DEBTOR NATION

VIDEOS

Wolf Richter On The Keiser Report
"Debtonomics and the NSA"

Wolf Richter on the Keiser Report
"Where Is The Fear"

Wolf Richter on Max Keiser's "On The Edge" 
"The Pauperization of America"

Wolf Richter on the Keiser Report
"Where the Money Goes to Die"

Clarke and Dawe: European Debt Crisis
Two favorite Australian Comedians

Clarke and Dawe: Quantitative Easing
Big industrial-strength printers, all facing the window

The Fastest Drive Ever Through San Francisco
Don't try to do this yourself
 

humanERROR - by "Frying Dutchman"
Powerful, lyrical appeal to the Japanese. Slams nuke industry, MSM, bureaucrats, and politicians.

« Small Business Apocalypse Or Political Vendetta? | Main | California's Budget Goes Off the Cliff »
Monday
Dec102012

The Socialist Heart Of France Spits Out Its First Victim

A new report released by Insee details the inexorable rise of official poverty in France. By the end of 2010, it engulfed 8.6 million people, 5.4% more than in 2009, and 16.7% more than in 2004. The poverty rate jumped to 14.1%, the highest since 1997. For children (under 18), the poverty rate hit 19.6%, for young adults (18 to 25 years old), it was a grizzly 22.5%!

More extreme forms of poverty increased rapidly. Poverty was defined as earning less than 60% of the median income in 2010. But those earning less than 50% of the median income rose to 4.755 million people, 22% more than in 2004. 

The report noted that “the standard of living has been sliding or stagnating for practically all categories of the population except the wealthiest.” Overall, it dropped 0.5% in constant euros in 2010. But for the lower 30%, it dropped between 1.3% and 1.6%, while it increased 1.3% for the top 5%. “Most of the indicators show a progression of inequalities,” the report underlines dryly.

Blame the current unemployment fiasco? Nope, the report says. In 2010, unemployment had been improving as the economy recovered from the financial crisis. Future poverty reports—those for 2011 and 2012—will reflect the pernicious effects of the rise in unemployment that started in mid-2011. And there is no letup in sight.

On Monday, the government reported that the number of temporary workers—an indicator of changes in demand for labor—had plunged 3.5% in October and is now down 13.9% from prior year. A collapse that nearly mirrors the debacle of the financial crisis. But this time around, it started falling from a much lower point than it did in 2008.

The disappearance of jobs, as France skids deeper into its economic crisis, is already putting its mark on poverty: 48% of the people consider themselves either living in poverty or on the way to living in it.

The survey set the tone for the National Conference of the Fight against Poverty and Exclusion this Monday and Tuesday. In a sign that the government was taking poverty seriously, President François Hollande himself would kick it off. Prime Minister Jean-Marc Ayrault would close it. It would be packed with ministers, representatives of anti-poverty associations, and even people who live in poverty. All under the motto, “Imagine the social policies of the 21st century” [read.... The Alarming “Sense of Pauperization” in France].

But the government’s display of its Socialist heart is already stalling. Hollande had a scheduling conflict. Instead of getting tangled up in a dicey effort that would call for programs the government wouldn’t have the money to pay for, he decided to hobnob, and hold hands, with German Chancellor Angela Merkel in Oslo, Norway, during the Nobel Peace Prize ceremony. It didn’t go unnoticed.

And the tip of the spear of the Socialist left wing, Industry Minister Arnaud Montebourg?

In October he’d pleaded flamboyantly that the “made in France” be given preference and that a dose of protectionism be instituted at the European level to stem France’s deindustrialization and protect its car makers from Korean imports [Shooting From The Hip And Hitting Consumers]. Then he’d stirred up a raucous debate with his threat to nationalize ArcelorMittal’s old steel plant at Florange [Nationalizations Take Off In France].

That tip of the spear? Broken off! While in Brussels on Monday to beg the free traders in the EU to impose his industrial vision on the land, he was asked about the ArcelorMittal plant—Ayrault having swept his threat off the table. “I let Prime Minister Ayrault sort things out at Florange,” he said, “That’s his job now.”

Montebourg has been shunted aside. After he got the cold shoulder from the same free traders who’d shot down his plea for protection against Korean imports, he mused, “For 30 years, consumers made the law in Europe, and the result is a disaster. As for me, I defend the producers.” He claimed that the EU was the only entity that didn’t “defend itself against unfair competition”—purposefully forgetting that the EU has a trade surplus with the rest of the world, though France has a trade deficit.

“We’ve become the idiots of the global village,” he added. But hardly anyone was listening to the Socialist firebrand. He has become irrelevant in an unpopular government that is desperately trying to swing the other way.

Fearing their own economic principles, economists and politicians drive Europe into perhaps decades of austerity, transfers from north to south, worsening imbalances, and uncertainty. Uncertainty, however, is the worst thing for business leaders and the European economy. Read.... He Who Says “No” To Austerity And Global Imbalances Must Say “Yes” To The Northern Euro.

EmailEmail Article to Friend

Reader Comments (4)

1. By doing PR for his socialist backers at home at the same time he has started a completely negative PR with investors of all sort, especially international. And created next to all the the uncertainty around the Euro plus a fiscal cliff alike (New-Maastricht criteria) situation worries which appears to be simply too much. No new real investments.
It is also clear that the French government is simply unable to properly manage the PR in the outside (non French speaking) world. It all comes around pretty negative.

2. Re poverty. Imho the main problem is the pricelevel combined with the fact living more cheaply is social political not acceptable. If you look at the pricelevel with French (or European) poverty line income (especially including all the direct and indirect costs like subsidised healthcare) you can have a comfortable middleclass lifestyle in nearly all of the EMs (with the exception of Russia probably). Also the cost of living are higher in Western Europe than in the US while wages are higher in the US. Probably caused by high taxes that are ulltimately simply added to the price of products plus less competition.

3. Problem for Hollande is he really branded himself in a very short time to everybody around as an interventionist socialist (something all investors get a strange rash and red eyes from at the moment, unless they can profit from the usually higher deficit (and so consumption)). Rebranding will take a very long time. And it is not really rebranding as well it are simply minor corrections while still funny socialist policies leak through at the same time. So simply will not do the job. He looks like an interventionist socialist and likely will remain that way for years to come. For getting on an investor shortlist that is killing.

4. Imho is is simply the way things go with poverty in Europe. It will rise further even if the economy will not deteriorate further. European welfarestate has been too expnsive for them (they had to overborrow to finance it and that is no longer possible). Plus the numbers are rising for several reasons; unfunded pensions combined with aging; inflow of low- or no-potential immigrants; more competition worldwide for especially lower paid jobs; automation/robots. All point to more un- or under employed at the bottom part of the labourmarket. While this market is effectively already dysfunctional (mainly caused by the social net and high minimum wages-level).
Combine with no growth it is a pretty dim picture.

Anyway still completely strange that 10Y French bonds do only 2% (roughly the inflation). Imho can only be explained that markets are totally looking short term (and by the lack of alternatives). Dangerous situation France, Japan and effecively also the UK (and the US, but with the reserve currency status) are in this position. If traders startto look at the long term perspectives (and price that in) a lot of things could be dumped over a very short period of time.
I am fully with GS on this completely overbought stuff. Probably only left alive by arm twisting rules and financial institutions looking for even the most marginal yields iso looking at the risk involved. Price is kept up simply because of the liquidity aspect (there is always a greater fool and anyway you can sell so quickly that losses are never that high). But history shows with eg tulips that at some time you run out of greater fools, donot expect it to be different this time for this polished turd.
For France I expect their banks going Spanish in that situation making them even more insolvent than they are now.
Which makes betting on it rather difficult (as GS noticed). There is a delay and probably a substantial one. Timing extremely difficult (reason we see few shorts probably (which is nearly all very short term focussed).

We had a bankingcrisis which was via bailing out transferred to the states that when they come in danger transfers it to the banks again. Solving nothing and only leveraging the sov debt position. Debt levels nearly doubled in that process. while nothing was solved and time was waisted. Debt level going from sustainable to simply too high in the process.
December 11, 2012 | Unregistered CommenterRik
Please examine the FACTS and stop misleading others.

Neither Socialism nor Capitalism are the problem, Central/Fractional Banking and making money out thin air is the only issue the world has (unless you work for TPTB and are here to rile up the public).

I'm a self-made man/Libertarian and don't want anyone to tell me how to live my life however; I respect the fact that others wants to be part of a community and being told what to do (Socialists). Once again, this is not the problem, as there is room for everyone in this world.
December 11, 2012 | Unregistered CommenterCharlie
Thank you Charlie.
This has been my main point to anyone would will listen to my diatribe. Central Banks are a cancer that must be radiated. I believe if society went back to Public Banking that all of society would see benefit.
There was a report created by the Auditor General of Canada in or around 1996 that showed that the public debt of 485 billion dollars was 97 percent interest and the government had only overspent by 38 billion dollars since confederation in 1867.
A report by the Comptroller General for the United States during the Regain administration showed that every single dollar collected by income tax went to the banks to pay interest on the Federal debt.
The USA now spends 350 billion dollars a year on interest payments and the Federal Government starting borrowing the funds to pay the interest in April 2010.
December 11, 2012 | Unregistered CommenterSmitty the Canuck
Amazing world we live in Smitty.

I've share the same facts you mentioned to many and have found that it's the enormous elephant in the room that no one wants to acknowledge, though some get it and simply feel helpless.

It is my hope that eventually, the cancerous tumour will become so evident and overwhelming that everyone will have to notice and we will then be able to BE THE CHANGE WE WANT...

I refused to engage in any political debate, for they are all the same and bought by the same parties. In the US, they even make a long TV show of the political campaign...talk about Bread & Circus....LOL...

In Canada they don't even need to try that hard, as barely anyone pays attention to the fact that we borrow 95% of our money supply from banks by choice and not because it's legislated as in the US.

They may control everything and they may force social engineering on us however; that does not mean everyone is as dumb and sleep not to notice...
December 12, 2012 | Unregistered CommenterCharlie

PostPost a New Comment

Enter your information below to add a new comment.
Author Email (optional):
Author URL (optional):
Post:
 
All HTML will be escaped. Hyperlinks will be created for URLs automatically.