Not only is support for sanctions in Europe crumbling, so is support for alleged austerity. I say alleged because there really hasn't been any austerity.
France Rebels Against Austerity
Please consider France Rebels Against Austerity as Europe's Recovery Collapses by Ambrose Evans-Pritchard.
Eurozone strategy is in tatters after economic recovery ground to a halt across the region and France demanded a radical shift in policy, warning that austerity overkill is driving Europe into a depression.
Growth slumped to zero in the second quarter, with Germany contracting by 0.2pc and France once again stuck at zero. Italy is already in a triple-dip recession.
Michel Sapin, France’s finance minister, sent tremors through European capitals with a defiant warning that his country would no longer try to meet its deficit targets and would not inflict further damage on its economy by tightening into the downturn. “I refuse to raise taxes to close any budget gaps,” he said.
Growth is too weak in Europe and inflation is too low. We must therefore stop reinforcing the causes of this depression,” he told RTL television.
“We must face the figures in front of us with realism. The truth is that, contrary to the forecasts of the International Monetary Fund and the [European] Commission, growth has broken down, both in France and in Europe.”
Cause of the Depression
Sapin's statement "We must therefore stop reinforcing the causes of this depression" is correct.
Unfortunately, both Sapin and Pritchard are clueless about austerity and the cause of France's woes.
Austerity means (or at least should mean), cutting government spending, not hiking taxes to maintain ridiculous levels of government spending. Speaking of which, government spending accounts for a whopping 57% of French GDP.
France desperately needs to cut government spending and burn thousands (if not tens of thousands) of regulations.
Instead, Pritchard wants the ECB to print more money. Sapin wants France to spend more money. It's a pair made in depression hell.
Yesterday, in Time for a Rethink, I made these statements.
Time for a Rethink
Sapin wants a rethink. I certainly agree. It's time for France to ...
- Rethink agricultural subsidies
- Rethink high tax rates
- Rethink work rules
- Rethink countless regulations
- Rethink government spending that accounts for 57% of GDP
- Rethink Hollande
- Rethink socialism
Actually, it's time for France to rethink everything that isn't working. In turn, that means France needs to rethink everything, because as best as I can tell, nothing is working properly.
Reader "Friendly Guy" complained about the fetid, foul-smelling US and proposed the following.
"Friendly Guy" says the US should ...
- Rethink agricultural corn subsidies
- Rethink low tax rates
- Rethink work rules and the few vacation days employees receive
- Rethink countless lack of banking regulations
- Rethink government spending that accounts for a large part of GDP
- Rethink Obama
- Rethink capitalism
Every country should become like the fetid U.S. of A.
"Friendly Guy" is on to something, but in the opposite sense on all but two points 1 and 6, assuming I have his tone correctly. Here is his list with my comments.
The US should ...
- Rethink agricultural corn subsidies: Yes, it should eliminate them.
- Rethink low tax rates: Yes, it should lower taxes and cut government spending to make it possible.
- Rethink work rules and the few vacation days employees receive: Yes, the government should get out of the way of regulations except when it comes to health, safety, fraud, and property rights.
- Rethink countless lack of banking regulations: Yes it should eliminate all regulations except those whose only purpose is to prevent fraud. And speaking of fraud, we need to get rid of fractional reserve lending and absurd accounting methods.
- Rethink government spending that accounts for a large part of GDP: Yes, we need to reduce government spending to the bone, pass national right-to-work laws, eliminate forced collective bargaining, and scrap Davis Bacon and all prevailing wage laws.
- Rethink Obama: Obviously
- Rethink capitalism: No. There is nothing to rethink. We should actually try it for a change.
Possibly I have "Friendly Guy's" tone wrong and we are in perfect agreement, but his sarcasm makes me think otherwise.
Mike "Mish" Shedlock