Saturday, November 1, 2008

Sarkozy propounds

The Wall Street Journal had a lovely piece about President Sarkozy and his ideas on how to solve the financial crisis. Unfortunately, only the first two paragraphs can be read by those who are not subscribers. Still you get the gist of it:
French President Nicolas Sarkozy unveiled a series of employment-boosting measures, including 100,000 additional subsidized job contracts, as new data showed a decline in European consumer confidence.

Mr Sarkozy said his government will increase to 330,000 the number of subsidized job contracts it will finance in 2009. The figure is 100,000 more than originally proposed.

He also warned employers not to use the crisis as a cover for shedding workers: “I won’t tolerate any cynical or opportunistic strategies,” he said in a speech, pointing to “those who might use the current crisis to justify reducing production and jobs.”
Let’s see: businesses will not be allowed to make various adjustments in line with what they see necessary for long-terms survival during the financial crisis and will, undoubtedly, be expected to pay more taxes (as will all those putative consumers who will have far less money to spend) in order to subsidize those extra jobs that are not actually needed. Hmmm. Economics is not the man’s strong point, clearly. But then, what is?
Mr Sarkozy’s job plan is intended to boost confidence by reassuring people that even if they lose their jobs, they will have another one to move on to. He is under popular pressure to help regular workers after helping out banks: Just over a week ago, France announced it would inject €10.5 billion (£8.32 billion) in capital into six of the country’s largest banks in order to promote lending.
Ahem, just who were those banks lending to? Would that be regular workers, who, moreover, would find themselves without funds if the banks crashed?

Sarkozy’s problems are complicated. On the one hand, he is under pressure from the unions who are demanding assurances that “employees”, particularly in their unions, do not suffer in the crisis. On the other hand, he has little money to play with and, in any case, he was elected to free up the economy from the deadening regulations. Instead of which he is lambasting employers who might consider rationalizing their outfits.

Of course, President Sarkozy or, as we like to call him, Le Chauve-Souris) does not really envisage the French taxpayer funding all his plans – he would like other European taxpayers to chip in as well.
French president Nicolas Sarkozy has called for an EU crisis fund for member states to be extended from €12 billion currently to "at least" €20 billion.

Mr Sarkozy - whose country currently holds the rotating EU presidency - will make the proposal to his EU counterparts when they meet in Brussels next Friday (7 November).

Currently, an EU "community mechanism" allows member states to receive medium-term loans from a common pot of €12 billion.

"I will propose on 7 November …that the EU itself, which has at its disposal €12 billion to support a certain number of member states, passes to at least €20 billion in order to increase our ability to respond to the [financial] crisis," the French president said on Tuesday (28 October) shortly before a meeting with UK prime minister Gordon Brown in Versailles, France.
Not to be outdone in the generosity stakes the Commission has, according to a report in EUObserver, unveiled a draft plan that surpasses Le Chauve-Souris’ munificence.
The European Commission has unveiled a draft version of its plan for the economic recovery of the European Union, a plan that includes an even more generous boost to the emergency fund for EU economies battered by the global financial crisis than had previously been proposed by French President Nicolas Sarkozy.

"Europe must confront the economic downturn with the same robust and coordinated approach we have taken on the financial crisis," commission President Jose Manuel Barroso said on Wednesday (29 October), after an extraordinary college meeting devoted to the ongoing market mayhem.

As part of the commission's plan - to be published at full length on 26 November - Brussels is proposing to more than double the existing financial facility used to provide loans to EU countries facing difficulties.

The fund's ceiling currently stands at €12 billion. The commission is now suggesting it should be topped up to €25 billion. On Tuesday night, French President Nicolas Sarkozy, whose country holds the EU's six-month rotating presidency until the end of December, had proposed a limit of €20 billion.
Anything the Americans can do, we can do better. Or not.

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