Tuesday, May 8, 2012

New French President: How it affects Europe and US

Elected French President François Hollande

If you’re not concerned about the newly elected president of France, you probably didn’t look that much into the matter. In spite of his harmless appearance and good sense of humor, when you look at the newly elected French president´s  background and political stance you can only be concerned about the future of France and the EU in general.

François Hollande is a pure breed socialist politician, a man of very limited if not none existent actual work experience outside of lobbying for the socialist party in France.  His “job” is being a Socialist. At a time when tough decisions must be made to save France from following Spain and Greece, Mr. Hollande stance is exactly the one you should avoid.
Instead of reducing government spending like Sarkoszy was trying to do, Hollande wants to considerably increase government spending, believing this is the way to get out of the crisis.
Its not that spending money to make money isn’t possible, but it works when your plan is to allow actual profit to be created rather than just planning on taking away from those that know how to make money while at the same time making it hard for them to do business.
You don’t get out of a crisis initiated by debt and wreckless spending by spending even more, not when your debt is close to 90% of your GDP, you get out of it by a)  spending less money and b) actually making more of it. A common illness among politicians in general but apparently more common among socialists because of their stance against capitalism, is that they don’t grasp the notion of what it means to run a company or make profit. They simply don’t know how to make money, yet they are good at spending it. Like anyone spending money that they never should have had in the first place, they spend it unwisely.

The way Holland envisions making money is by taking from those that do know how to make it, and redistributing it, taking from the rich and giving to the poor so to speak. Following this line, Hollande said he would tax the rich out of 75% of their income. Given that any EU citizen can reside in any EU country by simply moving to it and staying there, it is expected that a mass amount of capital will leave France, in many cases along with their owners.
Hollande’s solution to the economic crisis is government sponsored stimulus to revive and heat up the economy. This is along the lines of what Barack Obama does in USA. If this strategy impaired the natural process of a free market economy rather than promote it in USA, the results can be downright disastrous in France were lack of general entrepreneur mindset and acceptance of big nanny state is much more common.

In terms of relationships with other countries, François Hollande started with his left foot with Angela Merkel even before winning the elections, when he said he will renegotiate the Fiscal Compact treaty if he won. While his socialist agenda does go along well with Obama (who already invited him to the White House) the good relationship may not be that long lasting since Hollande will not support USA military or political actions like Sarkozy did.
As any good liberal socialist François Hollande is environmentally conscious, and today that means he strongly opposes nuclear power. He wants to reduce the use of nuclear energy from 75% to 50% and replace it with renewable energy sources. Anyone that knows the first thing about renewable energy knows that its highly inefficient, expensive, and the industrial process needed for creating the renewable energy equipment pollutes more than the pollution its supposed to avoid. One of the main reasons why its so popular in spite of being so inefficient and frankly not that good for the environment anyway, is that anything that says “green” on it is heavily subsidized around the word. Just more senseless government spending.

In social terms, the future doesn’t look much better. Hollande greatly appealed to a younger segment of French population which is known for its left leaning views and violent outbursts. When Sarkozy dared change the retirement age from 60 to 62 many of these supposed students and youth political activists rioted violently. It´s hard to believe that a twenty year old business student would torch the neighbor´s Renault Clio because of a two year difference in a retirement he´s still forty years away from. Rather than young idealists, these people are well organized troublemakers with a questionable political agenda.

What Hollande will have to do eventually is exactly what Kristina Kirchner did in Argentina: If he wants to stop them from burning the country down with continuous rioting, he will have to negotiate with these supporters of his, these young extreme left activists and allow them to take positions within the government. Surrendering to bullies and criminals and giving them positions of even more power never ends up well. Believe me when I say, I already saw this movie. I estimate this to be the worst legacy of François Hollande government. While his economic stance is clearly misguided, because of the Euro and ties to the rest of EU the damage he is capable of doing will be somewhat limited, but allowing people into the government through social bullying and other illegitimate means will have terrible consequences for the country.

To make the social time bomb building up in France even more concerning you have to add to the equation that Hollande wants to give resident status to illegal immigrants. Given that anyone with French citizenship is also a EU citizen, how will that policy go along with other EU nations that don’t appreciate having illegals just walking across their borders? France already has 5 million Muslims and a growing problem with Islamic fanatics. How safe will it be once Hollande gives green card to what was once illegal immigration? Every EU citizen has a right to bring along his family members as well. The amount of young Islamic fanatics will grow exponentially in EU. After gaining residency thanks to Mr. Hollande´s policies, France will be their door to all of Europe and even US, since you don’t need a US tourist Visa if you have an EU passport. There´s nothing wrong with legal immigration, no matter who you are and what ethnic background you come from, but legalizing illegal immigration invites precisely the kind of people you DON’T want in your country, the kind of people other countries want to get rid of.

France will become yet another rotten apple in the barrel, socioeconomically ruining the rest.
François Hollande looks like a nice enough man, but I’m concerned that he’s one of the worst choices during a time when Europe cannot afford any more of those.
Join the forum discussion on this post!


Anonymous said...

Good analysis.


Deft said...

It was a real victory for statism. Bummer.

gaga said...

It matters little what he wants as France doesn't have any money. One thing you have to remember about politicians in Europe is they will promise the world to get elected and fail to deliver when they 'discover' there is no money. They will make a lot of noise and carry on with the prevous parties policies.

Greece is a different matter, extremist parties who have been elected on anti 'austerity' vote. They will be kicked out of the Euro and suffer a 75% devaluation.

Alecton said...

I Ferfal (sorry for my english), I'm a french liberal and, by the way really disapointed to see FH becoming my president but I 've got to correct few mistakes.

First, FH knows how catastrophic is the french economic situation and every body knows, here, he won't be able to do the half of his promises. In the becoming weeks, after having used an institution we name « la cour des comptes », FH will announce this impossibility.

Second, he didn't promised to legalize all illegal immigrants. We are in a situation here (Front National 20%) in witch the fact of legalizing all illegal immigrant whould certainly cause a civil war. Don't forget France is a country of the south of Europ with 60 years of socialism behind us. Our right and left political parties are both socialists and we are in troubles now, the immigration based on analphabetised immigrants cannot continue.

Maldek said...

gaga you hit the nail on the head!

Nevertheless if we consider that the euro was the french prize for the united german, history is not without a sense of irony that today france is the one controlled by the euro rather than germany.

Mr. Hollande will have the choice between leaving the euro and printing his new franc in order to finance his socialist agendas or he will have to force a lot of austerity over his voters in the years to come simply because - as FerFal pointed out - there is no money and france is technicaly bankrupt just like spain or italy are.

Anonymous said...

Agreed, good analysis, Ferfal. I won't be hearing that one on the Evening News.


Butoeskor said...

I love this analysis. There's too many socialist shitheads going around here where I live, too many people who think they know how to spend my paycheck better than I do.

You're just keeping it real and telling the truth about what's going to happen in France.

MOTH said...

I don't agree that the economic damage will be minimal. With more entitlement programs to come, higher taxes, and capital leaving the country, I believe that the EU will be able to absorb only a portion of these problems until France hits a tipping point...and possibly taking all of the EU with her.

Economically, I am of the opinion that you are optimistic. (I am not so optimistic.) It is, however, a great article.

MOTH said...

I don't agree that the economic damage will be minimal. With more entitlement programs to come, higher taxes, and capital leaving the country, I believe that the EU will be able to absorb only a portion of these problems until France hits a tipping point...and possibly taking all of the EU with her.

Economically, I am of the opinion that you are optimistic. (I am not so optimistic.) It is, however, a great article.

Anonymous said...

I have also seen this movie, it is the same Zapatero did in Spain, ... (cuando las barbas de tu vecino veas cortar, ...)