Along with France it’s Keynesian economics that is totally bankrupt

Posted on January 29, 2013 by Steve Kates

Even with all that stimulus, France is now totally bankrupt according to its labour minister. From The Telegraph in the UK via Instapundit:

Michel Sapin made the gaffe in a radio interview, which left French President Francois Hollande battling to undo the potential reputational damage.

‘There is a state but it is a totally bankrupt state,” Mr Sapin said. “That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.’

The comments came as President Hollande attempts to improve the image of the French economy after pledging to reduce the country’s deficit by cutting spending by €60bn (£51.5bn) over the next five years and increasing taxes by €20bn.

Why saying what he said is considered a “gaffe” is beyond me since unless there is a bit of reality added to the actions being taken there is no reason for anyone to accept the need for cuts to spending and the deficit. But Keynesian theory or not, this is what people are actually doing and it’s not as if the French economy were overheating.

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6 Responses to Along with France it’s Keynesian economics that is totally bankrupt

  2. Rafe
    #712368, posted on January 29, 2013 at 10:33 pm

    Can they afford to be involved in Mali?

  3. JAG
    #712373, posted on January 29, 2013 at 10:39 pm

    “…and increasing taxes by €20bn.”

    Shows that they just don’t get it. You can’t increase taxes by a set dollar amount, you can only increase them by a percentage of what you are getting now and then pray that the extra revenue actually materialises.

  4. Myrrdin Seren
    #713000, posted on January 30, 2013 at 9:56 am

    Rafe

    Can they afford to be involved in Mali?

    In an oped about Mali and the French recently I saw a reference to something I had never heard about before.

    Can’t find the recent link, but I found this ( critical ) piece – which seems to have the following factual background:

    The CFA Franc

    Under the terms of the agreement which set up these banks and the CFA, the Central Bank of each African country is obliged to keep at least 65% of its foreign exchange reserves in an “operations account” held at the French Treasury, as well as another 20% to cover financial liabilities.

    In short, more than 85% of the foreign reserves of these African countries are deposited in the “operations accounts” controlled by the French Treasury. The two CFA banks are African in name, but have no monetary policies of their own. The countries themselves do not know, nor are they told, how much of the pool of foreign reserves held by the French Treasury belongs to them as a group or individually. The earnings of the investment of these funds in the French Treasury pool are supposed to be added to the pool but no accounting is given to either the banks or the countries of the details of any such changes. The limited group of high officials in the French Treasury who know the amounts in the “operations accounts”, where these funds are invested and whether there is a profit on these investments are prohibited from disclosing any of this information to the CFA banks or the central banks of the African states.

    Can the French afford NOT to be involved in Mali ?

    On this reading – they are not stabilising a friendly nation – they are protecting their economic interests and what is arguably the de facto ‘virtual’ empire.

  5. Jannie
    #713197, posted on January 30, 2013 at 1:00 pm

    Its beautiful to observe. Socialists in power committed to tax, borrow and spend themselves into prosperity. And no perfidious Anglos or Americans to blame, but perhaps they still expect the machinelike Bosch to clean up the debris. I am looking forward to the French, Spanish and Greeks occupying Brussels and demanding that investors buy their bonds at near zero rates.

  6. mundi
    #713230, posted on January 30, 2013 at 1:18 pm

    France is not bankrupt. they can easily pay the interest on their debts….

    Even if you count unfunded liabilities as debts, they can simply legislate them away.

    but its not surprising the socialists think they are bankrupt. as tgey consider every cent of spending to be absolutely vital.

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