France: Double dip or the edge of the abyss?

Patrick Young
Patrick L Young is CEO of niche crowdfunding platform HanzaTrade and an advisor to fund managers throughout the world. Born in Ireland, he is an active investor in the “New Europe” amongst other emerging markets and is an active Co Founder of grassroots startup group "Mission ToRun." Home Page: http://patricklyoung.net Twitter: @FrontierFinance
France: Double dip or the edge of the abyss?
Francois Hollande was elected a year ago. With a bloody-minded determination he is already the least popular President in French history. A double dip recession is hardly a surprise in the face of such concerted incompetence.

We’ll avoid the “c” word as one thing France isn’t doing is celebrating. A year ago, the electorate ousted the discredited Psycho-Sarko. The victor Hollande campaigned on a remarkably left wing manifesto (even by French standards). His redeeming feature for those of us not blessed with the looks of Brad Pitt, was that despite being nicknamed after a custard tart, Monsieur Flanby seems to have a remarkable way with beautiful women.

However, given the lack of empirical evidence that glamorous women close to the Presidency have actually galvanised economic growth (in the case of Hollande, even the simple act of buying engagement rings seems to be a commercial act too far), let’s stick to the essence of political economy...

To describe the French as in a depressive torpor rather overstates things. Monsieur Hollande’s first year as President has delivered a double dip recession. The crescendo of cynicism is rising about France’s discredited “third way” economics. Government spends with gusto, taxes with rapacious alacrity and watches wealth creators flee to South Kensington or Belgium...

Rank Government hypocrisy has further decimated Presidential credibility: it transpired the Budget Minister held significant assets offshore to evade his own punitive tax regime.

True, the government recently held high profile meetings to convince business leaders that the President believes in enterprise. The tricky point was that this came after months of increasingly shrill posturing against all forms of wealth creation. The entrepreneurial actor/national icon Gerard Depardieu ditched his passport, availing himself of Russia’s pragmatic flat tax fiscal policies at a fifth of the retrograde 75% rate imposed by Paris. Historians recall short Frenchmen used to march on Russia with invasion forces. Had it not been for flawed early adoption of global warming theory they might have succeeded. Now Frenchmen arrive in Moscow to renounce their nationality and embrace a prevailing capitalist culture...  How times change, the east looks progressive, the west is festering in a socialist mess of centralised planning.

France's President Francois Hollande (AFP Photo)

Other tax rises include investment transactions which will help impoverish future pensioners with the temerity to save. Now a plan is afoot to tax “smart” devices such as mobile phones and tablets. The insanity of taxing data -  a key future engine of economic growth - pinpoints the closeted bunker-like attitude of the government. When faced with the infant Web, the French bureaucracy actively protected their Minitel network against ‘upstart’ global web standards.

Foreign relations are messy too. The historical Franco-German axis anchoring the EU looks creaky. Germany wants austerity. France, having failed to balance their budget since 1974, want the punchbowl kept at the table to restart the party. To describe relations between the inept left wingers and their conservative counterparts as cool is an understatement.

France is tumbling towards a denouement: decades of irresponsible government promising the people cake have left the economy on the brink of collapse. The nation is ‘bankrupt’ according to Employment Minister Sapin’s own words in January. Maintaining the high spending, high tax, 57% government controlled economy risks disaster and France runs the risk of being just an auction or two away from becoming the next Mediterranean Bond market disaster...

Talk of revolution is premature although it preoccupies French media. Certainly the French political elite is staggeringly out of touch. When Hollande “relaunched” his Presidency with a walkabout ‘relaunch’ in Dijon during March, he was “visibly overwhelmed” by the vocal antipathy to his shambolic regime. Hollande is a damning indictment of the “grandes ecoles” system where remote “leaders” are de facto anointed by attending an elite college.

However, all is not lost. Entrepreneurs may feel crushed by France’s intransigent anti-capitalist culture but there is much to celebrate. French multinationals are enormously successful at the cutting edge of emerging markets: building, producing, supplying and retailing with panache throughout the world.

Nevertheless, President Hollande is already less popular than Charles De Gaulle when he sought protection in a German air base from rioting students in 1968! Clearly Mr ‘Flanby’ has panache: to be this unpopular after one year demonstrates a certain talent! Now he needs to focus on actually running a government and not a juvenile debate which is of lesser quality than on the barricades of 1968...

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.