while others wanted to erect a monument to Mario Draghi, the ECB president, for the good results of our groups.

But this is largely a pure accounting effect. The companies themselves recognize it. Two examples. The optician Essilor announced a jump in sales of 20%, but only 6.6% “excluding currency effects,” he says. Like the pharmaceutical group Sanofi is looking forward to an increase of sales of 16.1%, including 11.2% due to the decline of the euro. “At constant exchange rates, the increase was only 4.9%,” according to Sanofi.
Swelling of sales related to “exchange rates” is due simply to what one recognizes in a depreciated currency. As if we had reduced the standard meter which measures a dozen centimeters! The improvement is nominal, it is a money illusion. What therefore real gains in competitiveness?

Nothing new under the European sun.

Sanofi and Essilor have improved their sales “currency effect off” of 4.9% and 6.6% is of course not so bad, it is even remarkable. The reason is said is due to the dynamism of their markets, their own prowess or “good parity of the euro,” as François Hollande, who equates narrowly weakness? For it is likely that the weaker euro has really helped increase our sales of “marinières”, regardless of the accounting effect mentioned earlier.

But by how much exactly?
In its quarterly accounts, INSEE said that French exports grew in volume by 1.3% in the first quarter 2015 and 1.7% in the second (respectively 5.2% and 6.8% annualized). “A dynamic seems to have switched, with two caveats. Three quarters of the improvement came from the aviation equipment and we are not doing better than other countries. The share of our exports of goods in those of the euro area has just kept its previous level of 12.2%, “says Axelle Lacan, an economist at WCC-Rexecode, the Institute of situation that has developed an observatory of competitiveness. Compared to Germany, in particular, the volume of French exports continues to erode; they represent only 38% of total German exports, against 55% in 1999, at the launch of the euro.

Comparison is always right in the economy where competition is king. But this comparison remains largely against us vis-à-vis our neighbors when we look at the costs of production. Again, the ECB has established an indicator of competitiveness, taking into account both exchange rate and wage costs (compétitivité Harmonised indicators are based unit labor costs) for nineteen Member States.

The fall of the euro did not alter the balance of power in Europe.

Curiously, this indicator is an improvement for the whole euro area itself since the creation of the euro in 1999. It should not be surprising. On the one hand, the euro is now at a level lower than it was in the beginning, both vis-à-vis the dollar that “exchange rate”, and secondly wages have increased much less in Europe than in emerging countries. However within the monetary union, huge disparities exist, particularly between Germany and France, where costs fell almost five times slower.
Nothing new under the European sun: the fall of the euro did not alter the balance of power in Europe.

External features, internal efforts.

A “Lucky Coup”: the collapse of oil and other raw materials, largely offset the adverse effects of against-currency depreciation which normally increases the cost of imports. According to calculations Axelle Lacan, “the annual import bill of petroleum products is lightened 16 billion; this represents almost $ 8 billion in additional margins for companies in the year 2015 and 0.5% inflation in less for households. ” In other words, a gain in purchasing power of 8 billion for the French.

However, neither the euro or oil, these nudges from elsewhere, give us no vis-à-vis advantage with Europeans, our main competitors. But competitiveness is an essentially relative concept: If we were alone in the world, we do not talk!

To widen the difference to his advantage, each country has no other option but to rely on its own efforts. Or two indicators, among others, have recently switched to our detriment. At the corner, Spain produced more than half of motor vehicles in the first half we 2015. And in the Far East, Korea (South) just robbed us our fifth place in the ranking of exporting countries, according to statistics WTO denominated in dollars of course.

Currency depreciations decidedly engage in double-edged doping effect!

Most economists and analysts provide comments based on “history” (1929 Crisis, Oil crises in the 70 s, etc…) not – really – realizing (or wanting to) that this crisis is totally different because the world’s structure has changed immensely in the last quarter of a Century, geo politically and by sectors of activity, and that new models are required.

I have been doing my “share of work”…, trying to offer concrete new governance approaches through the 2000 posts in my blog “” since April 2011 and through two self-edited (with Amazon ) books: “Why Obsolete Macro Governance is Killing the World Economy” (September 2014) and “Growth through Structural Reforms” (April 2015), both titles being self-explanatory.

I am referring to Le Figaro Premium published today – 09/07/2015 an article: “Merkel – needing to prove her leadership” by Nicolas Bavarez, well known French historian and self-assumed “economist” (sic) who is always negative and never makes constructive comments. I have translated the article, will quote it and precede it with – my very much repeated – short comments.

My Comments

Mr. Bavarez should request from the “officialy” named (not elected) European Union (EU) and European Committe (EC) to exercice Governance and leave Germany out of it.

For two easy to understand reasons:

It is the EU and EC who, with a 35 000 manned techno bureaucratic “mammoth”, are not governing Europe. Europe would be better off without them but since they “occupy” their well / highly paid jobs and do “politicking” most of the time, they should start by execising their governance job or declare being inept. 

Germany’s policies are very well suited for…Germany, but not for Southern countries, nor the more and more “inefficient” France, because of obvious differences in mentality, usus, social protection and tax stucture, disciplinarian and constitutional attitudes. etc…


The chronicle of Nicolas Baverez.

Europe, who dreamed to go beyond history, is facing four major crises that call into question the achievements of sixty years of integration: Greek default; the referendum on leaving the United Kingdom of the Union; Russian intervention in Ukraine; the largest wave of migration since the end of World War II.

Due to the collapse of France, Germany is alone in the front line to meet these challenges are testing its leadership like that of Angela Merkel.

The central role of Germany in Europe is due to three reasons: the strength of its institutions, based on the culture of compromise and stability; the success of reunification; a new economic miracle. After a difficult decade 1990, Germany has adapted to forced march to globalization and the transition to the euro. It is the only major developed country that has truly overcome the crisis of globalization such as sovereign risk in Europe.

If the economic and monetary leadership of Germany is a continuation of its radical reform after 1945, the recent breakthrough in the diplomatic and moral field constitutes a break.

This economic dominance made  Germany to be the ultimate eurozone reinsurer alongside the ECB. This is the axis formed by Merkel and Mario Draghi who developed and produced the reform of institutions such as the single currency adjustment coordinated models of its Member States – with the notable exception of France. Germany has led the bailout of Greece according to its principles. For the same reasons, it stands out as the main interlocutor of David Cameron’s attempt to renegotiate the status of the UK within the European Union.

If the economic and monetary leadership of Germany is a continuation of his radical reform after 1945, the recent breakthrough in the diplomatic and moral field constitutes a break.

In the Ukrainian crisis, it is Merkel who took the initiative and led the negotiations Minsk 2, where the role of Francois Hollande has been reduced to that of simple guarantee. Especially, given the dramatic influx of refugees, it is Merkel who reminded the Europeans their home duty under the universality of human rights, while France remains paralyzed.

Far from merely talking, Germany began experiencing in 2015 with a project to receive more than 800,000 migrants, or 1% of its population, mobilizing for this purpose 10 billion euros.

After a paradox, Germany is in the leadership position. While refusing to exercice political power, Merkel always adopting the most prudent and consensual leadership, is  nowobliged to take considerable risks. Risks for its style and its popularity, as her art for consensus are disrupted by emergencies  coming from theirown crisis management.

Domestic political risks with the xenophobic violence around refugee – from pegida and neo-Nazi NDP – or outside because of the resurgence of anti-Germanism round of austerity policies. Strategic risks because its initiatives could turn against Germany and Europe in addressing the consequences of further shocks as their causes.

In the refugee crisis, Merkel has saved the honor of Europe while adopting a coherent position to stem the demographic decline of his country.

The new Greek bailout remains unsustainable both economically and financially, for lack of a restructuring debt reached 180% of GDP. In Ukraine, calls to order go to Kiev to ensure autonomous status to self-proclaimed republics Luhansk and Donetsk, not in Moscow, which methodically continued their annexation.

In the refugee crisis, Merkel has saved the honor of Europe while adopting a coherent position to stem the demographic decline of his country, whose population is expected to decline from 83 to 70 million people by 2050.

But Europe cannot sustainably accommodate 1 million migrants per year – particularly in the south of the continent heavily hit by the crisis, unemployment and debt – nor interrupt their flow, without deploying a comprehensive immigration policy and asylum, border control, Middle East Stabilisation and North Africa, starting with Libya. But it remains in limbo, due to lack of strategy and policy instruments.

Germany legitimately haunted by its history, wants an empire well. It is to be welcomed to bring up the freedom and dignity of men that France has abandoned to embody. But these values ​​must not only be illustrated; they must be defended at a time when internal and external threats comeback. Generosity is not enough; we need a policy, articulated at the national and European level, backed by power means to implement it. Leadership wears if it is exercised as hemiplegic way. Safety must become a priority for Germany and for Europe.

Once more Eurozone’s “Non Governance” fails to “manage” the Migration crisis and leaves leadership to Germany, who is then criticized as in Social-Economic Crisis matters.

I am referring to NYT‘s 03/09/2015 article: “Migrant Crisis Gives Germany Familiar Role in Another European Drama”, which I have quoted entirely and placed below “More” at the end of this post.

My own short comments follow:

For the”umptieth” and ad nauseum repetitive time in this blog, there is No European / Eurozone “Governance”, “only” (sic) a 35 000 manned techno bureaucratic mammoth which provides no governance nor guidance and leaves Germany to assume leadership, which is totally wrong because Germany’s style of government is fine for Germany, but not for Southern countries nor inefficient France, due to totally different mentalities, usus, tax and social protection structures, etc…

But when Germany takes measures it unvariably gets criticized by all “non doers”!

This applies even more strongly to social-economic matters than to this terrible Migration situation and crisis which will take “ages” to be resolved by implementing a feasible and practical European Common Policy on Migration, and not only talking about it and “politicking”!

The below quoted NYT article on this dramatic subject provides interesting data and illustrates well the dimension of this humanitarian crisis.

Read the rest of this entry »

The wordlwide social-economic situation, now strongly impacted by to be expected China’s negative evolution, is alarming if monetary measures continue being considered as key measures to obtain a recovery worldwide instead of, finally, implementing social-economic structural reforms – wordlwide

Please refer to my two latest posts with self-explanatory titles: 09/01/2015 : “Central Banking “Policies” Fail Consistently – See Why”, 09/02/2015: “China – US – Europe – Japan et al need social-economic restructuring – Globalisation has shown its limitations”, which try to explain why world wide growth stagnation is an “option” if no structural mesures are, finally, taken, abandoning solely monetary measures which have shown their level of incompetence.

I am referring to an article published on 09/01/2015 by Le Figaro Premium on a interview with well known Nobel Prize economist Joseph Stiglitz: “How can European leaders they glorify stagnation?”, which I will quote and precede with my own short comments.

My Comments

I respectfully disagree with economist Stiglitz on the principal measures he prioritizes.

He is still referring to monetary measures as “the solution” and does not recognize that Central Banking’s QE s and other liquidity expansion vehicles have killed the implementation of unpopular structural reforms, something that I have repeated at nauseum in my blog and written and published two books about: “Why Obsolete Macro Governance is Killing the World Economy” (Amazon – September 2014) and “Growth through Structural Reforms” (Amazon – April 2015).

Stiglitz is still referring to Greece, when the solution is easy: Exit it, it is a time and money loser and and will strengthen extremist parties in Europe due to all the mess the European Union and Commission and the Troika (EU/ECB/IMF) have (and continue), created during 8 months of sterile “negotiations”.

The EuropeanUnion and European Commission are obsolete techno bureaucratic “politicking” mammoths of 35 000 employees which decide on nothing and abide to Germany – de facto Eurozone leader

His criticism of Germany as an individual country is greatly unfounded, since this country had implemented most of the badly required  structural reforms in the early 2000s which allowed Germany to have a positive evolution.

What Germany has to be critized for is their rigidity, disciplinarian and constitutional attitudes which they want to impose on the rest of the Eurozone not wanting to understand that what  works well for Germany does not for the Southern countries and inefficient France, this being caused by the total absence of any real “governance” in Europe.

Quotes I translated this article – colored lettering is mine  

INTERVIEW – For the Nobel Prize in economics, austerity packages imposed within the EU block any return to growth.

Joseph Stiglitz, Nobel Prize in Economics in 2001 for his work on asymmetric information, published Wednesday in a French compilation of his writings about the growing inequality of American society in a book entitled “The Great Divide” (editions The links that release).

Professor at Columbia University (New York), 72 years old, the former chief economist of the World Bank and advisor to US President Bill Clinton, said that the American dream is dead and regrets that the revival orchestrated by President Barack Obama has especially favored banks, who were responsible for major wrongdoings in the subprime crisis (poisoned mortgages).

He worries about stagnation in Europe, which according to him was maintained by overly cautious leaders when they should, he said, have stopped the austerity measures that undermine the foundations of the eurozone and prime the pump of growth.

LE FIGARO. – In what state do you find the European economy?

Joseph Stiglitz. – France and Europe in general, have not had good results in recent years. Per capita income fell below its level before the crisis. Even the most successful economies, like Germany, have recorded anemic growth. If it were not for the crisis, Germany would have been rated D by everyone. And the lost half-decade could become an entire decade, given the economic situation.

Le Figaro – Which brings us to the question: why?

Joseph Stiglitz

The cause of the anemic growth throughout Europe is due to the current austerity cures. A sluggish economy results in low tax revenue, which under the Maastricht criteria, results in capital costs and tax increases, which in turn weaken the economy even more. This is mainly due to the stiffness of the corset imposed since the establishment of the eurozone. It maintains a form of permanent instability in denying States the adjustment tools to economic shocks, as once the gold standard imposed on the US Central Bank during the Great Depression. This explains why Europe has suffered from low growth in the last five years, and lets me fear that stagnation or near stagnation, will continue.

Le Figaro – What reforms should we lead?

Joseph Stiglitz
One in particular seems to me more urgent. European leaders overwhelmingly recognize the problem of the lack of Federation of banks in the European Union. Consequently, when the crisis occurred in 2008, money has fled the Spanish banks and those of other countries most at risk, to take refuge in Germany. We need to stop this hemorrhage by setting up a common supervision of the banking system within the EU, and a mechanism for resolving problems of capital flight. We must expand the mandate of the European Central Bank (ECB), so that it is more focused, not only on inflation but also on employment and growth. It is urgent to move the cursor.

Some countries like Greece can obviously no longer borrow on the markets but that is precisely where Europe can act. It was a very good move  to create solidarity funds for new entrants (note: during the recent enlargement phases). It needs to create stabilization funds for convalescent countries. Europeans should use more aggressively the European Investment Bank (EIB) to invest in countries in crisis. They must set up a loan fund recognizing that the banking system was devastated, facilitaing credit to SMEs in the countries in crisis.

“European leaders are careful not to upset the straitjacket of the eurozone”

Le Figaro – Do you see the light at the end of the tunnel?

Joseph Stiglitz
Honestly, I cannot distinguish it. The damages induced by the crisis are durable because the money that fled Spain and other countries most deeply affected and permanently damaged their banking systems. Even more than austerity in public spending, the contraction of lending to SMEs has had devastating effects on economic performance. What bothers me even more, is that European leaders seem to be satisfied with this virtual stagnation and are careful not to upset the straitjacket of the eurozone. A prime example: when the German Minister of Finance Wolfgang Schäuble came to Columbia University (last April 15), he acknowledged that he would have to get used to this new form of anemic growth as a new standard. As if one could glorify stagnation!

Le Figaro – You called to rush to the aid of Athens, by erasing the 312 billion euros of Greek debt. Has the Greek crisis been mismanaged?

Joseph Stiglitz
I’m not privy to but it seems that the German authorities have played a role in maintaining the status quo. But things are very clear: forecasts made by the experts for the “Greek model” have been calamitous. They said that austerity will cause some decline but restore confidence so quickly that there would be a return to growth. Normally, their  predictions invariably failing, year after year, you could have expected thta they would be conduct a review of this model. But no! Nothing of the sort happened and the Troika is held in hits certainty that the benefits would eventually end up manifesting it in English called “double down.”

Yet I observed some consensus on the fact that the Greek debt must be cleared. Just because the Greeks could never pay. The austerity program imposed on Greece is such that the GDP will continue to decline, the economic depression increase, which will require restructuring of their debt even more. The German position is frankly inconsistent. They want the IMF to be an integral part of the solution but the IMF will not wet himself without a prior restructuring of debt of any unsustainably. We will have what Berlin allows. Schäuble is not an economist. I hope someone in his entourage will eventually explain all this, but it would seem, alas, that it is not for tomorrow.

The European Union and European Commission continue wasting their money (which actually is Eurozone’s countries’ money!) and time on Greece and eventual results from next – 09/20/2015 – Greek elections. They have already lost 23 billion euros out of the very erroneously granted third bailout to Greece of 86 billion euros, with both IMFand ECB repaying themselves of what Greece owed Them in August 2015, and which Eurozone taxpayers will be liable for if the Greece “matter” blows up!

Greece’s now  ex-prime minister Tsipras resigned and called for elections on September 20, 2015 (one month after his resignation). He did so out of fear of losing a vote of confidence that would have forced the same result rapidly.

In addition, Tsipras wanted the confidence vote out of the way before further rounds of pension cuts and tax hikes (imposed by the inefficient ex-troika (EU/ECB/IMF) and indirectly by Germany, would continue playing havoc with the rapidly – non existing… –  Greek economy. Not that opportunistic and politicking Tsipras (letft radical populist “politicking” – sic) knew and knows what to do to “save” Greece either.

Due to defections – see further on please – Tsipras will have to form a new, more unwieldy coalition government — possibly with as many as three other parties.

The first major opinion poll since elections were called, published Friday in the left-leaning Efimerida ton Syntakton newspaper, showed Syriza as the most popular party, with 23% saying they intend to vote for it. That was down from 26% in early July 2015. The second-biggest party, the conservative New Democracy is seemingly increasing is voting potential with 19.5% of the intended vote, up from 15% in July 2015.

Short of a majority, Tsipras would first look to renew Syriza’s coalition with the Independent Greeks, a small right-wing party that had quietly backed all his policies. But in the ProRata poll, only 2% said they would support the Independent Greeks, below the 3% needed to enter Parliament.

Syriza would most probably reject the idea of an alliance with the Popular Unity, the new party formed by its own dissidents. A large portion of Syriza’s party has, seemingly (?), switched to the Popular Unity party, which is campaigning for a voluntary exit from the Eurozone and the re-adoption of the drachma.
“Re-adopting the drachma is not a catastrophe. . . There are plenty of European countries doing well that are not members of the eurozone,” Mr Lafazanis said at the weekend.

Tsipras tried to re assemble Syriza party members behind him during the weekend in advance of the election, opinion polls reflecting deepening disappointment among voters with his government’s “record “(there is none…). On top of everything, his former “friend”, Varoufakis, ex-blogger, self asssumed game playing “expert” and former… Greek Finance Minister (a joke) is trying to rally extreme left parties in all of Europe.

Tsipras’ message was somewhat diluted by infighting among senior party officials, reflecting Syriza’s disarray in the wake of mass defections last week to Popular Unity, a new radical party led by the former energy minister Panagiotis Lafazanis.

Tsipas is suffering from another “inconvenience”: a usually loyal party: the “Group of 53”, including several former Tsipars’ cabinet ministers, circulated a document at a meeting criticising Tsipras’ decision last month to make his “hundredth” political gyration within 8 months by “agreeing” (sic) to a third Greek bailout of 86 billion euros after months of endless and totally contradictory negotiations.




As is further stated at the end of this post, the obvious political and economic solution, since five years( this blog “proposed” it since its creation in July 2011), was and is to EXIT Greece from the Eurozone.

France, as usual, was the first to provide yesterday (08/22/2015)  a TV audience to left radical populist ex Greek Finance Minister Varoufakis, inviting this self proclaimed “expert game player” and ex-blogger to an interview (badly prepared without an official interpreter…) by France’s “official” Chain 2 at 8.30 pm.

France’s “politicking” as usual allows visibility to “people” like Varoufakis, who became Minister of Finance in the January 2015 elected Government in Greece with the left radical populist Syriza party, who made totally unrealistic promises to the Greek population, which had been mistreated by past corrupt and inefficient governements and made the big mistake of believing and electing these “charlatans”. This government – with Tsipras as Prime Minister and Varoufakis as Minister of Finance – immediatey undertook a “selling” trip in February 2015 to most European capitals, starting with France and getting “attentive” reception.

Brussels, with its EC president Juncker also paid great attention to these “jokers”…

During the February- August 2015 period Greece filled the News, pracftically every day, a country whose dwindling GDP represents less than 2% of Eurozone’s GDP!

This by itself shows the ineptitude of all supranational institutions – EU / EC / Eurogroup (perhaps the most inefficient “institution” (sic) / IMF / ECB et al – in setting priorities, which should have been to stress the urgent need for implementing real / complete social-economic structural reforms (not “reformettes” like in France) in the Eurozone, activating negotiations with the UK, before the second biggest economy in Europe (after Germany) separates from the Eurozone, and trying to plan ahead alternatives for the Eurozone in case of a China hard landing, instead of eternally “discussing” Greece and becoming the laughing stock worldwide!

Germany, “de facto” leader of the Eurozone, cannot continue assuming this “unofficial” role, setting policy for this supposed “Eurozone Union”, since what has worked very well in Germany, does not work well in Latin countries with different history, usus, mentality, etc…,and requires a completely different approach to Eurozone “Governance”, which this blog has been  repeating “ad nauseum” for over 4 years, providing concrete and applicable alternatives, which need a total revamp of the Brussels mammoth “organization”(sic) and approach to seizing opportunities and resolving problems.

The so called Greek governement made “hundred” girations during this 7 months’ period, not even respecting a referendum that they themselves called for, thereby” kidding” the Greek population. This last week Tsipras resigned as Prime Minister with new elections being called for on September 20, 2015 (in one month) because the Syriza party is split through the middle and there is no viable Government anymore to…govern.

Accordingly, there is no Greek government left anymore to respect the “agreement” reached some weeks ago to allow a third 86 billion euros bailout to Greece, where 23 billion euros had already been paid out to Greece – before Tsipras’ resignation (take the money and run…)!

With its  usual and undue optimism, Brussels feels that this election might (?) bring about a reinforced majority in Parliament to respect the “agreement” and proceed with the agreed upon (?) “reform plan”…

Varoufakis now makes HIS European trip, meeting all left radical populist parties, like this wekend the Extreme left in France (Melenchon) and “rebel” Montebourg, and will do the same with Spanish “Podemos”, with Italian Beppe Grillo’s  Five Star Movement, etc…, to try and form European resistance to what they call the Brussels (and Germany’s) “austerity” plans.

The ex-troika – EU / ECB / IMF –  is to blame for this , since, once more, they have been following European Commission (EC) and Germany’s requests, starting all over again with practically the same austerity “policies” which have rotundly failed in the five last years and providing all the necessary munitions and argumentation to Varoufakis and Co…

On top of all this big “Mess”, the institutions themselves in-fight, like IMF who wants to make “haircuts” to the huge and totally unmanageable Greek debt, this being opposed by Germany, the biggest Creditor with close to one third of the over 300 billion euros Greek Debt, a Debt which is now coming close to 200% of Greece’s falling GDP.

But, IMF started off (with ECB) by reimbursing itself, using the first 23 billion euros installment of the third bailout of 86 billion euros – already paid out (please refer to above comment), leaving the Eurozone countries with the debt burden which will eventually fall upon Eurozone taxpayers if the Greek situation fails (and not on IMF nor ECB!)

This situation has become totally unacceptable from a purely political Eurozone standpoint, with no respect for any agreements due to continuous changes in Greek “governments” (sic), the obvious obvious “solution” (since five years – which this blog “proposed” since its creation in July 2011) being to EXIT Greece from the Eurozone.


As is further stated at the end of this post, the obvious solution, since five years – this blog “proposed” it since its creation in July 2011 –  was and is to EXIT Greece from ethe Eurozone.

I just finished watching tonight (08/22/2015)  on French TV 2 – 8.30 pm an interview of Varoufakis.

France’s politicking as usual allows visibility to “people” like Varoufakis, a self-proclaimed expert in “game playing” and ex-blogger ,who became Minister of Finance in the January 20165  elected Government in Greece, with the leftish, radical, populist Syriza party, who made totally unrealistic promises to the Greek population, who having been mistreated by past corrupt and inefficient governemnts made the big mistake of believing these charlatans. This government – with Tsipras as Prime Minister and Varoufakis as Minister of Finance; immediatey undertook a “selling” trip to most European capitals,starting with France and getting a “warm reception”.

Brussels, with its EC president Juncker also paid great attention to these “jokers”…

During the February-  August 2015 period Greece filled the News, pracftically every day,a  country whose dwindling GDP represents less than 2% of Eurozone’s GDP!

This by itself shows the ineptitude of all supranational institutions – EU / EC / Eurogroup (perhaps the most inefficient “institution” (sic) / IMF / ECB et al – in setting priorities which should have ben to stress the urgent need for implementing real / complete social-economic structural reforms (not “reformettes” like in France) in the Eurozone, and activating negotiations with the UK, before the second biggest economy in Europe (after Germany) separates from the Eurozone.

Germany, “de facto” leader of the Eurozone cannot continue seting policy for this supposed “Union”, since what has worked very well in Germany, does not work well in Latin countries with different history, usus, mentality,etc…

The so called Greek governement made “hundred” girations during this 7 months’ period, not respecting a referendum that they themselves called for, thereby” kidding” the Greek population, until now, when Tsipras resigned and new elections are called for on September 20, 2015 (in one month) because the Syriza party is split through the middle and there is no government anymore! 

Varoufakis now makes HIS European trip, meeting all leftish populist parties, like the Extreme left in France (Melenchon) and “rebel” Montebourg, and will do the same with Spanish “Podemos”, with Italian Beppe Grillo’s  Five Star Movement, etc…, to try and form European resistance  to what they call “austerity”.

To blame is the ex-troika – EU / ECB / IMF – who have, following EC and Germany’s demands, started all over again with practically the same austerity “policies” which have rotundly failed in the five last years and providing all the necessary munitions to Varoufakis and Co…

On top of all this big “Mess”, the institutions themselves in-fight, like IMF who wants to make “haircuts” to the huge and totally unmanageable Greek debt, this being opposed by Germany, the biggest Creditor…, a Debt which is now close to 200% of Greece’s falling GDP.

IMF started off (with ECB) by reimbursing itself, using the first 23 billion euros installment of new”aid ” – already paid out (!) and being part of the agreed upon third bailout of 86 billion euros, which will eventually fall upon Eurozone taxpayers if the Greek situation fails (and not on IMF nor ECB!)

The obvious solution, since five years – this blog “proposed” it since its creation in July 2011 – was and is to EXIT Greece from ethe Eurozone.


Eurozone growth faltered to 0.3% for 2015 ‘s 2nd Qtr (vs 04% in the 1rst Qtr – source – Eurostat), with great disparities intra countries, this deterioration being mainly due to France. where there was no growth, contrary to France’s 0.7% growth in 2015 ‘s 1rst Qtr, which was neither explained, and was incidental, just like Greece’s apparent 0.8% growth in the 2nd Qtr of 2015 which nobody can explain (Greece anyhow is not important – less than 2% of Eurozone GDP…).

Economists are concerned that the Eurozone’s growth rate is not stronger considering the advantages represented by a (temporary) low exchange rate – the euro being 1.11 to the USD, again falling oil prices (Brent – $ 41.35) and ECB continuing making its 60 Billion euros liquidity inflows which are totally incapable of boosting economies, since demand has not been created, and total real Unemployment (including Under Employment) exceeds 20% of the nonfarm civilian working population, being double US total real  unemployment of 10.4% in July 2015.

Concerns over the Chinese economy were affecting exports to China and financial markets around the world.

US  growth rates were 0.6% in the 1rst Qtr 2015 and 2.5% (upward revision from 1.7%) in the 2nd Qtr. 2015, Annual 2015 Estimates being between 2.8 – 3.4%, which seems high, these forecasts (IMF (3.1%), World Bank (3.0%) UN (2.8%), Economists Intelligence Unit (3.4%) were made before the “outcome” of the China situation…(?)

All these apparently favorable macro conditions will not really alter the Eurozone picture, since they disguise the real social-economic problem – lack of structural reforms starting with labor and flexibility – which allow (sic) governments to not show the same sort of urgency about making their economies more dynamic.
This is another confirmation of the poorness of analytical capability in the Eurozone’s Brussel’s mammoth bureau technocratic so called “Governance”…

As has been the case for much of the past few years during the Eurozone’s crisis over high government debt, growth remains heavily reliant on Eurozone’s “de facto” leader – Germany, whose GDP increase was largely due to strong exports  partly due to the euro’s sizeable drop since last year.

France, second largest Eurozone economy, showed zero growth in the 2nd Qtr of 2015, contrary to 0.7% growth in 2015 ‘s 1rst Qtr, which was neither explained, and was incidental.The sharp slowdown in France was due to a great easing in  investment and consumer spending being  low.
Italy, Eurozone’s third largest economy, saw growth diminish to  0.2% vs 0.3%, which is totally insufficient to make up for growth decline over the last years.