FTT - Fantasy, Trickery & Theft! The UK Acts & Fitch Downgrades

Of the three large credit rating agencies Fitch, which downgraded the UK from Triple A to AA+ yesterday evening, is the only one with strong links to France for which it maintained its Triple A rating.

At the same time news emerged that the UK was going to challenge the legality of the Financial Transaction Tax, eleven EU countries are presently preparing under the Enhance Cooperation provisions of the EU Treaties. Open Europe has a good detailed report on that move linked here.

Far be it from me to attack or defend credit rating agencies, which by maintaining any triple A rating for any nation within the Euro Group must IMO be completely disconnected from any reality, but this clear connection in timing has to be pointed out.

France has been the country pushing hardest for the FTT. Its national economic estimates incorporate revenue from the tax which allows the fiction that it will meet its EU agreed targets for the present and coming years even slightly realistic.

Yesterday morning on this blog I suggested Britain and France work together to counter the dangerous direction Germany now seems to be taking our Continent, instead they have picked this fight over a completely absurd tax proposal.

This morning on Radio 4 Today programme we heard the harrowing account of a then eleven year old Jewish girl's escape from the Germans, though the sewers of Warsaw during the uprising which took place 70 years ago this weekend. The sheer horror of what then took place must AGAIN be generally recognised in Europe, together we must accept and confront the direction we seem to once gain be heading towards similar ghastliness.

That means leadership, which four Parliamentary votes yesterday in Italy failed to achieve but they try again this morning. BUT what are PM Cameron and President Hollande doing this weekend? They need to agree on something other than a tax disputation which was how things were left last evening!

Mali a New Trial for the EU

The Presidency of France is arguably the most powerful elected constitutional post in the Western world. This was strikingly illustrated by President Hollande's brief TV address to the nation yesterday afternoon, when he announced his country's forces were in action in Mali and that his Parliament could discuss it if they wished after the weekend, namely three days ahead on Monday.

Well that once was the case, but what now with the EU and the complications of the ESM Treaty now in force for about three and a half months, summary here, while a more detailed explanation here. The Mali engagement by French forces will inevitably impact the French deficit, debt, credit ratings and thereby its ability to meet its ESM Treaty obligations!

A fascinating dispute between France and Finland has only just arisen which illustrates the coming problems very well, read one report here. Essentially Finland has lost a contract to build a large Caribbean cruise liner in Turku to French competition in St Nazaire, apparently due to Finlan's reluctance to match the level of Government subsidy offered by France. How much more difficult has this dispute become as France's African venture brings ever closer the moment when France, instead of being the second largest contributor to the ESM, instead is forced to call upon it for funds and thus partly reliant on Finland's AAA credit rating for lower interest rates. 

Ironic, is it not that, such lower interest costs and higher credit rating are owed to the sanity of the Finnish Government, the sacrifices of its people given from living within their means and consequent reluctance to dish out grotesque subsidies of wasted taxpayers money for otherwise non-competitive industries?

This blog has repeatedly quoted the nonsense of the contribution percentages written into the ESM Treaty as begging belief, with both Spain and Italy being due to contribute large portions of the funds they seem to be among the most likely to need. Let me try another analogy on the ESM, think of it as a Christmas Club, where with all in full employment they all agree to cough up X% of their wages for a celebratory bash every year. How many need to become unemployed and broke before such a club folds? The ESM, of course, was only formed when several of its founders were already in a state of relying on the formation of such a Club for themselves to avoid bankruptcy!

Let us return to Mali, however, for even more absurdities of the EU will soon appear as a result of France's colonial legacy, the costs of which seem to be about to be partly defrayed by that country's Euro Group partners non-consulted members.

My Great Aunt, Margery Perham, was something of an Africa expert and in 1932 debated the contrast between French direct Colonial Rule with Britain's indirect methods with the then Governor of Chad, Jules Marcel de Coppet, who explained it partly in my Aunt's paraphrase - to the lingering dislike of local government in modern France,'a hangover from strong feudal power and an obstacle to centralization'. In addition, the French experience in Africa had been, from the start, more about military and imperial control than anything else, objectives backed up by the dominant French colonial paradigm to the north, represented by Algeria. (Into Africa, C.Brad Faught, Publisher I.B.Taurusp.80)  

Such is the situation (perhaps I should say potential quagmire) into which the EU, or at least the Euro Group has put itself this morning, complicated even further by the coming into force of the Fiscal Compact a mere eleven days ago.

I will, of course, be returning to these complex issues quite often as the date of PM Cameron's landmark speech on Britain and the EU has now been fixed at 22nd January in the Netherlands, a clear signal that Deputy Prime Minister, Nick Clegg's influence is clearly already heavily at work. The worldly maritime view from Holland and Spain will be now badly needed, rather than the dreadful EU embedded corporatism so far evident in all Clegg's actions.  The very unworldly and frankly almost naive David Cameron is going to struggle to rise to this occasion, especially with Clegg in his team and the likes of Michael Heseltine already loudly interfering from the wings, read here! 

                                                                                        

France's Tax Threats Against Belgium Signal Extreme Danger

The quite extraordinarily aggressive attitude of the President of France and his delegation against his neighbouring country of Belgium was the only truly significant factor of substance to emerge from this week's European Council meeting.

Belgium has been on the verge of falling apart for two years and survives mostly because it hosts the evil EU. The French speaking portion of the country Wallonia is therefore already looking towards France with considerably more interest than that of mere close neighbour.

One report on the substance and nature of the threats is best gleaned from this report that appeared yesterday in Zero Hedge, linked here.

The present attitude of the French Government is reminiscent of that of Cardinal Richelieu towards La Rochelle during the siege of 1627. La Rochelle was rich from trade with the new world, Richelieu fortified Brouage down the coast to contain the wealth he later expected to accrue, but when the siege was done with some 75% of its inhabitants slaughtered, the wealth and trade had disappeared with it. Arguably France struggled to ever recover from that folly of jealous greed disguised as a religious theological difference.

The village in Belgium, complete with socialist mayor (apparently an almost equal affront in President Hollande's eye) is home to other wealthy families from France, including the owners of the Auchan Hypermarket chain whose aisles across France seem brim full this Christmas season compared to those of some of their struggling competitors when noted by this infrquent shopper.

This blog has constantly warned that fragmentation of the old nation states could be the most dangerous means of the EU's inevitable demise. In this age of austerity I had never imagined that tax equalization could prove the spark in the tinder box for such disputes.

Belgium is in a poor situation to offer resistance against this French assault, were I a rich film star or owner of a prospering supermarket chain, I believe I would now be seeking another, home beyond the EU itself.

EU now in safer hands?

H/T Acting Man, linked here.

The original caption from Acting Man:



Francois Hollande on a personal expedition to find out what time it is.






The entire post "Catch 22 Revisited" is worth reading, from here.

Weakening euro serves to heighten German hegemony.

Watching Mrs Merkel pushing the new French President François Hollande all over the red carpet laid out for his arrival in Berlin, mere hours after having been sworn into office, I pondered the news made public earlier in the day that Germany was now almost virtually alone in having a growing economy amongst the countries lashed within the eurozone, and also grew at five times the forecast rate - an obscene achievement viewed against its present attitudes towards the prosperity plight of its supposed EU partners.

A weakening Euro, read the overnight movements from Reuters, linked here, should in theory aid the exporters in the smaller and peripheral eurozone member states, yet the German industrial panzer allowed free range within the structures of the EU, has already crushed and pulverised such ventures. German industry together with those so far allowed to survive in its immediately neighbouring states will thus gain the benefits of the tumbling Euro.

German apologists such as the Sky Foreign "expert" in Berlin for the Hollande visit, may well repeat every hour the plight of ordinary Germans during the Weimar Republic hyper-inflation, but it is wearing thin with this observer seeing first hand a Continent laid to waste through German intransigence. What does Germany want with this plundered and secreted wealth I wondered, power to prod and push it appeared was the answer!

Hollande thinks Merkel boycott could backfire on Sarkozy!

In France the widespread European boycott being imposed by leaders from the right on the socialist candidate François Hollande is seen from the left as likely to backfire. A report this afternoon from Der Spiegel discusses that matter in detail and is linked here.

It is hard for this non-French resident of France to comprehend the incumbent's strategy unveiled in Toulon, of suggesting the sole course for French national survival is submergence by Germany, followed by signing the EU Fiscal Treaty or fiskalcompakt, designed to achieve just that!