Taking France Out of the Euro

If you want to see what utter failure among a group of developed countries looks like, take a look at these series of charts from Eurostat.  It’s a compilation of the unemployment situation in the EU. I won’t put up the whole series but here are a couple that pretty much sum up the disaster. (click here and here for enlarged pics).

(click to enlarge)

(click to enlarge)

It’s difficult to imagine these conditions persisting without some sort of political upheaval. By upheaval I don’t mean the occasional riot or mass demonstration, rather I’m suggesting a complete rejection of the status quo arising through the political process. Essentially the election of a national leader who sets one or more of these countries on a trajectory completely at odds with the current EU strategy of survival.

Enter Marine Le Pen, the daughter of Jean-Marie Le Pen who founded the right wing Front National party. Ms. Le Pen has worked at smoothing the edges of her father’s politics and the party has pulled off  some surprising upsets running on an out-of-the EU theme. Ambrose Evans-Pritchard profiled Ms. Le Pen a few days ago. Here is the crux of her strategy towards the EU.

Mrs Le Pen said her first order of business on setting foot in the Elysee Palace will be to announce a referendum on EU membership, “rendez vous” one year later. “I will negotiate over the points on which there can be no compromise. If the result is inadequate, I will call for withdrawal,” she said.

The four sticking points are the currency, border control, the primacy of French law, and what she calls “economic patriotism”, the power for France to pursue “intelligent protectionism” and safeguard it social model. “I cannot imagine running economic policy without full control over our own money,” she said.

Asked if she intends to pull France of the euro immediately, she said: “Yes, because the euro blocks all economic decisions. France is not a country that can accept tutelage from Brussels,” she said.

Ms. Pen is drawing on work done by French economists who suggest that a withdrawal from the Euro by Spain, Italy and France would result in a restoration of competitiveness much more quickly than adjusting from within the system. Apparently the concept is drawing attention from politicians from other parts of the spectrum as well, but Ms. Pen is the only one vocalizing the theory at this time. Given the dire employment situation it’s apparent how alluring this scenario may appear to French voters.

I found this story interesting though likely to come to nothing given the French passion for dramatic gestures prior to voting for the status quo. They have a penchant for throwing out the old in order to replace it with a facsimile albeit with a different veneer. It appears as though the Le Pen surge is being taken seriously by the technocracy.

The European Parliament has removed the immunity of the French far-right leader and MEP Marine Le Pen, paving the way for her prosecution in France.

French prosecutors opened a case against Ms Le Pen in 2011 after she compared Muslims praying in the streets to the Nazi occupation of France.

Ms Le Pen, leader of the National Front (FN), is accused of incitement to hatred and discrimination.

The BBC article gives the details. Leaving aside concerns about free speech, it seems fairly obvious that there might be more than just a little bit of concern in Brussels about her emergence. When politicians start eating their own you can assume that there is some level of fear about.

If not Ms. Pen, and if not in France, someone in one of the more distressed countries of Europe is going to capture the imagination of the voters with a plan along her lines. The current situation is unsustainable, the road back with the Euro as a currency is too long.

About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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1 Comment on Taking France Out of the Euro

  1. These charts that you reference are meaningless if they lack the appropriate labeling.

    Chart 1? %? Percent what? I can assume economic growth… Chart 2? Only an array of values with no units? Economic growth again?

    Since you are abbreviating a larger report to make some lofty and speculative statements, it is appropriate to use some diligence in presenting legitimate/sensible/convincing data. These substandard graphs, however, leave me with the impression that you have only a cursory understanding of economics and a amateur sense of journalism.

    This data, as presented, would never pass peer review.

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