| Story Views | |
| Now: | |
| Last Hour: | |
| Last 24 Hours: | |
| Total: | |
Stimulating The Public Sector, Suffocating The Private Sector: A French Dichotomy
Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
testosteronepit.com / November 20, 2012, 7:45PM
Moody’s, when it stripped France off its AAA rating on Monday, had a laundry list of laments: “sustained loss of competitiveness,” “rigidities of its labor, goods, and service markets,” “deteriorating economic prospects,” uncertainties in the fiscal outlook, reduced ability to resist shocks emanating from the debt crisis….
A reflection of the granular details that have been seeping from every crack in France’s picturesque veneer: relentlessly rising unemployment, declining production and orders, collapsing automobile sales…. Everything seemed to go south. Home sales through August dropped 17%, mortgage originations plummeted 30.5% through September and 45.8% in October. OK, the “zero-rate mortgage,” a taxpayer funded program put in place by President Sarkozy’s conservative government to prop up home sales was drastically limited last November, austérité oblige. Down-payment requirements have jumped, and young buyers without a lot of cash have lost access to the housing market.
You’d think France is in a depression. Even its neighbor is worried [Germany’s Fear And Desperation Leak Out]. Yet, third quarter GDP edged up by 0.2%, after a decline of 0.1% in the second quarter. Mere stagnation since the second quarter of 2011. What gives?
Spending by France’s central government makes up 56% of GDP. Regional and local governments also spend voluminous amounts on various services, construction projects, art installations, and other essentials. Combined, they make up a much larger portion of the French economy than the 56% of the central government alone.
In addition, the central government owns all or large chunks of important companies, even after nearly two decades of privatization efforts. For example, Renault was privatized in 1996, but the government still owns 15.7%. France Telecom was privatized in 1998, but the government still owns 27% and gets to appoint the CEO. Air France was privatized in 1999, but even after its merger with KLM, the government still owns 18.6% of the group. And it owns other companies outright, such as EDF, a mega utility that owns all of France’s 58 active nuclear reactors, or SNCF, the national railroad with a quarter million employees.
Thanks to BrotherJohnF
2012-11-21 20:00:48
Source:
