For those in the Keynesian economic camp, here is the result of your efforts. The US is on a similar path. France is in trouble. As I predicted when the socialists took over, the EU will have a recession. Germany cannot support the EU by itself.
France’s solution to its economic woes was to ramp up taxes, and ramp up entitlement spending. It’s exactly the same program Obama has initiated in the US.
The virtual implosion of French industry is overlooked by analysts and pundits who claim that the eurozone had dodged disaster and entered a new, durable period of stability. In fact, it’s France — not Greece or Spain — that now poses the greatest threat to the euro’s survival. France epitomizes the real problem with the single currency: The inability of nations with high and rising production costs to adjust their currencies so that their products remain competitive in world markets.
So far, the worries over the euro have centered on dangerously rising debt and deficits. But those fiscal problems are primarily the result of a loss of competitiveness. When products cost too much to make, the economy stalls or actually declines, so that even modest increases in government spending swamp nations with big budget shortfalls and excessive borrowings. In this no-or-negative growth scenario, the picture is usually the same: The private economy shrinks while government keeps expanding.
My friend Yra Harris is promoting a book, “The Rotten Heart of Europe”. It should be required reading to understand the EU situation. The Frogs were a huge hinderance to allied efforts in World War Two, and they haven’t changed their stripes. Here is Yra on CNBC with Rick Santelli.
Here is how to order the book:
To order a copy e-mail firstname.lastname@example.org
Please send checks to:
Yra Harris c/o Shepard International
141 West Jackson Blvd., Suite 2270
Chicago, IL 60604