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Hollande wants to kick Germany out so he can devalue the Euro

by on September 12, 2012

Photography: Philippe Moreau Chevrolet

Laissez-nous-faire is a French phrase, which the French themselves seem to have forgotten. In a public debt problem, created by bad public finances and a lack of public and political will to reform the labour market, the French have chosen a Socialist President in Hollande. He has announced plans to raise a 75% tax on the wealthiest and nationalize industrial giants. This sounds similar to economic policies France’s last Socialist President, Mitterand, imposed.

IconicPhotos calls Mitterand’s first years of office were an unmitigated disaster he created 250,000 new government jobs, raised pay for government employees, shortened the work week from 40 to 39 hours, added a fifth week of paid vacation, reduced the retirement age to 60, increased social payments through Allocations Familiales, and nationalized 38 banks and 7 industrial giants. The budget deficit tripled; inflation and unemployment stood in double digits. Mitterrand had to devalue the Franc no less than three times to keep France’s exports competitive.

As we countdown to France’s fiscal crisis, Hollande will not be able to devalue the Euro to regain competitiveness. He will need to reform. Yet there may be another solution, he could devalue the Euro if he persuades the Germans and other Northern European countries leave:

The Buzz quotes George Soros when he says:

“So France’s real choice is, on the one hand, between breaking with Germany to save Europe and restore growth or, on the other, pretending to be in the hard currency boat for a limited time, only to be thrown overboard later,”

If Hollande is one bit like Mitterand, he will definitely take the first option and try to save face by taking the lead in a weak Euro and devalue it immediately.

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One Comment
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