Tuesday, July 26, 2011

The French role in the fracture of the Eurozone!

President Sarkozy is this morning reported in Le Figaro, link in french, as writing to his parliamentarians urging the passage of a "golden rule" requiring a balanced budget. Well may he do so.

France stands pretty much shoulder to shoulder with Britain in relation to the size of its dreadful indebtedness, and seems similarly unsuccessful in implementing meaningful cuts in the face of limited growth. Hailing his success in forcing moves towards a European Monetary Fund, the French President, thus pledging 15 billion euros extra payments by France to the basket case that is Greece, seems blithely unaware of the potential damage to France's AAA credit rating by extending such largesse to Portugal, Ireland and even thereafter, contemplating expensively frittering funds in support of the flailing countries of Italy and Spain, who laughingly will also be providing financing for these ludicrous market finaglings, through the structures of the EFSF.

The Golden rule needs 70 % of votes to pass, and will not be considered until the Autumn, we can therefore view the President's letter as the usual "grande" grandstanding.

The election will then be  a few short months away, will the Socialists find a candidate who can cash in on the anti-EU sentiment which is by then certain to be widespread, or will the longer-standing anti-EU-federalist parties be the beneficiaries?

Germany's Bundestag and electorate may well be persuaded that the financial costs of last week's package, may have some benefit to their country. Can France's parliament, faced with looming elections, really be persuaded that such penury for France's voters will ever have any benefit for France, when it merely seems to serve as the foundation for German control of the western end of the European peninsular?

Let us also not forget the IMF which, in spite of Lagarde, has yet to pronounce on last week's muddled and incomplete package:

The above video, of the Greek Finance Minister meeting the IMF yesterday, issued by AFP., does not work in some countries (of which, strangely, France appears to be one such), further explanation of the delicacy of this matter can be guaged from this link, whence comes the following quote:

But Charles Dallara, head of the Institute of International Finance, indicated that the IMF had promised it would expand its loan program. Dallara's IIF is a trade group that represents the world's leading banks and is spearheading talks with Greece.
"It's clear that Europe, and not just the private financial community, predicated its renewed commitments on continued IMF support," Dallara said, adding that the agreed "additional support" from the fund "was endorsed by all the officials in the room."
If the IMF were to refuse more financing for Greece, "not only is our deal invalid, but Europe's whole plan," Dallara said. "We all know that this does not work without continued IMF support," he said.
The decision on additional IMF funding is ultimately decided by the executive board that represents shareholder countries. IMF chief Christine Lagarde said last week that based on the deal for a new financing package, "the IMF will continue to play its part."

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