France Is In Big Trouble

While most of the world is focused on the economical troubles of Greece, Spain, and Portugal, it’s possible that France may blow past them in a rapid economical collapse.

France has been put under the spotlight when Gérard Depardieu, the country’s famous actor, decided to move to Belgium to avoid paying an 75% tax rate that was recently introduced on the rich by the newly elected socialist government headed by President Hollande. Depardieu decided that enough was enough after contributing over 145 million euros to the government during his career. The Telegraph was sympathetic in his move to Belgium, but the same cannot be said of the Washington Post, whose article seems to have been written by Hollande himself…

In real life, however, Depardieu has suddenly taken on a new role: filthy-rich tax-dodger, dissolute ingrate and traitor to his country in a time of need. It is a role he did not seek, but it has made him an unlikely political star at a time when France is bitterly divided over the Socialist government’s efforts to pull out of an economic slump dragging into its fifth year.

After it became known Depardieu bought a house in Belgium to become what is called here a “fiscal exile,” Prime Minister Jean-Marc Ayrault called his conduct “tacky.” Labor Minister Michel Sapin said he was an example not of France’s cinematic accomplishments but of “personal degradation.” Culture Minister Aurelie Filippetti accused him of “deserting the battlefield in a war against the economic crisis.”

President Francois Hollande tried hard to stay above the fray but could not resist a dig. “When someone loves France, he should serve it,” the chief of state intoned in a radio interview Friday.

Germany’s Spiegel claims that Hollande’s government is in denial about globalization, trying to run the country like an economic history museum. Meanwhile, discontent from both the rich and poor are growing…

Sociologist Olivier Galland, who headed the study, detects a feeling of bitterness and abandonment among 16- to 25-year-olds. “All of the elements are in place that could trigger yet another explosion,” like the one in the late fall of 2005, when there was rioting in the outskirts of major French cities.

“The system won’t survive if we don’t change,” says Gérard Dussillol, a French expert on finance who works for a Franco-Belgian think-tank. He believes that “France, as a domino, can shake the entire system of the euro zone.”

Even fashion designer Karl Lagerfeld no longer has anything good to say about his adopted country, where he claims to pay €2 million in annual taxes, which he calls “a sort of spa tax to the French state.” French politics, with its symbolic tax on the rich, has become “grotesque,” says Lagerfeld, while the French have “sterilized themselves intellectually.” The only thing that still works in the country is fashion, he said in an interview in Berlin.

:popcorn2:

Back in the US, economist Mish Shedlock calls France “economically insane” for trying to prevent companies from making layoffs.

Hollande’s layoff clampdown solution according to Labour Minister Michel Sapin is to “make layoffs so expensive for companies that it’s not worth it.”

Four things [will happen], all of them bad

1. Mass layoffs will occur before the law passes.
2. Companies will move any jobs they can overseas.
3. Ongoing, if it’s difficult to fire people, companies will not hire them in the first place.
4. Corporate profits will collapse along with the stock market should the need to fire people arise.

He believes France’s implosion is already underway…

Looking ahead to 2013, I expect things in France to get worse at an accelerated pace.

My interest in France is due to me currently living in Europe. A faltering Europe weakens the Euro and increases my purchasing power (I earn USD), but on the other hand, collapsing economies means less disposable income for 20-somethings, especially women. They go out less, party less, purchase less feminine clothing, and are less open to casual sex. While it’d be nice to save $150-200 a month from a 10% rise in the dollar, I rather have the poosy benefits of happy girls whose cash enables them to go and “have fun” instead of worrying about how they will make next month’s rent. This is why poorer countries can be harder to get easy sex in than rich ones (assuming you don’t resort to prostitutes).

Regardless of what I think, as long as France’s government turns back time with policies that no longer work in a globalized economy, Europe’s future remains in doubt. Now enjoy this Alizee video…