marine le pen naive about the euro

Monday, February 27th, 2017

marine le pen –who  is the spitting image of her father, is the leader of the anti-immigrant right-wing populist party front nationale in france. le pen has spent the past few years hiding her father’s past anti-semitic statements in a kind of pandora’s box, one might say. we are hoping that the french people will leave this box under jean-marie le pen’s bed.

at the moment it looks like marine le pen could win the first round of france’s presidential election in april. as she leads emmanuel macron , who her followers have taken to calling le plexiglas (aka the empty suite), of the newly launched en marche party. she leads macron by 7 points. macron, the former economics minister in president francois hollande’s government, is also a former banker. le pen’s next closest rival,  francois fillion, of the republican party is weighed down by a nepotism scandal. but le pen is predicted to fail in the second round. we are not so sure. france has a lot of structural problems. the 1968 generation of hippies morphed into yuppies who when they took over the levers of power, ensured that they themselves would receive lifelong work contracts from their employers. the law of unintended consequences has resulted in their having metaphorically pulled the ladder up behind them.

young people (and by that we mean young in a european sense, meaning those under 50) suffer from job insecurity. france has seemingly permanately high unemployment. and young people are only offered temporary contracts. to his credit, francoise hollande shoved through labor market reforms in 2016 that were similar to the reforms germany made in 2003. it is one reason why hollande’s approval ratings are around 4% and he has declined to run for a second term. but these structural reforms are one of the reasons the employment rate has recently started to fall. hollande, who apparently pays someone 10,000 euros per month for a haircut and presumably colour,is the gerhard schroeder of 2017. he will leave the office in disgrace but in 10 years will be partially rehabilitated.

one could poise the question, why is it that populists want to metaphorically blow up their countries, destabilize them and push them back to either the pre-world war 2 period or even the dark ages? does marine le pen understand the consequences of holding a referrendum on france exiting the european union? maybe charles degaulle made a mistake back in the day by pushing for presidents to be directly elected.

marine le pen (aka the frontrunner) repeatedly tosses out misleading statements by comparing a possibly frexit to a brexit. not only is this is not a parallel argument. it is factually wrong. unlike france, the UK has its own currency, the pound, and therefore was not part of the eurozone. the eurozone currently has 19 countries, one of which is greece. a few years ago there was talk of a grexit, but any country leaving the monetary union will create as donald rumsfeld might say, a known unknown.

joseph stiglitz, who most likely wants to destroy the european union like le pen, has written a widely read book called The Euro about what could happen to The Euro. he argues that the intentions for creating the common currency were diplomatic but not pragmatic. which is arguably true as france sought to bound a re-unifying germany more to the european union. but stiglitz’s concept of what an exit could look like is completely naive and a bit like playing roulette with the world economic system. but we are not so impressed by his book because he has long sections where he acutally name drops referring to this economist and that banker as his good friend so-and-so in the book. it’s like a stream of conscious screed similar to dairies of andy warhol written by someone with early signs of dementia.

stilgitz’s other idea of dividing the euro into a northern euro and a southern euro, could sew divisions amongst its neighbors –and is ill advised as well considering that one of the countries that was weighing heavily on the euro and got bailed out by the EU was ireland, which is decidely in northern europe.

brexit for the european union has (and will be) relatively benign as the UK never joined the euro. it has been a minor disaster for the UK as the UK is more a service-oriented economy than france. france exiting the european union would take away all the subsidies to french farmers. anyone in the world would be able to label their sparkling white wines champagne. and more importanty, a frexit woudl destroy the euro currency thereby directly taking 18 countries down with it including germany and melania trump’s poor little slovenia.

but that is just the beginning. what about the rest of the world? the swiss central bank will look prescient at having depegged its currency from the euro a few years ago. but that seemingly small change caused turmoil that reverberated globally, triggering a mortgage panic and panic about loans priced in swiss francs. just think. one day you wake up and the mortgage payment on your house jumps 20%. that’s what chaos and inflation looks like.



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