By Wolf Richter
France is mired in a
stagnating economy. The private sector is under pressure, auto manufacturing is
heading into a depression.
Unemployment hit a 13-year high of 10.2 percent,
leaving over 3 million people out of work.
Youth unemployment of 22.7 percent, bad as it is,
belies the catastrophic jobs situation for young people in ghetto-like
enclaves, such as the northern suburbs of Paris.
Gasoline and diesel prices are hovering near record
highs. So there are a lot of very unhappy campers.
In a BVA poll, 55 percent of the respondents were dissatisfied with
President François Hollande’s efforts to tackle the economic crisis. By comparison,
only 31 percent were dissatisfied with Nicolas Sarkozy in 2007 at the end of his honeymoon.
Devastatingly, for a socialist: 57 percent believed that he didn’t distribute
the “efforts” equitably—same as Sarkozy, the president of the rich.
The problem with voters is Hollande’s “inaction,”
after some initial half-measures, such as the partial reinstatement of
retirement at 60 and raising back-to-school aid for families. Now people
“seriously doubt his ability to change things.” They believe
that the government spends its time trying to “unravel Sarkozy’s legacy” and
“sitting around in meetings,” rather than making decisions.
In an OpinionWay poll, satisfaction with the job Hollande is
doing crashed a vertigo-inducing 14 points from 60 percent in July to 46
percent in September—compared to the 64 percent satisfaction score voters
heaped on Sarkozy in 2007. And 58 percent believed Hollande, after four months
in office, is already going “in the wrong direction.”
People have the “strange impression” that the
government is “only now becoming aware of the crisis,” and they’re worried that
the government lacks “clear vision” and “a war plan” to combat it, said Bruno
Jeanbart, deputy general director of OpinionWay. Anxiety is engulfing the
middle class, and it pummeled Hollande with a 19-point drop in
the satisfaction score. During his campaign he’d promised that he’d demand
“efforts” from the rich and from large corporations, but now the middle class
fears that it will be asked to step up to the plate and pay even more in taxes.
It gets worse. Only 34 percent are confident that
Hollande can tackle the unemployment fiasco, 33 percent are confident that he
can control budget deficits, and 29 percent believe that he can maintain
purchasing power (a formula based on inflation and a slew of other factors,
such as social payments). Prime Minister Jean-Marc Ayrault got knocked down by
13 points to 46 percent. Luckily for Hollande and his ilk, the entire classe
politique, including the opposition, got hammered, and even right-wing
Marine LePen was knocked down 10 points to 21 percent.
To turn things around, Hollande addressed the nation
on Sunday night TV (TF1) ... and lowered growth expectations for 2012 from the
already measly 1.2 percent to 0.8 percent. To keep the deficit in line, he’d have
to come up with €33 billion in new measures. He’d “save” €10 billion in public
service—though he’d already committed to hiring more civil servants for
education, law enforcement, and the decrepit justice system. Deep unnamed cuts
would have to be made elsewhere. A mystery, because the resulting strikes would
paralyze France for weeks.
And he outlined tax measures, some of which he’d
already proposed during his campaign, to extract another €20 billion from
households and businesses—the 75 percent top income tax bracket among them.
Once again, he emphasized to his incredulous middle-class compatriots that
these taxes would hit only the largest corporations and richest households.
Hence the explosive impact of the “affaire Arnault,”
as it has come to be called. Bernard Arnault, richest man in France, fourth richest man in the
world, top honcho at luxury retailer LVMH, and close associate of Sarkozy, has applied for Belgian citizenship.
France gasped. Liberation ran a
front-page article, “Hit the Road, Rich Idiot.” It lambasted him for his
tax-avoidance strategy and called him a “deserter.” Arnault decided to sue the paper. Economy Minister Pierre Moscovici
said on BFMTV that he was “shocked” and called for renegotiation of the tax
treaties with Belgium, Luxembourg, and Switzerland (unlike Americans, who are
taxed on their worldwide income, French citizens are not taxed in France if
they don’t live there).
In November 2011, Arnault called Armand De Decker, the
mayor of Uccle, a swank French-speaking community in the Region of Brussels, to
let him know that he’d buy a residence there and apply for citizenship. Arnault
had explained to him that his decision was based on the
current tax climate in France—”If certain tax measures are implemented,” De
Decker said, “that would mean for him that the taxes he’d pay would exceed his
income.”
But Brussels isn’t a hot tax haven—we used to live
there, and there are lots of reasons to live in Brussels, but you pay taxes out
of your nose for almost everything. Yet it’s 1 hour 22 minutes by train from
Paris; and there are some tax advantages over France, including inheritance
taxes. Hence, the dominant group of the many French escapees, the 45-60
year-olds, want to protect their moderate fortunes. But the super-rich tend to
go elsewhere. If nothing else, Arnault’s move is a deft slap in Hollande’s
face.
“Outright Monetary Transactions,” is what Mario Draghi
called the ECB’s strategy to buy “unlimited” amounts of Spanish and Italian
bonds. It’s supposed to repair “monetary policy transmission.” Impressive
nomenclature ... for a classic scheme to bail out bondholders and fund
governments. And it’s illegal. Read.... The European Central Bank Thumbs Its Nose At The Law, by Blankfiend.
No comments:
Post a Comment