The Ball and Chain of the French Economy

Last Friday, we got a little more enthusiasm in the markets… a little more spark…

Unfortunately, the juice was a little sour with the Dow falling 131 points. Gold, by contrast, rose $32. Gold buyers seem to be anticipating more QE. Stock investors, on the other hand, seem to have given up on it.

We’re not going to waste our time trying to analyse a single day’s movements. They’re meaningless. And investors don’t know what to think anyway. They’re filtering back to work after a few weeks of vacation. They’re catching up on their reading… finding out what has happened… trying to make sense of it… picking up the latest claptrap ideas as if they were the new autumn fashions.

In these scruffy pages, we try to help. Not that we have any better idea than anyone else. But we’re more suspicious and cynical than most investors. And we spend more time thinking about it. Most people have real jobs! They’re too busy to waste time thinking.

“The trouble with you Americans,” said a woman at last night’s dinner, “is that you only care about making money… work, work, work… But the important thing is to learn how to live better. I spent a lot of time in America. People have money… but the quality of life is often not very high.”

She had a point. More important, she had a pretty face; we wanted to listen.

“Oh… but France is full of tricks,” said another new friend. “Nothing really is exactly as it is supposed to be… and certainly not as we say it is.”

We’re starting to like France’s new socialist president, Francois Hollande. He reminds us of the Argentinians, ready to do precisely the wrong thing at precisely the wrong moment. France’s economy is not growing. The cost of living is much higher than in the US… with the minimum wage at least twice as high as in America.

Unemployment among the young and the poor is very high. And employers are reluctant to hire anyone, partly because new hires are so expensive… and partly because they know they will have to spend half their time on labour disputes.

Meanwhile, the whole country now risks sinking under the heavy burden of debt and dysfunction, just like Greece, Spain, Portugal, and other European economies. In fact, our colleague Simone Wapler, has just written a book showing why bankruptcy for the French economy is now inescapable.

“Oh… we French like a challenge,” our companion explained. “We work with a ball and chain around our legs… so we have to use our heads!”

Regulations… interference… meddling… just like the US. People spend more and more time trying to comply with… or skirt around… regulations and less time actually producing anything.

“It’s much worse here,” the conversation continued. “Even petty things. Here, the police set up road blocks late at night to catch people who’ve been to parties. They make you take a breathalyser test. If you fail, they take away your licence to drive.

“The next thing on the agenda is that they are going to force us to all carry two breathalyser things… you know… those things you breathe into… in our own cars. We’re supposed to test ourselves to determine whether or not we’re fit to drive. Then, I guess if we’re over the limit, maybe we’re supposed to call the local gendarmerie and ask them to come arrest us!

“Of course, this is still France… so people are very reasonable, even the gendarmes, when you know them personally. I was driving with my mother when I was stopped at one of these traps. I had had a few glasses of wine so I was worried that I might have my licence taken away. But when my mother saw the gendarme… she leaned across the seat…

“Didn’t I have you in my catechism class?” she asked.

“He looked at her… and he recognised her. He saluted… and he let us go.

“What people do is that they decide who’s going to drink and who’s going to drive. Typically, the husband does the drinking and the wife drives home. But this couple I know got to a party… and they were both having a good time.

And then, when it was time to go they realised that they had come from different directions in different cars. So, no problem, they set off… with the husband following the wife in his car and she in hers.

“Well… wouldn’t you know it… they are stopped. She pulls over. He pulls over behind her. But the wife, in the first car, quickly rolled down her window.

“She said to the gendarme: ‘Thank God you’re here… this guy behind me has been following me for the last ten miles!’

‘Don’t worry, madam,’ said the gallant policeman… ‘You go on your way… we’ll take care of him!'”

So, what does President Hollande do to try to make things better? He wants to raise taxes, especially on ‘the rich’. “I hate the rich,” he has been quoted as saying, proposing to put up the top rate to 75%, much higher than his European neighbours and practically guaranteeing an exodus of the most productive people in the country. And he’ll raise the minimum wage even higher. That ought to help too, right?

Another reason to like the French president, in addition to the entertaining damage he does to the French economy, is that his personal life is so colourful. In appearance, Mr Hollande is a drab functionary… middle aged… dumpy… with narrow shoulders and a paunch.

He is surely smart and is said to have a sense of humour, but as far as we know, he has never had an original thought, built anything worth having, written anything worth reading, or done anything worth doing.

“Still, he has a very rich story,” the woman next to us explained. “He had three children with Segolene Royal [an attractive socialist politician]… another child with another woman… then went back to Segolene and had another child. And now he lives with a third woman, Valerie Trierweiler. We call her the ‘Rottweiler’. He has married none of them.”

“That would never work in America,” we said to our dinner companions.

Mr Hollande blames ‘capitalism’ for widening the gap between the rich and the poor. But it is not capitalism that did the job… but the interference, the meddles… and the scammy, rigged-up fixes from people like the French president and the rest of the controlling elite.


Bill Bonner
for Markets and Money

From the Archives…

The Gold Sub-Standard and the Inflation Cake
24-08-2012 – Greg Canavan

BHP and Rio: Just Following the Followers
23-08-2012 – Greg Canavan

How Media Regulation is Just a Clamp Down on Freedom of Speech
22-08-2012 – Dan Denning

Monarchs, the Masses and Democratic Mayhem
21-08-2012 – Bill Bonner

Why China’s Crack-Economy Needs a New Fix
20-08-2012 – Dan Denning

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

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