President Macron’s Problems

The second round of the French Presidential election has run its predictable course and France now has a President Macron in no small part to people voting to keep Marine Le Pen out plus more than the 11 million who voted for her, either abstaining or spoiling their ballot papers. These elections have often in the past delivered a winner by default rather than a President seen as the “man for all of France” and this is really where the problems begin.

Equally of no surprise, along with a huge sigh of relief in Brussels, The Economist penned a ‘joyful article: http://www.economist.com/news/europe/21721808-mr-macron-who-never-previously-stood-election-faces-divided-country-and-heavy

Some Exchanges

Although I rarely do as much these days as in former times, I penned a couple of readers comments and posted against this article. In a sense I am touching on the same ground as in my post following the first round of the French Presidential election but this is valid because actually, nothing has changed, the same “vultures” and obstacles are still there, the highly splintered divisions politically within France and then, the Euro which hangs over all like the Sword of Damocles. Below I’ve present three of my posts, a couple are one sided conversations but perhaps, they work for all that, I hope so.

First Post

“The main problem with this article is that it is a “The Economists Heart Leaps With Joy…” because a pro EU candidate with the “right background” won but what you really need to consider is the Herculean task he faces which in all probability will end in failure. This is not because he is stupid, lacks sincerity and so on, it is because he lacks a political base which even if his candidates for Parliament (chosen apparently via email CVs) won quite a few seats, he still wouldn’t have. This result was not a surprise, the only surprise and warning being that some 11 million French people voted for Le Pen and even more either abstained or spoilt their ballot papers, Le Pen could only have become President if she had won in the first round outright.

I wish Macron and France well and who knows, he might be a very lucky man but if not, France has just put off facing its real issues until the next Presidential election in 2022 as the required changes will prove as impossible under this President as they were under Sarkozy. One should always remember that Marine Le Pen in recent years has always said that her real target for a serious bid would be the 2022 Presidential election, by then she could be the real threat if the Macron Presidency mirrors that of Hollande. France needs reforms and most French people know it but it is a bit like that saying: “Everyone wants to get to Heaven but nobody wants to die !””

Second Post

Someone wrote quite a good comment concerning the EU and how all the leaders of member states used Brussels as a whipping boy and often unjustifiably which is certainly true. He also made some other observations which were spot on but ended with sneering at Brexit and Theresa May because it would seem that this chap was a “Remainer” and despite its obvious flaws which he pointed out, still saw the EU as the “answer” rather than seeing it as increasingly the “problem”.

“Whilst I agree with much of what you have written, your belief that the EU is the solution to anything is where you and I part company. Whether Britain has inflicted any harm on itself by opting to leave the EU only time will tell but what is certain is that the EU signed a suicide pact the moment it created the Euro, a good time currency that has transitioned into the “King’s Magic Suit of Clothes” since 2008. What will change the EU dramatically is not countries leaving it, it is the Euro, the failure to deal with it properly in the past and a clear lack of any idea what to do about it now as the crucifixion of Greece, a country of only 11 million people demonstrates too clearly.

There were only ever two solutions to the Euro problem: Total Integration of tax, spend and welfare so that there could be mutual borrowing and debt sharing, a ‘federal solution’ OR: Germany left the Euro to set up a new D Mark zone which others who ‘complied’ could join thus letting the Euro devalue to it natural level. If this latter had been done some 8 years ago, economic vibrancy may well have returned to the remaining eurozone countries, long since.”

Third Post

In reply to my second comment, someone else replied to me in “defence” of the Euro by attacking Stirling, UK productivity and so on, his approach seemed to me a bit odd so I replied as below:

“Sorry you don’t seem to have understood my main point which has nothing to do with “Is the £ better than the Euro” or even “Brexit GB vs the EU”. To my mind the key factor is how do you fix the Euro so that it works for more countries than just Germany and gives Europe a secure platform for future growth ?

Prior to the crash in a world of cheap money when everybody thought they had found the secret to perpetual motion and constant growth, an awful lot of assets were purchased denominated in the Euro currency as a consequence in our interconnected world, there has been no appetite for anyone to face the truth that the currency is a nonsense since that crash for fear of causing another ! Hence the “King’s Magic Suit of Clothes” – the king is actually naked.

It follows that the only way to “let everyone down gently” is for Germany who props up the currency and quite reasonably doesn’t want mutual debt, to leave the eurozone and set up a new D Mark zone which others, The Netherlands, Austria etc could join because they have a reasonable amount of economic convergence. The rest still in the eurozone, would see the currency devalue which whilst it means that ‘investors’ would take a haircut, providing they held on to their assets, they wouldn’t realise their losses and providing substantial growth returned to the eurozone, might just recover those losses in due course.

The only alternative has never been put to the citizens of any EU country to get their permission: Total integration into a United States of Europe where there would need to be total harmonization of all tax rates, welfare benefits, a proper central bank that is the sole source for borrowing, mutual debt, all existing parliaments becoming “devolved administrations” and all power vested in the European Parliament. This is probably a bridge too far for even the most ardent EU fan and the Germans certainly won’t wear it.”

Conclusion

I wish President Macaron every success but the truth is that he will have a major uphill struggle to get anything done, France never easy to govern seems to be a country in a political turmoil where to a large extent, the ruling classes seem to have got totally out of step with their voters on both the left and the right. The candidates from the two main parties that have dominated France for the past 40/50 years were eliminated on the first ballot, the voters were drawn to the “outsiders” be they from the extreme right, the extreme left or the extremely ambiguous in Macron.

How this will all play out will be interesting to watch, who knows a bit of luck and Macron could turn out to be the right man, in the right place, at the right moment in time. However the danger is that if Macron is not lucky and his presidency turns out to be a re-run of Hollande’s period in power, the next election in 2022 could see someone from the ‘extremes’ being voted into power just to get the changes underway France needs, that person could be Marine Le Pen.

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